10-QPeriod: Q2 FY2001

STATE STREET CORP Quarterly Report for Q2 Ended Jun 30, 2001

Filed August 8, 2001For Securities:STTSTT-PG

Summary

State Street Corporation (STT) reported solid performance for the second quarter of 2001, with diluted earnings per share (EPS) of $0.50, an 11% increase compared to $0.45 in the prior year quarter. Net income rose 13% to $167 million on total revenue of $982 million, up 11%. The company benefited from strong growth in servicing fees, driven by new business wins and robust securities lending revenue, as well as an increase in net interest revenue due to improved spreads and client activity. However, the six-month results were impacted by a significant $50 million write-off of an investment in Bridge Information Systems, Inc., which reduced EPS by $0.10. Excluding this charge, operating EPS for the first half of 2001 was $0.97, with operating revenue of $1.9 billion. Despite market value declines, total assets under custody remained stable at $6.1 trillion, while assets under management slightly decreased. State Street continues to invest in technology and pursue strategic acquisitions, demonstrating a commitment to long-term growth.

Key Highlights

  • 1Diluted EPS increased 11% to $0.50 in Q2 2001, compared to $0.45 in Q2 2000.
  • 2Net income grew 13% to $167 million in Q2 2001, driven by revenue growth.
  • 3Total revenue rose 11% to $982 million in Q2 2001, primarily from servicing fees and net interest revenue.
  • 4Servicing fees, the largest component of fee revenue, increased 16% to $422 million in Q2 2001.
  • 5A $50 million investment write-off in Bridge Information Systems impacted the six-month results, reducing EPS by $0.10.
  • 6State Street completed two acquisitions in early 2001: DST Portfolio Systems, Inc. and a majority interest in Bel Air Investment Advisors LLC.
  • 7The company maintained strong regulatory capital ratios, with its Tier 1 risk-based capital ratio at 13.3% as of June 30, 2001, well above regulatory requirements.

Frequently Asked Questions

State Street reported a strong second quarter in 2001, with diluted earnings per share (EPS) of $0.50, an 11% increase from $0.45 in the same quarter of the previous year. Net income increased by 13% to $167 million.

Revenue growth was primarily driven by an 11% increase in total revenue to $982 million. This was largely due to significant growth in servicing fees, which rose 16% and were boosted by new business and strong securities lending revenue. Net interest revenue also increased due to improved spreads and higher client activity.

Yes, the six-month results were impacted by a $50 million write-off of an investment in Bridge Information Systems, Inc., which reduced net income by $33 million after tax and diluted EPS by $0.10. Excluding this charge, operating EPS for the first half of 2001 was $0.97.

State Street continues to pursue strategic growth through acquisitions. In the first half of 2001, the company completed the purchases of DST Portfolio Systems, Inc. and a majority interest in Bel Air Investment Advisors LLC. Additionally, it announced an agreement to acquire the passive equity business of Gartmore Investment Management plc.