Summary
State Street Corporation (STT) reported a significant net loss of $3.18 billion for the second quarter of 2009, largely driven by an extraordinary loss of $3.68 billion related to the consolidation of asset-backed commercial paper conduits onto its balance sheet. Excluding this extraordinary item, the company reported a net income of $370 million, a decrease from $548 million in the prior year's second quarter. Total revenue declined by 21% year-over-year, primarily due to a 24% drop in fee revenue, reflecting the adverse impact of ongoing global financial market instability on servicing and management fees. However, expenses also decreased significantly by 26%, outperforming revenue decline and leading to positive operating leverage. The company successfully repurchased its $2 billion TARP investment from the U.S. Treasury, signaling a step towards normalizing its capital structure. Despite the challenging market environment impacting fee revenues, State Street maintained strong capital adequacy ratios, exceeding regulatory requirements. The company also strengthened its liquidity position. Assets under custody and administration saw a modest increase from the end of 2008, although they declined year-over-year due to market valuations. Management is focused on navigating the current economic climate while strategically managing its balance sheet and capital. Investors should closely monitor the impact of market volatility on fee revenues and the resolution of ongoing legal and regulatory inquiries.
Financial Highlights
34 data points| Revenue | $2.12B |
| Interest Expense | $193.00M |
| Net Income | -$3.18B |
| EPS (Basic) | $-7.16 |
| EPS (Diluted) | $-7.12 |
| Shares Outstanding (Basic) | 463.20M |
| Shares Outstanding (Diluted) | 465.81M |
Key Highlights
- 1Reported a net loss of $3.18 billion for Q2 2009, including an extraordinary loss of $3.68 billion from conduit consolidation.
- 2Excluding the extraordinary loss, net income was $370 million, down from $548 million in Q2 2008.
- 3Total revenue decreased 21% to $2.12 billion, with fee revenue down 24%, reflecting market instability.
- 4Total expenses decreased 26% to $1.36 billion, driven by lower salaries and benefits, leading to positive operating leverage.
- 5Successfully repurchased $2 billion TARP investment from the U.S. Treasury.
- 6Assets under custody and administration were $16.39 trillion at June 30, 2009.
- 7Maintained strong regulatory capital ratios, exceeding minimum and well-capitalized thresholds.