STATE STREET CORP Quarterly Report for Q3 Ended Sep 30, 2010

Summary

State Street Corporation (STT) reported solid results for the third quarter of 2010, demonstrating a recovery from the challenging financial environment of the previous year. Total revenue increased by 3% year-over-year, driven by a significant 7% rise in fee revenue, largely attributed to acquisitions and improved equity market valuations. The company successfully integrated its acquisitions of Intesa Sanpaolo's securities services business and Mourant International Finance Administration, which contributed positively to revenue and assets under custody and administration. Despite a decline in trading and securities finance revenue due to market conditions, fee revenue from servicing and management fees showed resilience. The company also managed its expenses effectively, with total expenses decreasing by 12% year-over-year, partly due to the absence of a significant legal exposure provision recorded in the prior year. Overall, STT appears to be navigating the post-financial crisis landscape effectively, with a focus on strengthening its core servicing and management businesses.

Key Highlights

• 1Total revenue increased by 3% to $2.31 billion compared to Q3 2009, driven by a 7% increase in fee revenue.
• 2Servicing fees increased by 19% year-over-year, significantly boosted by recent acquisitions and improved equity market valuations.
• 3Total expenses decreased by 12% year-over-year, largely due to the absence of a $250 million provision for legal exposure recorded in Q3 2009.
• 4Assets under custody and administration grew to $20.23 trillion, an 8% increase from year-end 2009.
• 5Assets under management were $1.90 trillion, a slight decrease from year-end 2009 but a 10% increase year-over-year.
• 6Earnings per diluted share were $1.08, a significant improvement from $0.66 in Q3 2009.

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