Why is the CFO leaving and who is replacing him?

Eric Aboaf informed State Street in October 2024 that he intends to step down as Vice Chairman and CFO to take a position outside banking. His last day will be the date State Street files its 2024 Form 10-K, provided he remains through that date. Mark R. Keating, EVP and CFO for Investment Services since 2018, was appointed interim CFO effective upon Aboaf's departure, while retaining his existing responsibilities. The company has launched a formal internal and external search for a permanent CFO.

Were the 4Q24 results strong on an underlying basis?

Yes. Excluding notable items, 4Q24 EPS was $2.60 versus $2.08-ish in 4Q23 on an ex-notables basis, and total revenue rose 12% YoY. Expenses ex-notables increased 8%, mainly from higher performance-based incentive compensation and business and technology investments, so operating leverage remained positive. Notable items in the quarter were net negative $58 million pre-tax, or $0.14 per share, largely from a $79 million deferred compensation acceleration partly offset by a $31 million FDIC assessment release.

How much capital did State Street return and is it sustainable?

State Street returned $770 million to common shareholders in 4Q24, equal to 106% of quarterly net income available to common, consisting of $550 million in buybacks and $220 million in dividends ($0.76 per share). For full-year 2024 it returned $2.2 billion, an 87% payout ratio. Because the payout exceeded earnings in the quarter and RWA grew, the standardized CET1 ratio declined to 10.9%, down from 11.6% a year earlier. Investors should monitor whether capital generation keeps pace with return targets, though the company's LCR remained around 107% at the holding company level.

What does the 2025 outlook imply for investors?

Management guided to fee revenue growth of about 3-5%, supported by higher average market levels, organic growth in servicing and management fees, stronger FX and securities finance activity, and continued growth in front office software. NII is expected to be roughly flat, with a headwind from deposit mix shift. Expenses are projected to rise about 2-3%, including roughly $400 million or more of incremental investments offset by about $500 million of productivity savings. The outlook assumes no material NII headwind for positive operating leverage, and currency translation is expected to reduce growth by about 1 percentage point on both fees and expenses.

STT 8-K: Earnings & Results, Leadership Changes & More

01—Abstract

Summary

Summary of the 8-K filed January 17, 2025. Cited figures are marked; the original filing is the authoritative source.

State Street (STT) reported fourth-quarter 2024 EPS of $2.46^a (GAAP), or $2.60 excluding notable items, with total revenue up 12% year-over-year to $3.4 billion and fee revenue up 13%, driven by broad-based strength including management fees (+20%), FX trading (+17%), and securities finance (+22%).

Net interest income rose 10% to $749 million^b, and the company delivered positive fee and total operating leverage. Pre-tax margin was 28% (30% ex-notables), ROE was 12.7%, and full-year 2024 EPS of $8.21 ($8.67 ex-notables) rose 47% on a GAAP basis. Management also cited $1.1 trillion in quarterly new servicing AUC/A wins, record Management fees, and $64 billion of quarterly net inflows, and it guided to fee revenue growth of roughly 3-5%, flat-ish NII, and expense growth of 2-3% for 2025.

The filing also disclosed a leadership change: Vice Chairman and CFO Eric Aboaf will depart when the 2024 Form 10-K is filed, and Mark R. Keating, currently EVP and CFO for Investment Services, was named interim CFO with a $500,000^c base salary and $5.25 million annualized 2025 target incentive. A formal search for a permanent CFO is underway.

Investors should weigh the strong operating results against this executive transition and the modest decline in capital ratios, with the CET1 ratio falling 0.7 percentage points to 10.9% as capital return and RWA growth outpaced earnings. Notable items in 4Q24 were small on a net basis (-$58 million^d pre-tax, or -$0.14 EPS), including a $79 million accelerated deferred compensation charge partly offset by a $31 million FDIC special assessment release. Full-year 2024 results were also helped by $2.2 billion returned to common shareholders, including $1.3 billion in buybacks, representing an 87% total payout ratio.

02—Key points

Key Highlights

4Q24 GAAP EPS of $2.46 vs. $0.55 in 4Q23; $2.60 excluding notable items (up 27% YoY ex-notables)
Total revenue up 12% YoY to $3.4B; fee revenue up 13% and NII up 10%, with positive fee and total operating leverage
Pre-tax margin of 28% (30% ex-notables) and ROE of 12.7% (13.5% ex-notables) in 4Q24
Strong business momentum: $1.1T new servicing AUC/A wins in 4Q24 ($2.3T for FY2024), $64B quarterly AUM net inflows, and record Management fees of $576M
Capital returned $770M in 4Q24 (106% of net income to common), but standardized CET1 ratio fell 0.7 pts to 10.9%
Leadership transition: CFO Eric Aboaf departs upon 10-K filing; Mark R. Keating named interim CFO while a permanent CFO search continues
2025 outlook calls for fee revenue up ~3-5%, NII roughly flat, and expenses up ~2-3%, with positive fee and total operating leverage

03—Questions

Frequently Asked Questions

Why is the CFO leaving and who is replacing him?
Eric Aboaf informed State Street in October 2024 that he intends to step down as Vice Chairman and CFO to take a position outside banking. His last day will be the date State Street files its 2024 Form 10-K, provided he remains through that date. Mark R. Keating, EVP and CFO for Investment Services since 2018, was appointed interim CFO effective upon Aboaf's departure, while retaining his existing responsibilities. The company has launched a formal internal and external search for a permanent CFO.
Were the 4Q24 results strong on an underlying basis?
Yes. Excluding notable items, 4Q24 EPS was $2.60 versus $2.08-ish in 4Q23 on an ex-notables basis, and total revenue rose 12% YoY. Expenses ex-notables increased 8%, mainly from higher performance-based incentive compensation and business and technology investments, so operating leverage remained positive. Notable items in the quarter were net negative $58 million pre-tax, or $0.14 per share, largely from a $79 million deferred compensation acceleration partly offset by a $31 million FDIC assessment release.
How much capital did State Street return and is it sustainable?
State Street returned $770 million to common shareholders in 4Q24, equal to 106% of quarterly net income available to common, consisting of $550 million in buybacks and $220 million in dividends ($0.76 per share). For full-year 2024 it returned $2.2 billion, an 87% payout ratio. Because the payout exceeded earnings in the quarter and RWA grew, the standardized CET1 ratio declined to 10.9%, down from 11.6% a year earlier. Investors should monitor whether capital generation keeps pace with return targets, though the company's LCR remained around 107% at the holding company level.
What does the 2025 outlook imply for investors?
Management guided to fee revenue growth of about 3-5%, supported by higher average market levels, organic growth in servicing and management fees, stronger FX and securities finance activity, and continued growth in front office software. NII is expected to be roughly flat, with a headwind from deposit mix shift. Expenses are projected to rise about 2-3%, including roughly $400 million or more of incremental investments offset by about $500 million of productivity savings. The outlook assumes no material NII headwind for positive operating leverage, and currency translation is expected to reduce growth by about 1 percentage point on both fees and expenses.

04—Continue

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