Why did reported EPS rise 49% when expenses were largely flat?

The prior-year quarter (1Q24) included a $130 million FDIC special assessment that depressed both expenses and earnings. Comparing against that one-time charge inflates the growth rate, which is why management also cites a more modest 21% increase excluding notable items.

Is the growth in fee revenue sustainable?

Fee revenue growth was broad-based, but management fees and securities finance can be sensitive to market levels, lending balances and spreads. Sequentially, fee revenue fell 3% due to lower software renewals and other fee revenue, so investors should watch whether client activity and market-driven revenues hold up.

What is the impact of the senior notes redemption on State Street?

The company will redeem all $1 billion of 5.104% notes on May 18, 2025 at par plus accrued interest, using cash on hand. This reduces long-term debt and interest expense and is a routine capital-structure action that does not signal a change in financial condition.

How strong is State State's capital and liquidity position?

Ratios remain well above regulatory minimums, with a standardized CET1 ratio of 11.0% and SSBT's LCR around 139%. The CET1 ratio was essentially flat year over year, and the company continued returning capital through dividends and buybacks.

STT/STT-PG 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

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

State Street (STT) reported first-quarter 2025 results on April 17, 2025, with diluted EPS of $2.04^a, up 49% year over year and up 21% excluding notable items in the prior-year period.

Total revenue rose 5% to $3.28 billion^b and fee revenue rose 6% to $2.57 billion, led by management fees (+10%), software and processing fees (+9%), FX trading (+9%) and securities finance (+19%). Net interest income was flat year over year at $714 million, and total expenses fell 3% to $2.45 billion because the prior year included a $130 million FDIC special assessment. Excluding notable items, expenses rose 3%, so the quarter delivered positive fee and total operating leverage (roughly 8.6 and 7.2 percentage points on a GAAP basis).

Balance-sheet and capital metrics were stable. The standardized CET1 ratio was 11.0%, the Tier 1 leverage ratio 5.5%, and the State Street Bank and Trust LCR about 139%. The company returned $320 million^c to common shareholders, including $100 million of buybacks and $220 million of dividends.

Assets under custody and/or administration reached $46.7 trillion^d (up 6%) and assets under management $4.7 trillion (up 9%), though AUM fell 1% sequentially. Management pointed to a period of geopolitical and policy uncertainty and emphasized expense discipline and client value propositions.

Separately, the filing discloses that State Street will redeem all $1 billion of its 5.104% Fixed-to-Floating Rate Senior Notes due 2026 on May 18, 2025 at par plus accrued interest, funded with cash on hand. This is a routine balance-sheet action that reduces long-term debt, while the rest of the filing is a standard earnings release and investor presentation.

02—Key points

Key Highlights

Diluted EPS of $2.04, up 49% YoY (up 21% excluding notable items); net income of $644 million, up 39%.
Total revenue up 5% to $3.28B and fee revenue up 6% to $2.57B, with broad-based strength across management fees (+10%), software and processing (+9%), FX trading (+9%) and securities finance (+19%).
Total expenses down 3% reported, up 3% excluding notable items, delivering positive fee and total operating leverage.
Net interest income flat YoY at $714M, but down 5% sequentially as deposit mix shifted and short-end rates declined.
Pre-tax margin of 25.0% (down 3.1 points QoQ but up 5.9 points YoY) and ROE of 10.6%.
Capital remained strong: CET1 ratio 11.0%, Tier 1 leverage 5.5%, SSBT LCR ~139%; $320M returned to common shareholders.
AUC/A of $46.7T (+6% YoY) and AUM of $4.7T (+9% YoY); the company also announced redemption of $1B 5.104% senior notes due 2026 on May 18, 2025.

03—Questions

Frequently Asked Questions

Why did reported EPS rise 49% when expenses were largely flat?
The prior-year quarter (1Q24) included a $130 million FDIC special assessment that depressed both expenses and earnings. Comparing against that one-time charge inflates the growth rate, which is why management also cites a more modest 21% increase excluding notable items.
Is the growth in fee revenue sustainable?
Fee revenue growth was broad-based, but management fees and securities finance can be sensitive to market levels, lending balances and spreads. Sequentially, fee revenue fell 3% due to lower software renewals and other fee revenue, so investors should watch whether client activity and market-driven revenues hold up.
What is the impact of the senior notes redemption on State Street?
The company will redeem all $1 billion of 5.104% notes on May 18, 2025 at par plus accrued interest, using cash on hand. This reduces long-term debt and interest expense and is a routine capital-structure action that does not signal a change in financial condition.
How strong is State State's capital and liquidity position?
Ratios remain well above regulatory minimums, with a standardized CET1 ratio of 11.0% and SSBT's LCR around 139%. The CET1 ratio was essentially flat year over year, and the company continued returning capital through dividends and buybacks.

04—Continue

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