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State Street Fees Boost Bottom Line (Update 1)

Total assets were $222.6 billion as of Dec. 31, increasing by 3% from a year earlier. State Street's assets under custody or administration increased by 4% sequentially and 12% year-over-year, to $24.371 trillion as of Dec. 31. Assets under management grew by 1% from the third quarter and 13% year-over-year, to $2.089 trillion as of Dec 31.

State Street's shares closed at 50.38 Thursday, trading for 11.7 times the consensus 2013 EPS estimate of $4.30. The consensus 2014 EPS estimate is $4.90.

Based on a quarterly payout of 24 cents, the shares have a dividend yield of 1.91%.

The company repurchased 33.4 million shares during 2012 at an average price of $43.11, and said that it had about $360 million authorized for share repurchases through the end of the first quarter.

Jefferies analyst Ken Usdin said in a note following the earnings announcement that it was "difficult to derive core EPS given restated results and differing tax treatment, but at worst core EPS is $1.00, which is in line with consensus," and that "core fee momentum, step-up in cost saves and reiteration of [net interest margin guidance] for 2013 all bode well for STT's ability to achieve 2013 consensus of $4.30."

State Street's 2013 guidance calls for the net interest margin to range from 1.30% to 1.40%. The company also expects its expenses to decline by $220 million, with another $140 million decline in 2014.

Usdin rates State Street a "Hold," with a price target of $52.00.

Interested in more on State Street? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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