This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

State Street Beats as Fee Income Rises

NEW YORK (TheStreet) -- State Street (STT) of Boston on Friday announced a 4.9% year-over-year increase in fee revenue, with fourth-quarter results coming in ahead of expectations.

The trust and custody bank reported fourth-quarter net income available to common shareholders of $545 million, or $1.22 a share, on operating revenue of $2.46 billion. These figures all came in ahead of the consensus estimates of $532 million in earnings, or $1.22 a share, on revenue of $2.50 billion, among analysts polled by Thomson Reuters

On a non-GAAP operating basis, the company's earnings available to common shareholders came to $514 million, or $1.15 a share, on revenue of $2.528 billion, compared to earnings of $537 million, or $1.19 a share, on revenue of $2.469 billion during the third quarter, and earnings of $521 million, or $1.11 a share, on revenue of $2.463 billion during the fourth quarter of 2012.

Again on an operating basis, State Street said its earnings-per-share grew nearly 15% to $4.54 in 2013 from $3.95 in 2012, while revenue for 2013 rose 3.3% to $10.05 billion from $9.73 billion in 2012.

The bank's assets under custody and administration grew 5.4% sequentially and 12.5% year-over-year to $27.427 trillion as of Dec. 31, reflecting in part the strong performance of the stock market.  Assets under management were up 4.6% quarter-over and 12.4% year-over-year to $2.345 trillion.

On an operating basis, State Street's total fee revenue grew 0.6% sequentially and 4.9% year-over-year to $1.932 billion in the fourth quarter.  Fourth-quarter servicing fees were up 1.7% from the third quarter and 7.1% from a year earlier to $1.232 billion, while management fees rose 5.1% sequentially and 11.5% year-over-year to $290 million.  Foreign exchange trading revenue for the fourth quarter totaled $125 million, down from $147 million in the third quarter, but up from $118 million in the fourth quarter of 2012. 

Brokerage revenue declined 5.5% quarter-over-quarter and 17.6% year-over-year to $103 million during the fourth quarter.  Processing fees totaled $106 million during the fourth quarter, rising a bit from $103 million the previous quarter, but declining from $115 million a year earlier.

State Street's operating expenses rose 4.3% quarter-over-quarter and 2.7% year-over-year to $1.760 billion during the fourth quarter.

The bank's return on common equity rose to 10.9% in the fourth quarter from 10.8% the previous quarter and 9.3% a year earlier.

State Street CEO Joseph Hooley said in the company's earnings press release, "2013 was a very good year for State Street despite both the ongoing headwinds created by the low rate environment and the increasing regulatory cost and complexity." 

"We purchased approximately 8.0 million shares of our common stock during the fourth quarter, and 24.7 million shares since April 1, 2013, under our current $2.1 billion common stock purchase program effective through March 2014. We recently submitted our 2014 capital plan to the Federal Reserve, and the return of capital through dividends and common stock repurchases remains a key priority," Hooley added.

The Fed will complete its annual stress tests for major financial firms in mid-March, with the regulator announcing the results of its reviews of capital deployment plans a week later.  With an estimated Basel III Tier 1 common equity ratio of 10.1% as of Dec. 31, State Street appears well-positioned for significant share repurchases this year.  The company bought back 31.2 common shares during 2013 for $2.04 billion at an average price of $65.30.

State Street's shares were flat in premarket trading Friday, at $72.76.

The following chart shows state Street's performance against the KBW Bank Index (I:BKX) and the S&P 500 since the end of 2011:

STT Chart data by YCharts


RELATED STORIES:

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

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.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,079.57 -42.44 -0.25%
S&P 500 1,996.74 -3.38 -0.17%
NASDAQ 4,557.6950 -11.9260 -0.26%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs