on Wednesday posted fourth-quarter net income that beat Wall Street's expectations.
State Street earned $498 million, or one dollar a share, in the fourth quarter, vs. a consensus estimate of 97 cefnts a share. In comparison, State Street earned $327 million, or 66 cents a share, during the third quarter and $256 million during the fourth quarter of 2008.
State Street said it made $234 million, or 54 cents a share, available to common shareholders in the fourth quarter of 2008, after dividends on preferred shares issued to the government for money received via the Troubled Assets Relief Program. State Street repaid TARP in the second quarter of 2009.
With State Street's noninterest expenses rising faster than its fee income during the fourth quarter, the improvement in earnings over the third quarter mainly reflected a third-quarter pre-tax provision of $250 million, which covered expenses tied losses to investor losses from fixed-income investments managed by State Street Global Advisors, as well as costs tied to the TARP repayment and the 2007 acquisition of Investors Financial Services Corp.
For the full year, State Street reported a net loss to common shareholders of $2 billion, compared to $1.8 billion in net income for 2008. The major factor in the loss for the full year was the after-tax extraordinary loss of $3.7 billion during the second quarter, when the company moved commercial paper conduits it was managing, onto its balance sheet.
Written by Philip van Doorn in Jupiter Fla.
Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, 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.