- First-quarter net income to common shareholders of $443 million, or 96 cents a share
- Earnings beat the consensus EPS estimate of 93 cents
- Total revenue of $2.470 billion slightly below consensus estimate of $2.479 billion
- Assets under custody, administration and management grow 3% sequentially and 10% year-over-year
State Street's net interest revenue declined to $577 million in the first quarter from $600 million in the fourth quarter and $607 million in the first quarter of 2012. The sequential decline reflected the lower number of days in the first quarter. The year-over-year decline resulted from a narrowing of the net interest margin to 1.31% in the first quarter from 1.36% the previous quarter and 1.52% a year earlier.
State Street CEO Joseph L. Hooley said "the strength in the equity markets, combined with higher volumes and increased volatility in foreign-exchange trading, supported our fee revenue. We continue to control expenses across the organization and generate benefits from our transformation program."
State Street during the fourth quarter completed a common stock repurchase program, buying back $360 million worth of shares. The company in March announced a new $2.1 billion repurchase authorization, to run through the first quarter of 2014. Following the completion of the 2013 Federal Reserve stress tests, the company in March raised its quarterly dividend to 26 cents a share from 24 cents. State Street's stock was down 0.5% in late morning trading, to $56.23. Jefferies analyst Ken Usdin rates State Street a "buy," with a $66 price target, and in an early note to clients on Friday wrote that "While the result should support forward estimates, revenue growth (+0.3% Q-Q) was light vs. consensus (lower spread income, less growth in core fees)." "Early investor feedback is cautious on the revenue growth rate," Usdin wrote, "but we think the result is best among trust banks." When discussing the company's expense-control efforts, Usdin wrote that State Street's ratio of employee compensation to revenue of 41.9% in the first quarter "improved 200bp vs. 1Q12, which is a good sign that efficiency initiatives are taking hold." State Street's shares closed at $56.51 Thursday, returning 21% year-to-date, following a 19% return during 2012. The shares trade for 11 times the consensus 2014 EPS estimate of $5.12. The 2013 EPS estimate is $4.49. Based on the 26-cent quarterly payout, the shares have a dividend yield of 1.84%. STT data by YCharts
Interested in more on State Street? See TheStreet Ratings' report card for this stock. -- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn