STATE STREET BOSTON CORPORATION REPORTS SECOND QUARTER EARNINGS PER SHARE UP 15%.BOSTON--(BUSINESS WIRE)--July 18, 1995-- State Street Boston Boston, town, EnglandBoston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. Corporation reported second quarter earnings per share of $.75 on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, an increase of 15% from $.65 in the second quarter of 1994. Net income was $62.7 million, up from $53.9 million a year ago. The increase reflected revenue growth of 11%, operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. growth of 11% and a tax settlement. Return on stockholders equity was 17.2%. Marshall Marshall. 1 City (1990 pop. 12,711), seat of Saline co., N central Mo.; inc. 1839. In a large farm area, it is a processing center for grain, eggs, meat, and dairy products. Marshall is the seat of Missouri Valley College. N. Carter, Chairman and Chief Executive Officer, said, In the second quarter, several factors which drive our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth improved. Non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. assets under custody The care, possession, and control of a thing or person. The retention, inspection, guarding, maintenance, or security of a thing within the immediate care and control of the person to whom it is committed. The detention of a person by lawful authority or process. and transactions processed increased and U.S. equity and bond market values continued to climb. Growth in the mutual fund servicing and investment management businesses helped fuel a 7% consecutive quarter increase in fiduciary fiduciary (fĭd  `shēĕ'rē), in law, a person who is obliged to discharge faithfully a responsibility of trust toward another. compensation.
Foreign deposits grew, and foreign exchange trading Foreign Exchange Trading or FX Trading, clients are able to hedge against, or speculate upon, changes in the exchange rate of two currencies. For example, a speculator can long EUR/USD in foreign exchange market in order to profit from capturing the appreciation of Euro against the revenue remained
strong.We are now benefiting from the capabilities of our operating infrastructure which can process substantially higher volumes of non- non- word element [L.]not . non- pref. Not: noninvasive. U.S. activity as a result of our investment spending program. We continue to build and enhance our custody system which processes both international and domestic securities. New products, including our defined contribution plan Defined contribution plan A pension plan whose sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan recordkeeping system and currency risk management products, are contributing to revenue growth. Our development of non-U.S. locations is resulting in additional opportunities. At June June: see month. 30, assets under custody were $2.0 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. , up $320 billion, or 19%, from a year ago. About one half of the increase was due to market valuations with the other half from additional assets from existing customers and new business. Assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. were $185 billion, up 33% from June 1994, due primarily to additional assets from existing customers and net new business. Total revenue for the quarter was $388.3 million, up $38.6 million, or 11%, from a year ago. Revenue grew from the comprehensive range of services provided to customers and was reflected in fiduciary compensation, net interest revenue and foreign exchange trading revenue. Consecutive quarter revenue growth was $20.1 million. Fee revenue was $276.7 million, up $27.1 million, or 11%, from the second quarter of 1994. The largest component of fee revenue is fiduciary compensation, which is derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from accounting, custody, information services See Information Systems. , recordkeeping, investment management and trustee A user or group of users that has been given access rights to files on a network server. See also TRUSTe. services. Fiduciary compensation was $199.4 million, up $15.3 million, or 8%, from a year ago. The increase in revenues came in part from investment management services and services for pension plans. The rate of growth of fiduciary compensation was restrained by reductions in ongoing revenue as discussed in the first quarter, which continued to lower the growth rate of fiduciary compensation by 8 percentage points. These revenue reductions resulted from certain customers internalizing functions, pricing adjustments to retain certain large customers who are using a broader array of services, and customers no longer at State Street for various other reasons. Fiduciary compensation reflected revenue growth from managing international assets, growth in actively managed domestic assets and personal trust. Revenue from lending securities Lending securities Securities borrowed from a broker's inventory, from another customer's margin account, or from another broker, when a customer is required to deliver on a short sale. of pension plans, while down from the first quarter due to the flatter yield curve, was up from a year ago. Mutual fund services revenue benefited from 267 new funds and asset growth. The installation of customers using 401(k) recordkeeping and investment services as well as additional business outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. also contributed to the year-over-year improvement. Fiduciary compensation from corporate trust services declined in part because of the significant decline in new issuance of asset-backed securities Asset-backed security A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate. asset-backed security A debt security collateralized by specific assets. . Taxable equivalent net interest revenue was $113.6 million, up $10.4 million, or 10%, over the same quarter a year ago, primarily reflecting balance sheet growth to support customers activities, and the benefits of higher asset yields. These positive factors were partially offset by a narrower spread between interest rates earned and paid due to rising rates and a flatter Treasury yield curve. Average interest-earning assets grew $4.0 billion, or 21%, to $22.7 billion, funded primarily by an increase in securities sold under repurchase agreements Repurchase agreement An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. and foreign deposits. Securities sold under repurchase agreements were up $3.0 billion, or 73%, to $7.0 billion, reflecting short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments by customers. Foreign deposits increased by $1.1 billion, including a $.9 billion increase in transaction account balances. Noninterest-bearing deposits declined $.9 billion to $4.0 billion due primarily to lower deposit balances from mutual funds and corporate trust services. The spread between interest rates earned and paid declined from 1.55% to 1.21%. Net interest margin declined from 2.21% to 2.01%, reflecting narrower spreads and a larger portion of funding from interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid sources of funds. Foreign exchange revenue was $36.8 million, up $7.7 million, or 26%, from a year ago. The underlying trends supporting long-term growth in foreign exchange trading volume continued, particularly the management of currency risk by investment managers who invest globally. Trading in emerging market currencies returned to previous levels. Market volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the during the quarter also contributed to increased trading activity. Service fees were $14.4 million, up $2.4 million from a year ago. Securities gains were $2.0 million, compared with $.7 million in the second quarter of 1994. Other revenue of $9.3 million was up $1.3 million from a year ago. A non-strategic business, providing card replacement and related services for a bank card association, was sold, resulting in a gain of $2.7 million. Trading account Trading Account 1. An account similar to a traditional bank account, holding cash and securities, and is administered by an investment dealer. 2. An account held at a financial institution and administered by an investment dealer that the account holder uses to employ a profits replaced losses incurred a year ago. These positive factors were partially offset by lower currency translation gains on the foreign bond portfolio, which were a loss of $.1 million, down from a gain of $3.8 million a year ago. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. of $289.2 million were up $28.4 million, or 11%, from the second quarter of 1994 supporting business growth. Salaries and employee benefits were $159.4 million, up $16.0 million, or 11%, due to salary increases, a 4% increase in staff, incentive compensation, and employee benefit costs. All other expenses were up $12.4 million, or 11%, due in part to increased occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy and equipment expense. A settlement of prior years state taxes resulted in a net $3.6 million reduction in taxes. The settlement resolves a claim over the taxability tax·a·ble adj. Subject to taxation: taxable income. n. One that is subject to taxation: taxables such as cigarettes and liquor. of interest revenue on certain Massachusetts Massachusetts (măsəch `sĭts), most populous of the New England states of the NE United States. bonds on which
State Street paid taxes from 1977 to 1984.With $2.0 trillion in assets under custody and $185 billion under management, State Street is a leading servicer of financial assets Financial assets Claims on real assets. worldwide. Services are provided from offices in the United States, Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , Grand Cayman Grand Cayman See Cayman Islands. , Netherland Antilles Antilles: see West Indies. , United Kingdom, France, Belgium Belgium (bĕl`jəm), Du. België, Fr. La Belgique, officially Kingdom of Belgium, constitutional kingdom (2005 est. pop. 10,364,000), 11,781 sq mi (30,513 sq km), NW Europe. , Luxembourg Luxembourg, province, Belgium Luxembourg, Du. Luxemburg, province (1991 pop. 232,813), 1,706 sq mi (4,419 sq km), SE Belgium, in the Ardennes, bordering on the Grand Duchy of Luxembourg in the east and on France in the south. , Denmark Denmark (dĕn`märk), Dan. Danmark, officially Kingdom of Denmark, kingdom (2005 est. pop. 5,432,000), 16,629 sq mi (43,069 sq km), N Europe. , Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , United Arab Emirates United Arab Emirates, federation of sheikhdoms (2005 est. pop. 2,563,000), c.30,000 sq mi (77,700 sq km), SE Arabia, on the Persian Gulf and the Gulf of Oman. , Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan , Japan, Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. , and New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. . State Street is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol STT STT State Street Corporation (stock symbol) STT Suomen Tietotoimisto (Finnish National News Agency) STT Secure Transaction Technology STT Surface Tension Transfer (welding) .
STATE STREET BOSTON CORPORATION
Addendum
FOR THE THREE MONTHS ENDED JUNE 30,
1995 1994
-------- --------
Net income $62,661,000 $53,879,000 Primary earnings per share $ .75 $ .65 Fully diluted earnings per share $ .75 $ .65 Average number of shares 83,019,000 82,854,000 (primary) Average number of shares 83,697,000 83,512,000 (fully diluted) -0- FOR THE SIX MONTHS ENDED JUNE 30,
1995 1994
-------- --------
Net income $116,997,000 $108,076,000 Primary earnings per share $1.41 $1.31 Fully diluted earnings per share $1.40 $1.30 Average number of shares 82,958,000 82,745,000 (primary) Average number of shares 83,656,000 83,433,000 (fully diluted) -0-
STATE STREET BOSTON CORPORATION
Consolidated Statement of Income
Three Months ended June 30,
(Dollars in thousands, except per share data)
1995 1994 % Change
---- ---- --------
Net Interest Revenue
-------------------------
Interest revenue $330,128 $209,423 58
Interest expense 224,309 112,451 99
---------- ----------
Net interest revenue 105,819 96,972 9
Provision for loan losses 2,000 3,182 (37)
---------- ----------
Net interest revenue after
provision for loan losses 103,819 93,790 11
Fee Revenue
-----------
Fiduciary compensation 199,360 184,066 8
Foreign exchange 36,754 29,079 26
Processing service fees 14,968 15,844 (6)
Service fees 14,409 11,962 20
Securities gains,net 1,955 732 -
Other 9,278 7,983 16
---------- ----------
Total fee revenue 276,724 249,666 11
---------- ---------
Total revenue 380,543 343,456 11
Operating Expenses
-----------------------
Salaries & employee benefits 159,444 143,382 11
Occupancy, net 21,389 18,017 19
Equipment 31,295 28,045 12
Other 77,086 71,326 8
---------- ----------
Total operating expenses 289,214 260,770 11
---------- ----------
Income before income taxes 91,329 82,686 10
Income taxes 28,668 28,807 -
---------- ----------
Net Income $ 62,661 $ 53,879 16
========== ==========
Earnings Per Share ----------------------- Primary $ .75 $ .65 15 Fully diluted .75 .65 15
Average Shares Outstanding
(in thousands)
-----------------------------
Primary 83,019 82,854
Fully diluted 83,697 83,512
-0-
STATE STREET BOSTON CORPORATION
Consolidated Statement of Income
Six Months ended June 30,
(Dollars in thousands, except per share data)
1995 1994 % Change
---- ---- --------
Net Interest Revenue
-------------------------
Interest revenue $648,882 $408,560 59
Interest expense 442,612 217,830 103
---------- ----------
Net interest revenue 206,270 190,730 8
Provision for loan losses 4,000 6,352 (37)
---------- ----------
Net interest revenue after
provision for loan losses 202,270 184,378 10
Fee Revenue
-----------
Fiduciary compensation 385,521 372,300 4
Foreign exchange 73,216 63,166 16
Processing service fees 32,634 29,768 10
Service fees 26,845 23,380 15
Securities gains(losses),net 5,572 (235) -
Other 14,671 20,322 (28)
---------- ----------
Total fee revenue 538,459 508,701 6
---------- ---------
Total revenue 740,729 693,079 7
Operating Expenses
-----------------------
Salaries & employee benefits 309,900 287,469 8
Occupancy, net 41,582 34,807 19
Equipment 60,815 56,355 8
Other 151,730 145,922 4
---------- ----------
Total operating expenses 564,027 524,553 8
---------- ----------
Income before income taxes 176,702 168,526 5
Income taxes 59,705 60,450 (1)
---------- ----------
Net Income $116,997 $108,076 8
========== ==========
Earnings Per Share ----------------------- Primary $1.41 $1.31 8 Fully diluted 1.40 1.30 8
Average Shares Outstanding
(in thousands)
-----------------------------
Primary 82,958 82,745
Fully diluted 83,656 83,433
-0-
STATE STREET BOSTON CORPORATION
Consolidated Statement of Condition
June 30,
(Dollars in thousands)
1995 1994
-------- --------
Assets
------
Cash and due from banks $ 1,006,947 $ 1,555,327
Interest-bearing deposits with banks 5,899,473 4,581,060
Securities purchased under resale
agreements and securities borrowed 4,759,779 2,228,756
Federal funds sold 938,000 1,670,968
Trading account assets 278,543 750,182
Investment securities:
Held to maturity 4,896,699 4,573,371
Available for sale 2,556,598 2,048,569
----------- -----------
Total investment securities 7,453,297 6,621,940
Loans 3,537,259 3,261,124
Allowance for loan losses (60,245) (55,947)
----------- -----------
Net loans 3,477,014 3,205,177
Premises and equipment 487,810 464,628
Customers' acceptance liability 67,173 19,514
Accrued income receivable 366,199 357,831
Other assets 836,042 1,107,260
----------- -----------
Total Assets $25,570,277 $22,562,643
=========== ===========
Liabilities
----------------
Deposits:
Noninterest-bearing $ 6,089,166 $ 5,843,901
Interest-bearing:
Domestic 1,909,074 2,037,003
Foreign 7,641,053 7,483,974
----------- -----------
Total deposits 15,639,293 15,364,878
Federal funds purchased 317,937 105,445
Securities sold under 5,641,433 3,689,629
repurchase agreements
Other short-term borrowings 758,950 603,343
Notes payable 437,489 114,998
Acceptances outstanding 67,444 20,513
Accrued taxes and other expenses 496,374 420,610
Other liabilities 592,739 835,254
Long-term debt 127,086 127,942
----------- -----------
Total Liabilities 24,078,745 21,282,612
Stockholders' Equity
------------------------
Preferred stock, no par:
authorized 3,500,000; issued none
Common stock, $1 par: authorized
112,000,000; issued
82,625,000 and 82,403,000 82,625 82,403
Surplus 40,144 36,040
Retained earnings 1,368,180 1,184,265
Net unrealized gain(loss) on
available-for-sale securities 583 (22,677)
----------- -----------
Total Stockholders' Equity 1,491,532 1,280,031
----------- -----------
Total Liabilities and
Stockholders' Equity $25,570,277 $22,562,643
=========== ===========
-0-
STATE STREET BOSTON CORPORATION
Selected Financial Information
(Dollars in thousands, except per share data and average balances)
1995 Quarters 1994 Quarters
------------------ ----------------------------
Second First Fourth Third Second
-------- -------- -------- ------- --------
Operating Results
-------------------
Fee revenue $276,724 $261,735 $255,950 $252,681 $249,666
-------- -------- -------- -------- --------
Interest revenue-
taxable equivalent 337,860 326,699 290,599 249,644 215,598
Interest expense 224,309 218,303 182,246 144,017 112,451
-------- -------- -------- -------- --------
Net interest revenue
-taxable equivalent 113,551 108,396 108,353 105,627 103,147
Provision for
loan losses 2,000 2,000 2,058 3,159 3,182
-------- -------- -------- -------- --------
Net interest revenue
after provision
for loan loss 111,551 106,396 106,295 102,468 99,965
-------- -------- -------- -------- --------
Total revenue 388,275 368,131 362,245 355,149 349,631
Operating expenses 289,214 274,813 268,610 264,618 260,770
-------- -------- -------- -------- --------
Income before taxes
-taxable equivalent 99,061 93,318 93,635 90,531 88,861
Income taxes 28,668 31,037 29,972 29,372 28,807
Taxable equivalent
adjustment 7,732 7,945 6,550 6,006 6,175
-------- -------- -------- -------- --------
Net Income $ 62,661 $ 54,336 $ 57,113 $ 55,153 $ 53,879
======== ======== ======== ======== ========
Per Share
-----------
Earnings:
Primary $ .75 $ .66 $ .69 $ .66 $ .65
Fully diluted .75 .65 .68 .66 .65
Cash dividends
declared .17 .16 .16 .15 .15
Book value at
quarter end 18.05 17.14 16.22 15.99 15.53
Ratios
------
Return on equity 17.2 % 16.0 % 17.0 % 16.8 % 17.1 %
Return on assets .97 .88 .94 .97 .98
Internal capital
generation rate 13.4 12.1 13.1 13.0 13.2
Net interest margin 2.01 1.98 2.01 2.10 2.21
Risk-based capital:
Tier 1 14.6 13.4 13.6 13.2 11.9
Total Capital 15.1 13.9 14.2 13.7 12.4
Leverage 5.6 5.6 5.6 5.8 5.8
Average Balances (dollars in millions) --------------------------------------- Loans $ 3,532 $ 3,373 $ 3,365 $ 3,312 $ 3,566 Interest-earning assets 22,702 22,240 21,352 19,841 18,715 Total assets 25,957 25,094 24,081 22,632 21,980 Noninterest-bearing deposits 4,042 4,210 4,337 4,282 4,983 Stockholders' equity 1,457 1,380 1,333 1,304 1,265
Allowance for Loan Losses
-----------------------------
Beginning balance $ 59,363 $ 58,184 $ 58,336 $ 55,947 $ 54,987
Provision for
loan losses 2,000 2,000 2,058 3,159 3,182
Net charge-offs (1,118) (821) (2,210) (770) (2,222)
-------- -------- -------- -------- --------
Ending balance $ 60,245 $ 59,363 $ 58,184 $ 58,336 $ 55,947
======== ======== ======== ======== ========
Non-performing loans$ 26,555 $ 22,593 $ 23,043 $ 22,680 $ 26,939 Other real estate owned 1,259 4,359 4,359 6,575 6,792 Allowance to ending loans 1.70 % 1.82 % 1.80 % 1.89 % 1.72 % Non-performing assets to total assets .11 .11 .12 .13 .15
Assets Under Custody (dollars in billions)
------------------------------------------------
$ 1,995 $ 1,871 $ 1,728 $ 1,735 $ 1,675
Assets Under Management (dollars in billions)
-------------------------------------------------
$ 185 $ 180 $ 160 $ 155 $ 139
Bonds Under Trusteeship (dollars in billions)
-------------------------------------------------
$ 206 $ 209 $ 210 $ 202 $ 203
CONTACT: State Street Boston Corp. David A. Spina, 617/654-3125 |
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