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STATE STREET CORPORATION |
EARNINGS RELEASE ADDENDUM |
RECONCILIATIONS OF OPERATING-BASIS (NON-GAAP) FINANCIAL INFORMATION (Continued) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarters | | % Change | | | Year-to-Date | | % Change |
(Dollars in millions, except per share amounts, or where otherwise noted) | | 1Q15 | | 2Q15 | | 3Q15 | | 4Q15 | | 1Q16 | | 2Q16 | | 2Q16 vs. 2Q15 | | 2Q16 vs. 1Q16 | | | 2Q15 | | 2Q16 | | YTD 2Q16 vs. YTD 2Q15 | |
Net Interest Revenue & Net Interest Margin: | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest revenue, GAAP-basis | | $ | 546 |
| | $ | 535 |
| | $ | 513 |
| | $ | 494 |
| | $ | 512 |
| | $ | 521 |
| | (2.6 | )% | | 1.8 | % | | | $ | 1,081 |
| | $ | 1,033 |
| | (4.4 | )% | |
| Tax-equivalent adjustment associated with tax-exempt investment securities | | 44 |
| | 44 |
| | 43 |
| | 42 |
| | 42 |
| | 40 |
| | | | | | | 88 |
| | 82 |
| | | |
Net interest revenue, fully taxable-equivalent basis1 | | 590 |
| | 579 |
| | 556 |
| | 536 |
| | 554 |
| | 561 |
| | | | | | | 1,169 |
| | 1,115 |
| | | |
| Average interest earning assets1 | | 226,359 |
| | 233,411 |
| | 221,424 |
| | 200,899 |
| | 194,081 |
| | 198,243 |
| | | | | | | 229,905 |
| | 196,162 |
| | | |
Net interest margin, fully taxable-equivalent basis1 | | 1.06 | % | | 1.00 | % | | 1.00 | % | | 1.06 | % | | 1.15 | % | | 1.14 | % | | 14 |
| bps | (10 | ) | bps | | 1.03 | % | | 1.14 | % | | 11 |
| bps |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest revenue, fully taxable-equivalent basis1 | | $ | 590 |
| | $ | 579 |
| | $ | 556 |
| | $ | 536 |
| | $ | 554 |
| | $ | 561 |
| | | | | | | $ | 1,169 |
| | 1,115 |
| | | |
| Discount accretion associated with former conduit securities | | (25 | ) | | (23 | ) | | (27 | ) | | (23 | ) | | (15 | ) | | (15 | ) | | | | | | | (48 | ) | | (30 | ) | | | |
Net interest revenue, operating-basis1 | | 565 |
| | 556 |
| | 529 |
| | 513 |
| | 539 |
| | 546 |
| | (1.8 | ) | | 1.3 |
| | | 1,121 |
| | 1,085 |
| | (3.2 | ) | |
| Average interest earning assets1 | | 226,359 |
| | 233,411 |
| | 221,424 |
| | 200,899 |
| | 194,081 |
| | 198,243 |
| | | | | | | 229,905 |
| | 196,162 |
| | | |
Net interest margin, operating-basis1 | | 1.01 | % | | 0.96 | % | | 0.95 | % | | 1.01 | % | | 1.12 | % | | 1.11 | % | | 15 |
| bps | (1 | ) | bps | | 0.98 | % | | 1.11 | % | | 13 |
| bps |
| Effect of discount accretion | | 0.05 | % | | 0.04 | % | | 0.05 | % | | 0.05 | % | | 0.03 | % | | 0.03 | % | | | | | | | 0.05 | % | | 0.03 | % | | | |
| | | | | | | | | | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Total expenses, GAAP-basis | | $ | 2,097 |
| | $ | 2,134 |
| | $ | 1,962 |
| | $ | 1,857 |
| | $ | 2,050 |
| | $ | 1,860 |
| | (12.8 | )% | | (9.3 | )% | | | $ | 4,231 |
| | $ | 3,910 |
| | (7.6 | )% | |
| Severance costs associated with staffing realignment | | 1 |
| | — |
| | (75 | ) | | 1 |
| | (3 | ) | | 3 |
| | | | | | | 1 |
| | — |
| | | |
| Provisions for legal contingencies | | (150 | ) | | (250 | ) | | — |
| | (15 | ) | | — |
| | — |
| | | | | | | (400 | ) | | — |
| | | |
| Expense billing matter, net | | — |
| | — |
| | — |
| | (17 | ) | | — |
| | (15 | ) | | | | | | | — |
| | (15 | ) | | | |
| Acquisition costs | | (5 | ) | | (3 | ) | | (7 | ) | | (5 | ) | | (7 | ) | | (7 | ) | | | | | | | (8 | ) | | (14 | ) | | | |
| Restructuring charges, net | | (1 | ) | | — |
| | (3 | ) | | (1 | ) | | (97 | ) | | (13 | ) | | | | | | | (1 | ) | | (110 | ) | | | |
Total expenses, operating-basis | | $ | 1,942 |
| | $ | 1,881 |
| | $ | 1,877 |
| | $ | 1,820 |
| | $ | 1,943 |
| | $ | 1,828 |
| | (2.8 | ) | | (5.9 | ) | | | $ | 3,823 |
| | $ | 3,771 |
| | (1.4 | ) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and Employee Benefits Expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Total compensation and employee benefits expenses, GAAP-basis | | $ | 1,087 |
| | $ | 984 |
| | $ | 1,051 |
| | $ | 939 |
| | $ | 1,107 |
| | $ | 989 |
| | 0.5 |
| | (10.7 | ) | | | $ | 2,071 |
| | $ | 2,096 |
| | 1.2 |
| |
| Severance costs associated with staffing realignment | | 1 |
| | — |
| | (75 | ) | | 1 |
| | (3 | ) | | 3 |
| | | | | | | 1 |
| | — |
| | | |
Total compensation and employee benefits expenses, operating-basis | | $ | 1,088 |
| | $ | 984 |
| | $ | 976 |
| | $ | 940 |
| | $ | 1,104 |
| | $ | 992 |
| | 0.8 |
| | (10.1 | ) | | | $ | 2,072 |
| | $ | 2,096 |
| | 1.2 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Other Expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Total other expenses, GAAP-basis | | $ | 447 |
| | $ | 588 |
| | $ | 325 |
| | $ | 345 |
| | $ | 254 |
| | $ | 269 |
| | (54.3 | ) | | 5.9 |
| | | $ | 1,035 |
| | $ | 523 |
| | (49.5 | ) | |
| Provisions for legal contingencies | | (150 | ) | | (250 | ) | | — |
| | (15 | ) | | — |
| | — |
| | | | | | | (400 | ) | | — |
| | | |
| Expense billing matter, net | | — |
| | — |
| | — |
| | (17 | ) | | — |
| | (15 | ) | | | | | | | — |
| | (15 | ) | | | |
Total other expenses, operating-basis | | $ | 297 |
| | $ | 338 |
| | $ | 325 |
| | $ | 313 |
| | $ | 254 |
| | $ | 254 |
| | (24.9 | ) | | — |
| | | $ | 635 |
| | $ | 508 |
| | (20.0 | ) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Income Before Income Tax Expense: | | | | | | | | | | | | | | | | | | | | | | | | |
Income before income tax expense, GAAP-basis | | $ | 499 |
| | $ | 472 |
| | $ | 647 |
| | $ | 680 |
| | $ | 430 |
| | $ | 709 |
| | 50.2 |
| | 64.9 |
| | | $ | 971 |
| | $ | 1,139 |
| | 17.3 |
| |
| Net pre-tax effect of non-operating adjustments to revenue and expenses | | 227 |
| | 372 |
| | 113 |
| | 87 |
| | 197 |
| | 134 |
| | | | | | | 599 |
| | 331 |
| | | |
Income before income tax expense, operating-basis | | $ | 726 |
| | $ | 844 |
| | $ | 760 |
| | $ | 767 |
| | $ | 627 |
| | $ | 843 |
| | (0.1 | ) | | 34.4 |
| | | $ | 1,570 |
| | $ | 1,470 |
| | (6.4 | ) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Pre-tax operating margin: | | | | | | | | | | | | | | | | | | | | | | | | |
Pre-tax operating margin, GAAP-basis | | 19.2 | % | | 18.1 | % | | 24.8 | % | | 26.8 | % | | 17.3 | % | | 27.6 | % | | | | | | | 18.6 | % | | 22.5 | % | | | |
| Net effect of non-operating adjustments | | 8.0 |
| | 12.8 |
| | 4.0 |
| | 2.8 |
| | 7.1 |
| | 3.9 |
| | | | | | | 10.5 |
| | 5.5 |
| | | |
Pre-tax operating margin, operating-basis2 | | 27.2 | % | | 30.9 | % | | 28.8 | % | | 29.6 | % | | 24.4 | % | | 31.5 | % | | | | | | | 29.1 | % | | 28.0 | % | | | |
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