- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share data) Year ended December 31, 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------
FEE REVENUE
Fiduciary compensation ............................................... $ 1,504 $ 1,252 $ 1,018
Foreign exchange trading ............................................. 289 245 126
Servicing and processing ............................................. 177 159 125
Other ................................................................ 27 17 33
-------- -------- --------
Total fee revenue ................................................ 1,997 1,673 1,302
NET INTEREST REVENUE
Interest revenue ..................................................... 2,237 1,755 1,443
Interest expense ..................................................... 1,492 1,114 892
-------- -------- --------
Net interest revenue - Note L .................................... 745 641 551
Provision for loan losses - Note D ................................... 17 16 8
-------- -------- --------
Net interest revenue after provision for loan losses ............. 728 625 543
-------- -------- --------
Total Revenue .................................................... 2,725 2,298 1,845
OPERATING EXPENSES
Salaries and employee benefits - Note P .............................. 1,175 973 775
Information systems and communications ............................... 241 185 158
Transaction processing services ...................................... 196 184 164
Occupancy ............................................................ 164 132 111
Other - Note M ....................................................... 292 260 190
-------- -------- --------
Total operating expenses ......................................... 2,068 1,734 1,398
-------- -------- --------
Income before income taxes ....................................... 657 564 447
Income taxes - Note Q ................................................ 221 184 154
-------- -------- --------
Net Income ....................................................... $ 436 $ 380 $ 293
======== ======== ========
EARNINGS PER SHARE - NOTE R
Basic ............................................................ $ 2.71 $ 2.37 $ 1.81
Diluted .......................................................... 2.66 2.32 1.78
AVERAGE SHARES OUTSTANDING (in thousands)
Basic ............................................................ 160,937 160,662 161,783
Diluted .......................................................... 163,927 163,789 164,375
- ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
30 State Street Corporation 1998 Annual Report
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CONDITION
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
(Dollars in millions) As of December 31, 1998 1997
- -------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks - Note K .................................................. $ 1,365 $ 2,411
Interest-bearing deposits with banks .............................................. 12,085 10,080
Securities purchased under resale agreements and securities borrowed - Note F ..... 13,979 5,544
Federal funds sold ................................................................ 621
Trading account assets ............................................................ 335 205
Investment securities (principally available-for-sale) - Notes C and F ............ 9,737 10,375
Loans (less allowance of $84 and $83) - Note D .................................... 6,225 5,479
Premises and equipment - Notes E and H ............................................ 700 500
Accrued income receivable ......................................................... 610 566
Other assets ...................................................................... 2,046 2,194
------- -------
Total Assets .................................................................. $47,082 $37,975
======= =======
LIABILITIES
Deposits:
Noninterest-bearing .............................................................. $ 8,386 $ 7,785
Interest-bearing:
Domestic ........................................................................ 2,520 2,374
Non-U.S. ........................................................................ 16,633 14,719
------- -------
Total deposits ................................................................ 27,539 24,878
Securities sold under repurchase agreements - Note F .............................. 12,563 7,409
Federal funds purchased ........................................................... 914 189
Other short-term borrowings ....................................................... 431 609
Notes payable - Note G ............................................................ 44
Accrued taxes and other expenses - Note Q ......................................... 943 831
Other liabilities ................................................................. 1,459 1,246
Long-term debt - Note H ........................................................... 922 774
------- -------
Total Liabilities ............................................................. 44,771 35,980
STOCKHOLDERS' EQUITY - NOTES H, I, J, K AND S
Preferred stock, no par: authorized 3,500,000; issued none
Common stock, $1 par: authorized 250,000,000; issued 167,225,000 and 167,223,000 .. 167 167
Surplus ........................................................................... 63 102
Retained earnings ................................................................. 2,272 1,920
Net unrealized gains .............................................................. 22 11
Treasury stock, at cost (6,560,000 and 6,740,000 shares) .......................... (213) (205)
------- -------
Total Stockholders' Equity .................................................... 2,311 1,995
------- -------
Total Liabilities and Stockholders' Equity .................................... $47,082 $37,975
======= =======
- -------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
31
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
(Dollars in millions) Year ended December 31, 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income ....................................................................... $ 436 $ 380 $ 293
Non-cash charges for depreciation, amortization, provision for
loan losses and deferred income taxes ........................................... 345 271 221
-------- ------- ------
Net income adjusted for non-cash charges ....................................... 781 651 514
Adjustments to reconcile to net cash provided (used) by operating activities:
Securities gains, net ........................................................... (10) (2) (5)
Net change in:
Trading account assets ......................................................... (130) 50 249
Other, net ..................................................................... 209 (449) (161)
-------- ------- ------
Net Cash Provided by Operating Activities .................................... 850 250 597
INVESTING ACTIVITIES
Payments for purchases of:
Available-for-sale securities ................................................... (8,874) (5,985) (6,912)
Held-to-maturity securities ..................................................... (2,481) (976) (906)
Lease financing assets .......................................................... (1,040) (992) (539)
Premises and equipment .......................................................... (258) (158) (114)
Proceeds from:
Maturities of available-for-sale securities ..................................... 7,844 4,137 3,442
Maturities of held-to-maturity securities ....................................... 2,193 942 870
Sales of available-for-sale securities .......................................... 1,945 836 465
Principal collected from lease financing ........................................ 86 46 52
Net payments for:
Interest-bearing deposits with banks ............................................ (2,005) (2,515) (1,590)
Federal funds sold, resale agreements and securities borrowed ................... (7,814) (397) (14)
Loans ........................................................................... (433) (630) (572)
-------- ------- ------
Net Cash Used by Investing Activities ........................................ (10,837) (5,692) (5,818)
-------- ------- ------
FINANCING ACTIVITIES
Proceeds from issuance of:
Non-recourse debt for lease financing ........................................... 734 792 404
Notes payable ................................................................... 177
Long-term debt .................................................................. 150 300 350
Treasury stock .................................................................. 31 16 12
Payments for:
Non-recourse debt for lease financing ........................................... (106) (67) (66)
Maturity of notes payable ....................................................... (44) (42) (257)
Long-term debt .................................................................. (2) (2) (1)
Cash dividends .................................................................. (84) (69) (61)
Purchase of common stock ........................................................ (100) (110) (131)
Net proceeds from:
Deposits ........................................................................ 2,661 5,358 2,872
Short-term borrowings ........................................................... 5,701 54 2,123
-------- ------- ------
Net Cash Provided by Financing Activities .................................... 8,941 6,230 5,422
-------- ------- ------
Net (Decrease) Increase ...................................................... (1,046) 788 201
Cash and due from banks at beginning of year ..................................... 2,411 1,623 1,422
-------- ------- ------
Cash and Due from Banks at End of Year ....................................... $ 1,365 $ 2,411 $1,623
======== ======= ======
SUPPLEMENTAL DISCLOSURE
Interest paid ................................................................... $ 1,493 $ 1,122 $ 885
Income taxes paid ............................................................... 107 112 97
- ---------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
32 State Street Corporation 1998 Annual Report
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share data) Year ended December 31, 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
Balance at beginning of period .............................................. $ 167 $ 84 $ 83
Stock dividend, two-for-one split ........................................... 83
Common stock issued (1,840,000 in 1996) ..................................... 1
------- ------- -------
Balance at end of period .................................................. 167 167 84
------- ------- -------
SURPLUS
Balance at beginning of period .............................................. 102 105 40
Common stock issued ......................................................... 3 70
Treasury stock issued ....................................................... (63) (16) (12)
Stock options exercised ..................................................... 24 10 7
------- ------- -------
Balance at end of period .................................................. 63 102 105
------- ------- -------
RETAINED EARNINGS
Balance at beginning of period .............................................. 1,920 1,692 1,460
Net income .................................................................. 436 $436 380 $380 293 $293
Cash dividends declared ($.52, $.44 and $.38 per share) ..................... (84) (69) (61)
Stock dividend, two-for-one split ........................................... (83)
------- ------- -------
Balance at end of period .................................................. 2,272 1,920 1,692
------- ------- -------
NET UNREALIZED GAINS (LOSSES) -
OTHER COMPREHENSIVE INCOME
Balance at beginning of period .............................................. 11 14 18
Foreign currency translation ................................................ 5 5 (8) (8) (3) (3)
Change in net unrealized holdings on available-for-sale securities .......... 6 6 5 5 (1) (1)
------- ----- ------- ----- ------- -----
............................................................................ 11 (3) (4)
Balance at end of period ................................................ 22 11 14
------- ------- -------
Comprehensive Income .................................................... $ 447 $ 377 $ 289
===== ===== =====
TREASURY STOCK, AT COST
Balance at beginning of period .............................................. (205) (120) (13)
Common stock acquired (1,716,000, 2,760,000 and 5,398,000 shares) ........... (100) (110) (131)
Treasury stock issued (1,896,000, 941,000 and 1,091,000 shares) ............. 92 25 24
------- ------- -------
Balance at end of period .................................................. (213) (205) (120)
------- ------- -------
Total Stockholders' Equity ................................................ $ 2,311 $ 1,995 $ 1,775
======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
33
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE A
- --------------------------------------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
State Street Corporation ("State Street" or the "Corporation"), is a financial
services corporation that provides integrated banking, global custody,
investment management, administration and securities processing services to both
U.S. and non-U.S. customers. State Street reports three lines of business.
Services for Institutional Investors include accounting, custody, daily pricing,
administration, foreign exchange, cash management and information services to
support institutional investors. Investment Management provides an extensive
array of services for managing financial assets worldwide for both institutional
and individual investors as well as recordkeeping, administration, and
investment services for defined contribution plans and other employee benefit
programs. Commercial Lending includes lending activities, and other banking
services for regional middle-market companies, companies in selected industries
and institutional investor customers.
The accounting and reporting policies of State Street and its subsidiaries
conform to generally accepted accounting principles. Significant policies are
summarized below.
Basis of Presentation. The consolidated financial statements include the
accounts of State Street and its subsidiaries, including its principal
subsidiary, State Street Bank and Trust Company ("State Street Bank"). The
preparation of financial statements requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. All
significant intercompany balances and transactions have been eliminated upon
consolidation. The results of operations of businesses purchased are included
from the date of acquisition. Investments in 50%-owned affiliates are accounted
for using the equity method. Certain previously reported amounts have been
reclassified to conform to the current method of presentation.
For the Consolidated Statement of Cash Flows, State Street has defined cash
equivalents as those amounts included in the Consolidated Statement of Condition
caption, "Cash and due from banks."
The AICPA issued Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," in March 1998. State
Street adopted this standard effective January 1, 1999. State Street currently
expects the adoption of this statement to have a favorable impact on earnings in
1999.
Resale and Repurchase Agreements;
Securities Borrowed. State Street purchases U.S. Treasury and federal agency
securities ("U.S. government securities") under agreements to resell the
securities. These purchases are recorded as securities purchased under resale
agreements, an asset in the Consolidated Statement of Condition. State Street
can use these securities as collateral for repurchase agreements. State Street's
policy is to take possession or control of the security underlying the resale
agreement, allowing borrowers the right of collateral substitution and/or
short-notice termination. The securities are revalued daily to determine if
additional collateral is necessary from the borrower. State Street enters into
sales of U.S. government securities under repurchase agreements, which are
treated as financings, and the obligations to repurchase such securities sold
are reflected as a liability in the Consolidated Statement of Condition. The
dollar amount of U.S. government securities underlying the repurchase agreements
remains in investment securities.
Securities borrowed are recorded at the amount of cash collateral deposited with
the lender. State Street monitors its market exposure daily with respect to
securities borrowed transactions and requests that excess securities be returned
or that additional securities be provided as needed.
Securities. Debt securities are held in both the investment and trading account
portfolios. Debt and marketable equity securities that are classified as
available for sale are reported at fair value and the after-tax unrealized gains
and losses are reported in other comprehensive income, a component of
stockholders' equity. Securities classified as held to maturity are stated at
cost, adjusted for amortization of premiums and accretion of discounts. Gains or
losses on sales of available-for-sale securities are computed based on
identified costs and included in fee revenue. Trading account assets are held in
anticipation of short-term market movements and for resale to customers. Trading
account assets are carried at fair value with unrealized gains and losses
reported in other fee revenue.
Loans and Lease Financing. Loans are placed on a non-accrual basis when they
become 60 days past due as to either principal or interest, or when, in the
opinion of management, full collection of principal or interest is unlikely.
When the loan is placed on non-accrual, the accrual of interest is discontinued,
and previously recorded but unpaid interest is reversed and charged against
current earnings.
Leveraged leases are carried net of nonrecourse debt. Revenue on leveraged
leases is recognized on a basis calculated to achieve a constant rate of return
on the outstanding investment in the leases, net of related deferred tax
liabilities, in the years in which the net investment is positive. Gains and
losses on residual values of leased equipment sold are included in fee revenue.
- --------------------------------------------------------------------------------
34 State Street Corporation 1998 Annual Report
Allowance for Loan Losses. The adequacy of the allowance for loan losses is
evaluated on a regular basis by management. Factors considered in evaluating the
adequacy of the allowance include previous loss experience, current economic
conditions and adverse situations that may affect the borrowers' ability to
repay, timing of future payments, estimated value of underlying collateral and
the performance of individual credits in relation to contract terms, and other
relevant factors. The provision for loan losses charged to earnings is based
upon management's judgment of the amount necessary to maintain the allowance at
a level adequate to absorb probable losses.
Premises and Equipment. Buildings, leasehold improvements, computers, software
and other equipment are carried at cost less accumulated depreciation and
amortization. Depreciation and amortization charged to operating expenses are
computed using the straight-line method over the estimated useful life of the
related asset or the remaining term of the lease.
Currency Translation. The assets and liabilities of non-U.S. operations are
translated at month-end exchange rates, and revenue and expenses are translated
at average monthly exchange rates. Gains or losses from the translation of the
net assets of certain non-U.S. subsidiaries, net of any currency hedges and
related taxes, are reported in other comprehensive income. Gains or losses from
other translations are included in fee revenue.
Derivative Financial Instruments. State Street uses three methods to account for
derivative financial instruments: the deferral method, accrual method, and fair
value method.
Interest rate swaps that are entered into as part of interest rate management
are accounted for using the accrual method. Interest receivable or payable
payments under the terms of the interest rate swap are accrued over the period
to which the payment relates. The interest payments accrued and any fees paid at
inception are recorded as an adjustment to the interest revenue or interest
expense of the underlying asset or liability.
Other interest rate contracts that are used for balance sheet management are
accounted for under the deferral method. The basis of the contract is
capitalized and any gain or loss is deferred and amortized over the life of the
hedged asset or liability as an adjustment to the interest revenue or interest
expense.
The gross amount of unrealized gains and losses on foreign exchange and interest
rate contracts are reported separately as other assets and other liabilities,
respectively, in the Consolidated Statement of Condition, except where such
gains and losses arise from contracts covered by qualifying master netting
agreements.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
was issued in June 1998. This statement requires companies to record the fair
value of derivatives on the balance sheet as assets or liabilities. Fair market
valuation adjustments for derivatives meeting hedge criteria will be recorded as
either other comprehensive income, or through earnings in the Consolidated
Statement of Income, depending on their classification. Derivatives used for
trading purposes will continue to be marked to market through earnings. State
Street will adopt this statement beginning January 1, 2000. Management does not
expect the adoption of this statement to have a material impact on the financial
statements.
Income Taxes. The provision for income taxes includes deferred income taxes
arising as a result of reporting some items of revenue and expense in different
years for tax and financial reporting purposes.
Earnings Per Share. Basic earnings per share excludes all dilution and is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution that could occur if stock options and
stock award grants were exercised. Diluted earnings per share also includes the
assumption that all convertible debt has been converted as of the beginning of
each period.
Comprehensive Income. Effective January 1, 1998, State Street adopted SFAS No.
130, "Reporting Comprehensive Income." Disclosures required by this standard are
presented in the Consolidated Statement of Changes in Shareholders' Equity and
Note Q to the Consolidated Financial Statements. Lines of Business. Effective
for the year ended December 31, 1998, State Street adopted the new disclosures
required by SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The requirements of this standard are presented in Note O
to the Consolidated Financial Statements.
- --------------------------------------------------------------------------------
NOTE B
- --------------------------------------------------------------------------------
ACQUISITION
In November 1996, State Street acquired Princeton Financial Systems, Inc.
("PFS") for 1,846,000 shares of State Street's common stock and cash in a
transaction accounted for as a purchase. PFS provides services and client/server
software for investment managers with particular focus on the insurance
industry.
- --------------------------------------------------------------------------------
35
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE C
- --------------------------------------------------------------------------------
INVESTMENT SECURITIES
Available-for-sale securities are recorded at fair value and held-to-maturity securities are recorded at amortized cost on the
Consolidated Statement of Condition. Investment securities consisted of the following at December 31:
- ---------------------------------------------------------------------------------------------------------------------------------
1998 1997
Amortized Unrealized Fair Amortized Unrealized Fair
(Dollars in millions) Cost Gains Losses Value Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------------------------------
Available for sale:
U.S. Treasury and federal agencies $3,690 $ 7 $ 2 $3,695 $4,906 $15 $ 2 $4,919
State and political subdivisions 1,598 17 3 1,612 1,647 17 7 1,657
Asset-backed securities 1,717 3 1 1,719 1,673 1 1 1,673
Collateralized mortgage obligations 727 1 2 726 574 1 4 571
Other investments 791 17 808 654 9 1 662
------ --- --- ------ ------ --- --- ------
Total $8,523 $45 $ 8 $8,560 $9,454 $43 $15 $9,482
====== === === ====== ====== === === ======
Held to maturity:
U.S. Treasury and federal agencies $1,177 $ 3 $ 1 $1,179 $ 893 $ 1 $ 1 $ 893
====== === === ====== ====== === === ======
- ---------------------------------------------------------------------------------------------------------------------------------
The maturity of asset-backed securities is based upon the expected principal
payments. Securities carried at $3.3 billion and $5.0 billion at December 31,
1998 and 1997, respectively, were designated as pledged securities for public
and trust deposits, borrowed funds and for other purposes as provided by law.
During 1998, there were gross gains of $14 million and gross losses of $4
million realized on the sales of $1.9 billion of available-for-sale securities.
During 1997, there were gross gains of $3 million and gross losses of $1 million
realized on the sales of $836 million of available-for-sale securities.
Following is the maturity information for available-for-sale and
held-to-maturity debt securities at December 31, 1998:
- --------------------------------------------------------------------------------
Years
(Dollars in millions) Under 1 1 to 5 6 to 10 Over 10
- --------------------------------------------------------------------------------
Available for sale:
Amortized cost .......... $4,618 $3,445 $ 139 $ 285
Fair value .............. 4,624 3,469 141 290
Held to maturity:
Amortized cost .......... 924 253
Fair value .............. 925 254
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE D
- --------------------------------------------------------------------------------
LOANS
The loan portfolio consisted of the following at December 31:
- ---------------------------------------------------------
(Dollars in millions) 1998 1997
- ---------------------------------------------------------
Commercial and financial:
Domestic ....................... $4,306 $3,623
Non-U.S. ....................... 581 900
Lease financing:
Domestic ....................... 415 296
Non-U.S. ....................... 917 669
Real estate ..................... 90 74
------ ------
Total loans .................... 6,309 5,562
Less allowance for loan losses .. (84) (83)
------ ------
Net loans ...................... $6,225 $5,479
====== ======
- ---------------------------------------------------------
Non-accrual loans were $12 million and $2 million at December 31, 1998 and 1997,
respectively.
Changes in the allowance for loan losses for the years ended December 31, were
as follows:
- -----------------------------------------------------------------------
(Dollars in millions) 1998 1997 1996
- -----------------------------------------------------------------------
Balance at beginning of year ..... $ 83 $ 73 $ 63
Provision for loan losses ........ 17 16 8
Loan charge-offs ................. (19) (8) (5)
Recoveries ....................... 3 2 7
---- ---- ----
Balance at end of year ....... $ 84 $ 83 $ 73
==== ==== ====
- -----------------------------------------------------------------------
- --------------------------------------------------------------------------------
36 State Street Corporation 1998 Annual Report
- --------------------------------------------------------------------------------
NOTE E
- --------------------------------------------------------------------------------
PREMISES AND EQUIPMENT
Premises and equipment consisted of the following at December 31:
- ---------------------------------------------------------
(Dollars in millions) 1998 1997
- ---------------------------------------------------------
Buildings and land ................ $ 334 $ 294
Leasehold improvements ............ 196 157
Computers ......................... 520 410
Software .......................... 200 79
Other equipment ................... 210 177
------ ------
1,460 1,117
Accumulated depreciation
and amortization ................. (760) (617)
------ ------
Total premises and equipment .. $ 700 $ 500
====== ======
- ---------------------------------------------------------
State Street has entered into noncancelable operating leases for premises and
equipment. At December 31, 1998, future minimum payments under noncancelable
operating leases with initial or remaining terms of one year or more totaled
$1.0 billion. This consisted of $109 million, $100 million, $99 million, $92
million and $82 million for the years 1999 to 2003, respectively, and $565
million thereafter. The minimum rental commitments have been reduced by sublease
rental commitments of $31 million. Nearly all leases include renewal options.
Total rental expense amounted to $95 million, $64 million and $55 million in
1998, 1997 and 1996, respectively. Rental expense has been reduced by sublease
revenue of $4 million, $2 million and $1 million for the years ended December
31, 1998, 1997 and 1996, respectively.
- --------------------------------------------------------------------------------
NOTE F
- --------------------------------------------------------------------------------
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
State Street enters into sales of U.S. government securities under repurchase
agreements that are treated as financings, and the obligations to repurchase
such securities sold are reflected as a liability in the Consolidated Statement
of Condition. The dollar amount of U.S. government securities underlying the
repurchase agreements remains in investment securities.
Information on these U.S. government securities, and the related repurchase
agreements including accrued interest, is shown in the following table. This
table excludes repurchase agreements that are secured by securities purchased
under resale agreements and securities borrowed.
Information at December 31, 1998, was as follows:
- ---------------------------------------------------------------------------------------------
U.S. Government Repurchase
Securities Sold Agreements
--------------------- ---------------------
Amortized Fair Amortized
(Dollars in millions) Cost Value Cost Rate
- ---------------------------------------------------------------------------------------------
Maturity of repurchase agreements:
Overnight ............................... $1,660 $1,662 $1,629 4.76%
2 to 30 days ............................ 181 182 178 4.20
31 to 90 days ........................... 40 40 40 4.36
Over 90 days ............................ 41 41 40 4.13
------ ------ ------ ----
Total ................................ $1,922 $1,925 $1,887 4.68
====== ====== ======
- ---------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE G
- --------------------------------------------------------------------------------
NOTES PAYABLE
State Street Bank issues bank notes from time to time, in an aggregate amount
not to exceed $750 million and with original maturities ranging from 14 days to
five years.
Bank notes, which are not subject to redemption, represent unsecured debt
obligations of State Street Bank. Bank notes are neither obligations of nor
guaranteed by State Street and are recorded net of original issue discount. At
December 31, 1998, there were no notes payable outstanding. At December 31,
1997, there were $44 million of two-year non-U.S. dollar denominated notes
outstanding.
- --------------------------------------------------------------------------------
NOTE H
- --------------------------------------------------------------------------------
LONG-TERM DEBT
Long-term debt consisted of the following at December 31:
- -----------------------------------------------------------------------------
(Dollars in millions) 1998 1997
- -----------------------------------------------------------------------------
8.035% Capital securities B due 2027 ............... $300 $300
7.94% Capital securities A due 2026 ................ 200 200
Floating Rate Capital Trust I due 2028 ............. 150
7.35% Notes due 2026 ............................... 150 150
5.95% Notes due 2003 ............................... 100 100
9.50% Mortgage note due 2009 ....................... 20 21
7.75% Convertible subordinated
debentures due 2008 ............................. 2 3
---- ----
Total long-term debt ......................... $922 $774
==== ====
- -----------------------------------------------------------------------------
State Street has established three statutory business trusts, which collectively
issued $650 million of cumulative semi-annual income and quarterly income
preferred securities ("capital securities"). The capital securities qualify as
Tier 1 capital under federal regulatory guidelines. The proceeds of these
issuances along with proceeds of related issuances of common securities of the
trusts, were invested in junior
- --------------------------------------------------------------------------------
37
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE H - CONTINUED
- --------------------------------------------------------------------------------
subordinated debentures ("debentures") of State Street. The debentures are the
sole assets of the trusts. State Street owns all of the common securities of the
trusts.
Payments to be made by the trusts on the capital securities are dependent on
payments that State Street has committed to make, particularly the payments to
be made by State Street on the debentures. Compliance by State Street would have
the effect of providing a full, irrevocable and unconditional guarantee of the
trusts' obligations under the capital securities.
Distributions on the capital securities are included in interest expense and are
payable from interest payments received on the debentures and are due
semi-annually for capital securities A and B and quarterly for Capital Trust I,
subject to deferral for up to five years under certain conditions. The capital
securities are subject to mandatory redemption in whole at the stated maturity
upon repayment of the debentures; with the optional redemption at any time by
State Street of the debentures upon the occurance of certain tax events or
changes to tax treatment, investment company regulation or capital treatment
changes; or at any time after March 15, 2007 for the Capital Securities B, after
December 30, 2006 for the Capital Securities A and after May 15, 2028 for the
Capital Trust I securities.
For Capital Securities A and B, redemptions are based on declining redemption
prices according to the terms of the trust agreements. All redemptions are
subject to federal regulatory approval.
In April 1996, a shelf registration statement became effective that allowed
State Street to issue up to $500 million of unsecured debt securities or shares
of its preferred stock or both. In June 1996, State Street issued $150 million
of 7.35% notes due 2026, redeemable at the option of the holder in 2006. In
April 1998, that registration statement was amended to also allow for issuance
of capital securities. In May 1998, State Street completed the sale of $150
million of floating rate capital securities issued by Capital Trust I. In
connection with the sale of these capital securities, State Street issued $150
million of floating rate junior subordinated deferrable interest debentures to
Capital Trust I due in May 2028. Subsequent to that issuance, two interest rate
swaps were entered into to, in effect, modify the interest expense from a
floating rate to a fixed rate of 6.58%. At December 31, 1998, $200 million of
the shelf registration was available for issuance.
The 5.95% notes are unsecured obligations of State Street.
The 9.50% mortgage note was fully collateralized by property at December 31,
1998. The scheduled principal payments for the next five years are $1 million
for the years 1999 and 2000 and $2 million for each year 2001 through 2003.
The 7.75% debentures are convertible to common stock at a price of $2.875 per
share, subject to adjustment for certain events. The debentures are redeemable
at par, at State Street's option. During 1998 and 1997, debentures were
converted into 144,345 and 168,692 shares of common stock, respectively. At
December 31, 1998, 793,046 shares of common stock had been reserved for issuance
upon conversion.
- --------------------------------------------------------------------------------
NOTE I
- --------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
In May 1997, State Street distributed to stockholders a two-for-one stock split
in the form of a 100% stock dividend. The par value of these additional shares
was capitalized by a transfer from retained earnings to common stock. Prior
period share and per share amounts have been restated for the stock split.
During 1998, the Board of Directors increased the number of shares of State
Street common stock authorized for purchase from 12 million to 14 million
shares. Shares purchased under the authorization can be used for employee
benefit plans and general corporate purposes. During 1998 and 1997, State Street
purchased 1,716,000 and 2,760,000 shares of its common stock, respectively, at
an average cost of $58 and $40 per share, respectively. As of December 31, 1998,
total shares purchased were 10,706,000.
Under the 1997 Equity Incentive Plan, stock options, stock appreciation rights
("SARs"), restricted and unrestricted stock awards, deferred stock awards, and
performance awards covering 8,000,000 shares of common stock may be issued.
Under this long-term incentive plan, the exercise price of non-qualified and
incentive stock options may not be less than the fair value of such shares at
the date of grant and expire no longer than ten years from the date of grant.
Performance awards have been granted to officers at the policy-making level.
Performance awards are earned over a performance period based on achievement of
goals. Payment for performance awards is made in cash equal to the fair market
value of State Street's common stock after the conclusion of each performance
period. During 1998, 479,000 performance awards were granted. In 1998 and 1997,
284,000 and 351,000 restricted stock awards, net of cancellations, respectively,
were granted under the stock award program.
In addition, State Street has a stock award program consisting of 600,000 shares
vesting 20% per annum commencing January 1, 2001.
Compensation expense related to performance awards, restricted stock awards and
stock awards was $38 million, $29 million and $19 million for 1998, 1997 and
1996, respectively.
- --------------------------------------------------------------------------------
38 State Street Corporation 1998 Annual Report
Options outstanding and activity for the years ended
December 31, consisted of the following:
- -------------------------------------------------------------------------------
(Total dollars in millions, Option Price
shares in thousands) Shares Per Share Total
- -------------------------------------------------------------------------------
December 31, 1996 ............... 6,476 $ 2.81-33.88 $ 124
Granted ......................... 1,393 36.36-56.25 73
Exercised ....................... (766) 2.81-36.50 (15)
Canceled ........................ (159) 3.51-29.41 (2)
----- -----
December 31, 1997 ............... 6,944 2.81-56.25 180
Granted ......................... 2,242 52.44-69.53 152
Exercised ....................... (1,034) 2.81-52.44 (16)
Canceled ........................ (218) 3.51-68.31 (8)
----- -----
December 31, 1998 ............... 7,934 2.81-69.53 $ 308
===== =====
- -------------------------------------------------------------------------------
In 1996, 1,066,000 options were exercised at per share prices of $2.81 to
$14.53. At December 31, 1998, a total of 2,617,000 shares under options were
exercisable. At December 31, 1998, 3,372,000 shares under the 1997 Equity
Incentive Plan were available for future grants.
Pro forma results of net income and earnings per share using the fair value
method for accounting for stock-based employer compensation plans for the years
ended December 31, 1998, 1997 and 1996 are not presented, as results differ by
three percent or less from those reported. For purposes of the pro forma
calculation, the estimated fair value of the options is amortized to expense
over the options vesting period.
For purposes of estimating the fair value of State Street's employee stock
options at the grant date, a Black-Scholes option pricing model was used.
Following are the weighted average assumptions for 1998, 1997 and 1996,
respectively: risk-free interest rates of 5.15%, 6.22% and 6.41%; dividend
yields of .86%, 1.05% and 1.51%; and volatility factors of the expected market
price of State Street common stock of .29, .28 and .25. The weighted average
life of the stock options granted is 4.2, 5.5 and 6.6 years for the years ended
December 31, 1998, 1997 and 1996, respectively.
- -------------------------------------------------------------------------------
NOTE J
- -------------------------------------------------------------------------------
SHAREHOLDERS' RIGHTS PLAN
In 1988, State Street declared a dividend of one preferred share purchase right
for each outstanding share of common stock. On June 18, 1998, State Street
adopted an amendment to the Rights Agreement and has restated the Rights
Agreement. Under the Amended and Restated Rights Agreement, a right may be
exercised, under certain conditions, to purchase one four-hundredths share of a
series of participating preferred stock at an exercise price of $265, subject to
adjustment. The rights become exercisable if a party acquires or obtains the
right to acquire 10% or more of State Street's common stock or after
commencement or public announcement of an offer for 10% or more of State
Street's common stock. When exercisable, under certain conditions, each right
also entitles the holder thereof to purchase shares of common stock, of either
State Street or of the acquiror, having a market value of two times the then
current exercise price of that right.
The rights expire in September 2008, and may be redeemed at a price of $.0025
per right at any time prior to expiration or the acquisition of 10% of State
Street's common stock. Under certain circumstances, the rights may be redeemed
after they become exercisable and may be subject to automatic redemption.
39
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE K
- --------------------------------------------------------------------------------
REGULATORY MATTERS
Regulatory Capital. State Street is subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory and discretionary
actions by regulators that, if undertaken, could have a direct material effect
on State Street's financial statements. Under capital adequacy guidelines, State
Street must meet specific capital guidelines that involve quantitative measures
of State Street's assets, liabilities and certain off-balance sheet items as
calculated under regulatory accounting practices. State Street's capital amounts
and classification are also subject to qualitative judgments by the regulators
about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require State Street and State Street Bank to maintain minimum risk-based and
leverage ratios as set forth in the table below. The risk-based capital ratios
are Tier 1 capital and Total capital to total adjusted risk-weighted assets and
market-risk equivalents, and the leverage ratio is Tier 1 capital to quarterly
average assets.
As of December 31, 1998, State Street Bank was categorized as well capitalized
under the regulatory framework for prompt corrective action. To be categorized
as well capitalized, State Street Bank must exceed the well capitalized
guideline ratios, as set forth in the table, and meet certain other
requirements. Management believes that State Street Bank exceeds all well
capitalized requirements, and there have been no conditions or events since
year-end that management believes would change the status of well capitalized.
The regulatory capital amounts and ratios were the following at December 31:
- --------------------------------------------------------------------------------------------------------------------------------
Regulatory Guidelines (1) State Street State Street Bank
------------------------- ------------------ --------------------
Well
(Dollars in millions) Minimum Capitalized 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
Risk-based ratios:
Tier 1 capital .............................. 4% 6% 14.1% 13.7% 12.9% 12.2%
Total capital ............................... 8 10 14.4 13.8 13.3 12.5
Leverage ratio ................................ 3 5 5.4 5.9 5.3 5.2
Tier 1 capital ................................ $ 2,725 $ 2,259 $ 2,453 $ 1,996
Total capital ................................. 2,773 2,274 2,537 2,040
Adjusted risk-weighted assets and
market-risk equivalents:
On-balance sheet ............................ $14,599 $12,647 $14,374 $12,491
Off-balance sheet ........................... 4,435 3,825 4,435 3,825
Market-risk equivalent (2) .................. 232 232
------- ------- ------- -------
Total adjusted risk-weighted assets
and market-risk equivalents: .......... $19,266 $16,472 $19,041 $16,316
======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------------------------------
(1) The regulatory designation of "well capitalized" under prompt corrective
action regulations is not applicable to bank holding companies (State
Street). Regulation Y defines well capitalized for bank holding companies
(State Street) for the purpose of determining eligibility for a streamlined
review process for acquisition proposals. For such purposes, well
capitalized requires a minimum Tier 1 risk-based capital ratio of 6% and a
minimum total risk-based capital ratio of 10%.
(2) Effective January 1, 1998, regulatory capital standards require the addition
of market risk-equivalent assets to total risk-based assets.
Cash, Dividend, Loan and Other Restrictions. During 1998, subsidiary banks of
State Street were required by the Federal Reserve Bank to maintain average
reserve balances of $244 million. Federal and state banking regulations place
certain restrictions on dividends paid by subsidiary banks to State Street. At
December 31, 1998, State Street Bank had $979 million of retained earnings
available for distribution to State Street in the form of dividends.
The Federal Reserve Act requires that extensions of credit by State Street Bank
to certain affiliates, including State Street, be secured by specific
collateral, that the extension of credit to any one affiliate be limited to 10%
of capital and surplus (as defined), and that extensions of credit to all such
affiliates be limited to 20% of capital and surplus.
At December 31, 1998, consolidated retained earnings included $31 million
representing undistributed earnings of 50%-owned affiliates that are accounted
for using the equity method.
State Street has a committed line of credit of $50 million to support its
commercial paper program.
40 State Street Corporation 1998 Annual Report
- --------------------------------------------------------------------------------
NOTE L
- --------------------------------------------------------------------------------
NET INTEREST REVENUE
Net interest revenue consisted of the following for the years ended December 31:
- -----------------------------------------------------------------------------------------------------------------------------
(Dollars in millions) 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
Interest Revenue:
Deposits with banks ........................................................................ $ 537 $ 415 $ 337
Investment securities:
U.S. Treasury and federal agencies ........................................................ 313 360 260
State and political subdivisions (exempt from federal tax) ................................ 77 76 68
Other investments ......................................................................... 167 161 127
Loans ...................................................................................... 400 341 278
Securities purchased under resale agreements, securities borrowed and federal funds sold ... 733 393 356
Trading account assets ..................................................................... 10 9 17
------ ------ ------
Total interest revenue ............................................................... 2,237 1,755 1,443
------ ------ ------
Interest Expense:
Deposits ................................................................................... 656 512 425
Other borrowings ........................................................................... 770 547 452
Long-term debt ............................................................................. 66 55 15
------ ------ ------
Total interest expense ............................................................... 1,492 1,114 892
------ ------ ------
Net interest revenue ................................................................. $ 745 $ 641 $ 551
====== ====== ======
- -----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE M
- --------------------------------------------------------------------------------
OPERATING EXPENSES - OTHER
The other category of operating expenses consisted of the following for the
years ended December 31:
- -----------------------------------------------------------------------------------------
(Dollars in millions) 1998 1997 1996
- -----------------------------------------------------------------------------------------
Professional services .................................. $105 $ 87 $ 61
Advertising and sales promotion ........................ 60 48 34
Other .................................................. 127 125 95
---- ---- ----
Total operating expenses-other ....................... $292 $260 $190
==== ==== ====
- -----------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE N
- --------------------------------------------------------------------------------
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a tabulation of the unaudited quarterly results of operations:
- -----------------------------------------------------------------------------------------------------------------
(Dollars and shares in millions, 1998 Quarters 1997 Quarters
except per share data) Fourth Third Second First Fourth Third Second First
- -----------------------------------------------------------------------------------------------------------------
Fee revenue ......................... $530 $511 $493 $463 $453 $442 $404 $374
Interest revenue .................... 588 602 550 497 480 452 425 398
Interest expense .................... 388 415 368 321 307 288 271 248
---- ---- ---- ---- ---- ---- ---- ----
Net interest revenue ............... 200 187 182 176 173 164 154 150
Provision for loan losses ........... 4 4 4 5 5 5 3 3
---- ---- ---- ---- ---- ---- ---- ----
Total revenue ...................... 726 694 671 634 621 601 555 521
Operating expenses .................. 559 528 507 474 473 451 419 391
---- ---- ---- ---- ---- ---- ---- ----
Income before income taxes ......... 167 166 164 160 148 150 136 130
Income taxes ........................ 57 55 55 54 47 49 44 44
---- ---- ---- ---- ---- ---- ---- ----
Net Income ......................... $110 $111 $109 $106 $101 $101 $ 92 $ 86
==== ==== ==== ==== ==== ==== ==== ====
Earnings Per Share:
Basic .............................. $.69 $.69 $.67 $.66 $.63 $.63 $.57 $.54
Diluted ............................ .68 .68 .66 .64 .61 .62 .56 .53
Average Shares Outstanding:
Basic .............................. 161 161 161 161 161 160 160 161
Diluted ............................ 163 164 165 164 164 164 163 164
- -----------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
41
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE O
- --------------------------------------------------------------------------------
LINES OF BUSINESS
As of December 31, 1998, State Street adopted SFAS 131, "Disclosures about
Segments of an Enterprise and Related Information." State Street has three lines
of business as defined by the statement, which are Services for Institutional
Investors, Investment Management and Commercial Lending.
State Street's significant products and services are presented within the
underlying operating results. Intersegment revenues consist of compensation for
deposit balances and other services.
Further financial information by line of business is contained within the Lines
of Business section of the Financial Review on pages 22-23. Significant products
and services offered by State Street are included in the Fee Revenue section on
pages 15-18.
The following is a summary of the lines of business operating results for the
years ended December 31:
- -----------------------------------------------------------------------------------------------------------------------------------
Services for Investment Commercial
Institutional Investors Management Lending
------------------------- ------------------------ --------------------
(Dollars in millions; taxable equivalent) 1998 1997 1996 1998 1997 1996 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Total revenue ............................... $1,973 $1,696 $1,359 $558 $442 $341 $234 $204 $182
Income before income taxes .................. 470 402 316 97 95 73 130 111 95
Average assets (billions) ................... 40.2 30.6 25.7 .9 .8 .6 4.6 4.0 3.2
- -----------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE P
- --------------------------------------------------------------------------------
EMPLOYEE BENEFIT PLANS
State Street and certain of its subsidiaries participate in a non-contributory
defined benefit plan. In addition to the primary plan, State Street has
non-qualified supplemental plans that provide certain officers with defined
pension benefits in excess of allowable tax deductions. Non-U.S. employees
participate in local plans and the cost of these plans is not material.
State Street Bank and certain subsidiaries also participate in a postretirement
plan that provides health care and insurance benefits for retired employees.
The following table sets forth combined information for State Street's primary
plan, the non-qualified supplemental plans and non-U.S. defined benefit plans,
as well as the postretirement plan as of December 31:
- ---------------------------------------------------------------------------------------------------------------
Defined Benefit Plan Postretirement Plan
-------------------- ----------------------
(Dollars in millions) 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------
Benefit Obligations:
Beginning of year .................................. $ 222 $ 191 $ 17 $ 20
Current service cost ............................... 20 17 1 1
Interest cost ...................................... 17 16 1 2
Amendment and transfers in ......................... 7
Actuarial (gain) loss .............................. 35 16 3 (5)
Benefits paid ...................................... (14) (18) (1) (1)
----- ----- ----- ----
End of year ....................................... $ 287 $ 222 $ 21 $ 17
===== ===== ===== ====
Plan Assets at Fair Value:
Beginning of year .................................. $ 212 $ 201
Actual return on plan assets ....................... 24 27
Contributions and transfers in ..................... 5 2
Benefits paid ...................................... (14) (18)
----- -----
End of year ....................................... $ 227 $ 212
===== =====
Prepaid (Accrued) Benefit Expense:
Funded (underfunded) status of the plans ........... $ (60) $ (10) $ (21) $ (17)
Unrecognized net (asset) obligation at transition .. (10) (12) 15 17
Unrecognized net (gain) loss ....................... 45 13 (11) (16)
Unrecognized prior service costs ................... 4 5
----- ----- ----- ----
Total prepaid (accrued) benefit expense ........... $ (21) $ (4) $ (17) $ (16)
===== ===== ===== ====
Actuarial Assumptions:
Discount rate used to determine benefit obligation . 7.00% 7.75% 7.00% 7.75%
Rate of increase for future compensation ........... 4.25 4.50
Expected long-term rate of return on assets ........ 10.25 10.25
- ---------------------------------------------------------------------------------------------------------------
The assumed health care cost trend rate used in measuring the postretirement
plan benefit obligation was 4.5%.
- --------------------------------------------------------------------------------
42 State Street Corporation 1998 Annual Report
For those plans that have accumulated benefit obligations in excess of plan
assets as of December 31, 1998, the aggregate benefit obligation is $36 million,
the plan assets are $.3 million and the accumulated benefit obligation is $20
million.
The following table sets forth the expenses for State Street's defined benefit
and postretirement plans for the years ended December 31:
- --------------------------------------------------------------------------------
(Dollars in millions) 1998 1997 1996
- --------------------------------------------------------------------------------
Defined Benefit Plans:
Current service cost ............................... $ 20 $ 17 $ 16
Interest cost ...................................... 17 16 14
Actual return on plan assets ....................... (24) (27) (27)
Net amortization and deferral ...................... 3 7 7
---- ---- ----
Total ............................................. $ 16 $ 13 $ 10
==== ==== ====
Postretirement Plan:
Service cost ....................................... $ 1 $ 1 $ 1
Interest cost ...................................... 1 2 2
Net amortization and deferral ...................... 1
---- ---- ----
Total ............................................. $ 2 $ 3 $ 4
==== ==== ====
- --------------------------------------------------------------------------------
If the health care cost trend rates were increased by 1%, the postretirement
benefit obligation as of December 31, 1998, would have increased 4%, and the
aggregate expense for service and interest costs for 1998 would have increased
by 6%. Conversely, if the health care cost trend rates were decreased by 1%, the
postretirement benefit obligation as of December 31, 1998, would have decreased
4%, and the aggregate expense for service and interest costs for 1998 would have
decreased by 5%.
Employees of State Street Bank and certain subsidiaries are eligible to
contribute a portion of their pre-tax salary to a 401(k) savings plan. State
Street matches a portion of these contributions, and the related expense was $11
million for 1998 and 1997 and $9 million for 1996.
- --------------------------------------------------------------------------------
NOTE Q
- --------------------------------------------------------------------------------
INCOME TAXES
The provision for income taxes included in the Consolidated Statement of Income
consisted of the following:
- --------------------------------------------------------------------------------
(Dollars in millions) 1998 1997 1996
- --------------------------------------------------------------------------------
Current:
Federal ............................................ $ 39 $ 64 $ 44
State .............................................. 15 26 20
Non-U.S. ........................................... 35 40 15
----- ----- -----
Total current ..................................... 89 130 79
Deferred:
Federal ............................................ 96 37 59
State .............................................. 36 17 16
----- ----- -----
Total deferred .................................... 132 54 75
----- ----- -----
Total income taxes ................................ $ 221 $ 184 $ 154
===== ===== =====
- --------------------------------------------------------------------------------
Current and deferred taxes for 1997 and 1996 have been reclassified to reflect
the tax returns as actually filed. Income tax benefits recorded directly to
stockholders' equity for the years 1998, 1997 and 1996 included $24 million, $10
million and $7 million, respectively, related to employee stock option exercises
and other stock transactions. A benefit of $4 million and $3 million and an
expense of less than $1 million related to fair value adjustments for the
investment portfolio were included in other comprehensive income for the years
1998, 1997 and 1996, respectively. An expense of $4 million for 1998 and
benefits of $3 million and $1 million for 1997 and 1996, respectively, relating
to foreign currency translation adjustments were included in other comprehensive
income. These taxes are not included in the preceding table.
Income tax expense related to net securities gains was $4 million, $1 million
and $2 million for 1998, 1997 and 1996, respectively.
Pre-tax income attributable to operations located outside the United States was
$80 million, $85 million and $42 million in 1998, 1997 and 1996, respectively.
Significant components of the deferred tax liabilities and assets at December 31
were as follows:
- --------------------------------------------------------------------------------
(Dollars in millions) 1998 1997
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Lease financing transactions ............................... $656 $524
Other ...................................................... 23 20
---- ----
Total deferred tax liabilities ............................ 679 544
---- ----
Deferred tax assets:
Operating expenses ......................................... 73 74
Allowance for loan losses .................................. 36 36
Tax carryforwards .......................................... 10 5
Depreciation, net .......................................... 32 25
Other ...................................................... 17 19
Valuation allowance ........................................ (3) (5)
---- ----
Total deferred tax assets ................................. 165 154
---- ----
Net deferred tax liabilities .............................. $514 $390
==== ====
- --------------------------------------------------------------------------------
At December 31, 1998, State Street had U.S. alternative minimum tax credit
carryforwards of $9 million and non-U.S. tax loss carryforwards of $5 million.
If not used, $3 million of the non-U.S. tax losses will expire in the years 2000
and 2001. Remaining tax losses and alternative minimum tax credits carry forward
indefinitely.
A reconciliation of the differences between the U.S. statutory income tax rate
and the effective tax rates based on income before taxes is as follows:
- --------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
U.S. federal income tax rate .......................... 35.0% 35.0% 35.0%
Changes from statutory rate:
State taxes, net of federal benefit .................. 4.1 4.4 4.9
Tax-exempt interest revenue,
net of disallowed interest .......................... (3.6) (3.9) (4.5)
Tax credits .......................................... (2.6) (1.9) (1.4)
Other, net ........................................... .7 (1.0) .5
---- ---- ----
Effective tax rate .................................. 33.6% 32.6% 34.5%
==== ==== ====
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
43
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE R
- --------------------------------------------------------------------------------
EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share for the years ended December 31:
- -------------------------------------------------------------------------------------
(Dollars in millions, except per share data) 1998 1997 1996
- -------------------------------------------------------------------------------------
Net Income ........................................ $ 436 $ 380 $ 293
======== ======== ========
Earnings per share:
Basic earnings per share ......................... $ 2.71 $ 2.37 $ 1.81
Diluted earnings per share ....................... 2.66 2.32 1.78
Basic average shares (thousands) .................. 160,937 160,662 161,783
Effect of dilutive securities:
Stock options and stock awards .................. 2,133 2,068 1,482
7.75% convertible subordinated debentures ....... 857 1,059 1,110
-------- -------- --------
Dilutive average shares ........................... 163,927 163,789 164,375
======== ======== ========
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NOTE S
- -------------------------------------------------------------------------------
CONTINGENT LIABILITIES
State Street provides banking, trust, investment management, global custody,
accounting, administration and securities processing services to both domestic
and non-U.S. customers. Assets under custody and assets under management are
held by State Street in a fiduciary or custodial capacity and are not included
in the Consolidated Statement of Condition because such items are not assets of
State Street. Management conducts regular reviews of its responsibilities for
these services and considers the results in preparing its financial statements.
In the opinion of management, there are no contingent liabilities at December
31, 1998, that would have a material adverse effect on State Street's financial
position or results of operations.
State Street is subject to pending and threatened legal actions that arise in
the normal course of business. In the opinion of management, after discussion
with counsel, these actions can be successfully defended or resolved without a
material adverse effect on State Street's financial position or results of
operations.
- -------------------------------------------------------------------------------
NOTE T
- -------------------------------------------------------------------------------
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS,
INCLUDING DERIVATIVES
An off-balance sheet derivative instrument is a contract or agreement whose
value is derived from interest rates, currency exchange rates or other financial
indices. Derivative instruments include forwards, futures, swaps, options and
other instruments with similar characteristics. The use of these instruments
generates fee, interest or trading revenue.
Interest rate contracts involve an agreement with a counterparty to exchange
cash flows based on the movement of an underlying interest rate index. An
interest rate swap agreement involves the exchange of a series of interest
payments, either at a fixed or variable rate, based upon the notional amount
without the exchange of the underlying principal amount. An interest rate option
contract provides the purchaser, for a premium, the right, but not the
obligation, to buy or sell the underlying financial instrument at a set price at
or during a specified period. An interest rate futures contract is a commitment
to buy or sell, at a future date, a financial instrument at a contracted price;
it may be settled in cash or through the delivery of the contracted instrument.
Foreign exchange contracts involve an agreement to exchange the currency of one
country for the currency of another country at an agreed-upon rate and
settlement date. Foreign exchange contracts consist of swap agreements and
forward and spot contracts.
The following table summarizes the contractual or notional amounts of derivative
financial instruments held or issued by State Street for trading and balance
sheet management at December 31:
- --------------------------------------------------------------------------
(Dollars in millions) 1998 1997
- --------------------------------------------------------------------------
Trading:
Interest rate contracts:
Swap agreements ............................... $ 1,234 $ 1,015
Options and caps purchased .................... 21 38
Options and caps written ...................... 158 186
Futures - short position ...................... 1,130 594
Options on futures purchased .................. 5
Options on futures written .................... 8
Foreign exchange contracts:
Forward, swap and spot ........................ 136,781 91,742
Options purchased ............................. 572 144
Options written ............................... 571 138
Balance sheet management:
Interest rate contracts:
Swap agreements ............................... 427 243
Options and caps purchased .................... 30 50
Foreign exchange contracts ...................... 44
- --------------------------------------------------------------------------
State Street's risk exposure from interest rate and foreign exchange contracts
results from the possibility that one party may default on its contractual
obligation or from movements in exchange or interest rates. Credit risk is
limited to the positive market value of the derivative financial instrument,
which is significantly less than the notional value. The notional value provides
the basis for determining the exchange of contractual cash flows. The exposure
to credit loss can be estimated by calculating the cost, on a present value
basis, to replace at current market rates all profitable contracts at year end.
The estimated aggregate replacement cost of derivative financial instruments in
a net positive position was $1.6 billion and $1.4 billion at December 31, 1998
and 1997, respectively.
- --------------------------------------------------------------------------------
44 State Street Corporation 1998 Annual Report
The foreign exchange contracts have been reduced by offsetting balances with the
same counterparty where a master netting agreement exists. The following table
represents the fair value and average fair value of financial instruments held
or issued for trading purposes as of and for the years ended December 31:
- -----------------------------------------------------------------------------
Average
(Dollars in millions) Fair Value Fair Value
- -----------------------------------------------------------------------------
1998:
Foreign exchange contracts:
Contracts in a receivable position .............. $1,240 $1,284
Contracts in a payable position ................. 1,241 1,289
Other financial instrument contracts:
Contracts in a receivable position .............. 3 4
Contracts in a payable position ................. 8 4
1997:
Foreign exchange contracts:
Contracts in a receivable position .............. $1,037 $1,062
Contracts in a payable position ................. 1,036 1,087
Other financial instrument contracts:
Contracts in a receivable position .............. 3 7
Contracts in a payable position ................. 2 5
- -----------------------------------------------------------------------------
Net foreign exchange trading revenue related to foreign exchange contracts
totaled $289 million, $245 million and $126 million for 1998, 1997 and 1996,
respectively. Gains for other financial instrument contracts were $3 million in
1998 and $1 million in 1997 and 1996. Future cash requirements, if any, related
to foreign currency contracts are represented by the gross amount of currencies
to be exchanged under each contract unless State Street and the counterparty
have agreed to pay or receive the net contractual settlement amount on the
settlement date. Future cash requirements on other financial instruments are
limited to the net amounts payable under the agreements.
Credit-related financial instruments include indemnified securities on loan,
commitments to extend credit, standby letters of credit and letters of credit.
The maximum credit risk associated with credit-related financial instruments is
measured by the contractual amounts of these instruments.
The following is a summary of the contractual amount of State Street's
credit-related, off-balance sheet financial instruments at December 31:
- ----------------------------------------------------------------------------
(Dollars in millions) 1998 1997
- ----------------------------------------------------------------------------
Indemnified securities on loan ................... $66,236 $57,465
Loan commitments ................................. 10,539 7,294
Standby letters of credit ........................ 2,129 1,821
Letters of credit ................................ 220 179
- ----------------------------------------------------------------------------
On behalf of its customers, State Street lends their securities to creditworthy
brokers and other institutions. In certain circumstances, State Street may
indemnify its customers for the fair market value of those securities against a
failure of the borrower to return such securities. State Street requires the
borrowers to provide collateral in an amount equal to or in excess of 102% of
the fair market value of the securities borrowed. The borrowed securities are
revalued daily to determine if additional collateral is necessary. State Street
held, as collateral, cash and U.S. government securities totaling $68 billion
and $59 billion for indemnified securities on loan at December 31, 1998 and
1997, respectively.
Loan commitments (unfunded loans, asset purchase agreements and unused lines of
credit), standby letters of credit and letters of credit are issued to
accommodate the financing needs of State Street's customers. Loan commitments
are agreements by State Street to lend monies at a future date, or agreements to
purchase assets, subject to conditions established in the agreement. Standby
letters of credit and letters of credit commit State Street to make payments on
behalf of customers when certain specified events occur.
These loan and letter of credit commitments are subject to the same credit
policies and reviews as loans. The amount and nature of collateral is obtained
based upon management's assessment of the credit risk. Approximately 75% of the
loan commitments expire within one year from the date of issue. Since many of
the commitments are expected to expire without being drawn, the total commitment
amounts do not necessarily represent future cash requirements.
- --------------------------------------------------------------------------------
NOTE U
- --------------------------------------------------------------------------------
FAIR VALUE OF FINANCIAL INSTRUMENTS
State Street uses the following methods to estimate the fair value of financial
instruments.
For financial instruments that have quoted market prices, those quotes are used
to determine fair value. Financial instruments that have no defined maturity,
have a remaining maturity of 180 days or less, or reprice frequently to a market
rate, are assumed to have a fair value that approximates reported book value,
after taking into consideration any applicable credit risk. If no market quotes
are available, financial instruments are valued by discounting the expected cash
flow(s) using an estimated current market interest rate for the financial
instrument. For off-balance sheet derivative instruments, fair value is
estimated as the amount that State Street would receive or pay to terminate the
contracts at the reporting date, taking into account the current unrealized
gains or losses on open contracts.
- --------------------------------------------------------------------------------
45
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE U - CONTINUED
- --------------------------------------------------------------------------------
The short maturity of State Street's assets and liabilities results in having a
significant number of financial instruments whose fair value equals or closely
approximates reported balance sheet value. Such financial instruments are
reported in the following balance sheet captions: cash and due from banks,
interest-bearing deposits with banks, securities purchased under resale
agreements and securities borrowed, federal funds sold, deposits, securities
sold under repurchase agreements, federal funds purchased, and other short-term
borrowings. Fair value of trading accounts equals the balance sheet value. As of
December 31, 1998 and 1997, the fair value of interest rate contracts used for
balance sheet management were a payable of $8 million and $4 million,
respectively. There is no reported cost for loan commitments.
The reported value and fair value for other balance sheet captions at December
31, are as follows:
- --------------------------------------------------------------------------
Reported Fair
(Dollars in millions) Value Value
- --------------------------------------------------------------------------
1998:
Investment securities:
Available for sale ............................ $8,560 $8,560
Held to maturity .............................. 1,177 1,179
Net loans (excluding leases) ................... 4,977 4,977
Long-term debt ................................. 922 1,001
1997:
Investment securities:
Available for sale ............................ $9,482 $9,482
Held to maturity .............................. 893 893
Net loans (excluding leases) ................... 4,597 4,597
Notes payable .................................. 44 45
Long-term debt ................................. 774 892
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE V
- --------------------------------------------------------------------------------
NON-U.S. ACTIVITIES
Non-U.S. activities, as defined by the Securities and Exchange Commission, are
considered to be those revenue-producing assets and transactions that arise from
customers domiciled outside the United States. Due to the nature of State
Street's business, it is not possible to segregate precisely domestic and
non-U.S. activities. The determination of earnings attributable to non-U.S.
activities requires internal allocations for resources common to non-U.S. and
domestic activities. Subjective judgments have been used to arrive at the
operating results for non-U.S. activities. Interest expense allocations are
based on the average cost of short-term borrowed funds. Allocations for
operating expenses and certain administrative costs are based on services
provided and received.
The following table summarizes non-U.S. operating results and assets, based on
the domicile location of customers, for the years ended and as of December 31:
- -------------------------------------------------------------------------------
(Dollars in millions) 1998 1997 1996
- -------------------------------------------------------------------------------
Fee revenue ............................ $ 403 $ 353 $ 270
Interest revenue ....................... 675 535 435
Interest expense ....................... 430 313 260
------- ------- ------
Net interest revenue .................. 245 222 175
Provision for loan losses .............. 4 10 1
------- ------- ------
Total revenue ......................... 644 565 444
Operating expenses ..................... 473 405 342
------- ------- ------
Income before income taxes ............ 171 160 102
Income taxes ........................... 61 58 38
------- ------- ------
Net Income ............................ $ 110 $ 102 $ 64
======= ======= ======
Assets:
Interest-bearing deposits with banks .. $12,085 $10,080 $7,565
Loans and other assets ................ 2,761 2,713 1,486
------- ------- ------
Total Assets ........................ $14,846 $12,793 $9,051
======= ======= ======
- ------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
46 State Street Corporation 1998 Annual Report
- --------------------------------------------------------------------------------
NOTE W
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS OF STATE STREET CORPORATION
(PARENT ONLY)
STATEMENT OF INCOME
- ----------------------------------------------------------------------------------------------------------------------
(Dollars in millions) Year ended December 31, 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
Dividends from bank subsidiary ...................................................... $ 30 $ 22 $ 88
Interest on deposits with bank subsidiary ........................................... 6 22 8
Interest on securities purchased under resale agreement ............................. 125
Dividends and interest revenue ...................................................... 5 3 2
Securities gains, net ............................................................... 3
---- ---- ----
Total revenue ..................................................................... 166 47 101
Interest on securities sold under repurchase agreement .............................. 113
Interest on commercial paper ........................................................ 2 2 3
Interest on long-term debt .......................................................... 64 53 13
Other expenses ...................................................................... 2 4 3
---- ---- ----
Total expenses .................................................................... 181 59 19
Income tax benefit .................................................................. (18) (13) (1)
---- ---- ----
Income before equity in undistributed income of subsidiaries and affiliates ....... 3 1 83
Equity in undistributed income of subsidiaries and affiliates:
Consolidated bank .................................................................. 417 369 192
Consolidated nonbank ............................................................... 9 4 12
Unconsolidated affiliates .......................................................... 7 6 6
---- ---- ----
433 379 210
---- ---- ----
Net Income ........................................................................ $436 $380 $293
==== ==== ====
- ----------------------------------------------------------------------------------------------------------------------
STATEMENT OF CONDITION
- ----------------------------------------------------------------------------------------------------------------------
(Dollars in millions) As of December 31, 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
Assets:
Cash and due from bank subsidiary .................................................. $ 45 $ 15
Interest-bearing deposits with bank subsidiary ..................................... 1 2
Interest-bearing deposits with other banks ......................................... 75
Securities purchased under resale agreements ....................................... 3,557 320
Available-for-sale securities ...................................................... 36 15
Investment in consolidated subsidiaries:
Bank .............................................................................. 2,684 2,233
Nonbank ........................................................................... 122 100
Investment in unconsolidated affiliate ............................................. 39 32
Notes and other receivables from subsidiaries ...................................... 125 72
Other assets ....................................................................... 29 12
------ ------
Total Assets ................................................................... $6,713 $2,801
====== ======
Liabilities:
Securities sold under repurchase agreement ......................................... $3,445 $
Accrued taxes and other expenses ................................................... 12 22
Other liabilities .................................................................. 23 16
Long-term debt ..................................................................... 922 768
------ ------
Total Liabilities .............................................................. 4,402 806
------ ------
Stockholders' Equity ................................................................ 2,311 1,995
------ ------
Total Liabilities and Stockholders' Equity ..................................... $6,713 $2,801
====== ======
- ----------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
47
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE W - CONTINUED
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in millions) Year ended December 31, 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------
Operating Activities:
Net income .................................................................... $ 436 $ 380 $ 293
Equity in undistributed income of subsidiaries and affiliate .................. (433) (379) (210)
Securities gains, net ......................................................... (3)
Other, net .................................................................... (48) (4) 6
------- ----- -----
Net Cash (Used) Provided by Operating Activities .......................... (45) (3) 86
Investing Activities:
Net (payments for) proceeds from:
Investment in bank subsidiary ................................................ (75) (14)
Investment in nonbank subsidiaries ........................................... (13) (21) (8)
Securities purchased under resale agreement .................................. (3,237) (320)
Purchase of available-for-sale securities .................................... (39) (5) (10)
Maturity of available-for-sale securities .................................... 10 10
Sales of available-for-sale securities ....................................... 9 18
Interest bearing deposits with banks ......................................... (75) 314 (150)
Notes receivable from nonbank subsidiaries ................................... (25) (15) (41)
------- ----- -----
Net Cash Used by Investing Activities ..................................... (3,370) (122) (195)
Financing Activities:
Net payments for commercial paper ............................................. (8) (66)
Proceeds from issuance of long-term debt ...................................... 153 309 356
Proceeds from issuance of common and treasury stock ........................... 31 16 12
Payments for cash dividends ................................................... (84) (69) (61)
Payments for purchase of common stock ......................................... (100) (110) (131)
Net proceeds from short term borrowing ........................................ 3,445
------- ----- -----
Net Cash Provided by Financing Activities ................................. 3,445 138 110
------- ----- -----
Net Increase .............................................................. 30 13 1
------- ----- -----
Cash and due from banks at beginning of year ................................... 15 2 1
------- ----- -----
Cash and Due from Banks at End of Year .................................... $ 45 $ 15 $ 2
======= ===== =====
- -----------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
48 State Street Corporation 1998 Annual Report
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Stockholders and Board of Directors
State Street Corporation
We have audited the accompanying consolidated statements of condition of State
Street Corporation (Corporation) as of December 31, 1998 and 1997, and the
related consolidated statements of income, cash flows and changes in
stockholders' equity for each of the three years in the period ended December
31, 1998. These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to herein present fairly, in
all material respects, the consolidated financial position of State Street
Corporation at December 31, 1998 and 1997, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
January 18, 1999
- --------------------------------------------------------------------------------
49
- --------------------------------------------------------------------------------
SUPPLEMENTAL FINANCIAL DATA
- --------------------------------------------------------------------------------
CONDENSED AVERAGE STATEMENT OF CONDITION WITH NET INTEREST REVENUE ANALYSIS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
1998
- --------------------------------------------------------------------------------------------------------------
Average Average
(Dollars in millions; taxable equivalent) Balance Interest Rate
- --------------------------------------------------------------------------------------------------------------
ASSETS
Interest-bearing deposits with banks .................................. $ 11,271 $ 537 4.76%
Securities purchased under resale agreements and securities borrowed .. 12,876 691 5.37
Federal funds sold .................................................... 762 42 5.46
Trading account assets ................................................ 268 10 3.61
Investment securities:
U.S. Treasury and federal agencies ................................... 5,337 313 5.88
State and political subdivisions ..................................... 1,729 105 6.08
Other investments .................................................... 2,816 170 6.03
-------- ------
Total investment securities ........................................ 9,882 588 5.95
Loans:
Commercial and financial ............................................. 4,175 248 5.93
Real estate .......................................................... 73 6 8.55
Non-U.S. ............................................................. 970 62 6.37
Lease financing ...................................................... 1,129 93 8.29
-------- ------
Total loans ........................................................ 6,347 409 6.45
-------- ------
Total Interest-Earning Assets ...................................... 41,406 2,277 5.50
Cash and due from banks ............................................... 926
Allowance for loan losses ............................................. (90)
Premises and equipment ................................................ 633
Other assets .......................................................... 2,835
-----
Total Assets ....................................................... $ 45,710
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Savings .............................................................. $ 2,495 108 4.33
Time ................................................................. 140 7 5.18
Non-U.S. ............................................................. 16,294 542 3.33
-------- ------
Total interest-bearing deposits .................................... 18,929 657 3.47
Securities sold under repurchase agreements ........................... 13,775 703 5.11
Federal funds purchased ............................................... 704 37 5.28
Other short-term borrowings ........................................... 619 29 4.66
Notes payable ......................................................... 4 6.40
Long-term debt ........................................................ 867 66 7.62
-------- ------
Total Interest-Bearing Liabilities ................................. 34,898 1,492 4.28
Noninterest-bearing deposits .......................................... 6,254 ------
Other liabilities ..................................................... 2,401
Stockholders' equity .................................................. 2,157
-----
Total Liabilities and Stockholders' Equity ......................... $ 45,710
========
Net interest revenue ............................................... $ 785
======
Excess of rate earned over rate paid ............................... 1.22%
====
Net Interest Margin (1) ............................................ 1.90%
====
- --------------------------------------------------------------------------------------------------------------
(1) Net interest margin is taxable equivalent net interest revenue divided by
average interest-earning asset
- --------------------------------------------------------------------------------
50 State Street Corporation 1998 Annual Report
- ---------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
Average Average Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate
- ---------------------------------------------------------------------------------------------------------------------------------
$ 8,516 $ 415 4.88% $ 7,041 $ 336 4.78% $ 5,466 $ 278 5.25% $ 5,183 $ 209 4.04%
6,413 354 5.52 6,010 326 5.43 5,569 329 5.91 3,102 132 4.26
708 39 5.57 561 30 5.35 475 28 5.97 537 24 4.45
153 9 5.60 326 18 5.41 412 21 5.13 532 26 4.90
5,980 360 6.03 4,319 261 6.03 4,139 243 5.89 3,455 184 5.33
1,645 105 6.37 1,478 92 6.25 1,183 71 5.96 1,120 57 5.09
2,659 163 6.12 2,111 127 6.01 2,212 134 6.05 2,597 139 5.35
------- ----- ------- ----- ------- ----- ------- ----
10,284 628 6.11 7,908 480 6.06 7,534 448 5.95 7,172 380 5.30
3,494 215 6.15 2,938 185 6.30 2,519 171 6.79 2,347 123 5.24
99 9 8.72 106 9 8.76 99 8 8.39 96 7 7.57
882 61 6.98 815 52 6.40 536 42 7.80 586 38 6.41
876 69 7.86 654 44 6.73 510 37 7.31 372 22 5.98
------- ----- ------- ----- ------- ----- ------- ----
5,351 354 6.61 4,513 290 6.42 3,664 258 7.04 3,401 190 5.58
------- ----- ------- ----- ------- ----- ------- ----
31,425 1,799 5.73 26,359 1,480 5.61 23,120 1,371 5.93 19,927 961 4.82
1,119 1,164 1,026 1,286
(76) (70) (62) (58)
475 458 481 462
2,483 1,572 1,617 1,178
------- ------- ------- -------
$35,426 $29,483 $26,182 $22,795
======= ======= ======= =======
$ 2,081 87 4.17 $ 2,097 86 4.10 $ 1,913 85 4.45 $1,992 57 2.85
153 8 5.08 150 8 5.26 131 7 5.47 172 8 4.52
12,645 417 3.30 10,372 331 3.19 8,470 324 3.82 7,392 216 2.93
------- ----- ------- ----- ------- ----- ------- ----
14,879 512 3.44 12,619 425 3.37 10,514 416 3.96 9,556 281 2.93
9,598 499 5.20 7,819 394 5.05 7,080 399 5.65 4,958 201 4.07
291 15 5.26 357 19 5.18 504 30 5.89 411 16 3.90
602 30 5.03 707 36 5.04 761 41 5.32 563 25 4.40
76 3 4.34 124 3 2.47 214 12 5.73 258 12 4.64
717 55 7.70 213 15 6.95 127 9 6.71 128 9 6.73
------- ----- ------- ----- ------- ----- ------- ----
26,163 1,114 4.26 21,839 892 4.08 19,200 907 4.72 15,874 544 3.43
----- ----- ----- ----
5,288 4,638 4,113 4,701
2,128 1,388 1,386 936
1,847 1,618 1,483 1,284
------- ------- ------- -------
$35,426 $29,483 $26,182 $22,795
======= ======= ======= =======
$ 685 $ 588 $ 464 $ 417
===== ===== ===== =====
1.47% 1.53% 1.21% 1.39%
==== ==== ==== ====
2.18% 2.23% 2.01% 2.09%
==== ==== ==== ====
- ---------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
51