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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1993 COMMISSION FILE NO. 0-5108
STATE STREET BOSTON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2456637
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
225 FRANKLIN STREET
BOSTON, MASSACHUSETTS 02110
(ADDRESS OF PRINCIPAL (ZIP CODE)
EXECUTIVE OFFICE)
617-786-3000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $1 PAR VALUE
(TITLE OF CLASS)
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INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER
PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS) AND (2) HAS
BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90
DAYS. YES [X] NO []
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT ON FEBRUARY 28, 1994 WAS $2,835,150,000.
THE NUMBER OF SHARES OF THE REGISTRANT'S COMMON STOCK OUTSTANDING ON
FEBRUARY 28, 1994 WAS 76,111,410.
PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED INTO THE PARTS
OF THIS REPORT ON FORM 10-K INDICATED BELOW:
(1) ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31,
1993 (PARTS I AND II) AND (2) THE REGISTRANT'S DEFINITIVE PROXY
STATEMENT DATED MARCH 15, 1994 (PART III)
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PART I
ITEM 1. BUSINESS
THE CORPORATION
State Street Boston Corporation ("State Street") is a bank holding
company organized under the laws of the Commonwealth of Massachusetts.
State Street was organized in 1970 and conducts its business principally
through its subsidiary, State Street Bank and Trust Company ("State Street
Bank"), which traces its beginnings to the founding of the Union Bank in 1792.
The charter under which State Street Bank now operates was authorized by a
special act of the Massachusetts Legislature in 1891, and its present name was
adopted in 1960.
State Street is the fourth largest provider of trust services in the
United States as ranked on the basis of 1992 fiduciary compensation. The major
services contributing to fiduciary compensation are portfolio accounting,
securities custody and other related services for mutual funds/collective
investment funds; portfolio accounting, securities custody and other related
services for retirement and other financial assets of corporations, public
funds, endowments, foundations, and nuclear decommissioning trusts; investment
management for institutions through State Street Global Advisors; personal
trust; services for defined contribution plans; and corporate trust. Ranked on
the basis of assets as of December 1992, State Street Bank is the 28th largest
commercial bank in the United States.
State Street's total assets were $18.7 billion at December 31, 1993, of
which $13.5 billion, or 72%, were investment securities and money market
assets and $2.6 billion, or 14%, were loans. State Street had $1.6 trillion of
assets under custody, $201 billion of bonds under trusteeship, and $142
billion of assets under management at year-end 1993.
Services are provided from offices in the United States, as well as from
offices in Canada, Grand Cayman, Netherland Antilles, the United Kingdom,
France, Belgium, Luxembourg, Germany, United Arab Emirates, Hong Kong, Taiwan,
Japan, Australia, and New Zealand.
State Street's executive offices are located at 225 Franklin Street,
Boston, Massachusetts.
BUSINESS OF THE CORPORATION
State Street has two principal lines of business, financial asset services
and commercial lending.
FINANCIAL ASSET SERVICES
Financial asset services is comprised of the business components that
service and manage financial assets worldwide. These include services for
mutual funds and pension plans, both defined benefit and defined contribution;
corporate trusteeship; and management of institutional financial assets and
personal trust. A broad array of banking services is provided, including
accounting, recordkeeping, custody of securities, information services and
recordkeeping; taking short-term customer funds onto State Street's balance
sheet; investment management; foreign exchange trading; and cash management.
State Street began providing mutual fund services in 1924, and now has
$683 billion of the mutual fund industry's assets under custody. State Street
is the leading mutual fund custodian in the United States, servicing 37% of
the registered funds. Customers who sponsor the 1,948 U.S. mutual funds that
State Street services include investment companies, broker/dealers, insurance
companies and others. In addition, State Street services 192 collective
investment funds registered outside of the United States.
State Street's mutual fund services include domestic and global custody
services, which incorporates safekeeping portfolio assets, settling trades,
collecting and accounting for income, monitoring corporate actions and
reporting investable cash. State Street also offers portfolio accounting,
pricing, general ledger accounting, fund administration and other services.
Shareholder accounting is provided through a 50%-owned affiliate.
State Street began servicing pension assets in 1974. Servicing $574
billion of assets for North American customers, it is currently ranked as the
largest servicer of tax exempt assets for corporations and public funds
in the United States. Financial asset services are also provided for portfolios
of unions, endowments, foundations, and nuclear decommissioning trusts. In
addition, State Street provides global and domestic services for $66 billion
in assets for customers outside North America.
In the late 1970s, State Street began managing assets for institutions and
was a pioneer in the development of domestic and international index funds.
The products now offered also include enhanced and fully active equity
strategies, short-term investment funds and fixed income. These products are
sold domestically and from nine locations outside the United States. At year-
end 1993, institutional assets managed were $136 billion. State Street is
ranked as the largest manager of internationally-indexed assets and the third
largest manager of tax-exempt money in the United States.
State Street is a leading New England trustee and money manager for
individuals, and provides planned gift management services for non-profit
organizations throughout the United States.
State Street acts as participant recordkeeper, securities custodian and
trustee for defined contribution plans, such as 401(k) plans and ESOPs, and
issues checks for employee benefit distributions. Corporate trust services for
asset-backed securities, corporate securities, leveraged leases, and municipal
securities are provided to investment banks, corporations, municipalities and
government agencies from five offices in the United States. At year ended
1993, bonds under trusteeship totaled $201 billion.
State Street acts as a mortgage subservicer through Wendover Funding Inc.
in Greensboro, North Carolina. State Street also provides card replacement and
other services for a bank card association, processing of unclaimed securities
for state governments, accounting services for retained asset accounts of
insurance companies and clearing services for correspondent banks.
State Street provides foreign exchange trading, global cash management and
trading of securities to financial institutions and corporations. Funds are
gathered in the form of domestic and foreign deposits, federal funds and
securities sold under repurchase agreements from local, national and
international sources. Trading and arbitrage operations are conducted with
government securities, futures and options. Municipal dealer activities
include underwriting, trading and distribution of general obligation tax-
exempt bonds and notes. Treasury centers are located in Boston, London, Hong
Kong, Tokyo and Sydney. State Street also provides corporate finance services,
including private placement of debt and equity, acquisitions and divestitures
and project finance.
COMMERCIAL LENDING
State Street provides corporate banking, specialized lending and
international banking to businesses and financial institutions. The corporate
banking services are offered primarily to New England middle market companies.
Specialized lending is both regional and national, with specialties that
include communications, publishing, law firms, broker/dealers and other
financial institutions. In addition, State Street offers asset-based finance,
leasing, real estate, and trade finance. Trade finance includes letters of
credit, collection, payment and other specialized services for importers and
exporters. Dollar clearing and other correspondent banking services are
provided through an Edge Act subsidiary in New York City.
SELECTED STATISTICAL INFORMATION
The following tables contain State Street's consolidated statistical
information relating to, and should be read in conjunction with, the
consolidated financial statements. Additionally, certain previously reported
amounts have been reclassified to conform to the present method of
presentation.
DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
The average statements of condition and net interest revenue analysis for
the years indicated are presented below.
1993 1992 1991
--------------------------------- -------------------------------- ------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ---- ------- -------- ---- ------- -------- ----
(DOLLARS IN THOUSANDS)
ASSETS
Interest-bearing deposits
with
banks(1)<F1> ............ $ 5,021,752 $201,453 4.01% $ 5,101,515 $257,615 5.05% $ 3,646,161 $261,992 7.19%
Securities purchased under
resale agreements ....... 3,255,014 102,338 3.14 2,602,740 97,570 3.75 912,519 51,408 5.63
Federal funds sold ........ 413,601 12,642 3.06 330,019 11,579 3.51 305,391 17,793 5.83
Trading account assets .... 369,050 15,551 4.21 226,290 10,081 4.45 151,840 11,850 7.80
Investment securities:
U.S. Treasury and Federal
agencies .............. 2,076,758 119,495 5.75 1,703,026 115,745 6.80 1,416,754 115,599 8.16
State and political 682,856 37,823 5.54 375,972 28,998 7.72 378,431 34,424 9.09
Other investments ....... 1,826,568 97,383 5.33 1,443,628 87,963 6.09 1,212,333 100,850 8.32
Loans(2)<F2>
Domestic ................ 2,261,915 113,272 5.01 1,952,638 111,329 5.70 2,019,915 156,163 7.73
Foreign ................. 314,122 19,137 6.09 117,707 7,156 6.08 87,473 6,502 7.43
----------- -------- ----------- -------- ----------- --------
Total interest-
earning
assets ............ 16,221,636 719,094 4.43 13,853,535 728,036 5.26 10,130,817 756,581 7.47
-------- -------- --------
Cash and due from banks ... 911,082 818,991 774,715
Allowance for loan losses . (57,522) (66,767) (63,550)
Premises and equipment .... 435,475 358,895 268,902
Customers' acceptance
liability(3)<F3> ........ 33,363 51,745 60,562
Other assets .............. 625,133 485,720 402,961
----------- ----------- -----------
Total Assets ........ $18,169,167 $15,502,119 $11,574,407
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Savings ................. $ 2,166,996 52,175 2.41 $ 2,153,699 67,967 3.16 $ 1,818,398 94,936 5.22
Time .................... 157,481 4,531 2.88 162,464 6,265 3.86 306,789 18,417 6.00
Foreign ................. 4,953,696 146,051 2.95 3,954,528 174,615 4.42 2,648,345 173,396 6.55
Federal funds purchased ... 741,082 21,023 2.84 919,109 30,818 3.35 837,006 45,878 5.48
Securities sold under
repurchase
agreements .............. 4,133,726 119,300 2.89 3,290,196 112,407 3.42 1,765,768 89,778 5.08
Other short-term borrowings 215,948 8,156 3.78 193,927 8,281 4.27 155,810 8,235 5.29
Notes payable ............. 510,719 19,943 3.90 388,513 18,400 4.74 234,331 20,353 8.69
Long-term debt ............ 122,403 10,023 8.19 146,394 13,327 9.10 146,407 13,238 9.04
----------- -------- ----------- -------- ----------- --------
Total interest-
bearing
liabilities ....... 13,002,051 381,202 2.93 11,208,830 432,080 3.85 7,912,854 464,231 5.87
-------- ---- -------- ---- -------- ----
Noninterest-bearing
deposits .................. 3,622,849 2,952,363 2,460,175
Acceptances outstanding(3)<F3> 33,956 52,423 61,150
Other liabilities ......... 477,640 401,953 367,295
Stockholders' equity ...... 1,032,671 886,550 772,933
----------- ----------- -----------
Total Liabilities and
Stockholders'
Equity ............ $18,169,167 $15,502,119 $11,574,407
----------- ----------- -----------
----------- ----------- -----------
Net interest revenue $337,892 $295,956 $292,350
-------- -------- --------
-------- -------- --------
Excess of rate earned
over rate paid .... 1.50% 1.41% 1.60%
---- ---- ----
---- ---- ----
Net Interest Margin(4)<F4> 2.08% 2.14% 2.89%
---- ---- ----
---- ---- ----
<FN>
- ---------
<F1>(1) Amounts reported were with non-U.S. domiciled offices of other banks.
<F2>(2) Non-accrual loans are included in the average loan amounts outstanding.
<F3>(3) In 1993, 1992 and 1991, 13%, 9% and 5% of acceptances were foreign.
<F4>(4) Net interest margin is taxable equivalent net interest revenue divided by
total average interest-earning assets.
Interest revenue on non-taxable investment securities and loans includes
the effect of taxable equivalent adjustments, using a Federal income tax rate
of 35% in 1993 and 34% in 1992 and 1991, adjusted for applicable state income
taxes net of the related Federal tax benefit.
DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL (CONTINUED)
The table below summarizes changes in interest revenue and interest
expense due to changes in volume of interest-earning assets and interest-
bearing liabilities, and changes in interest rates. Changes attributed to
both volume and rate have been allocated based on the proportion of change in
each category.
1993 COMPARED TO 1992 1992 COMPARED TO 1991
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO NET DUE TO NET
-------------------------- INCREASE ------------------------- INCREASE
VOLUME RATE (DECREASE) VOLUME RATE (DECREASE)
------ ---- ---------- ------ ---- ----------
(DOLLARS IN THOUSANDS)
Interest revenue related
to:
Interest-bearing deposits
with banks .............. $ (3,971) $ (52,191) $ (56,162) $ 86,856 $ (91,234) $ (4,378)
Securities purchased under
resale agreements ....... 22,047 (17,279) 4,768 68,142 (21,979) 46,163
Federal funds sold ........ 2,684 (1,621) 1,063 1,338 (7,552) (6,214)
Trading account assets .... 6,044 (574) 5,470 4,488 (6,258) (1,770)
Investment securities:
U.S. Treasury and
Federal agencies .... 23,101 (19,351) 3,750 21,212 (21,067) 145
State and political
subdivisions ........ 18,732 (9,907) 8,825 (223) (5,203) (5,426)
Other investments ..... 21,349 (11,929) 9,420 17,079 (29,965) (12,886)
Loans:
Domestic .............. 16,410 (14,467) 1,943 (5,051) (39,782) (44,833)
Foreign ............... 11,966 15 11,981 1,980 (1,327) 653
--------- --------- -------- -------- --------- -------
Total interest-
earning assets .... 118,362 (127,304) (8,942) 195,821 (224,367) (28,546)
--------- --------- -------- -------- --------- --------
Interest expense related to:
Deposits:
Savings................ 417 (16,209) (15,792) 15,290 (42,259) (26,969)
Time .................. (187) (1,547) (1,734) (6,898) (5,253) (12,151)
Foreign ............... 37,815 (66,379) (28,564) 68,813 (67,594) 1,219
Federal funds purchased ... (5,455) (4,341) (9,796) 4,150 (19,211) (15,061)
Securities sold under
repurchase agreements ... 26,045 (19,151) 6,894 59,200 (36,572) 22,628
Other short-term borrowings 886 (1,012) (126) 1,798 (1,752) 46
Notes payable ............. 5,138 (3,595) 1,543 9,799 (11,752) (1,953)
Long-term debt ............ (2,048) (1,255) (3,303) (1) 90 89
-------- --------- -------- -------- --------- --------
Total interest-bearing
liabilities ....... 62,611 (113,489) (50,878) 152,151 (184,303) (32,152)
-------- --------- -------- -------- --------- --------
Net Interest Revenue $ 55,751 $ (13,815) $ 41,936 $ 43,670 $ (40,064) $ 3,606
-------- --------- -------- -------- --------- --------
-------- --------- -------- -------- --------- --------
RETURN ON EQUITY AND ASSETS AND CAPITAL RATIOS
The return on equity, return on assets, dividend payout ratio, equity to
assets ratio and capital ratios for the years ended December 31, were as
follows:
1993 1992 1991
---- ---- ----
Net income to:
Average stockholders'
equity ................. 17.4% 18.1% 18.0%
Average total assets ..... .99 1.03 1.20
Dividends declared to net
income ................... 21.9 20.8 20.4
Average equity to average
assets ................... 5.7 5.7 6.7
Risk-based ratios:
Tier 1 capital ........... 12.1 13.2 14.1
Total capital ............ 12.7 14.6 16.4
INVESTMENT PORTFOLIO
During the fourth quarter of 1992 State Street classified a portion of its
investment securities portfolio as being available for sale. This reflects the
intent to hold these securities for an indefinite period of time, not
necessarily until final maturity. Securities classified as available for sale
are carried at the lower of amortized cost or market. Investment securities
consisted of the following at December 31:
1993 1992 1991
------ ------- ------
(DOLLARS IN MILLIONS)
HELD FOR INVESTMENT
U.S. Treasury and Federal
agencies ................... $1,272 $ 996 $1,583
State and political
subdivisions ............... 1,084 451 382
Asset-backed securities .... 2,028 1,618 1,150
Other investments .......... 100 87 135
------ ------ ------
Total ................ 4,484 3,152 3,250
AVAILABLE FOR SALE
U.S. Treasuries ............ 1,122 940
Other investments .......... 95
------ ------
Total ................ 1,217 940
------ ------ ------
Total investment
securities ......... $5,701 $4,092 $3,250
------ ------ ------
------ ------ ------
The maturities of investment securities at December 31, 1993 and the
weighted average yields
(fully taxable equivalent basis) were as follows:
MATURING
---------------------------------------------------------------------------------------------
AFTER ONE AFTER FIVE
ONE YEAR BUT WITHIN BUT WITHIN AFTER
OR LESS FIVE YEARS TEN YEARS TEN YEARS
-------------------- ---------------------- ------------------- --------------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN MILLIONS)
HELD FOR INVESTMENT
U.S. Treasury and Federal agencies . $ 636 5.14% $ 603 4.93% $ 11 4.92% $ 22 4.90%
701 4.50 309 6.22 71 6.87 3 9.78
Asset-backed securities ............ 1,141 4.88 766 4.79 112 4.75 9 4.72
Other investments .................. 72 3.89 16 6.73 2 4.91 10 7.53
------ ------ ---- ----
Total ........................ 2,550 1,694 196 44
AVAILABLE FOR SALE
U.S. Treasuries .................... 341 7.61 781 4.62
Other investments .................. 48 6.56 47 6.61
------ ------
Total ........................ 389 828
------ ------ ---- ----
Total investment securities .. $2,939 $2,522 $196 $ 44
------ ------ ---- ----
------ ------ ---- ----
LOAN PORTFOLIO
Domestic and foreign loans at December 31 and average loans outstanding
for the years ended December 31, were as follows:
1993 1992 1991 1990 1989
---------- ---------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS)
Domestic:
Commercial and
financial ......... $1,889,143 $1,519,037 $1,411,994 $1,539,069 $1,417,103
Real estate ......... 94,073 105,156 128,376 173,530 247,072
Consumer ............ 46,315 64,841 75,366 94,680 538,546
Lease financing ..... 254,525 251,761 211,350 199,392 196,293
---------- ---------- ---------- ---------- ----------
Total domestic .. 2,284,056 1,940,795 1,827,086 2,006,671 2,399,014
---------- ---------- ---------- ---------- ----------
Foreign:
Commercial and
industrial ........ 295,716 50,838 67,622 55,500 48,857
Banks and other
financial
institutions ...... 25,940 8,838 7,495 38,141 14,728
Government and
official
institutions ...... 1,000 1,000 1,000 1,000 1,000
Lease financing ..... 70,976
Other ............... 2,486 2,242 2,112 3,762 1,423
---------- ---------- ---------- ---------- ----------
Total foreign ... 396,118 62,918 78,229 98,403 66,008
---------- ---------- ---------- ---------- ----------
Total loans ..... $2,680,174 $2,003,713 $1,905,315 $2,105,074 $2,465,022
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Average loans outstanding $2,576,037 $2,070,345 $2,107,388 $2,621,429 $2,467,473
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Selected loan maturities at December 31, 1993 were as follows:
AFTER ONE
ONE YEAR BUT WITHIN AFTER
OR LESS FIVE YEARS FIVE YEARS
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
Commercial and financial ............................ $1,535,927 $251,609 $101,607
Real estate ......................................... 40,098 49,960 4,015
Foreign ............................................. 313,464 11,678 70,976
The following table shows the classification of the above loans due after
one year according to sensitivity to changes in interest rates:
(DOLLARS IN THOUSANDS)
Loans with predetermined interest rates .............................................. $201,013
Loans with floating or adjustable interest rates ..................................... 288,832
--------
Total ............................................................................ $489,845
--------
--------
Loans are evaluated on an individual basis to determine the
appropriateness of renewing each loan. State Street does not have a general
policy. Unearned revenue included in loans was $4,423,000 and $5,467,000
at December 31, 1993 and 1992, respectively.
NON-ACCRUAL LOANS
It is State Street's policy to place loans 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. Past due loans are loans
on which principal or interest payments are over 90 days delinquent, but
where interest continues to be accrued. The following schedule discloses
information concerning non-accrual and past due loans.
NON-ACCRUAL LOANS (CONTINUED)
DECEMBER 31
-----------------------------------------------------------
1993 1992 1991 1990 1989
------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)
Non-accrual:
Domestic ............................. $26,804 $39,954 $39,620 $54,273 $19,090
Foreign .............................. 323 1,337 2,206 2,673
------- ------- ------- ------- -------
Total non-accrual ................ $26,804 $40,277 $40,957 $56,479 $21,763
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Past due:
Domestic ............................. $ 86 $ 288 $ 44 $ 2,590 $ 1,507
Foreign .............................. 65 507 88 541
------- ------- ------- ------- -------
Total past due ................... $ 86 $ 353 $ 551 $ 2,678 $ 2,048
------- ------- ------- ------- -------
------- ------- ------- ------- -------
The interest revenue for 1993 which would have been recorded related to
these non-accrual loans is $2,796,000 for domestic loans. The interest revenue
that was recorded on these non-accrual loans was $812,000, all of which
relates to domestic loans.
Loans totaling $12,914,000 were restructured in 1993, are performing in
accordance with their new terms and are accruing at a market rate.
ALLOWANCE FOR LOAN LOSSES
The changes in the allowance for loan losses for the years ended December
31, were as follows:
1993 1992 1991 1990 1989
----- ----- ---- ----- -----
(DOLLARS IN THOUSANDS)
Balance at beginning of year:
Domestic ........................ $56,987 $64,323 $49,007 $48,958 $48,906
Foreign ......................... 944 1,565 1,968 1,347 1,100
------- ------- ------- ------- --------
Total allowance for loan
losses .................. 57,931 65,888 50,975 50,305 50,006
------- ------- ------- ------- -------
Provision (credit) for loan losses:
Domestic ........................ 10,247 11,734 59,989 43,746 16,693
Foreign ......................... 1,073 467 23 1,915 2,727
------- ------- ------- ------- -------
Total provision for loan
losses .................. 11,320 12,201 60,012 45,661 19,420
------- ------- ------- ------- -------
Loan charge-offs:
Commercial and financial ........ 15,241 9,794 33,687 12,266 5,708
Real estate construction ........ 20 4,753 6,315 6,680 543
Real estate mortgage ............ 1,607 5,800 4,625 2,599 941
Consumer ........................ 1,416 1,811 2,273 25,197 13,627
Foreign ......................... 261 1,356 870 1,337 2,885
------- ------- ------- ------- -------
Total loan charge-offs ...... 18,545 23,514 47,770 48,079 23,704
------- ------- ------- ------- -------
Recoveries:
Commercial and financial ........ 1,178 1,414 1,494 256 487
Real estate contruction ......... 73 259 4 9
Real estate mortgage ............ 206 488 52
Consumer ........................ 561 927 681 2,785 3,682
Foreign ......................... 187 268 444 43 405
------- ------- ------- ------- -------
Total recoveries ............ 2,205 3,356 2,671 3,088 4,583
------- ------- ------- ------- -------
Net loan charge-offs ........ 16,340 20,158 45,099 44,991 19,121
------- ------- ------- ------- -------
Allowance of foreign subsidiary
purchased ........................... 1,405
Balance at end of year:
Domestic ........................ 50,968 56,987 64,323 49,007 48,958
Foreign ......................... 3,348 944 1,565 1,968 1,347
------- ------- ------- ------- -------
Total allowance for loan
losses .................. $54,316 $57,931 $65,888 $50,975 $50,305
------- ------- ------- -------- -------
------- ------- ------- ------- -------
Ratio of net charge-offs to average
loans outstanding ................. .63% .97% 2.14% 1.72% .77%
--- --- ----- ----- -----
--- --- ----- ----- -----
ALLOWANCE FOR LOAN LOSSES (CONTINUED)
State Street establishes an allowance for loan losses to absorb probable
credit losses. Management's review of the adequacy of the allowance for loan
losses is ongoing throughout the year and is based, among other factors, on
the evaluation of the level of risk in the portfolio, the volume of adversely
classified loans, previous loss experience, current trends, and expected
economic conditions and their effect on borrowers.
While the allowance is established to absorb probable losses inherent in
the total loan portfolio, management allocates the allowance for loan losses
to specific loans, selected portfolio segments and certain off-balance sheet
exposures and commitments. Adversely classified loans in excess of $1 million
are individually reviewed to evaluate risk of loss and assigned a specific
allocation of the allowance. The allocations are based on an assessment of
potential risk of loss and include evaluations of the borrowers' financial
strength, cash flows, collateral, appraisals and guarantees. The allocations
to portfolio segments and off-balance sheet exposures are based on
management's evaluation of relevant factors, including the current level of
problem loans and current economic trends. These allocations are also based on
subjective estimates and management judgment, and are subject to change from
quarter-to-quarter. In addition, a portion of the allowance remains
unallocated as a general reserve for the entire loan portfolio.
The provision for loan losses is a charge to earnings for the current
period which is required to maintain the total allowance at a level considered
adequate in relation to the level of risk in the loan portfolio. The provision
for loan losses was $11.3 million for 1993, which compares to $12.2 million in
1992.
At December 31, 1993, the allowance for loan losses was $54.3 million, or
2.03% of loans. This compares to an allowance of $57.9 million or 2.89% of
loans a year ago. This decline reflects improvement in measures of credit
quality and improvement in the outlook for general economic conditions and its
affect on borrowers. The decline in the allowance for loan losses as a
percentage of loan volume is also attributable to the growth in loan exposures
to financial asset services customers and securities brokers in conjunction
with their trading and settlement activity. These are generally short-term,
usually overnight, and are structured to have relatively low credit exposure.
CREDIT QUALITY
At December 31, 1993, loans comprised 14% of State Street's assets,
compared to over 55% for other banking companies of comparable size. State
Street's loan policies limit the size of individual loan exposures to reduce
risk through diversification.
In 1993, net charge-offs declined from $20.1 million to $16.3 million. Net
charge-offs as a percentage of average loans were .63% compared to .97% for
1992.
At December 31, 1993, total non-performing assets were $37.9 million, a
$14.9 million decrease from year-end 1992. Non-performing assets include $26.8
million of non-accrual loans and $11.1 million of other real estate owned. In
1993, loans placed on non-accrual status were more than offset by charge-offs,
payments, and the return to accrual status of several loans. The decline in
other real estate owned resulted from property sales.
In 1993, measures of credit quality improved, as discussed above, as did
the general economic outlook. The economy in the Northeast began to expand
modestly after several years of decline. We expect continued improvement in
credit quality in 1994.
CROSS-BORDER OUTSTANDINGS
Countries with which State Street has cross-border outstandings (primarily
deposits with banks and letters of credit) of at least 1% of its total assets,
all of which were to banks and other financial institutions, at December 31,
1993, 1992 and 1991, were as follows:
1993 1992 1991
--------- --------- ---------
(DOLLARS IN THOUSANDS)
Japan ............................................... $1,688,130 $1,630,148 $1,316,383
United Kingdom ...................................... 613,515 524,352 517,720
France .............................................. 519,565 444,637 371,585
Australia ........................................... 498,671 174,652
Italy ............................................... 367,931 420,535 283,605
Germany ............................................. 339,477 371,657 209,166
Canada .............................................. 289,152 220,217 180,472
Netherlands ......................................... 224,622
Hong Kong ........................................... 206,443
Switzerland ......................................... 175,052 167,360
---------- ---------- ----------
Total outstandings ............................ $4,747,506 $3,961,250 $3,046,291
---------- ---------- ----------
---------- ---------- ----------
Aggregate of cross-border outstandings in countries having between .75%
and 1% of total assets at December 31, 1993 was $171,688,000 (Belgium);
December 31, 1992 was $139,333,000 (Austria); and at December 31, 1991 was
$136,792,000 (Sweden). At December 31, 1993 there was $499,000 of cross-border
risk with Mexico.
DEPOSITS
The average balance and rates paid on interest-bearing deposits for the
years ended December 31, were as follows:
1993 1992 1991
---------------------- ----------------------- -------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE
----------- ------- ---------- ------- ------- -------
(DOLLARS IN THOUSANDS)
Domestic:
Noninterest-bearing
deposits ................ $3,589,812 $2,920,939 $2,434,756
Savings deposits .......... 2,166,996 2.41% 2,153,699 3.16% 1,818,398 5.22%
Time deposits ............. 157,481 2.88 162,464 3.86 306,789 6.00
---------- ---------- ----------
Total domestic ........ $5,914,289 $5,237,102 $4,559,943
---------- ---------- ----------
---------- ---------- ----------
Foreign:
Noninterest-bearing
deposits ................ $ 33,037 $ 31,424 $ 25,419
Time deposits ............. 4,953,696 2.95 3,954,528 4.42 2,648,345 6.55
---------- ---------- ----------
Total foreign ......... $4,986,733 $3,985,952 $2,673,764
---------- ---------- ----------
---------- ---------- ----------
Maturities of domestic certificates of deposit of $100,000 or more at
December 31, 1993, were as follows:
(DOLLARS IN THOUSANDS)
3 months or less .......................................................... $62,947
3 to 6 months ............................................................. 8,058
6 to 12 months ............................................................ 3,063
Over 12 months ............................................................ 7,902
-------
Total ............................................................... $81,970
-------
-------
At December 31, 1993, substantially all foreign time deposit liabilities
were in amounts of $100,000 or more. Included in noninterest-bearing deposits
were foreign deposits of $28,519,000, $41,492,000 and $22,188,000 at December
31, 1993, 1992 and 1991.
SHORT-TERM BORROWINGS
The following table reflects the amounts outstanding and weighted average
interest rates of the primary components of short-term borrowings as of and
for the years ended:
FEDERAL SECURITIES SOLD
FUNDS UNDER REPURCHASE
PURCHASED AGREEMENTS
--------- ----------
(DOLLARS IN THOUSANDS)
Balance as of December 31:
1993 ................................. $ 269,083 $2,972,928
1992 ................................. 623,670 2,751,416
1991 ................................. 587,985 3,821,035
Maximum outstanding at any month end:
1993 ................................. $1,081,811 $5,297,210
1992 ................................. 1,522,522 4,313,852
1991 ................................. 1,106,712 3,890,188
Average outstanding during the year:
1993 ................................. $ 741,082 $4,133,726
1992 ................................. 919,109 3,290,196
1991 ................................. 837,006 1,765,768
Weighted average interest rate at year end:
1993 ................................. 2.7% 2.7%
1992 ................................. 2.3 2.8
1991 ................................. 3.7 4.1
Weighted average interest rate during the
year:
1993 ................................. 2.8 2.9
1992 ................................. 3.4 3.4
1991 ................................. 5.5 5.1
COMPETITION
State Street is subject to competition in all of its products and
markets worldwide. In addition to competition from other deposit taking
institutions, State Street competes with investment management firms,
private trustees, insurance companies, mutual funds, broker/dealers,
investment banking firms, law firms, benefit consultants, and business service
companies. As State Street expands globally, additional types of competition
are encountered.
EMPLOYEES
At December 31, 1993, State Street had 10,117 employees, of whom 9,684
were full-time.
REGULATION AND SUPERVISION
State Street is registered with the Board of Governors of the Federal
Reserve System (the "Board") as a bank holding company pursuant to the Bank
Holding Company Act of 1956, as amended (the "Act"). The Act, with certain
exceptions, limits the activities that may be engaged in by State Street and
its non-bank subsidiaries to those which are deemed by the Board to be so
closely related to banking or managing or controlling banks as to be a proper
incident thereto. In making such determination, the Board must consider
whether the performance of any such activity by a subsidiary of State Street
can reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased
or unfair competition, conflicts of interest or unsound banking practices.
The Board is authorized to differentiate between activities commenced de novo
and those commenced by the acquisition in whole or in part of a going
concern. In the opinion of management, all of State Street's present
subsidiaries are within the statutory standard or are otherwise permissible.
The Act also requires a bank holding company to obtain prior approval of the
Board before it may acquire substantially all the assets of any bank or
ownership or control of more than 5% of the voting shares of any bank. The
Act prohibits a bank holding company from acquiring shares of a bank located
outside the state in which the operations of the holding company's banking
subsidiaries are principally conducted unless such an acquisition is
specifically authorized by statute of the other state. State Street and its
non-bank subsidiaries are affiliates of State Street Bank under the federal
banking laws, which impose certain restrictions on transfers of funds in the
form of loans, extensions of credit, investments or asset
REGULATION AND SUPERVISION (CONTINUED)
purchases by State Street Bank to State Street and its non-bank subsidiaries.
Transfers of this kind to State Street and its non-bank subsidiaries by State
Street Bank are limited to 10% of State Street Bank's capital and surplus with
respect to each affiliate and to 20% in the aggregate, and are also subject to
certain collateral requirements. A bank holding company and its subsidiaries
are prohibited from engaging in certain tie-in arrangements in connection
with any extension of credit or lease or sale of property or furnishing of
services. The Board has jurisdiction to regulate the terms of certain debt
issues of bank holding companies.
The primary banking agency responsible for regulating State Street and its
subsidiaries, including State Street Bank, for both domestic and international
operations is the Federal Reserve Bank of Boston. State Street is also
subject to the Massachusetts bank holding company statute. The Massachusetts
statute requires prior approval by the Massachusetts Board of Bank
Incorporation for the acquisition by State Street of more than 5% of the
voting shares of any additional bank and for other forms of bank
acquisitions. State Street's banking subsidiaries located in France, Japan and
Luxembourg are also subject to regulation by the regulatory authorities of
those countries. The capital of each of these banking subsidiaries is in
excess of the minimum legal capital requirements as set by those authorities.
State Street Bank is a member of the Federal Reserve System and the
Federal Deposit Insurance Corporation (the "FDIC") and is subject to
applicable federal and state banking laws and to supervision and
examination by the Federal Reserve Bank of Boston, as well as by the
Massachusetts Commissioner of Banks, the FDIC, and the regulatory authorities
of those countries in which a branch of State Street Bank is located.
In 1990, Massachusetts adopted a law which permits Massachusetts banking
institutions to acquire banking institutions located in other states based on
a reciprocal basis.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") broadened the enforcement powers of the federal banking agencies,
including increased power to impose fines and penalties, over all financial
institutions, including bank holding companies and commercial banks. The Crime
Control Act of 1990 further broadened the enforcement powers of the federal
banking agencies in a significant number of areas.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") has as its primary objectives to recapitalize the Bank Insurance
Fund ("BIF") and strengthen the regulation and supervision of financial
institutions. During 1993, the federal banking agencies continued the process
of promulgating regulations to implement the statute.
The "Prompt Corrective Action" provisions of the FDICIA are for the stated
purpose: "to resolve the problems of insured depository institutions at the
least possible long-term loss to the deposit insurance fund." Each federal
banking agency has implemented prompt corrective action regulations for the
institutions that it regulates. The statute requires or permits the agencies
to take certain supervisory actions when an insured depository institution
falls within one of five specifically enumerated capital categories. It also
restricts or prohibits certain activities and requires the submission of a
capital restoration plan when an insured institution becomes undercapitalized.
The implementing regulations establish the numerical limits for the capital
categories and establish procedures for issuing and contesting prompt
corrective action directives. To be within the category "well capitalized", an
insured depository institution must have a total risk-based capital ratio of
10.0 percent or greater, a Tier 1 risk-based capital ratio of 6.0 percent or
greater, and a leverage ratio of 5.0 percent or greater, and the institution
must not be subject to an order, written agreement, capital directive, or
prompt corrective action directive to meet specific capital requirements. An
insured institution is "adequately capitalized" if it has a total risk-based
capital ratio of 8.0 percent or greater, a Tier 1 risk-based capital ratio of
4.0 percent or greater, and a leverage ratio of 4.0 percent or greater (or a
leverage ratio of 3.0 percent or greater if the institution is rated composite
1 under the regulatory rating system). The final three capital categories are
levels of undercapitalized, which trigger mandatory statutory provisions.
While other factors in addition to capital ratios determine an institution's
capital category, State Street and State Street Bank each were within the
"well-capitalized" category at December 31, 1993.
The FDICIA requires the FDIC to recapitalize the BIF within a prescribed
time frame of 15 years and to adopt a risk-based deposit insurance assessment
system. The FDIC adopted a BIF recapitalization schedule
REGULATION AND SUPERVISION (CONTINUED)
and a final rule establishing a permanent risk-based assessment system, which
is based on definitions of capital categories consistent with the "Prompt
Corrective Actions" provisions. The rule is effective with the assessment
period starting on January 1, 1994. Depending on which of the nine capital and
supervisory categories a bank falls in, deposit insurance premiums will
continue to range from 23 cents per $100 of domestic deposits for well-
capitalized, financially sound institutions to a maximum of 31 cents for the
lowest category.
The Federal Reserve Board adopted a final rule, as required by the FDICIA,
prescribing standards that will limit the risks posed by an insured depository
institution's exposure to any other depository institution. Banks are required
to develop written policies and procedures to monitor credit exposure to other
banks, and to limit to 50% and 25% of total capital exposure to
"undercapitalized" banks in 1994 and 1995, respectively.
As required by the FDICIA, the FDIC adopted a regulation that permits only
well capitalized banks, and adequately capitalized banks that have received
waivers from the FDIC, to accept, renew or rollover brokered deposits.
Regulations have also been adopted by the FDIC to limit the activities
conducted as a principal by, and the equity investments of, state-chartered
banks to those permitted for national banks. Banks may apply to the FDIC for
approval to continue to engage in excepted investments and activities.
Other FDICIA regulations adopted require independent audits, an
independent audit committee of the bank's board of directors, stricter truth-
in-savings provisions, and standards for real estate lending. The FDICIA
amended deposit insurance coverage and the FDIC has implemented a rule
specifying the treatment of accounts to be insured up to $100,000.
Under other provisions of FDICIA, the federal banking agencies have
proposed safety and soundness standards for banks in a number of areas
including: internal controls, internal audit systems, information systems,
credit underwriting, interest rate risk, executive compensation and minimum
earnings. The agencies have also proposed rules to revise risk-based capital
standards to take account of interest rate risk, as required by FDICIA.
It is anticipated that the FDICIA and related regulations will result in
higher costs for the banking industry in terms of deposit insurance
assessments and costs of compliance and recordkeeping.
DIVIDENDS
As a bank holding company, State Street is a legal entity separate and
distinct from State Street Bank and its other non-bank subsidiaries. State
Street's principal source of cash revenues is dividends from State Street Bank
and its other non-bank subsidiaries. The right of State Street to participate
as a stockholder in any distribution of assets of a subsidiary upon its
liquidation or reorganization or otherwise is subject to the prior claims by
creditors of the subsidiary, including obligations for federal funds purchased
and securities sold under repurchase agreements, as well as deposit
liabilities. Payment of dividends by State Street Bank is subject to
provisions of the Massachusetts banking law which provide that dividends may
be paid out of net profits provided (i) capital stock and surplus remain
unimpaired, (ii) dividend and retirement fund requirements of any preferred
stock have been met, (iii) surplus equals or exceeds capital stock, and
(iv) there are deducted from net profits any losses and bad debts, as
defined, in excess of reserves specifically established therefor. Under the
Federal Reserve Act, the approval of the Board of Governors of the Federal
Reserve System would be required if dividends declared by the Bank in any year
would exceed the total of its net profits for that year combined with
retained net profits for the preceding two years, less any required transfers
to surplus. Under applicable federal and state law restrictions, at December
31, 1993 State Street Bank could have declared and paid dividends of
$366,454,000 without regulatory approval. Future dividend payments of the Bank
and non-bank subsidiaries cannot be determined at this time.
ECONOMIC CONDITIONS AND GOVERNMENT POLICIES
Economic policies of the government and its agencies influence the
operating environment of State Street. Monetary policy conducted by the
Federal Reserve Board directly affects the level of interest rates and
overall credit conditions of the economy. Policy instruments utilized by the
Federal Reserve Board include open market operations in U.S. Government
securities, changes in reserve requirements for depository institutions, and
changes in the discount rate and availability of borrowing from the Federal
Reserve.
ITEM 2. PROPERTIES
State Street's headquarters are located in the State Street Bank
Building, a 34-story building at 225 Franklin Street, Boston, Massachusetts,
which was completed in 1965. State Street leases approximately 415,000
square feet (or approximately 45% of the space in this building) for a
30-year initial term with two successive extension options of 20 years each
at rentals to be negotiated. State Street exercised the first of the two (2)
options which will be effective on January 1, 1996 for a term of 20 years.
State Street owns five buildings located in Quincy, Massachusetts, a
suburb of Boston. Four of the buildings, containing a total of approximately
1,365,000 square feet, function as the Bank's operations facilities. The
Bank occupies approximately 1,275,000 square feet and subleases the remaining
space. The fifth building, with 186,000 square feet, is leased to Boston
Financial Data Services, Inc., a 50% owned affiliate. Additionally, State
Street owns a 98,000 square foot building in Westborough, Massachusetts for
use as a second data center.
The remaining offices and facilities of State Street and its subsidiaries
are leased. As of December 31, 1993, the aggregate mortgage and lease
payments, net of sublease revenue, payable within one year amounted to
$23,632,000, plus assessments for real estate tax, cleaning and operating
escalations.
ITEM 3. LEGAL PROCEEDINGS
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 can be successfully defended or resolved
without a material adverse effect on State Street's financial position or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 4.A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with regard to each
executive officer of State Street. As used herein, the term "executive
officer" means an officer who performs policy-making functions for State
Street.
NAME AGE POSITION
- ---- --- --------
Marshall N. Carter ............................ 54 Chairman and Chief Executive Officer
David A. Spina ................................ 51 Vice Chairman
George J. Fesus ............................... 51 Executive Vice President, Chief Financial
Officer and Treasurer
A. Edward Allinson ............................ 59 Executive Vice President
Dale L. Carleton .............................. 49 Executive Vice President
Susan Comeau .................................. 52 Executive Vice President
Howard H. Fairweather ......................... 55 Executive Vice President
Charles J. Kelly .............................. 49 Executive Vice President
Ronald E. Logue ............................... 48 Executive Vice President
Nicholas A. Lopardo ........................... 47 Executive Vice President
Albert E. Petersen ............................ 48 Executive Vice President
David J. Sexton ............................... 54 Executive Vice President
Norton Q. Sloan ............................... 57 Executive Vice President
There are no family relationships between any director and executive
officer of State Street. With the exception of Messrs. Carter, Allinson,
Logue and Petersen, all of the executive officers have been officers of State
Street for five years or more. Mr. Carter became President of State Street in
July, 1991, Chief Executive Officer in January, 1992 and Chairman in January,
1993. Prior to joining State Street, he was with Chase Manhattan Bank for 15
years, including the last three as head of global securities services. Mr.
Allinson became an officer of State Street in March, 1990. Prior to joining
State Street, he was President of Mitchell Hutchins Asset Management, a
subsidiary of PaineWebber Incorporated, responsible for six financial service
subsidiaries. Mr. Petersen became an officer of State Street in August, 1991.
Prior to joining State Street, he was an Executive Vice President at First
Empire State Corporation, a bank holding company, responsible for operations
and systems. Mr. Logue became an officer of State Street in 1991. Prior to
joining State Street, he was Executive Vice President at Bank of New England
Corporation where he was head of processing services.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information concerning the market prices of and dividends on State
Street's common stock during the past two years appears on page 34 of
State Street's 1993 Annual Report to Stockholders and is incorporated by
reference. There were 5,886 stockholders of record at February 28, 1994. State
Street's common stock is traded over-the-counter on the National Marker
System, ticker symbol: STBK.
ITEM 6. SELECTED FINANCIAL DATA
The information is set forth on page 21 of State Street's 1993 Annual
Report to Stockholders and is incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The information required by this item appears in State Street's 1993
Annual Report to Stockholders on pages 2 and 3 and pages 22 through 35 and is
incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL FINANCIAL DATA
The Consolidated Financial Statements, Report of Independent Auditors and
Supplemental Financial Data appearing on pages 36 through 55 of State Street's
1993 Annual Report to Stockholders and are incorporated by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning State Street's directors appears on pages 1 through
6 of State Street's Proxy Statement for the 1994 Annual Meeting of
Stockholders under the caption "Election of Directors" which Statement is to
be filed with the Securities and Exchange Commission. Such information is
incorporated by reference.
Information concerning State Street's executive officers appears under the
caption "Executive Officers of the Registrant" in Item 4.A. of this Report.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning compensation of the executives of State Street
appears on pages 10 through 17 in State Street's Proxy Statement for the 1994
Annual Meeting of Stockholders under the caption "Executive Compensation".
Such information is incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management appears on pages 7 and 8 in State Street's Proxy Statement for the
1994 Annual Meeting of Stockholders under the caption "Beneficial Ownership of
Shares". Such information is incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions
appears on page 9 in State Street's Proxy Statement for the 1994 Annual
Meeting of Stockholders under the caption "Certain Transactions". Such
information is incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements -- The following consolidated financial statements of State
Street included in its Annual Report to Stockholders for the year ended December 31,
1993, are incorporated by reference in Item 8 hereof:
Consolidated Statement of Income--Years ended December 31, 1993, 1992 and 1991
Consolidated Statement of Condition--December 31, 1993 and 1992
Consolidated Statement of Cash Flows -- Years ended December 31, 1993, 1992 and 1991
Consolidated Statement of Changes in Stockholders' Equity -- Years ended December 31,
1993, 1992 and 1991
Notes to Financial Statements
Report of Independent Auditors
(2) Financial Statement Schedules -- Schedules to the consolidated financial statements
required by Article 9 of Regulation S-X are not required under the related
instructions, are inapplicable, or the information is contained herein and therefore
have been omitted.
(3) Exhibits
A list of the exhibits filed or incorporated by reference appears following page 16 of
this Report, which information is incorporated by reference.
(b) Reports on Form 8-K
A current report on Form 8-K dated October 8, 1993 was filed which reported on the
issuance by State Street of $100 million principal amount of 5.95% notes due September
15, 2003.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, on March 17, 1994, thereunto duly
authorized.
STATE STREET BOSTON CORPORATION
By REX S. SCHUETTE
-----------------------------------------
REX S. SCHUETTE
Senior Vice President and Comptroller
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on March 17, 1994, by the following persons
on behalf of the registrant and in the capacities indicated.
OFFICERS:
MARSHALL N. CARTER DAVID A. SPINA
- ---------------------------------------------------- ------------------------------------------------
MARSHALL N. CARTER, Chairman DAVID A. SPINA, Vice Chairman
and Chief Executive Officer
GEORGE J. FESUS REX S. SCHUETTE
- ---------------------------------------------------- ------------------------------------------------
GEORGE J. FESUS, Executive Vice President, REX S. SCHUETTE, Senior Vice President
Chief Financial Officer and Treasurer and Comptroller
DIRECTORS:
TENLEY E. ALBRIGHT JOSEPH A. BAUTE
- ---------------------------------------------------- ------------------------------------------------
TENLEY E. ALBRIGHT JOSEPH A. BAUTE
I. MACALLISTER BOOTH JAMES I. CASH
- ---------------------------------------------------- ------------------------------------------------
I. MACALLISTER BOOTH JAMES I. CASH
TRUMAN S. CASNER NADER F. DAREHSHORI
- ---------------------------------------------------- ------------------------------------------------
TRUMAN S. CASNER NADER F. DAREHSHORI
LOIS D. JULIBER CHARLES F. KAYE
- ---------------------------------------------------- ------------------------------------------------
LOIS D. JULIBER CHARLES F. KAYE
GEORGE H. KIDDER
- ---------------------------------------------------- ------------------------------------------------
GEORGE H. KIDDER JOHN M. KUCHARSKI
CHARLES R. LAMANTIA DAVID B. PERINI
- ---------------------------------------------------- ------------------------------------------------
CHARLES R. LAMANTIA DAVID B. PERINI
DENNIS J. PICARD BERNARD W. REZNICEK
- ---------------------------------------------------- ------------------------------------------------
DENNIS J. PICARD BERNARD W. REZNICEK
ROBERT E. WEISSMAN
- ----------------------------------------------------
ROBERT E. WEISSMAN
EXHIBIT INDEX
EXHIBIT 3. ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Restated Articles of Organization as amended (filed with the
Securities and Exchange Commission as Exhibit 3.1 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1988 and
incorporated by reference)
3.2 By-laws as amended (filed with the Securities and Exchange
Commission as Exhibit 3.2 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1991 and incorporated by reference)
3.3 Certificate of Designation, Preferences and Rights (filed with the
Securities and Exchange Commission as Exhibit 3.1 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated by reference)
EXHIBIT 4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
4.1 Rights Agreement dated as of September 15, 1988 between State Street
Boston Corporation and The First National Bank of Boston, Rights
Agent (filed with the Securities and Exchange Commission as Exhibit
4 to Registrant's Current Report on Form 8-K dated September 30,
1988 and incorporated by reference)
4.2 Amendment to Rights Agreement dated as of September 20, 1990 between
State Street Boston Corporation and The First National Bank of
Boston, Rights Agent (filed with the Securities and Exchange
Commission as Exhibit 4 to Registrant's Quarterly Report on Form 10-
Q for the quarter ended September 30, 1990 and incorporated by
reference)
4.3 Indenture dated as of August 2, 1993 between State Street Boston
Corporation and The First National Bank of Boston, as trustee (filed
with the Securities and Exchange Commission as Exhibit 4 to the
Registrant's Current Report on Form 8-K dated October 8, 1993 and
incorporated by reference)
EXHIBIT 10. MATERIAL CONTRACTS
Executive Compensation Plans and Agreements:
10.1 State Street Boston Corporation Long-Term Common Stock Incentive
Program, as amended (filed with the Securities and Exchange
Commission as Exhibit 10.1 to Registrant's Annual Report on Form 10-
K for the year ended December 31, 1981 and incorporated by
reference)
10.2 State Street Boston Corporation 1981 Stock Option and Performance
Share Plan, as amended (filed with the Securities and Exchange
Commission as Exhibit 10.2 to Registrant's Annual Report on Form 10-
K for the year ended December 31, 1981 and incorporated by
reference)
10.3 State Street Boston Corporation 1984 Stock Option Plan (filed with
the Securities and Exchange Commission as Exhibit 4(a) to
Registrant's Registration Statement on Form S-8 (File No. 2-93157)
and incorporated by reference)
10.4 State Street Boston Corporation 1985 Stock Option and Performance
Share Plan (filed with the Securities and Exchange Commission as
Exhibit 10.1 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1985 and incorporated by reference)
10.5 Revised Forms of Termination Agreement with Executive Officers
(filed with the Securities and Exchange Commission as Exhibit 10.1
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989 and incorporated by reference)
10.6 State Street Boston Corporation 1989 Stock Option Plan (filed with
the Securities and Exchange Commission as Exhibit 10.1 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1989 and incorporated by reference)
10.7 State Street Boston Corporation 1990 Stock Option and Performance
Share Plan (filed with the Securities and Exchange Commission as
Exhibit 10.1 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990 and incorporated by reference)
10.8 State Street Boston Corporation Supplemental Executive Retirement
Plan, together with individual benefit agreements (filed with the
Securities and Exchange Commission as Exhibit 10.1 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated by reference)
10.9 Individual Pension Agreement with Marshall N. Carter (filed with the
Securities and Exchange Commission as Exhibit 10.1 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated by reference)
10.10 Individual Pension Agreement with A. Edward Allinson (filed with the
Securities and Exchange Commission as Exhibit 10.1 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated by reference)
10.11 Supplemental Retirement Agreement with Norton Q. Sloan
10.12 Individual Pension Agreement with Albert E. Petersen
10.13 Termination Benefits Arrangement with Marshall N. Carter
10.14 State Street Global Advisor's Incentive Plan for 1993
10.15 State Street Global Advisor's Incentive Plan for 1994
10.16 Senior Executives Annual Incentive Plan
10.17 1994 Stock Option and Performance Unit Plan
EXHIBIT 11. STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
11.1 State Street Boston Corporation Computation of Earnings Per Share
EXHIBIT 12. STATEMENT RE COMPUTATION OF RATIOS
12.1 Statement of ratio of earnings to fixed charges.
EXHIBIT 13. PORTIONS OF ANNUAL REPORT TO STOCKHOLDERS
13.1 Five Year Selected Financial Data.
13.2 Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Three Years Ended December 31, 1993
(not covered by the Report of Independent Public Accountants).
13.3 Letter to Stockholders.
13.4 State Street Boston Corporation Consolidated Financial Statements
and Schedules.
EXHIBIT 21. SUBSIDIARIES
21.1 Subsidiaries of State Street Boston Corporation
EXHIBIT 23. CONSENTS OF EXPERTS AND COUNSEL
23.1 Consent of Independent Auditors