State Street Corp. Files Q2 2024 10-Q

Ticker: STT-PG · Form: 10-Q · Filed: Aug 1, 2024 · CIK: 93751

State Street Corp 10-Q Filing Summary
FieldDetail
CompanyState Street Corp (STT-PG)
Form Type10-Q
Filed DateAug 1, 2024
Risk Levellow
Pages15
Reading Time18 min
Key Dollar Amounts$1, $44.31, $4.37, $325.60 b, $239.16 b
Sentimentneutral

Sentiment: neutral

Topics: 10-Q, financials, preferred-stock, quarterly-report

Related Tickers: STT

TL;DR

**STT Q2 2024 10-Q FILED** - Financials out, check preferred stock details.

AI Summary

State Street Corp. filed its 10-Q for the period ending June 30, 2024. The filing details the company's financial performance and position, including information on its common stock and various series of preferred stock. The report covers the second quarter of 2024 and provides comparative data from the previous year.

Why It Matters

This filing provides investors and analysts with the latest financial details for State Street Corp., crucial for understanding the company's performance and making informed investment decisions.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial disclosures.

Key Numbers

  • 20240630 — Reporting Period End Date (Indicates the end of the fiscal quarter for which financial data is reported.)
  • 20240801 — Filing Date (The date the 10-Q was officially submitted to the SEC.)
  • Q2 2024 — Fiscal Quarter (Specifies the financial quarter covered by the report.)

Key Players & Entities

  • STATE STREET CORP (company) — Filer of the 10-Q
  • 0000093751 (company) — Central Index Key for State Street Corp.
  • 20240630 (date) — End of the reporting period
  • 20240801 (date) — Filing date
  • 617 786-3000 (dollar_amount) — Business phone number

FAQ

What is the primary purpose of this 10-Q filing?

The primary purpose of this 10-Q filing is to provide a comprehensive update on State Street Corp.'s financial performance and position for the fiscal quarter ending June 30, 2024.

What specific types of stock are mentioned in the filing details?

The filing details mention common stock (us-gaap:CommonStockMember) and various series of preferred stock, including Series G Preferred Stock Depository Shares (stt:SeriesGPreferredStockDepositoryShareMember), Series D Preferred Stock (us-gaap:SeriesDPreferredStockMember), and Series F Preferred Stock (us-gaap:SeriesFPreferredStockMember).

What is the SIC code for State Street Corp.?

The Standard Industrial Classification (SIC) code for State Street Corp. is 6022, which corresponds to State Commercial Banks.

When was the company formerly known as State Street Boston Financial Corp.?

State Street Boston Financial Corp. was formerly known as State Street Corp. prior to a name change on 19780525.

What is the fiscal year end for State Street Corp.?

The fiscal year end for State Street Corp. is December 31 (1231).

Filing Stats: 4,436 words · 18 min read · ~15 pages · Grade level 17 · Accepted 2024-08-01 08:12:06

Key Financial Figures

  • $1 — ange on which registered Common Stock, $1 par value per share STT New York Stoc
  • $44.31 — institutional investors worldwide, with $44.31 trillion of AUC/A and $4.37 trillion of
  • $4.37 — wide, with $44.31 trillion of AUC/A and $4.37 trillion of AUM as of June 30, 2024. A
  • $325.60 b — 24, we had consolidated total assets of $325.60 billion, consolidated total deposits of $
  • $239.16 b — billion, consolidated total deposits of $239.16 billion, consolidated total shareholders'
  • $24.76 billion — solidated total shareholders' equity of $24.76 billion and approximately 53,000 employees. Ou
  • $2 — rformance Earnings per share (EPS) o f $2.15, in the second quarter of 2024, decr
  • $407 million — . We returned a total of approximately $407 million to our shareholders in the form of comm

Filing Documents

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

Management's Discussion and Analysis of Financial Condition and Results of Operations 4

Management's Discussion and Analysis of Financial Condition and Results of Operations 4 General 4 Overview of Financial Results 8 Consolidated Results of Operations 10 Total Revenue 10 Net Interest Income 20 Provision for Credit Losses 23 Expenses 24 Repositioning Charges 24 Income Tax Expense 25 Line of Business Information 25 Investment Servicing 25 Investment Management 26 Financial Condition 27 Investment Securities 27 Loans 29 Risk Management 30 Credit Risk Management 31 Liquidity Risk Management 31 Operational Risk Management 35 Information Technology Risk Management 35 Market Risk Management 36 Model Risk Management 39 Strategic Risk Management 39 Capital 40 Off-Balance Sheet Arrangements 48 Other Matters 49 Recent Accounting Developments 49

Quantitative and Qualitative Disclosures About Market Risk 50

Quantitative and Qualitative Disclosures About Market Risk 50

Controls and Procedures 50

Controls and Procedures 50 Consolidated Financial Statements 51 Consolidated Statement of Income (unaudited) 51 Consolidated Statement of Comprehensive Income (unaudited) 52 Consolidated Statement of Condition 53 Consolidated Statement of Changes in Shareholders' Equity (unaudited) 54 Consolidated Statement of Cash Flows (unaudited) 55 Note 1. Summary of Significant Accounting Policies 56 Note 2. Fair Value 57 Note 3. Investment Securities 59 Note 4. Loans and Allowance for Credit Losses 63 Note 5. Goodwill and Other Intangible Assets 68 Note 6. Other Assets 69 Note 7. Derivative Financial Instruments 70 Note 8. Offsetting Arrangements 73 Note 9. Commitments and Guarantees 76 Note 10. Contingencies 76 Note 11. Variable Interest Entities 78 Note 12. Shareholders' Equity 79 Note 13. Regulatory Capital 82 Note 14. Net Interest Income 83 Note 15. Expenses 83 Note 16. Earnings Per Common Share 84 Note 17. Line of Business Information 85 Note 18. Revenue from Contracts with Customers 86 Note 19. Non-U.S. Activities 87 Note 20. Subsequent Events 88 Review Report of Independent Registered Public Accounting Firm 89

OTHER INFORMATION

PART II OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds 92

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 92

Other Information 92

Item 5 Other Information 92

Exhibits 93

Item 6 Exhibits 93 Signatures 94 We use acronyms and other defined terms for certain business terms and abbreviations, as defined in the acronyms list and glossary following the consolidated financial statements in this Form 10-Q.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION GENERAL As of June 30, 2024, we had consolidated total assets of $325.60 billion, consolidated total deposits of $239.16 billion, consolidated total shareholders' equity of $24.76 billion and approximately 53,000 employees. Our operations are organized into two lines of business, Investment Servicing and Investment Management, which are defined based on products and services provided. Additional information about our lines of business is provided in Line of Business Information in this Management's Discussion and Analysis and Note 17 to the consolidated financial statements in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (Form 10-Q). Our executive offices are located at One Congress Street, Boston, Massachusetts 02114 (telephone (617) 786-3000). For purposes of this Form 10-Q, unless the context requires otherwise, references to "State Street," "we," "us," "our" or similar terms mean State Street

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS taxable-equivalent NII that reports non-taxable revenue, such as interest income associated with tax-exempt investment securities, on a fully taxable-equivalent basis, which we believe facilitates an investor's understanding and analysis of our underlying financial performance and trends. We provide additional disclosures required by applicable bank regulatory standards, including supplemental qualitative and quantitative information with respect to regulatory capital (including market risk associated with our trading activities), the LCR and NSFR, summary results of annual State Street-run stress tests which we conduct under the Dodd-Frank Act, and recovery and resolution plan disclosures. These additional disclosures are accessible on the "Filings & reports" tab of our website at investors.statestreet.com . We have included our website address in this report as an inactive textual reference only. Information on our website is not incorporated by reference into this Form 10-Q. We use acronyms and other defined terms for certain business terms and abbreviations, as defined in the acronyms list and glossary following the consolidated financial statements in this Form 10-Q.

Forward-Looking Statements

Forward-Looking Statements This Form 10-Q, as well as other reports and proxy materials submitted by us under the Securities Exchange Act of 1934, registration statements filed by us under the Securities Act of 1933, our annual report to shareholders and other public statements we may make, may contain statements (including statements in our Management's Discussion and Analysis included in such reports, as applicable) that are considered "forward-looking statements" within the meaning of U.S. securities laws, including statements about our goals and expectations regarding our business, financial and capital condition, results of operations, strategies, cost savings and transformation initiatives, investment portfolio performance, climate, dividend and stock purchase programs, acquisitions, outcomes of legal proceedings, market growth, joint ventures and divestitures, client growth, new technologies, services and opportunities, sustainability and impact, human capital, as well as industry, governmental, regulatory, economic and market trends, initiatives and developments, the business environment and other matters that do not relate strictly to historical facts. Terminology such as "expect," "outlook," "will," "goal," "target," "strategy," "may," "estimate," "plan," "intend," "objective," "forecast," "believe," "priority," "anticipate," "seek," and "trend," or similar statements or variations of such terms, are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are subject to various risks and uncertainties, which change over time, are based on management's expectations and assumptions at the time the statements are made and are not guarantees of future results. Management's expectations and assumptions, and the continued validity of the forward-looking statements, are subject to change due to a broad range of factors affecting the U.S. and global economies, regulatory enviro

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS and liquidity or other disruptions in the markets for equity, fixed income and other assets classes globally or within specific markets; We have significant global operations and clients that can be adversely impacted by disruptions in key global economies, including local, regional and geopolitical developments affecting those economies; Our investment securities portfolio, consolidated financial condition and consolidated results of operations could be adversely affected by changes in the financial markets, governmental action or monetary policy. For example, among other risks, increases in prevailing interest rates or market conditions have led, and were they to occur in the future could further lead, to reduced levels of client deposits and resulting decreases in our NII or to portfolio management decisions resulting in reductions in our capital or liquidity ratios; Our business activities expose us to interest rate risk; We assume significant credit risk of counterparties, who may also have substantial financial dependencies on other financial institutions, and these credit exposures and concentrations could expose us to financial loss; Our fee revenue represents a significant portion of our revenue and is subject to decline based on, among other factors, market and currency declines, investment activities and preferences of our clients and their business mix; If we are unable to effectively manage our capital and liquidity, our financial condition, capital ratios, results of operations and business prospects could be adversely affected; Our calculations of risk exposures, total RWA and capital ratios depend on data inputs, formulae, models, correlations and assumptions that are subject to change, which could materially impact our risk exposures, our total RWA and our capital ratios from period to period; We may need to raise additional capital or debt in the future

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our risk management framework, models and processes may not be effective in identifying or mitigating risk and reducing the potential for related losses, and a failure or circumvention of our controls and procedures, or errors or delays in our operational and transaction processing, or those of third parties, could have an adverse effect on our business, financial condition, operating results and reputation; Shifting and maintaining operational activities to non-U.S. jurisdictions, changing our operating model, including by consolidating our operations joint ventures in India, and outsourcing to, or insourcing from, third parties expose us to increased operational risk, geopolitical risk and reputational harm and may not result in expected cost savings or operational improvements; Attacks or unauthorized access to our or our business partners' or clients' information technology systems or facilities, such as cyber-attacks or other disruptions to our or their operations, could result in significant costs, reputational damage and impacts on our business activities; Long-term contracts and customizing service delivery for clients expose us to increased operational risk, pricing and performance risk; We may not be able to protect our intellectual property or may infringe upon the rights of third parties; The quantitative models we use to manage our business may contain errors that could adversely impact our business, financial condition, operating results and regulatory compliance; Our reputation and business prospects may be damaged if investors in the collective investment pools we sponsor or manage incur substantial losses in these investment pools or are restricted in redeeming their interests in these investment pools; The impacts of climate change, and regulatory responses, and disclosure requirements related to such risks, could adversely affect us; and We may incur l

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW OF FINANCIAL RESULTS TABLE 1: OVERVIEW OF FINANCIAL RESULTS Three Months Ended June 30, % Change (Dollars in millions, except per share amounts) 2024 2023 Total fee revenue $ 2,456 $ 2,419 2 % Net interest income 735 691 6 Total revenue 3,191 3,110 3 Provision for credit losses 10 (18) nm Total expenses 2,269 2,212 3 Income before income tax expense 912 916 — Income tax expense 201 153 31 Net income $ 711 $ 763 (7) Adjustments to net income: Dividends on preferred stock (1) $ (55) $ (37) 49 Earnings allocated to participating securities (2) (1) — — Net income available to common shareholders $ 655 $ 726 (10) Earnings per common share: Basic $ 2.18 $ 2.20 (1) Diluted 2.15 2.17 (1) Average common shares outstanding (in thousands): Basic 300,564 329,383 (9) Diluted 304,765 333,540 (9) Cash dividends declared per common share $ 0.69 $ 0.63 10 Return on average common equity 11.9 % 13.0 % (110) bps Pre-tax margin 28.6 29.5 (90) Six Months Ended June 30, % Change (Dollars in millions, except per share amounts) 2024 2023 Total fee revenue $ 4,878 $ 4,754 3 % Net interest income 1,451 1,457 — Total revenue 6,329 6,211 2 Provision for credit losses 37 26 42 Total expenses 4,782 4,581 4 Income before income tax expense 1,510 1,604 (6) Income tax expense 336 292 15 Net income $ 1,174 $ 1,312 (11) Adjustments to net income: Dividends on preferred stock (1) $ (100) $ (60) 67 Earnings allocated to participating securities (2) (1) (1) — Net income available to common shareholders $ 1,073 $ 1,251 (14) Earnings per common share: Basic $ 3.56 $ 3.73 (5) Diluted 3.52 3.68 (4) Average common shares outstanding (in thousands): Basic 301,278 335,212 (10) Diluted 305,354 339,473 (10) Cash dividends declared per common share $ 1.38 $ 1.26 10 Return on average common equity 9.8 % 11.1 % (130) bps Pre-tax margin 23.9 25.8 (190) (1) Add

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS in each case relative to the same period of the prior year. We returned a total of approximately $407 million to our shareholders in the form of common share repurchases and common stock dividends. Completed the consolidation of our final operations joint venture in India, further advancing the plan to transform our operating model to unlock efficiency savings and improve client experience. The joint venture consolidation, together with a prior joint venture consolidation in October 2023, increased our headcount by approximately 26% as of June 30, 2024, compared to June 30, 2023. Associated headcount cost was previously reflected in compensation and employee benefits expenses. Revenue Total fee reven ue increased 2% in the second quarter of 2024, compared to the same period of 2023, reflecting higher management fees and FX trading services revenue, partially offset by lower servicing fees, securities finance revenue, software and processing fees and other fee revenue. Servicing fee revenue decreased 2% in the second quarter of 2024, compared to the same period of

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