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State Street Chairman & CEO Ronald E. Logue, President and Chief Operating Officer Joseph L. Hooley and Chief Financial Officer Edward J. Resch to Speak at 2009 Banking and Financial Services Conference
Business Wire  10 hrs ago  Comment 
State Street Corporation (NYSE: STT) announced today that its Chairman and Chief Executive Officer Ronald E. Logue, its President and Chief Operating Officer Joseph L. Hooley and its Chief Financial Officer Edward J. Resch will speak at the 2009
State Street Appointed to Service $2.2 Billion in Assets for Saskatchewan Teachers’ Federation
Business Wire  Nov 2  Comment 
State Street Corporation (NYSE: STT), one of the world's leading providers of financial services to institutional investors, announced today that it has been appointed by the Saskatchewan Teachers’ Federation to provide a range of investment
State Street Announces Private Equity Index Results
Business Wire  Oct 29  Comment 
State Street Corporation (NYSE:STT), one of the world’s leading providers of financial services to institutional investors, today announced the results of the State Street Private Equity Indexsm as of June 30, 2009. The index is based on the latest
State Street (STT) Displaying Bearish Technicals But Receives Very Positive 5 STARs S&P Rating
Market Intelligence Center  Oct 29  Comment 
State Street (NYSE: STT) closed yesterday at $42.58. So far the stock has hit a 52-week low of $14.43 and 52-week high of $55.87. State Street stock has been showing support around 41.65 and resistance in the 44.15 range. Technical indicators for...
State Street Appointed by Intermountain Equity Group to Provide Private Equity Administration Services for New Real Estate Fund
Business Wire  Oct 28  Comment 
State Street Corporation (NYSE: STT), one of the world’s leading providers of financial services to institutional investors, announced today that it has been appointed to provide fund administration services for Intermountain Equity Group’s (IEG)
State Street Expands Servicing Solutions for Wealth Management Customers
Business Wire  Oct 27  Comment 
State Street Corporation (NYSE: STT), one of the world’s leading providers of financial services to institutional investors, announced today enhancements to its wealth management service offerings that build on its comprehensive suite of services.
State Street’s New Boss Must Navigate Crisis Fallout
Bloomberg  Oct 23  Comment 
(Update1) Joseph “Jay” Hooley, the 23-year State Street Corp. veteran named yesterday to succeed Chief Executive Officer Ronald Logue in March, will have to clean up $3 billion in unrealized losses while steering the largest money manager for...
Hooley Must Navigate State Street Lawsuits, Balance Sheet Risk
Bloomberg  Oct 23  Comment 
State Street head Logue to retire
Bankstocks.com  Oct 23  Comment 
State Street Corp. Chairman and CEO Ronald Logue will retire from the Boston investment management firm in March, and operating
State Street Names New CEO
TheStreet.com  Oct 22  Comment 
State Street CEO Ronald Logue will retire, to be succeeded by the firm's current President, Jay Hooley.
State Street’s Jay Hooley to Succeed CEO Ronald Logue
Bloomberg  Oct 22  Comment 
State Street Says Logue to Retire, Names Hooley Chief Executive
Bloomberg  Oct 22  Comment 
State St. CEO Logue to retire, Hooley to take post
MarketWatch  Oct 22  Comment 
State Street Announces Leadership Succession Plan
Business Wire  Oct 22  Comment 
State Street Corporation (NYSE:STT), one of the world’s leading providers of financial services to institutional investors, today announced its leadership succession plan. Chairman and CEO, Ronald E. Logue, age 64, will retire from State Street on
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STT AT A GLANCE
 
 
 
 
 
 
 
 

State Street (NYSE: STT) is a financial holding company, providing a full range of products and services for large pools of investment assets. With $14 trillion in assets under custody and $1.7 trillion under management, their primary clients are institutional investors. [1]


State Street manages 80% of the world's largest money managers and asset owners with foreign exchange services and transition management services, and quantitative research and technology-driven tools. [2] The company also manages $2 trillion in assets worldwide, which is known as the world's largest pool of institutional assets.


State Street's revenue relies on management and performance fees. It announced in June 2008 on their alignment of its global alternative investment servicing capabilities. Their newly formed State Street Alternative Investment Solutions (AIS), which operates under the Investment Servicing business, combines State Street Corporation’s hedge fund, private equity, and alternative risk offerings to provide a complete set of fund accounting, fund administration and risk services to hedge funds and private equity funds. [3]


State Street faced legal troubles in early 2008 when investors sued over losses in fixed-income strategies managed by State Street Global Advisors. The plaintiffs claim that State Street did not properly communicate the investment objectives of the fund. The company set aside $618 million for legal expenses. The incident prompted State Street Global Advisors Chief, William Hunt, to step down, which is replaced by James Phalen. [4]


Company Overview

State Street Corporation provides a full range of products and services for institutional investors worldwide, through its subsidiaries, including its principal banking subsidiary, State Street Bank and Trust Company. [5] According to Jan. 1, 2009's Corporate Governance Quotient (CGQ®), State Street Corp. is better than 34.1% of S&P 500 companies and 83.9% of Diversified Financials companies. [6] The company was founded in 1832 [7], and has a total of 28,950 full-time employees.[8] Its company headquarter is located in Boston, MA, with office operating in 26 other countries and network spanning more than 100 geographic markets. [9]


Business & Financial Metrics

From 2006 to 2007, net income has increased from $1.106 billion to $1.261 billion and revenue has increased from $9.525 billion to $11.818 billion. [10] In percentage term, its total revenue for 2007 has increased 32% from 2006, and return on equity from continuing operations for 2007 was 13.4%, compared to 16.2% for 2006. [11]

From 2005 to 2006, net income increased from $838 billion to $1.106 billion and revenue increased from $7.497 billion to $9.525 billion. [12]



Business Segments

The company's broad and integrated range of services spans the entire investment spectrum, such as research, investment management, trading services and investment servicing. It has nearly $2 trillion under management, foreign exchange and securities lending, etc. Its subsidiaries include State Street Corporation, State Street Bank and Trust Company. State Street operates in 3 lines of business, which are Investment Management, Investment Servicing, Investment Research and Trading. [13]

State Street's Investment Management division, named State Street Global Advisors (SSgA), serves as an investment advisor to investment companies globally. They offer investment strategies for clients of every size and investment objective. It provides integrated solutions and trading services to their clients who want to outsource aspects of their investment programs. [14] Their services include active and passive United States and non-US equity and fixed income investment management strategies as well as securities finance, etc.

Contents

Their Investment Servicing division offers custodial and other investment services to insurance companies, foundations, endowments, corporate and public retirement plans, hedge funds, US mutual funds, global collective investment funds, and institutional investors. They provide shareholder services, including mutual fund and collective investment fund shareholder accounting, through its half-owned affiliates, Boston Financial Data Services, Inc. and the International Financial Data Services group. Their products comprise of custody, accounting, daily pricing and administration; master trust and master custody; recordkeeping; foreign exchange, brokerage and other trading services; securities finance; deposit and short-term investment facilities; loans and lease financing; investment manager and hedge fund manager operations outsourcing; and performance, risk and compliance analytics to support institutional investors. [15]

State Street’s Investment Research and Trading division, known as State Street Global Markets, specialize its research and trading in foreign exchange, money market products, equities, derivatives and fixed income. [16]

Trends and Forces

Exposure to Growth of Asset Management Industry

State Street has benefited from the growth in hedge funds, mutual funds, and other entities needing investment servicing. The hedge fund boom has resulted in a jump from US$40 billion in hedge fund assets under management in the late 80s to over US$650 billion AUM in 2003. Below is a breakdown of State Street's assets since 2003.


Exposure to International Growth

State Street has benefited from the high growth of international markets. Over 25% of serviced and managed assets at State Street are from overseas. The company operates a global business that can withstand a slow US economy and thrive on international growth. The company has the largest global exposure among its competitors at 41% of total revenues. 32% at Bank of New York; 34% at Northern Trust.


Adverse Market Conditions May Impact Fees but Improve Forex Revenue

State Street relies on management and performance fees for revenue. Adverse market conditions in 2007-08 leads to client assets reduction and thus State Street's revenue. On the asset management side, fund performance is negatively impacted due to weak equities. However, State Street has profited from these conditions in the form of higher foreign exchange revenues and better lending spreads.


Exposure to Subprime through MBS & ABCP

As a result of the subprime crisis, there is concern about the State Street's exposure to Mortgage Backed Securities ("MBS") as well as Asset Backed Commercial Papers ("ABCP"). The company has $6 billion in an MBS portfolio and over $29 billion in an ABCP conduit.

It is notable that State Street's conduits have much better ratings than those of its peers.


Competition

Against most of its competitors, State Street has the advantage of size. Its competition consists of the following:

  • Bank of New York Mellon Corporation (NYSE: BK) is a global financial services company. Its subsidiaries engage in trust and custody activities, investment management services, banking services and various securities-related activities. The Company operates through seven segments: Asset Management; Wealth Management; Asset Servicing; Issuer Services; Clearing and Execution Services; Treasury Services and Other. [17]
  • Citigroup (NYSE: C) is a bank holding and diversified global financial services holding company whose businesses provide a range of financial services to consumer and corporate customers. Citigroup was organized into four major segments: Consumer Banking, Global Cards, Institutional Clients Group and Global Wealth Management. [18]
  • Northern Trust Corporation (NYSE:NTRS) operates as the holding company for The Northern Trust Company that provides a range of banking and financial services to large and mid-sized corporations and financial institutions in the United States and internationally. It generates various deposit products, including demand and other noninterest bearing, savings, money market, savings certificates, and time deposit accounts. [19]


DIRECT COMPETITOR COMPARISON ' ' ' ' '
STTBKCNTRSIndustry
Market Cap:8.35B[20] 49.38B[21] 18.58B[22] 12.35B[23] 56.12M[24]
Employees:28,956[25] N/A[26] N/A[27] 12,100[28] 155[29]
Quarterly Rev Growth (yoy):7.80%[30] -25.20%[31] N/A[32] 3.90%[33] 9.30%[34]
Revenue (ttm):10.69B[35] 13.52B[36] 19.15B[37] 3.87B[38] 25.68M[39]
Gross Margin (ttm):N/A[40] N/A[41] N/A[42] N/A[43] 0%[44]
EBITDA (ttm):N/A[45] N/A[46] N/A[47] N/A[48] N/A[49]
Oper Margins (ttm):27.92%[50] 22.82%[51] -215.97%[52] 22.16%[53] 24.92%[54]
Net Income (ttm):1.62B[55] 1.41B[56] -24.86B[57] 577.50M[58] N/A[59]
EPS (ttm):3.893[60] 1.203[61] -3.883[62] 2.559[63] 0.77[64]
P/E (ttm):4.92[65] 19.18[66] N/A[67] 21.63[68] 12.8[69]
PEG (5 yr expected):0.42[70] 0.75[71] N/A[72] 1.17[73] 1.77[74]
P/S (ttm):0.89[75] 1.75[76] 0.89[77] 3.14[78] 2.61[79]

BK = The Bank of New York Mellon Corporation C = Citigroup Inc. NTRS = Northern Trust Corp. Industry = Regional - Northeast Banks [80]



References

  1. ↑ STT. Company Information.
  2. ↑ STT. [www.gbspraca.pl/docs/State%2520Street%2520Presentation.ppt State Street Presentation, Our Leading Market Position - Globally].
  3. ↑ Reuters. State Street Corp Profile.
  4. ↑ Reuters. State Street Corp Profile.
  5. ↑ SEC Filing. Annual Report, 10-K, Pg 1, Business.
  6. ↑ Yahoo! Finance. State Street Corp. Profile, Corporate Governance.
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  10. ↑ Yahoo! Finance. State Street Corporation Income Statement Annual Data.
  11. ↑ SEC Filing. Annual Report, 10-K, Pg 27, Financial Highlights.
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  17. ↑ Google Finance. Bank of New York Mellon Corporation Profile, Summary.
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