State Street Corporation · NYSE:STT
State Street — Merrill Lynch Banking and Financial Services Investor Conference 2008
24 slides from State Street's conference presentation, Nov 10, 2008
Slide 1: Merrill Lynch Banking and Financial Services Investor Conference
28) STATE STREET. Ronald E. Logue Chairman and Chief Executive Officer Merrill Lynch Banking and Financial Services Investor Conference 11 November 2008
Slide 2: Reminder
2 Reminder This presentation contains forward-looking statements as defined by United States securities laws, including statements about State Street's goals and expectations regarding its business, financial condition, results of operations and strategies, the financial and market outlook, governme
Slide 3: Agenda
3 Agenda Navigating the New Financial Landscape Core Business is Strong Managing through the Turmoil Building on the Core Business
Slide 4: Navigating the New Financial Landscape
4
Slide 5: Core Business is Strong
5 Navigating the New Financial Landscape Core Business is Strong* $2,417 $1.30 Consensus ** 650 BPS $2,700 $1.40 Actual Q2 08 $2,605 $1.36 Consensus ** 290 BPS $2,536 $1.24 Actual Q3 08 $2,514 $2,600 Operating Revenue Q1 08 810 BPS Operating Leverage $1.19 $1.39 Operating Earnings per Share Consensu
Slide 6: Core Business is Strong — 2008 Performance Year-to-Date
6 Core Business is Strong* — 2008 Performance Year-to-Date Navigating the New Financial Landscape *Results presented on an operating basis, including fully taxable-equivalent revenue; see reconciling tables in Appendix +24.7% +21.4% +25.4% % Change ex IFIN 17.3% 17.8% Operating ROE $ in millions, ex
Slide 7: Expectations for 2008
7 Navigating the New Financial Landscape Approaching the high end of the range Approaching the high end of the range Exceeding the high end of the range Expectations for 2008 14%–17% Operating ROE 10%–15% Growth in Operating EPS 14%–17% Growth in Operating Revenue Range (Includes Investors Financial
Slide 8: Core Business is Strong — New Business Wins
8 Navigating the New Financial Landscape Continued momentum in core business Core Business is Strong — New Business Wins Business 2009 Q4 08 $2 billion $23 billion $102 billion $127 billion Asset Management $852 billion Installed thru Q3 $130 billion To be installed $298 billion $1,280 billion Asset
Slide 9: Servicing Fee Revenue vs. Daily Average Values
9 -15.9 -18.6 3.1 -20 -15 -10 -5 0 5 Navigating the New Financial Landscape -8.7 -14.3 -1.1 -15 -10 -5 0 5 Servicing fees are based on more factors than AUC valuations Core Business is Strong — Servicing Fee Revenue vs. Daily Average Values % S&P 500 average daily valuations EAFE average daily valua
Slide 10: Management Fee Revenue vs. Average of Three Months' End
10 Navigating the New Financial Landscape Core Business is Strong — Management Fee Revenue vs. Average of Three Months’ End Q3 2008 vs. Q2 2008 -8.6 -15.6 -6.8 -20 -15 -10 -5 0 5 % % -16.6 -21.4 -12.7 -25 -20 -15 -10 -5 0 5 S&P 500 average of 3 months’ end EAFE average 3 months’ end State Street man
Slide 11: Managing Through the Turmoil
MANAGING THROUGH THE TURMOIL
Slide 12: ABCP Conduits
12 Market conditions improving, aided by the Federal Reserve and U.S. Treasury programs Navigating the New Financial Landscape Program created to address customer requests; Assets sourced from the market Committed to reducing size of program – $29.2 billion of assets at 9/30/07 – $25.5 billion of as
Slide 13: Pro forma impact on capital ratios
13 Navigating the New Financial Landscape 1 The estimated pro forma impact to State Street Corporation’s capital ratios assumes: - All four State Street-sponsored conduits, with combined assets of approximately $25.5 billion at September 30, 2008 are consolidated onto the balance sheet of State Stre
Slide 14: Investment Portfolio
14 Navigating the New Financial Landscape Conservatively structured and well seasoned At 9/30/08, 84% of portfolio assets were rated AAA and 97% were rated A or better Portfolio performing within expectations at 9/30/08 Portfolio constructed to perform well even with stresses in market environment ²
Slide 15: Stable Value Wrap Accounts
15 Navigating the New Financial Landscape Stable Value Wrap Accounts $10BN (as of 9/30/08) in SSgA-managed stable value accounts that have contractual arrangements with wrap providers A Stable Value investment option is an important choice to tens of thousands of retirement plan participants Continu
Slide 16: Securities Lending Program
16 Navigating the New Financial Landscape State Street acts as agent, not principal, in managing program Collateral pools performing as expected and are conservatively invested – 23 day duration book as of 9/30/08 – Customer participation/redemption in collateral pools managed with available liquidi
Slide 17: Government Actions
17 Navigating the New Financial Landscape State Street is an integral part of the financial services infrastructure Managing through the Turmoil — Government Actions TARP CPFF AMLF MBS Fed / Treasury Programs One of nine financial institutions selected to lead participation in Capital Purchase Progr
Slide 18: Building on the Core Business
BUILDING ON THE CORE BUSINESS ae
Slide 19: Rating Agency View of Capital
19 Navigating the New Financial Landscape Building on the Core Business — Rating Agency View of Capital “…State Street’s current capital levels provide a substantial cushion against the primary direct risks to its capital adequacy… if conduit assets were consolidated and the security portfolio unrea
Slide 20: Regulatory Ratios
20 Navigating the New Financial Landscape Raised $2.8 billion in equity capital in June 2008 TARP added $2 billion in preferred shares in October 2008 Generated approximately $1.8 billion of organic capital in 9 months of 2008 TOTAL: Added $6.6 billion in additional capital in the first 9 months of
Slide 21: Opportunities
21 Navigating the New Financial Landscape Building on the Core Business — Opportunities $225 billion * of AUM at SSgA and $270 billion in AUC from Sovereign Wealth Funds Leverage strong existing relationships to further penetrate this growing segment Integrated firm-wide approach presents new cross-
Slide 22: Expense Management
22 Navigating the New Financial Landscape Building on the Core Business — Expense Management Since 2004, inculcating expense management into corporate DNA Key Levers State Street remains committed to achieving positive operating leverage on an annual basis Given the uncertainty in the current econom
Slide 23: Summary
23 Navigating the New Financial Landscape Summary Core business remains strong, building momentum Flight to quality continues During turmoil, significantly strengthened capital levels and ratios Environment continues to be challenging Focus on expenses Concentrate on key revenue streams, such as add
Slide 24: State Street
STATE STREET.
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