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State Street Corporation

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Submitted By manky
Words 1179
Pages 5
STATE STREET CORPORATION
(STT)
MBA AF 603 Paper
Ankita Mantry

Introduction:
State Street Corporation is a US-based financial services firm. It is the second oldest financial institution in the United States and the largest financial institute globally. It started as a teller bank and now it is the largest trustee for mutual funds and pension funds with $25 trillion under custody and $2 trillion under management while also being the sixth largest investment manager. It has over 30,000 employees working under it worldwide.
It is a publically traded company at NYSE and is a part of S&P 500. State Street operates in 26 countries and in more than 100 geographic markets worldwide.

Company Background:
State Street Corporation started as Union bank in 1792 and received the bank’s charter on June 25th, 1792 in Massachusetts. It’s headquartered at Boston, Massachusetts. At that time State Street was the main thoroughfare in colonial Boston and a significant crossroads in the United States. Bracketed by the State House at one end and the Long Wharf at the other, State Street was a center of both commerce and politics. State Street was also known as the "Great Street to the Sea," and the economic growth of the new bank was closely tied to Boston's flourishing shipping industry. During that period, clippers crisscrossed Boston Harbor, welcoming incoming ships, loaded with cargo, to shore. Boston was a maritime capital by the mid-19th century. Some of the wealth from that trade would make its way into the coffers of the bank. In 1964 it opened its office in New York.
Table below depicts a brief history of the company development over the years: Key Dates: | 1792 | Union Bank becomes the third bank chartered in Boston | 1865 | It receives National Charter Renamed to National Union Bank of Boston | 1891 | State street Deposit and Trust Company was chartered in Boston | 1924 | Renamed as State Street Trust CompanyCustodian of the Nation’s first mutual fund. | 1925-1961 | Merges with 3 National Banks | 1972 | Becomes International; opens office in Munich | 1975 | Changes focus from commercial banking to investments, trusts, and securities processing | 1997 | Company adopts the name State Street Corporation |
Table 1: Key Dates

Few Recent Acquisitions:
On January 10, 2011, it acquired Bank of Ireland’s asset management business (BIAM). On October 3, 2011, the Company acquired Complementa Investment-Controlling AG.
On November 3, 2011, the Company acquired Pulse Trading, Inc.

State Street Corporation Rankings * #268 in FORTUNE 500 (May 2013) * S&P 500 (September 30, 2013) * #349 in FT Global 500 (July 2013) * #268 in FORTUNE 1000 (May 2013) * #122 largest company in the US by market capitalization (May 2013)

Subsidies under State Street Corporation: * State Street Bank and Trust Company * State Street Global Advisors * State Street Global Markets * Street Alternative Investment Solutions * State Street Global Services
State Street Global Advisors is the asset management business of State Street Corporation whereas State Street Global market is the investment research and trading arm of State Street Corporation. State Street Global services helps clients manage operational risks, optimize cost structure and act on growth opportunities.

Key services offered at State Street Corporation: * Investment Management and Servicing * Trading * Research services * Trust and custody for Mutual funds and other investments * Fund accounting * Foreign exchange * Shareholder services * Pension plans * Insurance * Endowments

Office locations in Massachusetts: * Boston * Hadley * Quincy * North Quincy
These offices employ over 700+ employees and are on an ongoing hunt for new talents.

Major Competitors: * The Bank of New York Mellon Corporation * JPMorgan Chase & Co. * Northern Trust Corporation * Citigroup
Long-term bond and stock rating for STT and its competitors is mentioned in the table. Type : | BNY Mellon | Northern Trust Corporation | State Street Corporation | Holding bank senior | Aa3 | A1 | A1 | Bank deposits | Aa1 | Aa3 | Aa2 | Baseline Credit Assessment | B/aa3 | B/aa3 | B/aa3 |
Table 2: Rating

STT and Its Numbers:
Income statement:
Revenue, NI and Profits for STT is shown in the graph below. As you can see revenue as almost stayed constant over the last one year but Net income is fluctuating indicating that the expenses for the period from December to June has been more, thus reducing its net income. To deal with this, State Street Corporation has recently announced a 2% cut in employment with about 260 people in Massachusetts alone.

Graph 1: Income statement for STT

Stock Price:
Graph below shows stock prices for State Street Corporation for the last one year. It was increasing from December 2012 till June 2013 after which it was almost constant at $67 till October 2013 and it has started increasing again since.
Volume of trade for the stock has fallen drastically from about 4 million to about 2 million with a few good days.
State Street Corporation is a part of S&P 500’s 50 companies and has outperformed it over the last one year.

Graph 2: STT stock prices

Graph 3: STT vs S&P 500
Size, Per Share Data and Ratios:
The table below shows the information for STT for the fiscal year 2012. Size | Per share Data ($) | Ratios | Market capitalization | 32 B | Earnings/share | 4.39 | Gross margin | n.a | Enterprise value | 41 B | Revenue/share | 21.36 | Return on equity | 10.07% | Revenue | 2.8 B | Cash flow/share | n.a | Price/sales | 3.2x | Net Income | 2 B | Dividends/share | 1.02 | Price/earnings | 16.6x | No. Of employees | 30 K | Book value/share (MRQ) | 46.30 | Price/book (MRQ) | 1.6x |
Table 3: Size, Per share data and Ratios

Giving back to the World:
State Street Corporation was named the top charitable contributor in Massachusetts. It has been that way for the last 5 years in a row. Globally it has donated about $21 million along with 87,000+ volunteer hours to non-profit organizations.

Conclusion: Impact on Massachusetts Economy
Financial industry is one of the key contributors to Massachusetts’s economy with State Street Corporation being one of its major players. State Street is headquartered at Boston, MA with four offices in Massachusetts creating countless job opportunities here. Higher education industry has also been encouraged in the state of Massachusetts due to the high knowledge base required to enter State Street Corporation. It has also influenced the real estate industry, food industry and transportation industry indirectly.

References:
Wikipedia: State Street Corporation http://en.wikipedia.org/wiki/State_Street_Corporation

Graphs from: http://www.rttnews.com/corpinfo/quotedetails.aspx?Symbol=stt&ChartDay=1Y&ChartType=3

Vault career intelligence http://www.vault.com/company-profiles/financial-services-(misc)/state-street-corporation.aspx New York Times: Analysis tools http://markets.on.nytimes.com/research/stocks/fundamentals/fundamentals.asp?symbol=STT Moody Investor Services: Ratings https://www.moodys.com/research/Moodys-places-BNY-Mellon-Northern-Trust-and-State-Street-on--PR_276281 Yahoo Finance http://finance.yahoo.com/news/state-street-named-top-charitable-130000102.html Google Finance https://www.google.com/finance?cid=540704 State Street Corporation www.statestreet.com Forbes: 07/30/2013
http://www.forbes.com/sites/dividendchannel/2013/07/30/state-street-now-122-largest-company-surpassing-viacom/

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