State Street Corp. (STT) swung to a second-quarter loss on
charges related to consolidation of asset-backed securities as
results missed expectations.
State Street shares traded down 1.6% at $48.02 in premarket
activity. Through Monday's close, the stock has tripled since it
hit its lowest level in more than a decade early this year, but it
remains off its 52-week high by a third.
The company, which is the parent of State Street Global
Advisors, said in May it was raising new capital after it moved
some damaging holdings onto its balance sheet. State Street said
the new money would support its tangible common equity ratio, which
measures how much of a bank's hard assets its common shareholders
actually hold. It fell to 5% in the latest quarter from 5.9% in the
first quarter and 5.8% a year earlier.
In the last couple months, State Street has severed all its
obligations to the Troubled Asset Relief Program, paying back the
$2 billion it borrowed and repurchasing warrants the Treasury
held.
State Street posted a second-quarter loss of $3.18 billion, or
$7.12 a share, compared with year-earlier income of $548 million,
or $1.35 a share. The latest results included $8.16 a share in
charges, mostly related to the consolidation of the asset-backed
commercial paper conduits onto the company's balance sheet and its
TARP repayment. Excluding those items, earnings would have been 79
cents a share.
Revenue decreased 21% to $2.12 billion as servicing fees fell
19%.
Analysts surveyed by Thomson Reuters expected earnings of 97
cents on revenue of $2.16 billion.
Unrealized mark-to-market losses at State Street's investment
portfolio fell 19% from the previous quarter.
-By Joan E. Solsman and Kerry Grace Benn, Dow Jones Newswires;
212-416-2353; kerry.benn@dowjones.com