State Street Corp (NYSE:STT) Q4 2016 Earnings Conference Call - Final Transcript

Jan 25, 2017 • 09:30 am ET

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State Street Corp (NYSE:STT) Q4 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, and welcome to State Street Corporation's Fourth Quarter of 2016 Earnings Conference Call and Webcast [Operator Instructions].

Now I would like to introduce Anthony Ostler, Senior Vice President of Investor Relations at State Street.

Executive
Anthony Ostler

Good morning, and thank you all for joining us. On our call today, our Chairman and CEO, Jay Hooley will speak first. Then Mike Bell, our CFO, who will take you through our fourth quarter and full year 2016 earnings slide presentation, which is available for download in the Investor Relations section of our website, investors.statestreet.com. Afterwards, we'll be happy to take questions. During the Q&A, please limit your questions to two questions and then re-queue.

Before we get started, I would like to remind you that today's presentation will include operating basis and other measures presented on a non-GAAP basis. Reconciliations of these non-GAAP measures to the most directly comparable GAAP or regulatory measure are available in the appendix to our 4Q '16 slide presentation.

In addition, today's presentation will contain forward-looking statements. Actual results may differ materially from those statements due to a variety of important factors, such as those factors referenced in our discussion today, in our 4Q '16 slide presentation under the heading forward-looking statements, and in our SEC filings, including the risk factors section of our 2015 Form 10-K. Our forward-looking statements speak only as of today, and we disclaim any obligation to update them, even if our views change.

Now let me turn it over to Jay.

Executive
Joseph Hooley

Thanks, Anthony and good morning, everyone. In reviewing our fourth quarter and full year 2016 results, I want to reinforce that our performance reflects the strength of our business and our commitment to advancing key strategic priorities that supports State Street's growth. I'm pleased with our 2016 performance, our major accomplishments and the substantial progress we made to address strategic priorities.

In a challenging year, we stayed focused on our client needs, invested in new products and solutions, including the acquisition of GE Asset Management, accelerated the pace of State Street's Beacon digitization initiatives and achieved positive fee operating leverage for the full year, excluding the impact of the acceleration of deferred compensation expense in 4Q '16.

As I just mentioned, we recorded a compensation expense in fourth quarter '16 reflecting the elimination of the service requirement from the churns of our outstanding deferred cash awards. This accelerated expense will give us the flexibility to improve the mix of cash and equity in our incentive compensation in our organization in future years, which will improve recruitment and retention of talent. Mike will take you through the details of this in a few minutes.

Now if I refer you to slide number 5 on the slide deck, I'll walk you through some of our key achievements this past year. We made advances on our strategic priority to digitize the company through States Street Beacon, delivering tangible service improvement benefits to clients. By making advances in our goal of digitizing end-to-end, we're leveraging our