State Street Corporation has released full-year and fourth-quarter 2010 earnings per common share of $3.09 and $0.16, compared to $3.46 and $1.00 for the full year and the fourth quarter of 2009, respectively.
Fourth-quarter earnings per share include the impact of certain actions taken to accelerate growth and to provide greater capital flexibility. These actions resulted in a loss of $0.67 per share resulting from a repositioning of the investment portfolio and a restructuring charge associated with a reduction in force and real estate consolidation of $0.21 per share.
Revenue in 2010 was $8.95 billion, an increase of 4% from $8.64 billion in 2009, and was $2.043 billion in the fourth quarter of 2010, down 10% from $2.28 billion in the fourth quarter of 2009. Expenses of $6.84 billion in 2010 increased 15% from $5.97 billion in 2009, primarily due to a $414 million pre-tax securities finance charge recorded in the second quarter of 2010 and the fourth-quarter restructuring charge of $156 million, as well as merger and integration costs of $89 million, primarily associated with the acquisitions of Intesa Sanpaolos Securities Servicing business (Intesa) and Mourant International Finance Administration (Mourant).
In the fourth quarter of 2010, expenses were $1.792 billion, including the above restructuring charge and merger and integration costs of $12 million primarily associated with the acquisitions, compared to $1.57 billion in the fourth quarter of 2009. Return on shareholders equity was 9.5% in 2010, down from 13.2% in 2009, and was 1.8% in the fourth quarter of 2010 compared to 14.0% in the fourth quarter of 2009.
In the fourth quarter, we continued to experience favorable growth in servicing and management fees, and in addition, we saw some improvement in trading services revenue compared to the third quarter, says Joseph L. Hooley, State Street’s chairman and CEO. We also maintained control over expenses, and on an operating basis in the fourth quarter we achieved 520 basis points of positive operating leverage compared to the fourth quarter of 2009.
Hooley continues, In 2010 we won mandates for $1.4 trillion in assets to be serviced, $390 billion of which are scheduled for installation in 2011. State Street Global Advisors (SSgA) continues to benefit from growth in passive and ETF assets. In 2010 SSgA added about $160 billion in gross new assets, $40 billion of which are to be installed in 2011. In January 2011, we closed the acquisition of Bank of Ireland Asset Management (BIAM), which expands SSgAs offerings, particularly in active fundamental management. The acquisitions of the Intesa and Mourant businesses were modestly accretive in 2010, and the integrations continue to progress well and are on track to meet the outlook we previously provided. We achieved a full-year operating-basis net interest margin of 168 basis points, which excludes discount accretion.
He concludes, While near-term we expect increased regulatory costs, as well as lower net interest revenue in 2011 due to pressure from the low interest-rate environment and the impact of the repositioning of the investment portfolio, we are well positioned to take advantage of global growth opportunities and, as the economy normalizes, we remain committed to our long-term financial goals.