State Street Corp (NYSE:STT) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Balance Sheet Size
Howard Chen – Credit Suisse: My first question is question on balance sheet size, Ed, just given all of the puts and takes to begin the year that you and Jay walked through. I was hoping you could comment, from where you are now, what would you characterize as seasonal and frictional rather than the impact of new core business installation?
Edward J. Resch – EVP and CFO: That’s a little hard to say, I think it’s a combination of clearly some new business, but it’s also I think a combination of the world being fairly awash in liquidity. I think we are seeing some of the customer deposit flows because of that, because of both factors really. I mean, we saw average deposits up about $6 million over Q4 and TAG had the effect of bringing deposit down about $7 billion which was in line with what we expected. So, we are seeing more, I’d say, more liquidity, a greater increase in Europe. The non-U.S. deposits are, we think, awaiting reinvestment, and I would say that that’s probably in the temporary category to your question. And what, in the U.S., we are seeing deposits up around $1 billion, but that’s net of the TAG outflows, so we have seen about $8 billion of U.S big inflows. We’re also seeing another trend – a little bit of a trend I guess, where the U.S. deposits half of them are coming into interest-bearing accounts which we think is again a reflection of excess liquidity being available in the marketplace hopefully awaiting reinvestment, but looking for some investment that is obviously safe and relatively market-yielding.
Howard Chen – Credit Suisse: Shifting over to securities lending, I realized the business isn’t as large as it used to be, but we saw a seasonal lift or maybe not as much as we see in the past. Could you just talk through your current outlook for that business and maybe latest thoughts on some of the rule proposals we are hearing out of Europe?
Joseph (Jay) L. Hooley – Chairman, President and CEO: The seasonal lift, Howard, you mean the dividend season, is that what you meant?
Howard Chen – Credit Suisse: No, I just meant 4Q to 1Q. I know that we usually see a bump-up, Jay, just with the New Year…
Joseph (Jay) L. Hooley – Chairman, President and CEO: Yeah, I think there is some bump-up, although, as you know the dividend season which is the real cyclical, high quarters is about to come on as in the second quarter, but I would say, generally, securities lending balances have stabilized in the low 300. I think if you look at quarter-to-quarter, year-over-year, the effect of the downward pressure on revenue, it’s been largely the Fed fund to three month LIBOR rate. So I would suggest that the business is kind of in a stable state, I think, waiting for a pickup in merger and acquisition activity which will have a positive effect on that and further leverage in the general financial services system would be catalyst for growth, in addition to any widening of spreads.
Howard Chen – Credit Suisse: Then the second part of the question, Jay, just thoughts on the rule proposals coming out of Europe, any latest views?
Joseph (Jay) L. Hooley – Chairman, President and CEO: I think it’s too early to tell. I think that there’s a number of things that are circling around securities finance, but our outlook is really unchanged as far as the business continuing to be a good business for us over time. As the rules firm up that may change, but no view as of today.
Robert Lee – KBW: First question I have is I’m just curious, if I look at the assets under custody and administration and clearly you’ve had some tailwind of favorable markets and new business, but I mean the pension assets, the pension products there have been relatively flat for several quarters. And I’m just curious, can you address maybe what kind of mix you’re seeing? Are new business wins coming mainly in kind of fund products and maybe it’s the pension clients where you’re seeing some runoff of clients or business?
Joseph (Jay) L. Hooley – Chairman, President and CEO: Yeah, it is a real mix. This quarter, which was – I think last year we had total assets – new asset serviced of $1.2 billion and this quarter it was $230 billion, so kind of an in line quarter from a longer-term trend standpoint. Two-thirds U.S., one-third non-U.S.; that’s a little bit different than what we’ve seen in the past, but I guess more to your sector question, pension is kind of stable. We’ve had some good new business wins there, no losses that I’m aware of, so kind of a net positive, but as you know in the pension segment, it’s a pretty stable segment. Most of these are oriented funds that aren’t getting new flows. So on the other side broadly the funds business, U.S. and non-U.S. obviously benefits from flows and all the things that happen when clients re-risk and that pipeline and the successes have been very good. And as you know, in many markets, including the U.S., we are a little bit of a significant market share leader, and I think we continue to gain on that leadership. I just draw a little bit of a line under dimensional fund advisors, which is a very significant U.S. based but with global products in the asset management space and converting that business this quarter was a big win for us and we would hope that they will continue to succeed and with their success we will benefit from that as well. So again, pre-diversify the only other segment that I would call out would be the alternative segment, which – and you see this in broad based flows or asset growth, the alternatives continue to grow and for us the growth is two-fold, that, we grow as the funds grow, we grow as we competitive – we are successful in competitive new business plans, but also a good deal of that particularly private equity and the real estate segment is yet to outsource. So, that’s why I continue to call it out, because that should continue to be a right area for growth for us.
Robert Lee – KBW: And maybe just my follow-up just for Ed. This is a question and possibly it’s not bigger deal and maybe hard to quantify, though I’m just curious, I mean I know in the, probably in the ETF business and some of the funds business and maybe even the managed revenue, there is a little bit of an impact from day count, just there being a few couple of fewer days in the first quarter. So, any way of quantifying that that impact is on revenue at all?
Edward J. Resch – EVP and CFO: Yes, there is. I mean we think about that frankly more from the perspective of net interest revenue. I don’t have that number at my fingertips Rob, but absolutely there is an impact in terms of day count. We’re looking for the number now. I don’t know if we have it available, but I can certainly follow-up with you after the call.