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State Street Posts Dip in 4Q Net Income

January 13, 2004

BOSTON (AP) _ State Street Corp. on Tuesday said fourth-quarter net income fell 6.3 percent from a year ago, when the financial-services company posted a big gain from the sale of its corporate-trust business.

Net income for the latest quarter came to $447 million, or $1.33 a share, compared with $477 million, or $1.46 a share, a year earlier.

Results for the latest quarter included a gain of $285 million, or 56 cents a share, from the sale of the Boston-based company’s asset-management business; and a gain of $60 million, or 12 cents a share, on the sale last year of its corporate-trust business.

State Street also incurred $29 million, or 6 cents a share, in merger, integration and divestiture costs.

In the fourth quarter of 2002, State Street posted a gain of $495 million, or 90 cents a share, from the sale of the corporate-trust business.

Excluding items and the results of the Global Securities Services business it bought in January 2003, State Street earned 69 cents a share in the latest quarter, up 28 percent from 54 cents a share in the same period a year earlier.

Revenue, including gains from sales of divested businesses, rose 3.4 percent in the latest quarter to $1.51 billion from $1.46 billion. Fee revenue jumped 36 percent to $957 million.

In morning trading, shares of State Street dipped 85 cents, or 1.5 percent, to $54.37 on the New York Stock Exchange.

For the full year, net income fell 29 percent to $722 million, or $2.15 a share, from $1.02 billion, or $3.10 a share, in 2002. Revenue for 2003 rose 7.7 percent to $4.73 billion from $4.4 billion a year earlier, and fee revenue climbed 25 percent to $3.56 billion.

State Street ended the year with $9.37 trillion in assets under custody and $1.106 trillion in assets under management.

Despite an improving economy, Chairman and Chief Executive David A. Spina said he expects 2004 to be another challenging year for the financial-services industry, as competition remains intense and costs rise.

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