State Street's operating profit excludes money earned from the sale or maturing of bonds whose value was written down in May 2009, which the company records as "discount accretion" within net interest income. Discount accretion added $40 million to net income in the second quarter.
Using generally accepted accounting principles, or GAAP, State Street's net income fell to $654 million, or $1.36 a share, from $543 million, or $1.10, a year earlier.
GAAP earnings include a net, after-tax benefit of 35 cents a share, most of which relates to claims associated with the 2008 bankruptcy of Lehman Brothers Holdings Inc.
State Street estimated its Tier 1 common ratio, a measure of financial strength as calculated under Basel III rules, rose in the third quarter to 11.3 percent from 11 percent.
Custody banks keep records, track performance and lend securities for institutional investors including mutual funds, pension funds and hedge funds. State Street also manages investments for individuals and institutions.