I'm particularly pleased with our results as quarterly total fee revenue exceeded $2.5 billion for the first time in the Company's history.
Second quarter earnings per share was $2.07 or $1.97 excluding notable items.
Despite the impact of interest rates on our NII, earnings per share ex-notables reached the highest level since 4Q '19 when quarterly NII was notably higher more than 35% more than it was in 2Q '21.
Relative to the year-ago period, quarterly total fee revenue exceeded $2.5 billion for the first time, increasing 6% year-over-year, driven by solid servicing and management fee growth, which increased 10% and 14% year-over-year respectively, as well as better securities finance results.
While second quarter total expenses were up 1% relative to the year-ago period, they were down almost 0.5 percentage point year-over-year, excluding notable items and currency translation as our productivity improvements continued to yield results.
Our strong fee revenue performance coupled with continued cost discipline, delivered a 200 basis point improvement to our pre-tax margin year-over-year which reached nearly 30% in the second quarter excluding notable items.
Further, return on equity was 12.6% or 11.9% excluding notable items in the second quarter.
AUC/A increased to a record $42.6 trillion at quarter-end, supported by higher period-end equity market levels and new business onboardings.
New asset servicing wins increased to $1.2 trillion for the quarter, including the large Alpha mandate with Invesco announced in April.
We reported two new Alpha wins in the second quarter, taking the total number of Alpha clients to 15.
It will provide investors with extensive reach into more than 100 markets around the world.
At CRD, annual recurring revenue increased 11% year-over-year to $230 million and we remain pleased with how the business is performing while also enabling and propelling our Alpha strategy.
AUM increased to $3.9 trillion and management fees increased to $504 million, both records, benefiting from strong second quarter flows of $83 billion across the ETF, institutional and cash businesses as we continue to leverage the strengths of our asset management franchise.
Turning to our balance sheet and capital, we returned over $600 million of capital to our shareholders during the second quarter, inclusive of $425 million of common share repurchases, consistent with the limit set by the Federal Reserve.
As examples, yesterday, we announced that our Board of Directors has approved a 10% increase of our third quarter common dividend to $0.57 per share and authorized a common share repurchase program of up to $3 billion during the third quarter of 2021 through the fourth quarter of 2022.
We reported earnings per share of $2.07, or $1.97 excluding the $0.10 positive impact of notable items which was driven by a previously announced sale of a majority stake in a legacy business.
Period end AUC/A increased 27% year-on-year and 6% quarter-on-quarter to a record $42.6 trillion.
At Global Advisors, AUM increased 28% year-on-year and 9% quarter-on-quarter to $3.9 trillion, also a record.
Second quarter servicing fees increased 10% year-on-year, including currency translation, which was worth approximately 3 percentage points year-on-year.
AUC/A wins totaled $1.2 trillion in the second quarter, substantially up from recent quarters, primarily as a result of the large Alpha client mandate announced last April that Ron just mentioned.
AUC/A won, but yet to be installed also amounted to $1.2 trillion at quarter-end as we smoothly onboarded over $400 billion of client assets this past quarter.
This quarter, we had strong growth in the EMEA region, aided by our intense coverage efforts, which now extend to approximately 350 overall of our top clients.
We continue to estimate that we need at least $1.5 trillion in gross AUC/A wins annually in order to offset typical client attrition and normal pricing headwinds and we've clearly exceeded that mark this year.
At this time, we expect the current won but yet to be installed AUC/A will be converted over the coming 12 to 24-month time period with the associated revenue benefits beginning in 2022 and the majority occurring in 2023.
Second quarter management fees reached a record $504 million, up 14% year-on-year inclusive of a 2 percentage point impact from currency translation and were up 2% quarter-on-quarter resulting in an investment management pre-tax margin approaching 35%.
These benefits were only partially offset by the run rate impact from the previously reported idiosyncratic institutional client asset reallocation, as well as about $25 million of money market fee waivers this quarter.
While we previously estimated that money market fee waivers on our management fees could be approximately $35 million per quarter, as a result of the recent improvement in short-end rates following the June FOMC meeting, we now expect that they will be about $20 million to $25 million per quarter for the rest of the year, which is about a third lower than we had previously expected.
Global Advisors recorded solid flows across institutional, ETFs and cash for the quarter with the total amount -- amounting to $83 billion.
Relative to a strong second quarter in 2020, FX revenue fell 12% year-on-year as declining FX market volatility compared to the COVID environment last year more than offset higher client volumes.
FX revenue was down 17% quarter-on-quarter, driven by a moderation of client volumes from index rebalances experienced in the first quarter and lower market volatility.
Our securities finance business recorded strong revenue growth with fees increasing 18% year-on-year and 10% quarter-on-quarter, mainly as a result of higher enhanced custody and agency balances as client leverage rebounded.
Finally, second quarter software and processing fees were down 12% year-on-year, largely due to the absence of prior-year positive mark-to-market adjustments.
Software and processing fees increased 24% quarter-on-quarter, mainly as a result of higher CRD revenues.
The more durable SaaS and professional services revenues continued to grow nicely and were up 10% year-on-year resulting in an increase in stand-alone annualized recurring revenue to $230 million.
Although Alpha deals usually take somewhat longer to implement given the size and scope, the pay-off outweighs the longer implementation period as we are able to further expand share of wallet to generate attractive revenue growth rates and increase the contract lengths which can be up to 10 years in length for Alpha services that span the front and middle office.
Turning to Slide 10, second quarter NII declined 16% year-on-year, mainly as a result of the effects of lower interest rate environment on our investment portfolio yields and sponsored member repo product.
Total average deposits increased by $16 billion in the second quarter or an increase of 7% quarter-on-quarter, reflecting the continued impact of the Federal Reserve's expansionary monetary policy.
While we continue to remain mindful of OCI risk in the current rate environment, we tactically added about $5 billion quarter-on-quarter to our investment portfolio a few months ago, before the recent downdraft in rates.
We also increased our average loan balances by approximately 5% quarter-on-quarter to over $29 billion, driven by higher utilization by asset managers and private equity capital call client.
Second quarter expenses, excluding notable items, increased 2% year-on-year, mainly driven by the weaker dollar.
Excluding the impact of notable items and currency translation, total expenses were down nearly 0.5 percentage point year-on-year as productivity savings for the quarter more than offset higher revenue related expenses and targeted investments in client onboarding costs.
Information systems and communications were up 5% due to continued investment in our technology estate.
Transaction processing was up 10%, primarily driven by higher revenue related expenses for sub-custody balances and market data costs.
Occupancy was down 13% reflecting benefits from our footprint optimization efforts and some timing benefits.
And other expenses were down 11% primarily driven by lower-than-usual professional services fees.
We are pleased with our performance under this year's CCAR with the calculated Stress Capital Buffer well below the 2.5% minimum, resulting in a preliminary SCB at that floor.
For example, yesterday, we announced a 10% increase to our third quarter common dividend to $0.57 per share and our Board has authorized a common share repurchase program of up to $3 billion from the third quarter of 2021 through year-end 2022.
In addition, we are also pleased that the Federal Reserve has provided State Street with one additional year until January 1, 2024, to retain its current G-SIB surcharge of 1%.
To the left of the slide, we show the evolution of our CET1 and Tier 1 leverage ratios.
As of quarter-end, our standardized CET1 ratio improved by 40 basis points quarter-on-quarter to 11.2% as we had expected and sits above the upper end of our 10% to 11% CET1 target range.
Our Tier 1 leverage ratio remains well above the regulatory minimum, but declined by 20 basis points quarter-on-quarter to 5.2%, primarily as a result of the further increase in average client balances as the Fed's quantitative easing continues.
We continue to think that a Tier 1 leverage ratio in the 5s as appropriate for our business model.
Total fee revenue was up almost 6% year-on-year and exceeded $2.5 billion for the first time with double-digit growth in servicing and management fees, despite the year-on-year headwind from the strong FX trading services results we had in the second quarter of last year during COVID.
In terms of the third quarter of 2021, we expect overall fee revenue to be up 7% to 8% year-over-year with servicing and management fees each expected to be up 7% to 9% year-over-year.
Regarding NII, despite the recent flattening in the yield curve, we have seen an increase in short-end market rates and we now expect a modestly improved quarterly NII range of $460 million to $470 million per quarter for the rest of the year, assuming rates do not deteriorate and premium amortization continues to attenuate.
We expect that third quarter expenses ex-notable items will be flattish, plus or minus 0.5 percentage point year-over-year in 3Q.
These fee and expense guides for 3Q include approximately 1 point of currency translation year-over-year.
On taxes, we expect that the 3Q '21 tax rate will be in the middle of our full-year range of 17% to 19%.

Summary:
Second quarter earnings per share was $2.07 or $1.97 excluding notable items.
As examples, yesterday, we announced that our Board of Directors has approved a 10% increase of our third quarter common dividend to $0.57 per share and authorized a common share repurchase program of up to $3 billion during the third quarter of 2021 through the fourth quarter of 2022.
We reported earnings per share of $2.07, or $1.97 excluding the $0.10 positive impact of notable items which was driven by a previously announced sale of a majority stake in a legacy business.
Period end AUC/A increased 27% year-on-year and 6% quarter-on-quarter to a record $42.6 trillion.
At Global Advisors, AUM increased 28% year-on-year and 9% quarter-on-quarter to $3.9 trillion, also a record.
Second quarter servicing fees increased 10% year-on-year, including currency translation, which was worth approximately 3 percentage points year-on-year.
For example, yesterday, we announced a 10% increase to our third quarter common dividend to $0.57 per share and our Board has authorized a common share repurchase program of up to $3 billion from the third quarter of 2021 through year-end 2022.