There's no mistaking the Street's reaction to this morning's earnings release from global custodian State Street (NYSE:STT). As I write this, the stock is down almost 16% on the day compared to the KBW Bank Index's 4% decline. True, at $1.09 per share, earnings were shy of the consensus estimate of $1.20 per share, but a closer look at the numbers shows a situation that's less cut-and-dried than the Street's treatment of the stock suggests.

The good: a wonderfully stable business
The huge number of non-operating items makes true operating performance a little bit murkier to decipher. However, as a custody bank and asset manager, it's striking how stable the company's business is in the current crisis compared to that of straight commercial banks (let alone new "bank holding companies" Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS)).

Indeed, return on shareholder's equity (ROE) didn't vary substantially from the prior-year quarter and is pretty respectable at 13.6%. Even excluding the non-operating items, ROE was down just 40 basis points to 15.4%.

The bad: potential exposures and liabilities
No doubt the crisis has accustomed investors to focus on the downside -- which probably drew their attention to multibillion-dollar unrealized losses in State Street's investment portfolio and commercial paper conduits, as well as a potential future loss should it decide to support some of its investment funds. All the same, CEO Ronald Logue reaffirmed annual guidance for growth in operating earnings per share, operating revenue, and operating ROE.

Finally, it's no surprise that the earnings release mentions yesterday's announcement that the U.S. government will make equity investments in nine leading financial institutions, including competitors Bank of New York Mellon (NYSE:BK), Citigroup, and JPMorgan Chase (NYSE:JPM), and banking heavyweights Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC). It's far from obvious that the investment is economically necessary in State Street's case, but at least it should be "minimally dilutive" to shareholders.

The last time(s) the stock was this cheap
For investors with a multi-year time horizon, I think State Street looks pretty attractive at less than 11.5 times its trailing-12-month earnings and 10.5 times the lowest analyst estimate for next year's earnings. Prior to this year, the last couple of times the stock's earnings multiple dipped lower than it is now (March 2003, January 1995), it went on to significantly outperform its sector and the broader market.

More credit-crisis Foolishness:

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Alex Dumortier, CFA, has a beneficial interest in Wells Fargo and BB&T, but not in any of the other companies mentioned in this article. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.