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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Massachusetts
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04-2456637
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(State or other jurisdiction of incorporation)
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(I.R.S. Employer Identification No.)
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One Lincoln Street
Boston, Massachusetts
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02111
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(Address of principal executive office)
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(Zip Code)
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617-786-3000
(Registrant’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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(Title of Each Class)
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(Name of each exchange on which registered)
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Common Stock, $1 par value per share
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New York Stock Exchange
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Depositary Shares, each representing a 1/4,000th ownership interest in a share of Non-Cumulative Perpetual Preferred Stock, Series C, without par value per share
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New York Stock Exchange
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Depositary Shares, each representing a 1/4,000th ownership interest in a share of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, without par value per share
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New York Stock Exchange
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Depositary Shares, each representing a 1/4,000th ownership interest in a share of Non-Cumulative Perpetual Preferred Stock, Series E, without par value per share
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New York Stock Exchange
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Depositary Shares, each representing a 1/4,000th ownership interest in a share of Non-Cumulative Perpetual Preferred Stock, Series G, without par value per share
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New York Stock Exchange
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Emerging growth company
¨
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PART I
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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Supplemental Item
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PART II
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Item 5
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Item 6
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Item 7
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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PART III
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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PART IV
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Item 15
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Exhibits
, Financial Statement Schedules
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Item 16
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Form 10-K Summary
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EXHIBIT INDEX
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SIGNATURES
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adds requirements for a minimum CET1 risk-based capital ratio of 4.5% and a minimum supplementary leverage ratio of 3% for advanced approaches banking organizations;
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raises the minimum tier 1 risk-based capital ratio from 4% under both Basel I and Basel II to 6%;
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leaves the minimum total capital ratio at 8%;
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implements the capital conservation and countercyclical capital buffers, referenced below, as well as a G-SIB surcharge included under "Capital" in "Financial Condition"
in our
Management's Discussion and Analysis
in this Form 10-K
;
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implements the previously described standardized approach to replace the calculation of credit RWA under Basel I; and
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implements the advanced approaches for the calculation of credit RWA.
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Method 1: Assesses systemic importance based upon five equally-weighted components: size, interconnectedness, complexity, cross-jurisdictional activity and substitutability; or
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Method 2: Alters the calculation from Method 1 by factoring in a wholesale funding score in place of substitutability and applying a 2x multiplier to the sum of the five components.
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the financial strength of the counterparties with which we or our clients do business and to which we have investment, credit or financial exposures or to which our clients have such exposures as a result of our acting as agent, including as an asset manager or securities lending agent;
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increases in the volatility of, or declines in the level of, our NII, changes in the composition or valuation of the assets recorded in our consolidated statement of condition (and our ability to measure the fair value of investment securities) and changes in the manner in which we fund those assets;
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the volatility of servicing fee, management fee, trading fee and securities finance revenues due to, among other factors, the value of equity and fixed-income markets, market interest and foreign exchange rates, the volume of client transaction activity, competitive pressures in the investment servicing and asset management industries, and the timing of revenue recognition with respect to processing fees and other revenues;
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the liquidity of the U.S. and international securities markets, particularly the markets for fixed-income securities and inter-bank credits; the liquidity of the assets on our balance sheet and changes or volatility in the sources of such funding, particularly the deposits of our clients; and demands upon our liquidity, including the liquidity demands and requirements of our clients;
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the level and volatility of interest rates, the valuation of the U.S. dollar relative to other currencies in which we record revenue or accrue expenses and the performance and volatility of securities, credit, currency and other markets in the U.S. and internationally; and the impact of monetary and fiscal policy in the U.S. and internationally on prevailing rates of interest and currency exchange rates in the markets in which we provide services to our clients;
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the credit quality, credit-agency ratings and fair values of the securities in our investment securities portfolio, a deterioration or downgrade of which could lead to other-than-temporary impairment of such securities and the recognition of an impairment loss in our consolidated statement of income;
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our ability to attract deposits and other low-cost, short-term funding; our ability to manage the level and pricing of such deposits and the relative portion of our deposits that are determined to be operational under regulatory guidelines; and our ability to deploy deposits in a profitable manner consistent with our liquidity needs, regulatory requirements and risk profile;
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the manner and timing with which the Federal Reserve and other U.S. and non-U.S. regulators implement or reevaluate the regulatory framework applicable to our operations (as well as changes to that framework), including implementation or modification of the Dodd-Frank Act and related stress testing and resolution planning requirements, implementation of international standards applicable to financial institutions, such as those proposed by the Basel Committee and European legislation (such as UCITS V, the Money Market Fund Regulation and MiFID II
/ MiFIR); among other consequences, these regulatory changes impact the levels of regulatory capital, long-term debt and liquidity we must maintain, acceptable levels of credit exposure to third parties, margin requirements applicable to derivatives, restrictions on banking and financial activities and the manner in which we structure and implement our global operations and servicing relationships. In addition, our regulatory posture and related expenses have been and will continue to be affected by heightened standards and changes in regulatory expectations for global systemically important financial institutions applicable to, among other things, risk management, liquidity and capital planning, resolution planning and compliance programs, as well as changes in governmental enforcement approaches to perceived failures to comply with regulatory or legal obligations;
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adverse changes in the regulatory ratios that we are, or will be, required to meet, whether arising under the Dodd-Frank Act or implementation of international standards applicable to financial institutions, such as those proposed by the Basel Committee, or due to changes in regulatory positions, practices or regulations in jurisdictions in which we engage in banking activities, including changes in internal or external data, formulae, models, assumptions or other advanced systems used in the calculation of our capital or liquidity ratios that cause changes in those ratios as they are measured from period to period;
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requirements to obtain the prior approval or non-objection of the Federal Reserve or other U.S. and non-U.S. regulators for the use, allocation or distribution of our capital or other specific capital actions or corporate activities, including, without limitation, acquisitions, investments in subsidiaries, dividends and stock repurchases, without which our growth plans, distributions to shareholders, share repurchase programs or other capital or corporate initiatives may be restricted;
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changes in law or regulation, or the enforcement of law or regulation, that may adversely affect our
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economic or financial market disruptions in the U.S. or internationally, including those which may result from recessions or political instability; for example, the U.K.'s exit from the European Union or actual or potential changes in trade policy, such as tariffs or bilateral and multilateral trade agreements;
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our ability to create cost efficiencies through changes in our operational processes and to further digitize our processes and interfaces with our clients, any failure of which, in whole or in part, may among other things, reduce our competitive position, diminish the cost-effectiveness of our systems and processes or provide an insufficient return on our associated investment;
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our ability to promote a strong culture of risk management, operating controls, compliance oversight, ethical behavior and governance that meets our expectations and those of our clients and our regulators, and the financial, regulatory, reputational and other consequences of our failure to meet such expectations;
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the impact on our compliance and controls enhancement programs associated with the appointment of a monitor under the deferred prosecution agreement with the DOJ and compliance consultant appointed under a settlement with the SEC, including the potential for such monitor and compliance consultant to require changes to our programs or to identify other issues that require substantial expenditures, changes in our operations, payments to clients or reporting to U.S. authorities;
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the results of our review of our billing practices, including additional findings or amounts we may be required to reimburse clients, as well as potential consequences of such review, including damage to our client relationships or our reputation and adverse actions or penalties imposed by governmental authorities;
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our ability to expand our use of technology to enhance the efficiency, accuracy and reliability of our operations and our dependencies on information technology; to replace and consolidate systems, particularly those relying upon older technology, and to adequately incorporate resiliency and business continuity into our systems management; to implement robust management processes into our technology development and maintenance programs; and to
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our ability to address threats to our information technology infrastructure and systems (including those of our third-party service providers), the effectiveness of our and our third party service providers' efforts to manage the resiliency of the systems on which we rely, controls regarding the access to, and integrity of, our and our clients' data, and complexities and costs of protecting the security of such systems and data;
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the results of, and costs associated with, governmental or regulatory inquiries and investigations, litigation and similar claims, disputes, or civil or criminal proceedings;
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changes or potential changes in the amount of compensation we receive from clients for our services, and the mix of services provided by us that clients choose;
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the large institutional clients on which we focus are often able to exert considerable market influence and have diverse investment activities, and this, combined with strong competitive market forces, subjects us to significant pressure to reduce the fees we charge, to potentially significant changes in our AUC/A or our AUM in the event of the acquisition or loss of a client, in whole or in part, and to potentially significant changes in our revenue in the event a client re-balances or changes its investment approach, re-directs assets to lower- or higher-fee asset classes or changes the mix of products or services that it receives from us;
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the potential for losses arising from our investments in sponsored investment funds;
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the possibility that our clients will incur substantial losses in investment pools for which we act as agent, the possibility of significant reductions in the liquidity or valuation of assets underlying those pools and the potential that clients will seek to hold us liable for such losses; and the possibility that our clients or regulators will assert claims that our fees, with respect to such investment products, are not appropriate;
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our ability to anticipate and manage the level and timing of redemptions and withdrawals from our collateral pools and other collective investment products;
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the credit agency ratings of our debt and depositary obligations and investor and client perceptions of our financial strength;
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adverse publicity
,
whether specific to us or regarding other industry participants or industry-wide factors, or other reputational harm;
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our ability to control operational risks, data security breach risks and outsourcing risks, our ability to
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changes or potential changes to the competitive environment, due to, among other things, regulatory and technological changes, the effects of industry consolidation and perceptions of us, as a suitable service provider or counterparty;
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our ability to complete acquisitions, joint ventures and divestitures, including, without limitation, our ability to obtain regulatory approvals, the ability to arrange financing as required and the ability to satisfy closing conditions;
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the risks that our acquired businesses, including, without limitation, our acquisition of Charles River Development, and joint ventures will not achieve their anticipated financial, operational and product innovation benefits or will not be integrated successfully
,
or that the integration will take longer than anticipated; that expected synergies will not be achieved or unexpected negative synergies or liabilities will be experienced; that client and deposit retention goals will not be met; that other regulatory or operational challenges will be experienced; and that disruptions from the transaction will harm our relationships with our clients, our employees or regulators;
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our ability to integrate Charles River Development's front office software solutions with our middle and back office capabilities to develop a front-to-middle-to-back office platform that is competitive, generates revenues in line with our expectations and meets our clients' requirements;
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our ability to recognize evolving needs of our clients and to develop products that are responsive to such trends and profitable to us; the performance of and demand for the products and services we offer; and the potential for new products and services to impose additional costs on us and expose us to increased operational risk;
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our ability to grow revenue, manage expenses, attract and retain highly skilled people and raise the capital necessary to achieve our business goals and comply with regulatory requirements and expectations;
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changes in accounting standards and practices; and
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the impact of the U.S. tax legislation enacted in 2017, and changes in tax legislation and in the interpretation of existing tax laws by U.S. and non-U.S. tax authorities that affect the amount of taxes due.
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Short-term credit
. The degree of client demand for short-term credit tends to increase during periods of market turbulence, which may expose us to further counterparty- related risks. For example, investors in collective investment vehicles for which we act as custodian may experience significant redemption activity due to adverse market or economic news. Our relationship with our clients and the nature of the settlement process for some types of payments may result in the extension of short-term credit in such circumstances. We also provide committed lines of credit to support such activity. For some types of clients, we provide credit to allow them to leverage their portfolios, which may expose us to potential loss if the client experiences investment losses or other credit difficulties.
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Industry and country risks
. In addition to our exposure to financial institutions, we are from time to time exposed to concentrated credit risk at an industry or country level. This concentration risk also applies to groups of unrelated counterparties that may have similar investment strategies involving one or more particular industries, regions, or other characteristics. These unrelated counterparties may concurrently experience adverse effects to their performance, liquidity or reputation due to events or other factors affecting such investment strategies. Though potentially not material individually (relative to any one such counterparty), our credit exposures to such a group of counterparties could expose us to a single market or political event or a correlated set of events that, in the aggregate, could have a material adverse impact on our business.
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Subcustodian risks
. Our use of unaffiliated subcustodians exposes us to credit risk, in addition to other risks, such as operational risk, dependencies on credit extensions and risks of the legal systems of the jurisdictions in which the subcustodians operate, each of which may be material.
Our operating model exposes us to risk of unaffiliated sub-custodians to a degree greater than some of our competitors who have banking operations in more jurisdictions than us. Our sub-custodians operate in all jurisdictions in which our clients invest, including emerging and other underdeveloped markets that entail heightened risks.
These risks are amplified due to changing regulatory requirements with respect to our financial exposures in the event those subcustodians are unable to return a client’s assets, including,
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Settlement risks
. We are exposed to settlement risks, particularly in our payments and foreign exchange activities. Those activities may lead to extension of credit and consequent losses in the event of a counterparty breach, failure to provide credit extensions or an operational error. Due to our membership in several industry clearing or settlement exchanges, we may be required to guarantee obligations and liabilities, or provide financial support, in the event that other members do not honor their obligations or default. Moreover, not all of our counterparty exposure is secured, and even when our exposure is secured, the realizable value of the collateral may have declined by the time we exercise our rights against that
collateral. This risk may be particularly acute if we are required to sell the collateral into an illiquid or temporarily-impaired market or with respect to clients protected by sovereign immunity. We are exposed to risk of short-term credit or overdraft of our clients in connection with the process to facilitate settlement of trades and related foreign exchange activities, particularly when contractual settlement has been agreed with our clients. The occurrence of overdrafts at peak volatility could create significant credit exposure to our clients depending upon the value of such clients' collateral at the time.
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Securities lending and repurchase agreement indemnification
. On behalf of clients enrolled in our securities lending program, we lend securities to banks, broker/dealers and other institutions. In the event of a failure of the borrower to return such securities, we typically agree to indemnify our clients for the amount by which the fair market value of those securities exceeds the proceeds of the disposition of the collateral recalled from the borrower in connection with such transaction. We also lend and borrow securities as riskless principal, and in connection with those transactions receive a security interest in securities held by the borrowers in their securities portfolios and advance cash or securities as collateral to securities lenders. Borrowers are generally required to provide collateral equal to a contractually agreed percentage equal to or in excess of the fair market value of the loaned securities. As the fair market value of the loaned securities or
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Stable value arrangements
.
W
e enter into stable value wrap derivative contracts with unaffiliated stable value funds that allow a stable value fund to provide book value coverage to its participants.
During the financial crisis, the book value of obligations under many of these contracts exceeded the market value of the underlying portfolio holdings. Concerns regarding the portfolio of investments protected by such contracts, or regarding the investment manager overseeing such an investment option, may result in redemption demands from stable value products covered by benefit-responsive contracts at a time when the portfolio's market value is less than its book value, potentially exposing us to risk of loss.
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U.S. municipal obligations remarketing credit facilities
. We provide credit facilities in connection with the remarketing of U.S. municipal obligations, potentially exposing us to credit exposure to the municipalities issuing such bonds and contingent liquidity risk.
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Senior secured bank loans
. In recent years, we have increased our investment in senior secured bank loans, both in the U.S. and in Europe. We invest in these loans to non-investment grade borrowers through
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Commercial Real Estate.
We have recently launched an initiative financing commercial and multi-family properties, which serve as collateral for our loans. Although collateralized, these loans may become under-secured if the value of the collateral was over-estimated or changes. Loan payments are dependent on the successful operation and management of the underlying collateral property to generate sufficient cash flow to repay the loan in a timely fashion. A material decline in real estate markets or economic conditions could negatively impact value or property performance, which could adversely impact timely loan repayment, which may result in increased provision for losses on loans, and actual losses, either of which would have an adverse impact on our net income. We seek to minimize these risks by maintaining lending policies and procedures and underwriting standards, however, there can be no assurance that these will protect us from credit-related losses or delinquencies.
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Unavailability of netting
. We are generally not able to net exposures across counterparties that are affiliated entities and may not be able in all circumstances to net exposures to the same legal entity across multiple products. As a consequence, we may incur a loss in relation to one entity or product even though our exposure to an entity's affiliates or across product types is over-collateralized. In some cases, for example in our securities finance and foreign exchange activities, we are able to enter into netting agreements that allow us to net offsetting exposures and payment obligations against one another. In the event we become unable, due to operational constraints, actions by regulators, changes in accounting principles, law or regulation (or related interpretations) or other factors, to net some or all of our offsetting exposures and payment
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Asset class concentration
. Our investment portfolio continues to have significant concentrations in several classes of securities, including
, without limitation,
agency residential MBS, commercial MBS and other ABS, and securities with concentrated exposure to consumers. These classes and types of securities experienced significant liquidity, valuation and credit quality deterioration during the financial crisis that began in mid-2007. We also hold non-U.S. MBS and ABS with exposures to European countries, whose sovereign-debt markets have experienced increased stress at times since 2011 and may continue to experience stress in the future. For further information, refer to the risk factor
titled
“Our businesses have significant European operations, and disruptions in European economies could have an adverse effect on our consolidated results of operations or financial condition".
Further
,
we hold a portfolio of U.S. state and municipal bonds, the value of which may be affected by the budget deficits that a number of states and municipalities currently face, resulting in risks associated with this portfolio.
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Effects of market conditions
. If market conditions deteriorate, our investment portfolio could experience a decline in market value, whether due to a decline in liquidity or an increase in the yield required by investors to hold such securities, regardless of our credit view of our portfolio holdings. For example, we recorded significant losses not related to credit in connection with the consolidation of our off-balance sheet asset-backed commercial paper conduits in 2009 and the repositioning of our investment portfolio in 2010. In addition, in general, deterioration in credit quality, or changes in management's expectations regarding repayment timing or in management's investment intent to hold securities to maturity, in each case with respect to our portfolio holdings, could result in OTTI. Similarly, if a material portion of our investment portfolio were to experience credit deterioration, our capital ratios as calculated pursuant to the Basel III final rule could be adversely affected. This risk is greater with portfolios of investment securities that contain credit risk than with holdings of U.S. Treasury securities.
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Effects of interest rates
. Our investment portfolio is further subject to changes in both U.S. and non-U.S. (primarily in Europe) interest
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meet clients' demands for return of their deposits;
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extend credit to our clients in connection with our investor services businesses; and
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fund the pool of long- and intermediate-term assets that are included in the investment securities carried in our consolidated statement of condition.
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integrating Charles River Development's business into our own in a manner that permits the combined company to achieve the cost and operating synergies anticipated to result from the acquisition, which could result in the anticipated benefits of the acquisition not being realized partly or wholly in the time frame currently anticipated or at all;
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retaining Charles River Development’s clients, some of which are our competitors;
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retaining key management and technical personnel;
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integrating Charles River Development’s software solutions with our existing products and services and related operations and systems, including performance, risk and compliance analytics, investment manager operations outsourcing, accounting, administration and custody;
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accelerating the development of enhancements to the features and functions of Charles River Development’s software solutions;
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coordinating and integrating our internal operations, compensation programs, policies and procedures, and corporate structures;
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potential unknown liabilities and unforeseen or increased costs and expenses;
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the possibility of faulty assumptions underlying expectations regarding potential synergies and the integration process;
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incurring significant acquisition-related costs and expenses associated with combining our operations; and
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performance shortfalls as a result of the diversion of management’s attention and resources caused by integrating the companies’ operations.
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Principal Properties
(1)
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City
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State/
Country
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Owned/
Leased
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U.S. and Canada:
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State Street Financial Center
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Boston
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MA
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Leased
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Channel Center
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Boston
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MA
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Leased
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Summer Street
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Boston
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MA
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Leased
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District Avenue
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Burlington
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MA
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Leased
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Crown Colony Drive
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Quincy
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MA
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Leased
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Heritage Drive
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Quincy
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MA
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Leased
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John Adams Building
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Quincy
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MA
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Owned
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Josiah Quincy Building
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Quincy
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MA
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Leased
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Grafton Data Center
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Grafton
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MA
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Owned
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Westborough Data Center
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Westborough
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MA
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Owned
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Summer Street
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Stamford
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CT
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Leased
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Pennsylvania Avenue
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Kansas City
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MO
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Leased
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College Road East
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Princeton
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NJ
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Leased
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Avenue of the Americas
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New York
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NY
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Leased
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Adelaide Street East
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Toronto
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Canada
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Leased
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Europe, Middle East and Africa:
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Churchill Place
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London
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England
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Leased
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Brienner Strasse
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Munich
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Germany
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Leased
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Sir John Rogerson's Quay
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Dublin
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Ireland
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Leased
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Via Ferrante Aporti
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Milan
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Italy
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Leased
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Kirchberg
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Luxembourg
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Luxembourg
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Leased
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Titanium Tower
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Gdansk
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Poland
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Leased
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BIG
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Krakow
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Poland
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Leased
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Bonarka
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Krakow
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Poland
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Leased
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CBK
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Krakow
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Poland
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Leased
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Asia Pacific:
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George Street
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Sydney
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Australia
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Leased
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San Dun
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Hangzhou
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China
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Leased
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Tian Tang
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Hangzhou
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China
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Leased
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Ecoworld 6B
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Bangalore
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India
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Leased
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Knowledge City Salarpuria
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Hyderabad
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India
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Leased
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RMZ Ecoworld 7
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Bangalore
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India
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Leased
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Name
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Age
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Position
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Ronald P. O'Hanley
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62
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Chief Executive Officer and President
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Eric W. Aboaf
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54
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Executive Vice President and Chief Financial Officer
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Ian W. Appleyard
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54
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Executive Vice President, Global Controller and Chief Accounting Officer
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Jeffrey N. Carp
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62
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Executive Vice President, Chief Legal Officer and Secretary
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Jeff D. Conway
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53
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Executive Vice President, Global Head of Operations and Business Transformation
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Andrew J. Erickson
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49
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Executive Vice President, Head of Global Services
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Hannah M. Grove
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55
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Executive Vice President and Chief Marketing Officer
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Kathryn M. Horgan
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53
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Executive Vice President and Chief Human Resources and Citizenship Officer
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Karen C. Keenan
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56
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Executive Vice President and Chief Administrative Officer
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Andrew P. Kuritzkes
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58
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Executive Vice President and Chief Risk Officer
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Louis D. Maiuri
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54
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Executive Vice President, Head of Global Markets and Global Exchange
|
Donna M. Milrod
|
|
51
|
|
|
Executive Vice President and Head of Global Clients Division
|
Elizabeth Nolan
|
|
56
|
|
|
Executive Vice President, Chief Executive Officer for Europe, Middle East and Africa
|
Antoine Shagoury
|
|
48
|
|
|
Executive Vice President and Global Chief Information Officer
|
Cyrus Taraporevala
|
|
52
|
|
|
President and Chief Executive Officer, State Street Global Advisors
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||
State Street Corporation
|
$
|
100
|
|
|
$
|
109
|
|
|
$
|
94
|
|
|
$
|
112
|
|
|
$
|
143
|
|
|
$
|
95
|
|
S&P 500 Index
|
100
|
|
|
114
|
|
|
115
|
|
|
129
|
|
|
157
|
|
|
150
|
|
||||||
S&P Financial Index
|
100
|
|
|
115
|
|
|
113
|
|
|
139
|
|
|
170
|
|
|
148
|
|
||||||
KBW Bank Index
|
100
|
|
|
109
|
|
|
110
|
|
|
141
|
|
|
168
|
|
|
138
|
|
(Dollars in millions, except per share amounts or where otherwise noted)
|
|
|
|
|
|
|
|
|
|
||||||||||
YEARS ENDED DECEMBER 31:
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Total fee revenue
|
$
|
9,305
|
|
|
$
|
8,905
|
|
|
$
|
8,116
|
|
|
$
|
8,278
|
|
|
$
|
8,010
|
|
Net interest income
|
2,671
|
|
|
2,304
|
|
|
2,084
|
|
|
2,088
|
|
|
2,260
|
|
|||||
Gains (losses) related to investment securities, net
|
6
|
|
|
(39
|
)
|
|
7
|
|
|
(6
|
)
|
|
4
|
|
|||||
Total revenue
|
11,982
|
|
|
11,170
|
|
|
10,207
|
|
|
10,360
|
|
|
10,274
|
|
|||||
Provision for loan losses
|
15
|
|
|
2
|
|
|
10
|
|
|
12
|
|
|
10
|
|
|||||
Total expenses
|
8,968
|
|
|
8,269
|
|
|
8,077
|
|
|
8,050
|
|
|
7,827
|
|
|||||
Income before income tax expense
|
2,999
|
|
|
2,899
|
|
|
2,120
|
|
|
2,298
|
|
|
2,437
|
|
|||||
Income tax expense (benefit)
|
400
|
|
|
722
|
|
|
(22
|
)
|
|
318
|
|
|
415
|
|
|||||
Net income from non-controlling interest
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
2,599
|
|
|
$
|
2,177
|
|
|
$
|
2,143
|
|
|
$
|
1,980
|
|
|
$
|
2,022
|
|
Adjustments to net income
(1)
|
(189
|
)
|
|
(184
|
)
|
|
(175
|
)
|
|
(132
|
)
|
|
(64
|
)
|
|||||
Net income available to common shareholders
|
$
|
2,410
|
|
|
$
|
1,993
|
|
|
$
|
1,968
|
|
|
$
|
1,848
|
|
|
$
|
1,958
|
|
PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
6.48
|
|
|
$
|
5.32
|
|
|
$
|
5.03
|
|
|
$
|
4.53
|
|
|
$
|
4.62
|
|
Diluted
|
6.40
|
|
|
5.24
|
|
|
4.97
|
|
|
4.47
|
|
|
4.53
|
|
|||||
Cash dividends declared
|
1.78
|
|
|
1.60
|
|
|
1.44
|
|
|
1.32
|
|
|
1.16
|
|
|||||
Closing market price (at year end)
|
63.07
|
|
|
97.61
|
|
|
77.72
|
|
|
66.36
|
|
|
78.50
|
|
|||||
AS OF DECEMBER 31:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment securities
|
$
|
87,062
|
|
|
$
|
97,579
|
|
|
$
|
97,167
|
|
|
$
|
100,022
|
|
|
$
|
112,636
|
|
Average total interest-earning assets
|
185,637
|
|
|
191,235
|
|
|
199,184
|
|
|
220,456
|
|
|
209,054
|
|
|||||
Total assets
|
244,626
|
|
|
238,425
|
|
|
242,698
|
|
|
245,155
|
|
|
274,089
|
|
|||||
Deposits
|
180,360
|
|
|
184,896
|
|
|
187,163
|
|
|
191,627
|
|
|
209,040
|
|
|||||
Long-term debt
|
11,093
|
|
|
11,620
|
|
|
11,430
|
|
|
11,497
|
|
|
10,012
|
|
|||||
Total shareholders' equity
|
24,790
|
|
|
22,317
|
|
|
21,219
|
|
|
21,103
|
|
|
21,328
|
|
|||||
Assets under custody and/or administration (in billions)
|
31,620
|
|
|
33,119
|
|
|
28,771
|
|
|
27,508
|
|
|
28,188
|
|
|||||
Assets under management (in billions)
|
2,511
|
|
|
2,782
|
|
|
2,468
|
|
|
2,245
|
|
|
2,448
|
|
|||||
Number of employees
|
40,142
|
|
|
36,643
|
|
|
33,783
|
|
|
32,356
|
|
|
29,970
|
|
|||||
RATIOS:
|
|
|
|
|
|
|
|
|
|
||||||||||
Return on average common shareholders' equity
|
12.2
|
%
|
|
10.6
|
%
|
|
10.5
|
%
|
|
9.8
|
%
|
|
9.8
|
%
|
|||||
Return on average assets
|
1.16
|
|
|
0.99
|
|
|
0.93
|
|
|
0.79
|
|
|
0.85
|
|
|||||
Common dividend payout
|
27.58
|
|
|
29.89
|
|
|
28.46
|
|
|
28.99
|
|
|
25.03
|
|
|||||
Average common equity to average total assets
|
8.9
|
|
|
8.6
|
|
|
8.2
|
|
|
7.6
|
|
|
8.4
|
|
|||||
Net interest margin, fully taxable-equivalent basis
|
1.47
|
|
|
1.29
|
|
|
1.13
|
|
|
1.03
|
|
|
1.16
|
|
|||||
Common equity tier 1 ratio
(2)
|
12.1
|
|
|
12.3
|
|
|
11.7
|
|
|
12.5
|
|
|
12.4
|
|
|||||
Tier 1 capital ratio
(2)
|
16.0
|
|
|
15.5
|
|
|
14.8
|
|
|
15.3
|
|
|
14.5
|
|
|||||
Total capital ratio
(2)
|
16.9
|
|
|
16.5
|
|
|
16.0
|
|
|
17.4
|
|
|
16.4
|
|
|||||
Tier 1 leverage ratio
(3)
|
7.2
|
|
|
7.3
|
|
|
6.5
|
|
|
6.9
|
|
|
6.3
|
|
|||||
Supplementary leverage ratio
(4)
|
6.3
|
|
|
6.5
|
|
|
5.9
|
|
|
6.2
|
|
|
5.6
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
||
|
||
|
||
|
||
Net Interest Income
|
|
|
|
||
|
||
Acquisition Costs
|
65
|
|
Restructuring and Repositioning Charges
|
65
|
|
|
||
|
||
Investment Servicing
|
|
|
Investment Management
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Strategic Risk Management
|
|
|
|
||
|
||
Significant Accounting Estimates
|
|
|
|
•
|
accounting for fair value measurements;
|
•
|
impairment of goodwill and other intangible assets; and
|
•
|
contingencies.
|
TABLE 1: OVERVIEW OF FINANCIAL RESULTS
|
|||||||||||
|
Years Ended December 31,
|
||||||||||
(Dollars in millions, except per share amounts)
|
2018
|
|
2017
|
|
2016
|
||||||
Total fee revenue
(1)(2)(3)
|
$
|
9,305
|
|
|
$
|
8,905
|
|
|
$
|
8,116
|
|
Net interest income
(2)
|
2,671
|
|
|
2,304
|
|
|
2,084
|
|
|||
Gains (losses) related to investment securities, net
|
6
|
|
|
(39
|
)
|
|
7
|
|
|||
Total revenue
(1)(3)
|
11,982
|
|
|
11,170
|
|
|
10,207
|
|
|||
Provision for loan losses
|
15
|
|
|
2
|
|
|
10
|
|
|||
Total expenses
(1)(3)
|
8,968
|
|
|
8,269
|
|
|
8,077
|
|
|||
Income before income tax expense
|
2,999
|
|
|
2,899
|
|
|
2,120
|
|
|||
Income tax expense (benefit)
|
400
|
|
|
722
|
|
|
(22
|
)
|
|||
Net income from non-controlling interest
|
—
|
|
|
—
|
|
|
1
|
|
|||
Net income
|
$
|
2,599
|
|
|
$
|
2,177
|
|
|
$
|
2,143
|
|
Adjustments to net income:
|
|
|
|
|
|
||||||
Dividends on preferred stock
(4)
|
$
|
(188
|
)
|
|
$
|
(182
|
)
|
|
$
|
(173
|
)
|
Earnings allocated to participating securities
(5)
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|||
Net income available to common shareholders
|
$
|
2,410
|
|
|
$
|
1,993
|
|
|
$
|
1,968
|
|
Earnings per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
6.48
|
|
|
$
|
5.32
|
|
|
$
|
5.03
|
|
Diluted
|
6.40
|
|
|
5.24
|
|
|
4.97
|
|
|||
Average common shares outstanding (in thousands):
|
|||||||||||
Basic
|
371,983
|
|
|
374,793
|
|
|
391,485
|
||||
Diluted
|
376,476
|
|
|
380,213
|
|
|
396,090
|
||||
Cash dividends declared per common share
|
$
|
1.78
|
|
|
$
|
1.60
|
|
|
$
|
1.44
|
|
Return on average common equity
|
12.2
|
%
|
|
10.6
|
%
|
|
10.5
|
%
|
|
•
|
EPS of
$6.40
in
2018
increased
22%
compared to
$5.24
in
2017
. Both years include the impact of notable items.
|
◦
|
2018
notable items included:
|
▪
|
Repositioning charges of approximately
$300 million
;
|
▪
|
Legal and related expenses of approximately
$50 million
; and
|
▪
|
Acquisition and restructuring costs primarily related to Charles River Development of approximately
$24 million
.
|
◦
|
2017
notable items included:
|
▪
|
One-time estimated net impact of
$270 million
associated with the TCJA, including a one-time estimated tax expense of approximately
$250 million
and a one-time reduction in revenue of approximately
$20 million
; and
|
▪
|
Acquisition and restructuring costs related to GEAM and Beacon of approximately
$266 million
.
|
•
|
2018 revenues were impacted by unfavorable market conditions and fee compression. In light of challenging market and industry headwinds, we have launched a new expense program designed to reduce costs.
|
•
|
2018
ROE of
12.2%
increased from
10.6%
in
2017
. Pre-tax margin of
25.0%
in
2018
decreased from
26.0%
in
2017
.
|
•
|
Operating leverage was
(1.2)%
for
2018
. Operating leverage represents the difference between the percentage change in total revenue and the percentage change in total expenses, in each case relative to the prior year period.
|
•
|
Fee operating leverage was
(4.0)%
for
2018
. Fee operating leverage represents the difference between the percentage change in total fee revenue and the percentage change in total expenses, in each case relative to the prior year period. The negative fee operating leverage is primarily due to higher expenses, in part due to the aforementioned notable items.
|
•
|
On October 1, 2018, we completed our acquisition of Charles River Development, a provider of investment management front office
|
◦
|
Total revenues contributed by Charles River Development in the fourth quarter of
2018
were approximately
$121 million
, including
$116 million
in processing fees and other revenue and
$5 million
in other revenue lines.
|
◦
|
Total expenses contributed by Charles River Development in the fourth quarter of
2018
were approximately
$57 million
, including
$28 million
in compensation and employee benefits,
$18 million
in amortization of other intangible assets and
$11 million
in other expense lines.
|
•
|
We have resumed our common stock purchase program in the first quarter of 2019 and may repurchase up to
$600 million
through June 30, 2019 under the 2018 Program.
|
•
|
Total revenue
and fee revenue
increased
7%
and
5%
, respectively, in
2018
compared to
2017
, primarily driven by higher management fees and foreign exchange trading services and, in the case of total revenue, higher NII, partially offset by lower securities finance revenue.
|
◦
|
The new revenue recognition standard, effective January 1, 2018, contributed approximately
$272 million
to total revenue in
2018
compared to
2017
.
|
◦
|
Charles River Development contributed approximately
$121 million
to total revenue in
2018
.
|
•
|
Servicing fee revenue increased
1%
in
2018
compared to
2017
, primarily due to market appreciation and net new business, largely offset by challenging industry conditions, including fee pressure.
|
•
|
Management fee revenue increased
15%
, or
$235 million
, in
2018
compared to
2017
, reflecting
higher average global equity markets during 2018
. The new revenue recognition standard contributed
$190 million
to management fee revenue in
2018
, compared to
2017
.
|
•
|
Securities finance revenue decreased
10%
in
2018
compared to
2017
, primarily due to certain balance sheet repositioning efforts in
2018
.
|
•
|
Processing fees and other revenue increased
17%
in
2018
compared to
2017
, and reflects approximately
$116 million
from Charles River Development in
2018
.
|
•
|
NII increased
16%
in
2018
compared to
2017
, primarily due to higher U.S. interest rates and disciplined liability pricing, partially offset by a mix shift to HQLA. In
2018
, we sold approximately
$26 billion
of non-HQLA, of which a significant portion has been reinvested in HQLA.
|
•
|
Total expenses
increased
9%
in
2018
compared to
2017
, primarily due to repositioning charges taken in
2018
, the adoption of the new revenue recognition standard in
2018
and higher technology costs, partially offset by net Beacon savings.
|
◦
|
In
2018
, we initiated a new expense savings program and expect to realize
$350 million
in gross expense savings by the end of 2019. As part of that program, we recorded a repositioning charge in the fourth quarter of
2018
of approximately
$223 million
, consisting of
$198 million
of compensation and employee benefits expenses and
$25 million
of occupancy expenses. Including a charge taken in the second quarter of
2018
, total repositioning charges were
$300 million
in
2018
.
|
◦
|
In
2018
, we achieved approximately
$245 million
of Beacon pre-tax year-over-year savings, net of Beacon investments.
|
◦
|
Total expenses in
2018
include approximately
$272 million
and
$57 million
related to the adoption of the new revenue recognition standard and our acquisition of Charles River Development, respectively.
|
•
|
AUC/A decreased
5%
in
2018
compared to
2017
, primarily due to lower market levels. In
2018
, newly announced asset servicing mandates totaled approximately
$1.9 trillion
. Servicing assets remaining to be installed in future periods totaled approximately
$385 billion
as of
December 31, 2018
.
|
•
|
AUM decreased
10%
in
2018
compared to
2017
, primarily driven by weaker period end equity markets as well as institutional and cash outflows, partially offset by ETF net inflows.
|
•
|
We declared aggregate common stock dividends of
$1.78
per share, totaling
$665 million
in
2018
, compared to
$1.60
per share, totaling
$596 million
in
2017
, representing an increase of approximately
12%
on a per share basis.
|
•
|
In the first quarter of 2018, we acquired
3.3 million
shares of common stock at an average per share cost of $
105.31
and an aggregate cost of approximately
$350 million
under our prior common stock purchase program (the 2017 Program) approved by our Board.
|
•
|
In connection with our acquisition of Charles River Development, we did not repurchase any common stock
under the common stock purchase plan approved by our Board in June 2018 (the 2018 Program), nor did we repurchase any common stock under the 2017 Program in the quarter ended June 30, 2018. We have resumed our common stock purchase program in the first quarter of 2019 and may repurchase up to
$600 million
through June 30, 2019 under the 2018 Program.
|
•
|
In July 2018, we completed a public offering of approximately 13.24 million shares of our common stock. The offering price was $86.93 per share and net proceeds totaled approximately
$1.15 billion
.
|
•
|
In September 2018, we issued 500,000 depositary shares each representing a 1/100th ownership interest in a share of our Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series H, without par value per share, with a liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share) and an initial dividend rate of 5.625% per annum. The net proceeds were approximately
$500 million
.
|
•
|
Our standardized CET1 capital ratio decreased to
11.7%
as of
December 31, 2018
compared to
11.9%
as of
December 31, 2017
, and Tier 1 leverage ratio decreased to
7.2%
as of
December 31, 2018
compared to
7.3%
as of
December 31, 2017
. The decreases are primarily driven by higher deduction of goodwill of
$1.5 billion
and intangible assets of
$1.0 billion
as a result of our acquisition of Charles River Development, as well as the phase in of the intangible assets of
$0.3 billion
(
100%
in
2018
compared to
80%
in 2017).
|
|
|
•
|
A 10% increase or decrease in worldwide equity valuations, on a weighted average basis, over the relevant periods for which our servicing fees are calculated, would result in a corresponding change in our total servicing fee revenues, on average and over time, of approximately 3%; and
|
•
|
A 10% increase or decrease in worldwide fixed income valuations, on a weighted average basis, over the relevant periods for which our servicing fees are calculated, would result in a corresponding change in our total servicing fee revenues
,
on average and over time, of approximately 1%.
|
TABLE 3: DAILY, MONTH-END AND YEAR-END EQUITY INDICES
(1)
|
||||||||||||||||||||||||||
|
Years Ended December 31,
|
|
Years Ended December 31,
|
|
Years Ended December 31,
|
|||||||||||||||||||||
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
|||||||||
|
Daily Averages of Indices
|
|
Averages of Month-End Indices
|
|
Year-End Indices
|
|||||||||||||||||||||
S&P 500
®
|
2,746
|
|
|
2,449
|
|
|
12
|
%
|
|
2,738
|
|
|
2,465
|
|
|
11
|
%
|
|
2,507
|
|
|
2,674
|
|
|
(6
|
)%
|
MSCI EAFE
®
|
1,965
|
|
|
1,886
|
|
|
4
|
|
|
1,957
|
|
|
1,900
|
|
|
3
|
|
|
1,720
|
|
|
2,051
|
|
|
(16
|
)
|
MSCI
®
Emerging Markets
|
1,093
|
|
|
1,028
|
|
|
6
|
|
|
1,090
|
|
|
1,036
|
|
|
5
|
|
|
966
|
|
|
1,158
|
|
|
(17
|
)
|
HFRI Asset Weighted Composite
®
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
1,404
|
|
|
1,352
|
|
|
4
|
|
|
1,380
|
|
|
1,389
|
|
|
(1
|
)
|
Barclays Capital Global Aggregate Bond Index
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
479
|
|
|
485
|
|
|
(1
|
)
|
|
|
|
TABLE 4: INDUSTRY ASSET FLOWS
|
|||||||
|
Years Ended December 31,
|
||||||
(In billions)
|
2018
|
|
2017
|
||||
North America - ICI Market Data
(1)(2)
|
|
|
|||||
Long-Term Funds
(3)
|
$
|
(349.6
|
)
|
|
$
|
66.8
|
|
Money Market
|
119.8
|
|
|
81.2
|
|
||
ETF
|
310.9
|
|
|
470.8
|
|
||
Total ICI Flows
|
$
|
81.1
|
|
|
$
|
618.8
|
|
|
|
|
|
||||
Europe - Broadridge Market Data
(1)(4)
|
|
|
|||||
Long-Term Funds
(3)
|
$
|
(52.1
|
)
|
|
$
|
713.5
|
|
Money Market
|
12.4
|
|
|
75.7
|
|
||
Total Broadridge Flows
|
$
|
(39.7
|
)
|
|
$
|
789.2
|
|
|
|
|
•
|
A 10% increase or decrease in worldwide equity valuations, on a weighted average basis, over the relevant periods for which our management fees are calculated, would result in a corresponding change in our total management fee revenues, on average and over time, of approximately
5%
; and
|
•
|
A 10% increase or decrease in worldwide fixed-income valuations, on a weighted average basis, over the relevant periods for which our management fees are calculated, would result in a corresponding change in our total management fee revenues
,
on average and over time, of approximately
4%
.
|
TABLE 5: AVERAGE BALANCES AND INTEREST RATES - FULLY TAXABLE-EQUIVALENT BASIS
(1)
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
Years Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||||||||||||||
(Dollars in millions; fully taxable-equivalent basis)
|
Average
Balance
|
|
Interest
Revenue/
Expense
|
|
Rate
|
|
Average
Balance
|
|
Interest
Revenue/
Expense
|
|
Rate
|
|
Average
Balance |
|
Interest
Revenue/ Expense |
|
Rate
|
|||||||||||||||
Interest-bearing deposits with banks
|
$
|
54,328
|
|
|
$
|
387
|
|
|
0.71
|
%
|
|
$
|
47,514
|
|
|
$
|
180
|
|
|
0.38
|
%
|
|
$
|
53,091
|
|
|
$
|
126
|
|
|
0.24
|
%
|
Securities purchased under resale agreements
(2)
|
2,901
|
|
|
335
|
|
|
11.55
|
|
|
2,131
|
|
|
264
|
|
|
12.38
|
|
|
2,558
|
|
|
146
|
|
|
5.70
|
|
||||||
Trading account assets
|
1,051
|
|
|
—
|
|
|
—
|
|
|
1,011
|
|
|
(1
|
)
|
|
(0.12
|
)
|
|
921
|
|
|
—
|
|
|
—
|
|
||||||
Investment securities
|
88,070
|
|
|
1,927
|
|
|
2.19
|
|
|
95,779
|
|
|
1,891
|
|
|
1.97
|
|
|
100,738
|
|
|
1,962
|
|
|
1.95
|
|
||||||
Loans and leases
|
23,573
|
|
|
698
|
|
|
2.96
|
|
|
21,916
|
|
|
519
|
|
|
2.37
|
|
|
19,013
|
|
|
384
|
|
|
2.02
|
|
||||||
Other interest-earning assets
|
15,714
|
|
|
372
|
|
|
2.37
|
|
|
22,884
|
|
|
222
|
|
|
0.97
|
|
|
22,863
|
|
|
61
|
|
|
0.27
|
|
||||||
Average total interest-earning assets
|
$
|
185,637
|
|
|
$
|
3,719
|
|
|
2.00
|
|
|
$
|
191,235
|
|
|
$
|
3,075
|
|
|
1.61
|
|
|
$
|
199,184
|
|
|
$
|
2,679
|
|
|
1.34
|
|
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S.
|
$
|
54,953
|
|
|
$
|
256
|
|
|
0.47
|
%
|
|
$
|
30,623
|
|
|
$
|
96
|
|
|
0.31
|
%
|
|
$
|
30,107
|
|
|
$
|
132
|
|
|
0.44
|
%
|
Non-U.S.
(3)
|
70,623
|
|
|
107
|
|
|
0.15
|
|
|
91,937
|
|
|
67
|
|
|
0.07
|
|
|
95,551
|
|
|
(47
|
)
|
|
(0.05
|
)
|
||||||
Total interest-bearing deposits
(3)(4)
|
125,576
|
|
|
363
|
|
|
0.29
|
|
|
122,560
|
|
|
163
|
|
|
0.13
|
|
|
125,658
|
|
|
85
|
|
|
0.07
|
|
||||||
Securities sold under repurchase agreements
|
2,048
|
|
|
13
|
|
|
0.62
|
|
|
3,683
|
|
|
2
|
|
|
0.05
|
|
|
4,113
|
|
|
1
|
|
|
0.02
|
|
||||||
Federal funds purchased
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
||||||
Other short-term borrowings
|
1,327
|
|
|
17
|
|
|
1.28
|
|
|
1,313
|
|
|
10
|
|
|
0.80
|
|
|
1,666
|
|
|
7
|
|
|
0.40
|
|
||||||
Long-term debt
|
10,686
|
|
|
389
|
|
|
3.64
|
|
|
11,595
|
|
|
308
|
|
|
2.66
|
|
|
11,401
|
|
|
260
|
|
|
2.29
|
|
||||||
Other interest-bearing liabilities
|
4,956
|
|
|
209
|
|
|
4.20
|
|
|
4,607
|
|
|
121
|
|
|
2.63
|
|
|
5,394
|
|
|
75
|
|
|
1.39
|
|
||||||
Average total interest-bearing liabilities
|
$
|
144,593
|
|
|
$
|
991
|
|
|
0.68
|
|
|
$
|
143,758
|
|
|
$
|
604
|
|
|
0.42
|
|
|
$
|
148,263
|
|
|
$
|
428
|
|
|
0.29
|
|
Interest rate spread
|
|
|
|
|
1.32
|
%
|
|
|
|
|
|
1.19
|
%
|
|
|
|
|
|
1.05
|
%
|
||||||||||||
Net interest income-fully taxable-equivalent basis
|
|
|
$
|
2,728
|
|
|
|
|
|
|
$
|
2,471
|
|
|
|
|
|
|
$
|
2,251
|
|
|
|
|||||||||
Net interest margin-fully taxable-equivalent basis
|
|
|
|
|
1.47
|
%
|
|
|
|
|
|
1.29
|
%
|
|
|
|
|
|
1.13
|
%
|
||||||||||||
Tax-equivalent adjustment
|
|
|
(57
|
)
|
|
|
|
|
|
(167
|
)
|
|
|
|
|
|
(167
|
)
|
|
|
||||||||||||
Net interest income-GAAP basis
|
|
|
$
|
2,671
|
|
|
|
|
|
|
$
|
2,304
|
|
|
|
|
|
|
$
|
2,084
|
|
|
|
|
|
TABLE 6: EXPENSES
|
|||||||||||||||||
|
Years Ended December 31,
|
|
% Change 2018 vs. 2017
|
|
% Change 2017 vs. 2016
|
||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
2016
|
|
|
||||||||||
Compensation and employee benefits
(1)
|
$
|
4,780
|
|
|
$
|
4,394
|
|
|
$
|
4,353
|
|
|
9
|
%
|
|
1
|
%
|
Information systems and communications
|
1,324
|
|
|
1,167
|
|
|
1,105
|
|
|
14
|
|
|
6
|
|
|||
Transaction processing services
(2)
|
938
|
|
|
838
|
|
|
800
|
|
|
12
|
|
|
5
|
|
|||
Occupancy
|
500
|
|
|
461
|
|
|
440
|
|
|
9
|
|
|
5
|
|
|||
Acquisition costs
|
31
|
|
|
21
|
|
|
69
|
|
|
48
|
|
|
(70
|
)
|
|||
Restructuring charges, net
|
(7
|
)
|
|
245
|
|
|
140
|
|
|
nm
|
|
|
75
|
|
|||
Amortization of other intangible assets
(1)
|
226
|
|
|
214
|
|
|
207
|
|
|
6
|
|
|
3
|
|
|||
Other:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Professional services
|
357
|
|
|
340
|
|
|
379
|
|
|
5
|
|
|
(10
|
)
|
|||
Regulatory fees and assessments
|
87
|
|
|
106
|
|
|
82
|
|
|
(18
|
)
|
|
29
|
|
|||
Other
(2)
|
732
|
|
|
483
|
|
|
502
|
|
|
52
|
|
|
(4
|
)
|
|||
Total other
(2)
|
1,176
|
|
|
929
|
|
|
963
|
|
|
27
|
|
|
(4
|
)
|
|||
Total expenses
(1) (2)
|
$
|
8,968
|
|
|
$
|
8,269
|
|
|
$
|
8,077
|
|
|
9
|
|
|
2
|
|
Number of employees at year-end
|
40,142
|
|
|
36,643
|
|
|
33,783
|
|
|
10
|
|
|
8
|
|
|
|
TABLE 7: RESTRUCTURING AND REPOSITIONING CHARGES
|
|||||||||||||||
(In millions)
|
Employee
Related Costs |
|
Real Estate
Actions |
|
Asset and Other Write-offs
|
|
Total
|
||||||||
Accrual Balance at December 31, 2015
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
3
|
|
|
$
|
23
|
|
Accruals for Business Operations and Information Technology
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Accruals for Beacon
|
94
|
|
|
18
|
|
|
30
|
|
|
142
|
|
||||
Payments and other adjustments
|
(64
|
)
|
|
(12
|
)
|
|
(31
|
)
|
|
(107
|
)
|
||||
Accrual Balance at December 31, 2016
|
$
|
37
|
|
|
$
|
17
|
|
|
$
|
2
|
|
|
$
|
56
|
|
Accruals for Beacon
|
186
|
|
|
32
|
|
|
27
|
|
|
245
|
|
||||
Payments and Other Adjustments
|
(57
|
)
|
|
(17
|
)
|
|
(26
|
)
|
|
(100
|
)
|
||||
Accrual Balance at December 31, 2017
|
$
|
166
|
|
|
$
|
32
|
|
|
$
|
3
|
|
|
$
|
201
|
|
Accruals for Beacon
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||
Accruals for Repositioning Charges
|
259
|
|
|
41
|
|
|
—
|
|
|
300
|
|
||||
Payments and Other Adjustments
|
(115
|
)
|
|
(36
|
)
|
|
(2
|
)
|
|
(153
|
)
|
||||
Accrual Balance at December 31, 2018
|
$
|
303
|
|
|
$
|
37
|
|
|
$
|
1
|
|
|
$
|
341
|
|
TABLE 8: INVESTMENT SERVICING LINE OF BUSINESS RESULTS
|
|||||||||||||||||
(Dollars in millions, except where otherwise noted)
|
Years Ended December 31,
|
|
% Change 2018 vs. 2017
|
|
% Change 2017 vs. 2016
|
||||||||||||
2018
|
|
2017
|
|
2016
|
|
||||||||||||
Servicing fees
|
$
|
5,429
|
|
|
$
|
5,365
|
|
|
$
|
5,073
|
|
|
1
|
%
|
|
6
|
%
|
Foreign exchange trading services
|
1,071
|
|
|
999
|
|
|
1,038
|
|
|
7
|
|
|
(4
|
)
|
|||
Securities finance
|
543
|
|
|
606
|
|
|
562
|
|
|
(10
|
)
|
|
8
|
|
|||
Processing fees and other
(1)
|
294
|
|
|
240
|
|
|
119
|
|
|
23
|
|
|
102
|
|
|||
Total fee revenue
(1)
|
7,337
|
|
|
7,210
|
|
|
6,792
|
|
|
2
|
|
|
6
|
|
|||
Net interest income
|
2,691
|
|
|
2,309
|
|
|
2,081
|
|
|
17
|
|
|
11
|
|
|||
Gains (losses) related to investment securities, net
|
6
|
|
|
(39
|
)
|
|
7
|
|
|
nm
|
|
|
nm
|
|
|||
Total revenue
(1)
|
10,034
|
|
|
9,480
|
|
|
8,880
|
|
|
6
|
|
|
7
|
|
|||
Provision for loan losses
|
15
|
|
|
2
|
|
|
10
|
|
|
650
|
|
|
(80
|
)
|
|||
Total expenses
|
7,034
|
|
|
6,717
|
|
|
6,660
|
|
|
5
|
|
|
1
|
|
|||
Income before income tax expense
|
$
|
2,985
|
|
|
$
|
2,761
|
|
|
$
|
2,210
|
|
|
8
|
|
|
25
|
|
Pre-tax margin
|
30
|
%
|
|
29
|
%
|
|
25
|
%
|
|
|
|
|
|
||||
Average assets (in billions)
|
$
|
220.2
|
|
|
$
|
214.0
|
|
|
$
|
225.3
|
|
|
|
|
|
|
|
|
TABLE 9: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY PRODUCT
|
|||||||||||||||||
|
As of December 31,
|
|
% Change
2018 vs. 2017
|
|
% Change
2017 vs. 2016
|
||||||||||||
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|
||||||||||
Collective funds
|
8,999
|
|
|
9,707
|
|
|
7,501
|
|
|
(7
|
)
|
|
29
|
|
|||
Insurance and other products
|
8,220
|
|
|
9,105
|
|
|
8,845
|
|
|
(10
|
)
|
|
3
|
|
|||
Mutual funds
|
$
|
7,912
|
|
|
$
|
7,603
|
|
|
$
|
6,841
|
|
|
4
|
%
|
|
11
|
%
|
Pension products
|
6,489
|
|
|
6,704
|
|
|
5,584
|
|
|
(3
|
)
|
|
20
|
|
|||
Total
|
$
|
31,620
|
|
|
$
|
33,119
|
|
|
$
|
28,771
|
|
|
(5
|
)
|
|
15
|
|
TABLE 10: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY ASSET CLASS
|
|||||||||||||||||
|
As of December 31,
|
|
% Change
2018 vs. 2017 |
|
% Change
2017 vs. 2016 |
||||||||||||
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|
||||||||||
Equities
|
$
|
18,041
|
|
|
$
|
19,214
|
|
|
$
|
16,189
|
|
|
(6
|
)%
|
|
19
|
%
|
Fixed-income
|
9,758
|
|
|
10,070
|
|
|
9,231
|
|
|
(3
|
)
|
|
9
|
|
|||
Short-term and other investments
|
3,821
|
|
|
3,835
|
|
|
3,351
|
|
|
—
|
|
|
14
|
|
|||
Total
|
$
|
31,620
|
|
|
$
|
33,119
|
|
|
$
|
28,771
|
|
|
(5
|
)
|
|
15
|
|
TABLE 11: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY GEOGRAPHY
(1)
|
|||||||||||||||||
|
As of December 31,
|
|
% Change
2018 vs. 2017 |
|
% Change
2017 vs. 2016 |
||||||||||||
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|
||||||||||
Americas
|
$
|
23,203
|
|
|
$
|
24,418
|
|
|
$
|
21,544
|
|
|
(5
|
)%
|
|
13
|
%
|
Europe/Middle East/Africa
|
6,699
|
|
|
7,028
|
|
|
5,734
|
|
|
(5
|
)
|
|
23
|
|
|||
Asia/Pacific
|
1,718
|
|
|
1,673
|
|
|
1,493
|
|
|
3
|
|
|
12
|
|
|||
Total
|
$
|
31,620
|
|
|
$
|
33,119
|
|
|
$
|
28,771
|
|
|
(5
|
)
|
|
15
|
|
|
|
•
|
Direct sales and trading
: Represent FX transactions at negotiated rates with clients and investment managers that contact our trading desk directly. These principal market-making activities include transactions for funds serviced by third party custodians or prime brokers, as well as those funds under custody with us.
|
•
|
Indirect FX trading
: Represent FX transactions with clients or their investment managers routed to our FX desk through our asset-servicing operation, and to all of which, we are the funds' custodian. We execute indirect FX trades as a principal at rates disclosed to our clients.
|
•
|
Electronic FX services: Our clients may choose to execute FX transactions through one of our
|
•
|
Other trading, transition management and brokerage revenue: As our clients look to us to enhance and preserve portfolio values, they may choose to utilize our Transition or Currency Management capabilities or transact with our Equity Trade execution group. These transactions generate revenue via commissions charged for trades transacted during the management of these portfolios.
|
TABLE 12: INVESTMENT MANAGEMENT LINE OF BUSINESS RESULTS
|
|||||||||||||||||
(Dollars in millions, except where otherwise noted)
|
Years Ended December 31,
|
|
% Change 2018 vs. 2017
|
|
% Change 2017 vs. 2016
|
||||||||||||
2018
|
|
2017
|
|
2016
|
|
|
|||||||||||
Management fees
(1)
|
$
|
1,851
|
|
|
$
|
1,616
|
|
|
$
|
1,292
|
|
|
15
|
%
|
|
25
|
%
|
Foreign exchange trading services
(1)(2)
|
130
|
|
|
72
|
|
|
61
|
|
|
81
|
|
|
18
|
|
|||
Processing fees and other
|
(5
|
)
|
|
7
|
|
|
(29
|
)
|
|
(171
|
)
|
|
(124
|
)
|
|||
Total fee revenue
|
1,976
|
|
|
1,695
|
|
|
1,324
|
|
|
17
|
|
|
28
|
|
|||
Net interest income
|
(20
|
)
|
|
(5
|
)
|
|
3
|
|
|
nm
|
|
|
nm
|
|
|||
Total revenue
|
1,956
|
|
|
1,690
|
|
|
1,327
|
|
|
16
|
|
|
27
|
|
|||
Total expenses
(1)
|
1,544
|
|
|
1,286
|
|
|
1,218
|
|
|
20
|
|
|
6
|
|
|||
Income before income tax expense
|
$
|
412
|
|
|
$
|
404
|
|
|
$
|
109
|
|
|
2
|
|
|
271
|
|
Pre-tax margin
|
21
|
%
|
|
24
|
%
|
|
8
|
%
|
|
|
|
|
|||||
Average assets
(in billions)
|
$
|
3.2
|
|
|
$
|
5.4
|
|
|
$
|
4.4
|
|
|
|
|
|
|
|
TABLE 13: ASSETS UNDER MANAGEMENT BY ASSET CLASS AND INVESTMENT APPROACH
|
|
|
|||||||||||||||
|
As of December 31,
|
|
% Change
2018 vs. 2017 |
|
% Change
2017 vs. 2016 |
||||||||||||
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|
||||||||||
Equity:
|
|||||||||||||||||
Active
|
$
|
80
|
|
|
$
|
95
|
|
|
$
|
73
|
|
|
(16
|
)%
|
|
30
|
%
|
Passive
|
1,464
|
|
|
1,650
|
|
|
1,401
|
|
|
(11
|
)
|
|
18
|
|
|||
Total Equity
|
1,544
|
|
|
1,745
|
|
|
1,474
|
|
|
(12
|
)
|
|
18
|
|
|||
Fixed-Income:
|
|||||||||||||||||
Active
|
81
|
|
|
77
|
|
|
70
|
|
|
5
|
|
|
10
|
|
|||
Passive
|
341
|
|
|
337
|
|
|
308
|
|
|
1
|
|
|
9
|
|
|||
Total Fixed-Income
|
422
|
|
|
414
|
|
|
378
|
|
|
2
|
|
|
10
|
|
|||
Cash
(1)
|
287
|
|
|
330
|
|
|
333
|
|
|
(13
|
)
|
|
(1
|
)
|
|||
Multi-Asset-Class Solutions:
|
|||||||||||||||||
Active
|
19
|
|
|
18
|
|
|
19
|
|
|
6
|
|
|
(5
|
)
|
|||
Passive
|
113
|
|
|
129
|
|
|
107
|
|
|
(12
|
)
|
|
21
|
|
|||
Total Multi-Asset-Class Solutions
|
132
|
|
|
147
|
|
|
126
|
|
|
(10
|
)
|
|
17
|
|
|||
Alternative Investments
(2)
:
|
|||||||||||||||||
Active
|
21
|
|
|
23
|
|
|
28
|
|
|
(9
|
)
|
|
(18
|
)
|
|||
Passive
|
105
|
|
|
123
|
|
|
129
|
|
|
(15
|
)
|
|
(5
|
)
|
|||
Total Alternative Investments
|
126
|
|
|
146
|
|
|
157
|
|
|
(14
|
)
|
|
(7
|
)
|
|||
Total
|
$
|
2,511
|
|
|
$
|
2,782
|
|
|
$
|
2,468
|
|
|
(10
|
)
|
|
13
|
|
|
|
|
|
TABLE 15: GEOGRAPHIC MIX OF ASSETS UNDER MANAGEMENT
(1)
|
|
|
|
|
|||||||||||||
|
As of December 31,
|
|
% Change
2018 vs. 2017 |
|
% Change
2017 vs. 2016 |
||||||||||||
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|
||||||||||
North America
|
$
|
1,731
|
|
|
$
|
1,931
|
|
|
$
|
1,691
|
|
|
(10
|
)%
|
|
14
|
%
|
Europe/Middle East/Africa
|
421
|
|
|
521
|
|
|
482
|
|
|
(19
|
)
|
|
8
|
|
|||
Asia/Pacific
|
359
|
|
|
330
|
|
|
295
|
|
|
9
|
|
|
12
|
|
|||
Total
|
$
|
2,511
|
|
|
$
|
2,782
|
|
|
$
|
2,468
|
|
|
(10
|
)
|
|
13
|
|
|
|
TABLE 16: ACTIVITY IN ASSETS UNDER MANAGEMENT BY PRODUCT CATEGORY
|
|||||||||||||||||||||||
(In billions)
|
Equity
|
|
Fixed-Income
|
|
Cash
(1)
|
|
Multi-Asset-Class Solutions
|
|
Alternative Investments
(2)
|
|
Total
|
||||||||||||
Balance as of December 31, 2015
|
$
|
1,326
|
|
|
$
|
312
|
|
|
$
|
368
|
|
|
$
|
103
|
|
|
$
|
136
|
|
|
$
|
2,245
|
|
Long-term institutional flows, net
(3)
|
(57
|
)
|
|
(6
|
)
|
|
|
|
|
14
|
|
|
(8
|
)
|
|
(57
|
)
|
||||||
ETF flows, net
|
37
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
52
|
|
||||||
Cash fund flows, net
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
||||||
Total flows, net
|
(20
|
)
|
|
3
|
|
|
(37
|
)
|
|
14
|
|
|
(2
|
)
|
|
(42
|
)
|
||||||
Market appreciation
|
140
|
|
|
10
|
|
|
—
|
|
|
9
|
|
|
14
|
|
|
173
|
|
||||||
Foreign exchange impact
|
(10
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(20
|
)
|
||||||
Total market/foreign exchange impact
|
130
|
|
|
7
|
|
|
(2
|
)
|
|
6
|
|
|
12
|
|
|
153
|
|
||||||
Acquisitions and transfers
(4)
|
38
|
|
|
56
|
|
|
4
|
|
|
3
|
|
|
11
|
|
|
112
|
|
||||||
Balance as of December 31, 2016
|
$
|
1,474
|
|
|
$
|
378
|
|
|
$
|
333
|
|
|
$
|
126
|
|
|
$
|
157
|
|
|
$
|
2,468
|
|
Long-term institutional flows, net
(3)
|
(74
|
)
|
|
2
|
|
|
|
|
4
|
|
|
(21
|
)
|
|
(89
|
)
|
|||||||
ETF flows, net
|
26
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
37
|
|
||||||
Cash fund flows, net
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||||
Total flows, net
|
(48
|
)
|
|
12
|
|
|
(8
|
)
|
|
4
|
|
|
(20
|
)
|
|
(60
|
)
|
||||||
Market appreciation
|
293
|
|
|
15
|
|
|
2
|
|
|
12
|
|
|
3
|
|
|
325
|
|
||||||
Foreign exchange impact
|
26
|
|
|
9
|
|
|
3
|
|
|
5
|
|
|
6
|
|
|
49
|
|
||||||
Total market/foreign exchange impact
|
319
|
|
|
24
|
|
|
5
|
|
|
17
|
|
|
9
|
|
|
374
|
|
||||||
Balance as of December 31, 2017
|
$
|
1,745
|
|
|
$
|
414
|
|
|
$
|
330
|
|
|
$
|
147
|
|
|
$
|
146
|
|
|
$
|
2,782
|
|
Long-term institutional flows, net
(3)
|
(45
|
)
|
|
12
|
|
|
—
|
|
|
(3
|
)
|
|
(2
|
)
|
|
(38
|
)
|
||||||
ETF flows, net
|
(3
|
)
|
|
7
|
|
|
6
|
|
|
—
|
|
|
(2
|
)
|
|
8
|
|
||||||
Cash fund flows, net
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
||||||
Total flows, net
|
(48
|
)
|
|
19
|
|
|
(44
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(80
|
)
|
||||||
Market appreciation (depreciation)
|
(142
|
)
|
|
(7
|
)
|
|
3
|
|
|
(10
|
)
|
|
(10
|
)
|
|
(166
|
)
|
||||||
Foreign exchange impact
|
(11
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|
(25
|
)
|
||||||
Total market/foreign exchange impact
|
(153
|
)
|
|
(11
|
)
|
|
1
|
|
|
(12
|
)
|
|
(16
|
)
|
|
(191
|
)
|
||||||
Balance as of December 31, 2018
|
$
|
1,544
|
|
|
$
|
422
|
|
|
$
|
287
|
|
|
$
|
132
|
|
|
$
|
126
|
|
|
$
|
2,511
|
|
|
|
TABLE 17: AVERAGE STATEMENT OF CONDITION
(1)
|
|||||||||||
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
(In millions)
|
Average Balance
|
|
Average Balance
|
|
Average Balance
|
||||||
Assets:
|
|
|
|
|
|
||||||
Interest-bearing deposits with banks
|
$
|
54,328
|
|
|
$
|
47,514
|
|
|
$
|
53,091
|
|
Securities purchased under resale agreements
|
2,901
|
|
|
2,131
|
|
|
2,558
|
|
|||
Trading account assets
|
1,051
|
|
|
1,011
|
|
|
921
|
|
|||
Investment securities
|
88,070
|
|
|
95,779
|
|
|
100,738
|
|
|||
Loans and leases
|
23,573
|
|
|
21,916
|
|
|
19,013
|
|
|||
Other interest-earning assets
|
15,714
|
|
|
22,884
|
|
|
22,863
|
|
|||
Average total interest-earning assets
|
185,637
|
|
|
191,235
|
|
|
199,184
|
|
|||
Cash and due from banks
|
3,178
|
|
|
3,097
|
|
|
3,157
|
|
|||
Other non-interest-earning assets
|
34,570
|
|
|
25,118
|
|
|
27,386
|
|
|||
Average total assets
|
$
|
223,385
|
|
|
$
|
219,450
|
|
|
$
|
229,727
|
|
|
|
|
|
|
|
||||||
Liabilities and shareholders’ equity:
|
|
|
|
|
|||||||
Interest-bearing deposits:
|
|
|
|
|
|
||||||
U.S.
|
$
|
54,953
|
|
|
$
|
30,623
|
|
|
$
|
30,107
|
|
Non-U.S.
|
70,623
|
|
|
91,937
|
|
|
95,551
|
|
|||
Total interest-bearing deposits
(2)
|
125,576
|
|
|
122,560
|
|
|
125,658
|
|
|||
Securities sold under repurchase agreements
|
2,048
|
|
|
3,683
|
|
|
4,113
|
|
|||
Federal funds purchased
|
—
|
|
|
—
|
|
|
31
|
|
|||
Other short-term borrowings
|
1,327
|
|
|
1,313
|
|
|
1,666
|
|
|||
Long-term debt
|
10,686
|
|
|
11,595
|
|
|
11,401
|
|
|||
Other interest-bearing liabilities
|
4,956
|
|
|
4,607
|
|
|
5,394
|
|
|||
Average total interest-bearing liabilities
|
144,593
|
|
|
143,758
|
|
|
148,263
|
|
|||
Non-interest-bearing deposits
(2)
|
35,832
|
|
|
41,248
|
|
|
44,827
|
|
|||
Other non-interest-bearing liabilities
|
19,804
|
|
|
12,379
|
|
|
14,742
|
|
|||
Preferred shareholders’ equity
|
3,327
|
|
|
3,197
|
|
|
3,060
|
|
|||
Common shareholders’ equity
|
19,829
|
|
|
18,868
|
|
|
18,835
|
|
|||
Average total liabilities and shareholders’ equity
|
$
|
223,385
|
|
|
$
|
219,450
|
|
|
$
|
229,727
|
|
|
|
TABLE 18: CARRYING VALUES OF INVESTMENT SECURITIES
|
|||||||||||
|
As of December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Available-for-sale:
|
|||||||||||
U.S. Treasury and federal agencies:
|
|||||||||||
Direct obligations
|
$
|
1,039
|
|
|
$
|
223
|
|
|
$
|
4,263
|
|
Mortgage-backed securities
|
15,968
|
|
|
10,872
|
|
|
13,257
|
|
|||
Total U.S. Treasury and federal agencies
|
17,007
|
|
|
11,095
|
|
|
17,520
|
|
|||
Asset-backed securities:
|
|
|
|
|
|
||||||
Student loans
(1)
|
541
|
|
|
3,358
|
|
|
5,596
|
|
|||
Credit cards
|
583
|
|
|
1,542
|
|
|
1,351
|
|
|||
Sub-prime
|
—
|
|
|
—
|
|
|
272
|
|
|||
Other
|
593
|
|
|
1,447
|
|
|
905
|
|
|||
Total asset-backed securities
|
1,717
|
|
|
6,347
|
|
|
8,124
|
|
|||
Non-U.S. debt securities:
|
|
|
|
|
|
||||||
Mortgage-backed securities
|
1,682
|
|
|
6,695
|
|
|
6,535
|
|
|||
Asset-backed securities
|
1,574
|
|
|
2,947
|
|
|
2,516
|
|
|||
Government securities
|
12,793
|
|
|
10,721
|
|
|
5,836
|
|
|||
Other
|
6,602
|
|
|
6,108
|
|
|
5,613
|
|
|||
Total non-U.S. debt securities
|
22,651
|
|
|
26,471
|
|
|
20,500
|
|
|||
State and political subdivisions
|
1,918
|
|
|
9,151
|
|
|
10,322
|
|
|||
Collateralized mortgage obligations
|
197
|
|
|
1,054
|
|
|
2,593
|
|
|||
Other U.S. debt securities
|
1,658
|
|
|
2,560
|
|
|
2,469
|
|
|||
U.S. equity securities
(2)
|
—
|
|
|
46
|
|
|
42
|
|
|||
Non-U.S. equity securities
(2)
|
—
|
|
|
—
|
|
|
3
|
|
|||
U.S. money-market mutual funds
(2)
|
—
|
|
|
397
|
|
|
409
|
|
|||
Non-U.S. money-market mutual funds
(2)
|
—
|
|
|
—
|
|
|
16
|
|
|||
Total
|
$
|
45,148
|
|
|
$
|
57,121
|
|
|
$
|
61,998
|
|
|
|
|
|
|
|
||||||
Held-to-maturity
(3)
:
|
|
|
|
|
|
||||||
U.S. Treasury and federal agencies:
|
|||||||||||
Direct obligations
|
$
|
14,794
|
|
|
$
|
17,028
|
|
|
$
|
17,527
|
|
Mortgage-backed securities
|
21,647
|
|
|
16,651
|
|
|
10,334
|
|
|||
Total U.S. Treasury and federal agencies
|
36,441
|
|
|
33,679
|
|
|
27,861
|
|
|||
Asset-backed securities:
|
|
|
|
|
|
||||||
Student loans
(1)
|
3,191
|
|
|
3,047
|
|
|
2,883
|
|
|||
Credit cards
|
193
|
|
|
798
|
|
|
897
|
|
|||
Other
|
1
|
|
|
1
|
|
|
35
|
|
|||
Total asset-backed securities
|
3,385
|
|
|
3,846
|
|
|
3,815
|
|
|||
Non-U.S. debt securities:
|
|
|
|
|
|
||||||
Mortgage-backed securities
|
638
|
|
|
939
|
|
|
1,150
|
|
|||
Asset-backed securities
|
223
|
|
|
263
|
|
|
531
|
|
|||
Government securities
|
358
|
|
|
474
|
|
|
286
|
|
|||
Other
|
46
|
|
|
48
|
|
|
113
|
|
|||
Total non-U.S. debt securities
|
1,265
|
|
|
1,724
|
|
|
2,080
|
|
|||
Collateralized mortgage obligations
|
823
|
|
|
1,209
|
|
|
1,413
|
|
|||
Total
|
$
|
41,914
|
|
|
$
|
40,458
|
|
|
$
|
35,169
|
|
|
|
TABLE 19: INVESTMENT PORTFOLIO BY EXTERNAL CREDIT RATING
|
|||||
|
December 31, 2018
|
|
December 31, 2017
|
||
AAA
(1)
|
76
|
%
|
|
74
|
%
|
AA
|
14
|
|
|
16
|
|
A
|
5
|
|
|
6
|
|
BBB
|
5
|
|
|
4
|
|
Below BBB
|
—
|
|
|
—
|
|
|
100
|
%
|
|
100
|
%
|
|
|
TABLE 20: INVESTMENT PORTFOLIO BY ASSET CLASS
|
|||||
|
December 31, 2018
|
|
December 31, 2017
|
||
US Agency MBS
|
40
|
%
|
|
26
|
%
|
Foreign Sovereign
|
19
|
|
|
12
|
|
US Treasuries
|
18
|
|
|
17
|
|
ABS
|
11
|
|
|
22
|
|
Other Credit
|
12
|
|
|
23
|
|
|
100
|
%
|
|
100
|
%
|
TABLE 21: NON-U.S. DEBT SECURITIES
|
|||||||
|
As of December 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Available-for-sale:
|
|
|
|
||||
Australia
|
$
|
2,847
|
|
|
$
|
4,717
|
|
United Kingdom
|
2,580
|
|
|
5,721
|
|
||
Canada
|
2,185
|
|
|
3,066
|
|
||
France
|
1,875
|
|
|
2,500
|
|
||
Germany
|
1,547
|
|
|
529
|
|
||
Spain
|
1,504
|
|
|
1,413
|
|
||
Japan
|
1,352
|
|
|
1,319
|
|
||
Austria
|
1,312
|
|
|
234
|
|
||
Ireland
|
1,301
|
|
|
787
|
|
||
Netherlands
|
1,116
|
|
|
1,175
|
|
||
European
(1)
|
1,087
|
|
|
—
|
|
||
Italy
|
1,010
|
|
|
1,645
|
|
||
Belgium
|
952
|
|
|
1,193
|
|
||
Finland
|
789
|
|
|
299
|
|
||
Hong Kong
|
458
|
|
|
666
|
|
||
Asian
(1)
|
338
|
|
|
—
|
|
||
Sweden
|
186
|
|
|
538
|
|
||
Norway
|
94
|
|
|
514
|
|
||
Other
(2)
|
118
|
|
|
155
|
|
||
Total
|
$
|
22,651
|
|
|
$
|
26,471
|
|
Held-to-maturity:
|
|
|
|
||||
United Kingdom
|
$
|
363
|
|
|
$
|
410
|
|
Singapore
|
242
|
|
|
353
|
|
||
Netherlands
|
187
|
|
|
372
|
|
||
Australia
|
158
|
|
|
235
|
|
||
Germany
|
115
|
|
|
127
|
|
||
Spain
|
92
|
|
|
104
|
|
||
Other
(3)
|
108
|
|
|
123
|
|
||
Total
|
$
|
1,265
|
|
|
$
|
1,724
|
|
|
|
•
|
a pre-tax net unrealized loss of
$32 million
, composed of gross unrealized gains of
$40 million
and gross unrealized losses of
$72 million
, associated with non-U.S. debt securities AFS; and
|
•
|
a pre-tax net unrealized gain of
$69 million
, composed of gross unrealized gains of
$78 million
and gross unrealized losses of
$9 million
, associated with non-U.S. debt securities HTM.
|
TABLE 22: STATE AND MUNICIPAL OBLIGORS
(1)
|
||||||||||||||
(Dollars in millions)
|
Total Municipal
Securities |
|
Credit and
Liquidity
Facilities
(2)
|
|
Total
|
|
% of Total Municipal
Exposure
|
|||||||
December 31, 2018
|
|
|
|
|
|
|
||||||||
State of Issuer:
|
|
|
|
|
|
|
||||||||
Texas
|
$
|
315
|
|
|
$
|
2,467
|
|
|
$
|
2,782
|
|
|
25
|
%
|
California
|
108
|
|
|
1,693
|
|
|
1,801
|
|
|
16
|
|
|||
New York
|
231
|
|
|
1,518
|
|
|
1,749
|
|
|
15
|
|
|||
Massachusetts
|
467
|
|
|
978
|
|
|
1,445
|
|
|
13
|
|
|||
Total
|
$
|
1,121
|
|
|
$
|
6,656
|
|
|
$
|
7,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2017
|
|
|
|
|
|
|
||||||||
State of Issuer:
|
|
|
|
|
|
|
||||||||
Texas
|
$
|
1,713
|
|
|
$
|
1,622
|
|
|
$
|
3,335
|
|
|
18
|
%
|
California
|
415
|
|
|
2,237
|
|
|
2,652
|
|
|
14
|
|
|||
New York
|
742
|
|
|
1,288
|
|
|
2,030
|
|
|
11
|
|
|||
Massachusetts
|
859
|
|
|
991
|
|
|
1,850
|
|
|
10
|
|
|||
Washington
|
623
|
|
|
366
|
|
|
989
|
|
|
5
|
|
|||
Total
|
$
|
4,352
|
|
|
$
|
6,504
|
|
|
$
|
10,856
|
|
|
|
|
|
|
|
TABLE 23: CONTRACTUAL MATURITIES AND YIELDS
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
As of December 31, 2018
|
|
Under 1 Year
|
|
1 to 5 Years
|
|
6 to 10 Years
|
|
Over 10 Years
|
||||||||||||||||||||
(Dollars in millions)
|
|
Amount
|
|
Yield
|
|
Amount
|
|
Yield
|
|
Amount
|
|
Yield
|
|
Amount
|
|
Yield
|
||||||||||||
Available-for-sale
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct obligations
|
|
$
|
224
|
|
|
—
|
%
|
|
$
|
815
|
|
|
2.74
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Mortgage-backed securities
|
|
101
|
|
|
3.38
|
|
|
802
|
|
|
3.53
|
|
|
1,884
|
|
|
3.24
|
|
|
13,181
|
|
|
3.97
|
|
||||
Total U.S. treasury and federal agencies
|
|
325
|
|
|
|
|
1,617
|
|
|
|
|
1,884
|
|
|
|
|
13,181
|
|
|
|
||||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Student loans
|
|
57
|
|
|
3.37
|
|
|
164
|
|
|
3.27
|
|
|
250
|
|
|
3.14
|
|
|
70
|
|
|
5.14
|
|
||||
Credit cards
|
|
199
|
|
|
1.67
|
|
|
294
|
|
|
1.96
|
|
|
90
|
|
|
3.21
|
|
|
—
|
|
|
—
|
|
||||
Collateralized loan obligations
|
|
—
|
|
|
—
|
|
|
402
|
|
|
3.42
|
|
|
171
|
|
|
1.09
|
|
|
20
|
|
|
3.37
|
|
||||
Total asset-backed securities
|
|
256
|
|
|
|
|
860
|
|
|
|
|
511
|
|
|
|
|
90
|
|
|
|
||||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
139
|
|
|
1.59
|
|
|
769
|
|
|
0.85
|
|
|
176
|
|
|
2.59
|
|
|
598
|
|
|
3.07
|
|
||||
Asset-backed securities
|
|
136
|
|
|
0.36
|
|
|
698
|
|
|
0.85
|
|
|
581
|
|
|
0.68
|
|
|
159
|
|
|
0.57
|
|
||||
Government securities
|
|
3,439
|
|
|
0.86
|
|
|
6,409
|
|
|
1.13
|
|
|
2,945
|
|
|
2.85
|
|
|
—
|
|
|
—
|
|
||||
Other
|
|
1,071
|
|
|
1.03
|
|
|
4,575
|
|
|
1.32
|
|
|
937
|
|
|
1.07
|
|
|
19
|
|
|
3.64
|
|
||||
Total non-U.S. debt securities
|
|
4,785
|
|
|
|
|
12,451
|
|
|
|
|
4,639
|
|
|
|
|
776
|
|
|
|
||||||||
State and political subdivisions
(2)
|
|
235
|
|
|
5.13
|
|
|
776
|
|
|
4.46
|
|
|
446
|
|
|
4.63
|
|
|
461
|
|
|
5.68
|
|
||||
Collateralized mortgage obligations
|
|
2
|
|
|
3.51
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|
3.53
|
|
||||
Other U.S. debt securities
|
|
141
|
|
|
3.64
|
|
|
1,219
|
|
|
2.64
|
|
|
298
|
|
|
2.44
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
5,744
|
|
|
|
|
$
|
16,923
|
|
|
|
|
$
|
7,778
|
|
|
|
|
$
|
14,703
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Held-to-maturity
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct obligations
|
|
$
|
4,002
|
|
|
1.91
|
%
|
|
$
|
10,737
|
|
|
2.27
|
%
|
|
$
|
12
|
|
|
2.66
|
%
|
|
$
|
43
|
|
|
2.58
|
%
|
Mortgage-backed securities
|
|
33
|
|
|
2.50
|
|
|
127
|
|
|
2.60
|
|
|
1,697
|
|
|
3.05
|
|
|
19,790
|
|
|
3.44
|
|
||||
Total U.S. treasury and federal agencies
|
|
4,035
|
|
|
|
|
10,864
|
|
|
|
|
1,709
|
|
|
|
|
19,833
|
|
|
|
||||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Student loans
|
|
7
|
|
|
2.65
|
|
|
291
|
|
|
3.02
|
|
|
267
|
|
|
3.02
|
|
|
2,626
|
|
|
3.19
|
|
||||
Credit cards
|
|
58
|
|
|
2.72
|
|
|
135
|
|
|
2.85
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
3.51
|
|
||||
Total asset-backed securities
|
|
65
|
|
|
|
|
426
|
|
|
|
|
267
|
|
|
|
|
2,627
|
|
|
|
||||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
160
|
|
|
0.18
|
|
|
42
|
|
|
3.03
|
|
|
7
|
|
|
2.99
|
|
|
429
|
|
|
1.42
|
|
||||
Asset-backed securities
|
|
96
|
|
|
1.23
|
|
|
127
|
|
|
1.23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Government securities
|
|
243
|
|
|
4.14
|
|
|
115
|
|
|
0.25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other
|
|
46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total non-U.S. debt securities
|
|
545
|
|
|
|
|
284
|
|
|
|
|
7
|
|
|
|
|
429
|
|
|
|
||||||||
Collateralized mortgage obligations
|
|
1
|
|
|
2.91
|
|
|
318
|
|
|
3.22
|
|
|
15
|
|
|
3.00
|
|
|
489
|
|
|
3.36
|
|
||||
Total
|
|
$
|
4,646
|
|
|
|
|
$
|
11,892
|
|
|
|
|
$
|
1,998
|
|
|
|
|
$
|
23,378
|
|
|
|
|
|
|
|
|
|
TABLE 25: CONTRACTUAL MATURITIES FOR LOANS AND LEASES
|
||||||||||||||||
|
As of December 31, 2018
|
|||||||||||||||
(In millions)
|
|
Under 1 Year
|
|
1 to 5 Years
|
|
Over 5 Years
|
|
Total
|
||||||||
Domestic:
|
|
|
|
|
|
|
|
|
||||||||
Commercial and financial
|
|
$
|
12,062
|
|
|
$
|
5,252
|
|
|
$
|
2,165
|
|
|
$
|
19,479
|
|
Commercial real estate
|
|
—
|
|
|
139
|
|
|
735
|
|
|
874
|
|
||||
Lease financing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total domestic
|
|
12,062
|
|
|
5,391
|
|
|
2,900
|
|
|
20,353
|
|
||||
Non-U.S.:
|
|
|
|
|
|
|
|
|
||||||||
Commercial and financial
|
|
3,253
|
|
|
1,637
|
|
|
546
|
|
|
5,436
|
|
||||
Lease financing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total non-U.S.
|
|
3,253
|
|
|
1,637
|
|
|
546
|
|
|
5,436
|
|
||||
Total loans and leases
|
|
$
|
15,315
|
|
|
$
|
7,028
|
|
|
$
|
3,446
|
|
|
$
|
25,789
|
|
TABLE 26: CLASSIFICATION OF LOAN AND LEASE BALANCES DUE AFTER ONE YEAR
|
|||
(In millions)
|
As of December 31, 2018
|
||
Loans and leases with predetermined interest rates
|
$
|
778
|
|
Loans and leases with floating or adjustable interest rates
|
9,696
|
|
|
Total
|
$
|
10,474
|
|
TABLE 27: ALLOWANCE FOR LOAN AND LEASE LOSSES
|
|||||||||||||||||||
|
Years Ended December 31,
|
||||||||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Allowance for loan and lease losses:
|
|||||||||||||||||||
Beginning balance
|
$
|
54
|
|
|
$
|
53
|
|
|
$
|
46
|
|
|
$
|
38
|
|
|
$
|
28
|
|
Provision for loan and lease losses
(1)
|
15
|
|
|
2
|
|
|
10
|
|
|
12
|
|
|
10
|
|
|||||
Charge-offs
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
—
|
|
|||||
Ending balance
|
$
|
67
|
|
|
$
|
54
|
|
|
$
|
53
|
|
|
$
|
46
|
|
|
$
|
38
|
|
|
|
TABLE 28: CROSS-BORDER OUTSTANDINGS
(1)
|
|||||||||||
(In millions)
|
Investment Securities and Other Assets
|
|
Derivatives and Securities on Loan
|
|
Total Cross-Border Outstandings
|
||||||
December 31, 2018
|
|
|
|
|
|
|
|||||
Germany
|
$
|
20,157
|
|
|
$
|
489
|
|
|
$
|
20,646
|
|
Japan
|
13,985
|
|
|
1,084
|
|
|
15,069
|
|
|||
United Kingdom
|
12,623
|
|
|
1,176
|
|
|
13,799
|
|
|||
Australia
|
4,217
|
|
|
1,349
|
|
|
5,566
|
|
|||
Canada
|
3,010
|
|
|
1,507
|
|
|
4,517
|
|
|||
Ireland
|
2,019
|
|
|
809
|
|
|
2,828
|
|
|||
France
|
2,495
|
|
|
294
|
|
|
2,789
|
|
|||
Luxembourg
|
2,033
|
|
|
710
|
|
|
2,743
|
|
|||
December 31, 2017
|
|
|
|
|
|
|
|
||||
Germany
|
$
|
18,201
|
|
|
$
|
295
|
|
|
$
|
18,496
|
|
Japan
|
15,250
|
|
|
549
|
|
|
15,799
|
|
|||
United Kingdom
|
12,051
|
|
|
1,253
|
|
|
13,304
|
|
|||
Australia
|
5,278
|
|
|
390
|
|
|
5,668
|
|
|||
Canada
|
4,215
|
|
|
707
|
|
|
4,922
|
|
|||
France
|
2,684
|
|
|
344
|
|
|
3,028
|
|
|||
December 31, 2016
|
|
|
|
|
|
||||||
United Kingdom
|
$
|
18,712
|
|
|
$
|
1,761
|
|
|
$
|
20,473
|
|
Japan
|
17,922
|
|
|
1,171
|
|
|
19,093
|
|
|||
Germany
|
13,812
|
|
|
484
|
|
|
14,296
|
|
|||
Australia
|
5,122
|
|
|
986
|
|
|
6,108
|
|
|||
Luxembourg
|
3,389
|
|
|
762
|
|
|
4,151
|
|
|||
Canada
|
3,179
|
|
|
781
|
|
|
3,960
|
|
|
|
•
|
credit and counterparty risk;
|
•
|
liquidity risk, funding and management;
|
•
|
operational risk;
|
•
|
information technology risk;
|
•
|
market risk associated with our trading activities;
|
•
|
market risk associated with our non-trading activities, which we refer to as asset-and-liability management, and which consists primarily of interest rate risk;
|
•
|
strategic risk;
|
•
|
model risk; and
|
•
|
reputational, fiduciary and business conduct risk.
|
•
|
A culture of risk awareness that extends across all of our business activities;
|
•
|
The identification, classification and quantification of our material risks;
|
•
|
The establishment of our risk appetite and associated limits and policies, and our compliance with these limits;
|
•
|
The establishment of a risk management structure at the “top of the house” that enables the control and coordination of risk-taking across the business lines;
|
•
|
The implementation of stress testing practices and a dynamic risk-assessment capability;
|
•
|
A direct link between risk and strategic-decision making processes and incentive compensation practices; and
|
•
|
The overall flexibility to adapt to the ever-changing business and market conditions.
|
|
Form 10-K
Page Number
|
Information Technology Risk Management
|
|
•
|
“Vertical” business unit-aligned risk groups that support business managers with risk management, measurement and monitoring activities;
|
•
|
“Horizontal” risk groups that monitor the risks that cross all of our business units (for example, credit and operational risk); and
|
•
|
Risk oversight for international activities, which combines intersecting “Verticals” and “Horizontals” through a hub and spoke model to provide important regional and legal entity perspectives to the global risk framework.
|
•
|
The approval of the policies of our global risk, capital and liquidity management frameworks, including our risk appetite framework;
|
•
|
The monitoring and assessment of our capital adequacy based on internal policies and regulatory requirements;
|
•
|
The oversight of our firm-wide risk identification, model risk governance, stress testing and Recovery and Resolution Plan programs; and
|
•
|
The ongoing monitoring and review of risks undertaken within the businesses, and our senior management oversight and approval of risk strategies and tactics.
|
•
|
ALCO is the senior corporate oversight and decision-making body for balance sheet strategy, Global Treasury business activities and risk management for interest rate risk, liquidity risk and non-trading market risk. ALCO’s roles and responsibilities are designed to be complementary to, and in coordination with the MRAC, which approves the corporate risk appetite and associated balance sheet strategy;
|
•
|
CRPC has primary responsibility for the oversight and review of credit and counterparty risk across business units, as well as oversight, review and approval of the credit risk policies and guidelines; the Committee consists of senior executives within ERM, and reviews policies and guidelines related to all aspects of our business which give rise to credit risk; our business units are also represented on the CRPC; credit risk policies and guidelines are reviewed periodically, but at least annually;
|
•
|
TMRC reviews the effectiveness of, and approves, the market risk framework at least annually; it is the senior oversight and decision-making committee for risk management within our global markets businesses; the TMRC is responsible for the formulation of guidelines, strategies and workflows with respect to the measurement, monitoring and control of our trading market risk, and also approves market risk tolerance limits, collateral and margin policies and trading authorities; the TMRC meets regularly to monitor the management of our trading market risk activities;
|
•
|
BOC provides oversight and governance over Basel related regulatory requirements, assesses compliance with respect to Basel regulations and approves all material methodologies and changes, policies and reporting;
|
•
|
The Recovery and Resolution Planning Executive Review Board oversees the development of recovery and resolution plans as required by banking regulators;
|
•
|
MRC monitors the overall level of model risk and provides oversight of the model governance process pertaining to financial models, including the validation of key models and the ongoing monitoring of model performance. The MRC may also, as appropriate, mandate remedial actions and compensating controls to be applied to models to address modeling deficiencies as well as other issues identified;
|
•
|
The CCAR Steering Committee provides primary supervision of the stress tests performed in conformity with the Federal Reserve's CCAR process and the Dodd-Frank Act, and is responsible for the overall management, review, and approval of all material assumptions, methodologies, and results of each stress scenario;
|
•
|
The
State Street Global Advisors
Risk Committee is the most senior oversight and decision making committee for risk management within
State Street Global Advisors
; the committee is responsible for overseeing the alignment of State Street Global Advisors' strategy, and risk appetite, as well as alignment with our corporate-wide strategies and risk management standards; and
|
•
|
The Country Risk Committee oversees the identification, assessment, monitoring, reporting and mitigation, where necessary, of country risks.
|
•
|
The Fiduciary Review Committee reviews and assesses the fiduciary risk management programs of those units in which we serve in a fiduciary capacity;
|
•
|
The New Business and Product Approval Committee provides oversight of the evaluation of the risk inherent in proposed new products or services and new business, and extensions of existing products or services, evaluations including economic justification, material risk, compliance, regulatory and legal considerations, and capital and liquidity analyses;
|
•
|
The Compliance and Ethics Committee provides review and oversight of our compliance programs, including its culture of compliance and high standards of ethical behavior;
|
•
|
The Legal Entity Oversight Committee establishes standards with respect to the governance of our legal entities, monitors adherence to those standards, and oversees the ongoing evaluation of our legal entity structure, including the formation, maintenance and dissolution of legal entities; and
|
•
|
The Conduct Standards Committee provides oversight of our enforcement of employee conduct standards.
|
•
|
The Operational Risk Committee, along with the support of regional business or entity-specific working groups and committees, is responsible for oversight of our operational risk programs, including determining that the implementation of those programs is designed to identify, manage and control operational risk in an effective and consistent manner across the firm;
|
•
|
The Technology Risk Committee is responsible for the global oversight, review and monitoring of operational, legal and regulatory compliance and reputational risk that may result in a significant change to our Information Technology risk profile or a material financial loss or reputational impact to global technology services. The Committee serves as a forum to provide regular reporting to TORC and escalate technology risk and control issues to TORC, as appropriate;
|
•
|
The Executive Information Security Steering Committee provides direction for the Enterprise Information Security posture and program, including cyber security protections, provides enterprise-wide oversight and assessment of
|
•
|
The Global Transitions Oversight Committee is responsible for establishing a framework to monitor and oversee transitions between and among our legal entities against our resolvability principles, to monitor compliance with that framework to support optimization of our global operating footprint through increased consistency, transparency and sharing of best practices among our legal entities, and to serve as a forum for review and discussion of issues impacting internal transitions among our legal entities.
|
•
|
Default risk - the risk that a counterparty fails to meet its contractual payment obligations;
|
•
|
Country risk - the risk that we may suffer a loss, in any given country, due to any of the following reasons: deterioration of economic conditions, political and social upheaval, nationalization and appropriation of assets, government repudiation of indebtedness, exchange controls and disruptive currency depreciation or devaluation; and
|
•
|
Settlement risk - the risk that the settlement or clearance of transactions will fail, which arises whenever the exchange of cash, securities and/or other assets is not simultaneous.
|
•
|
We measure and consolidate credit risks to each counterparty, or group of counterparties, in accordance with a “one-obligor” principle that aggregates risks across our business units;
|
•
|
ERM reviews and approves all extensions of credit, or material changes to extensions of credit (such as changes in term, collateral structure or covenants), in accordance with assigned credit-approval authorities;
|
•
|
Credit-approval authorities are assigned to individuals according to their qualifications, experience and training, and these authorities are periodically reviewed. Our largest exposures require approval by the Credit Committee, a sub-committee of the CRPC. With respect to small and low-risk extensions of credit to certain types of counterparties, approval authority is granted to individuals outside of ERM;
|
•
|
We seek to avoid or limit undue concentrations of risk. Counterparty (or groups of counterparties), industry, country and product-specific concentrations of risk are subject to frequent review and approval in accordance with our risk appetite;
|
•
|
We determine the creditworthiness of counterparties through a risk assessment, including the use of internal risk-rating methodologies;
|
•
|
We seek to review all extensions of credit and the creditworthiness of counterparties at least annually. The nature and extent of these reviews are determined by the size, nature and term of the extensions of credit and the creditworthiness of the counterparty; and
|
•
|
We subject all corporate policies and guidelines to annual review as an integral part of our periodic assessment of our risk appetite.
|
•
|
The assessment of the creditworthiness of new counterparties and, in conjunction with our risk appetite statement, the development of appropriate credit limits for our products and services, including loans, foreign exchange, securities finance, placements and repurchase agreements;
|
•
|
The use of an automated process for limit approvals for certain low-risk counterparties, as defined in our credit risk guidelines, based on the counterparty’s probability-of-default, or PD, rating class;
|
•
|
The development of approval authority matrices based on PD; riskier counterparties with higher ratings require higher levels of approval for a comparable PD and limit size compared to less risky counterparties with lower ratings;
|
•
|
The analysis of risk concentration trends using historical PD and exposure-at-default, or EAD, data;
|
•
|
The standardization of rating integrity testing by GCR using rating parameters;
|
•
|
The determination of the level of management review of short-duration advances depending on PD; riskier counterparties with higher rating class values generally trigger higher levels of management escalation for comparable short-duration advances compared to less risky counterparties with lower rating-class values;
|
•
|
The monitoring of credit facility utilization levels using EAD values and the identification of instances where counterparties have exceeded limits;
|
•
|
The aggregation and comparison of counterparty exposures with risk appetite levels to determine if businesses are maintaining appropriate risk levels; and
|
•
|
The determination of our regulatory capital requirements for the AIRB provided in the Basel framework.
|
•
|
Annual Reviews
.
A formal review of counterparties is conducted at least annually and includes a thorough review of operating performance, primary risk factors and our internal credit risk rating. This annual review also includes a review of current and proposed credit limits, an assessment of our ongoing risk appetite and verification that supporting legal documentation remains effective.
|
•
|
Interim Monitoring.
Periodic monitoring of our largest and riskiest counterparties is undertaken more frequently, utilizing financial
|
•
|
Separate and objective assessments of our credit and counterparty exposures to determine the nature and extent of risk undertaken by the business units;
|
•
|
Periodic credit process and credit product reviews, focusing on and assessing credit analysis, policy compliance, prudent transaction structure and underwriting standards, administration and documentation, risk-rating integrity and relevant trends;
|
•
|
Identification and monitoring of developing counterparty, market and/or industry sector trends to limit risk of loss and protect capital;
|
•
|
Regular and formal reporting of reviews, including findings and requisite actions to remedy identified deficiencies;
|
•
|
Allocation of resources for specialized risk assessments (on an as-needed basis);
|
•
|
Assessment of the level of the allowance for loan and lease losses and OTTI; and
|
•
|
Liaison with auditors and regulatory personnel on matters relating to risk rating, reporting and measurement.
|
•
|
Structural liquidity management addresses liquidity by monitoring and directing the composition of our consolidated statement of condition. Structural liquidity is measured by metrics such as the percentage of total wholesale funds to consolidated total assets, and the percentage of non-government investment securities to client deposits. In addition, on a regular basis and as described below, our structural liquidity is evaluated under various stress scenarios.
|
•
|
Tactical liquidity management addresses our day-to-day funding requirements and is largely driven by changes in our primary source of funding, which are client deposits. Fluctuations in client deposits may be supplemented with short-term borrowings, which generally include commercial paper, repurchase agreements, FHLB products and certificates of deposit.
|
•
|
Stress testing and contingent funding planning are longer-term strategic liquidity risk management practices. Regular and ad hoc liquidity stress testing are performed under various severe but plausible scenarios at the consolidated level and at significant subsidiaries, including State Street Bank. These tests contemplate severe market and events specific to us under various time horizons and severities. Tests contemplate the impact of material changes in key funding sources, credit ratings, additional collateral requirements, contingent uses of funding, systemic shocks to the financial markets and operational failures based on market and
|
•
|
diverse and stable core earnings;
|
•
|
relative market position;
|
•
|
strong risk management;
|
•
|
strong capital ratios;
|
•
|
diverse liquidity sources, including the global capital markets and client deposits;
|
•
|
strong liquidity monitoring procedures; and
|
•
|
preparedness for current or future regulatory developments.
|
•
|
providing assurance for unsecured funding and depositors;
|
•
|
increasing the potential market for our debt and improving our ability to offer products;
|
•
|
serving markets; and
|
•
|
engaging in transactions in which clients value high credit ratings.
|
TABLE 29: CREDIT RATINGS
|
|||||
|
As of December 31, 2018
|
||||
|
Standard & Poor’s
|
|
Moody’s Investors Service
|
|
Fitch
|
State Street:
|
|
|
|
|
|
Senior debt
|
A
|
|
A1
|
|
AA-
|
Subordinated debt
|
A-
|
|
A2
|
|
A+
|
Junior subordinated debt
|
BBB
|
|
A3
|
|
BBB+
|
Preferred stock
|
BBB
|
|
Baa1
|
|
BBB
|
Outlook
|
Stable
|
|
Stable
|
|
Stable
|
State Street Bank:
|
|
|
|
|
|
Short-term deposits
|
A-1+
|
|
P-1
|
|
F1+
|
Long-term deposits
|
AA-
|
|
Aa1
|
|
AA+
|
Senior debt/Long-term issuer
|
AA-
|
|
Aa3
|
|
AA
|
Subordinated debt
|
A
|
|
Aa3
|
|
A+
|
Outlook
|
Stable
|
|
Stable
|
|
Stable
|
TABLE 30: LONG-TERM CONTRACTUAL CASH OBLIGATIONS
|
|
|
||||||||||||||||||
December 31, 2018
|
Payments Due by Period
|
|||||||||||||||||||
(In millions)
|
|
Less than 1
year
|
|
1-3
years
|
|
4-5
years
|
|
Over 5
years
|
|
Total
|
||||||||||
Long-term debt
(1)(2)
|
|
$
|
—
|
|
|
$
|
3,132
|
|
|
$
|
2,712
|
|
|
$
|
5,059
|
|
|
$
|
10,903
|
|
Operating leases
|
|
192
|
|
|
351
|
|
|
275
|
|
|
380
|
|
|
1,198
|
|
|||||
Capital lease obligations
(2)
|
|
34
|
|
|
62
|
|
|
55
|
|
|
—
|
|
|
151
|
|
|||||
Tax liability
|
|
—
|
|
|
—
|
|
|
23
|
|
|
24
|
|
|
47
|
|
|||||
Total contractual cash obligations
|
|
$
|
226
|
|
|
$
|
3,545
|
|
|
$
|
3,065
|
|
|
$
|
5,463
|
|
|
$
|
12,299
|
|
|
|
|
|
•
|
Obligations which will be settled in cash, primarily in less than one year, such as client deposits, federal funds purchased, securities sold under repurchase agreements and other short-term borrowings. Additional information about deposits, federal funds purchased, securities sold under repurchase agreements and other short-term borrowings is provided in Note
8
to the consolidated financial statements
in this Form 10-K
.
|
•
|
Obligations related to derivative instruments because the derivative-related amounts recorded in our consolidated statement of condition as of December 31, 2018 did not represent the amounts that may ultimately be paid under the contracts upon settlement. Additional information about our derivative instruments is provided in Note
10
to the consolidated financial statements
in this Form 10-K
. We have obligations under pension and other post-retirement benefit plans, with additional information provided in Note
19
to the consolidated financial statements
in this Form 10-K
, which are not included in
Table 30: Long-Term Contractual Cash Obligations
.
|
TABLE 31: OTHER COMMERCIAL COMMITMENTS
|
|
|
|
|
|
|
||||||||||||||
|
Duration of Commitment as of December 31, 2018
|
|||||||||||||||||||
(In millions)
|
|
Less than
1 year
|
|
1-3
years
|
|
4-5
years
|
|
Over 5
years
|
|
Total amounts
committed
(1)
|
||||||||||
Indemnified securities financing
|
|
$
|
342,337
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
342,337
|
|
Unfunded credit facilities
|
|
18,838
|
|
|
5,600
|
|
|
3,979
|
|
|
535
|
|
|
28,952
|
|
|||||
Standby letters of credit
|
|
814
|
|
|
1,057
|
|
|
1,114
|
|
|
—
|
|
|
2,985
|
|
|||||
Purchase obligations
(2)
|
|
64
|
|
|
89
|
|
|
33
|
|
|
27
|
|
|
213
|
|
|||||
Total commercial commitments
|
|
$
|
362,053
|
|
|
$
|
6,746
|
|
|
$
|
5,126
|
|
|
$
|
562
|
|
|
$
|
374,487
|
|
|
|
|
|
•
|
A common understanding of operational risk management and its supporting processes;
|
•
|
The clarification of responsibilities for the management of operational risk across our business;
|
•
|
The alignment of business priorities with risk management objectives;
|
•
|
The active management of risk and early identification of emerging risks;
|
•
|
The consistent application of policies and the collection of data for risk management and measurement; and
|
•
|
The estimation of our operational risk capital requirement.
|
•
|
The global head of Operational Risk, a member of the CRO’s executive management team, leads ERM’s corporate ORM group. ORM is responsible for the strategy, evolution and consistent implementation of our operational risk guidelines, framework and supporting tools across our business. ORM reviews and analyzes operational key risk information, events, metrics and indicators at the business unit and corporate level for purposes of risk management, reporting and escalation to the CRO, senior management and governance committees;
|
•
|
ERM’s Corporate Risk Analytics group develops and maintains operational risk capital estimation models, and ORM's Capital Analysis group calculates our required capital for operational risk;
|
•
|
ERM’s MVG independently validates the quantitative models used to measure operational risk, and ORM performs validation checks on the output of the model;
|
•
|
CIS establishes the framework, policies and related programs to measure, monitor and report on information security risks, including the effectiveness of cyber security program protections. CIS defines and manages the enterprise-wide information security program. CIS coordinates with Information Technology, control functions and business units to support the confidentiality, integrity and availability of corporate information assets. CIS identifies and employs a risk-based methodology consistent with applicable regulatory cyber security requirements and monitors the compliance of our systems with information security policies; and
|
•
|
Corporate Audit performs separate reviews of the application of operational risk management practices and methodologies utilized across our business.
|
•
|
The risk assessment program seeks to understand the risks associated with day-to-day activities, and the effectiveness of controls intended to manage potential exposures arising from these activities. These risks are typically frequent in nature but generally not severe in terms of exposure;
|
•
|
The Material Risk Identification process utilizes a bottom-up approach to identify our most significant risk exposures across all on- and off-balance sheet risk-taking activities. The program is specifically designed to consider risks that could have a material impact irrespective of their likelihood or frequency. This can include risks that may have an impact on longer-term business objectives, such as significant change management activities or long-term strategic initiatives;
|
•
|
The Scenario Analysis program focuses on the set of risks with the highest severity and most relevance from a capital perspective. These are generally referred to as “tail risks," and serve as important benchmarks for our loss distribution approach model (see below); they also provide inputs into stress testing; and
|
•
|
Business-specific programs to identify, assess and measure risk, including new business and product review and approval, new client screening, and, as deemed appropriate, targeted risk assessments.
|
•
|
Internal loss event data is collected from across our business in conformity with our operating loss policy that establishes the requirements for collecting and reporting individual loss events. We categorize the data into seven Basel-defined event types and further subdivide the data by business unit, as deemed appropriate. Each of these loss events are represented in a UOM which is used to estimate a specific amount of capital required for the types of loss events that fall into each specific category. Some UOMs are measured at the corporate level because they are not “business specific,” such as damage to physical assets, where the cause of an event is not primarily driven by the behavior of a single business unit. Internal losses of $500 or greater are captured, analyzed and included in the modeling approach. Loss event data is collected using a corporate-wide data collection tool, which stores the data in a Loss Event Data Repository (LEDR) to support processes related to analysis, management reporting and the calculation of required capital. Internal loss event data provides our frequency and severity information to our capital calculation process for historical loss events experienced by us. Internal loss event data may be incorporated into our LDA model in a future quarter following the realization of the losses, with the timing and categorization dependent on the processes for model updates and, if applicable, model revalidation and regulatory review and related supervisory processes. An individual loss event can have a significant effect on the output of our LDA model and our operational risk RWA under the advanced approaches depending on the severity of the loss event, its categorization among the seven Basel-defined UOMs and the stability of the distributional approach for a particular UOM;
|
•
|
External loss event data provides information with respect to loss event severity from other financial institutions to inform our capital estimation process of events in similar business units at other banking organizations. This information supplements the data pool available for use in our LDA model. Assessments of the sufficiency of internal data and the relevance of external data are completed before pooling the two data sources for use in our LDA model;
|
•
|
Scenario analysis workshops are conducted across our business to inform management of the less frequent but most severe, or “tail,” risks
|
•
|
Business environment and internal control factors are gathered as part of our scenario analysis program to inform the scenario analysis workshop participants of internal loss event data and business-relevant metrics, such as risk assessment program results, along with industry loss event data and case studies where appropriate. Business environment and internal control factors are those characteristics of a bank’s internal and external operating environment that bear an exposure to operational risk. The use of this information indirectly influences our calculation of required capital by providing additional relevant data to workshop participants when reviewing specific UOM risks.
|
•
|
Third party vendor risk;
|
•
|
Business disruption and technology resiliency risk;
|
•
|
Cyber and information security risk;
|
•
|
Technology asset and configuration risk; and
|
•
|
Technology obsolescence risk.
|
•
|
Coordinating various risk assessment and risk management activities, including ERM operational risk programs;
|
•
|
Establishing, through TORC and TOPS of the Board, the enterprise level technology risk and cyber risk appetite and limits;
|
•
|
Producing enterprise level risk reporting, aggregation, dashboards, profiles and risk appetite statements;
|
•
|
Validating appropriateness of reporting of information technology risks and risk acceptance to senior management risk committees and the Board;
|
•
|
Promoting a strong technology risk culture through communication;
|
•
|
Serving as an escalation and challenge point for technology risk policy guidance, expectations and clarifications;
|
•
|
Assessing effectiveness of key enterprise information technology risk and internal control remediation programs; and
|
•
|
Providing risk oversight, challenge and monitoring for the Global Continuity and Third Party Vendor Management Program, including the collection of risk appetite, metrics and KRIs, and reviewing issue management processes and consistent program adoption.
|
•
|
A trading market risk management process led by ERM, separate from the business units' discrete activities;
|
•
|
Clearly defined responsibilities and authorities for the primary groups involved in trading market risk management;
|
•
|
A trading market risk measurement methodology that captures correlation effects and allows aggregation of market risk across risk types, markets and business lines;
|
•
|
Daily monitoring, analysis and reporting of market risk exposures associated with trading activities against market risk limits;
|
•
|
A defined limit structure and escalation process in the event of a market risk limit excess;
|
•
|
Use of VaR models to measure the one-day market risk exposure of trading positions;
|
•
|
Use of VaR as a ten-day-based regulatory capital measure of the market risk exposure of trading positions;
|
•
|
Use of non-VaR-based limits and other controls;
|
•
|
Use of stressed-VaR models, stress-testing analysis and scenario analysis to support the trading market risk measurement and management process by assessing how portfolios and global business lines perform under extreme market conditions;
|
•
|
Use of back-testing as a diagnostic tool to assess the accuracy of VaR models and other risk management techniques; and
|
•
|
A new product approval process that requires market risk teams to assess trading-related market risks and apply risk tolerance limits to
|
•
|
Compared to a shorter observation period, a two-year observation period is slower to reflect increases in market volatility (although temporary increases in market volatility will affect the calculation of VaR for a longer period); consequently, in periods of sudden increases in volatility or increasing volatility, in each case relative to the prior two-year period, the calculation of VaR may understate current risk;
|
•
|
Compared to a longer observation period, a two-year observation period may not reflect as many past periods of volatility in the markets, because such past volatility is no longer in the observation period; consequently, historical market scenarios of high volatility, even if similar to current or likely future market circumstances, may fall outside the two-year observation period, resulting in a potential understatement of current risk;
|
•
|
The VaR-based measure is calibrated to a specified level of confidence and does not indicate the potential magnitude of losses beyond this confidence level;
|
•
|
In certain cases, VaR-based measures approximate the impact of changes in risk factors on the values of positions and portfolios; this may happen because the number of inputs included in the VaR model is necessarily limited; for example, yield curve risk factors do not exist for all future dates;
|
•
|
The use of historical market information may not be predictive of future events, particularly those that are extreme in nature; this “backward-looking” limitation can cause VaR to understate or overstate risk;
|
•
|
The effect of extreme and rare market movements is difficult to estimate; this may result from non-linear risk sensitivities as well as the potential for actual volatility and correlation levels to differ from assumptions implicit in the VaR calculations; and
|
•
|
Intra-day risk is not captured.
|
TABLE 34: TEN-DAY VaR ASSOCIATED WITH TRADING ACTIVITIES BY RISK FACTOR
(1)
|
|||||||||||||||||||
|
As of December 31, 2018
(2)
|
|
As of December 31, 2017
|
||||||||||||||||
(In thousands)
|
Foreign Exchange Risk
|
|
Interest Rate Risk
|
|
Foreign Exchange Risk
|
|
Interest Rate Risk
|
|
Volatility Risk
|
||||||||||
By component:
|
|
|
|
|
|
|
|
|
|
||||||||||
Global Markets
|
$
|
2,679
|
|
|
$
|
11,850
|
|
|
$
|
6,149
|
|
|
$
|
5,546
|
|
|
$
|
3
|
|
Global Treasury
|
53
|
|
|
1,377
|
|
|
100
|
|
|
1,372
|
|
|
—
|
|
|||||
Diversification
|
(39
|
)
|
|
(1,436
|
)
|
|
1
|
|
|
(1,078
|
)
|
|
—
|
|
|||||
Total VaR
|
$
|
2,693
|
|
|
$
|
11,791
|
|
|
$
|
6,250
|
|
|
$
|
5,840
|
|
|
$
|
3
|
|
TABLE 35: TEN-DAY STRESSED VaR ASSOCIATED WITH TRADING ACTIVITIES BY RISK FACTOR
(1)
|
|||||||||||||||||||
|
As of December 31, 2018
(2)
|
|
As of December 31, 2017
|
||||||||||||||||
(In thousands)
|
Foreign Exchange Risk
|
|
Interest Rate Risk
|
|
Foreign Exchange Risk
|
|
Interest Rate Risk
|
|
Volatility Risk
|
||||||||||
By component:
|
|
|
|
|
|
|
|
|
|
||||||||||
Global Markets
|
$
|
10,465
|
|
|
$
|
23,324
|
|
|
$
|
15,975
|
|
|
$
|
27,161
|
|
|
$
|
3
|
|
Global Treasury
|
74
|
|
|
8,202
|
|
|
153
|
|
|
12,192
|
|
|
—
|
|
|||||
Diversification
|
(132
|
)
|
|
(7,835
|
)
|
|
(23
|
)
|
|
(14,176
|
)
|
|
—
|
|
|||||
Total Stressed VaR
|
$
|
10,407
|
|
|
$
|
23,691
|
|
|
$
|
16,105
|
|
|
$
|
25,177
|
|
|
$
|
3
|
|
|
|
|
TABLE 36: NII SENSITIVITY
|
||||||||
|
|
December 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
Rate change:
|
|
Benefit (Exposure)
|
||||||
+100 bps shock
|
|
$
|
371
|
|
|
$
|
435
|
|
–100 bps shock
|
|
(183
|
)
|
|
(294
|
)
|
||
+100 bps ramp
|
|
148
|
|
|
177
|
|
||
–100 bps ramp
|
|
(72
|
)
|
|
(122
|
)
|
TABLE 37: EVE SENSITIVITY
|
||||||||
|
|
December 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
Rate change:
|
|
Benefit (Exposure)
|
||||||
+200 bps shock
|
|
$
|
(1,603
|
)
|
|
$
|
(1,507
|
)
|
–200 bps shock
|
|
796
|
|
|
11
|
|
•
|
A model risk governance program that defines roles and responsibilities, including the authority to restrict model usage, provides policies and guidance, monitors compliance and reports regularly to the Board on the overall degree of model risk across the corporation;
|
•
|
A model development process that focuses on sound design and computational accuracy, and includes activities designed to test for robustness, stability and sensitivity to assumptions; and
|
•
|
An independent model validation function designed to verify that models are conceptually sound, computationally accurate, are performing as expected, and are in line with their design objectives.
|
•
|
Risk Management - identification, measurement, monitoring and forecasting of different types of risk and their combined impact on capital adequacy;
|
•
|
Capital Management - determination of optimal capital levels; and
|
•
|
Business Management - strategic planning, budgeting, forecasting and performance management.
|
TABLE 38: BASEL III FINAL RULES TRANSITION ARRANGEMENTS AND MINIMUM RISK-BASED CAPITAL RATIOS
(1)
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||
Capital conservation buffer (CET1)
|
|
2.500
|
%
|
|
1.875
|
%
|
|
1.250
|
%
|
|
0.625
|
%
|
|
—
|
%
|
G-SIB surcharge (CET1)
(2)
|
|
1.500
|
|
|
1.125
|
|
|
0.750
|
|
|
0.375
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Minimum CET1
(3)
|
|
8.500
|
|
|
7.500
|
|
|
6.500
|
|
|
5.500
|
|
|
4.500
|
|
Minimum tier 1 capital
(3)
|
|
10.000
|
|
|
9.000
|
|
|
8.000
|
|
|
7.000
|
|
|
6.000
|
|
Minimum total capital
(3)
|
|
12.000
|
|
|
11.000
|
|
|
10.000
|
|
|
9.000
|
|
|
8.000
|
|
|
|
|
|
TABLE 39: REGULATORY CAPITAL STRUCTURE AND RELATED REGULATORY CAPITAL RATIOS
|
|||||||||||||||||||||||||||||||||||
|
State Street
|
|
State Street Bank
|
||||||||||||||||||||||||||||||||
(In millions)
|
Basel III Advanced Approaches December 31, 2018
|
|
Basel III Standardized Approach December 31, 2018
|
|
Basel III Advanced Approaches December 31, 2017
|
|
Basel III Standardized Approach December 31, 2017
|
|
Basel III Advanced Approaches December 31, 2018
|
|
Basel III Standardized Approach December 31, 2018
|
|
Basel III Advanced Approaches December 31, 2017
|
|
Basel III Standardized Approach December 31, 2017
|
||||||||||||||||||||
Common shareholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Common stock and related surplus
|
$
|
10,565
|
|
|
$
|
10,565
|
|
|
$
|
10,302
|
|
|
$
|
10,302
|
|
|
$
|
12,894
|
|
|
$
|
12,894
|
|
|
$
|
11,612
|
|
|
$
|
11,612
|
|
||||
Retained earnings
|
20,606
|
|
|
20,606
|
|
|
18,856
|
|
|
18,856
|
|
|
14,261
|
|
|
14,261
|
|
|
12,312
|
|
|
12,312
|
|
||||||||||||
Accumulated other comprehensive income (loss)
|
(1,332
|
)
|
|
(1,332
|
)
|
|
(972
|
)
|
|
(972
|
)
|
|
(1,112
|
)
|
|
(1,112
|
)
|
|
(809
|
)
|
|
(809
|
)
|
||||||||||||
Treasury stock, at cost
|
(8,715
|
)
|
|
(8,715
|
)
|
|
(9,029
|
)
|
|
(9,029
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Total
|
21,124
|
|
|
21,124
|
|
|
19,157
|
|
|
19,157
|
|
|
26,043
|
|
|
26,043
|
|
|
23,115
|
|
|
23,115
|
|
||||||||||||
Regulatory capital adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Goodwill and other intangible assets, net of associated deferred tax liabilities
(1)
|
(9,350
|
)
|
|
(9,350
|
)
|
|
(6,877
|
)
|
|
(6,877
|
)
|
|
(9,073
|
)
|
|
(9,073
|
)
|
|
(6,579
|
)
|
|
(6,579
|
)
|
||||||||||||
Other adjustments
(2)
|
(194
|
)
|
|
(194
|
)
|
|
(76
|
)
|
|
(76
|
)
|
|
(29
|
)
|
|
(29
|
)
|
|
(5
|
)
|
|
(5
|
)
|
||||||||||||
CET1 capital
|
11,580
|
|
|
11,580
|
|
|
12,204
|
|
|
12,204
|
|
|
16,941
|
|
|
16,941
|
|
|
16,531
|
|
|
16,531
|
|
||||||||||||
Preferred stock
|
3,690
|
|
|
3,690
|
|
|
3,196
|
|
|
3,196
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Trust preferred capital securities subject to phase-out from tier 1 capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Other adjustments
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Tier 1 capital
|
15,270
|
|
|
15,270
|
|
|
15,382
|
|
|
15,382
|
|
|
16,941
|
|
|
16,941
|
|
|
16,531
|
|
|
16,531
|
|
||||||||||||
Qualifying subordinated long-term debt
|
778
|
|
|
778
|
|
|
980
|
|
|
980
|
|
|
776
|
|
|
776
|
|
|
983
|
|
|
983
|
|
||||||||||||
Trust preferred capital securities phased out of tier 1 capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
ALLL and other
|
14
|
|
|
83
|
|
|
4
|
|
|
72
|
|
|
11
|
|
|
83
|
|
|
—
|
|
|
72
|
|
||||||||||||
Other adjustments
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Total capital
|
$
|
16,062
|
|
|
$
|
16,131
|
|
|
$
|
16,367
|
|
|
$
|
16,435
|
|
|
$
|
17,728
|
|
|
$
|
17,800
|
|
|
$
|
17,514
|
|
|
$
|
17,586
|
|
||||
RWA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Credit risk
(3)
|
$
|
47,738
|
|
|
$
|
97,303
|
|
|
$
|
52,000
|
|
|
$
|
101,349
|
|
|
$
|
45,565
|
|
|
$
|
94,776
|
|
|
$
|
49,489
|
|
|
$
|
98,433
|
|
||||
Operational risk
(4)
|
46,060
|
|
|
NA
|
|
|
45,822
|
|
|
NA
|
|
|
44,494
|
|
|
NA
|
|
|
45,295
|
|
|
NA
|
|
||||||||||||
Market risk
|
1,517
|
|
|
1,517
|
|
|
1,334
|
|
|
1,334
|
|
|
1,517
|
|
|
1,517
|
|
|
1,334
|
|
|
1,334
|
|
||||||||||||
Total RWA
|
$
|
95,315
|
|
|
$
|
98,820
|
|
|
$
|
99,156
|
|
|
$
|
102,683
|
|
|
$
|
91,576
|
|
|
$
|
96,293
|
|
|
$
|
96,118
|
|
|
$
|
99,767
|
|
||||
Adjusted quarterly average assets
|
$
|
211,924
|
|
|
$
|
211,924
|
|
|
$
|
209,328
|
|
|
$
|
209,328
|
|
|
$
|
209,413
|
|
|
$
|
209,413
|
|
|
$
|
206,070
|
|
|
$
|
206,070
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Capital Ratios:
|
2018 Minimum Requirements Including Capital Conservation Buffer and G-SIB Surcharge
(5)
|
2017 Minimum Requirements Including Capital Conservation Buffer and G-SIB Surcharge
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
CET1 capital
|
7.5
|
%
|
6.5
|
%
|
12.1
|
%
|
|
11.7
|
%
|
|
12.3
|
%
|
|
11.9
|
%
|
|
18.5
|
%
|
|
17.6
|
%
|
|
17.2
|
%
|
|
16.6
|
%
|
||||||||
Tier 1 capital
|
9.0
|
|
8.0
|
|
16.0
|
|
|
15.5
|
|
|
15.5
|
|
|
15.0
|
|
|
18.5
|
|
|
17.6
|
|
|
17.2
|
|
|
16.6
|
|
||||||||
Total capital
|
11.0
|
|
10.0
|
|
16.9
|
|
|
16.3
|
|
|
16.5
|
|
|
16.0
|
|
|
19.4
|
|
|
18.5
|
|
|
18.2
|
|
|
17.6
|
|
|
|
|
|
TABLE 40: CAPITAL ROLL-FORWARD
|
||||||||||||||||
(In millions)
|
|
Basel III Advanced Approaches
December 31
, 2018
|
|
Basel III Standardized Approach December 31, 2018
|
|
Basel III Advanced Approaches December 31, 2017
|
|
Basel III Standardized Approach December 31, 2017
|
||||||||
CET1 capital:
|
|
|
|
|
|
|
|
|
||||||||
CET1 capital balance, beginning of period
|
|
$
|
12,204
|
|
|
$
|
12,204
|
|
|
$
|
11,624
|
|
|
$
|
11,624
|
|
Net income
|
|
2,599
|
|
|
2,599
|
|
|
2,177
|
|
|
2,177
|
|
||||
Changes in treasury stock, at cost
|
|
314
|
|
|
314
|
|
|
(1,347
|
)
|
|
(1,347
|
)
|
||||
Dividends declared
|
|
(853
|
)
|
|
(853
|
)
|
|
(778
|
)
|
|
(778
|
)
|
||||
Goodwill and other intangible assets, net of associated deferred tax liabilities
|
|
(2,473
|
)
|
|
(2,473
|
)
|
|
(529
|
)
|
|
(529
|
)
|
||||
Effect of certain items in accumulated other comprehensive income (loss)
|
|
(360
|
)
|
|
(360
|
)
|
|
964
|
|
|
964
|
|
||||
Other adjustments
|
|
149
|
|
|
149
|
|
|
93
|
|
|
93
|
|
||||
Changes in CET1 capital
|
|
(624
|
)
|
|
(624
|
)
|
|
580
|
|
|
580
|
|
||||
CET1 capital balance, end of period
|
|
11,580
|
|
|
11,580
|
|
|
12,204
|
|
|
12,204
|
|
||||
Additional tier 1 capital:
|
|
|
|
|
|
|
|
|
||||||||
Tier 1 capital balance, beginning of period
|
|
15,382
|
|
|
15,382
|
|
|
14,717
|
|
|
14,717
|
|
||||
Change in CET1 capital
|
|
(624
|
)
|
|
(624
|
)
|
|
580
|
|
|
580
|
|
||||
Net issuance of preferred stock
|
|
494
|
|
|
494
|
|
|
—
|
|
|
—
|
|
||||
Trust preferred capital securities phased out of tier 1 capital
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other adjustments
|
|
18
|
|
|
18
|
|
|
85
|
|
|
85
|
|
||||
Changes in tier 1 capital
|
|
(112
|
)
|
|
(112
|
)
|
|
665
|
|
|
665
|
|
||||
Tier 1 capital balance, end of period
|
|
15,270
|
|
|
15,270
|
|
|
15,382
|
|
|
15,382
|
|
||||
Tier 2 capital:
|
|
|
|
|
|
|
|
|
||||||||
Tier 2 capital balance, beginning of period
|
|
985
|
|
|
1,053
|
|
|
1,192
|
|
|
1,250
|
|
||||
Net issuance and changes in long-term debt qualifying as tier 2
|
|
(202
|
)
|
|
(202
|
)
|
|
(192
|
)
|
|
(192
|
)
|
||||
Changes in ALLL and other
|
|
10
|
|
|
11
|
|
|
(15
|
)
|
|
(5
|
)
|
||||
Change in other adjustments
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Changes in tier 2 capital
|
|
(193
|
)
|
|
(192
|
)
|
|
(207
|
)
|
|
(197
|
)
|
||||
Tier 2 capital balance, end of period
|
|
792
|
|
|
861
|
|
|
985
|
|
|
1,053
|
|
||||
Total capital:
|
|
|
|
|
|
|
|
|
||||||||
Total capital balance, beginning of period
|
|
16,367
|
|
|
16,435
|
|
|
15,909
|
|
|
15,967
|
|
||||
Changes in tier 1 capital
|
|
(112
|
)
|
|
(112
|
)
|
|
665
|
|
|
665
|
|
||||
Changes in tier 2 capital
|
|
(193
|
)
|
|
(192
|
)
|
|
(207
|
)
|
|
(197
|
)
|
||||
Total capital balance, end of period
|
|
$
|
16,062
|
|
|
$
|
16,131
|
|
|
$
|
16,367
|
|
|
$
|
16,435
|
|
TABLE 41: ADVANCED APPROACHES RWA ROLL-FORWARD
|
||||||||
(In millions)
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Total RWA, beginning of period
|
|
$
|
99,156
|
|
|
$
|
99,301
|
|
Changes in credit RWA:
|
|
|
|
|
||||
Net increase (decrease) in investment securities-wholesale
|
|
(940
|
)
|
|
2,914
|
|
||
Net increase (decrease) in loans and leases
|
|
(12
|
)
|
|
30
|
|
||
Net increase (decrease) in securitization exposures
|
|
(3,666
|
)
|
|
(683
|
)
|
||
Net increase (decrease) in repo-style transaction exposures
|
|
(19
|
)
|
|
440
|
|
||
Net increase (decrease) in OTC derivatives exposures
|
|
(1,170
|
)
|
|
(1,129
|
)
|
||
Net increase (decrease) in all other
(1)
|
|
1,545
|
|
|
(2,543
|
)
|
||
Net increase (decrease) in credit RWA
|
|
(4,262
|
)
|
|
(971
|
)
|
||
Net increase (decrease) in market RWA
|
|
183
|
|
|
(417
|
)
|
||
Net increase (decrease) in operational RWA
|
|
238
|
|
|
1,243
|
|
||
Total RWA, end of period
|
|
$
|
95,315
|
|
|
$
|
99,156
|
|
|
|
|
|
|
|
|
|
|
TABLE 44: PREFERRED STOCK ISSUED AND OUTSTANDING
|
||||||||||||||||||||
|
Issuance Date
|
|
Depositary Shares Issued
|
|
Ownership Interest Per Depositary Share
|
|
Liquidation Preference Per Share
|
|
Liquidation Preference Per Depositary Share
|
|
Net Proceeds of Offering
(In millions) |
|
Redemption Date
(1)
|
|||||||
Preferred Stock
(2)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Series C
|
August 2012
|
|
20,000,000
|
|
|
1/4,000th
|
|
$
|
100,000
|
|
|
$
|
25
|
|
|
$
|
488
|
|
|
September 15, 2017
|
Series D
|
February 2014
|
|
30,000,000
|
|
|
1/4,000th
|
|
100,000
|
|
|
25
|
|
|
742
|
|
|
March 15, 2024
|
|||
Series E
|
November 2014
|
|
30,000,000
|
|
|
1/4,000th
|
|
100,000
|
|
|
25
|
|
|
728
|
|
|
December 15, 2019
|
|||
Series F
|
May 2015
|
|
750,000
|
|
|
1/100th
|
|
100,000
|
|
|
1,000
|
|
|
742
|
|
|
September 15, 2020
|
|||
Series G
|
April 2016
|
|
20,000,000
|
|
|
1/4,000th
|
|
100,000
|
|
|
25
|
|
|
493
|
|
|
March 15, 2026
|
|||
Series H
|
September 2018
|
|
500,000
|
|
|
1/100th
|
|
100,000
|
|
|
1,000
|
|
|
494
|
|
|
December 15, 2023
|
|
|
|
|
TABLE 45: PREFERRED STOCK DIVIDENDS
|
|||||||||||||||||||||||
|
Years Ended December 31,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
Dividends Declared per Share
|
|
Dividends Declared per Depositary Share
|
|
Total
(In millions) |
|
Dividends Declared per Share
|
|
Dividends Declared per Depositary Share
|
|
Total
(In millions) |
||||||||||||
Preferred Stock:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Series C
|
$
|
5,250
|
|
|
$
|
1.32
|
|
|
$
|
26
|
|
|
$
|
5,250
|
|
|
$
|
1.32
|
|
|
$
|
26
|
|
Series D
|
5,900
|
|
|
1.48
|
|
|
44
|
|
|
5,900
|
|
|
1.48
|
|
|
44
|
|
||||||
Series E
|
6,000
|
|
|
1.52
|
|
|
45
|
|
|
6,000
|
|
|
1.52
|
|
|
45
|
|
||||||
Series F
|
5,250
|
|
|
52.50
|
|
|
40
|
|
|
5,250
|
|
|
52.50
|
|
|
40
|
|
||||||
Series G
|
5,352
|
|
|
1.32
|
|
|
27
|
|
|
5,352
|
|
|
1.32
|
|
|
27
|
|
||||||
Series H
|
1,219
|
|
|
12.18
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
|
|
|
$
|
188
|
|
|
|
|
|
|
$
|
182
|
|
TABLE 46: SHARES REPURCHASED
|
||||||||||
|
Year Ended December 31, 2018
(1)
|
|||||||||
|
Shares Acquired
(In millions) |
|
Average Cost per Share
|
|
Total Acquired
(In millions) |
|||||
2017 Program
|
3.3
|
|
|
$
|
105.31
|
|
|
$
|
350
|
|
|
|
|
TABLE 47: COMMON STOCK DIVIDENDS
|
|||||||||||||||
|
Years Ended December 31,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Dividends Declared per Share
|
|
Total
(In millions) |
|
Dividends Declared per Share
|
|
Total
(In millions) |
||||||||
Common Stock
|
$
|
1.78
|
|
|
$
|
665
|
|
|
$
|
1.60
|
|
|
$
|
596
|
|
|
Years Ended December 31,
|
||||||||||
(Dollars in millions, except per share amounts)
|
2018
|
|
2017
|
|
2016
|
||||||
Fee revenue:
|
|
|
|
|
|
||||||
Servicing fees
|
$
|
5,421
|
|
|
$
|
5,365
|
|
|
$
|
5,073
|
|
Management fees
|
1,851
|
|
|
1,616
|
|
|
1,292
|
|
|||
Foreign exchange trading services
|
1,201
|
|
|
1,071
|
|
|
1,099
|
|
|||
Securities finance
|
543
|
|
|
606
|
|
|
562
|
|
|||
Processing fees and other
|
289
|
|
|
247
|
|
|
90
|
|
|||
Total fee revenue
|
9,305
|
|
|
8,905
|
|
|
8,116
|
|
|||
Net interest income:
|
|
|
|
|
|
||||||
Interest income
|
3,662
|
|
|
2,908
|
|
|
2,512
|
|
|||
Interest expense
|
991
|
|
|
604
|
|
|
428
|
|
|||
Net interest income
|
2,671
|
|
|
2,304
|
|
|
2,084
|
|
|||
Gains (losses) related to investment securities, net:
|
|
|
|
|
|
||||||
Gains (losses) from sales of available-for-sale securities, net
|
9
|
|
|
(39
|
)
|
|
10
|
|
|||
Losses from other-than-temporary impairment
|
(3
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Losses reclassified (from) to other comprehensive income
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Gains (losses) related to investment securities, net
|
6
|
|
|
(39
|
)
|
|
7
|
|
|||
Total revenue
|
11,982
|
|
|
11,170
|
|
|
10,207
|
|
|||
Provision for loan losses
|
15
|
|
|
2
|
|
|
10
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Compensation and employee benefits
|
4,780
|
|
|
4,394
|
|
|
4,353
|
|
|||
Information systems and communications
|
1,324
|
|
|
1,167
|
|
|
1,105
|
|
|||
Transaction processing services
|
938
|
|
|
838
|
|
|
800
|
|
|||
Occupancy
|
500
|
|
|
461
|
|
|
440
|
|
|||
Acquisition and restructuring costs
|
24
|
|
|
266
|
|
|
209
|
|
|||
Amortization of other intangible assets
|
226
|
|
|
214
|
|
|
207
|
|
|||
Other
|
1,176
|
|
|
929
|
|
|
963
|
|
|||
Total expenses
|
8,968
|
|
|
8,269
|
|
|
8,077
|
|
|||
Income before income tax expense (benefit)
|
2,999
|
|
|
2,899
|
|
|
2,120
|
|
|||
Income tax expense (benefit)
|
400
|
|
|
722
|
|
|
(22
|
)
|
|||
Net income from non-controlling interest
|
—
|
|
|
—
|
|
|
1
|
|
|||
Net income
|
$
|
2,599
|
|
|
$
|
2,177
|
|
|
$
|
2,143
|
|
Net income available to common shareholders
|
$
|
2,410
|
|
|
$
|
1,993
|
|
|
$
|
1,968
|
|
Earnings per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
6.48
|
|
|
$
|
5.32
|
|
|
$
|
5.03
|
|
Diluted
|
6.40
|
|
|
5.24
|
|
|
4.97
|
|
|||
Average common shares outstanding (in thousands):
|
|
|
|
|
|
||||||
Basic
|
371,983
|
|
|
374,793
|
|
|
391,485
|
|
|||
Diluted
|
376,476
|
|
|
380,213
|
|
|
396,090
|
|
|||
Cash dividends declared per common share
|
$
|
1.78
|
|
|
$
|
1.60
|
|
|
$
|
1.44
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
2,599
|
|
|
$
|
2,177
|
|
|
$
|
2,143
|
|
Other comprehensive income (loss), net of related taxes:
|
|
|
|
|
|
||||||
Foreign currency translation, net of related taxes of ($8), $21 and ($11), respectively
|
(67
|
)
|
|
900
|
|
|
(372
|
)
|
|||
Net unrealized gains (losses) on available-for-sale securities, net of reclassification adjustment and net of related taxes of ($134), $272 and ($119), respectively
|
(302
|
)
|
|
367
|
|
|
(181
|
)
|
|||
Net unrealized gains (losses) on available-for-sale securities designated in fair value hedges, net of related taxes of $9, $16 and $16, respectively
|
24
|
|
|
22
|
|
|
23
|
|
|||
Other-than-temporary impairment on held-to-maturity securities related to factors other than credit, net of related taxes of $2, $3 and $5, respectively
|
4
|
|
|
3
|
|
|
7
|
|
|||
Net unrealized gains (losses) on cash flow hedges, net of related taxes of ($17), ($181) and ($42), respectively
|
(33
|
)
|
|
(285
|
)
|
|
(64
|
)
|
|||
Net unrealized gains (losses) on retirement plans, net of related taxes of $8, $8 and $1, respectively
|
27
|
|
|
24
|
|
|
(11
|
)
|
|||
Other comprehensive income (loss)
|
(347
|
)
|
|
1,031
|
|
|
(598
|
)
|
|||
Total comprehensive income
|
$
|
2,252
|
|
|
$
|
3,208
|
|
|
$
|
1,545
|
|
|
December 31,
|
||||||
(Dollars in millions, except per share amounts)
|
2018
|
|
2017
|
||||
Assets:
|
|
|
|
||||
Cash and due from banks
|
$
|
3,597
|
|
|
$
|
2,107
|
|
Interest-bearing deposits with banks
|
73,040
|
|
|
67,227
|
|
||
Securities purchased under resale agreements
|
4,679
|
|
|
3,241
|
|
||
Trading account assets
|
860
|
|
|
1,093
|
|
||
Investment securities available-for-sale
|
45,148
|
|
|
57,121
|
|
||
Investment securities held-to-maturity (fair value of $41,351 and $40,255)
|
41,914
|
|
|
40,458
|
|
||
Loans and leases (less allowance for losses of $67 and $54)
|
25,722
|
|
|
23,240
|
|
||
Premises and equipment (net of accumulated depreciation of $4,152 and $3,881)
|
2,214
|
|
|
2,186
|
|
||
Accrued interest and fees receivable
|
3,203
|
|
|
3,099
|
|
||
Goodwill
|
7,446
|
|
|
6,022
|
|
||
Other intangible assets
|
2,369
|
|
|
1,613
|
|
||
Other assets
|
34,434
|
|
|
31,018
|
|
||
Total assets
|
$
|
244,626
|
|
|
$
|
238,425
|
|
Liabilities:
|
|
|
|
||||
Deposits:
|
|
|
|
||||
Non-interest-bearing
|
$
|
44,804
|
|
|
$
|
47,175
|
|
Interest-bearing - U.S.
|
66,235
|
|
|
50,139
|
|
||
Interest-bearing - non-U.S.
|
69,321
|
|
|
87,582
|
|
||
Total deposits
|
180,360
|
|
|
184,896
|
|
||
Securities sold under repurchase agreements
|
1,082
|
|
|
2,842
|
|
||
Other short-term borrowings
|
3,092
|
|
|
1,144
|
|
||
Accrued expenses and other liabilities
|
24,209
|
|
|
15,606
|
|
||
Long-term debt
|
11,093
|
|
|
11,620
|
|
||
Total liabilities
|
219,836
|
|
|
216,108
|
|
||
Commitments, guarantees and contingencies (Notes 12 and 13)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, no par, 3,500,000 shares authorized:
|
|
|
|
||||
Series C, 5,000 shares issued and outstanding
|
491
|
|
|
491
|
|
||
Series D, 7,500 shares issued and outstanding
|
742
|
|
|
742
|
|
||
Series E, 7,500 shares issued and outstanding
|
728
|
|
|
728
|
|
||
Series F, 7,500 shares issued and outstanding
|
742
|
|
|
742
|
|
||
Series G, 5,000 shares issued and outstanding
|
493
|
|
|
493
|
|
||
Series H, 5,000 shares issued and outstanding
|
494
|
|
|
—
|
|
||
Common stock, $1 par, 750,000,000 shares authorized:
|
|
|
|
||||
503,879,642 and 503,879,642 shares issued, and 379,946,724 and 367,649,858 shares outstanding
|
504
|
|
|
504
|
|
||
Surplus
|
10,061
|
|
|
9,799
|
|
||
Retained earnings
|
20,606
|
|
|
18,856
|
|
||
Accumulated other comprehensive income (loss)
|
(1,356
|
)
|
|
(1,009
|
)
|
||
Treasury stock, at cost (123,932,918 and 136,229,784 shares)
|
(8,715
|
)
|
|
(9,029
|
)
|
||
Total shareholders’ equity
|
24,790
|
|
|
22,317
|
|
||
Total liabilities and shareholders' equity
|
$
|
244,626
|
|
|
$
|
238,425
|
|
(Dollars in millions, except per share amounts, shares in thousands)
|
Preferred
Stock
|
|
Common Stock
|
|
Surplus
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury Stock
|
|
Total
|
||||||||||||||||||||
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||
Balance as of December 31, 2015
|
$
|
2,703
|
|
|
503,880
|
|
|
$
|
504
|
|
|
$
|
9,746
|
|
|
$
|
16,049
|
|
|
$
|
(1,442
|
)
|
|
104,228
|
|
|
$
|
(6,457
|
)
|
|
$
|
21,103
|
|
Net income
|
|
|
|
|
|
|
|
|
2,143
|
|
|
|
|
|
|
|
|
2,143
|
|
||||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
(598
|
)
|
|
|
|
|
|
(598
|
)
|
||||||||||||||
Preferred stock issued
|
493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
493
|
|
||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Common stock - $1.44 per share
|
|
|
|
|
|
|
|
|
(559
|
)
|
|
|
|
|
|
|
|
(559
|
)
|
||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
(173
|
)
|
|
|
|
|
|
|
|
(173
|
)
|
||||||||||||||
Common stock acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
21,098
|
|
|
(1,365
|
)
|
|
(1,365
|
)
|
|||||||||||||
Common stock awards and options vested, including income tax benefit of $13
|
|
|
|
|
|
|
36
|
|
|
|
|
|
|
(3,369
|
)
|
|
139
|
|
|
175
|
|
||||||||||||
Other
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
(16
|
)
|
|
1
|
|
|
—
|
|
||||||||||||
Balance as of December 31, 2016
|
$
|
3,196
|
|
|
503,880
|
|
|
$
|
504
|
|
|
$
|
9,782
|
|
|
$
|
17,459
|
|
|
$
|
(2,040
|
)
|
|
121,941
|
|
|
$
|
(7,682
|
)
|
|
$
|
21,219
|
|
Net income
|
|
|
|
|
|
|
|
|
2,177
|
|
|
|
|
|
|
|
|
2,177
|
|
||||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
1,031
|
|
|
|
|
|
|
1,031
|
|
||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common stock - $1.60 per share
|
|
|
|
|
|
|
|
|
(596
|
)
|
|
|
|
|
|
|
|
(596
|
)
|
||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
(182
|
)
|
|
|
|
|
|
|
|
(182
|
)
|
||||||||||||||
Common stock acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
16,788
|
|
|
(1,450
|
)
|
|
(1,450
|
)
|
|||||||||||||
Common stock awards vested
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
(2,503
|
)
|
|
104
|
|
|
120
|
|
||||||||||||
Other
|
|
|
|
|
|
|
1
|
|
|
(2
|
)
|
|
|
|
4
|
|
|
(1
|
)
|
|
(2
|
)
|
|||||||||||
Balance as of December 31, 2017
|
$
|
3,196
|
|
|
503,880
|
|
|
$
|
504
|
|
|
$
|
9,799
|
|
|
$
|
18,856
|
|
|
$
|
(1,009
|
)
|
|
136,230
|
|
|
$
|
(9,029
|
)
|
|
$
|
22,317
|
|
Net income
|
|
|
|
|
|
|
|
|
2,599
|
|
|
|
|
|
|
|
|
|
2,599
|
|
|||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
(347
|
)
|
|
|
|
|
|
(347
|
)
|
||||||||||||||
Preferred stock issued
|
494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
494
|
|
||||||||||||||
Common stock issued
|
|
|
|
|
|
|
586
|
|
|
|
|
|
|
(13,244
|
)
|
|
564
|
|
|
1,150
|
|
||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common stock - $1.78 per share
|
|
|
|
|
|
|
|
|
(665
|
)
|
|
|
|
|
|
|
|
(665
|
)
|
||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
(188
|
)
|
|
|
|
|
|
|
|
(188
|
)
|
||||||||||||||
Common stock acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
3,324
|
|
|
(350
|
)
|
|
(350
|
)
|
|||||||||||||
Common stock awards vested
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
(2,389
|
)
|
|
101
|
|
|
145
|
|
||||||||||||
Other
|
|
|
|
|
|
|
(368
|
)
|
|
4
|
|
|
|
|
12
|
|
|
(1
|
)
|
|
(365
|
)
|
|||||||||||
Balance as of December 31, 2018
|
$
|
3,690
|
|
|
503,880
|
|
|
$
|
504
|
|
|
$
|
10,061
|
|
|
$
|
20,606
|
|
|
$
|
(1,356
|
)
|
|
123,933
|
|
|
$
|
(8,715
|
)
|
|
$
|
24,790
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
2,599
|
|
|
$
|
2,177
|
|
|
$
|
2,143
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Deferred income tax (benefit)
|
(145
|
)
|
|
95
|
|
|
(358
|
)
|
|||
Amortization of other intangible assets
|
226
|
|
|
214
|
|
|
207
|
|
|||
Other non-cash adjustments for depreciation, amortization and accretion, net
|
977
|
|
|
871
|
|
|
722
|
|
|||
(Gains) losses related to investment securities, net
|
(6
|
)
|
|
39
|
|
|
(7
|
)
|
|||
Change in trading account assets, net
|
233
|
|
|
(69
|
)
|
|
(175
|
)
|
|||
Change in accrued interest and fees receivable, net
|
26
|
|
|
(455
|
)
|
|
(298
|
)
|
|||
Change in collateral deposits, net
|
7,326
|
|
|
1,819
|
|
|
(18
|
)
|
|||
Change in unrealized (gains) losses on foreign exchange derivatives, net
|
(1,836
|
)
|
|
3,267
|
|
|
(1,057
|
)
|
|||
Change in other assets, net
|
260
|
|
|
(1,341
|
)
|
|
1,772
|
|
|||
Change in accrued expenses and other liabilities, net
|
397
|
|
|
9
|
|
|
(1,147
|
)
|
|||
Other, net
|
400
|
|
|
307
|
|
|
506
|
|
|||
Net cash provided by operating activities
|
10,457
|
|
|
6,933
|
|
|
2,290
|
|
|||
Investing Activities:
|
|
|
|
|
|
||||||
Net (increase) decrease in interest-bearing deposits with banks
|
(5,813
|
)
|
|
3,708
|
|
|
4,403
|
|
|||
Net (increase) decrease in securities purchased under resale agreements
|
(1,438
|
)
|
|
(1,285
|
)
|
|
1,448
|
|
|||
Proceeds from sales of available-for-sale securities
|
26,082
|
|
|
12,439
|
|
|
1,401
|
|
|||
Proceeds from maturities of available-for-sale securities
|
14,645
|
|
|
28,878
|
|
|
30,070
|
|
|||
Purchases of available-for-sale securities
|
(31,814
|
)
|
|
(34,841
|
)
|
|
(30,162
|
)
|
|||
Proceeds from maturities of held-to-maturity securities
|
6,296
|
|
|
4,028
|
|
|
7,942
|
|
|||
Purchases of held-to-maturity securities
|
(6,539
|
)
|
|
(8,772
|
)
|
|
(8,425
|
)
|
|||
Net (increase) in loans and leases
|
(2,461
|
)
|
|
(3,511
|
)
|
|
(924
|
)
|
|||
Business acquisitions, net of cash acquired
|
(2,595
|
)
|
|
—
|
|
|
(437
|
)
|
|||
Purchases of equity investments and other long-term assets
|
(326
|
)
|
|
(233
|
)
|
|
(643
|
)
|
|||
Purchases of premises and equipment, net
|
(609
|
)
|
|
(637
|
)
|
|
(613
|
)
|
|||
Proceeds from sale of joint venture investment
|
—
|
|
|
172
|
|
|
—
|
|
|||
Other, net
|
76
|
|
|
102
|
|
|
170
|
|
|||
Net cash (used in) provided by investing activities
|
(4,496
|
)
|
|
48
|
|
|
4,230
|
|
|||
Financing Activities:
|
|
|
|
|
|
||||||
Net increase (decrease) in time deposits
|
6,673
|
|
|
(15,306
|
)
|
|
8,488
|
|
|||
Net (decrease) increase in all other deposits
|
(11,209
|
)
|
|
13,040
|
|
|
(12,952
|
)
|
|||
Net increase (decrease) in other short-term borrowings
|
188
|
|
|
(1,999
|
)
|
|
(268
|
)
|
|||
Proceeds from issuance of long-term debt, net of issuance costs
|
995
|
|
|
747
|
|
|
1,492
|
|
|||
Payments for long-term debt and obligations under capital leases
|
(1,461
|
)
|
|
(493
|
)
|
|
(1,441
|
)
|
|||
Proceeds from issuance of preferred stock, net of issuance costs
|
495
|
|
|
—
|
|
|
493
|
|
|||
Proceeds from issuance of common stock, net of issuance costs
|
1,150
|
|
|
—
|
|
|
—
|
|
|||
Repurchases of common stock
|
(350
|
)
|
|
(1,292
|
)
|
|
(1,365
|
)
|
|||
Excess tax benefit related to stock-based compensation
|
—
|
|
|
—
|
|
|
13
|
|
|||
Repurchases of common stock for employee tax withholding
|
(124
|
)
|
|
(126
|
)
|
|
(122
|
)
|
|||
Payments for cash dividends
|
(828
|
)
|
|
(768
|
)
|
|
(723
|
)
|
|||
Other, net
|
—
|
|
|
9
|
|
|
(28
|
)
|
|||
Net cash (used in) financing activities
|
(4,471
|
)
|
|
(6,188
|
)
|
|
(6,413
|
)
|
|||
Net increase
|
1,490
|
|
|
793
|
|
|
107
|
|
|||
Cash and due from banks at beginning of period
|
2,107
|
|
|
1,314
|
|
|
1,207
|
|
|||
Cash and due from banks at end of period
|
$
|
3,597
|
|
|
$
|
2,107
|
|
|
$
|
1,314
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
981
|
|
|
$
|
593
|
|
|
$
|
441
|
|
Income taxes paid, net
|
549
|
|
|
345
|
|
|
371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 7. De
posits
|
|
|
|
Note 8.
Short-Term Borrowings
|
|
|
|
Note 9.
Long-Term Debt
|
|
|
|
Note 10.
Derivative Financial Instruments
|
|
|
|
Note 11.
Offsetting Arrangements
|
|
|
|
Note 12.
Commitments and Guarantees
|
|
|
|
Note 13.
Contingencies
|
|
|
|
Note 14. Variable Interest Entities
|
|
|
|
Note 15. Shareholders' Equity
|
|
|
|
Note 16. Regulatory Capital
|
|
|
|
Note 17. Net Interest Income
|
|
|
|
Note 18.
Equity-Based Compensation
|
|
|
|
Note 19.
Employee Benefits
|
|
|
|
Note 20.
Occupancy Expense and Information Systems and Communications Expense
|
|
|
|
Note 21. Expenses
|
|
|
|
|
|
Note 23. Earnings Per Common Share
|
|
|
|
Note 24. Line of Business Information
|
|
|
|
Note 25. Revenue From Contracts
|
|
|
|
Note 26. Non- U.S. Activities
|
|
|
|
Note 27. Parent Company Financial Statements
|
|
|
|
Note
|
2
|
|
Page
|
||
Note
|
3
|
|
Page
|
||
Note
|
4
|
|
Page
|
||
Note
|
5
|
|
Page
|
||
Note
|
10
|
|
Page
|
||
Note
|
11
|
|
Page
|
||
Note
|
13
|
|
Page
|
||
Note
|
14
|
|
Page
|
||
Note
|
16
|
|
Page
|
||
Note
|
18
|
|
Page
|
||
Note
|
22
|
|
Page
|
||
Note
|
23
|
|
Page
|
||
Revenue from Contracts with Customers
|
Note
|
25
|
|
Page
|
Relevant standards that were recently issued but not yet adopted as of December 31, 2018:
|
|||
Standard
|
Description
|
Date of Adoption
|
Effects on the financial statements or other significant matters
|
ASU 2016-02, Leases (Topic 842) and relevant amendments
|
The standard represents a wholesale change to lease accounting and requires all leases, other than short-term leases, to be reported on balance sheet through recognition of a right-of-use asset and a corresponding liability for future lease obligations. The standard also requires extensive disclosures for assets, expenses, and cash flows associated with leases, as well as a maturity analysis of lease liabilities.
|
January 1, 2019
|
We have adopted the new standard as of January 1, 2019. Upon adoption of the standard, we recognized the required right-of-use assets of approximately $0.9 billion and lease liabilities of approximately $1.1 billion. This increase largely relates to the present value of future minimum lease payments due under existing operating leases of office space. No material changes are expected to the recognition of lease expenses in the Consolidated Statement of Income. We adopted the standard by applying the transition method whereby comparative periods will not be restated, and no material adjustment to retained earnings was required. For adoption we elected the standard’s package of three practical expedients, and (1) have not reassessed whether any expired or existing contracts are or contain leases, (2) have not reassessed the lease classification for any expired or existing leases, and (3) have not reassessed initial direct costs for any existing leases. In addition, we made an accounting policy election not to apply the recognition requirements to short-term leases, and have elected the practical expedient to not separate lease and nonlease components.
|
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
|
The standard replaces the existing incurred loss impairment guidance and requires immediate recognition of expected credit losses for financial assets carried at amortized cost, including trade and other receivables, loans and commitments, held-to-maturity debt securities and other financial assets, held at the reporting date to be measured based on historical experience, current conditions and reasonable supportable forecasts. The standard also amends existing impairment guidance for available-for-sale securities, and credit losses will be recorded as an allowance versus a write-down of the amortized cost basis of the security and will allow for a reversal of impairment loss when the credit of the issuer improves. The guidance requires a cumulative effect of initial application to be recognized in retained earnings at the date of initial application.
|
January 1, 2020, early adoption permitted
|
We are continuing to assess the impact of the standard on our consolidated financial statements. We have established a steering committee to provide cross-functional governance over the project plan and key decisions, and are continuing to develop key accounting policies, assess existing credit loss models and processes against the new guidance and address data requirements and sources to ensure that the expected credit losses are calculated in accordance with the standard. We continue to develop and test new and modified credit loss models and based on our analysis to date, we expect the recognition of credit losses to accelerate under the new standard. We are continuing to assess the extent of the impact on the allowance for credit losses which will be impacted by our portfolio and the macroeconomic factors on the date of adoption. We plan to adopt the new guidance on January 1, 2020.
|
ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
|
The standard simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The ASU requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying value exceeds the fair value of the reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss.
|
January 1, 2020, early adoption permitted
|
We are evaluating the impacts of early adoption, and will apply this standard prospectively upon adoption.
|
ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium amortization on Purchased Callable Debt Securities
|
The standard shortens the amortization period for certain purchased callable debt securities to the earliest call date. The standard does not impact debt securities which are held at a discount. The guidance requires a cumulative effect of initial application to be recognized in retained earnings at the beginning of the period of adoption.
|
January 1, 2019
|
We have adopted the new standard as of January 1, 2019. No material adjustment to retained earnings was required.
|
ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
|
This standard provides an election to reclassify the stranded tax effects resulting from the enactment of the Tax Cuts and Jobs Act of 2017, from accumulated other comprehensive income to retained earnings.
|
January 1, 2019
|
We have adopted the new standard as of January 1, 2019. Upon adoption of the standard we reclassified approximately $84 million of stranded tax effects from accumulated other comprehensive income to retained earnings.
|
Relevant standards that were recently issued but not yet adopted as of December 31, 2018 (continued):
|
|||
Standard
|
Description
|
Date of Adoption
|
Effects on the financial statements or other significant matters
|
ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement
|
The standard eliminates, amends and adds disclosure requirements for fair value measurements.
|
January 1, 2020, early adoption permitted, including partial early adoption. Provisions that eliminate or amend disclosures can be early adopted without early adopting the new disclosure requirements.
|
We have elected to early adopt the provisions of the new standard that eliminate or amend disclosures as of December 31, 2018 and our disclosures were modified accordingly. The provisions of the new standard that add disclosures will be adopted upon the effective date of the standard.
|
ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)
|
This standard addresses accounting for fees paid by a customer for implementation, set-up and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor, i.e., a service contract. The new guidance aligns treatment for capitalization of implementation costs with guidance on internal-use software.
|
January 1, 2020, early adoption permitted
|
We are currently evaluating the impact of the new standard and the early adoption provisions.
|
•
|
Quoted prices for similar assets or liabilities in active markets;
|
•
|
Quoted prices for identical or similar assets or liabilities in non-active markets;
|
•
|
Pricing models whose inputs are observable for substantially the full term of the asset or liability; and
|
•
|
Pricing models whose inputs are derived principally from, or corroborated by, observable market information through correlation or other means for substantially the full term of the asset or liability.
|
•
|
The fair value of our investment securities categorized in level 3 is measured using information obtained from third-party sources,
|
•
|
The fair value of certain foreign exchange contracts, primarily options, is measured using an option-pricing model. Because of a limited number of observable transactions, certain model inputs are not observable, such as implied volatility surface, but are derived from observable market information.
|
|
Fair Value Measurements on a Recurring Basis
|
||||||||||||||||||
|
As of December 31, 2018
|
||||||||||||||||||
(In millions)
|
Quoted Market
Prices in Active
Markets
(Level 1)
|
|
Pricing Methods
with Significant
Observable
Market Inputs
(Level 2)
|
|
Pricing Methods
with Significant
Unobservable
Market Inputs
(Level 3)
|
|
Impact of Netting
(1)
|
|
Total Net
Carrying Value
in Consolidated
Statement of
Condition
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trading account assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government securities
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
34
|
|
||
Non-U.S. government securities
|
146
|
|
|
179
|
|
|
—
|
|
|
|
|
325
|
|
||||||
Other
|
—
|
|
|
501
|
|
|
—
|
|
|
|
|
501
|
|
||||||
Total trading account assets
|
180
|
|
|
680
|
|
|
—
|
|
|
|
|
860
|
|
||||||
AFS investment securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct obligations
|
1,039
|
|
|
—
|
|
|
—
|
|
|
|
|
1,039
|
|
||||||
Mortgage-backed securities
|
—
|
|
|
15,968
|
|
|
—
|
|
|
|
|
15,968
|
|
||||||
Total U.S. Treasury and federal agencies
|
1,039
|
|
|
15,968
|
|
|
—
|
|
|
|
|
17,007
|
|
||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Student loans
|
—
|
|
|
541
|
|
|
—
|
|
|
|
|
541
|
|
||||||
Credit cards
|
—
|
|
|
583
|
|
|
—
|
|
|
|
|
583
|
|
||||||
Collateralized loan obligations
|
—
|
|
|
—
|
|
|
593
|
|
|
|
|
593
|
|
||||||
Total asset-backed securities
|
—
|
|
|
1,124
|
|
|
593
|
|
|
|
|
1,717
|
|
||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage-backed securities
|
—
|
|
|
1,682
|
|
|
—
|
|
|
|
|
1,682
|
|
||||||
Asset-backed securities
|
—
|
|
|
943
|
|
|
631
|
|
|
|
|
1,574
|
|
||||||
Government securities
|
—
|
|
|
12,793
|
|
|
—
|
|
|
|
|
12,793
|
|
||||||
Other
(2)
|
—
|
|
|
6,544
|
|
|
58
|
|
|
|
|
6,602
|
|
||||||
Total non-U.S. debt securities
|
—
|
|
|
21,962
|
|
|
689
|
|
|
|
|
22,651
|
|
||||||
State and political subdivisions
|
—
|
|
|
1,918
|
|
|
—
|
|
|
|
|
1,918
|
|
||||||
Collateralized mortgage obligations
|
—
|
|
|
195
|
|
|
2
|
|
|
|
|
197
|
|
||||||
Other U.S. debt securities
|
—
|
|
|
1,658
|
|
|
—
|
|
|
|
|
1,658
|
|
||||||
Total AFS investment securities
|
1,039
|
|
|
42,825
|
|
|
1,284
|
|
|
|
|
45,148
|
|
||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign exchange contracts
|
—
|
|
|
16,382
|
|
|
4
|
|
|
$
|
(11,210
|
)
|
|
5,176
|
|
||||
Interest rate contracts
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||
Total derivative instruments
|
13
|
|
|
16,382
|
|
|
4
|
|
|
(11,210
|
)
|
|
5,189
|
|
|||||
Other
|
—
|
|
|
395
|
|
|
—
|
|
|
—
|
|
|
395
|
|
|||||
Total assets carried at fair value
|
$
|
1,232
|
|
|
$
|
60,282
|
|
|
$
|
1,288
|
|
|
$
|
(11,210
|
)
|
|
$
|
51,592
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued expenses and other liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign exchange contracts
|
—
|
|
|
16,518
|
|
|
4
|
|
|
(11,564
|
)
|
|
4,958
|
|
|||||
Interest rate contracts
|
—
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|||||
Other derivative contracts
|
—
|
|
|
214
|
|
|
—
|
|
|
—
|
|
|
214
|
|
|||||
Total derivative instruments
|
—
|
|
|
16,803
|
|
|
4
|
|
|
(11,564
|
)
|
|
5,243
|
|
|||||
Total liabilities carried at fair value
|
$
|
—
|
|
|
$
|
16,803
|
|
|
$
|
4
|
|
|
$
|
(11,564
|
)
|
|
$
|
5,243
|
|
|
|
|
|
|
Fair Value Measurements on a Recurring Basis
|
||||||||||||||||||
|
As of December 31, 2017
|
||||||||||||||||||
(In millions)
|
Quoted Market
Prices in Active
Markets
(Level 1)
|
|
Pricing Methods
with Significant
Observable
Market Inputs
(Level 2)
|
|
Pricing Methods
with Significant
Unobservable
Market Inputs
(Level 3)
|
|
Impact of Netting
(1)
|
|
Total Net
Carrying Value
in Consolidated
Statement of
Condition
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trading account assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government securities
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
39
|
|
||
Non-U.S. government securities
|
389
|
|
|
93
|
|
|
—
|
|
|
|
|
482
|
|
||||||
Other
|
44
|
|
|
528
|
|
|
—
|
|
|
|
|
572
|
|
||||||
Total trading account assets
|
472
|
|
|
621
|
|
|
—
|
|
|
|
|
1,093
|
|
||||||
AFS investment securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct obligations
|
11
|
|
|
212
|
|
|
—
|
|
|
|
|
223
|
|
||||||
Mortgage-backed securities
|
—
|
|
|
10,872
|
|
|
—
|
|
|
|
|
10,872
|
|
||||||
Total U.S. Treasury and federal agencies
|
11
|
|
|
11,084
|
|
|
—
|
|
|
|
|
11,095
|
|
||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Student loans
|
—
|
|
|
3,358
|
|
|
—
|
|
|
|
|
3,358
|
|
||||||
Credit cards
|
—
|
|
|
1,542
|
|
|
—
|
|
|
|
|
1,542
|
|
||||||
Collateralized loan obligations
|
—
|
|
|
89
|
|
|
1,358
|
|
|
|
|
1,447
|
|
||||||
Total asset-backed securities
|
—
|
|
|
4,989
|
|
|
1,358
|
|
|
|
|
6,347
|
|
||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Mortgage-backed securities
|
—
|
|
|
6,576
|
|
|
119
|
|
|
|
|
6,695
|
|
||||||
Asset-backed securities
|
—
|
|
|
2,545
|
|
|
402
|
|
|
|
|
2,947
|
|
||||||
Government securities
|
—
|
|
|
10,721
|
|
|
—
|
|
|
|
|
10,721
|
|
||||||
Other
(2)
|
—
|
|
|
5,904
|
|
|
204
|
|
|
|
|
6,108
|
|
||||||
Total non-U.S. debt securities
|
—
|
|
|
25,746
|
|
|
725
|
|
|
|
|
26,471
|
|
||||||
State and political subdivisions
|
—
|
|
|
9,108
|
|
|
43
|
|
|
|
|
9,151
|
|
||||||
Collateralized mortgage obligations
|
—
|
|
|
1,054
|
|
|
—
|
|
|
|
|
1,054
|
|
||||||
Other U.S. debt securities
|
—
|
|
|
2,560
|
|
|
—
|
|
|
|
|
2,560
|
|
||||||
U.S. equity securities
|
—
|
|
|
46
|
|
|
—
|
|
|
|
|
46
|
|
||||||
U.S. money-market mutual funds
|
—
|
|
|
397
|
|
|
—
|
|
|
|
|
397
|
|
||||||
Total AFS investment securities
|
11
|
|
|
54,984
|
|
|
2,126
|
|
|
|
|
57,121
|
|
||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivatives instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign exchange contracts
|
—
|
|
|
11,596
|
|
|
1
|
|
|
$
|
(7,593
|
)
|
|
4,004
|
|
||||
Interest rate contracts
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Other derivative contracts
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total derivative instruments
|
9
|
|
|
11,596
|
|
|
1
|
|
|
(7,593
|
)
|
|
4,013
|
|
|||||
Total assets carried at fair value
|
$
|
492
|
|
|
$
|
67,201
|
|
|
$
|
2,127
|
|
|
$
|
(7,593
|
)
|
|
$
|
62,227
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued expenses and other liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trading account liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Other
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39
|
|
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign exchange contracts
|
—
|
|
|
11,467
|
|
|
1
|
|
|
(5,970
|
)
|
|
5,498
|
|
|||||
Interest rate contracts
|
—
|
|
|
100
|
|
|
—
|
|
|
—
|
|
|
100
|
|
|||||
Other derivative contracts
|
1
|
|
|
283
|
|
|
—
|
|
|
—
|
|
|
284
|
|
|||||
Total derivative instruments
|
1
|
|
|
11,850
|
|
|
1
|
|
|
(5,970
|
)
|
|
5,882
|
|
|||||
Total liabilities carried at fair value
|
$
|
40
|
|
|
$
|
11,850
|
|
|
$
|
1
|
|
|
$
|
(5,970
|
)
|
|
$
|
5,921
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using Significant Unobservable Inputs
|
||||||||||||||||||||||||||||||||||||||
|
Year Ended December 31, 2017
|
||||||||||||||||||||||||||||||||||||||
|
Fair Value
as of
December 31,
2016
|
|
Total Realized and
Unrealized Gains (Losses) |
|
Purchases
|
|
Sales
|
|
Settlements
|
|
Transfers
into Level 3 |
|
Transfers
out of Level 3 |
|
Fair Value
as of
December 31,
2017
(1)
|
|
Change in Unrealized Gains (Losses) Related to Financial Instruments
Held as of
December 31, 2017
|
||||||||||||||||||||||
(In millions)
|
|
Recorded
in Revenue (1) |
|
Recorded
in Other Comprehensive Income (1) |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
AFS Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
(25
|
)
|
|
$
|
—
|
|
|
|
||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Student loans
|
97
|
|
|
—
|
|
|
1
|
|
|
200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(298
|
)
|
|
—
|
|
|
|
|||||||||||
Other
|
905
|
|
|
3
|
|
|
—
|
|
|
1,035
|
|
|
(240
|
)
|
|
(620
|
)
|
|
275
|
|
|
—
|
|
|
1,358
|
|
|
|
|||||||||||
Total asset-backed securities
|
1,002
|
|
|
3
|
|
|
1
|
|
|
1,235
|
|
|
(240
|
)
|
|
(620
|
)
|
|
275
|
|
|
(298
|
)
|
|
1,358
|
|
|
|
|||||||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Mortgage-backed securities
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
119
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
119
|
|
|
|
|||||||||||
Asset-backed securities
|
32
|
|
|
1
|
|
|
—
|
|
|
370
|
|
|
(10
|
)
|
|
(11
|
)
|
|
67
|
|
|
(47
|
)
|
|
402
|
|
|
|
|||||||||||
Other
|
248
|
|
|
—
|
|
|
1
|
|
|
5
|
|
|
(81
|
)
|
|
31
|
|
|
—
|
|
|
—
|
|
|
204
|
|
|
|
|||||||||||
Total non-U.S. debt securities
|
280
|
|
|
1
|
|
|
(1
|
)
|
|
494
|
|
|
(91
|
)
|
|
22
|
|
|
67
|
|
|
(47
|
)
|
|
725
|
|
|
|
|||||||||||
State and political subdivisions
|
39
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
5
|
|
|
—
|
|
|
43
|
|
|
|
|||||||||||
Collateralized mortgage obligations
|
16
|
|
|
—
|
|
|
(1
|
)
|
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
|
|||||||||||
Other U.S. debt securities
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||||||||||
Total AFS investment securities
|
1,337
|
|
|
4
|
|
|
1
|
|
|
1,772
|
|
|
(350
|
)
|
|
(601
|
)
|
|
372
|
|
|
(409
|
)
|
|
2,126
|
|
|
|
|||||||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Foreign exchange contracts
|
8
|
|
|
(7
|
)
|
|
—
|
|
|
4
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
$
|
(3
|
)
|
|||||||||
Total derivative instruments
|
8
|
|
|
(7
|
)
|
|
—
|
|
|
4
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
(3
|
)
|
||||||||||
Total assets carried at fair value
|
$
|
1,345
|
|
|
$
|
(3
|
)
|
|
$
|
1
|
|
|
$
|
1,776
|
|
|
$
|
(350
|
)
|
|
$
|
(605
|
)
|
|
$
|
372
|
|
|
$
|
(409
|
)
|
|
$
|
2,127
|
|
|
$
|
(3
|
)
|
|
|
|
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||||||||||
|
|
Fair Value
|
|
|
|
|
|
Weighted-Average
|
||||||||||
(Dollars in millions)
|
|
As of December 31, 2018
|
|
As of December 31, 2017
|
|
Valuation Technique
|
|
Significant Unobservable Input
(1)
|
|
As of December 31, 2018
|
|
As of December 31, 2017
|
||||||
Significant unobservable inputs readily available to State Street:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivative Instruments, foreign exchange contracts
|
|
$
|
4
|
|
|
$
|
1
|
|
|
Option model
|
|
Volatility
|
|
11.4
|
%
|
|
7.2
|
%
|
Total
|
|
$
|
4
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivative instruments, foreign exchange contracts
|
|
$
|
4
|
|
|
$
|
1
|
|
|
Option model
|
|
Volatility
|
|
11.4
|
%
|
|
7.2
|
%
|
Total
|
|
$
|
4
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
For financial instruments that have quoted market prices, those quoted prices are used to estimate fair value;
|
•
|
For financial instruments that have no defined maturity, have a remaining maturity of 180 days or less, or reprice frequently to a market rate, we assume that the fair value of these instruments approximates their reported value, after taking into consideration any applicable credit risk; and
|
•
|
For financial instruments for which no quoted market prices are available, fair value is estimated
|
|
|
|
|
|
|
Fair Value Hierarchy
|
||||||||||||||
(In millions)
|
|
Reported Amount
|
|
Estimated Fair Value
|
|
Quoted Market Prices in Active Markets (Level 1)
|
|
Pricing Methods with Significant Observable Market Inputs (Level 2)
|
|
Pricing Methods with Significant Unobservable Market Inputs (Level 3)
|
||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks
|
|
$
|
3,597
|
|
|
$
|
3,597
|
|
|
$
|
3,597
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest-bearing deposits with banks
|
|
73,040
|
|
|
73,040
|
|
|
—
|
|
|
73,040
|
|
|
—
|
|
|||||
Securities purchased under resale agreements
|
|
4,679
|
|
|
4,679
|
|
|
—
|
|
|
4,679
|
|
|
—
|
|
|||||
Investment securities held-to-maturity
|
|
41,914
|
|
|
41,351
|
|
|
14,541
|
|
|
26,688
|
|
|
122
|
|
|||||
Net loans (excluding leases)
(1)
|
|
25,722
|
|
|
25,561
|
|
|
—
|
|
|
24,648
|
|
|
913
|
|
|||||
Other
(2)
|
|
8,500
|
|
|
8,500
|
|
|
—
|
|
|
8,500
|
|
|
—
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-interest-bearing
|
|
$
|
44,804
|
|
|
$
|
44,804
|
|
|
$
|
—
|
|
|
$
|
44,804
|
|
|
$
|
—
|
|
Interest-bearing - U.S.
|
|
66,235
|
|
|
66,235
|
|
|
—
|
|
|
66,235
|
|
|
—
|
|
|||||
Interest-bearing - non-U.S.
|
|
69,321
|
|
|
69,321
|
|
|
—
|
|
|
69,321
|
|
|
—
|
|
|||||
Securities sold under repurchase agreements
|
|
1,082
|
|
|
1,082
|
|
|
—
|
|
|
1,082
|
|
|
—
|
|
|||||
Other short-term borrowings
|
|
3,092
|
|
|
3,092
|
|
|
—
|
|
|
3,092
|
|
|
—
|
|
|||||
Long-term debt
|
|
11,093
|
|
|
11,048
|
|
|
—
|
|
|
10,865
|
|
|
183
|
|
|||||
Other
(2)
|
|
8,500
|
|
|
8,500
|
|
|
—
|
|
|
8,500
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Hierarchy
|
||||||||||||||
(In millions)
|
|
Reported Amount
|
|
Estimated Fair Value
|
|
Quoted Market Prices in Active Markets (Level 1)
|
|
Pricing Methods with Significant Observable Market Inputs (Level 2)
|
|
Pricing Methods with Significant Unobservable Market Inputs (Level 3)
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks
|
|
$
|
2,107
|
|
|
$
|
2,107
|
|
|
$
|
2,107
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest-bearing deposits with banks
|
|
67,227
|
|
|
67,227
|
|
|
—
|
|
|
67,227
|
|
|
—
|
|
|||||
Securities purchased under resale agreements
|
|
3,241
|
|
|
3,241
|
|
|
—
|
|
|
3,241
|
|
|
—
|
|
|||||
Investment securities held-to-maturity
|
|
40,458
|
|
|
40,255
|
|
|
16,814
|
|
|
23,318
|
|
|
123
|
|
|||||
Net loans (excluding leases)
(1)
|
|
22,577
|
|
|
22,482
|
|
|
—
|
|
|
22,431
|
|
|
51
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-interest-bearing
|
|
$
|
47,175
|
|
|
$
|
47,175
|
|
|
$
|
—
|
|
|
$
|
47,175
|
|
|
$
|
—
|
|
Interest-bearing - U.S.
|
|
50,139
|
|
|
50,139
|
|
|
—
|
|
|
50,139
|
|
|
—
|
|
|||||
Interest-bearing - non-U.S.
|
|
87,582
|
|
|
87,582
|
|
|
—
|
|
|
87,582
|
|
|
—
|
|
|||||
Securities sold under repurchase agreements
|
|
2,842
|
|
|
2,842
|
|
|
—
|
|
|
2,842
|
|
|
—
|
|
|||||
Other short-term borrowings
|
|
1,144
|
|
|
1,144
|
|
|
—
|
|
|
1,144
|
|
|
—
|
|
|||||
Long-term debt
|
|
11,620
|
|
|
11,919
|
|
|
—
|
|
|
11,639
|
|
|
280
|
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
|
|
Fair
Value
|
||||||||||||||||||||
(In millions)
|
Gains
|
|
Losses
|
|
Gains
|
|
Losses
|
|
|||||||||||||||||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Direct obligations
|
$
|
1,035
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
1,039
|
|
|
$
|
222
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
223
|
|
Mortgage-backed securities
|
16,112
|
|
|
37
|
|
|
181
|
|
|
15,968
|
|
|
10,975
|
|
|
26
|
|
|
129
|
|
|
10,872
|
|
||||||||
Total U.S. Treasury and federal agencies
|
17,147
|
|
|
41
|
|
|
181
|
|
|
17,007
|
|
|
11,197
|
|
|
28
|
|
|
130
|
|
|
11,095
|
|
||||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Student loans
(1)
|
538
|
|
|
4
|
|
|
1
|
|
|
541
|
|
|
3,325
|
|
|
37
|
|
|
4
|
|
|
3,358
|
|
||||||||
Credit cards
|
609
|
|
|
—
|
|
|
26
|
|
|
583
|
|
|
1,565
|
|
|
2
|
|
|
25
|
|
|
1,542
|
|
||||||||
Collateralized loan obligations
|
594
|
|
|
1
|
|
|
2
|
|
|
593
|
|
|
1,440
|
|
|
7
|
|
|
—
|
|
|
1,447
|
|
||||||||
Total asset-backed securities
|
1,741
|
|
|
5
|
|
|
29
|
|
|
1,717
|
|
|
6,330
|
|
|
46
|
|
|
29
|
|
|
6,347
|
|
||||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Mortgage-backed securities
|
1,687
|
|
|
—
|
|
|
5
|
|
|
1,682
|
|
|
6,664
|
|
|
36
|
|
|
5
|
|
|
6,695
|
|
||||||||
Asset-backed securities
|
1,580
|
|
|
—
|
|
|
6
|
|
|
1,574
|
|
|
2,942
|
|
|
5
|
|
|
—
|
|
|
2,947
|
|
||||||||
Government securities
|
12,816
|
|
|
22
|
|
|
45
|
|
|
12,793
|
|
|
10,754
|
|
|
16
|
|
|
49
|
|
|
10,721
|
|
||||||||
Other
(2)
|
6,600
|
|
|
18
|
|
|
16
|
|
|
6,602
|
|
|
6,076
|
|
|
38
|
|
|
6
|
|
|
6,108
|
|
||||||||
Total non-U.S. debt securities
|
22,683
|
|
|
40
|
|
|
72
|
|
|
22,651
|
|
|
26,436
|
|
|
95
|
|
|
60
|
|
|
26,471
|
|
||||||||
State and political subdivisions
(3)
|
1,905
|
|
|
20
|
|
|
7
|
|
|
1,918
|
|
|
8,929
|
|
|
245
|
|
|
23
|
|
|
9,151
|
|
||||||||
Collateralized mortgage obligations
|
200
|
|
|
—
|
|
|
3
|
|
|
197
|
|
|
1,060
|
|
|
3
|
|
|
9
|
|
|
1,054
|
|
||||||||
Other U.S. debt securities
|
1,683
|
|
|
1
|
|
|
26
|
|
|
1,658
|
|
|
2,563
|
|
|
12
|
|
|
15
|
|
|
2,560
|
|
||||||||
U.S. equity securities
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
8
|
|
|
2
|
|
|
46
|
|
||||||||
U.S. money-market mutual funds
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
397
|
|
|
—
|
|
|
—
|
|
|
397
|
|
||||||||
Total
|
$
|
45,359
|
|
|
$
|
107
|
|
|
$
|
318
|
|
|
$
|
45,148
|
|
|
$
|
56,952
|
|
|
$
|
437
|
|
|
$
|
268
|
|
|
$
|
57,121
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Direct obligations
|
$
|
14,794
|
|
|
$
|
—
|
|
|
$
|
199
|
|
|
$
|
14,595
|
|
|
$
|
17,028
|
|
|
$
|
—
|
|
|
$
|
143
|
|
|
$
|
16,885
|
|
Mortgage-backed securities
|
21,647
|
|
|
24
|
|
|
518
|
|
|
21,153
|
|
|
16,651
|
|
|
22
|
|
|
225
|
|
|
16,448
|
|
||||||||
Total U.S. Treasury and federal agencies
|
36,441
|
|
|
24
|
|
|
717
|
|
|
35,748
|
|
|
33,679
|
|
|
22
|
|
|
368
|
|
|
33,333
|
|
||||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Student loans
(1)
|
3,191
|
|
|
35
|
|
|
10
|
|
|
3,216
|
|
|
3,047
|
|
|
32
|
|
|
9
|
|
|
3,070
|
|
||||||||
Credit cards
|
193
|
|
|
—
|
|
|
—
|
|
|
193
|
|
|
798
|
|
|
2
|
|
|
—
|
|
|
800
|
|
||||||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||||
Total asset-backed securities
|
3,385
|
|
|
35
|
|
|
10
|
|
|
3,410
|
|
|
3,846
|
|
|
34
|
|
|
9
|
|
|
3,871
|
|
||||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Mortgage-backed securities
|
638
|
|
|
77
|
|
|
9
|
|
|
706
|
|
|
939
|
|
|
82
|
|
|
6
|
|
|
1,015
|
|
||||||||
Asset-backed securities
|
223
|
|
|
—
|
|
|
—
|
|
|
223
|
|
|
263
|
|
|
1
|
|
|
—
|
|
|
264
|
|
||||||||
Government securities
|
358
|
|
|
1
|
|
|
—
|
|
|
359
|
|
|
474
|
|
|
2
|
|
|
—
|
|
|
476
|
|
||||||||
Other
|
46
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
48
|
|
||||||||
Total non-U.S. debt securities
|
1,265
|
|
|
78
|
|
|
9
|
|
|
1,334
|
|
|
1,724
|
|
|
85
|
|
|
6
|
|
|
1,803
|
|
||||||||
Collateralized mortgage obligations
|
823
|
|
|
38
|
|
|
2
|
|
|
859
|
|
|
1,209
|
|
|
45
|
|
|
6
|
|
|
1,248
|
|
||||||||
Total
|
$
|
41,914
|
|
|
$
|
175
|
|
|
$
|
738
|
|
|
$
|
41,351
|
|
|
$
|
40,458
|
|
|
$
|
186
|
|
|
$
|
389
|
|
|
$
|
40,255
|
|
|
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
December 31, 2018
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
(In millions)
|
|
|
|
|
|
||||||||||||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
$
|
5,058
|
|
|
$
|
21
|
|
|
$
|
5,089
|
|
|
$
|
160
|
|
|
$
|
10,147
|
|
|
$
|
181
|
|
Total U.S. Treasury and federal agencies
|
5,058
|
|
|
21
|
|
|
5,089
|
|
|
160
|
|
|
10,147
|
|
|
181
|
|
||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Student loans
|
106
|
|
|
—
|
|
|
218
|
|
|
1
|
|
|
324
|
|
|
1
|
|
||||||
Credit cards
|
90
|
|
|
—
|
|
|
493
|
|
|
26
|
|
|
583
|
|
|
26
|
|
||||||
Collateralized loan obligations
|
548
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
548
|
|
|
2
|
|
||||||
Total asset-backed securities
|
744
|
|
|
2
|
|
|
711
|
|
|
27
|
|
|
1,455
|
|
|
29
|
|
||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
1,407
|
|
|
4
|
|
|
118
|
|
|
1
|
|
|
1,525
|
|
|
5
|
|
||||||
Asset-backed securities
|
1,479
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
1,479
|
|
|
6
|
|
||||||
Government securities
|
5,478
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
5,478
|
|
|
45
|
|
||||||
Other
|
2,167
|
|
|
12
|
|
|
226
|
|
|
4
|
|
|
2,393
|
|
|
16
|
|
||||||
Total non-U.S. debt securities
|
10,531
|
|
|
67
|
|
|
344
|
|
|
5
|
|
|
10,875
|
|
|
72
|
|
||||||
State and political subdivisions
|
365
|
|
|
3
|
|
|
244
|
|
|
4
|
|
|
609
|
|
|
7
|
|
||||||
Collateralized mortgage obligations
|
181
|
|
|
3
|
|
|
14
|
|
|
—
|
|
|
195
|
|
|
3
|
|
||||||
Other U.S. debt securities
|
861
|
|
|
14
|
|
|
484
|
|
|
12
|
|
|
1,345
|
|
|
26
|
|
||||||
Total
|
$
|
17,740
|
|
|
$
|
110
|
|
|
$
|
6,886
|
|
|
$
|
208
|
|
|
$
|
24,626
|
|
|
$
|
318
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct obligations
|
$
|
2,192
|
|
|
$
|
45
|
|
|
$
|
12,403
|
|
|
$
|
154
|
|
|
$
|
14,595
|
|
|
$
|
199
|
|
Mortgage-backed securities
|
6,502
|
|
|
103
|
|
|
10,648
|
|
|
415
|
|
|
17,150
|
|
|
518
|
|
||||||
Total U.S. Treasury and federal agencies
|
8,694
|
|
|
148
|
|
|
23,051
|
|
|
569
|
|
|
31,745
|
|
|
717
|
|
||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Student loans
|
481
|
|
|
4
|
|
|
536
|
|
|
6
|
|
|
1,017
|
|
|
10
|
|
||||||
Total asset-backed securities
|
481
|
|
|
4
|
|
|
536
|
|
|
6
|
|
|
1,017
|
|
|
10
|
|
||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
184
|
|
|
2
|
|
|
119
|
|
|
7
|
|
|
303
|
|
|
9
|
|
||||||
Total non-U.S. debt securities
|
184
|
|
|
2
|
|
|
119
|
|
|
7
|
|
|
303
|
|
|
9
|
|
||||||
Collateralized mortgage obligations
|
102
|
|
|
1
|
|
|
51
|
|
|
1
|
|
|
153
|
|
|
2
|
|
||||||
Total
|
$
|
9,461
|
|
|
$
|
155
|
|
|
$
|
23,757
|
|
|
$
|
583
|
|
|
$
|
33,218
|
|
|
$
|
738
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
December 31, 2017
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
(In millions)
|
|
|
|
|
|
||||||||||||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct obligations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67
|
|
|
$
|
1
|
|
|
$
|
67
|
|
|
$
|
1
|
|
Mortgage-backed securities
|
5,161
|
|
|
31
|
|
|
3,341
|
|
|
98
|
|
|
8,502
|
|
|
129
|
|
||||||
Total U.S. Treasury and federal agencies
|
5,161
|
|
|
31
|
|
|
3,408
|
|
|
99
|
|
|
8,569
|
|
|
130
|
|
||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Student loans
|
—
|
|
|
—
|
|
|
769
|
|
|
4
|
|
|
769
|
|
|
4
|
|
||||||
Credit cards
|
1,289
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
1,289
|
|
|
25
|
|
||||||
Total asset-backed securities
|
1,289
|
|
|
25
|
|
|
769
|
|
|
4
|
|
|
2,058
|
|
|
29
|
|
||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
1,059
|
|
|
4
|
|
|
469
|
|
|
1
|
|
|
1,528
|
|
|
5
|
|
||||||
Government securities
|
7,629
|
|
|
48
|
|
|
68
|
|
|
1
|
|
|
7,697
|
|
|
49
|
|
||||||
Other
|
816
|
|
|
4
|
|
|
289
|
|
|
2
|
|
|
1,105
|
|
|
6
|
|
||||||
Total non-U.S. debt securities
|
9,504
|
|
|
56
|
|
|
826
|
|
|
4
|
|
|
10,330
|
|
|
60
|
|
||||||
State and political subdivisions
|
734
|
|
|
6
|
|
|
901
|
|
|
17
|
|
|
1,635
|
|
|
23
|
|
||||||
Collateralized mortgage obligations
|
399
|
|
|
5
|
|
|
136
|
|
|
4
|
|
|
535
|
|
|
9
|
|
||||||
Other U.S. debt securities
|
1,007
|
|
|
8
|
|
|
345
|
|
|
7
|
|
|
1,352
|
|
|
15
|
|
||||||
U.S. equity securities
|
—
|
|
|
—
|
|
|
6
|
|
|
2
|
|
|
6
|
|
|
2
|
|
||||||
Total
|
$
|
18,094
|
|
|
$
|
131
|
|
|
$
|
6,391
|
|
|
$
|
137
|
|
|
$
|
24,485
|
|
|
$
|
268
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct obligations
|
$
|
14,439
|
|
|
$
|
109
|
|
|
$
|
2,447
|
|
|
$
|
34
|
|
|
$
|
16,886
|
|
|
$
|
143
|
|
Mortgage-backed securities
|
6,785
|
|
|
38
|
|
|
5,988
|
|
|
187
|
|
|
12,773
|
|
|
225
|
|
||||||
Total U.S. Treasury and federal agencies
|
21,224
|
|
|
147
|
|
|
8,435
|
|
|
221
|
|
|
29,659
|
|
|
368
|
|
||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Student loans
|
440
|
|
|
3
|
|
|
423
|
|
|
6
|
|
|
863
|
|
|
9
|
|
||||||
Total asset-backed securities
|
440
|
|
|
3
|
|
|
423
|
|
|
6
|
|
|
863
|
|
|
9
|
|
||||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
—
|
|
|
—
|
|
|
239
|
|
|
6
|
|
|
239
|
|
|
6
|
|
||||||
Total non-U.S. debt securities
|
—
|
|
|
—
|
|
|
239
|
|
|
6
|
|
|
239
|
|
|
6
|
|
||||||
Collateralized mortgage obligations
|
—
|
|
|
—
|
|
|
276
|
|
|
6
|
|
|
276
|
|
|
6
|
|
||||||
Total
|
$
|
21,664
|
|
|
$
|
150
|
|
|
$
|
9,373
|
|
|
$
|
239
|
|
|
$
|
31,037
|
|
|
$
|
389
|
|
December 31, 2018
|
Under 1
Year
|
|
1 to 5
Years
|
|
6 to 10
Years
|
|
Over 10
Years
|
|
Total
|
||||||||||
(In millions)
|
|
|
|
|
|||||||||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct obligations
|
$
|
224
|
|
|
$
|
815
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,039
|
|
Mortgage-backed securities
|
101
|
|
|
802
|
|
|
1,884
|
|
|
13,181
|
|
|
15,968
|
|
|||||
Total U.S. Treasury and federal agencies
|
325
|
|
|
1,617
|
|
|
1,884
|
|
|
13,181
|
|
|
17,007
|
|
|||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Student loans
|
57
|
|
|
164
|
|
|
250
|
|
|
70
|
|
|
541
|
|
|||||
Credit cards
|
199
|
|
|
294
|
|
|
90
|
|
|
—
|
|
|
583
|
|
|||||
Collateralized loan obligations
|
—
|
|
|
402
|
|
|
171
|
|
|
20
|
|
|
593
|
|
|||||
Total asset-backed securities
|
256
|
|
|
860
|
|
|
511
|
|
|
90
|
|
|
1,717
|
|
|||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage-backed securities
|
139
|
|
|
769
|
|
|
176
|
|
|
598
|
|
|
1,682
|
|
|||||
Asset-backed securities
|
136
|
|
|
698
|
|
|
581
|
|
|
159
|
|
|
1,574
|
|
|||||
Government securities
|
3,439
|
|
|
6,409
|
|
|
2,945
|
|
|
—
|
|
|
12,793
|
|
|||||
Other
|
1,071
|
|
|
4,575
|
|
|
937
|
|
|
19
|
|
|
6,602
|
|
|||||
Total non-U.S. debt securities
|
4,785
|
|
|
12,451
|
|
|
4,639
|
|
|
776
|
|
|
22,651
|
|
|||||
State and political subdivisions
|
235
|
|
|
776
|
|
|
446
|
|
|
461
|
|
|
1,918
|
|
|||||
Collateralized mortgage obligations
|
2
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|
197
|
|
|||||
Other U.S. debt securities
|
141
|
|
|
1,219
|
|
|
298
|
|
|
—
|
|
|
1,658
|
|
|||||
Total
|
$
|
5,744
|
|
|
$
|
16,923
|
|
|
$
|
7,778
|
|
|
$
|
14,703
|
|
|
$
|
45,148
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and federal agencies:
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct obligations
|
$
|
4,002
|
|
|
$
|
10,737
|
|
|
$
|
12
|
|
|
$
|
43
|
|
|
$
|
14,794
|
|
Mortgage-backed securities
|
33
|
|
|
127
|
|
|
1,697
|
|
|
19,790
|
|
|
21,647
|
|
|||||
Total U.S. Treasury and federal agencies
|
4,035
|
|
|
10,864
|
|
|
1,709
|
|
|
19,833
|
|
|
36,441
|
|
|||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Student loans
|
7
|
|
|
291
|
|
|
267
|
|
|
2,626
|
|
|
3,191
|
|
|||||
Credit cards
|
58
|
|
|
135
|
|
|
—
|
|
|
—
|
|
|
193
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||
Total asset-backed securities
|
65
|
|
|
426
|
|
|
267
|
|
|
2,627
|
|
|
3,385
|
|
|||||
Non-U.S. debt securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage-backed securities
|
160
|
|
|
42
|
|
|
7
|
|
|
429
|
|
|
638
|
|
|||||
Asset-backed securities
|
96
|
|
|
127
|
|
|
—
|
|
|
—
|
|
|
223
|
|
|||||
Government securities
|
243
|
|
|
115
|
|
|
—
|
|
|
—
|
|
|
358
|
|
|||||
Other
|
46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|||||
Total non-U.S. debt securities
|
545
|
|
|
284
|
|
|
7
|
|
|
429
|
|
|
1,265
|
|
|||||
Collateralized mortgage obligations
|
1
|
|
|
318
|
|
|
15
|
|
|
489
|
|
|
823
|
|
|||||
Total
|
$
|
4,646
|
|
|
$
|
11,892
|
|
|
$
|
1,998
|
|
|
$
|
23,378
|
|
|
$
|
41,914
|
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Gross realized gains from sales of AFS investment securities
|
|
$
|
205
|
|
|
$
|
74
|
|
|
$
|
15
|
|
Gross realized losses from sales of AFS investment securities
|
|
(196
|
)
|
|
(113
|
)
|
|
(5
|
)
|
|||
Net impairment losses:
|
|
|
|
|
|
|
||||||
Gross losses from OTTI
|
|
(3
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Losses reclassified (from) to other comprehensive income
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Net impairment losses
(1)
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||
Gains (losses) related to investment securities, net
|
|
$
|
6
|
|
|
$
|
(39
|
)
|
|
$
|
7
|
|
(1)
Net impairment losses, recognized in our consolidated statement of income, were composed of the following:
|
|
|
|
|
|
|
||||||
Impairment associated with expected credit losses
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
Impairment associated with adverse changes in timing of expected future cash flows
|
|
(3
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Net impairment losses
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance, beginning of period
|
|
$
|
77
|
|
|
$
|
79
|
|
|
$
|
105
|
|
Additions
(1)
:
|
|
|
|
|
|
|
||||||
OTTI recognized
|
|
3
|
|
|
—
|
|
|
2
|
|
|||
Deductions
(2)
:
|
|
|
|
|
|
|
||||||
Realized losses on securities sold or matured
|
|
(2
|
)
|
|
(2
|
)
|
|
(28
|
)
|
|||
Balance, end of period
|
|
$
|
78
|
|
|
$
|
77
|
|
|
$
|
79
|
|
|
|
•
|
the identification and evaluation of securities that have indications of potential OTTI, such as issuer-specific concerns, including deteriorating financial condition or bankruptcy;
|
•
|
the analysis of expected future cash flows of securities, based on quantitative and qualitative factors;
|
•
|
the analysis of the collectability of those future cash flows, including information about past events, current conditions, and reasonable and supportable forecasts;
|
•
|
the analysis of the underlying collateral for MBS and ABS;
|
•
|
the analysis of individual impaired securities, including consideration of the length of time the security has been in an unrealized loss position, the anticipated recovery period, and the magnitude of the overall price decline;
|
•
|
evaluation of factors or triggers that could cause individual securities to be deemed OTTI and those that would not support OTTI; and
|
•
|
documentation of the results of these analyses.
|
•
|
certain macroeconomic drivers;
|
•
|
certain industry-specific drivers;
|
•
|
the length of time the security has been impaired;
|
•
|
the severity of the impairment;
|
•
|
the cause of the impairment and the financial condition and near-term prospects of the issuer;
|
•
|
activity in the market with respect to the issuer's securities, which may indicate adverse credit conditions; and
|
•
|
our intention not to sell, and the likelihood that we will not be required to sell, the security for a period of time sufficient to allow for its recovery in value.
|
(In millions)
|
December 31, 2018
|
|
December 31, 2017
|
||||
Domestic:
|
|
|
|
||||
Commercial and financial:
|
|
|
|
||||
Loans to investment funds
|
$
|
15,050
|
|
|
$
|
13,618
|
|
Senior secured bank loans
|
3,490
|
|
|
2,923
|
|
||
Loans to municipalities
|
902
|
|
|
2,105
|
|
||
Other
|
37
|
|
|
50
|
|
||
Commercial real estate
|
874
|
|
|
98
|
|
||
Lease financing
(1)
|
—
|
|
|
267
|
|
||
Total domestic
|
20,353
|
|
|
19,061
|
|
||
Non-U.S.:
|
|
|
|
||||
Commercial and financial:
|
|
|
|
||||
Loans to investment funds
|
4,505
|
|
|
3,213
|
|
||
Senior secured bank loans
|
931
|
|
|
624
|
|
||
Lease financing
(1)
|
—
|
|
|
396
|
|
||
Total non-U.S.
|
5,436
|
|
|
4,233
|
|
||
Total loans and leases
|
25,789
|
|
|
23,294
|
|
||
Allowance for loan and lease losses
|
(67
|
)
|
|
(54
|
)
|
||
Loans and leases, net of allowance
|
$
|
25,722
|
|
|
$
|
23,240
|
|
|
|
|
|
December 31, 2018
|
Commercial and Financial
|
|
Commercial Real Estate
|
|
Lease
Financing
|
|
Total Loans and Leases
|
||||||||
(In millions)
|
|||||||||||||||
Investment grade
(1)
|
$
|
19,599
|
|
|
$
|
874
|
|
|
$
|
—
|
|
|
$
|
20,473
|
|
Speculative
(2)
|
5,308
|
|
|
—
|
|
|
—
|
|
|
5,308
|
|
||||
Substandard
(3)
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Total
|
$
|
24,915
|
|
|
$
|
874
|
|
|
$
|
—
|
|
|
$
|
25,789
|
|
December 31, 2017
|
Commercial and Financial
|
|
Commercial Real Estate
|
|
Lease
Financing
|
|
Total Loans and Leases
|
||||||||
(In millions)
|
|||||||||||||||
Investment grade
(1)
|
$
|
17,866
|
|
|
$
|
98
|
|
|
$
|
663
|
|
|
$
|
18,627
|
|
Speculative
(2)
|
4,638
|
|
|
—
|
|
|
—
|
|
|
4,638
|
|
||||
Special mention
(4)
|
29
|
|
|
—
|
|
|
—
|
|
|
29
|
|
||||
Total
|
$
|
22,533
|
|
|
$
|
98
|
|
|
$
|
663
|
|
|
$
|
23,294
|
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
(In millions)
|
Commercial and Financial
|
|
Commercial Real Estate
|
|
Lease Financing
|
|
Total Loans and Leases
|
|
Commercial and Financial
|
|
Commercial Real Estate
|
|
Lease Financing
|
|
Total Loans and Leases
|
||||||||||||||||
Loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Individually evaluated for impairment
(1)
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Collectively evaluated for impairment
|
24,907
|
|
|
874
|
|
|
—
|
|
|
25,781
|
|
|
22,533
|
|
|
98
|
|
|
663
|
|
|
23,294
|
|
||||||||
Total
|
$
|
24,915
|
|
|
$
|
874
|
|
|
$
|
—
|
|
|
$
|
25,789
|
|
|
$
|
22,533
|
|
|
$
|
98
|
|
|
$
|
663
|
|
|
$
|
23,294
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Allowance for loan and lease losses:
|
|||||||||||
Beginning balance
|
$
|
54
|
|
|
$
|
53
|
|
|
$
|
46
|
|
Provision for loan and lease losses
(1)
|
15
|
|
|
2
|
|
|
10
|
|
|||
Charge-offs
(1)
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|||
Ending balance
|
$
|
67
|
|
|
$
|
54
|
|
|
$
|
53
|
|
|
|
(In millions)
|
Investment
Servicing
(1)
|
|
Investment
Management
|
|
Total
|
||||||
Goodwill:
|
|
|
|
|
|
||||||
Ending balance December 31, 2016
|
$
|
5,550
|
|
|
$
|
264
|
|
|
$
|
5,814
|
|
Acquisitions
|
17
|
|
|
—
|
|
|
17
|
|
|||
Divestitures and other reductions
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|||
Foreign currency translation
|
194
|
|
|
6
|
|
|
200
|
|
|||
Ending balance December 31, 2017
|
5,752
|
|
|
270
|
|
|
6,022
|
|
|||
Acquisitions
(1)
|
1,512
|
|
|
—
|
|
|
1,512
|
|
|||
Foreign currency translation
|
(84
|
)
|
|
(4
|
)
|
|
(88
|
)
|
|||
Ending balance December 31, 2018
|
$
|
7,180
|
|
|
$
|
266
|
|
|
$
|
7,446
|
|
|
|
|
|
(In millions)
|
Investment
Servicing
(1)
|
|
Investment
Management
|
|
Total
|
||||||
Other intangible assets:
|
|
|
|
|
|
||||||
Ending balance December 31, 2016
|
$
|
1,539
|
|
|
$
|
211
|
|
|
$
|
1,750
|
|
Acquisitions
|
16
|
|
|
—
|
|
|
16
|
|
|||
Divestitures
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|||
Amortization
|
(183
|
)
|
|
(31
|
)
|
|
(214
|
)
|
|||
Foreign currency translation
|
71
|
|
|
1
|
|
|
72
|
|
|||
Ending balance December 31, 2017
|
1,432
|
|
|
181
|
|
|
1,613
|
|
|||
Acquisitions
(1)
|
1,007
|
|
|
—
|
|
|
1,007
|
|
|||
Amortization
|
(196
|
)
|
|
(30
|
)
|
|
(226
|
)
|
|||
Foreign currency translation
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
|||
Ending balance December 31, 2018
|
$
|
2,218
|
|
|
$
|
151
|
|
|
$
|
2,369
|
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
(In millions)
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Client relationships
|
$
|
3,262
|
|
|
$
|
(1,605
|
)
|
|
$
|
1,657
|
|
|
$
|
2,669
|
|
|
$
|
(1,470
|
)
|
|
$
|
1,199
|
|
Technology
|
389
|
|
|
(49
|
)
|
|
340
|
|
|
47
|
|
|
(40
|
)
|
|
7
|
|
||||||
Core deposits
|
676
|
|
|
(350
|
)
|
|
326
|
|
|
686
|
|
|
(320
|
)
|
|
366
|
|
||||||
Other
|
103
|
|
|
(57
|
)
|
|
46
|
|
|
95
|
|
|
(54
|
)
|
|
41
|
|
||||||
Total
|
$
|
4,430
|
|
|
$
|
(2,061
|
)
|
|
$
|
2,369
|
|
|
$
|
3,497
|
|
|
$
|
(1,884
|
)
|
|
$
|
1,613
|
|
(In millions)
|
Future Amortization
|
||
Years Ended December 31,
|
|
||
2019
|
$
|
245
|
|
2020
|
243
|
|
|
2021
|
236
|
|
|
2022
|
233
|
|
|
2023
|
232
|
|
|
December 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Securities borrowed
(1)
|
$
|
19,575
|
|
|
$
|
19,404
|
|
Derivative instruments, net
|
5,189
|
|
|
4,013
|
|
||
Bank-owned life insurance
|
3,323
|
|
|
3,242
|
|
||
Investments in joint ventures and other unconsolidated entities
(2)
|
2,912
|
|
|
2,259
|
|
||
Collateral, net
|
1,354
|
|
|
473
|
|
||
Receivable for securities settlement
|
531
|
|
|
188
|
|
||
Prepaid expenses
|
493
|
|
|
364
|
|
||
Accounts receivable
|
343
|
|
|
348
|
|
||
Income taxes receivable
|
129
|
|
|
97
|
|
||
Deferred tax assets, net of valuation allowance
(3)
|
113
|
|
|
113
|
|
||
Deposits with clearing organizations
|
58
|
|
|
120
|
|
||
Other
|
414
|
|
|
397
|
|
||
Total
|
$
|
34,434
|
|
|
$
|
31,018
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
(Dollars in millions)
|
Securities Sold Under
Repurchase Agreements
|
|
Tax-Exempt
Investment Program
|
|
Other
|
||||||||||||||||||||||||||||||
Balance as of December 31
|
$
|
1,082
|
|
|
$
|
2,842
|
|
|
$
|
4,400
|
|
|
$
|
931
|
|
|
$
|
1,078
|
|
|
$
|
1,158
|
|
|
$
|
2,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Maximum outstanding as of any month-end
|
3,441
|
|
|
4,302
|
|
|
5,572
|
|
|
1,078
|
|
|
1,158
|
|
|
1,726
|
|
|
2,000
|
|
|
—
|
|
|
29
|
|
|||||||||
Average outstanding during the year
|
2,048
|
|
|
3,683
|
|
|
4,113
|
|
|
1,023
|
|
|
1,127
|
|
|
1,512
|
|
|
nm
|
|
|
1
|
|
|
31
|
|
|||||||||
Weighted-average interest rate as of year-end
|
1.38
|
%
|
|
.03
|
%
|
|
.04
|
%
|
|
1.74
|
%
|
|
1.45
|
%
|
|
.67
|
%
|
|
2.68
|
%
|
|
.00
|
%
|
|
.00
|
%
|
|||||||||
Weighted-average interest rate during the year
|
.62
|
|
|
.05
|
|
|
.02
|
|
|
1.46
|
|
|
.79
|
|
|
.36
|
|
|
nm
|
|
|
.00
|
|
|
.17
|
|
|
|
|
U.S. Government
Securities Sold
|
|
Repurchase
Agreements
(1)
|
||||||||
(In millions)
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
||||||
Overnight maturity
|
$
|
1,127
|
|
|
$
|
1,100
|
|
|
$
|
1,082
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|||||||
Issuance Date
|
|
Maturity Date
|
|
Coupon Rate
|
|
Seniority
|
|
Interest Due Dates
|
|
2018
|
|
2017
|
|||||
Parent Company And Non-Banking Subsidiary Issuances
|
|
|
|
|
|||||||||||||
August 18, 2015
|
|
August 18, 2025
|
|
3.55
|
%
|
|
Senior notes
|
|
2/18; 8/18
(1)
|
|
$
|
1,268
|
|
|
$
|
1,287
|
|
August 18, 2015
|
|
August 18, 2020
|
|
2.55
|
%
|
|
Senior notes
|
|
2/18; 8/18
|
|
1,177
|
|
|
1,184
|
|
||
November 19, 2013
|
|
November 20, 2023
|
|
3.7
|
%
|
|
Senior notes
|
|
5/20; 11/20
(1)
|
|
1,006
|
|
|
1,021
|
|
||
December 15, 2014
|
|
December 16, 2024
|
|
3.3
|
%
|
|
Senior notes
|
|
6/16; 12/16
(1)
|
|
979
|
|
|
993
|
|
||
May 15, 2013
|
|
May 15, 2023
(2)
|
|
3.1
|
%
|
|
Subordinated notes
|
|
5/15; 11/15
(1)
|
|
972
|
|
|
981
|
|
||
April 30, 2007
|
|
June 15, 2047
|
|
Floating-rate
|
|
|
Junior subordinated debentures
|
|
3/15; 6/15; 9/15; 12/15
|
|
794
|
|
|
793
|
|
||
May 15, 2017
|
|
May 15, 2023
|
|
2.653
|
%
|
|
Fixed-to-floating rate senior notes
|
|
5/15; 11/15
(1)
|
|
734
|
|
|
740
|
|
||
March 7, 2011
|
|
March 7, 2021
|
|
4.375
|
%
|
|
Senior notes
|
|
3/7; 9/7
(1)
|
|
731
|
|
|
734
|
|
||
May 19, 2016
|
|
May 19, 2021
|
|
1.95
|
%
|
|
Senior notes
|
|
5/19; 11/19
(1)
|
|
725
|
|
|
724
|
|
||
May 19, 2016
|
|
May 19, 2026
|
|
2.65
|
%
|
|
Senior notes
|
|
5/19; 11/19
(1)
|
|
698
|
|
|
706
|
|
||
December 3, 2018
|
|
December 3, 2029
|
|
4.141
|
%
|
|
Fixed-to-floating rate senior notes
|
|
6/3; 12/3
(1)
|
|
513
|
|
|
—
|
|
||
December 3, 2018
|
|
December 3, 2024
|
|
3.776
|
%
|
|
Fixed-to-floating rate senior notes
|
|
6/3; 12/3
(1)
|
|
507
|
|
|
—
|
|
||
August 18, 2015
|
|
August 18, 2020
|
|
Floating-rate
|
|
|
Senior notes
|
|
2/18; 5/18; 8/18; 11/18
|
|
499
|
|
|
499
|
|
||
May 15, 1998
|
|
May 15, 2028
|
|
Floating-rate
|
|
|
Junior subordinated debentures
|
|
2/15; 5/15; 8/15; 11/15
|
|
150
|
|
|
150
|
|
||
June 21, 1996
|
|
June 15, 2026
(3)
|
|
7.35
|
%
|
|
Senior notes
|
|
6/15; 12/15
|
|
150
|
|
|
150
|
|
||
February 11, 2011
|
|
March 15, 2018
|
|
4.956
|
%
|
|
Junior subordinated debentures
|
|
3/15; 9/15
|
|
—
|
|
|
502
|
|
||
May 15, 2013
|
|
May 15, 2018
|
|
1.35
|
%
|
|
Senior notes
|
|
5/15; 11/15
|
|
—
|
|
|
499
|
|
||
Parent Company
|
|
|
|||||||||||||||
Long-term capital leases
|
|
190
|
|
|
250
|
|
|||||||||||
State Street Bank issuances
|
|
|
|||||||||||||||
September 24, 2003
|
|
October 15, 2018
(2)
|
|
5.25
|
%
|
|
Subordinated notes
|
|
4/15; 10/15
|
|
—
|
|
|
407
|
|
||
Total long-term debt
|
|
|
|
|
|
|
|
|
|
$
|
11,093
|
|
|
$
|
11,620
|
|
|
|
|
|
(1)
|
We have entered into interest rate swap agreements, recorded as fair value hedges, to modify our interest expense on these senior and subordinated notes from a fixed rate to a floating rate. As of
December 31, 2018
and
2017
, the carrying value of long-term debt associated with these fair value hedges decreased
$157 million
and
$87 million
, respectively. Refer to Note 10 for additional information about fair value hedges.
|
(2)
|
The subordinated notes qualify for inclusion in tier 2 regulatory capital under current federal regulatory capital guidelines.
|
(3)
|
We may not redeem notes prior to their maturity.
|
|
December 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
||||
Interest rate contracts:
|
|
|
|
||||
Futures
|
$
|
2,348
|
|
|
$
|
2,392
|
|
Foreign exchange contracts:
|
|
|
|
||||
Forward, swap and spot
|
2,238,819
|
|
|
1,679,976
|
|
||
Options purchased
|
578
|
|
|
350
|
|
||
Options written
|
576
|
|
|
302
|
|
||
Futures
|
49
|
|
|
50
|
|
||
Commodity and equity contracts:
|
|
|
|||||
Commodity
(1)
|
—
|
|
|
16
|
|
||
Equity
(1)
|
—
|
|
|
50
|
|
||
Other:
|
|
|
|
||||
Stable value contracts
(2)
|
26,634
|
|
|
26,653
|
|
||
Deferred value awards
(3)
|
434
|
|
|
473
|
|
||
Derivatives designated as hedging instruments:
|
|
|
|
||||
Interest rate contracts:
|
|
|
|
||||
Swap agreements
|
10,596
|
|
|
11,047
|
|
||
Foreign exchange contracts:
|
|
|
|
||||
Forward and swap
|
3,412
|
|
|
28,913
|
|
|
|
|
December 31,
|
|
December 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
Derivative Assets
(1)
|
|
Derivative Liabilities
(2)
|
||||||||||||
(In millions)
|
Fair Value
|
|
Fair Value
|
||||||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|||||||||||
Foreign exchange contracts
|
$
|
16,369
|
|
|
$
|
11,477
|
|
|
$
|
16,434
|
|
|
$
|
11,361
|
|
Other derivative contracts
|
—
|
|
|
1
|
|
|
214
|
|
|
284
|
|
||||
Total
|
$
|
16,369
|
|
|
$
|
11,478
|
|
|
$
|
16,648
|
|
|
$
|
11,645
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|||||||||||
Foreign exchange contracts
|
$
|
17
|
|
|
$
|
120
|
|
|
$
|
88
|
|
|
$
|
107
|
|
Interest rate contracts
|
13
|
|
|
8
|
|
|
71
|
|
|
100
|
|
||||
Total
|
$
|
30
|
|
|
$
|
128
|
|
|
$
|
159
|
|
|
$
|
207
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In millions)
|
Location of Gain (Loss) on
Derivative in Consolidated
Statement of Income
|
|
Amount of Gain (Loss) on Derivative Recognized in Consolidated Statement of Income
|
||||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|||||||
Foreign exchange contracts
|
Foreign exchange trading services revenue
|
|
$
|
723
|
|
|
$
|
632
|
|
|
$
|
662
|
|
Foreign exchange contracts
|
Interest expense
(1)
|
|
(41
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign exchange contracts
|
Processing fees and other revenue
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|||
Interest rate contracts
|
Foreign exchange trading services revenue
|
|
(6
|
)
|
|
8
|
|
|
(7
|
)
|
|||
Interest rate contracts
|
Processing fees and other revenue
(1)
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
|||
Credit derivative contracts
|
Foreign exchange trading services revenue
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Other derivative contracts
|
Foreign exchange trading services revenue
|
|
5
|
|
|
—
|
|
|
(2
|
)
|
|||
Other derivative contracts
|
Compensation and employee benefits
|
|
(171
|
)
|
|
(143
|
)
|
|
(448
|
)
|
|||
Total
|
|
|
$
|
509
|
|
|
$
|
474
|
|
|
$
|
205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
Hedged Items Currently Designated
|
|
Hedged Items No Longer Designated
(1)
|
||||||||||||
(In millions)
|
Carrying Amount of Assets (Liabilities)
(2)
|
|
Cumulative Hedge Accounting Basis Adjustments
|
|
Carrying Amount of Assets (Liabilities)
|
|
Cumulative Hedge Accounting Basis Adjustments
|
||||||||
Long-term debt
|
$
|
8,270
|
|
|
$
|
(137
|
)
|
|
$
|
1,197
|
|
|
$
|
(20
|
)
|
Available-for-sale securities
|
1,496
|
|
|
72
|
|
|
50
|
|
|
1
|
|
||||
Total
|
$
|
9,766
|
|
|
$
|
(65
|
)
|
|
$
|
1,247
|
|
|
$
|
(19
|
)
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
Hedged Items Currently Designated
|
|
Hedged Items No Longer Designated(1)
|
||||||||||||
(In millions)
|
Carrying Amount of Assets (Liabilities)
(2)
|
|
Cumulative Hedge Accounting Basis Adjustments
|
|
Carrying Amount of Assets (Liabilities)
|
|
Cumulative Hedge Accounting Basis Adjustments
|
||||||||
Long-term debt
|
$
|
8,465
|
|
|
$
|
(95
|
)
|
|
$
|
1,400
|
|
|
$
|
8
|
|
Available-for-sale securities
|
1,926
|
|
|
106
|
|
|
894
|
|
|
1
|
|
||||
Total
|
$
|
10,391
|
|
|
$
|
11
|
|
|
$
|
2,294
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||||||||||||
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
(In millions)
|
Location of Gain (Loss) on Derivative in Consolidated Statement of Income
|
|
Amount of Gain
(Loss) on Derivative
Recognized in
Consolidated
Statement of Income
|
|
Hedged Item in Fair Value Hedging Relationship
|
|
Location of Gain (Loss) on Hedged Item in Consolidated Statement of Income
|
|
Amount of Gain
(Loss) on Hedged
Item Recognized in
Consolidated
Statement of Income
|
||||||||||||||||||||||||||||||||
Derivatives designated as fair value hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Foreign exchange contracts
|
Processing fees and other revenue
|
|
|
$
|
(74
|
)
|
|
|
|
$
|
18
|
|
|
|
|
$
|
(6
|
)
|
|
|
Investment securities
|
|
Processing fees and other revenue
|
|
|
$
|
74
|
|
|
|
|
$
|
(18
|
)
|
|
|
|
$
|
6
|
|
|
Foreign exchange contracts
|
Processing fees and other revenue
|
|
(328
|
)
|
|
|
626
|
|
|
|
221
|
|
|
|
FX deposit
|
|
Processing fees and other revenue
|
|
328
|
|
|
|
(626
|
)
|
|
|
(221
|
)
|
|
||||||||||||
Interest rate contracts
(1)
|
Net interest income
|
|
31
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Available-for-sale securities
(2)
|
|
Net interest income
|
|
(32
|
)
|
|
|
—
|
|
|
|
—
|
|
|
||||||||||||
Interest rate contracts
(1)
|
Net interest income
|
|
(58
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
Long-term debt
|
|
Net interest income
|
|
49
|
|
|
|
—
|
|
|
|
—
|
|
|
||||||||||||
Interest rate contracts
(1)
|
Processing fees and other revenue
|
|
—
|
|
|
|
39
|
|
|
|
43
|
|
|
|
Available-for-sale securities
(2)
|
|
Processing fees and other revenue
|
|
—
|
|
|
|
(37
|
)
|
|
|
(40
|
)
|
|
||||||||||||
Interest rate contracts
(1)
|
Processing fees and other revenue
|
|
—
|
|
|
|
(38
|
)
|
|
|
(98
|
)
|
|
|
Long-term debt
|
|
Processing fees and other revenue
|
|
—
|
|
|
|
39
|
|
|
|
100
|
|
|
||||||||||||
Total
|
|
|
|
$
|
(429
|
)
|
|
|
|
$
|
645
|
|
|
|
|
$
|
160
|
|
|
|
|
|
|
|
|
$
|
419
|
|
|
|
|
$
|
(642
|
)
|
|
|
|
$
|
(155
|
)
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
(In millions)
|
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative
|
|
Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
|
|
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
|
||||||||||||||||||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
$
|
(12
|
)
|
|
$
|
(14
|
)
|
|
$
|
—
|
|
|
Net interest income
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
(12
|
)
|
|
(104
|
)
|
|
(39
|
)
|
|
Net interest income
|
|
27
|
|
|
24
|
|
|
24
|
|
||||||
Total
|
$
|
(24
|
)
|
|
$
|
(118
|
)
|
|
$
|
(39
|
)
|
|
|
|
$
|
26
|
|
|
$
|
26
|
|
|
$
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives designated as net investment hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
81
|
|
|
$
|
(160
|
)
|
|
$
|
109
|
|
|
Gains (losses) related to investment securities, net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
81
|
|
|
$
|
(160
|
)
|
|
$
|
109
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Assets:
|
|
December 31, 2018
|
||||||||||||||||||
|
|
Gross Amounts of Recognized
Assets
(1)(2)
|
|
Gross Amounts Offset in Statement of Condition
(3)
|
|
Net Amounts of Assets Presented in Statement of Condition
|
|
Gross Amounts Not Offset in Statement of Condition
|
||||||||||||
(In millions)
|
|
|
|
|
Cash and Securities Received
(4)
|
|
Net Amount
(5)
|
|||||||||||||
Derivatives:
|
|
|
|
|
|
|
||||||||||||||
Foreign exchange contracts
|
|
$
|
16,386
|
|
|
$
|
(10,223
|
)
|
|
$
|
6,163
|
|
|
$
|
—
|
|
|
$
|
6,163
|
|
Interest rate contracts
(6)
|
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|||||
Other derivative contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash collateral and securities netting
|
|
NA
|
|
|
(987
|
)
|
|
(987
|
)
|
|
(220
|
)
|
|
(1,207
|
)
|
|||||
Total derivatives
|
|
16,399
|
|
|
(11,210
|
)
|
|
5,189
|
|
|
(220
|
)
|
|
4,969
|
|
|||||
Other financial instruments:
|
|
|
|
|
|
|
||||||||||||||
Resale agreements and securities borrowing
(7)
|
|
116,143
|
|
|
(91,889
|
)
|
|
24,254
|
|
|
(22,872
|
)
|
|
1,382
|
|
|||||
Total derivatives and other financial instruments
|
|
$
|
132,542
|
|
|
$
|
(103,099
|
)
|
|
$
|
29,443
|
|
|
$
|
(23,092
|
)
|
|
$
|
6,351
|
|
Assets:
|
|
December 31, 2017
|
||||||||||||||||||
|
|
Gross Amounts of Recognized
Assets
(1)(2)
|
|
Gross Amounts Offset in Statement of Condition
(3)
|
|
Net Amounts of Assets Presented in Statement of Condition
|
|
Gross Amounts Not Offset in Statement of Condition
|
||||||||||||
(In millions)
|
|
|
|
|
Cash and Securities Received
(4)
|
|
Net Amount
(5)
|
|||||||||||||
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign exchange contracts
|
|
$
|
11,597
|
|
|
$
|
(5,548
|
)
|
|
$
|
6,049
|
|
|
$
|
—
|
|
|
$
|
6,049
|
|
Interest rate contracts
(6)
|
|
8
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|||||
Other derivative contracts
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Cash collateral and securities netting
|
|
NA
|
|
|
(2,045
|
)
|
|
(2,045
|
)
|
|
(124
|
)
|
|
(2,169
|
)
|
|||||
Total derivatives
|
|
11,606
|
|
|
(7,593
|
)
|
|
4,013
|
|
|
(124
|
)
|
|
3,889
|
|
|||||
Other financial instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Resale agreements and securities borrowing
(7)
|
|
70,079
|
|
|
(47,434
|
)
|
|
22,645
|
|
|
(22,645
|
)
|
|
—
|
|
|||||
Total derivatives and other financial instruments
|
|
$
|
81,685
|
|
|
$
|
(55,027
|
)
|
|
$
|
26,658
|
|
|
$
|
(22,769
|
)
|
|
$
|
3,889
|
|
|
|
|
|
|
Liabilities:
|
|
December 31, 2018
|
||||||||||||||||||
|
|
Gross Amounts of Recognized Liabilities
(1)(2)
|
|
Gross Amounts Offset in Statement of Condition
(3)
|
|
Net Amounts of Liabilities Presented in Statement of Condition
|
|
Gross Amounts Not Offset in Statement of Condition
|
||||||||||||
(In millions)
|
|
|
|
|
Cash and Securities Received
(4)
|
|
Net Amount
(5)
|
|||||||||||||
Derivatives:
|
|
|
|
|
|
|
||||||||||||||
Foreign exchange contracts
|
|
$
|
16,522
|
|
|
$
|
(10,223
|
)
|
|
$
|
6,299
|
|
|
$
|
—
|
|
|
$
|
6,299
|
|
Interest rate contracts
(6)
|
|
71
|
|
|
—
|
|
|
71
|
|
|
—
|
|
|
71
|
|
|||||
Other derivative contracts
|
|
214
|
|
|
—
|
|
|
214
|
|
|
—
|
|
|
214
|
|
|||||
Cash collateral and securities netting
|
|
NA
|
|
|
(1,341
|
)
|
|
(1,341
|
)
|
|
(215
|
)
|
|
(1,556
|
)
|
|||||
Total derivatives
|
|
16,807
|
|
|
(11,564
|
)
|
|
5,243
|
|
|
(215
|
)
|
|
5,028
|
|
|||||
Other financial instruments:
|
|
|
|
|
|
|
||||||||||||||
Repurchase agreements and securities lending
(7)
|
|
104,494
|
|
|
(91,889
|
)
|
|
12,605
|
|
|
(11,543
|
)
|
|
1,062
|
|
|||||
Total derivatives and other financial instruments
|
|
$
|
121,301
|
|
|
$
|
(103,453
|
)
|
|
$
|
17,848
|
|
|
$
|
(11,758
|
)
|
|
$
|
6,090
|
|
Liabilities:
|
|
December 31, 2017
|
||||||||||||||||||
|
|
Gross Amounts of Recognized Liabilities
(1)(2)
|
|
Gross Amounts Offset in Statement of Condition
(3)
|
|
Net Amounts of Liabilities Presented in Statement of Condition
|
|
Gross Amounts Not Offset in Statement of Condition
|
||||||||||||
(In millions)
|
|
|
|
|
Cash and Securities Received
(4)
|
|
Net Amount
(5)
|
|||||||||||||
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign exchange contracts
|
|
$
|
11,467
|
|
|
$
|
(5,548
|
)
|
|
$
|
5,919
|
|
|
$
|
—
|
|
|
$
|
5,919
|
|
Interest rate contracts
(6)
|
|
100
|
|
|
—
|
|
|
100
|
|
|
—
|
|
|
100
|
|
|||||
Other derivative contracts
|
|
285
|
|
|
—
|
|
|
285
|
|
|
—
|
|
|
285
|
|
|||||
Cash collateral and securities netting
|
|
NA
|
|
|
(422
|
)
|
|
(422
|
)
|
|
(450
|
)
|
|
(872
|
)
|
|||||
Total derivatives
|
|
11,852
|
|
|
(5,970
|
)
|
|
5,882
|
|
|
(450
|
)
|
|
5,432
|
|
|||||
Other financial instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Repurchase agreements and securities lending
(7)
|
|
54,127
|
|
|
(47,434
|
)
|
|
6,693
|
|
|
(4,299
|
)
|
|
2,394
|
|
|||||
Total derivatives and other financial instruments
|
|
$
|
65,979
|
|
|
$
|
(53,404
|
)
|
|
$
|
12,575
|
|
|
$
|
(4,749
|
)
|
|
$
|
7,826
|
|
|
|
|
|
|
|
|
As of December 31, 2018
|
|
As of December 31, 2017
(1)
|
||||||||||||
(In millions)
|
|
Overnight and Continuous
|
|
Up to 30 Days
|
|
Total
|
|
Overnight and Continuous
|
||||||||
Repurchase agreements:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency securities
|
|
$
|
88,904
|
|
|
$
|
—
|
|
|
$
|
88,904
|
|
|
$
|
43,072
|
|
Total
|
|
88,904
|
|
|
—
|
|
|
88,904
|
|
|
43,072
|
|
||||
Securities lending transactions:
|
|
|
|
|
|
|
|
|
||||||||
US Treasury and agency securities
|
|
249
|
|
|
—
|
|
|
249
|
|
|
—
|
|
||||
Corporate debt securities
|
|
278
|
|
|
—
|
|
|
278
|
|
|
35
|
|
||||
Equity securities
|
|
6,426
|
|
|
137
|
|
|
6,563
|
|
|
11,020
|
|
||||
Other
(2)
|
|
8,500
|
|
|
—
|
|
|
8,500
|
|
|
—
|
|
||||
Total
|
|
15,453
|
|
|
137
|
|
|
15,590
|
|
|
11,055
|
|
||||
Gross amount of recognized liabilities for repurchase agreements and securities lending
|
|
$
|
104,357
|
|
|
$
|
137
|
|
|
$
|
104,494
|
|
|
$
|
54,127
|
|
|
|
|
|
|
(In millions)
|
December 31, 2018
|
|
December 31, 2017
|
||||
Commitments:
|
|
|
|
||||
Unfunded credit facilities
|
$
|
28,951
|
|
|
$
|
26,488
|
|
|
|
|
|
||||
Guarantees
(1)
:
|
|
|
|
||||
Indemnified securities financing
|
$
|
342,337
|
|
|
$
|
381,817
|
|
Standby letters of credit
|
2,985
|
|
|
3,158
|
|
|
|
(In millions)
|
December 31, 2018
|
|
December 31, 2017
|
||||
Fair value of indemnified securities financing
|
$
|
342,337
|
|
|
$
|
381,817
|
|
Fair value of cash and securities held by us, as agent, as collateral for indemnified securities financing
|
357,893
|
|
|
400,828
|
|
||
Fair value of collateral for indemnified securities financing invested in indemnified repurchase agreements
|
42,610
|
|
|
61,270
|
|
||
Fair value of cash and securities held by us or our agents as collateral for investments in indemnified repurchase agreements
|
45,064
|
|
|
65,272
|
|
|
Issuance Date
|
|
Depositary Shares Issued
|
|
Ownership Interest Per Depositary Share
|
|
Liquidation Preference Per Share
|
|
Liquidation Preference Per Depositary Share
|
|
Net Proceeds of Offering
(In millions)
|
|
Redemption Date
(1)
|
|||||||
Preferred Stock
(2)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Series C
|
August 2012
|
|
20,000,000
|
|
|
1/4,000th
|
|
$
|
100,000
|
|
|
$
|
25
|
|
|
$
|
488
|
|
|
September 15, 2017
|
Series D
|
February 2014
|
|
30,000,000
|
|
|
1/4,000th
|
|
100,000
|
|
|
25
|
|
|
742
|
|
|
March 15, 2024
|
|||
Series E
|
November 2014
|
|
30,000,000
|
|
|
1/4,000th
|
|
100,000
|
|
|
25
|
|
|
728
|
|
|
December 15, 2019
|
|||
Series F
|
May 2015
|
|
750,000
|
|
|
1/100th
|
|
100,000
|
|
|
1,000
|
|
|
742
|
|
|
September 15, 2020
|
|||
Series G
|
April 2016
|
|
20,000,000
|
|
|
1/4,000th
|
|
100,000
|
|
|
25
|
|
|
493
|
|
|
March 15, 2026
|
|||
Series H
|
September 2018
|
|
500,000
|
|
|
1/100th
|
|
100,000
|
|
|
1,000
|
|
|
494
|
|
|
December 15, 2023
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
Dividends Declared per Share
|
|
Dividends Declared per Depositary Share
|
|
Total
(In millions) |
|
Dividends Declared per Share
|
|
Dividends Declared per Depositary Share
|
|
Total
(In millions)
|
||||||||||||
Preferred Stock:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Series C
|
$
|
5,250
|
|
|
$
|
1.32
|
|
|
$
|
26
|
|
|
$
|
5,250
|
|
|
$
|
1.32
|
|
|
$
|
26
|
|
Series D
|
5,900
|
|
|
1.48
|
|
|
44
|
|
|
5,900
|
|
|
1.48
|
|
|
44
|
|
||||||
Series E
|
6,000
|
|
|
1.52
|
|
|
45
|
|
|
6,000
|
|
|
1.52
|
|
|
45
|
|
||||||
Series F
|
5,250
|
|
|
52.50
|
|
|
40
|
|
|
5,250
|
|
|
52.50
|
|
|
40
|
|
||||||
Series G
|
5,352
|
|
|
1.32
|
|
|
27
|
|
|
5,352
|
|
|
1.32
|
|
|
27
|
|
||||||
Series H
|
1,219
|
|
|
12.18
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
|
|
|
$
|
188
|
|
|
|
|
|
|
$
|
182
|
|
|
Year Ended December 31, 2018
(1)
|
|||||||||
|
Shares Acquired
(In millions) |
|
Average Cost per Share
|
|
Total Acquired
(In millions) |
|||||
2017 Program
|
3.3
|
|
|
$
|
105.31
|
|
|
$
|
350
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Dividends Declared per Share
|
|
Total
(In millions)
|
|
Dividends Declared per Share
|
|
Total
(In millions)
|
||||||||
Common Stock
|
$
|
1.78
|
|
|
$
|
665
|
|
|
$
|
1.60
|
|
|
$
|
596
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Net unrealized (losses) gains on cash flow hedges
|
$
|
(89
|
)
|
|
$
|
(56
|
)
|
|
$
|
229
|
|
Net unrealized (losses) gains on available-for-sale securities portfolio
|
(193
|
)
|
|
148
|
|
|
(225
|
)
|
|||
Net unrealized gains related to reclassified available-for-sale securities
|
58
|
|
|
19
|
|
|
25
|
|
|||
Net unrealized (losses) gains on available-for-sale securities
|
(135
|
)
|
|
167
|
|
|
(200
|
)
|
|||
Net unrealized (losses) on available-for-sale securities designated in fair value hedges
|
(40
|
)
|
|
(64
|
)
|
|
(86
|
)
|
|||
Net unrealized gains (losses) on hedges of net investments in non-U.S. subsidiaries
|
16
|
|
|
(65
|
)
|
|
95
|
|
|||
Other-than-temporary impairment on held-to-maturity securities related to factors other than credit
|
(2
|
)
|
|
(6
|
)
|
|
(9
|
)
|
|||
Net unrealized (losses) on retirement plans
|
(143
|
)
|
|
(170
|
)
|
|
(194
|
)
|
|||
Foreign currency translation
|
(963
|
)
|
|
(815
|
)
|
|
(1,875
|
)
|
|||
Total
|
$
|
(1,356
|
)
|
|
$
|
(1,009
|
)
|
|
$
|
(2,040
|
)
|
(In millions)
|
Net Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Net Unrealized Gains (Losses) on Available-for-Sale Securities
|
|
Net Unrealized Gains (Losses) on Hedges of Net Investments in Non-U.S. Subsidiaries
|
|
Other-Than-Temporary Impairment on Held-to-Maturity Securities
|
|
Net Unrealized Losses on Retirement Plans
|
|
Foreign Currency Translation
|
|
Total
|
||||||||||||||
Balance as of December 31, 2016
|
$
|
229
|
|
|
$
|
(286
|
)
|
|
$
|
95
|
|
|
$
|
(9
|
)
|
|
$
|
(194
|
)
|
|
$
|
(1,875
|
)
|
|
$
|
(2,040
|
)
|
Other comprehensive income (loss) before reclassifications
|
(285
|
)
|
|
412
|
|
|
(160
|
)
|
|
3
|
|
|
—
|
|
|
1,059
|
|
|
1,029
|
|
|||||||
Amounts reclassified into (out of) earnings
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
24
|
|
|
1
|
|
|
2
|
|
|||||||
Other comprehensive income (loss)
|
(285
|
)
|
|
389
|
|
|
(160
|
)
|
|
3
|
|
|
24
|
|
|
1,060
|
|
|
1,031
|
|
|||||||
Balance as of December 31, 2017
|
$
|
(56
|
)
|
|
$
|
103
|
|
|
$
|
(65
|
)
|
|
$
|
(6
|
)
|
|
$
|
(170
|
)
|
|
$
|
(815
|
)
|
|
$
|
(1,009
|
)
|
Other comprehensive income (loss) before reclassifications
|
(33
|
)
|
|
(285
|
)
|
|
81
|
|
|
6
|
|
|
—
|
|
|
(148
|
)
|
|
(379
|
)
|
|||||||
Amounts reclassified into (out of) earnings
|
—
|
|
|
7
|
|
|
—
|
|
|
(2
|
)
|
|
27
|
|
|
—
|
|
|
32
|
|
|||||||
Other comprehensive income (loss)
|
(33
|
)
|
|
(278
|
)
|
|
81
|
|
|
4
|
|
|
27
|
|
|
(148
|
)
|
|
(347
|
)
|
|||||||
Balance as of December 31, 2018
|
$
|
(89
|
)
|
|
$
|
(175
|
)
|
|
$
|
16
|
|
|
$
|
(2
|
)
|
|
$
|
(143
|
)
|
|
$
|
(963
|
)
|
|
$
|
(1,356
|
)
|
|
Years Ended December 31,
|
|
|
||||||
|
2018
|
|
2017
|
|
|
||||
(In millions)
|
Amounts Reclassified into
(out of) Earnings |
|
Affected Line Item in Consolidated Statement of Income
|
||||||
Available-for-sale securities:
|
|
|
|
|
|
||||
Net realized gains (losses) from sales of available-for-sale securities, net of related taxes of ($2) and $16, respectively
|
$
|
7
|
|
|
$
|
(23
|
)
|
|
Net gains (losses) from sales of available-for-sale securities
|
Held-to-maturity securities:
|
|
|
|
|
|
||||
Other-than-temporary impairment on held-to-maturity securities related to factors other than credit, net of related taxes of $1 and zero, respectively
|
(2
|
)
|
|
—
|
|
|
Losses reclassified (from) to other comprehensive income
|
||
Retirement plans:
|
|
|
|
|
|
||||
Amortization of actuarial losses, net of related taxes of ($8) and ($8), respectively
|
27
|
|
|
24
|
|
|
Compensation and employee benefits expenses
|
||
Foreign currency translation:
|
|
|
|
|
|
||||
Sales of non-U.S. entities, net of related taxes
|
—
|
|
|
1
|
|
|
Processing fees and other revenue
|
||
Total reclassifications into (out of) AOCI
|
$
|
32
|
|
|
$
|
2
|
|
|
|
|
|
|
State Street
|
|
State Street Bank
|
||||||||||||||||||||||||||||||
(In millions)
|
|
Basel III Advanced Approaches December 31, 2018
|
|
Basel III Standardized Approach December 31, 2018
|
|
Basel III Advanced Approaches December 31, 2017
|
|
Basel III Standardized Approach December 31, 2017
|
|
Basel III Advanced Approaches December 31, 2018
|
|
Basel III Standardized Approach December 31, 2018
|
|
Basel III Advanced Approaches December 31, 2017
|
|
Basel III Standardized Approach December 31, 2017
|
|||||||||||||||||||
Common shareholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Common stock and related surplus
|
$
|
10,565
|
|
|
$
|
10,565
|
|
|
$
|
10,302
|
|
|
$
|
10,302
|
|
|
$
|
12,894
|
|
|
$
|
12,894
|
|
|
$
|
11,612
|
|
|
$
|
11,612
|
|
||||
Retained earnings
|
|
20,606
|
|
|
20,606
|
|
|
18,856
|
|
|
18,856
|
|
|
14,261
|
|
|
14,261
|
|
|
12,312
|
|
|
12,312
|
|
|||||||||||
Accumulated other comprehensive income (loss)
|
(1,332
|
)
|
|
(1,332
|
)
|
|
(972
|
)
|
|
(972
|
)
|
|
(1,112
|
)
|
|
(1,112
|
)
|
|
(809
|
)
|
|
(809
|
)
|
||||||||||||
Treasury stock, at cost
|
|
(8,715
|
)
|
|
(8,715
|
)
|
|
(9,029
|
)
|
|
(9,029
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||||
Total
|
|
|
21,124
|
|
|
21,124
|
|
|
19,157
|
|
|
19,157
|
|
|
26,043
|
|
|
26,043
|
|
|
23,115
|
|
|
23,115
|
|
||||||||||
Regulatory capital adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Goodwill and other intangible assets, net of associated deferred tax liabilities
(1)
|
(9,350
|
)
|
|
(9,350
|
)
|
|
(6,877
|
)
|
|
(6,877
|
)
|
|
(9,073
|
)
|
|
(9,073
|
)
|
|
(6,579
|
)
|
|
(6,579
|
)
|
||||||||||||
Other adjustments
(2)
|
|
(194
|
)
|
|
(194
|
)
|
|
(76
|
)
|
|
(76
|
)
|
|
(29
|
)
|
|
(29
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|||||||||||
Common equity tier 1 capital
|
11,580
|
|
|
11,580
|
|
|
12,204
|
|
|
12,204
|
|
|
16,941
|
|
|
16,941
|
|
|
16,531
|
|
|
16,531
|
|
||||||||||||
Preferred stock
|
3,690
|
|
|
3,690
|
|
|
3,196
|
|
|
3,196
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Trust preferred capital securities subject to phase-out from tier 1 capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Other adjustments
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||||
Tier 1 capital
|
15,270
|
|
|
15,270
|
|
|
15,382
|
|
|
15,382
|
|
|
16,941
|
|
|
16,941
|
|
|
16,531
|
|
|
16,531
|
|
||||||||||||
Qualifying subordinated long-term debt
|
778
|
|
|
778
|
|
|
980
|
|
|
980
|
|
|
776
|
|
|
776
|
|
|
983
|
|
|
983
|
|
||||||||||||
Trust preferred capital securities phased out of tier 1 capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
ALLL and other
|
14
|
|
|
83
|
|
|
4
|
|
|
72
|
|
|
11
|
|
|
83
|
|
|
—
|
|
|
72
|
|
||||||||||||
Other adjustments
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||||
Total capital
|
$
|
16,062
|
|
|
$
|
16,131
|
|
|
$
|
16,367
|
|
|
$
|
16,435
|
|
|
$
|
17,728
|
|
|
$
|
17,800
|
|
|
$
|
17,514
|
|
|
$
|
17,586
|
|
||||
RWA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Credit risk
(3)
|
$
|
47,738
|
|
|
$
|
97,303
|
|
|
$
|
52,000
|
|
|
$
|
101,349
|
|
|
$
|
45,565
|
|
|
$
|
94,776
|
|
|
$
|
49,489
|
|
|
$
|
98,433
|
|
||||
Operational risk
(4)
|
46,060
|
|
|
NA
|
|
|
45,822
|
|
|
NA
|
|
|
44,494
|
|
|
NA
|
|
|
45,295
|
|
|
NA
|
|
||||||||||||
Market risk
|
1,517
|
|
|
1,517
|
|
|
1,334
|
|
|
1,334
|
|
|
1,517
|
|
|
1,517
|
|
|
1,334
|
|
|
1,334
|
|
||||||||||||
Total RWA
|
|
$
|
95,315
|
|
|
$
|
98,820
|
|
|
$
|
99,156
|
|
|
$
|
102,683
|
|
|
$
|
91,576
|
|
|
$
|
96,293
|
|
|
$
|
96,118
|
|
|
$
|
99,767
|
|
|||
Adjusted quarterly average assets
|
$
|
211,924
|
|
|
$
|
211,924
|
|
|
$
|
209,328
|
|
|
$
|
209,328
|
|
|
$
|
209,413
|
|
|
$
|
209,413
|
|
|
$
|
206,070
|
|
|
$
|
206,070
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Capital Ratios:
|
2018 Minimum Requirements Including Capital Conservation Buffer and
G-SIB Surcharge
(5)
|
2017 Minimum Requirements Including Capital Conservation Buffer and
G-SIB Surcharge
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common equity tier 1 capital
|
7.5
|
%
|
6.5
|
%
|
12.1
|
%
|
|
11.7
|
%
|
|
12.3
|
%
|
|
11.9
|
%
|
|
18.5
|
%
|
|
17.6
|
%
|
|
17.2
|
%
|
|
16.6
|
%
|
||||||||
Tier 1 capital
|
9.0
|
|
8.0
|
|
16.0
|
|
|
15.5
|
|
|
15.5
|
|
|
15.0
|
|
|
18.5
|
|
|
17.6
|
|
|
17.2
|
|
|
16.6
|
|
||||||||
Total capital
|
11.0
|
|
10.0
|
|
16.9
|
|
|
16.3
|
|
|
16.5
|
|
|
16.0
|
|
|
19.4
|
|
|
18.5
|
|
|
18.2
|
|
|
17.6
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Interest income:
|
|
|
|
|
|
||||||
Interest-bearing deposits with banks
|
$
|
387
|
|
|
$
|
180
|
|
|
$
|
126
|
|
Investment securities:
|
|
|
|
|
|
||||||
U.S. Treasury and federal agencies
|
1,178
|
|
|
854
|
|
|
821
|
|
|||
State and political subdivisions
|
143
|
|
|
226
|
|
|
224
|
|
|||
Other investments
|
560
|
|
|
658
|
|
|
756
|
|
|||
Securities purchased under resale agreements
|
335
|
|
|
264
|
|
|
146
|
|
|||
Loans and leases
|
687
|
|
|
504
|
|
|
378
|
|
|||
Other interest-earning assets
|
372
|
|
|
222
|
|
|
61
|
|
|||
Total interest income
|
3,662
|
|
|
2,908
|
|
|
2,512
|
|
|||
Interest expense:
|
|
|
|
|
|
||||||
Interest-bearing deposits
|
363
|
|
|
163
|
|
|
85
|
|
|||
Securities sold under repurchase agreements
|
13
|
|
|
2
|
|
|
1
|
|
|||
Other short-term borrowings
|
17
|
|
|
10
|
|
|
7
|
|
|||
Long-term debt
|
389
|
|
|
308
|
|
|
260
|
|
|||
Other interest-bearing liabilities
|
209
|
|
|
121
|
|
|
75
|
|
|||
Total interest expense
|
991
|
|
|
604
|
|
|
428
|
|
|||
Net interest income
|
$
|
2,671
|
|
|
$
|
2,304
|
|
|
$
|
2,084
|
|
|
Shares
(In thousands)
|
|
Weighted-Average
Exercise
Price
|
|
Weighted-Average Remaining Contractual Term
(In years)
|
|
Total Intrinsic Value
(In millions)
|
|||||
Stock Appreciation Rights:
|
||||||||||||
Outstanding as of December 31, 2016
|
955
|
|
|
$
|
77.52
|
|
|
|
|
|
||
Exercised
|
(595
|
)
|
|
81.71
|
|
|
|
|
|
|||
Forfeited or expired
|
(360
|
)
|
|
70.59
|
|
|
|
|
|
|||
Outstanding as of December 31, 2017
|
0
|
|
|
$
|
—
|
|
|
0
|
|
$
|
—
|
|
|
Shares
(In thousands)
|
|
Weighted-Average
Grant Date Fair
Value
|
|||
Deferred Stock Awards:
|
||||||
Outstanding as of December 31, 2016
|
7,814
|
|
|
$
|
60.01
|
|
Granted
|
2,977
|
|
|
76.38
|
|
|
Vested
|
(3,686
|
)
|
|
62.88
|
|
|
Forfeited
|
(257
|
)
|
|
63.56
|
|
|
Outstanding as of December 31, 2017
|
6,848
|
|
|
65.44
|
|
|
Granted
|
2,500
|
|
|
101.25
|
|
|
Vested
|
(3,235
|
)
|
|
70.98
|
|
|
Forfeited
|
(138
|
)
|
|
80.6
|
|
|
Outstanding as of December 31, 2018
|
5,975
|
|
|
$
|
77.07
|
|
|
Shares
(In thousands)
|
|
Weighted-Average
Grant Date Fair Value
|
|||
Performance Awards:
|
||||||
Outstanding as of December 31, 2016
|
1,247
|
|
|
$
|
60.37
|
|
Granted
|
534
|
|
|
76.27
|
|
|
Forfeited
|
0
|
|
|
—
|
|
|
Paid out
|
(233
|
)
|
|
58.91
|
|
|
Outstanding as of December 31, 2017
|
1,548
|
|
|
66.09
|
|
|
Granted
|
1,067
|
|
|
74.68
|
|
|
Forfeited
|
(1
|
)
|
|
101.26
|
|
|
Paid out
|
(457
|
)
|
|
70.58
|
|
|
Outstanding as of December 31, 2018
|
2,157
|
|
|
$
|
69.36
|
|
(In millions)
|
Capital
Leases
|
|
Operating
Leases
|
|
Total
|
||||||
2019
|
$
|
34
|
|
|
$
|
192
|
|
|
$
|
226
|
|
2020
|
31
|
|
|
181
|
|
|
212
|
|
|||
2021
|
31
|
|
|
170
|
|
|
201
|
|
|||
2022
|
31
|
|
|
147
|
|
|
178
|
|
|||
2023
|
24
|
|
|
128
|
|
|
152
|
|
|||
Thereafter
|
—
|
|
|
380
|
|
|
380
|
|
|||
Total minimum lease payments
|
151
|
|
|
$
|
1,198
|
|
|
$
|
1,349
|
|
|
Less amount representing interest payments
|
(31
|
)
|
|
|
|
|
|||||
Present value of minimum lease payments
|
$
|
120
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Professional services
|
$
|
357
|
|
|
$
|
340
|
|
|
$
|
379
|
|
Sales advertising public relations
|
115
|
|
|
67
|
|
|
52
|
|
|||
Insurance
|
97
|
|
|
118
|
|
|
93
|
|
|||
Regulatory fees and assessments
|
87
|
|
|
106
|
|
|
82
|
|
|||
Bank operations
|
70
|
|
|
80
|
|
|
62
|
|
|||
Litigation
|
7
|
|
|
(15
|
)
|
|
50
|
|
|||
Other
|
443
|
|
|
233
|
|
|
245
|
|
|||
Total other expenses
|
$
|
1,176
|
|
|
$
|
929
|
|
|
$
|
963
|
|
(In millions)
|
Employee
Related Costs |
|
Real Estate
Actions |
|
Asset and Other Write-offs
|
|
Total
|
||||||||
Accrual Balance at December 31, 2015
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
3
|
|
|
$
|
23
|
|
Accruals for Business Operations and Information Technology
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Accruals for Beacon
|
94
|
|
|
18
|
|
|
30
|
|
|
142
|
|
||||
Payments and other adjustments
|
(64
|
)
|
|
(12
|
)
|
|
(31
|
)
|
|
(107
|
)
|
||||
Accrual Balance at December 31, 2016
|
$
|
37
|
|
|
$
|
17
|
|
|
$
|
2
|
|
|
$
|
56
|
|
Accruals for Beacon
|
186
|
|
|
32
|
|
|
27
|
|
|
245
|
|
||||
Payments and Other Adjustments
|
(57
|
)
|
|
(17
|
)
|
|
(26
|
)
|
|
(100
|
)
|
||||
Accrual Balance at December 31, 2017
|
$
|
166
|
|
|
$
|
32
|
|
|
$
|
3
|
|
|
$
|
201
|
|
Accruals for Beacon
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||
Accruals for Repositioning Charges
|
259
|
|
|
41
|
|
|
—
|
|
|
300
|
|
||||
Payments and Other Adjustments
|
(115
|
)
|
|
(36
|
)
|
|
(2
|
)
|
|
(153
|
)
|
||||
Accrual Balance at December 31, 2018
|
$
|
303
|
|
|
$
|
37
|
|
|
$
|
1
|
|
|
$
|
341
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
27
|
|
|
$
|
229
|
|
|
$
|
(14
|
)
|
State
|
144
|
|
|
18
|
|
|
30
|
|
|||
Non-U.S.
|
374
|
|
|
380
|
|
|
320
|
|
|||
Total current expense
|
545
|
|
|
627
|
|
|
336
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(134
|
)
|
|
49
|
|
|
(311
|
)
|
|||
State
|
(25
|
)
|
|
65
|
|
|
38
|
|
|||
Non-U.S.
|
14
|
|
|
(19
|
)
|
|
(85
|
)
|
|||
Total deferred expense (benefit)
|
(145
|
)
|
|
95
|
|
|
(358
|
)
|
|||
Total income tax expense (benefit)
|
$
|
400
|
|
|
$
|
722
|
|
|
$
|
(22
|
)
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
U.S. federal income tax rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Changes from statutory rate:
|
|
|
|
|
|
|||
State taxes, net of federal benefit
|
3.0
|
|
|
1.9
|
|
|
2.0
|
|
Tax-exempt income
|
(2.1
|
)
|
|
(4.5
|
)
|
|
(6.1
|
)
|
Business tax credits
(1)
|
(6.9
|
)
|
|
(6.8
|
)
|
|
(13.6
|
)
|
Foreign tax differential
|
(0.6
|
)
|
|
(7.4
|
)
|
|
(7.7
|
)
|
Transition tax
|
—
|
|
|
15.7
|
|
|
—
|
|
Deferred tax revaluation
|
(1.1
|
)
|
|
(6.8
|
)
|
|
—
|
|
Foreign designated earnings
|
—
|
|
|
(0.7
|
)
|
|
(6.8
|
)
|
Foreign capital transactions
|
—
|
|
|
—
|
|
|
(4.3
|
)
|
Litigation expense
|
0.3
|
|
|
—
|
|
|
1.4
|
|
Other, net
|
(0.3
|
)
|
|
(1.5
|
)
|
|
(0.9
|
)
|
Effective tax rate
|
13.3
|
%
|
|
24.9
|
%
|
|
(1
|
)%
|
|
|
|
December 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Unrealized losses on investment securities, net
|
$
|
146
|
|
|
$
|
17
|
|
Deferred compensation
|
134
|
|
|
159
|
|
||
Pension plan
|
55
|
|
|
82
|
|
||
Accrued expenses
|
156
|
|
|
132
|
|
||
Foreign currency translation
|
50
|
|
|
18
|
|
||
General business credit
|
274
|
|
|
231
|
|
||
NOL and other carryforwards
|
153
|
|
|
101
|
|
||
Other
|
—
|
|
|
27
|
|
||
Total deferred tax assets
|
968
|
|
|
767
|
|
||
Valuation allowance for deferred tax assets
|
(138
|
)
|
|
(88
|
)
|
||
Deferred tax assets, net of valuation allowance
|
$
|
830
|
|
|
$
|
679
|
|
Deferred tax liabilities:
|
|
|
|
||||
Leveraged lease financing
|
$
|
—
|
|
|
$
|
184
|
|
Fixed and intangible assets
|
744
|
|
|
755
|
|
||
Non-U.S. earnings
|
—
|
|
|
6
|
|
||
Investment basis differences
|
206
|
|
|
158
|
|
||
Other
|
11
|
|
|
$
|
—
|
|
|
Total deferred tax liabilities
|
$
|
961
|
|
|
$
|
1,103
|
|
(In millions)
|
Deferred Tax Asset
|
|
Valuation Allowance
|
|
Expiration
|
||||
General business Credits
|
$
|
274
|
|
|
$
|
—
|
|
|
2035-2038
|
NOLs - Non-U.S.
|
55
|
|
|
(41
|
)
|
|
2019-2028, None
|
||
Other Carryforwards
|
88
|
|
|
(88
|
)
|
|
2037-2039 /None
|
||
NOLs - State
|
11
|
|
|
(9
|
)
|
|
2019-2036
|
|
December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Beginning balance
|
$
|
94
|
|
|
$
|
71
|
|
|
$
|
63
|
|
Decrease related to agreements with tax authorities
|
(40
|
)
|
|
(14
|
)
|
|
(13
|
)
|
|||
Increase related to tax positions taken during current year
|
12
|
|
|
26
|
|
|
7
|
|
|||
Increase related to tax positions taken during prior years
|
44
|
|
|
11
|
|
|
14
|
|
|||
Decreases related to a lapse of the applicable statute of limitations
|
(2
|
)
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
$
|
108
|
|
|
$
|
94
|
|
|
$
|
71
|
|
|
Years Ended December 31,
|
||||||||||
(Dollars in millions, except per share amounts)
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
2,599
|
|
|
$
|
2,177
|
|
|
$
|
2,143
|
|
Less:
|
|
|
|
|
|
||||||
Preferred stock dividends
|
(188
|
)
|
|
(182
|
)
|
|
(173
|
)
|
|||
Dividends and undistributed earnings allocated to participating securities
(1)
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|||
Net income available to common shareholders
|
$
|
2,410
|
|
|
$
|
1,993
|
|
|
$
|
1,968
|
|
Average common shares outstanding (In thousands):
|
|
|
|
|
|
||||||
Basic average common shares
|
371,983
|
|
|
374,793
|
|
|
391,485
|
|
|||
Effect of dilutive securities: equity-based awards
|
4,493
|
|
|
5,420
|
|
|
4,605
|
|
|||
Diluted average common shares
|
376,476
|
|
|
380,213
|
|
|
396,090
|
|
|||
Anti-dilutive securities
(2)
|
1,011
|
|
|
188
|
|
|
2,143
|
|
|||
Earnings per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
6.48
|
|
|
$
|
5.32
|
|
|
$
|
5.03
|
|
Diluted
(3)
|
6.40
|
|
|
5.24
|
|
|
4.97
|
|
|
|
•
|
Net repositioning charges related to organizational changes and management streamlining of
$300 million
;
|
•
|
Business exit costs of
$24 million
;
|
•
|
Legal and related expenses of
$50 million
; and
|
•
|
Net acquisition and restructuring costs of
$24 million
.
|
•
|
Net acquisition and restructuring costs of
$209 million
; and
|
•
|
Net severance costs associated with staffing realignment of
$10 million
.
|
|
Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Investment
Servicing |
|
Investment
Management (1) |
|
Other
|
|
Total
|
||||||||||||||||||||||||||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
Servicing fees
|
$
|
5,429
|
|
|
$
|
5,365
|
|
|
$
|
5,073
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,421
|
|
|
$
|
5,365
|
|
|
$
|
5,073
|
|
Management fees
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,851
|
|
|
1,616
|
|
|
1,292
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,851
|
|
|
1,616
|
|
|
1,292
|
|
||||||||||||
Foreign exchange trading services
(1)
|
1,071
|
|
|
999
|
|
|
1,038
|
|
|
130
|
|
|
72
|
|
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,201
|
|
|
1,071
|
|
|
1,099
|
|
||||||||||||
Securities finance
|
543
|
|
|
606
|
|
|
562
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
543
|
|
|
606
|
|
|
562
|
|
||||||||||||
Processing fees and other
(2)
|
294
|
|
|
240
|
|
|
119
|
|
|
(5
|
)
|
|
7
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
289
|
|
|
247
|
|
|
90
|
|
||||||||||||
Total fee revenue
(1)(2)
|
7,337
|
|
|
7,210
|
|
|
6,792
|
|
|
1,976
|
|
|
1,695
|
|
|
1,324
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
9,305
|
|
|
8,905
|
|
|
8,116
|
|
||||||||||||
Net interest income
|
2,691
|
|
|
2,309
|
|
|
2,081
|
|
|
(20
|
)
|
|
(5
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,671
|
|
|
2,304
|
|
|
2,084
|
|
||||||||||||
Gains (losses) related to investment securities, net
|
6
|
|
|
(39
|
)
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
(39
|
)
|
|
7
|
|
||||||||||||
Total revenue
(1)(2)
|
10,034
|
|
|
9,480
|
|
|
8,880
|
|
|
1,956
|
|
|
1,690
|
|
|
1,327
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
11,982
|
|
|
11,170
|
|
|
10,207
|
|
||||||||||||
Provision for loan losses
|
15
|
|
|
2
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
2
|
|
|
10
|
|
||||||||||||
Total expenses
(1)(2)
|
7,034
|
|
|
6,717
|
|
|
6,660
|
|
|
1,544
|
|
|
1,286
|
|
|
1,218
|
|
|
390
|
|
|
266
|
|
|
199
|
|
|
8,968
|
|
|
8,269
|
|
|
8,077
|
|
||||||||||||
Income before income tax expense
|
$
|
2,985
|
|
|
$
|
2,761
|
|
|
$
|
2,210
|
|
|
$
|
412
|
|
|
$
|
404
|
|
|
$
|
109
|
|
|
$
|
(398
|
)
|
|
$
|
(266
|
)
|
|
$
|
(199
|
)
|
|
$
|
2,999
|
|
|
$
|
2,899
|
|
|
$
|
2,120
|
|
Pre-tax margin
|
30
|
%
|
|
29
|
%
|
|
25
|
%
|
|
21
|
%
|
|
24
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
25
|
%
|
|
26
|
%
|
|
21
|
%
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Average assets (in billions)
|
$
|
220.2
|
|
|
$
|
214.0
|
|
|
$
|
225.3
|
|
|
$
|
3.2
|
|
|
$
|
5.4
|
|
|
$
|
4.4
|
|
|
|
|
|
|
|
|
$
|
223.4
|
|
|
$
|
219.4
|
|
|
$
|
229.7
|
|
|
|
|
|
|
|
Year Ended December 31, 2018
|
||||||||||||||||||||||||||||||||||||||
|
|
Investment Servicing
|
|
Investment Management
|
|
Other
|
|
Total
|
||||||||||||||||||||||||||||||||
(Dollars in millions)
|
|
Topic 606 revenue
|
|
All other revenue
|
|
Total
|
|
Topic 606 revenue
|
|
All other revenue
|
|
Total
|
|
Topic 606 revenue
|
|
All other revenue
|
|
Total
|
|
2018
|
||||||||||||||||||||
Servicing fees
|
|
$
|
5,429
|
|
|
$
|
—
|
|
|
$
|
5,429
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
5,421
|
|
Management fees
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,851
|
|
|
—
|
|
|
1,851
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,851
|
|
||||||||||
Foreign exchange trading services
|
|
361
|
|
|
710
|
|
|
1,071
|
|
|
130
|
|
|
—
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,201
|
|
||||||||||
Securities finance
|
|
308
|
|
|
235
|
|
|
543
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
543
|
|
||||||||||
Processing fees and other
|
|
209
|
|
|
85
|
|
|
294
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
289
|
|
||||||||||
Total fee revenue
|
|
6,307
|
|
|
1,030
|
|
|
7,337
|
|
|
1,981
|
|
|
(5
|
)
|
|
1,976
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|
9,305
|
|
||||||||||
Net interest income
|
|
—
|
|
|
2,691
|
|
|
2,691
|
|
|
—
|
|
|
(20
|
)
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,671
|
|
||||||||||
Gains (losses) related to investment securities, net
|
|
—
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||||||||
Total revenue
|
|
$
|
6,307
|
|
|
$
|
3,727
|
|
|
$
|
10,034
|
|
|
$
|
1,981
|
|
|
$
|
(25
|
)
|
|
$
|
1,956
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
11,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Years Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||||||
(In millions)
|
Non-U.S.
(1)
|
|
U.S.
|
|
Total
|
|
Non-U.S.
(1)
|
|
U.S.
|
|
Total
|
|
Non-U.S.
(1)
|
|
U.S.
|
|
Total
|
||||||||||||||||||
Total revenue
|
$
|
5,178
|
|
|
$
|
6,804
|
|
|
$
|
11,982
|
|
|
$
|
4,734
|
|
|
$
|
6,436
|
|
|
$
|
11,170
|
|
|
$
|
4,419
|
|
|
$
|
5,788
|
|
|
$
|
10,207
|
|
Income before income taxes
|
1,664
|
|
|
1,335
|
|
|
2,999
|
|
|
1,230
|
|
|
1,669
|
|
|
2,899
|
|
|
1,047
|
|
|
1,073
|
|
|
2,120
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Cash dividends from consolidated banking subsidiary
|
$
|
785
|
|
|
$
|
2,224
|
|
|
$
|
640
|
|
Cash dividends from consolidated non-banking subsidiaries and unconsolidated entities
|
41
|
|
|
12
|
|
|
75
|
|
|||
Other, net
|
58
|
|
|
127
|
|
|
92
|
|
|||
Total revenue
|
884
|
|
|
2,363
|
|
|
807
|
|
|||
Interest expense
|
381
|
|
|
297
|
|
|
249
|
|
|||
Other expenses
|
115
|
|
|
94
|
|
|
107
|
|
|||
Total expenses
|
496
|
|
|
391
|
|
|
356
|
|
|||
Income tax (benefit)
|
(127
|
)
|
|
(86
|
)
|
|
(47
|
)
|
|||
Income before equity in undistributed income of consolidated subsidiaries and unconsolidated entities
|
515
|
|
|
2,058
|
|
|
498
|
|
|||
Equity in undistributed income of consolidated subsidiaries and unconsolidated entities:
|
|
|
|
|
|
||||||
Consolidated banking subsidiary
|
1,950
|
|
|
20
|
|
|
1,629
|
|
|||
Consolidated non-banking subsidiaries and unconsolidated entities
|
134
|
|
|
99
|
|
|
16
|
|
|||
Net income
|
$
|
2,599
|
|
|
$
|
2,177
|
|
|
$
|
2,143
|
|
|
As of December 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Assets:
|
|
|
|
||||
Interest-bearing deposits with consolidated banking subsidiary
|
$
|
486
|
|
|
$
|
532
|
|
Trading account assets
|
357
|
|
|
361
|
|
||
Investment securities available-for-sale
|
224
|
|
|
43
|
|
||
Investments in subsidiaries:
|
|
|
|
||||
Consolidated banking subsidiary
|
26,019
|
|
|
23,080
|
|
||
Consolidated non-banking subsidiaries
|
6,726
|
|
|
6,762
|
|
||
Unconsolidated entities
|
106
|
|
|
63
|
|
||
Notes and other receivables from:
|
|
|
|
||||
Consolidated banking subsidiary
|
64
|
|
|
273
|
|
||
Consolidated non-banking subsidiaries and unconsolidated entities
|
2,337
|
|
|
2,843
|
|
||
Other assets
|
96
|
|
|
263
|
|
||
Total assets
|
$
|
36,415
|
|
|
$
|
34,220
|
|
Liabilities:
|
|
|
|
||||
Accrued expenses and other liabilities
|
$
|
685
|
|
|
$
|
917
|
|
Long-term debt
|
10,940
|
|
|
10,986
|
|
||
Total liabilities
|
11,625
|
|
|
11,903
|
|
||
Shareholders’ equity
|
24,790
|
|
|
22,317
|
|
||
Total liabilities and shareholders’ equity
|
$
|
36,415
|
|
|
$
|
34,220
|
|
|
Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Net cash provided by operating activities
|
$
|
2,250
|
|
|
$
|
2,047
|
|
|
$
|
417
|
|
Investing Activities:
|
|
|
|
|
|
||||||
Net decrease (increase) in interest-bearing deposits with consolidated banking subsidiary
|
46
|
|
|
3,103
|
|
|
2,100
|
|
|||
Purchases of available-for-sale securities
|
(224
|
)
|
|
—
|
|
|
—
|
|
|||
Investments in consolidated banking and non-banking subsidiaries
|
(4,883
|
)
|
|
(7,672
|
)
|
|
(7,600
|
)
|
|||
Sale or repayment of investment in consolidated banking and non-banking subsidiaries
|
2,472
|
|
|
4,216
|
|
|
6,703
|
|
|||
Business acquisitions
|
—
|
|
|
—
|
|
|
(395
|
)
|
|||
Net increase in investments in unconsolidated affiliates
|
—
|
|
|
172
|
|
|
—
|
|
|||
Net cash (used in) provided by investing activities
|
(2,589
|
)
|
|
(181
|
)
|
|
808
|
|
|||
Financing Activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt, net of issuance costs
|
996
|
|
|
748
|
|
|
1,492
|
|
|||
Payments for long-term debt
|
(1,000
|
)
|
|
(450
|
)
|
|
(1,000
|
)
|
|||
Proceeds from issuance of preferred stock, net of issuance costs
|
495
|
|
|
—
|
|
|
493
|
|
|||
Proceeds from issuance of common stock, net of issuance costs
|
1,150
|
|
|
—
|
|
|
—
|
|
|||
Repurchases of common stock
|
(350
|
)
|
|
(1,292
|
)
|
|
(1,365
|
)
|
|||
Repurchases of common stock for employee tax withholding
|
(124
|
)
|
|
(104
|
)
|
|
(122
|
)
|
|||
Payments for cash dividends
|
(828
|
)
|
|
(768
|
)
|
|
(723
|
)
|
|||
Net cash provided (used in) financing activities
|
339
|
|
|
(1,866
|
)
|
|
(1,225
|
)
|
|||
Net change
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash and due from banks at beginning of year
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash and due from banks at end of year
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Years Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||||||||||||||
(Dollars in millions; fully
taxable-equivalent basis) |
Average
Balance
|
|
Interest
|
|
Average
Rate
|
|
Average
Balance
|
|
Interest
|
|
Average
Rate
|
|
Average
Balance
|
|
Interest
|
|
Average
Rate
|
|||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-bearing deposits with U.S. banks
|
$
|
18,081
|
|
|
$
|
345
|
|
|
1.91
|
%
|
|
$
|
16,790
|
|
|
$
|
184
|
|
|
1.10
|
%
|
|
$
|
19,639
|
|
|
$
|
102
|
|
|
.52
|
%
|
Interest-bearing deposits with non-U.S. banks
|
36,247
|
|
|
42
|
|
|
.12
|
|
|
30,724
|
|
|
(4
|
)
|
|
(.01
|
)
|
|
33,452
|
|
|
24
|
|
|
.07
|
|
||||||
Securities purchased under resale agreements
|
2,901
|
|
|
335
|
|
|
11.55
|
|
|
2,131
|
|
|
264
|
|
|
12.38
|
|
|
2,558
|
|
|
146
|
|
|
5.70
|
|
||||||
Trading account assets
|
1,051
|
|
|
—
|
|
|
—
|
|
|
1,011
|
|
|
(1
|
)
|
|
(.12
|
)
|
|
921
|
|
|
—
|
|
|
—
|
|
||||||
Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S. Treasury and federal agencies
(1)
|
48,449
|
|
|
1,178
|
|
|
2.43
|
|
|
43,273
|
|
|
854
|
|
|
1.97
|
|
|
46,551
|
|
|
821
|
|
|
1.76
|
|
||||||
State and political subdivisions
(1)
|
5,481
|
|
|
189
|
|
|
3.45
|
|
|
9,928
|
|
|
378
|
|
|
3.80
|
|
|
10,326
|
|
|
385
|
|
|
3.73
|
|
||||||
Other investments
|
34,140
|
|
|
560
|
|
|
1.64
|
|
|
42,578
|
|
|
659
|
|
|
1.55
|
|
|
43,861
|
|
|
756
|
|
|
1.72
|
|
||||||
Loans
|
23,147
|
|
|
687
|
|
|
2.97
|
|
|
21,149
|
|
|
498
|
|
|
2.36
|
|
|
18,136
|
|
|
354
|
|
|
1.95
|
|
||||||
Lease financing
(1)
|
426
|
|
|
11
|
|
|
2.53
|
|
|
767
|
|
|
21
|
|
|
2.67
|
|
|
877
|
|
|
30
|
|
|
3.44
|
|
||||||
Other interest-earning assets
|
15,714
|
|
|
372
|
|
|
2.37
|
|
|
22,884
|
|
|
222
|
|
|
.97
|
|
|
22,863
|
|
|
61
|
|
|
.27
|
|
||||||
Total interest-earning assets
(1)
|
185,637
|
|
|
3,719
|
|
|
2.00
|
|
|
191,235
|
|
|
3,075
|
|
|
1.61
|
|
|
199,184
|
|
|
2,679
|
|
|
1.34
|
|
||||||
Cash and due from banks
|
3,178
|
|
|
|
|
|
|
3,097
|
|
|
|
|
|
|
3,157
|
|
|
|
|
|
||||||||||||
Other assets
|
34,570
|
|
|
|
|
|
|
25,118
|
|
|
|
|
|
|
27,386
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
223,385
|
|
|
|
|
|
|
$
|
219,450
|
|
|
|
|
|
|
$
|
229,727
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Liabilities and shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Time
|
$
|
17,081
|
|
|
$
|
121
|
|
|
.71
|
%
|
|
$
|
12,020
|
|
|
$
|
72
|
|
|
.61
|
%
|
|
$
|
19,223
|
|
|
$
|
127
|
|
|
.66
|
%
|
Savings
|
37,872
|
|
|
135
|
|
|
.36
|
|
|
18,603
|
|
|
24
|
|
|
.13
|
|
|
10,884
|
|
|
5
|
|
|
.05
|
|
||||||
Non-U.S.
|
70,623
|
|
|
107
|
|
|
.15
|
|
|
91,937
|
|
|
67
|
|
|
.07
|
|
|
95,551
|
|
|
(47
|
)
|
|
(.05
|
)
|
||||||
Total interest-bearing deposits
|
125,576
|
|
|
363
|
|
|
.29
|
|
|
122,560
|
|
|
163
|
|
|
.13
|
|
|
125,658
|
|
|
85
|
|
|
.07
|
|
||||||
Securities sold under repurchase agreements
|
2,048
|
|
|
13
|
|
|
.62
|
|
|
3,683
|
|
|
2
|
|
|
.05
|
|
|
4,113
|
|
|
1
|
|
|
.02
|
|
||||||
Federal funds purchased
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
||||||
Other short-term borrowings
|
1,327
|
|
|
17
|
|
|
1.28
|
|
|
1,313
|
|
|
10
|
|
|
.80
|
|
|
1,666
|
|
|
7
|
|
|
.40
|
|
||||||
Long-term debt
|
10,686
|
|
|
389
|
|
|
3.64
|
|
|
11,595
|
|
|
308
|
|
|
2.66
|
|
|
11,401
|
|
|
260
|
|
|
2.29
|
|
||||||
Other interest-bearing liabilities
|
4,956
|
|
|
209
|
|
|
4.20
|
|
|
4,607
|
|
|
121
|
|
|
2.63
|
|
|
5,394
|
|
|
75
|
|
|
1.39
|
|
||||||
Total interest-bearing liabilities
|
144,593
|
|
|
991
|
|
|
.68
|
|
|
143,758
|
|
|
604
|
|
|
.42
|
|
|
148,263
|
|
|
428
|
|
|
.29
|
|
||||||
Non-interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Special time
|
19,187
|
|
|
|
|
|
|
27,402
|
|
|
|
|
|
|
32,589
|
|
|
|
|
|
||||||||||||
Demand
|
16,260
|
|
|
|
|
|
|
13,556
|
|
|
|
|
|
|
12,107
|
|
|
|
|
|
||||||||||||
Non-U.S.
(2)
|
385
|
|
|
|
|
|
|
290
|
|
|
|
|
|
|
131
|
|
|
|
|
|
||||||||||||
Other liabilities
|
19,804
|
|
|
|
|
|
|
12,379
|
|
|
|
|
|
|
14,742
|
|
|
|
|
|
||||||||||||
Shareholders’ equity
|
23,156
|
|
|
|
|
|
|
22,065
|
|
|
|
|
|
|
21,895
|
|
|
|
|
|
||||||||||||
Total liabilities and shareholders’ equity
|
$
|
223,385
|
|
|
|
|
|
|
$
|
219,450
|
|
|
|
|
|
|
$
|
229,727
|
|
|
|
|
|
|||||||||
Net interest income, fully taxable-equivalent basis
|
|
|
$
|
2,728
|
|
|
|
|
|
|
$
|
2,471
|
|
|
|
|
|
|
$
|
2,251
|
|
|
|
|||||||||
Excess of rate earned over rate paid
|
|
|
|
|
1.32
|
%
|
|
|
|
|
|
1.19
|
%
|
|
|
|
|
|
1.05
|
%
|
||||||||||||
Net interest margin
(3)
|
|
|
|
|
1.47
|
|
|
|
|
|
|
1.29
|
|
|
|
|
|
|
1.13
|
|
|
|
|
|
(1)
|
Fully taxable-equivalent revenue is a method of presentation in which the tax savings achieved by investing in tax-exempt investment securities and certain leases are included in interest income with a corresponding charge to income tax expense. This method facilitates the comparison of the performance of these assets. The adjustments are computed using a federal income tax rate of
35%
for periods ending in 2016 and 2017, and a tax rate of
21
% for periods ending in 2018, adjusted for applicable state income taxes, net of the related federal tax benefit. The fully taxable-equivalent adjustments included in interest income presented above were
$57 million
,
$167 million
and
$167 million
for the
years ended December 31, 2018, 2017 and 2016
, respectively, and were substantially related to tax-exempt securities (state and political subdivisions).
|
(2)
|
Non-U.S. non-interest-bearing deposits were
$1,165 million
,
$762 million
and
$337 million
as of
December 31, 2018, 2017 and 2016
, respectively.
|
(3)
|
NIM is calculated by dividing fully taxable-equivalent NII by average total interest-earning assets.
|
Years Ended December 31,
|
2018 Compared to 2017
|
|
2017 Compared to 2016
|
||||||||||||||||||||
(Dollars in millions; fully
taxable-equivalent basis) |
Change in
Volume |
|
Change in
Rate |
|
Net (Decrease)
Increase |
|
Change in
Volume
|
|
Change in
Rate
|
|
Net (Decrease)
Increase
|
||||||||||||
Interest income related to:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing deposits with U.S. banks
|
$
|
14
|
|
|
$
|
147
|
|
|
$
|
161
|
|
|
$
|
(15
|
)
|
|
$
|
97
|
|
|
$
|
82
|
|
Interest-bearing deposits with non-U.S. banks
|
(1
|
)
|
|
47
|
|
|
46
|
|
|
(2
|
)
|
|
(26
|
)
|
|
(28
|
)
|
||||||
Securities purchased under resale agreements
|
95
|
|
|
(24
|
)
|
|
71
|
|
|
(24
|
)
|
|
142
|
|
|
118
|
|
||||||
Trading account assets
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and federal agencies
|
102
|
|
|
222
|
|
|
324
|
|
|
(58
|
)
|
|
91
|
|
|
33
|
|
||||||
State and political subdivisions
|
(169
|
)
|
|
(20
|
)
|
|
(189
|
)
|
|
(15
|
)
|
|
8
|
|
|
(7
|
)
|
||||||
Other investments
|
(131
|
)
|
|
32
|
|
|
(99
|
)
|
|
(22
|
)
|
|
(75
|
)
|
|
(97
|
)
|
||||||
Loans
|
47
|
|
|
142
|
|
|
189
|
|
|
59
|
|
|
85
|
|
|
144
|
|
||||||
Lease financing
|
(9
|
)
|
|
(1
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|
(5
|
)
|
|
(9
|
)
|
||||||
Other interest-earning assets
|
(70
|
)
|
|
220
|
|
|
150
|
|
|
—
|
|
|
161
|
|
|
161
|
|
||||||
Total interest-earning assets
|
(122
|
)
|
|
766
|
|
|
644
|
|
|
(81
|
)
|
|
477
|
|
|
396
|
|
||||||
Interest expense related to:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Time
|
30
|
|
|
19
|
|
|
49
|
|
|
(48
|
)
|
|
(7
|
)
|
|
(55
|
)
|
||||||
Savings
|
24
|
|
|
87
|
|
|
111
|
|
|
4
|
|
|
15
|
|
|
19
|
|
||||||
Non-U.S.
|
(15
|
)
|
|
55
|
|
|
40
|
|
|
2
|
|
|
112
|
|
|
114
|
|
||||||
Securities sold under repurchase agreements
|
(1
|
)
|
|
12
|
|
|
11
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Federal funds purchased
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other short-term borrowings
|
—
|
|
|
7
|
|
|
7
|
|
|
(1
|
)
|
|
4
|
|
|
3
|
|
||||||
Long-term debt
|
(24
|
)
|
|
105
|
|
|
81
|
|
|
4
|
|
|
44
|
|
|
48
|
|
||||||
Other interest-bearing liabilities
|
9
|
|
|
79
|
|
|
88
|
|
|
(11
|
)
|
|
57
|
|
|
46
|
|
||||||
Total interest-bearing liabilities
|
23
|
|
|
364
|
|
|
387
|
|
|
(50
|
)
|
|
226
|
|
|
176
|
|
||||||
Net interest income
|
$
|
(145
|
)
|
|
$
|
402
|
|
|
$
|
257
|
|
|
$
|
(31
|
)
|
|
$
|
251
|
|
|
$
|
220
|
|
(Dollars in millions,
except per share amounts; shares in thousands)
|
4Q18
|
|
3Q18
|
|
2Q18
|
|
1Q18
|
|
4Q17
|
|
3Q17
|
|
2Q17
|
|
1Q17
|
||||||||||||||||
Total fee revenue
|
$
|
2,289
|
|
|
$
|
2,280
|
|
|
$
|
2,358
|
|
|
$
|
2,378
|
|
|
$
|
2,230
|
|
|
$
|
2,242
|
|
|
$
|
2,235
|
|
|
$
|
2,198
|
|
Interest income
|
982
|
|
|
916
|
|
|
907
|
|
|
857
|
|
|
797
|
|
|
761
|
|
|
700
|
|
|
650
|
|
||||||||
Interest expense
|
285
|
|
|
244
|
|
|
248
|
|
|
214
|
|
|
181
|
|
|
158
|
|
|
125
|
|
|
140
|
|
||||||||
Net interest income
|
697
|
|
|
672
|
|
|
659
|
|
|
643
|
|
|
616
|
|
|
603
|
|
|
575
|
|
|
510
|
|
||||||||
Gains (losses) related to investment securities, net
|
—
|
|
|
(1
|
)
|
|
9
|
|
|
(2
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
(40
|
)
|
||||||||
Total revenue
|
2,986
|
|
|
2,951
|
|
|
3,026
|
|
|
3,019
|
|
|
2,846
|
|
|
2,846
|
|
|
2,810
|
|
|
2,668
|
|
||||||||
Provision for loan losses
|
8
|
|
|
5
|
|
|
2
|
|
|
—
|
|
|
(2
|
)
|
|
3
|
|
|
3
|
|
|
(2
|
)
|
||||||||
Total expenses
|
2,474
|
|
|
2,079
|
|
|
2,159
|
|
|
2,256
|
|
|
2,131
|
|
|
2,021
|
|
|
2,031
|
|
|
2,086
|
|
||||||||
Income before income tax expense
|
504
|
|
|
867
|
|
|
865
|
|
|
763
|
|
|
717
|
|
|
822
|
|
|
776
|
|
|
584
|
|
||||||||
Income tax expense (benefit)
|
65
|
|
|
102
|
|
|
131
|
|
|
102
|
|
|
347
|
|
|
137
|
|
|
156
|
|
|
82
|
|
||||||||
Net income
|
$
|
439
|
|
|
$
|
765
|
|
|
$
|
734
|
|
|
$
|
661
|
|
|
$
|
370
|
|
|
$
|
685
|
|
|
$
|
620
|
|
|
$
|
502
|
|
Net income available to common shareholders
|
$
|
398
|
|
|
$
|
709
|
|
|
$
|
698
|
|
|
$
|
605
|
|
|
$
|
334
|
|
|
$
|
629
|
|
|
$
|
584
|
|
|
$
|
446
|
|
Earnings per common share
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
1.05
|
|
|
$
|
1.89
|
|
|
$
|
1.91
|
|
|
$
|
1.65
|
|
|
$
|
.91
|
|
|
$
|
1.69
|
|
|
$
|
1.56
|
|
|
$
|
1.17
|
|
Diluted
|
1.04
|
|
|
1.87
|
|
|
1.88
|
|
|
1.62
|
|
|
.89
|
|
|
1.66
|
|
|
1.53
|
|
|
1.15
|
|
||||||||
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
379,741
|
|
|
374,963
|
|
|
365,619
|
|
|
367,439
|
|
|
369,934
|
|
|
372,765
|
|
|
375,395
|
|
|
381,224
|
|
||||||||
Diluted
|
383,651
|
|
|
379,383
|
|
|
370,410
|
|
|
372,619
|
|
|
375,477
|
|
|
378,518
|
|
|
380,915
|
|
|
386,417
|
|
||||||||
Dividends per common share
|
$
|
.47
|
|
|
$
|
.47
|
|
|
$
|
.42
|
|
|
$
|
.42
|
|
|
$
|
.42
|
|
|
$
|
.42
|
|
|
$
|
.38
|
|
|
$
|
.38
|
|
|
|
|
|
(1)
|
Basic and diluted earnings per common share for full-year
2018
and basic earnings per common share for full-year
2017
do not equal the sum of the four quarters for the year.
|
ACRONYMS
|
|||
|
|
|
|
ABS
|
Asset-backed securities
|
GEAM
|
General Electric Asset Management
|
AFS
|
Available-for-sale
|
G-SIB
|
Global systemically important bank
|
AIFMD
|
Alternative Investment Fund Managers Directive
|
HQLA
(1)
|
High-quality liquid assets
|
AIRB
(1)
|
Advanced Internal Ratings-Based Approach
|
HTM
|
Held-to-maturity
|
ALLL
|
Allowance for loan and lease losses
|
IDI
|
Insured depository institution
|
AMA
|
Advanced Measurement Approach
|
ISDA
|
International Swaps and Derivatives Association
|
AML
|
Anti-money laundering
|
LCR
(1)
|
Liquidity coverage ratio
|
AOCI
|
Accumulated other comprehensive income (loss)
|
LDA model
|
Loss distribution approach model
|
APAC
|
Asia Pacific
|
LIBOR
|
London Interbank Offered Rate
|
ASU
|
Accounting Standards Update
|
LTD
|
Long-term debt
|
AUC/A
|
Assets under custody and/or administration
|
MBS
|
Mortgage-backed securities
|
AUM
|
Assets under management
|
MiFID
|
Markets in Financial Instruments Directive
|
BCBS
|
Basel Committee on Banking Supervision
|
MiFID II
|
Markets in Financial Instruments Directive II
|
BCRC
|
Business Conduct Risk Committee
|
MiFIR
|
Markets in Financial Instruments Regulation
|
BOC
|
Basel Oversight Committee
|
MRAC
|
Management Risk and Capital Committee
|
bps
|
Basis points
|
MRC
|
Model Risk Committee
|
BRRD
|
Bank Recovery and Resolution Directive
|
MVG
|
Model Validation Group
|
CAP
|
Capital adequacy process
|
NII
|
Net interest income
|
CCAR
|
Comprehensive Capital Analysis and Review
|
NIM
|
Net interest margin
|
CCO
|
Chief Compliance Officer
|
NOL
|
Net Operating Loss
|
CD
|
Certificates of deposit
|
NSFR
(1)
|
Net stable funding ratio
|
CET1
(1)
|
Common equity tier 1
|
NYSE
|
New York Stock Exchange
|
CFTC
|
Commodity Futures Trading Commission
|
OCI
|
Other comprehensive income (loss)
|
CIS
|
Corporate Information Security
|
OCC
|
Office of the Comptroller of the Currency
|
CLO
|
Collateralized loan obligations
|
OCIO
|
Outsourced Chief Investment Officer
|
CMO
|
Collateralized mortgage obligations
|
OFAC
|
Office of Foreign Assets Control
|
COSO
|
Committee of Sponsoring Organizations of the Treadway Commission
|
ORM
|
Operational risk management
|
CRE
|
Commercial real estate
|
OTC
|
Over-the-counter
|
CRO
|
Chief Risk Officer
|
OTTI
|
Other-than-temporary-impairment
|
CRPC
|
Credit Risk & Policy Committee
|
PCA
|
Prompt corrective action
|
CVA
|
Credit valuation adjustment
|
PCAOB
|
Public Company Accounting Oversight Board
|
DIF
|
Deposit Insurance Fund
|
PD
(1)
|
Probability-of-default
|
DOJ
|
Department of Justice
|
P&L
|
Profit-and-loss
|
DOL
|
Department of Labor
|
RC
|
Risk Committee
|
E&A Committee
|
Examining and Audit Committee
|
ROE
|
Return on average common equity
|
EAD
(1)
|
Exposure-at-default
|
RWA
(1)
|
Risk-weighted asset
|
ECB
|
European Central Bank
|
SCB
|
Stress Capital Buffer
|
ECC
|
Executive Compensation Committee
|
SCCL
|
Single-counterparty credit limits
|
EGRRCPA
|
Economic Growth, Regulatory Relief, and Consumer Protection Act
|
SEC
|
Securities and Exchange Commission
|
EMEA
|
Europe, Middle East, and Africa
|
SERP
|
Supplemental executive retirement plans
|
EMIR
|
European Market Infrastructure Resolution
|
SIFI
|
Systemically important financial institutions
|
EPS
|
Earnings per share
|
SLB
|
Stress Leverage Buffer
|
ERISA
|
Employee Retirement Income Security Act
|
SLR
(1)
|
Supplementary leverage ratio
|
ERM
|
Enterprise Risk Management
|
SOX
|
Sarbanes-Oxley Act of 2002
|
eSLR
|
Enhanced supplementary leverage ratio
|
SPDR
|
Spider; Standard and Poor's depository receipt
|
ETF
|
Exchange-Traded Fund
|
SPOE Strategy
|
Single Point of Entry Strategy
|
EVE
|
Economic value of equity
|
SSIF
|
State Street Intermediate Funding, LLC
|
FASB
|
Financial Accounting Standards Board
|
TCJA
|
Tax Cuts and Jobs Act
|
FDIC
|
Federal Deposit Insurance Corporation
|
TLAC
(1)
|
Total loss-absorbing capacity
|
FFELP
|
Federal Family Education Loan Program
|
TMRC
|
Trading and Markets Risk Committee
|
FHLB
|
Federal Home Loan Bank of Boston
|
TOPS
|
Technology and Operations Committee
|
FRBB
|
Federal Reserve Bank of Boston
|
TORC
|
Technology and Operational Risk Committee
|
FSB
|
Financial Stability Board
|
UCITS
|
Undertakings for Collective Investments in Transferable Securities
|
FSOC
|
Financial Stability Oversight Council
|
U.K. FCA
|
United Kingdom Financial Conduct Authority
|
FX
|
Foreign exchange
|
U.K. PRA
|
United Kingdom Prudential Regulation Authority
|
GAAP
|
Generally accepted accounting principles
|
UOM
|
Unit of measure
|
GCR
|
Global credit review
|
VaR
|
Value-at-Risk
|
GDPR
|
General Data Protection Regulation
|
VIE
|
Variable interest entity
|
|
|
VIX
|
Volatility Index
|
|
|
|
|
(Shares in thousands)
|
(a)
Number of securities
to be issued
upon exercise of
outstanding
options,
warrants and rights
|
|
(b)
Weighted-average
exercise price of
outstanding
options,
warrants and rights
(1)
|
|
(c)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected
in column (a))
|
||||
Plan category:
|
|
|
|
|
|
||||
Equity compensation plans approved by shareholders
|
8,132
|
|
(2)
|
$
|
—
|
|
|
23,573
|
|
Equity compensation plans not approved by shareholders
|
24
|
|
(3)
|
—
|
|
|
—
|
|
|
Total
|
8,156
|
|
|
—
|
|
|
23,573
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
4.1 (P)
|
|
The description of State Street’s Common Stock is included in State Street’s Registration Statement on Form 8-A (File No. 001-07511), as filed on January 18, 1995 and March 7, 1995 (filed with the SEC on January 18, 1995 and March 7, 1995 and incorporated herein by reference)
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
|
(Note: None of the instruments defining the rights of holders of State Street’s outstanding long-term debt are in respect of indebtedness in excess of 10% of the total assets of State Street and its subsidiaries on a consolidated basis. State Street hereby agrees to furnish to the SEC upon request a copy of any other instrument with respect to long-term debt of State Street and its subsidiaries.)
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
*
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
*
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
*
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document
|
|
|
|
|
*
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
*
|
101.LAB
|
|
XBRL Taxonomy Label Linkbase Document
|
|
|
|
|
*
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document
|
|
|
|
|
†
|
|
Denotes management contract or compensatory plan or arrangement
|
*
|
|
Submitted electronically herewith
|
|
STATE STREET CORPORATION
|
|
|
|
|
|
By
|
/s/ E
RIC
W. A
BOAF
|
|
|
ERIC W. ABOAF,
|
|
|
Executive Vice President and
Chief Financial Officer
|
|
|
|
|
By
|
/s/ I
AN
W. A
PPLEYARD
|
|
|
IAN W. APPLEYARD,
|
|
|
Executive Vice President, Global Controller and
Chief Accounting Officer
|
/s/ R
ONALD
P. O
'HANLEY
|
|
|
/s/ E
RIC
W. A
BOAF
|
RONALD P. O'HANLEY,
|
|
|
ERIC W. ABOAF,
|
President and Chief Executive Officer
|
|
|
Executive Vice President and
Chief Financial Officer
|
|
|
|
|
|
|
|
/s/ I
AN
W. A
PPLEYARD
|
|
|
|
IAN W. APPLEYARD,
|
|
|
|
Executive Vice President, Global Controller and
Chief Accounting Officer
|
/s/ J
OSEPH
L. H
OOLEY
|
|
|
/s/ R
ONALD
P. O
'HANLEY
|
JOSEPH L. HOOLEY
|
|
|
RONALD P. O'HANLEY
|
|
|
|
|
/s/ K
ENNETT
F. B
URNES
|
|
|
/s/ S
ARA
M
ATHEW
|
KENNETT F. BURNES
|
|
|
SARA MATHEW
|
|
|
|
|
/s/ P
ATRICK
de
S
AINT
-A
IGNAN
|
|
|
/s/ W
ILLIAM
L. M
EANEY
|
PATRICK de SAINT-AIGNAN
|
|
|
WILLIAM L. MEANEY
|
|
|
|
|
/s/ L
YNN
A. D
UGLE
|
|
|
/s/ S
EAN
O'S
ULLIVAN
|
LYNN A. DUGLE
|
|
|
SEAN O'SULLIVAN
|
|
|
|
|
/s/ A
MELIA
C. F
AWCETT
|
|
|
/s/ R
ICHARD
P. S
ERGEL
|
AMELIA C. FAWCETT
|
|
|
RICHARD P. SERGEL
|
|
|
|
|
/s/ W
ILLIAM
C. F
REDA
|
|
|
/s/ G
REGORY
L. S
UMME
|
WILLIAM C. FREDA
|
|
|
GREGORY L. SUMME
|
|
|
|
|
1.
|
I have reviewed this
Annual Report on
Form 10-K
of State Street Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
Date:
|
February 21, 2019
|
|
By:
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/s/ R
ONALD
P. O
'HANLEY
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Ronald P. O'Hanley,
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President and Chief Executive Officer
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1.
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I have reviewed this
Annual Report on
Form 10-K
of State Street Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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Date:
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February 21, 2019
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By:
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/s/ E
RIC
W. A
BOAF
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Eric W. Aboaf,
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Executive Vice President and Chief Financial Officer
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Date:
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February 21, 2019
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By:
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/s/ R
ONALD
P. O
'HANLEY
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Ronald P. O'Hanley,
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President and Chief Executive Officer
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Date:
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February 21, 2019
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By:
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/s/ E
RIC
W. A
BOAF
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Eric W. Aboaf,
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Executive Vice President and Chief Financial Officer
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