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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 17, 2020
______________________
State Street Corporation
(Exact name of registrant as specified in its charter)
____________________
Massachusetts
 
001-07511
 
04-2456637
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification Number)
 
 
 
 
 
One Lincoln Street
 
Boston
Massachusetts
02111
 
(Address of principal executive offices, and Zip Code)
 
Registrant’s telephone number, including area code:
(617)
786-3000
________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common stock, $1 par value per share
 
STT
 
New York Stock Exchange
 
 
 
 
 
Depositary Shares, each representing a 1/4,000th ownership interest in a share of
 
STT.PRC
 
New York Stock Exchange
Non-Cumulative Perpetual Preferred Stock, Series C, without par value per share
 
 
 
 
 
 
 
Depositary Shares, each representing a 1/4,000th ownership interest in a share of
 
STT.PRD
 
New York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, without par value per share
 
 
 
 
 
 
 
Depositary Shares, each representing a 1/4,000th ownership interest in a share of
 
STT.PRG
 
New York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series G, without par value per share
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company 
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
 




Item 2.02.    Results of Operations and Financial Condition.
On January 17, 2020, State Street Corporation issued a news release announcing its results of operations for the fourth-quarter of 2019 and full-year 2019. Copies of that news release and accompanying fourth-quarter 2019 and full-year 2019 financial information addendum are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference.
Item 5.02    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 14, 2020, Karen C. Keenan, Executive Vice President and Chief Administrative Officer of State Street Corporation, notified the company that she will retire in March 2020.

Item 7.01.    Regulation FD Disclosure.
On January 17, 2020, State Street Corporation made available a slide presentation providing highlights of its fourth-quarter 2019 and full-year 2019 results of operations and related information as of December 31, 2019, which is being made available in connection with a January 17, 2020 investor conference call. A copy of that slide presentation is furnished herewith as Exhibit 99.3 and is incorporated herein by reference.
Item 9.01.    Financial Statements and Exhibits.
(d)    Exhibits.
State Street Corporation's news release dated January 17, 2020, announcing its fourth-quarter 2019 and full-year 2019 results of operations and accompanying fourth-quarter 2019 and full-year 2019 financial information addendum are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference in Item 2.02 hereof; and a slide presentation providing highlights of State Street's fourth-quarter 2019 and full-year 2019 results of operations and related information as of December 31, 2019, which is being made available in connection with a January 17, 2020 investor conference call, is furnished herewith as Exhibit 99.3 and is incorporated by reference in Item 7.01 hereof.

 
 
 
*
 
Submitted electronically herewith




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
STATE STREET CORPORATION
 
 
 
 
 
 
 
 
 
By:
 
/s/ IAN W. APPLEYARD
 
 
 
Name:
 
Ian W. Appleyard,
 
 
 
Title:
 
Executive Vice President, Global Controller and Chief Accounting Officer
Date:
January 17, 2020
 
 
 
 



A1Q19STTLOGOA15.GIF
 
Exhibit 99.1
State Street Corporation
One Lincoln Street
Boston, MA 02111
NYSE: STT
         www.statestreet.com



Boston, MA… January 17, 2020 News Release
STATE STREET REPORTS FOURTH-QUARTER 2019 EPS OF $1.73; $1.98 EXCLUDING NOTABLE ITEMS(a) 
FEE REVENUE UP 2% YEAR-ON-YEAR IN 4Q19; NEW INVESTMENT SERVICING WINS TOTAL $294 BILLION IN 4Q19 AND $1.8 TRILLION IN 2019
EXPENSES DOWN 9% YEAR-ON-YEAR IN 4Q19, DOWN 2% EX-NOTABLES, REFLECTING EXPENSE PROGRAM SAVINGS OF $415 MILLION IN 2019
PRE-TAX MARGIN OF 25.5% IN 4Q19, 29.1% EX-NOTABLES
ROE OF 11.6% IN 4Q19; RETURNED $2.3 BILLION OF CAPITAL TO SHAREHOLDERS IN 2019
Ron O'Hanley, Chairman and Chief Executive Officer: "We are pleased with these results and our improving performance which reflect hard work and better execution across the organization. 2019 began with significant industry challenges, including market weakness and increased pricing pressure. We acted aggressively to offset these headwinds, improve value to clients, stabilize revenues and reduce expenses. As a result, we realized approximately $415 million in expense savings, enhanced client service through the establishment of our new coverage model and continued to build our front-to-back Alpha platform, which is producing results for our clients and for State Street. We were also able to deliver a total capital payout of 108% to our shareholders."

O'Hanley added: "Looking ahead, we will continue to drive innovation, automation and productivity to achieve our goal of becoming the very best provider to our clients. While we have made measurable progress towards our revenue and cost savings targets, we have more to do to improve margins and reach our medium-term goals by optimizing our technology infrastructure and client-centered revenue growth as key drivers. We are confident in the trajectory of our business and focused on continuing to improve our performance."  
FINANCIAL HIGHLIGHTS(b) 
(Table presents summary results, $ millions, except per share amounts, or where otherwise noted)
4Q19

3Q19

4Q18

 
 % QoQ

 
 % YoY

 
Income Statement:
 
 
 
 
 
 
 
 
Total fee revenue
$
2,368

$
2,259

$
2,326

 
4.8
 %
 
1.8
 %
 
Net interest income
636

644

697

 
(1.2
)
 
(8.8
)
 
Other income
44

—

—

 
nm

 
nm

 
Total revenue
3,048

2,903

3,023

 
5.0

 
0.8

 
Total expenses
2,267

2,180

2,486

 
4.0

 
(8.8
)
 
Net income
704

583

437

 
20.8

 
61.1

 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
Diluted earnings per share
$
1.73

$
1.42

$
1.03

 
21.8
 %
 
68.0
 %
 
 
 
 
 
 
 
 
 
 
Financial ratios and other metrics:
 
 
 
 
 
 
 
 
Return on average common equity
11.6
%
9.7
%
7.5
%
 
190

bps
410

bps
Pre-tax margin
25.5

24.8

17.5

 
70

 
800

 
AUC/A ($ billions)
34,358

32,899

31,620

 
4.4
 %
 
8.7
 %
 
AUM ($ billions)
3,116

2,953

2,511

 
5.5

 
24.1

 
 
 
 
 
 
 
 
 
 
(a) See 4Q19 Highlights in this News Release for a listing of notable items. Results excluding notable items are non-GAAP measures. Please refer to the Addendum included with this News Release for an explanation and reconciliation of non-GAAP measures. Total capital payout ratio calculated based on a capital return of $2,331 million and net income available to common shareholders for the year ended December 31, 2019 of $2,149 million; resulting in a total payout ratio of 108%.
(b) Please refer to the Addendum included with this New Release for full year results.
Investor Contact: Ilene Fiszel Bieler +1 617/664-3477          Media Contact: Marc Hazelton +1 617/513-9439

1


4Q19 HIGHLIGHTS
(all comparisons are to 4Q18, unless otherwise noted)

AUC/A and AUM
•
Investment Servicing AUC/A as of quarter-end increased 9% to $34.4 trillion, primarily due to higher end of period market levels and client flows, partially offset by a previously announced client transition.
•
Investment Management AUM as of quarter-end increased 24% to a record $3.1 trillion primarily due to higher end of period market levels and net inflows of $103 billion in 2019.

New Business
•
Investment Servicing mandates announced in 4Q19 totaled $294 billion with quarter-end servicing assets remaining to be installed in future periods of $1.2 trillion.
•
Investment Management net outflows in 4Q19 of $3 billion were driven by institutional and cash outflows, partially offset by ETF inflows.
•
Four front-to-back State Street AlphaSM platform wins for FY 2019 in multiple client segments and Charles River Development (CRD) new bookings, excluding affiliates, of $23 million and $37 million for 4Q19 and FY 2019, respectively.

Revenue
•
Fee revenue increased 2% reflecting higher servicing, management and software and processing fees, partially offset by lower FX trading services and securities finance revenue:
◦
The increase in servicing fees primarily reflects higher average market levels and net new business, partially offset by fee pressure.
•
Net interest income (NII) decreased 9% primarily due to lower market rates and mix shift from non-interest bearing to interest-bearing deposits, partially offset by asset growth.
◦
Compared to 3Q19, NII decreased 1% driven by the absence of episodic market-related benefits and lower market rates, partially offset by increased deposit balances.

Expenses
•
Total expenses were down 9%, primarily reflecting the impact of lower repositioning charges in 4Q19 as well as savings from resource discipline, process re-engineering and automation initiatives.
◦
Excluding notable items, total expenses were down 2% compared to 4Q18 and flat to 3Q19(c).
◦
4Q19 repositioning charge of $110 million to further drive process automation, information technology optimization and organization rationalization in 2020.
◦
Our expense savings program announced in January 2019 achieved approximately $415 million total savings in the year through resource discipline, process re-engineering and automation benefits.
•
Total headcount was down 3%, or over 1,000, compared to 4Q18, primarily driven by productivity savings.
◦
4Q19 was the fourth sequential quarterly decline in total headcount, while strengthening client service through quality initiatives and automation.
◦
Higher-cost location headcount reductions of 3,400, exceeded the original target of 1,500 for FY 2019.



(c) This is a non-GAAP measure; quarterly expenses ex-notable items, as presented, are calculated as expenses less notable items; refer to the Addendum included in this News Release for reconciliations of our non-GAAP financial information.

2


Notable Items
(Dollars in millions, except EPS amounts)
Quarters
4Q19
4Q18
Repositioning costs:
 
 
Compensation & employee benefits
$
(98
)
$
(198
)
Occupancy
(12
)
(25
)
Total repositioning costs
(110
)
(223
)
 
 
 
 
 
 
Acquisition and restructuring costs
(29
)
(24
)
Business exit
—

(24
)
Legal and related costs
—

(50
)
Gain on junior subordinated debt (d)
44

—

Notable items (pre-tax)
$
(95
)
$
(321
)
 
 
 
Preferred securities redemption (after-tax) (e)
(22
)
—

 
 
 
 
 
 
EPS impact ($s)
$
(0.25
)
$
(0.64
)
 
 
 

Capital
•
ROE of 11.6% in 4Q19, up 4.1%pts compared to 4Q18 and up 1.9%pts compared to 3Q19.
•
Returned $686 million to shareholders in 4Q19, consisting of $500 million in common share repurchases and approximately $186 million in common share dividends.
◦
Dividends reflect the declared 4Q19 quarterly common share dividend of $0.52 per share, up 11% compared to 4Q18.
•
Estimated Common Equity Tier 1 (CET1) of 11.9% (Advanced approaches), Tier 1 Leverage ratio of 7.0% and Supplementary Leverage Ratio (SLR) of 6.2% at quarter-end.




































(d) A cash tender offer was completed in 4Q19 of approximately $297 million of our $800 million aggregate principal amount of outstanding Floating Rate Junior Subordinated Debentures due 2047, resulting in a gain of approximately $44 million.
(e) $22 million included in dividends on preferred stock impacting net income available to common shareholders is related to the redemption of all outstanding Series E preferred stock.

3


MARKET DATA, AUC/A AND AUM
The tables below provide a summary of selected financial information, market indices and foreign exchange rates as well as industry flow data.

(Dollars in billions, except market indices and foreign exchange rates)
4Q19

 
3Q19

 
4Q18

 
 % QoQ

 
 % YoY

 
 
 
 
 
 
 
 
 
 
Assets under Custody and/or Administration (AUC/A)(1) (2)
$
34,358

 
$
32,899

 
$
31,620

 
4.4
 %
 
8.7
 %
Assets under Management (AUM)(2)
3,116

 
2,953

 
2,511

 
5.5

 
24.1

 
 
 
 
 
 
 
 
 
 
Market Indices:(3)
 
 
 
 
 
 
 
 
 
S&P 500 daily average
3,083

 
2,958

 
2,699

 
4.2

 
14.2

S&P 500 EOP
3,231

 
2,977

 
2,507

 
8.5

 
28.9

MSCI EAFE daily average
1,962

 
1,882

 
1,809

 
4.3

 
8.5

MSCI EAFE EOP
2,037

 
1,889

 
1,720

 
7.8

 
18.4

MSCI Emerging Markets daily average
1,051

 
1,014

 
978

 
3.6

 
7.5

MSCI Emerging Markets EOP
1,115

 
1,001

 
966

 
11.4

 
15.4

Barclays Capital Global Aggregate Bond Index EOP
512

 
509

 
479

 
0.5

 
6.9

Foreign Exchange Volatility Indices:(3)
 
 
 
 
 
 
 
 
 
JPM G7 Volatility Index daily average
6.0

 
6.9

 
7.9

 
(13.0
)
 
(24.1
)
JPM Emerging Market Volatility Index daily average
7.2

 
8.1

 
10.0

 
(11.1
)
 
(28.0
)
 
 
 
 
 
 
 
 
 
 
Average Foreign Exchange Rate:
 
 
 
 
 
 
 
 
 
Euro vs. USD
1.107

 
1.112

 
1.141

 
(0.4
)
 
(3.0
)
GBP vs. USD
1.288

 
1.233

 
1.286

 
4.5

 
0.2

(1) Includes assets under custody of $26,195 billion, $25,078 billion, and $23,248 billion, as of 4Q19, 3Q19, and 4Q18, respectively.
(2) As of period-end.
(3) The index names listed in the table are service marks of their respective owners.

INDUSTRY FLOW DATA
(Dollars in billions)
4Q19

3Q19

2Q19

1Q19

4Q18

 3Q18

2Q18

1Q18

North America - ICI Market Data:(1)
 
 
 
 
 
 
 
 
Long Term Funds
$
(47.7
)
$
(51.6
)
$
(38.2
)
$
41.8

$
(308.8
)
$
(50.4
)
$
(28.3
)
$
38.0

Money Market
169.0

224.5

137.0

54.0

187.9

35.8

(51.7
)
(52.2
)
ETF
132.2

84.8

65.4

45.7

105.0

87.2

55.8

62.8

Total ICI Flows
$
253.5

$
257.7

$
164.2

$
141.5

$
(15.9
)
$
72.6

$
(24.2
)
$
48.6

 
 
 
 
 
 
 
 
 
Europe - Broadridge Market Data:(1)(2)
 
 
 
 
 
 
 
 
Long Term Funds
$
106.3

$
49.4

$
27.5

$
5.7

$
(171.4
)
$
(16.2
)
$
(24.9
)
$
160.5

Money Market
(16.7
)
78.9

1.6

(9.0
)
62.4

(21.9
)
(17.8
)
(10.3
)
Total Broadridge Flows
$
89.6

$
128.3

$
29.1

$
(3.3
)
$
(109.0
)
$
(38.1
)
$
(42.7
)
$
150.2

(1) Industry data is provided for illustrative purposes only and is not intended to reflect the Company's or its clients' activity.
(2) 4Q19 data is on a rolling 3 month basis and includes September through November 2019 for EMEA (Copyright 2019 Broadridge Financial Solutions, Inc.)  

4


INVESTMENT SERVICING AUC/A
The following table presents AUC/A information by product and financial instrument.
(Dollars in billions)
4Q19

3Q19

4Q18

 % QoQ

 % YoY

Assets Under Custody and/or Administration(1)
 
 
 
 
 
By Product Classification:
 
 
 
 
 
Mutual funds
$
9,221

$
8,687

$
7,912

6.1
%
16.5
%
Collective funds, including ETFs
9,796

9,224

8,999

6.2

8.9

Pension products
6,924

6,817

6,489

1.6

6.7

Insurance and other products
8,417

8,171

8,220

3.0

2.4

Total Assets Under Custody and/or Administration
$
34,358

$
32,899

$
31,620

4.4
%
8.7
%
By Financial Instrument:
 
 
 
 
 
Equities
$
19,301

$
18,243

$
18,041

5.8
%
7.0
%
Fixed-income
10,766

10,413

9,758

3.4

10.3

Short-term and other investments
4,291

4,243

3,821

1.1

12.3

Total Assets Under Custody and/or Administration
$
34,358

$
32,899

$
31,620

4.4
%
8.7
%
(1) As of period-end.
INVESTMENT MANAGEMENT AUM
The following tables present 4Q19 activity in AUM by product category.
(Dollars in billions)
 Equity

Fixed- Income

 Cash

 Multi-Asset Class Solutions

Alternative Investments(1)

 
 Total

Beginning balance as of September 30, 2019
$
1,831

$
459

$
336

$
157

$
170

 
$
2,953

Net asset flows:
 
 
 
 
 
 
 
Long-term institutional(2)
(16
)
6

(2
)
(5
)
1

 
(16
)
ETF
21

4

—

—

(1
)
 
24

Cash fund
—

—

(11
)
—

—

 
(11
)
Total flows, net
$
5

$
10

$
(13
)
$
(5
)
$
—

 
$
(3
)
Market appreciation/(depreciation)
144

(3
)
—

4

4

 
149

Foreign exchange impact
11

2

1

1

2

 
17

Total market/foreign exchange impact
$
155

$
(1
)
$
1

$
5

$
6

 
$
166

 
 
 
 
 
 
 
 
Ending balance as of December 31, 2019
$
1,991

$
468

$
324

$
157

$
176

 
$
3,116


(Dollars in billions)
 4Q19

 3Q19

 2Q19

 1Q19

 4Q18

 3Q18

 2Q18

 1Q18

Beginning balance
$
2,953

$
2,918

$
2,805

$
2,511

$
2,810

$
2,723

$
2,729

$
2,782

Net asset flows:
 
 
 
 
 
 
 
 
Long-term institutional(2)
(16
)
(14
)
16

52

(13
)
16

(14
)
(27
)
ETF
24

12

1

(3
)
1

12

—

(5
)
Cash fund
(11
)
15

3

24

(35
)
(19
)
(2
)
6

Total flows, net
$
(3
)
$
13

$
20

$
73

$
(47
)
$
9

$
(16
)
$
(26
)
Market appreciation/(depreciation)
149

40

86

223

(248
)
84

38

(40
)
Foreign exchange impact
17

(18
)
7

(2
)
(4
)
(6
)
(28
)
13

Total market and foreign exchange impact
$
166

$
22

$
93

$
221

$
(252
)
$
78

$
10

$
(27
)
 
 
 
 
 
 
 
 
 
Ending balance
$
3,116

$
2,953

$
2,918

$
2,805

$
2,511

$
2,810

$
2,723

$
2,729

 
 
 
 
 
 
 
 
 
(1) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust, for which we are not the investment manager but act as the marketing agent.
(2) Amounts represent long-term portfolios, excluding ETFs.


5


REVENUE
(Dollars in millions)
4Q19

3Q19

4Q18

 
 % QoQ
 
% YoY
 
Servicing fees
$
1,299

$
1,272

$
1,286

 
2.1
 %
 
1.0
 %
 
Management fees
465

445

440

 
4.5

 
5.7

 
Foreign exchange trading services
274

284

294

 
(3.5
)
 
(6.8
)
 
Securities finance revenue
111

116

120

 
(4.3
)
 
(7.5
)
 
Software and processing fees
219

142

186

 
54.2

 
17.7

 
Total fee revenue
$
2,368

$
2,259

$
2,326

 
4.8

 
1.8

 
 
 
 
 
 
 
 
 
 
Net interest income
636

644

697

 
(1.2
)
 
(8.8
)
 
Other income
44

—

—

 
nm

 
nm

 
Total Revenue
$
3,048

$
2,903

$
3,023

 
5.0

 
0.8

 
 
 
 
 
 
 
 
 
 
Net interest margin (FTE)(f)
1.36
%
1.42
%
1.55
%
 
(6
)
bps
(19
)
bps

Servicing fees were up 1% compared to 4Q18 and 2% compared to 3Q19 each driven by higher average market levels and net new business, partially offset by fee pressure.

Management fees increased 6% compared to 4Q18 mainly due to higher average equity market levels and net inflows from ETF and cash, partially offset by mix changes away from higher fee institutional products. Management fees increased 4% compared to 3Q19 primarily reflecting higher average market levels and net inflows from ETF, partially offset by net outflows from institutional.

Foreign exchange trading services decreased 7% compared to 4Q18 and 4% compared to 3Q19 each primarily due to lower market volatility, partially offset by higher volumes.

Securities finance decreased 8% compared to 4Q18 and 4% compared to 3Q19 each reflecting lower securities on loan and enhanced custody balances and spreads.

Software and processing fees increased 18% compared to 4Q18 and 54% compared to 3Q19 each primarily driven by higher CRD revenue and market-related adjustments. CRD contributed $119 million of revenue on a consolidated basis in 4Q19 compared to $114 million in 4Q18(g).

Net interest income (NII) decreased 9% compared to 4Q18 primarily due to lower market rates and lower non-interest bearing deposits, partially offset by asset growth. NII decreased 1% compared to 3Q19 primarily due to the absence of episodic market-related benefits and lower market rates, partially offset by higher deposit balances. Net interest margin (NIM)(f) decreased 19 basis points compared to 4Q18 and 6 basis points compared to 3Q19 driven by lower NII and higher interest-earning assets.












(f) NIM is presented on a fully taxable-equivalent (FTE) basis. Refer to the Addendum for reconciliations of our FTE-basis presentation.
(g) See In This News Release for an explanation and reconciliation of CRD consolidated revenue.

6


EXPENSES
(Dollars in millions)
4Q19

3Q19

4Q18

 
 % QoQ

 
 % YoY

 
Compensation and employee benefits
$
1,145

$
1,083

$
1,303

 
5.7
 %
 
(12.1
)%
 
Information systems and communications
362

376

356

 
(3.7
)
 
1.7

 
Transaction processing services
242

254

226

 
(4.7
)
 
7.1

 
Occupancy
126

113

146

 
11.5

 
(13.7
)
 
Acquisition and restructuring costs
29

27

24

 
7.4

 
20.8

 
Amortization of other intangible assets
58

59

81

 
(1.7
)
 
(28.4
)
 
Other
305

268

350

 
13.8

 
(12.9
)
 
Total Expenses
$
2,267

$
2,180

$
2,486

 
4.0
 %
 
(8.8
)%
 
 
 
 
 
 
 
 
 
 
Effective tax rate
9.5
%
19.2
%
17.4
%
 
(970
)
bps
(790
)
bps

Compensation and employee benefits decreased 12% compared to 4Q18 reflecting the impact of notable items and savings from resource discipline and process re-engineering initiatives, including a shift from higher-cost locations to strategic hubs. Compensation and employee benefits were up 6% compared to 3Q19, primarily reflecting the impact of notable items in 4Q19, partially offset by savings from resource discipline and process re-engineering initiatives, including a shift from higher-cost locations to strategic hubs.

Information systems and communications increased 2% compared to 4Q18 reflecting infrastructure investments, partially offset by the impact of supplier renegotiations and consolidation. Information systems and communications decreased 4% compared to 3Q19 primarily due to supplier renegotiations and consolidation.

Transaction processing services increased 7% compared to 4Q18 primarily due to higher business volumes. Transaction processing services decreased 5% compared to 3Q19 primarily due to lower sub-custody costs.

Occupancy decreased 14% compared to 4Q18 and was up 12% compared to 3Q19 each primarily reflecting the impact of notable items.

Amortization of other intangible assets decreased 28% compared to 4Q18 primarily due to the absence of business exit costs taken in 4Q18. Amortization of other intangible assets was largely flat compared to 3Q19.

Other expenses decreased 13% compared to 4Q18 primarily reflecting legal and related costs in 4Q18 and lower professional fees in 4Q19, partially offset by higher State Street Foundation funding in 4Q19. Compared to 3Q19, other expenses were up 14%, primarily reflecting the impact of State Street Foundation funding and higher professional fees.

The effective tax rate in 4Q19 was 9.5% compared to 17.4% in 4Q18 and 19.2% in 3Q19. Compared to 4Q18 and 3Q19, the effective tax rate decreased primarily due to foreign legal entity restructuring and the associated impact on our deferred tax position in 4Q19.


7


CAPITAL AND LIQUIDITY
The following table presents preliminary estimates of regulatory capital ratios for State Street Corporation.
December 31, 2019
4Q19

3Q19

4Q18

Basel III Standardized Estimated:
 
 
 
Common Equity Tier 1 ratio
11.9
%
11.3
%
11.7
%
Tier 1 capital ratio
14.7

14.6

15.5

Total capital ratio
15.9

15.3

16.3

 
 
 
 
Basel III Advanced Approaches:
 
 
 
Common Equity Tier 1 ratio
11.9

12.2

12.1

Tier 1 capital ratio
14.7

15.9

16.0

Total capital ratio
15.7

16.5

16.9

 
 
 
 
Tier 1 leverage ratio
7.0

7.4

7.2

Supplementary leverage ratio
6.2

6.6

6.3

   
Advanced approaches capital ratios were binding for the period. Advanced approaches CET1 ratio declined slightly compared to 3Q19, driven primarily by increased risk-weighted assets. Tier 1 Leverage and Supplementary Leverage ratios decreased slightly quarter-on-quarter primarily driven by the redemption of the Company's $750 million Series E preferred stock in 4Q19.

Preliminary estimated average liquidity coverage ratio (LCR) for State Street Corporation of approximately 110% at quarter-end.




























Note: Based on a capital return of $686 million and net income available to common shareholders for the quarter ended December 31, 2019 of $632 million, our total payout ratio was 109%; Based on a capital return of $2,331 million and net income available to common shareholders for the year ended December 31, 2019 of $2,149 million, our total payout ratio was 108%.

8


INVESTOR CONFERENCE CALL AND QUARTERLY WEBSITE DISCLOSURE
State Street will webcast an investor conference call today, Friday, January 17th, 2020, at 10:00 a.m. EST, available at http://investors.statestreet.com/. The conference call will also be available via telephone, at (866) 211-3118 inside the U.S. or at (647) 689-6605 outside of the U.S. The Conference ID# is 4365208.

Recorded replays of the conference call will be available on the website and by telephone at (800) 585-8367 or (416) 621-4642 beginning approximately two hours after the call's completion. The Conference ID# is 4365208.

The telephone replay will be available for approximately two weeks following the conference call. This News Release, presentation materials referred to on the conference call and additional financial information are available on State Street's website, at http://investors.statestreet.com/ under “Investor Relations--Investor News & Events" and under the title “Events and Presentations.”

State Street intends to publish updates to its public disclosure regarding regulatory capital, as required by the Basel III final rule, and the liquidity coverage ratio, on a quarterly basis on its website at http:// investors.statestreet.com/, under "Filings & Reports." Those updates will be published each quarter, during the period beginning after State Street's public announcement of its quarterly results of operations and ending on or prior to the due date under applicable bank regulatory requirements (i.e., ordinarily, ending no later than 60 days following year-end or 45 days following each other quarter-end, as applicable). For 4Q19, State Street expects to publish its updates during the period beginning today and ending on or about February 28, 2020.

State Street Corporation (NYSE: STT) is the world's leading provider of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $34.36 trillion in assets under custody and administration and $3.12 trillion* in assets under management as of December 31, 2019, State Street operates globally in more than 100 geographic markets and employs approximately 39,000 worldwide. For more information, visit State Street's website at www.statestreet.com.
* Assets under management as of December 31, 2019 includes approximately $45 billion of assets with respect to which State Street Global Advisors Funds Distributors, LLC (SSGA FD) serves as marketing agent; SSGA FD and State Street Global Advisors are affiliated.

9


IN THIS NEWS RELEASE:
•
Expenses and other measures are sometimes presented excluding notable items, such as seasonal and CRD expenses. This is a non-GAAP presentation. See the Addendum to this News Release for an explanation and reconciliations of our non-GAAP measures and CRD expenses. The 2019 expense savings program is stated on a gross basis.
•
CRD annual contract value bookings, as presented in this New Release, represent signed annual recurring revenue contract value excluding bookings with affiliates, including SSGA. CRD annual contract value bookings in FY 2019 of $37 million excludes $28 million of bookings with affiliates, including SSGA. CRD annual contract value bookings in 4Q19 of $23 million excludes $0.1 million of bookings with affiliates, including SSGA. CRD revenue derived from affiliate agreements is eliminated in consolidation for financial reporting purposes.
•
For 4Q19, on a consolidated basis, CRD revenue contributed $121 million, including $119 million in Software and processing fees and $2 million in FX trading services. For 4Q18 on a consolidated basis, CRD revenue contributed $119 million, including $114 million in Software and processing fees and $5 million in FX trading services.
•
New asset servicing mandates, including announced front-to-back investment servicing clients, may be subject to completion of definitive agreements, approval of applicable boards and shareholders and customary regulatory approvals. New asset servicing mandates and servicing assets remaining to be installed in future periods exclude new business which has been contracted, but for which the client has not yet provided permission to publicly disclose and is not yet installed. These excluded assets, which from time to time may be significant, will be included in new asset servicing mandates and reflected in servicing assets remaining to be installed in the period in which the client provides its permission. Servicing mandates and servicing assets remaining to be installed in future periods are presented on a gross basis and therefore also do not include the impact of clients who have notified us during the period of their intent to terminate or reduce their relationship with State Street, which from time to time may be significant.
•
New business in assets to be serviced is reflected in our AUC/A after we begin servicing the assets, and new business in assets to be managed is reflected in our AUM after we begin managing the assets. As such, only a portion of any new asset servicing and asset management mandates may be reflected in our AUC/A and AUM as of any particular date specified. Generally, our servicing fee revenues are affected by several factors including changes in market valuations, client activity and asset flows, net new business and the manner in which we price our services. We provide a range of services to our clients, including core custody services, accounting, reporting and administration and middle office services, and the nature and mix of services provided affects our servicing fees. The basis for fees will differ across regions and clients. The industry in which we operate has historically faced pricing pressure, and our servicing fee revenues are also affected by such pressures today. Consequently, no assumption should be drawn as to future revenue run rate from announced servicing wins or new servicing business yet to be installed, as the amount of revenue associated with AUC/A can vary materially. Management fees generally are affected by our level of AUM and differ based upon the nature, type and investment strategy of the investment product. Management fee revenue is more sensitive to market valuations than servicing fee revenue, as a higher proportion of the underlying services provided, and the associated management fees earned, are dependent on equity and fixed-income security valuations. Additional factors, such as the relative mix of assets managed, may have a significant effect on our management fee revenue. While certain management fees are directly determined by the values of AUM and the investment strategies employed, management fees may reflect other factors, including performance fee arrangements, as well as our relationship pricing for clients.
•
State Street’s common stock and other stock dividends, including the declaration, timing and amount, remain subject to consideration and approval by State Street’s Board of Directors at the relevant times. State Street's $2 billion common stock repurchase authorization was effective beginning July 1, 2019 and covers the period ending June 30, 2020. Stock purchases may be made using various types of transactions, including open-market purchases, accelerated share repurchases or other transactions off the market, and may be made under Rule 10b5-1 trading programs. The timing of stock purchases, type of transaction and number of shares purchased will depend on several factors, including market conditions and State Street’s capital position, its financial performance, the amount of common stock issued as part of employee compensation programs and investment opportunities. The common stock purchase program does not have specific price targets and may be suspended at any time.
•
2019 expense program savings stated on a gross basis. Process re-engineering and automation savings, as presented in this News Release, can include high-cost location workforce reductions, reducing manual/bespoke activities, reducing redundant activities, streamlining operational centers and moves to common platforms/retiring legacy applications. Resource discipline benefits, as presented in this News Release, can include reducing senior management headcount, rigorous performance management, vendor management and optimization of real estate.
•
Distribution fees from the SPDR® Gold ETF and the SPDR® Long Dollar Gold Trust ETF are recorded in brokerage and other fee revenue and not in management fee revenue.
•
During the first quarter of 2019, we voluntarily changed our accounting method under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 323, Investments - Equity Method and Joint Ventures, for investments in low income housing tax credit from the equity method of accounting to the proportional amortization method of accounting. This change in accounting method has been applied retrospectively to all prior periods. Refer to the Form 8-K filed on March 5, 2019 for further details.

10


•
Unless otherwise noted, all capital ratios referenced on this News Release and elsewhere in this presentation refer to State Street Corporation, or State Street, and not State Street Bank and Trust Company, or State Street Bank. The lower of capital ratios calculated under the Basel III advanced approaches and under the Basel III standardized approach are applied in the assessment of our capital adequacy for regulatory purposes. Standardized approach ratios were binding for 4Q18 and 3Q19, while Advanced approaches ratios were binding for 4Q19. Refer to the Addendum included with this News Release for additional information. Effective January 1, 2018, the applicable final rules are in effect and the ratios presented are calculated based on fully phased-in basis.
•
All earnings per share amounts represent fully diluted earnings per common share.
•
Return on average common shareholders' equity is determined by dividing annualized net income available to common equity by average common shareholders' equity for the period.
•
Return on tangible equity is determined by dividing annualized, year-to-date net income available to common equity by total tangible common equity. Refer to the Addendum included with this News Release for details.
•
Quarter-over-quarter (QoQ) is a sequential quarter comparison. Year-on-year (YoY) is the current period compared to the same period a year ago.
•
"AUC/A" denotes Assets Under Custody and/or Administration; "AUC" denotes Assets Under Custody; "AUM" denotes Assets Under Management; "nm" denotes not meaningful; "EOP" denotes end of period.
•
"FTE" denotes fully taxable-equivalent basis; NIM is presented on an FTE-basis. Refer to the Addendum for reconciliations of our FTE-basis presentation.
•
Industry data is provided for illustrative purposes only and is not intended to reflect State Street's or its clients' activity.
◦
Investment Company Institute (ICI) data includes funds not registered under the Investment Company Act of 1940. Mutual fund data represents estimates of net new cash flow, which is new sales minus redemptions combined with net exchanges, while exchange-traded fund (ETF) data represents net issuance, which is gross issuance less gross redemptions. Data for mutual funds that invest primarily in other mutual funds and ETFs that invest primarily in other ETFs were excluded from the series. ICI classifies mutual funds and ETFs based on language in the fund prospectus.
◦
Broadridge flows data © Copyright 2019, Broadridge Financial Solutions, Inc. Funds of funds have been excluded from Broadridge data (to avoid double counting). Therefore, a market total is the sum of all the investment categories excluding the three funds of funds categories (in-house, ex-house and hedge). ETFs are included in Broadridge’s database on mutual funds, but this excludes exchange-traded commodity products that are not mutual funds.
◦
The long term fund flows reported by ICI are composed of North America Market flows mainly in Equities, Hybrids and Fixed Income Asset Classes. The long term fund flows reported by Broadridge are composed of EMEA Market flows mainly in Equities, Fixed Income, and Multi Asset Classes.

FORWARD LOOKING STATEMENTS
This News Release (and the conference call referenced herein) contains forward-looking statements within the meaning of United States securities laws, including statements about our goals and expectations regarding our business, financial and capital condition, results of operations, strategies, the financial and market outlook, dividend and stock purchase programs, governmental and regulatory initiatives and developments, expense reduction programs, new client business, and the business environment. Forward-looking statements are often, but not always, identified by such forward-looking terminology as “outlook,” “guidance,” “expect,” “priority,” “objective,” “intend,” “plan,” “forecast,” “believe,” “anticipate,” “estimate,” “seek,” “may,” “will,” “trend,” “target,” “strategy” and “goal,” or similar statements or variations of such terms. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our expectations or beliefs as of any time subsequent to the time this News Release is first issued.
Important factors that may affect future results and outcomes include, but are not limited to:
•
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;
•
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;
•
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

11


activity, competitive pressures in the investment servicing and asset management industries, and the timing of revenue recognition with respect to software and processing fee revenues;
•
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;
•
the level, volatility and uncertainty of interest rates; the expected discontinuation of Interbank Offered Rates (IBORs) including LIBOR; the valuation of the U.S. dollar relative to other currencies in which we record revenue or accrue expenses; 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;
•
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;
•
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;
•
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;
•
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;
•
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;
•
changes in law or regulation, or the enforcement of law or regulation, that may adversely affect our business activities or those of our clients or our counterparties, and the products or services that we sell, including, without limitation, additional or increased taxes or assessments thereon, capital adequacy requirements, margin requirements and changes that expose us to risks related to the adequacy of our controls or compliance programs;
•
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;
•
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;
•
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;
•
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

12


issues that require substantial expenditures, changes in our operations, payments to clients or reporting to U.S. authorities;
•
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;
•
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 control risks related to use of technology, including cyber-crime and inadvertent data disclosures;
•
our ability to identify and 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;
•
the results of, and costs associated with, governmental or regulatory inquiries and investigations, litigation and similar claims, disputes, or civil or criminal proceedings;
•
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;
•
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;
•
the potential for losses arising from our investments in sponsored investment funds;
•
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;
•
our ability to anticipate and manage the level and timing of redemptions and withdrawals from our collateral pools and other collective investment products;
•
the credit agency ratings of our debt and depositary obligations and investor and client perceptions of our financial strength;
•
adverse publicity, whether specific to us or regarding other industry participants or industry-wide factors, or other reputational harm;
•
our ability to control operational risks, data security breach risks and outsourcing risks, our ability to protect our intellectual property rights, the possibility of errors in the quantitative models we use to manage our business and the possibility that our controls will prove insufficient, fail or be circumvented;
•
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;
•
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;
•
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;
•
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;
•
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;

13


•
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;
•
changes in accounting standards and practices; and
•
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.
Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in our 2018 Annual Report on Form 10-K and our subsequent SEC filings. We encourage investors to read these filings, particularly the sections on risk factors, for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this News Release should not by relied on as representing our expectations or beliefs as of any time subsequent to the time this News Release is first issued, and we do not undertake efforts to revise those forward-looking statements to reflect events after that time.

14
Exhibit 99.2
STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
December 31, 2019
 
 
Table of Contents
 
 
GAAP-Basis Financial Information:

5-Year Summary of Results
2
Consolidated Financial Highlights
3
Consolidated Results of Operations
4
Consolidated Statement of Condition
6
Average Statement of Condition - Rates Earned and Paid - Fully Taxable-Equivalent Basis
7
Assets Under Custody and/or Administration
9
Assets Under Management
10
Industry Flow Data by Asset Class
11
 
 
Investment Portfolio:
 
Investment Portfolio Holdings by Asset Class
12
Investment Portfolio Non-U.S. Investments
13
 
 
Non-GAAP Financial Information:
 
Reconciliations of Non-GAAP Financial Information
14
Reconciliation of Pre-tax Margin Excluding Notable Items
16
Reconciliation of Notable Items
17
Reconciliations of Constant Currency FX Impacts
18
 
 
Capital:
 
Reconciliation of Tangible Common Equity Ratio
19
Regulatory Capital
20
Reconciliations of Supplementary Leverage Ratios
21
 
 
This financial information should be read in conjunction with State Street's news release dated January 17, 2020.
 
 


STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
5-YEAR SUMMARY OF RESULTS
 
 
 
 
 
(Dollars in millions, except per share amounts, or where otherwise noted)
 
2015(1)
 
2016(1)
 
2017(1)
 
2018(1)
 
2019
Year ended December 31:
 
 
 
 
 
 
 
 
 
 
Total fee revenue
 
$
8,351

 
$
8,200

 
$
9,001

 
$
9,454

 
$
9,147

Net interest income
 
2,088

 
2,084

 
2,304

 
2,671

 
2,566

Other income
 
(6
)
 
7

 
(39
)
 
6

 
43

Total revenue
 
10,433

 
10,291

 
11,266

 
12,131

 
11,756

Provision for loan losses
 
12

 
10

 
2

 
15

 
10

Total expenses
 
8,050

 
8,077

 
8,269

 
9,015

 
8,894

Income before income tax expense
 
2,371

 
2,204

 
2,995

 
3,101

 
2,852

Income tax expense
 
398

 
67

 
839

 
508

 
470

Net income from non-controlling interest
 
—

 
1

 
—

 
—

 
—

Net income
 
1,973

 
2,138

 
2,156

 
2,593

 
2,382

Net income available to common shareholders
 
$
1,841

 
$
1,963

 
$
1,972

 
$
2,404

 
$
2,149

Per common share:
 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share
 
$
4.45

 
$
4.96

 
$
5.19

 
$
6.39

 
$
5.75

Average diluted common shares outstanding (in thousands)
 
413,638

 
396,090

 
380,213

 
376,476

 
373,666

Cash dividends declared per common share
 
$
1.32

 
$
1.44

 
$
1.60

 
$
1.78

 
$
1.98

Closing price per share of common stock (at year end)
 
66.36

 
77.72

 
97.61

 
63.07

 
79.10

Average balance sheet:
 
 
 
 
 
 
 
 
 
 
Investment securities
 
$
105,611

 
$
100,738

 
$
95,779

 
$
88,070

 
$
91,768

Total assets
 
250,432

 
229,727

 
219,450

 
223,385

 
223,334

Total deposits
 
184,985

 
170,485

 
163,808

 
161,408

 
158,262

Ratios and other metrics:
 
 
 
 
 
 
 
 
 
 
Return on average common equity
 
9.7
%
 
10.4
%
 
10.5
%
 
12.1
%
 
10.0
%
Pre-tax margin
 
22.7

 
21.4

 
26.6

 
25.6

 
24.3

Pre-tax margin, excluding notable items(2)
 
26.6

 
26.2

 
28.7

 
28.8

 
25.8

Net interest margin, fully taxable-equivalent basis
 
1.03

 
1.13

 
1.29

 
1.47

 
1.42

Common equity tier 1 ratio(3)(4)
 
12.5

 
11.7

 
12.3

 
12.1

 
11.9

Tier 1 capital ratio(3)(4)
 
15.3

 
14.8

 
15.5

 
16.0

 
14.7

Total capital ratio(3)(4)
 
17.4

 
16.0

 
16.5

 
16.9

 
15.7

Tier 1 leverage ratio(3)(4)
 
6.9

 
6.5

 
7.3

 
7.2

 
7.0

Supplementary leverage ratio(3)(4)
 
6.2

 
5.9

 
6.5

 
6.3

 
6.2

Assets under custody and/or administration (in trillions)
 
$
27.51

 
$
28.77

 
$
33.12

 
$
31.62

 
$
34.36

Assets under management (in trillions)
 
2.25

 
2.47

 
2.78

 
2.51

 
3.12

 
 
 
 
 
 
 
 
 
 
 
(1) We revised previously-filed periods in the Form 8-K filed on May 2, 2019.
(2) Notable items include acquisition and restructuring costs, gains on sales, and other notable items. Refer to Reconciliations of pre-tax margin excluding notable items for details.
(3) The capital ratios presented are calculated in conformity with the applicable regulatory guidance in effect as of each period end. Effective January 1, 2018, the applicable final rules are in effect and the ratios are calculated based on fully phased-in CET1, tier 1, total capital and supplementary leverage numbers. We did not revise previously-filed reported capital metrics and ratios.
(4) Under the applicable bank regulatory rules, we are not required to and, accordingly, did not revise previously-filed reported capital metrics and ratios following the change in accounting for LIHTC.

2

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
CONSOLIDATED FINANCIAL HIGHLIGHTS
 
 
 
Quarters
 
% Change
(Dollars in millions, except per share amounts, or where otherwise noted)
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee revenue(1)
 
$
2,415

 
$
2,395

 
$
2,318

 
$
2,326

 
$
2,260

 
$
2,260

 
$
2,259

 
$
2,368

 
1.8
 %
 
 
4.8
 %
 
Net interest income(1)
 
643

 
659

 
672

 
697

 
673

 
613

 
644

 
636

 
(8.8
)
 
 
(1.2
)
 
Other income
 
(2
)
 
9

 
(1
)
 
—

 
(1
)
 
—

 
—

 
44

 
nm

 
 
nm

 
Total revenue
 
3,056

 
3,063

 
2,989

 
3,023

 
2,932

 
2,873

 
2,903

 
3,048

 
0.8

 
 
5.0

 
Provision for loan losses
 
—

 
2

 
5

 
8

 
4

 
1

 
2

 
3

 
(62.5
)
 
 
50.0

 
Total expenses(2)
 
2,268

 
2,170

 
2,091

 
2,486

 
2,293

 
2,154

 
2,180

 
2,267

 
(8.8
)
 
 
4.0

 
Income before income tax expense
 
788

 
891

 
893

 
529

 
635

 
718

 
721

 
778

 
47.1

 
 
7.9

 
Income tax expense
 
129

 
158

 
129

 
92

 
127

 
131

 
138

 
74

 
(19.6
)
 
 
(46.4
)
 
Net income
 
659

 
733

 
764

 
437

 
508

 
587

 
583

 
704

 
61.1

 
 
20.8

 
Net income available to common shareholders
 
$
603

 
$
697

 
$
708

 
$
396

 
$
452

 
$
537

 
$
528

 
$
632

 
59.6

 
 
19.7

 
Per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 


 
Diluted earnings per common share
 
$
1.62

 
$
1.88

 
$
1.87

 
$
1.03

 
$
1.18

 
$
1.42

 
$
1.42

 
$
1.73

 
68.0

 
 
21.8

 
Average diluted common shares outstanding (in thousands)
 
372,619

 
370,410

 
379,383

 
383,651

 
381,703

 
377,577

 
370,595

 
365,851

 
(4.6
)
 
 
(1.3
)
 
Cash dividends declared per common share
 
$
.42

 
$
.42

 
$
.47

 
$
.47

 
$
.47

 
$
.47

 
$
.52

 
$
.52

 
10.6

 
 
—

 
Closing price per share of common stock (as of quarter end)
 
99.73

 
93.09

 
83.78

 
63.07

 
65.81

 
56.06

 
59.19

 
79.10

 
25.4

 
 
33.6

 
Average for the quarter:
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 


 
 


 
Investment securities
 
$
95,362

 
$
86,360

 
$
85,623

 
$
85,074

 
$
88,273

 
$
89,930

 
$
93,588

 
$
95,186

 
11.9

 
 
1.7

 
Total assets
 
226,870

 
224,089

 
221,313

 
221,350

 
219,560

 
221,514

 
223,273

 
228,886

 
3.4

 
 
2.5

 
Total deposits
 
165,010

 
162,795

 
159,578

 
158,345

 
155,343

 
156,570

 
157,226

 
163,829

 
3.5

 
 
4.2

 
Securities on loan (dollars in billions):
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Average securities on loan
 
$
397

 
$
406

 
$
386

 
$
362

 
$
368

 
$
389

 
$
388

 
$
376

 
3.9

 
 
(3.1
)
 
End-of-period securities on loan
 
405

 
404

 
386

 
351

 
398

 
396

 
397

 
380

 
8.3

 
 
(4.3
)
 
Ratios and other metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Return on average common equity
 
12.8
%
 
14.7
%
 
14.0
%
 
7.5
%
 
8.7
%
 
10.1
%
 
9.7
%
 
11.6
%
 
410

bps
 
190

bps
Pre-tax margin
 
25.8

 
29.1

 
29.9

 
17.5

 
21.7

 
25.0

 
24.8

 
25.5

 
800

 
 
70

 
Pre-tax margin, excluding notable items(3)
 
25.8

 
31.6

 
29.9

 
28.2

 
22.5

 
25.4

 
26.4

 
29.1

 
90

 
 
270

 
Net interest margin, fully taxable-equivalent basis
 
1.40

 
1.46

 
1.48

 
1.55

 
1.54

 
1.38

 
1.42

 
1.36

 
(19
)
 
 
(6
)
 
Common equity tier 1 ratio(4)
 
12.1

 
12.4

 
14.1

 
12.1

 
12.1

 
12.3

 
12.2

 
11.9

 
(20
)
 
 
(30
)
 
Tier 1 capital ratio(4)
 
15.4

 
15.7

 
17.9

 
16.0

 
15.9

 
15.9

 
15.9

 
14.7

 
(130
)
 
 
(120
)
 
Total capital ratio(4)
 
16.4

 
16.4

 
18.7

 
16.9

 
16.7

 
16.6

 
16.5

 
15.7

 
(120
)
 
 
(80
)
 
Tier 1 leverage ratio(4)
 
6.9

 
7.1

 
8.1

 
7.2

 
7.4

 
7.6

 
7.4

 
7.0

 
(20
)
 
 
(40
)
 
Supplementary leverage ratio(4)
 
6.0

 
6.2

 
7.1

 
6.3

 
6.6

 
6.7

 
6.6

 
6.2

 
(10
)
 
 
(40
)
 
Assets under custody and/or administration (in billions)
 
$
33,284

 
$
33,867

 
$
33,996

 
$
31,620

 
$
32,643

 
$
32,754

 
$
32,899

 
$
34,358

 
8.7
 %
 
 
4.4
 %
 
Assets under management (in billions)
 
2,729

 
2,723

 
2,810

 
2,511

 
2,805

 
2,918

 
2,953

 
3,116

 
24.1

 
 
5.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Approximately $15 million of swap costs in 1Q18 were reclassified from software and processing fees within fee revenue to net interest income to conform to current presentation.
(2) 2Q18 includes repositioning charges of approximately $77 million, including approximately $61 million within compensation and employee benefits expense and $16 million within occupancy expense. 4Q18 expenses include repositioning charges of approximately $247 million, including approximately $198 million within compensation and employee benefits expense, $25 million within occupancy expense and $24 million of business exit costs. 4Q19 expenses include repositioning charges of approximately $110 million, including approximately $98 million within compensation and employee benefits expense and $12 million within occupancy expense.
(3) Notable items include acquisition and restructuring costs, gains on sales and other notable items. Refer to Reconciliations of non-GAAP Financial Information pages for details.
(4) The capital ratios presented are calculated in conformity with the applicable regulatory guidance in effect as of each period end. Effective January 1, 2018, the applicable final rules are in effect and the ratios are calculated based on fully phased-in CET1, tier 1, total capital and supplementary leverage numbers. We did not revise previously-filed reported capital metrics and ratios.
nm Not meaningful

3

STATE STREET CORPORATION
 
EARNINGS RELEASE ADDENDUM
 
CONSOLIDATED RESULTS OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Quarters

% Change

Year-to-Date

% Change

(Dollars in millions, except per share amounts, or where otherwise noted)

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

4Q19
vs.
4Q18

4Q19
vs.
3Q19

2018
 
2019

YTD2019
vs.
YTD2018
 
Fee revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Servicing fees
 
$
1,421

 
$
1,381

 
$
1,333

 
$
1,286

 
$
1,251

 
$
1,252

 
$
1,272

 
$
1,299

 
1.0
 %
 
 
2.1
 %
 
 
$
5,421

 
$
5,074

 
(6.4
)%

Management fees
 
472

 
465

 
474

 
440

 
420

 
441

 
445

 
465

 
5.7

 
 
4.5

 
 
1,851

 
1,771

 
(4.3
)

Foreign exchange trading services
 
304

 
315

 
288

 
294

 
280

 
273

 
284

 
274

 
(6.8
)
 
 
(3.5
)
 
 
1,201

 
1,111

 
(7.5
)

Securities finance
 
141

 
154

 
128

 
120

 
118

 
126

 
116

 
111

 
(7.5
)
 
 
(4.3
)
 
 
543

 
471

 
(13.3
)

Software and processing fees
 
77

 
80

 
95

 
186

 
191

 
168

 
142

 
219

 
17.7

 
 
54.2

 
 
438

 
720

 
64.4


Total fee revenue(1)
 
2,415

 
2,395

 
2,318

 
2,326

 
2,260

 
2,260

 
2,259

 
2,368

 
1.8

 
 
4.8

 
 
9,454

 
9,147

 
(3.2
)

Net interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
857

 
907

 
916

 
982

 
1,027

 
1,007

 
1,001

 
906

 
(7.7
)
 
 
(9.5
)
 
 
3,662

 
3,941

 
7.6


Interest expense(1)
 
214

 
248

 
244

 
285

 
354

 
394

 
357

 
270

 
(5.3
)
 
 
(24.4
)
 
 
991

 
1,375

 
38.7


Net interest income(1)
 
643

 
659

 
672

 
697

 
673

 
613

 
644

 
636

 
(8.8
)
 
 
(1.2
)
 
 
2,671

 
2,566

 
(3.9
)
 
Other income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains (losses) related to investment securities, net
 
(2
)
 
9

 
(1
)
 
—

 
(1
)
 
—

 
—

 
—

 
nm

 
 
nm

 
 
6

 
(1
)
 
nm

 
Other income
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
44

 
nm

 
 
nm

 
 
—

 
44

 
nm

 
Total other income
 
(2
)
 
9

 
(1
)
 
—

 
(1
)
 
—

 
—

 
44

 
nm

 
 
nm

 
 
6

 
43

 
nm


Total revenue
 
3,056

 
3,063

 
2,989

 
3,023

 
2,932

 
2,873

 
2,903

 
3,048

 
0.8

 
 
5.0

 
 
12,131

 
11,756

 
(3.1
)

Provision for loan losses
 
—

 
2

 
5

 
8

 
4

 
1

 
2

 
3

 
(62.5
)
 
 
50.0

 
 
15

 
10

 
(33.3
)

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits(1)
 
1,249

 
1,125

 
1,103

 
1,303

 
1,229

 
1,084

 
1,083

 
1,145

 
(12.1
)
 
 
5.7

 
 
4,780

 
4,541

 
(5.0
)

Information systems and communications
 
315

 
321

 
332

 
356

 
362

 
365

 
376

 
362

 
1.7

 
 
(3.7
)
 
 
1,324

 
1,465

 
10.6


Transaction processing services(1)
 
254

 
257

 
248

 
226

 
242

 
245

 
254

 
242

 
7.1

 
 
(4.7
)
 
 
985

 
983

 
(0.2
)

Occupancy
 
120

 
124

 
110

 
146

 
116

 
115

 
113

 
126

 
(13.7
)
 
 
11.5

 
 
500

 
470

 
(6.0
)

Acquisition and restructuring costs
 
—

 
—

 
—

 
24

 
9

 
12

 
27

 
29

 
20.8

 
 
7.4

 
 
24

 
77

 
220.8


Amortization of other intangible assets
 
50

 
48

 
47

 
81

 
60

 
59

 
59

 
58

 
(28.4
)
 
 
(1.7
)
 
 
226

 
236

 
4.4


Other
 
280

 
295

 
251

 
350

 
275

 
274

 
268

 
305

 
(12.9
)
 
 
13.8

 
 
1,176

 
1,122

 
(4.6
)

Total expenses(1)
 
2,268

 
2,170

 
2,091

 
2,486

 
2,293

 
2,154

 
2,180

 
2,267

 
(8.8
)
 
 
4.0

 
 
9,015

 
8,894

 
(1.3
)

Income before income tax expense
 
788

 
891

 
893

 
529

 
635

 
718

 
721

 
778

 
47.1

 
 
7.9

 
 
3,101

 
2,852

 
(8.0
)

Income tax expense
 
129

 
158

 
129

 
92

 
127

 
131

 
138

 
74

 
(19.6
)
 
 
(46.4
)
 
 
508

 
470

 
(7.5
)

Net income
 
$
659

 
$
733

 
$
764

 
$
437

 
$
508

 
$
587

 
$
583

 
$
704

 
61.1

 
 
20.8

 
 
$
2,593

 
$
2,382

 
(8.1
)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 













4



STATE STREET CORPORATION
 
EARNINGS RELEASE ADDENDUM
 
CONSOLIDATED RESULTS OF OPERATIONS (Continued)
 
 
 
 
 
 
Quarters
 
% Change
 
Year-to-Date
 
% Change
 
 
(Dollars in millions, except per share amounts, or where otherwise noted)
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
 
2018
 
2019
 
YTD2019
vs.
YTD2018
 
Adjustments to net income:











































Dividends on preferred stock(2)

$
(55
)

$
(36
)

$
(55
)

$
(41
)

$
(55
)

$
(50
)

$
(55
)

$
(72
)

75.6
 %


30.9
 %


$
(187
)

$
(232
)

24.1
 %


Earnings allocated to participating securities

(1
)

—


(1
)

—


(1
)

—


—


—


—



—



(2
)

(1
)

(50.0
)


Net income available to common shareholders

$
603


$
697


$
708


$
396


$
452


$
537


$
528


$
632


59.6



19.7



$
2,404


$
2,149


(10.6
)


Per common share:











































Basic earnings

$
1.64


$
1.91


$
1.89


$
1.04


$
1.20


$
1.44


$
1.44


$
1.75


68.3



21.5



$
6.48


$
5.81


(10.3
)


Diluted earnings

1.62


1.88


1.87


1.03


1.18


1.42


1.42


1.73


68.0



21.8



6.39


5.75


(10.0
)


Average common shares outstanding (in thousands):











































Basic

367,439


365,619


374,963


379,741


377,915


373,773


366,732


361,439


(4.8
)


(1.4
)


371,983


369,911


(0.6
)


Diluted

372,619


370,410


379,383


383,651


381,703


377,577


370,595


365,851


(4.6
)


(1.3
)


376,476


373,666


(0.7
)


Cash dividends declared per common share

$
.42


$
.42


$
.47


$
.47


$
.47


$
.47


$
.52


$
.52


10.6



—



$
1.78


$
1.98


11.2



Closing price per share of common stock (as of quarter end)

99.73


93.09


83.78


63.07


65.81


56.06


59.19


79.10


25.4



33.6



63.07


79.10


25.4



Financial ratios:











































Effective tax rate

16.4
%

17.7
%

14.5
%

17.4
%

20.1
%

18.1
%

19.2
%

9.5
%

(790
)
bps

(970
)
bps

16.4
%

16.5
%

10

bps

Return on average common equity

12.8


14.7


14.0


7.5


8.7


10.1


9.7


11.6


410



190



12.1


10.0


(210
)


Return on tangible common equity(3)

20.1


21.1


19.4


20.6


15.0


15.8


16.3


17.2


(340
)


90



20.6


17.2


(340
)


Pre-tax margin

25.8


29.1


29.9


17.5


21.7


25.0


24.8


25.5


800



70



25.6


24.3


(130
)


Pre-tax margin, excluding notable items(4)

25.8


31.6


29.9


28.2


22.5


25.4


26.4


29.1


90



270



28.8


25.8


(300
)


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Approximately $15 million of swap costs in 1Q18 were reclassified from software and processing fees within fee revenue to net interest income to conform to current presentation.
 
 
 
 
 
 
(2) We redeemed all outstanding Series E noncumulative perpetual preferred stock on December 15, 2019 at a redemption price of $750 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends. The difference between the redemption value and the net carrying value of $22 million resulted in an EPS impact of approximately ($.06) per share in 2019.
(3) Return on tangible common equity is calculated by dividing year-to-date annualized net income available to common shareholders (GAAP-basis) by tangible common equity.
 
 
 
 
 
 
(4) Notable items include acquisition and restructuring costs and other notable items. Refer to Reconciliations of non-GAAP Financial Information pages for details.
 
 
 
 
 
 


5

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
CONSOLIDATED STATEMENT OF CONDITION
 
 
As Of
 
% Change
(Dollars in millions, except per share amounts)
 
March 31, 2018(1)
 
June 30, 2018(1)
 
September 30, 2018(1)
 
December 31, 2018(1)
 
March 31, 2019(1)
 
June 30, 2019(1)
 
September 30, 2019
 
December 31, 2019
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
2,087

 
$
3,254

 
$
4,279

 
$
3,212

 
$
4,000

 
$
3,110

 
$
3,598

 
$
3,302

 
2.8
 %
 
(8.2
)%
Interest-bearing deposits with banks
 
79,418

 
76,366

 
63,618

 
73,040

 
53,864

 
62,534

 
62,324

 
68,965

 
(5.6
)
 
10.7

Securities purchased under resale agreements
 
5,136

 
3,583

 
4,195

 
4,679

 
1,522

 
1,732

 
3,041

 
1,487

 
(68.2
)
 
(51.1
)
Trading account assets
 
1,178

 
1,160

 
1,001

 
860

 
856

 
894

 
839

 
914

 
6.3

 
8.9

Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
Investment securities available-for-sale
 
44,304

 
47,348

 
46,102

 
45,148

 
49,002

 
53,242

 
54,757

 
53,815

 
19.2

 
(1.7
)
Investment securities held-to-maturity(2)
 
41,158

 
39,594

 
40,567

 
41,914

 
41,145

 
39,236

 
39,119

 
41,782

 
(0.3
)
 
6.8

Total investment securities
 
85,462

 
86,942

 
86,669

 
87,062

 
90,147

 
92,478

 
93,876

 
95,597

 
9.8

 
1.8

Loans and leases, net(3)
 
29,528

 
24,069

 
23,312

 
25,722

 
23,311

 
25,349

 
26,938

 
26,235

 
2.0

 
(2.6
)
Premises and equipment, net(4)
 
2,194

 
2,189

 
2,193

 
2,214

 
2,230

 
2,244

 
2,306

 
2,282

 
3.1

 
(1.0
)
Accrued interest and fees receivable
 
3,183

 
3,086

 
3,196

 
3,203

 
3,277

 
3,202

 
3,258

 
3,231

 
0.9

 
(0.8
)
Goodwill
 
6,068

 
5,973

 
6,016

 
7,446

 
7,549

 
7,565

 
7,500

 
7,556

 
1.5

 
0.7

Other intangible assets
 
1,578

 
1,500

 
1,461

 
2,369

 
2,208

 
2,155

 
2,077

 
2,030

 
(14.3
)
 
(2.3
)
Other assets
 
34,421

 
40,154

 
38,162

 
34,789

 
39,368

 
40,277

 
38,849

 
34,011

 
(2.2
)
 
(12.5
)
Total assets
 
$
250,253

 
$
248,276

 
$
234,102

 
$
244,596

 
$
228,332

 
$
241,540

 
$
244,606

 
$
245,610

 
0.4

 
0.4

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
   Non-interest-bearing
 
$
57,025

 
$
52,316

 
$
41,893

 
$
44,804

 
$
35,295

 
$
34,278

 
$
33,719

 
$
34,031

 
(24.0
)
 
0.9

   Interest-bearing -- U.S.
 
55,094

 
57,407

 
63,661

 
66,235

 
62,988

 
68,964

 
72,260

 
77,504

 
17.0

 
7.3

   Interest-bearing -- Non-U.S.
 
79,398

 
76,940

 
62,644

 
69,321

 
64,188

 
67,352

 
64,907

 
70,337

 
1.5

 
8.4

Total deposits(5)
 
191,517

 
186,663

 
168,198

 
180,360

 
162,471

 
170,594

 
170,886

 
181,872

 
0.8

 
6.4

Securities sold under repurchase agreements
 
2,020

 
3,088

 
1,690

 
1,082

 
1,420

 
1,829

 
1,330

 
1,102

 
1.8

 
(17.1
)
Other short-term borrowings
 
1,066

 
1,103

 
1,009

 
3,092

 
947

 
4,939

 
7,073

 
839

 
(72.9
)
 
(88.1
)
Accrued expenses and other liabilities
 
22,356

 
24,514

 
28,368

 
24,232

 
27,274

 
27,350

 
28,653

 
24,717

 
2.0

 
(13.7
)
Long-term debt
 
10,944

 
10,387

 
10,335

 
11,093

 
11,182

 
11,374

 
11,455

 
12,509

 
12.8

 
9.2

Total liabilities
 
227,903

 
225,755

 
209,600

 
219,859

 
203,294

 
216,086

 
219,397

 
221,039

 
0.5

 
0.7

Shareholders' equity:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
Preferred stock, no par, 3,500,000 shares authorized:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
Series C, 5,000 shares issued and outstanding
 
491

 
491

 
491

 
491

 
491

 
491

 
491

 
491

 
—

 
—

Series D, 7,500 shares issued and outstanding
 
742

 
742

 
742

 
742

 
742

 
742

 
742

 
742

 
—

 
—

Series E, 7,500 shares issued and outstanding
 
728

 
728

 
728

 
728

 
728

 
728

 
728

 
—

 
(100.0
)
 
(100.0
)
Series F, 7,500 shares issued and outstanding
 
742

 
742

 
742

 
742

 
742

 
742

 
742

 
742

 
—

 
—

Series G, 5,000 shares issued and outstanding
 
493

 
493

 
493

 
493

 
493

 
493

 
493

 
493

 
—

 
—

Series H, 5,000 shares issued and outstanding
 
—

 
—

 
494

 
494

 
494

 
494

 
494

 
494

 
—

 
—

Common stock, $1 par, 750,000,000 shares authorized(6)(7)
 
504

 
504

 
504

 
504

 
504

 
504

 
504

 
504

 
—

 
—

Surplus
 
9,796

 
9,820

 
10,418

 
10,061

 
10,082

 
10,109

 
10,117

 
10,132

 
0.7

 
0.1

Retained earnings
 
19,262

 
19,806

 
20,336

 
20,553

 
20,911

 
21,274

 
21,612

 
22,058

 
7.3

 
2.1

Accumulated other comprehensive income (loss)
 
(1,074
)
 
(1,488
)
 
(1,711
)
 
(1,356
)
 
(1,180
)
 
(874
)
 
(985
)
 
(876
)
 
(35.4
)
 
(11.1
)
Treasury stock, at cost(8)
 
(9,334
)
 
(9,317
)
 
(8,735
)
 
(8,715
)
 
(8,969
)
 
(9,249
)
 
(9,729
)
 
(10,209
)
 
17.1

 
4.9

Total shareholders' equity
 
22,350

 
22,521

 
24,502

 
24,737

 
25,038

 
25,454

 
25,209

 
24,571

 
(0.7
)
 
(2.5
)
Total liabilities and equity
 
$
250,253

 
$
248,276

 
$
234,102

 
$
244,596

 
$
228,332

 
$
241,540

 
$
244,606

 
$
245,610

 
0.4

 
0.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Certain previously reported amounts presented in this earnings release addendum have been reclassified to conform to current-period presentation.
 
 
 
 
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
 
 
 
(2) Fair value of investment securities held-to-maturity
 
$
40,483

 
$
38,805

 
$
39,591

 
$
41,351

 
$
40,971

 
$
39,473

 
$
39,535

 
$
42,157

 
 
 
 
(3) Allowance for loan losses
 
54

 
55

 
60

 
67

 
70

 
72

 
71

 
74

 
 
 
 
(4) Accumulated depreciation for premises and equipment
 
4,005

 
3,999

 
4,110

 
4,152

 
3,937

 
4,091

 
4,235

 
4,367

 
 
 
 
(5) Average total deposits
 
165,010

 
162,795

 
159,578

 
158,345

 
155,343

 
156,570

 
157,226

 
163,829

 
 
 
 
(6) Common stock shares issued
 
503,879,642

 
503,879,642

 
503,879,642

 
503,879,642

 
503,879,642

 
503,879,642

 
503,879,642

 
503,879,642

 
 
 
 
(7) Total common shares outstanding
 
365,407,197

 
365,827,604

 
379,489,507

 
379,946,724

 
376,720,715

 
372,572,622

 
363,623,285

 
357,389,416

 
 
 
 
(8) Treasury stock shares
 
138,472,445

 
138,052,038

 
124,390,135

 
123,932,918

 
127,158,927

 
131,307,020

 
140,256,357

 
146,490,226

 
 
 
 

6

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
AVERAGE STATEMENT OF CONDITION - RATES EARNED AND PAID - FULLY TAXABLE-EQUIVALENT BASIS(1)
The following table presents average rates earned and paid, on a fully taxable-equivalent basis, on consolidated average interest-earning assets and average interest-bearing liabilities for the quarters indicated. Tax-equivalent adjustments were calculated using a federal income tax rate of 21%, adjusted for applicable state income taxes, net of related federal benefit.
 
 
Quarters
 
% Change
 
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
(Dollars in millions; fully-taxable equivalent basis)
 
Average balance
 
Average rates
 
Average balance
 
Average rates
 
Average balance
 
Average rates
 
Average balance
 
Average rates
 
Average balance
 
Average rates
 
Average balance
 
Average rates
 
Average balance
 
Average rates
 
Average balance
 
Average rates
 
Average balance
 
Average balance
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with banks
 
$
51,492

 
0.64
%
 
$
55,180

 
0.66
%
 
$
56,513

 
0.67
%
 
$
54,073

 
0.88
%
 
$
48,856

 
0.99
%
 
$
48,074

 
0.91
%
 
$
45,791

 
0.85
%
 
$
51,284

 
0.69
 %
 
(5.2
)%
 
12.0
 %
Securities purchased under resale agreements(2)
 
2,872

 
10.89

 
2,474

 
13.20

 
2,932

 
11.77

 
3,320

 
10.69

 
2,775

 
14.33

 
1,975

 
18.30

 
3,149

 
12.75

 
2,124

 
14.00

 
(36.0
)
 
(32.6
)
Trading account assets
 
1,138

 
—

 
1,139

 
—

 
1,019

 
—

 
912

 
—

 
866

 
—

 
892

 
—

 
880

 
—

 
897

 
—

 
(1.6
)
 
1.9

Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 


 
 
 
 
 
 
 
 
U.S. Treasury and federal agencies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 


 
 
 
 
 
 
 
 
Direct obligations
 
17,183

 
1.67

 
16,627

 
1.69

 
15,834

 
1.71

 
15,284

 
1.75

 
15,427

 
1.79

 
13,960

 
1.83

 
13,614

 
1.83

 
14,017

 
1.83

 
(8.3
)
 
3.0

Mortgage-and asset-backed securities
 
28,307

 
2.59

 
31,064

 
2.70

 
32,962

 
2.82

 
36,462

 
3.03

 
39,216

 
3.06

 
41,905

 
2.83

 
44,357

 
2.71

 
44,009

 
2.60

 
20.7

 
(0.8
)
State and political subdivisions
 
8,622

 
3.23

 
6,739

 
3.48

 
4,107

 
3.68

 
2,537

 
3.63

 
1,914

 
3.43

 
1,909

 
3.34

 
1,839

 
3.27

 
1,815

 
3.20

 
(28.5
)
 
(1.3
)
Other investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 


 
 
 
 
 
 
 
 
Asset-backed securities
 
19,543

 
1.78

 
12,471

 
2.24

 
11,259

 
2.30

 
10,144

 
2.48

 
9,078

 
2.47

 
9,335

 
2.54

 
9,913

 
2.39

 
10,593

 
2.28

 
4.4

 
6.9

Collateralized mortgage-backed securities and obligations
 
2,088

 
2.07

 
1,492

 
2.95

 
1,415

 
3.05

 
1,212

 
3.35

 
980

 
3.78

 
918

 
3.69

 
871

 
3.31

 
818

 
2.95

 
(32.5
)
 
(6.1
)
Other debt investments and equity securities
 
19,619

 
1.25

 
17,967

 
1.31

 
20,046

 
1.20

 
19,435

 
1.08

 
21,658

 
1.04

 
21,903

 
1.05

 
22,994

 
1.04

 
23,934

 
1.07

 
23.1

 
4.1

Total investment securities
 
95,362

 
2.03

 
86,360

 
2.21

 
85,623

 
2.21

 
85,074

 
2.31

 
88,273

 
2.30

 
89,930

 
2.23

 
93,588

 
2.16

 
95,186

 
2.08

 
11.9

 
1.7

Loans and leases
 
23,959

 
2.68

 
23,622

 
2.93

 
22,511

 
3.11

 
24,207

 
3.12

 
23,056

 
3.49

 
23,824

 
3.33

 
23,926

 
3.24

 
25,461

 
2.86

 
5.2

 
6.4

Other interest-earning assets
 
17,733

 
1.78

 
17,397

 
2.36

 
14,702

 
2.59

 
13,088

 
2.90

 
15,286

 
2.89

 
15,104

 
3.02

 
13,990

 
3.02

 
12,295

 
2.13

 
(6.1
)
 
(12.1
)
Total interest-earning assets
 
192,556

 
1.85

 
186,172

 
1.99

 
183,300

 
2.01

 
180,674

 
2.17

 
179,112

 
2.34

 
179,799

 
2.26

 
181,324

 
2.20

 
187,247

 
1.93

 
3.6

 
3.3

Cash and due from banks
 
3,081

 
 
 
3,978

 
 
 
3,067

 
 
 
2,591

 
 
 
3,078

 
 
 
4,011

 
 
 
3,114

 


 
3,358

 
 
 
29.6

 
7.8

Other assets
 
31,233

 
 
 
33,939

 
 
 
34,946

 
 
 
38,085

 
 
 
37,370

 
 
 
37,704

 
 
 
38,835

 


 
38,281

 
 
 
0.5

 
(1.4
)
Total assets
 
$
226,870

 
 
 
$
224,089

 
 
 
$
221,313

 
 
 
$
221,350

 
 
 
$
219,560

 
 
 
$
221,514

 
 
 
$
223,273

 


 
$
228,886

 
 
 
3.4

 
2.5

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 


 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
 
 
U.S.
 
$
48,638

 
0.28
%
 
$
50,276

 
0.37
%
 
$
57,558

 
0.51
%
 
$
63,153

 
0.64
%
 
$
64,531

 
0.83
%
 
$
66,502

 
0.91
%
 
$
67,170

 
0.83
%
 
$
71,910

 
0.64
 %
 
13.9

 
7.1

Non-U.S.(3)
 
78,582

 
0.15

 
76,307

 
0.23

 
67,741

 
0.06

 
60,097

 
0.16

 
59,775

 
0.26

 
61,303

 
0.39

 
61,355

 
0.21

 
62,737

 
(0.04
)
 
4.4

 
2.3

Total interest-bearing deposits(3)
 
127,220

 
0.20

 
126,583

 
0.28

 
125,299

 
0.27

 
123,250

 
0.41

 
124,306

 
0.56

 
127,805

 
0.66

 
128,525

 
0.53

 
134,647

 
0.32

 
9.2

 
4.8

Securities sold under repurchase agreements
 
2,617

 
0.16

 
2,641

 
0.92

 
1,835

 
0.79

 
1,117

 
0.67

 
1,773

 
2.66

 
1,488

 
2.19

 
1,998

 
1.45

 
1,208

 
1.18

 
8.1

 
(39.5
)
Other short-term borrowings
 
1,255

 
1.09

 
1,320

 
1.25

 
1,249

 
1.38

 
1,485

 
1.38

 
1,157

 
1.34

 
2,041

 
1.22

 
1,788

 
1.68

 
1,110

 
1.17

 
(25.3
)
 
(37.9
)
Long-term debt
 
11,412

 
3.37

 
10,649

 
3.66

 
10,375

 
3.84

 
10,323

 
3.72

 
10,955

 
3.89

 
11,228

 
3.78

 
11,415

 
3.48

 
12,286

 
3.34

 
19.0

 
7.6

Other interest-bearing liabilities
 
5,260

 
3.87

 
4,994

 
4.17

 
5,306

 
3.88

 
4,271

 
5.05

 
4,642

 
5.31

 
3,979

 
6.47

 
3,691

 
7.62

 
4,106

 
4.85

 
(3.9
)
 
11.2

Total interest-bearing liabilities
 
147,764

 
0.59

 
146,187

 
0.68

 
144,064

 
0.67

 
140,446

 
0.80

 
142,833

 
1.00

 
146,541

 
1.08

 
147,417

 
0.96

 
153,357

 
0.70

 
9.2

 
4.0

Non-interest bearing deposits
 
37,790

 
 
 
36,212

 
 
 
34,279

 
 
 
35,095

 
 
 
31,037

 
 
 
28,765

 
 
 
28,701

 


 
29,182

 
 
 
(16.8
)
 
1.7

Other liabilities
 
18,942

 
 
 
19,454

 
 
 
19,585

 
 
 
21,208

 
 
 
20,921

 
 
 
21,188

 
 
 
21,935

 


 
21,139

 
 
 
(0.3
)
 
(3.6
)
Preferred shareholders' equity
 
3,197

 
 
 
3,197

 
 
 
3,218

 
 
 
3,690

 
 
 
3,690

 
 
 
3,690

 
 
 
3,690

 


 
3,541

 
 
 
(4.0
)
 
(4.0
)
Common shareholders' equity
 
19,177

 
 
 
19,039

 
 
 
20,167

 
 
 
20,911

 
 
 
21,079

 
 
 
21,330

 
 
 
21,530

 


 
21,667

 
 
 
3.6

 
0.6

Total liabilities and shareholders' equity
 
$
226,870

 
 
 
$
224,089

 
 
 
$
221,313

 
 
 
$
221,350

 
 
 
$
219,560

 
 
 
$
221,514

 
 
 
$
223,273

 


 
$
228,886

 
 
 
3.4

 
2.5

Excess of rate earned over rate paid
 
 
 
1.26
%
 
 
 
1.31
%
 
 
 
1.34
%
 
 
 
1.37
%
 
 
 
1.34
%
 
 
 
1.18
%
 
 
 
1.24
%
 
 
 
1.23
 %
 
 
 
 
Net interest margin
 
 
 
1.40
%
 
 
 
1.46
%
 
 
 
1.48
%
 
 
 
1.55
%
 
 
 
1.54
%
 
 
 
1.38
%
 
 
 
1.42
%
 
 
 
1.36
 %
 
 
 
 
Net interest income, fully taxable-equivalent basis
 
 
 
$
664

 
 
 
$
677

 
 
 
$
684

 
 
 
$
703

 
 
 
$
678

 
 
 
$
618

 
 
 
$
648

 
 
 
$
640

 
 
 
 
Tax-equivalent adjustment
 
 
 
(21
)
 
 
 
(18
)
 
 
 
(12
)
 
 
 
(6
)
 
 
 
(5
)
 
 
 
(5
)
 
 
 
(4
)
 
 
 
(4
)
 
 
 
 
Net interest income, GAAP-basis(3)
 
 
 
$
643

 
 
 
$
659

 
 
 
$
672

 
 
 
$
697

 
 
 
$
673

 
 
 
$
613

 
 
 
$
644

 
 
 
$
636

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Average rates earned and paid on interest-earning assets and interest-bearing liabilities include the impact of hedge activities associated with our asset and liability management activities where applicable.
(2) Reflects the impact of balance sheet netting under enforceable netting agreements of approximately $32 billion, $31 billion, $35 billion and $45 billion in the first, second, third and fourth quarters of 2018, respectively, and approximately $59 billion, $75 billion, $118 billion and $94 billion in the first, second, third and fourth quarters of 2019. Excluding the impact of netting, the average interest rates would be approximately 0.89%, 0.98%, 0.91% and 0.74% for the first, second, third and fourth quarters of 2018, respectively, and approximately 0.64%, 0.47%, 0.33% and 0.31% in the first, second, third and fourth quarters of 2019.
(3) Average rates includes the impact of FX swap expense of approximately $34 million, $42 million, $6 million and $24 million for the first, second, third and fourth quarters of 2018, respectively, and approximately $39 million, $59 million, $37 million and $18 million in the first, second, third and fourth quarters of 2019. The first quarter of 2018 includes approximately $15 million of swap costs that were reclassified from processing fees and other revenue within fee revenue to net interest income to conform to current presentation. Average rates for total interest-bearing deposits excluding the impact of FX swap expense were 0.09%, 0.15%, 0.25% and 0.33% for the first, second, third and fourth quarters of 2018, respectively, and approximately 0.43%, 0.47%, 0.42% and 0.27% for the first, second, third and fourth quarters of 2019.

7

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
AVERAGE STATEMENT OF CONDITION - RATES EARNED AND PAID - FULLY TAXABLE-EQUIVALENT BASIS - YEAR TO DATE(1)
The following table presents consolidated average interest-earning assets, average interest-bearing liabilities and related average rates earned and paid, respectively, for the years indicated, on a fully taxable-equivalent basis, which is a non-GAAP measure. Tax-equivalent adjustments were calculated using a federal income tax rate of 21% for periods ending in 2018 and 2019, respectively, adjusted for applicable state income taxes, net of related federal benefit.
 
 
Year-to-Date
 
 
 
 
2018
 
2019
 
% Change
(Dollars in millions; fully-taxable equivalent basis)
 
Average balance
 
Average rates
 
Average balance
 
Average rates
 
2019 vs. 2018
Assets:
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with banks
 
$
54,328

 
0.71
%
 
$
48,500

 
0.86
%
 
(10.7
)%
Securities purchased under resale agreements(2)
 
2,901

 
11.55

 
2,506

 
14.54

 
(13.6
)
Trading account assets
 
1,051

 
—

 
884

 
0.11

 
(15.9
)
Investment securities:
 

 
 
 
 
 

 
 
U.S. Treasury and federal agencies:
 

 
 
 
 
 

 
 
Direct obligations
 
16,226

 
1.70

 
14,249

 
1.82

 
(12.2
)
Mortgage-and asset-backed securities
 
32,223

 
2.80

 
42,390

 
2.79

 
31.6

State and political subdivisions
 
5,481

 
3.45

 
1,869

 
3.31

 
(65.9
)
Other investments:
 

 
 
 
 
 
 
 
 
Asset-backed securities
 
13,323

 
2.14

 
9,734

 
2.41

 
(26.9
)
Collateralized mortgage-backed securities and obligations
 
1,549

 
2.76

 
896

 
3.46

 
(42.2
)
Other debt investments and equity securities
 
19,268

 
1.21

 
22,630

 
1.05

 
17.4

Total investment securities
 
88,070

 
2.19

 
91,768

 
2.19

 
4.2

Loans and leases
 
23,573

 
2.96

 
24,073

 
3.22

 
2.1

Other interest-earning assets
 
15,714

 
2.37

 
14,160

 
2.79

 
(9.9
)
Total interest-earning assets
 
185,637

 
2.00

 
181,891

 
2.18

 
(2.0
)
Cash and due from banks
 
3,178

 
 
 
3,390

 
 
 
6.7

Other assets
 
34,570

 
 
 
38,053

 
 
 
10.1

Total assets
 
$
223,385

 
 
 
$
223,334

 
 
 
—

Liabilities:
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
U.S.
 
$
54,953

 
0.47

 
$
67,547

 
0.80

 
22.9

Non-U.S.(3)
 
70,623

 
0.15

 
61,301

 
0.20

 
(13.2
)
Total interest-bearing deposits(3)
 
125,576

 
0.29

 
128,848

 
0.51

 
2.6

Securities sold under repurchase agreements
 
2,048

 
0.62

 
1,616

 
1.90

 
(21.1
)
Other short-term borrowings
 
1,327

 
1.28

 
1,524

 
1.37

 
14.8

Long-term debt
 
10,686

 
3.64

 
11,474

 
3.61

 
7.4

Other interest-bearing liabilities
 
4,956

 
4.20

 
4,103

 
6.00

 
(17.2
)
Total interest-bearing liabilities
 
144,593

 
0.68

 
147,565

 
0.93

 
2.1

Non-interest bearing deposits
 
35,832

 
 
 
29,414

 
 
 
(17.9
)
Other liabilities
 
19,804

 
 
 
21,299

 
 
 
7.5

Preferred shareholders' equity
 
3,327

 
 
 
3,653

 
 
 
9.8

Common shareholders' equity
 
19,829

 
 
 
21,403

 
 
 
7.9

Total liabilities and shareholders' equity
 
$
223,385

 
 
 
$
223,334

 
 
 
—

Excess of rate earned over rate paid
 
 
 
1.32
%
 
 
 
1.25
%
 
 
Net interest margin
 
 
 
1.45
%
 
 
 
1.42
%
 
 
Net interest income, fully taxable-equivalent basis
 
 
 
$
2,728

 
 
 
$
2,585

 
 
Tax-equivalent adjustment
 
 
 
(57
)
 
 
 
(19
)
 
 
Net interest income, GAAP-basis
 
 
 
$
2,671

 
 
 
$
2,566

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Average rates earned and paid on interest-earning assets and interest-bearing liabilities include the impact of hedge activities associated with our asset and liability management activities where applicable.
(2) Reflects the impact of balance sheet netting under enforceable netting agreements of approximately $36 billion and $87 billion as of December 31, 2018 and 2019, respectively. Excluding the impact of netting, the average interest rates would be approximately 0.87% and 0.41% for the years ended December 31, 2018 and 2019, respectively.
(3) Average rates include the impact of FX swap expense of approximately $106 million and $153 million for the years ended December 31, 2018 and 2019, respectively. Average rates for total interest-bearing deposits excluding the impact of FX swap expense were 0.20% and 0.40% for the years ended December 31, 2018 and 2019, respectively.

8

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
ASSETS UNDER CUSTODY AND/OR ADMINISTRATION
 
 
 
Quarters
 
 
 
% Change
(Dollars in billions)
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
Assets Under Custody and/or Administration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By Product Classification:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual funds
 
$
7,503

 
$
8,548

 
$
8,717

 
$
7,912

 
$
8,586

 
$
8,645

 
$
8,687

 
$
9,221

 
16.5
%
 
6.1
%
Collective funds, including ETFs
 
9,908

 
9,615

 
9,646

 
8,999

 
9,436

 
9,272

 
9,224

 
9,796

 
8.9

 
6.2

Pension products
 
6,802

 
6,808

 
6,807

 
6,489

 
6,513

 
6,542

 
6,817

 
6,924

 
6.7

 
1.6

Insurance and other products
 
9,071

 
8,896

 
8,826

 
8,220

 
8,108

 
8,295

 
8,171

 
8,417

 
2.4

 
3.0

Total Assets Under Custody and/or Administration
 
$
33,284

 
$
33,867

 
$
33,996

 
$
31,620

 
$
32,643

 
$
32,754

 
$
32,899

 
$
34,358

 
8.7

 
4.4

By Financial Instrument(1):
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
Equities
 
$
19,198

 
$
19,475

 
$
20,070

 
$
18,041

 
$
18,924

 
$
18,504

 
$
18,243

 
$
19,301

 
7.0

 
5.8

Fixed-income
 
10,186

 
10,189

 
10,018

 
9,758

 
9,831

 
10,089

 
10,413

 
10,766

 
10.3

 
3.4

Short-term and other investments
 
3,900

 
4,203

 
3,908

 
3,821

 
3,888

 
4,161

 
4,243

 
4,291

 
12.3

 
1.1

Total Assets Under Custody and/or Administration
 
$
33,284

 
$
33,867

 
$
33,996

 
$
31,620

 
$
32,643

 
$
32,754

 
$
32,899

 
$
34,358

 
8.7

 
4.4

By Geographic Location(2):
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
Americas
 
$
24,336

 
$
24,989

 
$
25,157

 
$
23,203

 
$
23,979

 
$
23,989

 
$
23,888

 
$
25,018

 
7.8

 
4.7

Europe/Middle East/Africa
 
7,211

 
7,134

 
7,094

 
6,699

 
6,875

 
6,937

 
7,091

 
7,325

 
9.3

 
3.3

Asia/Pacific
 
1,737

 
1,744

 
1,745

 
1,718

 
1,789

 
1,828

 
1,920

 
2,015

 
17.3

 
4.9

Total Assets Under Custody and/or Administration
 
$
33,284

 
$
33,867

 
$
33,996

 
$
31,620

 
$
32,643

 
$
32,754

 
$
32,899

 
$
34,358

 
8.7

 
4.4

Assets Under Custody(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By Product Classification:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual funds
 
$
6,894

 
$
7,950

 
$
8,086

 
$
7,344

 
$
7,966

 
$
8,012

 
$
8,060

 
$
8,447

 
15.0

 
4.8

Collective funds, including ETFs
 
8,189

 
7,602

 
7,455

 
6,936

 
7,445

 
7,614

 
7,668

 
8,216

 
18.5

 
7.1

Pension products
 
5,682

 
5,703

 
5,627

 
5,237

 
5,307

 
5,236

 
5,457

 
5,554

 
6.1

 
1.8

Insurance and other products
 
4,281

 
4,160

 
4,132

 
3,731

 
3,851

 
3,909

 
3,893

 
3,978

 
6.6

 
2.2

Total Assets Under Custody
 
$
25,046

 
$
25,415

 
$
25,300

 
$
23,248

 
$
24,569

 
$
24,771

 
$
25,078

 
$
26,195

 
12.7

 
4.5

By Geographic Location(2):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas
 
$
19,131

 
$
19,545

 
$
19,433

 
$
17,652

 
$
18,784

 
$
18,911

 
$
19,048

 
$
19,838

 
12.4

 
4.1

Europe/Middle East/Africa
 
4,617

 
4,557

 
4,561

 
4,309

 
4,462

 
4,515

 
4,615

 
4,858

 
12.7

 
5.3

Asia/Pacific
 
1,298

 
1,313

 
1,306

 
1,287

 
1,323

 
1,345

 
1,415

 
1,499

 
16.5

 
5.9

Total Assets Under Custody
 
$
25,046

 
$
25,415

 
$
25,300

 
$
23,248

 
$
24,569

 
$
24,771

 
$
25,078

 
$
26,195

 
12.7

 
4.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Certain previously reported amounts have been reclassified to conform to current period presentation.
(2) Geographic mix is generally based on the domicile of the entity servicing the funds and is not necessarily representative of the underlying asset mix.
(3) Assets under custody are a component of assets under custody and/or administration presented above.

9

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
ASSETS UNDER MANAGEMENT
 
 
 
 
 
 
Quarters
 
 
 
% Change
(Dollars in billions)
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
Assets Under Management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By Asset Class and Investment Approach:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Active
 
$
94

 
$
92

 
$
96

 
$
80

 
$
85

 
$
86

 
$
84

 
$
88

 
10.0
%
 
4.8
 %
Passive(1)
 
1,576

 
1,575

 
1,693

 
1,464

 
1,694

 
1,757

 
1,747

 
1,903

 
30.0

 
8.9

Total Equity
 
1,670

 
1,667

 
1,789

 
1,544

 
1,779

 
1,843

 
1,831

 
1,991

 
29.0

 
8.7

Fixed-Income:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
   Active
 
79

 
79

 
80

 
81

 
88

 
93

 
92

 
89

 
9.9

 
(3.3
)
Passive
 
354

 
358

 
343

 
341

 
341

 
357

 
367

 
379

 
11.1

 
3.3

Total Fixed-Income
 
433

 
437

 
423

 
422

 
429

 
450

 
459

 
468

 
10.9

 
2.0

Cash(2)
 
336

 
333

 
317

 
287

 
314

 
319

 
336

 
324

 
12.9

 
(3.6
)
Multi-Asset-Class Solutions:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
   Active
 
18

 
18

 
20

 
19

 
22

 
23

 
23

 
24

 
26.3

 
4.3

Passive
 
128

 
126

 
125

 
113

 
125

 
132

 
134

 
133

 
17.7

 
(0.7
)
Total Multi-Asset-Class Solutions
 
146

 
144

 
145

 
132

 
147

 
155

 
157

 
157

 
18.9

 
—

Alternative Investments(3):
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
   Active
 
23

 
22

 
22

 
21

 
21

 
21

 
22

 
21

 
—

 
(4.5
)
Passive(1)
 
121

 
120

 
114

 
105

 
115

 
130

 
148

 
155

 
47.6

 
4.7

Total Alternative Investments
 
144

 
142

 
136

 
126

 
136

 
151

 
170

 
176

 
39.7

 
3.5

Total Assets Under Management
 
$
2,729

 
$
2,723

 
$
2,810

 
$
2,511

 
$
2,805

 
$
2,918

 
$
2,953

 
$
3,116

 
24.1

 
5.5

By Geographic Location:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
North America
 
$
1,885

 
$
1,897

 
$
1,956

 
$
1,731

 
$
1,899

 
$
1,965

 
$
1,999

 
$
2,115

 
22.2

 
5.8

Europe/Middle East/Africa
 
511

 
495

 
476

 
421

 
447

 
471

 
476

 
493

 
17.1

 
3.6

Asia/Pacific
 
333

 
331

 
378

 
359

 
459

 
482

 
478

 
508

 
41.5

 
6.3

Total Assets Under Management
 
$
2,729

 
$
2,723

 
$
2,810

 
$
2,511

 
$
2,805

 
$
2,918

 
$
2,953

 
$
3,116

 
24.1

 
5.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 1Q19 and 2Q19 have been revised to reflect a reclassification of $14 billion in assets from Passive equity to Passive alternative assets.
(2) Includes both floating- and constant-net-asset-value portfolios held in commingled structures or separate accounts.
(3) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust, for which we are not the investment manager but act as the marketing agent.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exchange-Traded Funds(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By Asset Class:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alternative Investments
 
$
48

 
$
46

 
$
40

 
$
43

 
$
45

 
$
48

 
$
56

 
$
56

 
30.2
%
 
—
 %
Cash
 
3

 
3

 
4

 
9

 
8

 
9

 
9

 
9

 
—

 
—

Equity
 
513

 
524

 
566

 
482

 
535

 
548

 
553

 
618

 
28.2

 
11.8

Fixed-Income
 
65

 
66

 
69

 
66

 
73

 
77

 
80

 
85

 
28.8

 
6.3

Total Exchange-Traded Funds
 
$
629

 
$
639

 
$
679

 
$
600

 
$
661

 
$
682

 
$
698

 
$
768

 
28.0

 
10.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  Exchange-traded funds are a component of assets under management presented above.

10

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
INDUSTRY FLOW DATA BY ASSET CLASS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in billions)
 
Quarters
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
North America - ICI Market Data(1)(2)(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long Term Funds(4)
 
$
38.0

 
$
(28.3
)
 
$
(50.4
)
 
$
(308.8
)
 
$
41.8

 
$
(38.2
)
 
$
(51.6
)
 
$
(47.7
)
 
Money Market
 
(52.2
)
 
(51.7
)
 
35.8

 
187.9

 
54.0

 
137.0

 
224.5

 
169.0

 
ETF
 
62.8

 
55.8

 
87.2

 
105.0

 
45.7

 
65.4

 
84.8

 
132.2

 
 
Total ICI Flows
 
$
48.6

 
$
(24.2
)
 
$
72.6

 
$
(15.9
)
 
$
141.5

 
$
164.2

 
$
257.7

 
$
253.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Europe - Broadridge Market Data(1)(5)(6)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long Term Funds(4)
 
$
160.5

 
$
(24.9
)
 
$
(16.2
)
 
$
(171.4
)
 
$
5.7

 
$
27.5

 
$
49.4

 
$
106.3

 
Money Market
 
(10.3
)
 
(17.8
)
 
(21.9
)
 
62.4

 
(9.0
)
 
1.6

 
78.9

 
(16.7
)
 
 
Total Broadridge Flows
 
$
150.2

 
$
(42.7
)
 
$
(38.1
)
 
$
(109.0
)
 
$
(3.3
)
 
$
29.1

 
$
128.3

 
$
89.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Industry data is provided for illustrative purposes only and is not intended to reflect the Company's or its clients' activity.
(2) Source: Investment Company Institute.
Investment Company Institute (ICI) data includes selected funds not registered under the Investment Company Act of 1940. Mutual fund data represents estimates of net new cash flow, which is new sales minus redemptions combined with net exchanges, while exchange-traded fund (ETF) data represents net issuance, which is gross issuance less gross redemptions. Data for mutual funds that invest primarily in other mutual funds and ETFs that invest primarily in other ETFs were excluded from the series. ICI classifies mutual funds and ETFs based on language in the fund prospectus.
(3) 4Q19 data includes ICI actuals for October and November 2019 and ICI estimates for December 2019.
(4) The long-term fund flows reported by ICI are composed of North America Market flows mainly in Equities, Hybrids and Fixed-Income Asset Classes. The long-term fund flows reported by Broadridge are composed of the European, Middle-Eastern, and African market flows mainly in Equities, Fixed-Income and Multi Asset Classes.
(5) Source: © Copyright 2019, Broadridge Financial Solutions, Inc.
Funds of funds have been excluded from Broadridge data (to avoid double counting). Therefore, a market total is the sum of all the investment categories excluding the three funds of funds categories, as categorized by Broadridge (in-house, ex-house and hedge). ETFs are included in Broadridge’s database on mutual funds, but this excludes exchange-traded commodity products that are not mutual funds.
(6) 4Q19 data is on a rolling 3 month basis and includes September through November 2019 for EMEA (Copyright 2019 Broadridge Financial Solutions, Inc.).

11

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
INVESTMENT PORTFOLIO HOLDINGS BY ASSET CLASS
 
 
 
Ratings
 
 
 
 
 
 
 
 
(Dollars in billions, or where otherwise noted)
 
UST/AGY
 
AAA
 
AA
 
A
 
BBB
 
<BBB
 
NR
 
Book Value(1)
 
Book Value
(% Total)
 
Net Unrealized After-tax MTM Gain/(Loss)
(In millions)(2)
 
Fixed Rate/
Floating Rate(3)
Government & agency securities
 
44
%
 
19
%
 
22
%
 
8
%
 
6
%
 
—
%
 
1
%
 
$
31.8

 
33.5
%
 
$
133

 
100% / 0%
Asset-backed securities
 
—

 
66

 
30

 
1

 
2

 
1

 
—

 
10.8

 
11.4

 
20

 
0% / 100%
Student loans
 
—

 
33

 
62

 
1

 
3

 
1

 
—

 
4.3

 
39.8

 
(31
)
 
 
Credit cards
 
—

 
100

 
—

 
—

 
—

 
—

 
—

 
0.3

 
2.8

 
—

 
 
Auto & equipment
 
—

 
73

 
27

 
—

 
—

 
—

 
—

 
1.0

 
9.3

 
1

 
 
Non-U.S. residential mortgage backed securities
 
—

 
84

 
9

 
4

 
1

 
2

 
—

 
2.4

 
22.2

 
53

 
 
Collateralized loan obligation
 
—

 
100

 
—

 
—

 
—

 
—

 
—

 
2.7

 
25.0

 
(3
)
 
 
Other
 
—

 
—

 
100

 
—

 
—

 
—

 
—

 
0.1

 
0.9

 
—

 
 
Mortgage-backed securities
 
100

 
—

 
—

 
—

 
—

 
—

 
—

 
39.3

 
41.3

 
398

 
99% / 1%
Agency MBS
 
100

 
—

 
—

 
—

 
—

 
—

 
—

 
39.2

 
99.7

 
377

 
 
Non-agency MBS
 
—

 
2

 
6

 
9

 
18

 
49

 
16

 
0.1

 
0.3

 
21

 
 
CMBS
 
88

 
12

 
—

 
—

 
—

 
—

 
—

 
5.4

 
5.7

 
(7
)
 
44% / 56%
Corporate bonds
 
—

 
—

 
11

 
37

 
52

 
—

 
—

 
4.7

 
4.9

 
39

 
97% / 3%
Covered bonds
 
—

 
100

 
—

 
—

 
—

 
—

 
—

 
0.7

 
0.7

 
2

 
10% / 90%
Municipal bonds
 
—

 
24

 
71

 
5

 
—

 
—

 
—

 
0.8

 
0.8

 
28

 
100% / 0%
Clipper tax-exempt bonds/other
 
—

 
20

 
65

 
12

 
3

 
—

 
—

 
1.6

 
1.7

 
18

 
31% / 69%
Total Portfolio
 
61
%
 
16
%
 
13
%
 
5
%
 
5
%
 
—
%
 
—
%
 
$
95.1

 
100.0
%
 
$
631

 
83% / 17%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book Value
 
$
57.8

 
$
15.0

 
$
12.4

 
$
4.7

 
$
4.6

 
$
0.2

 
$
0.4

 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Portfolio amounts are expressed at book value; book value includes the amortized cost of transferred securities at the time they were transferred.
(2) At December 31, 2019, the after-tax unrealized MTM gain/(loss) includes after-tax unrealized gain on securities available-for-sale of $370 million, after-tax unrealized gain on securities held-to-maturity of $278 million and after-tax unrealized loss primarily related to securities previously transferred from available-for-sale to held-to-maturity of ($17) million.
(3) At December 31, 2019, fixed-to-floating rate securities had a book value of approximately $294 million or 0.31% of the total portfolio.



12

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
INVESTMENT PORTFOLIO NON-U.S. INVESTMENTS
 
 
 
 
 
 
 
Book Value
(Dollars in billions)
 
Book Value
 
Average Rating
 
Gov't/Agency(1)(2)
 
ABS
FRMBS
 
ABS
All Other
 
Corporate Bonds
 
Covered Bonds
 
Other
United Kingdom
 
$
3.3

 
AAA
 
$
2.1

 
$
0.5

 
$
0.4

 
$
0.2

 
$
0.1

 
$
—

Germany
 
3.1

 
AAA
 
2.3

 
—

 
0.7

 
0.1

 
—

 
—

Australia
 
2.8

 
AAA
 
0.7

 
1.1

 
—

 
0.3

 
—

 
0.7

Canada
 
2.6

 
AA
 
2.4

 
—

 
—

 
0.2

 
—

 
—

France
 
2.2

 
AA
 
1.1

 
—

 
0.7

 
0.2

 
0.2

 
—

Spain
 
1.6

 
BBB
 
1.4

 
0.1

 
0.1

 
—

 
—

 
—

Netherlands
 
1.6

 
AA
 
0.6

 
0.5

 
—

 
0.4

 
0.1

 
—

Japan
 
1.4

 
AA
 
1.4

 
—

 
—

 
—

 
—

 
—

Austria
 
1.4

 
A
 
1.4

 
—

 
—

 
—

 
—

 
—

Ireland
 
1.2

 
A
 
1.2

 
—

 
—

 
—

 
—

 
—

Italy
 
1.1

 
A
 
0.6

 
0.2

 
0.3

 
—

 
—

 
—

Belgium
 
1.0

 
AA
 
0.9

 
—

 
—

 
—

 
0.1

 
—

Finland
 
0.8

 
AA
 
0.8

 
—

 
—

 
—

 
—

 
—

Hong Kong
 
0.6

 
AA
 
0.6

 
—

 
—

 
—

 
—

 
—

Other
 
1.0

 
AA
 
0.6

 
—

 
—

 
0.3

 
0.1

 
—

Total Non-U.S. Investments(3)
 
$
25.7

 
 
 
$
18.1

 
$
2.4

 
$
2.2

 
$
1.7

 
$
0.6

 
$
0.7

U.S. Investments
 
69.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio
 
$
95.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Sovereign debt is reflected in the government / agency column.
(2) As of December 31, 2019, the book value included $5.46 billion of supranational and non-U.S. agency bonds.
(3) Country of collateral used except for corporates where country of issuer is used.





13

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
RECONCILIATIONS OF NON-GAAP FINANCIAL INFORMATION
In addition to presenting State Street's financial results in conformity with U.S. generally accepted accounting principles, or GAAP, management also presents certain financial information on a basis that excludes or adjusts one or more items from GAAP. This latter basis is a non-GAAP presentation. In general, our non-GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of revenue and expenses outside of State Street’s normal course of business or other notable items, such as acquisition and restructuring charges, repositioning charges, gains/losses on sales, as well as, for selected comparisons, seasonal items. For example, we sometimes present expenses on a basis we may refer to as "underlying expenses", which exclude notable items and, to provide additional perspective on both prior year quarter and sequential quarter comparisons, also exclude seasonal items and expenses related to our Charles River Development (CRD) acquisition (completed in October 2018). Management believes that this presentation of financial information facilitates an investor's further understanding and analysis of State Street's financial performance and trends with respect to State Street’s business operations from period-to-period, including providing additional insight into our underlying margin and profitability. In addition, Management may also provide additional non-GAAP measures. For example, we present capital ratios, calculated under regulatory standards scheduled to be effective in the future or other standards, that management uses in evaluating State Street’s business and activities and believes may similarly be useful to investors. Additionally, we may present revenue and expense measures on a constant currency basis to identify the significance of changes in foreign currency exchange rates (which often are variable) in period-to-period comparisons. This presentation represents the effects of applying prior period weighted average foreign currency exchange rates to current period results.
Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP.
 
 
 
 
 
 
 
 
 
 
 
 
Quarters
 
% Change
 
Year-to-Date
 
% Change
(Dollars in millions)
1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19
 
4Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
 
2018
 
2019
 
YTD2019
vs.
YTD2018
Fee Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total fee revenue, GAAP-basis(1)
$
2,415

 
$
2,395

 
$
2,318

 
$
2,326

 
$
2,260

 
$
2,260

 
$
2,259

 
$
2,368

 
1.8
 %
 
 
4.8
 %
 
 
$
9,454

 
$
9,147

 
(3.2
)%
 
Add: legal and related
—

 
—

 
—

 
8

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
8

 
—

 
 
 
Total fee revenue, excluding notable items
$
2,415

 
$
2,395

 
$
2,318

 
$
2,334

 
$
2,260

 
$
2,260

 
$
2,259

 
$
2,368

 
1.5

 
 
4.8

 
 
$
9,462

 
$
9,147

 
(3.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue, GAAP-basis
$
3,056

 
$
3,063

 
$
2,989

 
$
3,023

 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,048

 
0.8
 %
 
 
5.0
 %
 
 
$
12,131

 
$
11,756

 
(3.1
)%
 
Add: legal and related
—

 
—

 
—

 
8

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
8

 
—

 
 
 
Less: other income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(44
)
 
 
 
 
 
 
 
—

 
(44
)
 
 
 
Total revenue, excluding notable items
$
3,056

 
$
3,063

 
$
2,989

 
$
3,031

 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,004

 
(0.9
)
 
 
3.5

 
 
$
12,139

 
$
11,712

 
(3.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total expenses, GAAP-basis
$
2,268

 
$
2,170

 
$
2,091

 
$
2,486

 
$
2,293

 
$
2,154

 
$
2,180

 
$
2,267

 
(8.8
)%
 
 
4.0
 %
 
 
$
9,015

 
$
8,894

 
(1.3
)%
 
Less: Notable expense items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs(2)
—

 
—

 
—

 
(24
)
 
(9
)
 
(12
)
 
(27
)
 
(29
)
 
 
 
 
 
 
 
(24
)
 
(77
)
 
 
 
Repositioning charges(3)
—

 
(77
)
 
—

 
(247
)
 
—

 
—

 
—

 
(110
)
 
 
 
 
 
 
 
(324
)
 
(110
)
 
 
 
Legal and related
—

 
—

 
—

 
(42
)
 
(14
)
 
—

 
(18
)
 
—

 
 
 
 
 
 
 
(42
)
 
(32
)
 
 
 
Total expenses, excluding notable items
$
2,268

 
$
2,093

 
$
2,091

 
$
2,173

 
$
2,270

 
$
2,142

 
$
2,135

 
$
2,128

 
(2.1
)

 
(0.3
)
 
 
$
8,625

 
$
8,675

 
0.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Operating Leverage, GAAP-Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total fee revenue, GAAP-basis(1)
$
2,415

 
$
2,395

 
$
2,318

 
$
2,326

 
$
2,260

 
$
2,260

 
$
2,259

 
$
2,368

 
1.8
 %
 
 
4.8
 %
 
 
$
9,454

 
$
9,147

 
(3.2
)%
 
Total expenses, GAAP-basis
2,268

 
2,170

 
2,091

 
2,486

 
2,293

 
2,154

 
2,180

 
2,267

 
(8.8
)
 
 
4.0

 
 
9,015

 
8,894

 
(1.3
)
 
Fee operating leverage, GAAP-basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,060

bps
 
80

bps
 
 
 
 
 
(190
)
bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Operating Leverage, excluding notable items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total fee revenue, excluding notable items (as reconciled above)
$
2,415

 
$
2,395

 
$
2,318

 
$
2,334

 
$
2,260

 
$
2,260

 
$
2,259

 
$
2,368

 
1.5
 %
 
 
4.8
 %
 
 
$
9,462

 
$
9,147

 
(3.3
)%
 
Total expenses, excluding notable items (as reconciled above)
2,268

 
2,093

 
2,091

 
2,173

 
2,270

 
2,142

 
2,135

 
2,128

 
(2.1
)
 
 
(0.3
)
 
 
8,625

 
8,675

 
0.6

 
Fee operating leverage, excluding notable items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
360

bps
 
510

bps
 
 
 
 
 
(390
)
bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Leverage, GAAP-Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue, GAAP-basis
$
3,056

 
$
3,063

 
$
2,989

 
$
3,023

 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,048

 
0.8
 %
 
 
5.0
 %
 
 
$
12,131

 
$
11,756

 
(3.1
)%
 
Total expenses, GAAP-basis
2,268

 
2,170

 
2,091

 
2,486

 
2,293

 
2,154

 
2,180

 
2,267

 
(8.8
)
 
 
4.0

 
 
9,015

 
8,894

 
(1.3
)
 
Operating leverage, GAAP-basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
960

bps
 
100

bps
 
 
 
 
 
(180
)
bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Leverage, excluding notable items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue, excluding notable items (as reconciled above)
$
3,056

 
$
3,063

 
$
2,989

 
$
3,031

 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,004

 
(0.9
)%
 
 
3.5
 %
 
 
$
12,139

 
$
11,712

 
(3.5
)%
 
Total expenses, excluding notable items (as reconciled above)
2,268

 
2,093

 
2,091

 
2,173

 
2,270

 
2,142

 
2,135

 
2,128

 
(2.1
)
 
 
(0.3
)
 
 
8,625

 
8,675

 
0.6

 
Operating leverage, excluding notable items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
120

bps
 
380

bps
 

 

 
(410
)
bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

14

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
RECONCILIATIONS OF NON-GAAP FINANCIAL INFORMATION (Continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters
 
% Change
 
Year-to-Date
 
% Change
(Dollars in millions, except per Earnings per share, or where otherwise noted)
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
 
2018
 
2019
 
YTD2019
vs.
YTD2018
Net Income Available to Common Shareholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Available to Common Shareholders, GAAP-basis
$
603

 
$
697

 
$
708

 
$
396

 
$
452

 
$
537

 
$
528

 
$
632

 
59.6
 %
 
 
19.7
 %
 
 
$
2,404

 
$
2,149

 
(10.6
)%
 
Less: Notable items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs(2)
—

 
—

 
—

 
24

 
9

 
12

 
27

 
29

 
 
 
 
 
 
 
24

 
77

 
 
 
Repositioning charges(3)
—

 
77

 
—

 
247

 
—

 
—

 
—

 
110

 
 
 
 
 
 
 
324

 
110

 
 
 
Legal and related
—

 
—

 
—

 
50

 
14

 
—

 
18

 
—

 
 
 
 
 
 
 
50

 
32

 
 
 
Other income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(44
)
 
 
 
 
 
 
 
—

 
(44
)
 
 
 
Preferred securities redemption(4)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
22

 
 
 
 
 
 
 
—

 
22

 
 
 
Tax impact of notable items
—

 
(16
)
 
—

 
(73
)
 
(2
)
 
(3
)
 
(12
)
 
(25
)
 
 
 
 
 
 
 
(89
)
 
(42
)
 
 
 
Net Income Available to Common Shareholders, excluding notable items
$
603

 
$
758

 
$
708

 
$
644

 
$
473

 
$
546

 
$
561

 
$
724

 
12.4

 
 
29.1

 
 
$
2,713

 
$
2,304

 
(15.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted Earnings per Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share, GAAP-basis
$
1.62

 
$
1.88

 
$
1.87

 
$
1.03

 
$
1.18

 
$
1.42

 
$
1.42

 
$
1.73

 
68.0
 %
 
 
21.8
 %
 
 
$
6.39

 
$
5.75

 
(10.0
)%
 
Less: Notable items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs(2)
—

 
—

 
—

 
0.04

 
0.02

 
0.03

 
0.06

 
0.06

 
 
 
 
 
 
 
0.05

 
0.16

 
 
 
Repositioning charges(3)
—

 
0.16

 
—

 
0.48

 
—

 
—

 
—

 
0.22

 
 
 
 
 
 
 
0.65

 
0.22

 
 
 
Legal and related
—

 
—

 
—

 
0.12

 
0.04

 
—

 
0.03

 
—

 
 
 
 
 
 
 
0.12

 
0.07

 
 
 
Other income

—

 
—

 
—

 
—

 
—

 
—

 
—

 
(0.09
)
 
 
 
 
 
 
 
—

 
(0.09
)
 
 
 
Preferred securities redemption(4)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
0.06

 
 
 
 
 
 
 
—

 
0.06

 
 
 
Diluted earnings per share, excluding notable items
$
1.62

 
$
2.04

 
$
1.87

 
$
1.67

 
$
1.24

 
$
1.45

 
$
1.51

 
$
1.98

 
18.6

 
 
31.1

 
 
$
7.21

 
$
6.17

 
(14.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax Margin:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax margin, GAAP-basis
25.8
%
 
29.1
 %
 
29.9
%
 
17.5
 %
 
21.7
%
 
25.0
%
 
24.8
 %
 
25.5
 %
 
800

bps
 
70

bps
 
25.6
 %
 
24.3
 %
 
(130
)
bps
Less: Notable items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs(2)
—

 
—

 
—

 
0.8

 
0.3

 
0.4

 
1.0

 
1.0

 
 
 
 
 
 
 
0.2

 
0.7

 
 
 
Repositioning charges(3)
—

 
2.5

 
—

 
8.2

 
—

 
—

 
—

 
3.6

 
 
 
 
 
 
 
2.7

 
0.9

 
 
 
Legal and related
—

 
—

 
—

 
1.7

 
0.5

 
—

 
0.6

 
—

 
 
 
 
 
 
 
0.3

 
0.3

 
 
 
Other income

—

 
—

 
—

 
—

 
—

 
—

 
—

 
(1.0
)
 
 
 
 
 
 
 
—

 
(0.4
)
 
 
 
Pre-tax margin, excluding notable items
25.8
%
 
31.6
 %
 
29.9
%
 
28.2
 %
 
22.5
%
 
25.4
%
 
26.4
 %
 
29.1
 %
 
90

 
 
270

 
 
28.8
 %
 
25.8
 %
 
(300
)
bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on Average Common Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average common equity, GAAP-basis
12.8
%
 
14.7
 %
 
14.0
%
 
7.5
 %
 
8.7
%
 
10.1
%
 
9.7
 %
 
11.6
 %
 
410

bps
 
190

bps
 
12.1
 %
 
10.0
 %
 
(210
)
bps
Less: Notable items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs(2)
—

 
—

 
—

 
0.5

 
0.2

 
0.2

 
0.5

 
0.5

 
 
 
 
 
 
 
0.1

 
0.4

 
 
 
Repositioning charges(3)
—

 
1.6

 
—

 
4.7

 
—

 
—

 
—

 
2.0

 
 
 
 
 
 
 
1.6

 
0.5

 
 
 
Legal and related
—

 
—

 
—

 
0.9

 
0.2

 
—

 
0.3

 
—

 
 
 
 
 
 
 
0.3

 
0.1

 
 
 
Other income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(0.8
)
 
 
 
 
 
 
 
—

 
(0.2
)
 
 
 
Preferred securities redemption(4)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
0.4

 
 
 
 
 
 
 
—

 
0.1

 
 
 
Tax impact of notable items
—

 
(0.3
)
 
—

 
(1.4
)
 
—

 
—

 
(0.2
)
 
(0.4
)
 
 
 
 
 
 
 
(0.4
)
 
(0.1
)
 
 
 
Return on average common equity, excluding notable items
12.8
%
 
16.0
 %
 
14.0
%
 
12.2
 %
 
9.1
%
 
10.3
%
 
10.3
 %
 
13.3
 %
 
110

 
 
300

 
 
13.7
 %
 
10.8
 %
 
(290
)
bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Approximately $15 million of swap costs in 1Q18 were reclassified from processing fees and other revenue within fee revenue to net interest income to conform to current presentation.
 
(2) Acquisition and restructuring costs of approximately $29 million in 4Q19, consisting of acquisition costs primarily related to CRD.
 
 
 
 
(3) Includes charges in 4Q18 that were previously disclosed as "Business exit: Channel Islands."
 
 
 
 
(4) We redeemed all outstanding Series E noncumulative perpetual preferred stock on December 15, 2019 at a redemption price of $750 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends. The difference between the redemption value and the net carrying value of $22 million resulted in an EPS impact of approximately ($.06) per share in 2019.

15

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
RECONCILIATION OF PRE-TAX MARGIN EXCLUDING NOTABLE ITEMS
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
2015(1)
 
2016(1)
 
2017
 
2018(1)
 
2019
Total revenue:
 
 
 
 
 
 
 
 
 
 
Total revenue, GAAP-basis
 
$
10,433

 
$
10,291

 
$
11,266

 
$
12,131

 
$
11,756

 
 
Less: Gain on sale
 
(165
)
 
(53
)
 
(56
)
 
—

 
—

 
 
Add: Impact of tax legislation
 
—

 
—

 
20

 
—

 
—

 
 
Add: Legal and related
 
—

 
43

 
—

 
8

 
—

 
 
Less: Other income
 
—

 
—

 
—

 
—

 
(44
)
Total revenue, excluding notable items
 
10,268

 
10,281

 
11,230

 
12,139

 
11,712

 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
 
12

 
10

 
2

 
15

 
10

Total expenses:
 
 
 
 
 
 
 
 
 
 
Total expenses, GAAP-basis
 
8,050

 
8,077

 
8,269

 
9,015

 
8,894

 
Less:
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs
 
(25
)
 
(209
)
 
(266
)
 
(24
)
 
(77
)
 
 
Legal and related
 
(432
)
 
(56
)
 
—

 
(42
)
 
(32
)
 
 
Repositioning charges(1)
 
(73
)
 
11

 
—

 
(324
)
 
(110
)
 
 
Acceleration of deferred cash awards
 
—

 
(249
)
 
—

 
—

 
—

Total expenses, excluding notable items
 
7,520

 
7,574

 
8,003

 
8,625

 
8,675

Income before income tax expense, excluding notable items
 
$
2,736

 
$
2,697

 
$
3,225

 
$
3,499

 
$
3,027

 
 
 
 
 
 
 
 
 
 
 
Income before income tax expense, GAAP-basis
 
$
2,371

 
$
2,204

 
$
2,995

 
$
3,101

 
$
2,852

 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax margin, excluding notable items
 
26.6
%
 
26.2
%
 
28.7
%
 
28.8
%
 
25.8
%
Pre-tax margin, GAAP-basis
 
22.7

 
21.4

 
26.6

 
25.6

 
24.3

 
(1) Includes charges in 2015 and 2016 that were previously disclosed as "severance costs associated with staffing realignment" and charges in 2018 that were previously disclosed as "Business exit: Channel Islands."
 



16

STATE STREET CORPORATION
 
EARNINGS RELEASE ADDENDUM
 
RECONCILIATION OF NOTABLE ITEMS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters
 
% Change
 
Year-to-Date
 
% Change
 
(Dollars in millions)
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
 
2018
 
2019
 
YTD2019 vs. YTD2018
 
Total revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue, GAAP-basis
 
$
3,056

 
$
3,063

 
$
2,989

 
$
3,023

 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,048

 
0.8
 %
 
5.0
 %
 
$
12,131

 
$
11,756

 
(3.1
)%
 
Add: legal and related
 
—

 
—

 
—

 
8

 
—

 
—

 
—

 
—

 
 
 
 
 
8

 
—

 
 
 
Less: other income
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(44
)
 
 
 
 
 
—

 
(44
)
 
 
 
Total revenue, excluding notable items
 
$
3,056

 
$
3,063

 
$
2,989

 
$
3,031

 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,004

 
(0.9
)
 
3.5

 
$
12,139

 
$
11,712

 
(3.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total expenses, GAAP basis
 
$
2,268

 
$
2,170

 
$
2,091

 
$
2,486

 
$
2,293

 
$
2,154

 
$
2,180

 
$
2,267

 
(8.8
)
 
4.0

 
$
9,015

 
$
8,894

 
(1.3
)
 
Less: Notable expense items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repositioning charges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
 
$
—

 
$
(61
)
 
$
—

 
$
(198
)
 
$
—

 
$
—

 
$
—

 
$
(98
)
 
(50.5
)
 
nm

 
$
(259
)
 
$
(98
)
 
(62.2
)
 
Occupancy
 
—

 
(16
)
 
—

 
(25
)
 
—

 
—

 
—

 
(12
)
 
(52.0
)
 
nm

 
(41
)
 
(12
)
 
(70.7
)
 
Repositioning charges
 
—

 
(77
)
 
—

 
(223
)
 
—

 
—

 
—

 
(110
)
 
(50.7
)
 
—

 
(300
)
 
(110
)
 
(63.3
)
 
Acquisition and restructuring costs
 
—

 
—

 
—

 
(24
)
 
(9
)
 
(12
)
 
(27
)
 
(29
)
 
20.8

 
7.4

 
(24
)
 
(77
)
 
220.8

 
Legal and related
 
—

 
—

 
—

 
(42
)
 
(14
)
 
—

 
(18
)
 
—

 
nm

 
nm

 
(42
)
 
(32
)
 
(23.8
)
 
Business exit: Channel Islands
 
—

 
—

 
—

 
(24
)
 
—

 
—

 
—

 
—

 
nm

 
nm

 
(24
)
 
—

 
nm

 
Total expenses, excluding notable items
 
2,268

 
2,093

 
2,091

 
2,173

 
2,270

 
2,142

 
2,135

 
2,128

 
(2.1
)
 
(0.3
)
 
8,625

 
8,675

 
0.6

 
CRD expenses
 
—

 
—

 
—

 
(39
)
 
(41
)
 
(46
)
 
(56
)
 
(58
)
 
48.7

 
3.6

 
(39
)
 
(201
)
 
415.4

 
CRD related expenses: intangible asset amortization costs
 
—

 
—

 
—

 
(18
)
 
(15
)
 
(17
)
 
(17
)
 
(16
)
 
(11.1
)
 
(5.9
)
 
(18
)
 
(65
)
 
261.1

 
Total expenses, excluding notable items and CRD and CRD related expenses
 
2,268

 
2,093

 
2,091

 
2,116

 
2,214

 
2,079

 
2,062

 
2,054

 
(2.9
)
 
(0.4
)
 
8,568

 
8,409

 
(1.9
)
 
Seasonal expenses
 
(148
)
 
—

 
—

 
—

 
(137
)
 
—

 
—

 
—

 
—

 
—

 
(148
)
 
(137
)
 
(7.4
)
 
Total expenses, excluding notable items, seasonal items, CRD and CRD related expenses
 
$
2,120

 
$
2,093

 
$
2,091

 
$
2,116

 
$
2,077

 
$
2,079

 
$
2,062

 
$
2,054

 
(2.9
)
 
(0.4
)
 
$
8,420

 
$
8,272

 
(1.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Available to Common Shareholders, GAAP-basis
 
$
603

 
$
697

 
$
708

 
$
396

 
$
452

 
$
537

 
$
528

 
$
632

 
59.6

 
19.7

 
$
2,404

 
$
2,149

 
(10.6
)
 
Notable items as reconciled above: pre-tax
 
—

 
77

 
—

 
321

 
23

 
12

 
45

 
95

 
 
 
 
 
398

 
175

 
 
 
Tax impact on notable items as reconciled above
 
—

 
(16
)
 
—

 
(73
)
 
(2
)
 
(3
)
 
(12
)
 
(25
)
 
 
 
 
 
(89
)
 
(42
)
 
 
 
Preferred security cost
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
22

 
 
 
 
 
—

 
22

 
 
 
Net Income Available to Common Shareholders, excluding notable items
 
$
603

 
$
758

 
$
708

 
$
644

 
$
473

 
$
546

 
$
561

 
$
724

 
12.4

 
29.1

 
$
2,713

 
$
2,304

 
(15.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
nm Denotes not meaningful
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

17

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
RECONCILIATIONS OF CONSTANT CURRENCY FX IMPACTS
GAAP-Basis Quarter Comparison
 
Reported
 
Currency Translation Impact
 
Excluding Currency Impact
 
% Change Constant Currency
(Dollars in millions)
 
4Q18
 
3Q19
 
4Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
 
4Q19
vs.
4Q18
 
4Q19
vs.
3Q19
GAAP-Basis Results:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Servicing fees
 
$
1,286

 
$
1,272

 
$
1,299

 
$
(3
)
 
$
7

 
$
1,302

 
$
1,292

 
1.2
 %
 
1.6
 %
Management fees
 
440

 
445

 
465

 
(1
)
 
3

 
466

 
462

 
5.9

 
3.8

Foreign exchange trading services
 
294

 
284

 
274

 
—

 
—

 
274

 
274

 
(6.8
)
 
(3.5
)
Securities finance
 
120

 
116

 
111

 
—

 
—

 
111

 
111

 
(7.5
)
 
(4.3
)
Software and processing fees(1)
 
186

 
142

 
219

 
—

 
1

 
219

 
218

 
17.7

 
53.5

Total fee revenue
 
2,326

 
2,259

 
2,368

 
(4
)
 
11

 
2,372

 
2,357

 
2.0

 
4.3

Net interest income(1)
 
697

 
644

 
636

 
(2
)
 
3

 
638

 
633

 
(8.5
)
 
(1.7
)
Total other income
 
—

 
—

 
44

 
—

 
—

 
44

 
44

 
nm

 
nm

Total revenue
 
$
3,023

 
$
2,903

 
$
3,048

 
$
(6
)
 
$
14

 
$
3,054

 
$
3,034

 
1.0

 
4.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
 
$
1,303

 
$
1,083

 
$
1,145

 
$
(1
)
 
$
5

 
$
1,146

 
$
1,140

 
(12.0
)
 
5.3

Information systems and communications
 
356

 
376

 
362

 
—

 
1

 
362

 
361

 
1.7

 
(4.0
)
Transaction processing services
 
226

 
254

 
242

 
—

 
1

 
242

 
241

 
7.1

 
(5.1
)
Occupancy
 
146

 
113

 
126

 
—

 
1

 
126

 
125

 
(13.7
)
 
10.6

Acquisition and restructuring costs
 
24

 
27

 
29

 
—

 
—

 
29

 
29

 
20.8

 
7.4

Amortization of other intangible assets
 
81

 
59

 
58

 
—

 
—

 
58

 
58

 
(28.4
)
 
(1.7
)
Other
 
350

 
268

 
305

 
(3
)
 
1

 
308

 
304

 
(12.0
)
 
13.4

Total expenses
 
$
2,486

 
$
2,180

 
$
2,267

 
$
(4
)
 
$
9

 
$
2,271

 
$
2,258

 
(8.6
)
 
3.6

GAAP-Basis YTD Comparison
 
Reported
 
Currency Translation Impact
 
Excluding Currency Impact
 
% Change Constant Currency
(Dollars in millions)
 
2018
 
2019
 
YTD2019
vs.
YTD2018
 
2019
 
YTD2019
vs.
YTD2018
Fee revenue:
 
 
 
 
 
 
 
 
 
 
Servicing fees
 
$
5,421

 
$
5,074

 
$
(71
)
 
$
5,145

 
(5.1
)%
Management fees
 
1,851

 
1,771

 
(18
)
 
1,789

 
(3.3
)
Foreign exchange trading services
 
1,201

 
1,111

 
(3
)
 
1,114

 
(7.2
)
Securities finance
 
543

 
471

 
(1
)
 
472

 
(13.1
)
Software and processing fees(1)
 
438

 
720

 
—

 
720

 
64.4

Total fee revenue
 
9,454

 
9,147

 
(93
)
 
9,240

 
(2.3
)
Net interest income(1)
 
2,671

 
2,566

 
(26
)
 
2,592

 
(3.0
)
Other income
 
6

 
43

 
—

 
43

 
nm
Total revenue
 
$
12,131

 
$
11,756

 
$
(119
)
 
$
11,875

 
(2.1
)
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
 
$
4,780

 
$
4,541

 
$
(54
)
 
$
4,595

 
(3.9
)
Information systems and communications
 
1,324

 
1,465

 
(6
)
 
1,471

 
11.1

Transaction processing services
 
985

 
983

 
(9
)
 
992

 
0.7

Occupancy
 
500

 
470

 
(9
)
 
479

 
(4.2
)
Acquisition and restructuring costs
 
24

 
77

 
—

 
77

 
nm
Amortization of other intangible assets
 
226

 
236

 
(3
)
 
239

 
5.8

Other
 
1,176

 
1,122

 
(14
)
 
1,136

 
(3.4
)
Total expenses
 
$
9,015

 
$
8,894

 
$
(95
)
 
$
8,989

 
(0.3
)
 
 
 
 
 
 
 
 
 
 
 
(1) Approximately $15 million of swap costs in 1Q18 were reclassified from processing fees and other revenue within fee revenue to net interest income to conform to current presentation.
nm Denotes not meaningful
 
 
 
 
 
 
 
 
 
 
 

18

STATE STREET CORPORATION
 
 
EARNINGS RELEASE ADDENDUM
 
 
RECONCILIATION OF TANGIBLE COMMON EQUITY RATIO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The tangible common equity, or TCE, ratio is a capital ratio that management believes provides context useful in understanding and assessing State Street's capital adequacy. The TCE ratio is calculated by dividing consolidated total common shareholders’ equity by consolidated total assets, after reducing both amounts by goodwill and other intangible assets net of related deferred taxes. Total assets reflected in the TCE ratio also exclude cash balances on deposit at the Federal Reserve Bank and other central banks in excess of required reserves. The TCE ratio is not required by GAAP or by banking regulations, but is a metric used by management to evaluate the adequacy of State Street’s capital levels. Since there is no authoritative requirement to calculate the TCE ratio, our TCE ratio is not necessarily comparable to similar capital measures disclosed or used by other companies in the financial services industry. Tangible common equity and adjusted tangible assets are non-GAAP financial measures and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP or other applicable requirements. Reconciliations with respect to the calculation of the TCE ratios are provided within the Reconciliation of Tangible Common Equity Ratio within this package.
The following table presents the calculation of State Street's ratios of tangible common equity to total tangible assets.
 
 
 
 
 
 
Quarters
(Dollars in millions)
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
Consolidated total assets
 
$
250,253

 
$
248,276

 
$
234,102

 
$
244,596

 
$
228,332

 
$
241,540

 
$
244,606

 
$
245,610

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Goodwill
 
6,068

 
5,973

 
6,016

 
7,446

 
7,549

 
7,565

 
7,500

 
7,556

   Other intangible assets
 
1,578

 
1,500

 
1,461

 
2,369

 
2,208

 
2,155

 
2,077

 
2,030

Cash balances held at central banks in excess of required reserves
 
62,901

 
64,640

 
51,707

 
62,867

 
44,294

 
52,847

 
57,330

 
65,812

Adjusted assets
 
179,706

 
176,163

 
174,918

 
171,914

 
174,281

 
178,973

 
177,699

 
170,212

   Plus related deferred tax liabilities
 
477

 
465

 
461

 
464

 
464

 
464

 
462

 
475

Total tangible assets
A
$
180,183

 
$
176,628

 
$
175,379

 
$
172,378

 
$
174,745

 
$
179,437

 
$
178,161

 
$
170,687

Consolidated total common shareholders' equity
 
$
19,154

 
$
19,325

 
$
20,812

 
$
21,047

 
$
21,348

 
$
21,764

 
$
21,519

 
$
21,609

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Goodwill
 
6,068

 
5,973

 
6,016

 
7,446

 
7,549

 
7,565

 
7,500

 
7,556

   Other intangible assets
 
1,578

 
1,500

 
1,461

 
2,369

 
2,208

 
2,155

 
2,077

 
2,030

Adjusted equity
 
11,508

 
11,852

 
13,335

 
11,232

 
11,591

 
12,044

 
11,942

 
12,023

   Plus related deferred tax liabilities
 
477

 
465

 
461

 
464

 
464

 
464

 
462

 
475

Total tangible common equity
B
$
11,985

 
$
12,317

 
$
13,796

 
$
11,696

 
$
12,055

 
$
12,508

 
$
12,404

 
$
12,498

Tangible common equity ratio
B/A
6.7
%
 
7.0
%
 
7.9
%
 
6.8
%
 
6.9
%
 
7.0
%
 
7.0
%
 
7.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP-basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
 
$
603

 
$
697

 
$
708

 
$
396

 
$
452

 
$
537

 
$
528

 
$
632

Return on tangible common equity
 
20.1
%
 
21.1
%
 
19.4
%
 
20.6
%
 
15.0
%
 
15.8
%
 
16.3
%
 
17.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

19

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
REGULATORY CAPITAL
 
 
Quarters
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
(Dollars in millions)
Basel III Advanced Approaches(1)
 
Basel III Standardized Approach(2)
 
Basel III Advanced Approaches(1) 
 
Basel III Standardized Approach(2)
 
Basel III Advanced Approaches(1) 
 
Basel III Standardized Approach(2)
 
Basel III Advanced Approaches(1) 
 
Basel III Standardized Approach(2)
 
Basel III Advanced Approaches(1) 
 
Basel III Standardized Approach(2)
 
Basel III Advanced Approaches(1) 
 
Basel III Standardized Approach(2)
 
Basel III Advanced Approaches(1) 
 
Basel III Standardized Approach(2)
 
Basel III Advanced Approaches(1) 
 
Basel III Standardized Approach(2)
RATIOS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
12.1
%
 
10.8
%
 
12.4
%
 
11.3
%
 
14.1
%
 
13.0
%
 
12.1
%
 
11.7
%
 
12.1
%
 
11.5
%
 
12.3
%
 
11.5
%
 
12.2
%
 
11.3
%
 
11.9
%
 
11.9
%
Tier 1 capital
15.4

 
13.7

 
15.7

 
14.3

 
17.9

 
16.4

 
16.0

 
15.5

 
15.9

 
15.0

 
15.9

 
14.9

 
15.9

 
14.6

 
14.7

 
14.7

Total capital
16.4

 
14.6

 
16.4

 
15.1

 
18.7

 
17.2

 
16.9

 
16.3

 
16.7

 
15.9

 
16.6

 
15.5

 
16.5

 
15.3

 
15.7

 
15.9

Tier 1 leverage
6.9

 
6.9

 
7.1

 
7.1

 
8.1

 
8.1

 
7.2

 
7.2

 
7.4

 
7.4

 
7.6

 
7.6

 
7.4

 
7.4

 
7.0

 
7.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supporting Calculations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
$
11,950

 
$
11,950

 
$
12,223

 
$
12,223

 
$
13,703

 
$
13,703

 
$
11,580

 
$
11,580

 
$
11,899

 
$
11,899

 
$
12,367

 
$
12,367

 
$
12,229

 
$
12,229

 
$
12,352

 
$
12,352

Total risk-weighted assets
98,512

 
110,477

 
98,502

 
107,740

 
97,367

 
105,770

 
95,315

 
98,820

 
98,023

 
103,643

 
100,699

 
107,972

 
100,327

 
108,701

 
104,245

 
103,915

Common equity tier 1 risk-based capital ratio
12.1
%
 
10.8
%
 
12.4
%
 
11.3
%
 
14.1
%
 
13.0
%
 
12.1
%
 
11.7
%
 
12.1
%
 
11.5
%
 
12.3
%
 
11.5
%
 
12.2
%
 
11.3
%
 
11.9
%
 
11.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital
$
15,146

 
$
15,146

 
$
15,419

 
$
15,419

 
$
17,393

 
$
17,393

 
$
15,270

 
$
15,270

 
$
15,589

 
$
15,589

 
$
16,058

 
$
16,058

 
$
15,919

 
$
15,919

 
$
15,315

 
$
15,315

Total risk-weighted assets
98,512

 
110,477

 
98,502

 
107,740

 
97,367

 
105,770

 
95,315

 
98,820

 
98,023

 
103,643

 
100,699

 
107,972

 
100,327

 
108,701

 
104,245

 
103,915

Tier 1 risk-based capital ratio
15.4
%
 
13.7
%
 
15.7
%
 
14.3
%
 
17.9
%
 
16.4
%
 
16.0
%
 
15.5
%
 
15.9
%
 
15.0
%
 
15.9
%
 
14.9
%
 
15.9
%
 
14.6
%
 
14.7
%
 
14.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital
$
16,107

 
$
16,179

 
$
16,184

 
$
16,257

 
$
18,159

 
$
18,228

 
$
16,062

 
$
16,131

 
$
16,386

 
$
16,460

 
$
16,672

 
$
16,748

 
$
16,530

 
$
16,612

 
$
16,415

 
$
16,500

Total risk-weighted assets
98,512

 
110,477

 
98,502

 
107,740

 
97,367

 
105,770

 
95,315

 
98,820

 
98,023

 
103,643

 
100,699

 
107,972

 
100,327

 
108,701

 
104,245

 
103,915

Total risk-based capital ratio
16.4
%
 
14.6
%
 
16.4
%
 
15.1
%
 
18.7
%
 
17.2
%
 
16.9
%
 
16.3
%
 
16.7
%
 
15.9
%
 
16.6
%
 
15.5
%
 
16.5
%
 
15.3
%
 
15.7
%
 
15.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital
$
15,146

 
$
15,146

 
$
15,419

 
$
15,419

 
$
17,393

 
$
17,393

 
$
15,270

 
$
15,270

 
$
15,589

 
$
15,589

 
$
16,058

 
$
16,058

 
$
15,919

 
$
15,919

 
$
15,315

 
$
15,315

Adjusted quarterly average assets
219,582

 
219,582

 
216,896

 
216,896

 
214,103

 
214,103

 
211,924

 
211,924

 
210,099

 
210,099

 
212,127

 
212,127

 
213,997

 
213,997

 
219,624

 
219,624

Tier 1 leverage ratio
6.9
%
 
6.9
%
 
7.1
%
 
7.1
%
 
8.1
%
 
8.1
%
 
7.2
%
 
7.2
%
 
7.4
%
 
7.4
%
 
7.6
%
 
7.6
%
 
7.4
%
 
7.4
%
 
7.0
%
 
7.0
%
(1) CET1, tier 1 capital, total capital and tier 1 leverage ratios for each period above were calculated in conformity with the advanced approaches provisions of the Basel III final rule.
(2) CET1, tier 1 capital, total capital and tier 1 leverage ratios for each period above were calculated in conformity with the standardized approach provisions of the Basel III final rule.

20

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
RECONCILIATIONS OF SUPPLEMENTARY LEVERAGE RATIOS
 
In 2014, U.S. banking regulators issued final rules implementing a supplementary leverage ratio, or SLR, for certain bank holding companies, like State Street, and their insured depository institution subsidiaries, like State Street Bank. We refer to these final rules as the SLR final rule. Under the SLR final rule, which was implemented as of January 1, 2018, (i) State Street Bank must maintain an SLR of at least 6% to be well capitalized under the U.S. banking regulators’ Prompt Corrective Action framework and (ii) if State Street maintains an SLR of at least 5%, it is not subject to limitations on distribution and discretionary bonus payments under the SLR final rule. Beginning with reporting for March 31, 2015, State Street was required to include SLR disclosures with its other Basel disclosures.
The following tables reconcile our estimated pro forma fully-phased in SLR ratios in conformity with the SLR final rule, as described, to our SLR ratios calculated in conformity with applicable regulatory requirements as of the dates indicated.
 
 
 
 
 
 
 
 
State Street Corporation
 
 
 
State Street Bank
As of December 31, 2019
(Dollars in millions)
 
 
Fully Phased-In SLR
 
 
 
Fully Phased-In SLR
Tier 1 Capital
 
A
$
15,315

 
 
 
$
16,758

On-and off-balance sheet leverage exposure
 
 
257,127

 
 
 
253,506

Less: regulatory deductions
 
 
(9,262
)
 
 
 
(8,840
)
Total assets for SLR
 
B
247,865

 
 
 
244,666

Supplementary Leverage Ratio
 
A/B
6.2
%
 
 
 
6.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State Street Corporation
 
 
 
State Street Bank
As of September 30, 2019
(Dollars in millions)
 
 
Fully Phased-In SLR
 
 
 
Fully Phased-In SLR
Tier 1 Capital
 
C
$
15,919

 
 
 
$
17,466

On-and off-balance sheet leverage exposure
 
 
251,304

 
 
 
247,529

Less: regulatory deductions
 
 
(9,276
)
 
 
 
(8,845
)
Total assets for SLR
 
D
242,028

 
 
 
238,684

Supplementary Leverage Ratio
 
C/D
6.6
%
 
 
 
7.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State Street Corporation
 
 
 
State Street Bank
As of June 30, 2019
(Dollars in millions)
 
 
Fully Phased-In SLR
 
 
 
Fully Phased-In SLR
Tier 1 Capital
 
E
$
16,058

 
 
 
$
17,611

On-and off-balance sheet leverage exposure
 
 
248,690

 
 
 
245,118

Less: regulatory deductions
 
 
(9,387
)
 
 
 
(8,980
)
Total assets for SLR
 
F
239,303

 
 
 
236,138

Supplementary Leverage Ratio
 
E/F
6.7
%
 
 
 
7.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State Street Corporation
 
 
 
State Street Bank
As of March 31, 2019
(Dollars in millions)
 
 
Fully Phased-In SLR
 
 
 
Fully Phased-In SLR
Tier 1 Capital
 
G
$
15,589

 
 
 
$
17,196

On-and off-balance sheet leverage exposure
 
 
245,449

 
 
 
242,506

Less: regulatory deductions
 
 
(9,461
)
 
 
 
(9,017
)
Total assets for SLR
 
H
235,988

 
 
 
233,489

Supplementary Leverage Ratio
 
G/H
6.6
%
 
 
 
7.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

21

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
RECONCILIATIONS OF SUPPLEMENTARY LEVERAGE RATIOS (Continued)
 
 
 
 
 
 
 
 
 
 
 
State Street Corporation
 
 
 
State Street Bank
As of December 31, 2018
(Dollars in millions)
 
 
Fully Phased-In SLR
 
 
 
Fully Phased-In SLR
Tier 1 Capital
 
I
$
15,270

 
 
 
$
16,941

On-and off-balance sheet leverage exposure
 
 
250,629

 
 
 
247,770

Less: regulatory deductions
 
 
(9,426
)
 
 
 
(8,989
)
Total assets for SLR
 
J
241,203

 
 
 
238,781

Supplementary Leverage Ratio
 
I/J
6.3
%
 
 
 
7.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State Street Corporation
 
 
 
State Street Bank
As of September 30, 2018
(Dollars in millions)
 
 
Fully Phased-In SLR
 
 
 
Fully Phased-In SLR
Tier 1 Capital
 
K
$
17,393

 
 
 
$
19,012

On-and off-balance sheet leverage exposure
 
 
253,821

 
 
 
250,764

Less: regulatory deductions
 
 
(7,210
)
 
 
 
(6,769
)
Total assets for SLR
 
L
246,611

 
 
 
243,995

Supplementary Leverage Ratio
 
K/L
7.1
%
 
 
 
7.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State Street Corporation
 
 
 
State Street Bank
As of June 30, 2018
(Dollars in millions)
 
 
Fully Phased-In SLR
 
 
 
Fully Phased-In SLR
Tier 1 Capital
 
M
$
15,419

 
 
 
$
16,795

On-and off-balance sheet leverage exposure
 
 
257,354

 
 
 
254,588

Less: regulatory deductions
 
 
(7,194
)
 
 
 
(6,755
)
Total assets for SLR
 
N
250,160

 
 
 
247,833

Supplementary Leverage Ratio
 
M/N
6.2
%
 
 
 
6.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State Street Corporation
 
 
 
State Street Bank
As of March 31, 2018
(Dollars in millions)
 
 
Fully Phased-In SLR
 
 
 
Fully Phased-In SLR
Tier 1 Capital
 
O
$
15,146

 
 
 
$
16,296

On-and off-balance sheet leverage exposure
 
 
259,650

 
 
 
256,593

Less: regulatory deductions
 
 
(7,288
)
 
 
 
(6,860
)
Total assets for SLR
 
P
252,362

 
 
 
249,733

Supplementary Leverage Ratio
 
O/P
6.0
%
 
 
 
6.5
%

22
4Q 2019 Financial Highlights January 17, 2020 (NYSE: STT)

 
Preface and Forward-looking Statements This presentation includes certain highlights of, and also material supplemental to, State Street Corporation’s news release announcing its fourth quarter and full year 2019 financial results. That news release contains a more detailed discussion of many of the matters described in this presentation and is accompanied by detailed financial tables. This presentation is designed to be reviewed together with that news release, which is available on State Street’s website, at http://investors.statestreet.com, and is incorporated herein by reference. This presentation (and the conference call accompanying it) contains forward-looking statements as defined by United States securities laws. These statements are not guarantees of future performance, are inherently uncertain, are based on assumptions that are difficult to predict and have a number of risks and uncertainties. The forward-looking statements in this presentation speak only as of the time this presentation is first furnished to the SEC on a Current Report on Form 8-K, and State Street does not undertake efforts to revise forward-looking statements. See “Forward-looking statements” in the Appendix for more information, including a description of certain factors that could affect future results and outcomes. Certain financial information in this presentation is presented on both a GAAP basis and on a basis that excludes or adjusts one or more items from GAAP. The latter basis is a non-GAAP presentation. Refer to the Appendix for explanations of our non-GAAP financial measures and to the Addendum for reconciliations of our non-GAAP financial information. 2

 
4Q19 & FY2019 highlights All comparisons are to corresponding prior year periods unless noted otherwise 4Q19 FY2019 • Total revenue of $11.8B, down (3)% YoY • Total revenue of , up 1% YoY and 5% $3.0B primarily driven by challenging industry QoQA conditions, lower U.S. market interest rates A Financial – Fee revenue of $2.4B, up 2% YoY and 5% and FX volatility QoQ performance – CRD revenue growth of ~8%B • EPS of $1.73 and ROE of 11.6%; $1.98 and 13.3% ex-notable items, respectivelyA • EPS of $5.75 and ROE of 10.0%; $6.17 and 10.8% ex-notable items, respectivelyA • New servicing business wins of ; and, • AUC/A of $34.4T, servicing wins of $294B ~$1.8T four front-to-back State Street AlphaSM and new business yet to be installed of $1.2T 1 1 platform wins Business at quarter-end • Record AUM levels reflecting higher market metrics • AUM of $3.1T at quarter-end primarily 1 reflecting higher market levels and ETF net levels and net inflows of ~$100B 1 inflows C • Strong CRD bookings of ~$37M • Expenses ex-notable items and CRD down • Held expenses ex-notable items flat QoQ and (2)%, exceeding initial target of down (1)% continued to aggressively manage expensesA Efficiency • Total in-year expense savings of ~$415M and capital • Returned a total of $686M, or ~109% total achieved5 payout, to shareholders in 4Q19, including $500M of common share repurchases2 • Strong capital ratios while generating ~108% payout to shareholders2 A Financial metrics ex-notable items are non-GAAP measures; Expenses ex-notable items and CRD are calculated as expenses less notable items and CRD-related expenses; refer to the Appendix for explanations and reconciliations of our non-GAAP measures. B CRD revenue growth based on the percentage change between FY2019 standalone revenue and unaudited estimated proforma FY2018 standalone revenue for CRD under the ASC606 accounting standard. Refer to endnote 3 for further details. C CRD annual contract value bookings of $37M excludes $28M of bookings with affiliates, including SSGA. Refer to endnote 4 for further details. Refer to the Appendix included with this presentation for endnotes 1 to 17. 3

 
4Q19 notable items QuartersA ($M, except EPS data) 4Q18 4Q19 Repositioning costs: Repositioning costs of $110M • Compensation & employee benefits cost of $98M associated Compensation & employee benefits $(198) $(98) with automation of processes and IT optimization enabling Occupancy (25) (12) workforce rationalization • Occupancy cost of $12M related to real estate footprint Total repositioning costs (223) (110) optimization Acquisition and restructuring costs (24) (29) Other notable items Legal and related costs (50) - • Acquisition and restructuring costs of $29M primarily associated with the CRD acquisition • Gain of ~$44M included in Other income associated with a Business exit: Channel Islands (24) - tender offer of our Floating Rate Junior Subordinated DebentureB Gain on Junior Subordinated DebtB - 44 • $22M included in Dividends on preferred stock impacting Net income available to common shareholders related to the Notable items (pre-tax) $(321) $(95) redemption of all our outstanding Series E preferred stock Preferred securities redemption (after-tax) - (22) EPS Impact $(0.64) $(0.25) A Refer to the addendum for further details on FY2019 notable items. B A cash tender offer was completed in 4Q19 of ~$297M of our $800M aggregate principal amount of outstanding Floating Rate Junior Subordinated Debentures due 2047, resulting in a gain of ~$44M. 4

 
Summary of 4Q19 and FY2019 results 6 % ∆ Full Year ($M, except EPS data, or w here otherw ise noted) Quarters 4Q18 3Q19 4Q19 4Q18 3Q19 2018 2019 % ∆ Revenue: Servicing fees $1,286 $1,272 $1,299 1% 2% $5,421 $5,074 (6)% Management fees 440 445 465 6 4 1,851 1,771 (4) Foreign exchange trading services 294 284 274 (7) (4) 1,201 1,111 (7) Securities finance 120 116 111 (8) (4) 543 471 (13) Software and processing fees 186 142 219 18 54 438 720 64 Total fee revenue 2,326 2,259 2,368 2 5 9,454 9,147 (3) Net interest income 697 644 636 (9) (1) 2,671 2,566 (4) Other income - - 44 nm nm 6 43 nm Total revenue $3,023 $2,903 $3,048 1% 5% $12,131 $11,756 (3)% Total expenses $2,486 $2,180 $2,267 (9)% 4% $9,015 $8,894 (1)% Net income $437 $583 $704 61% 21% $2,593 $2,382 (8)% Diluted earnings per share $1.03 $1.42 $1.73 68% 22% $6.39 $5.75 (10)% Return on average common equity 7.5% 9.7% 11.6% 4.1%pts 1.9%pts 12.1% 10.0% (2.1)%pts Pre-tax margin 17.5% 24.8% 25.5% 8.0%pts 0.7%pts 25.6% 24.3% (1.3)%pts Tax rate 17.4% 19.2% 9.5% (7.9)%pts (9.7)%pts 16.4% 16.5% 0.1%pts Memo (ex-notable items except where otherwise noted, non-GAAP) A: Total revenue $3,031 $2,903 $3,004 (1)% 3% $12,139 $11,712 (4)% Total expenses 2,173 2,135 2,128 (2) (0) 8,625 8,675 1 Total expenses ex-notable items & CRD 2,116 2,062 2,054 (3) (0) 8,568 8,409 (2) EPS $1.67 $1.51 $1.98 19 31 $7.21 $6.17 (14) Pre-tax margin 28.2% 26.4% 29.1% 0.9%pts 2.7%pts 28.8% 25.8% (3.0)%pts A This is a non-GAAP presentation; quarterly expenses ex-notable items, as presented, are calculated as expenses less notable items; Expenses ex-notable items include CRD-related expenses beginning on 4Q18; In comparison to 4Q18 and FY2018, expenses ex-notable items can further exclude CRD-related expenses; refer to the Appendix for a reconciliation of ex-notable items to GAAP expenses and further explanations of non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 17. 5

 
AUC/A and AUM levels reflect higher end of period market levels and client net inflows AUC/A and AUMA Market indices7 AUC/A ($T, as of period-end) 4Q19 vs +4% • 9% increase from 4Q18 primarily (% change) driven by: 4Q18 3Q19 +9% – Higher end of period equity and EOP 29% 9% $34.4 fixed income levels and client S&P 500 $32.9 Daily Avg 14 4 $31.6 flows, partially offset by a previously announced client EOP 18 8 transition MSCI EAFE Daily Avg 8 4 • 4% increase from 3Q19 largely reflecting: EOP 15 11 MSCI EM – Higher end of period equity Daily Avg 7 4 levels, client flows and net new 4Q18 3Q19 4Q19 business Barclays Global EOP 7 - Agg AUM ($B, as of period-end) +6% • 24% increase from 4Q18 reflecting: +24% Industry flows – Higher end of period market $ 3,116 levels and net inflows $ 2,953 Total flows $ 2,511 ($B) • 6% increase from 3Q19 primarily 4Q18 3Q19 4Q19 due to: 8 – Higher end of period market North America $(16) $258 $254 levels and net inflows from ETFs, 9 partially offset by outflows from Europe (109) 128 90 institutional and cash 4Q18 3Q19 4Q19 A Changes to AUC/A and AUM also reflect FX translation. Refer to the Appendix included with this presentation for endnotes 1 to 17. 6

 
Revenue: Servicing fee performance reflects stronger markets, new business growth and moderating fee pressure Servicing fees ($M) 4Q19 performance Total revenue: Servicing fees of $1,299M up 1% YoY and 2% QoQ YoY +1% GAAP $3,023 $2,932 $2,873 $2,903 $3,048 QoQ +5% • Up 1% YoY and 2% QoQ primarily driven by higher average market levels and net new business, partially offset by fee pressure +2% • Continued strong client interest in the front-to-back Alpha platform +1% – Four front-to-back Alpha platform wins for FY2019 in different client segments ranging from asset managers and asset owners Servicing $1,299 fees $1,286 $1,251 $1,252 $1,272 • Total revenue and servicing fees were negatively impacted by FX Mgmt A fees, translation when compared to 4Q18 by $6M and $3M, respectively FX, SF Software & Proc. AUC/A sales performance indicators ($B) 4Q18 1Q19 2Q19 3Q19 4Q19 NII AUC/A wins $140 $120 $390 $1,031 $294 4Q18 1Q19 2Q19 3Q19 4Q19 AUC/A to be installed 384 309 575 1,165 1,167 A Total revenue and servicing fees were positively impacted by FX translation when compared to 3Q19 by $14M and $7M, respectively. 7

 
Revenue: Management, Markets, Software and processing fee revenue impacted by seasonal activity, stronger markets and FX volatility Management, Markets, Software and processing fee A 4Q19 performance revenue ($M) Management, Markets, Software and processing fee Total revenue of $1,069M up 3% YoY and 8% QoQ $3,023 $3,048 revenue $2,903 • Management fees of $465M – Up 6% YoY mainly due to higher average equity market levels and net inflows from ETF and cash, partially offset by mix Servicing +8% changes away from higher fee institutional products fees +3% – Up 4% QoQ primarily driven by higher average equity market levels and net inflows from ETF, partially offset by net outflows from institutional $1,040 $1,069 $987 B • FX trading services of $274M Mgmt. $440 fees $445 $465 – Down (7)% YoY and (4)% QoQ mainly reflecting lower FX volatility, partially offset by higher FX volumes FX $294 $284 $274 SF $120 • Securities finance of $111M $116 $111 Software & $186 – Down (8)% YoY and (4)% QoQ primarily due to lower volumes Processing $142 $219 and spreads B • Software and Processing fees of $219M NII – Up 18% YoY and 54% QoQ largely reflecting higher CRD revenue and market-related adjustments 4Q18 3Q19 4Q19 Mgmt. fees FX trading services (FX)10 Sec. Finance (SF) Software & Processing A Management fees, Markets, Software and processing fee revenue was negatively impacted by FX translation when compared to 4Q18 by $1M and positively impacted compared to 3Q19 by $4M. B For 4Q19, on a consolidated basis, CRD contributed $121M, including $119M in Software and processing fees and $2M in FX trading services. Refer to endnote 11 for further details. Refer to the Appendix included with this presentation for endnotes 1 to 17. 8

 
CRD financial performance driven by seasonal activity and new bookings Quarterly metrics ($M) Full year metrics ($M) Standalone CRD revenue11 Standalone CRD revenue +48% ~+8% +4% $401 $372 $121 $126 $99 $91 $85 4Q18 1Q19 2Q19 3Q19 4Q19 FY2018 FY2019 (Proforma)3 Pre-tax Pre-tax 3 income $82 $58 $45 $29 $68 income $218 $200 Financial performance Business momentum in 2019 C CRD financials 4Q18 3Q19 4Q19 • CRD bookings of $37M, an increase of 28% YoY 12 RevenueA $121 $85 $126 • Increased new client contract term by 20% post acquisition Operating expenses 39 56 58 • Average new client contract deal size doubled historical pre- acquisition CRD deal size12 New bookings4 14 5 23 • Enhanced platform economics and expanded suite of open- STT expenses related to CRD architecture strategic alliances by 9 partnerships Amortization costs 18 17 16 • Confident in achieving both revenue and expense synergy targets13 Acquisition and restructuring costsB 24 27 29 A For 4Q19, CRD standalone results include revenue of $126M and pre-tax income of $68M, which includes $5M of revenue associated with affiliates, including SSGA. On a consolidated basis, CRD contributed $121M, including $119M in Software and processing fees and $2M in FX trading services. B Acquisition and restructuring costs mainly related to CRD. C CRD annual contract value bookings of $37M excludes $28M of bookings with affiliates, including SSGA. Refer to endnote 4 for further details. Refer to the Appendix included with this presentation for endnotes 1 to 17. 9

 
Revenue: NII stabilized as higher deposit balances offset lower U.S. market rates NII and NIMA ($M) 4Q19 performance Total $3,023 $3,048 NII of $636M down (9)% YoY and (1)% QoQ revenue $2,903 • Down (9)% YoY primarily due to: Servicing fees – Lower market rates and mix shift from non-interest bearing to -1% interest-bearing deposits, partially offset by asset growth Mgmt. fees, -9% • Down (1)% QoQ, or up 2% excluding the episodic market-related FX, SF, benefits in 3Q19: Software & Proc. $697 $644 $636 – Down (1)% primarily driven by absence of episodic market- NII related benefits of ~$20M reflected in 3Q19 results and lower market rates, partially offset by higher deposit balances 4Q18 3Q19 4Q19 NIM (FTE,%)A 1.55% 1.42% 1.36% Average assets & deposits Balance sheet highlights ($B, or where otherwise noted) 4Q18 3Q19 4Q19 • Momentum in deposit gathering initiatives $223 Total assets $221 $229 – Total deposits increased 4% QoQ, with interest bearing deposits Loans and leases (ex overdrafts) 19 20 21 increasing 5% and non-interest bearing deposits relatively flat Total investment securities 85 94 95 • Continue to target growth in client lending and increased size of Total depositsB 158 157 164 the investment portfolio Interest bearing deposits 123 129 135 Non-Interest bearing deposits 35 29 29 A NII is presented on a GAAP-basis; NIM is presented on an FTE-basis. Refer to the Addendum for reconciliations of our FTE-basis presentation. B Line items may not sum to total due to rounding. 10

 
Expenses ex-notable items flat QoQ as savings offset technology infrastructure costs and CRD expansion Non-GAAP ex-notable itemsA Expenses (ex-notable items) 4Q19 YoY: Expenses ex-notable items down (2)% ($M) • Compensation and benefits down (5)% YoY primarily driven by savings Flat from resource discipline and process re-engineering5 • Information systems and communications up 2% YoY largely reflecting -2% technology infrastructure investments, partially offset by savings from supplier renegotiations and consolidation $2,173 $2,135 $2,128 • Transaction processing services up 7% YoY primarily reflecting higher business volumes • Occupancy down (2)% YoY • down (2)% YoY $1,105 $1,083 $1,047 Other • Total expenses were positively impacted by FX translation when compared to 4Q18 by $4M and negatively impacted compared to 3Q19 by $9M $356 $376 $362 4Q19 QoQ: Expenses ex-notable items flat $226 $254 $242 • Compensation and benefits down (3)% QoQ mainly due to savings from $116 5 $113 $114 resource discipline and process re-engineering $370 $309 $363 • Information systems and communications down (4)% QoQ primarily driven by savings from supplier renegotiations and consolidation 4Q18 3Q19 4Q19 • Transaction processing services down (5)% QoQ mainly due to lower GAAP subcustody costs Expense $2,486 $2,180 $2,267 • Occupancy up 1% QoQ Head- 40,142 39,407 39,103 count • Other up 17% QoQ mainly reflecting higher Foundation funding and professional fees Comp. & ben. Info. sys. Tran. processing Occupancy Other14 • Headcount down (3)% YoY and (1)% QoQ driven by productivity savings A Quarterly expenses ex-notable items, as presented, is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items to GAAP expenses and further explanations of non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 17. 11

 
Investment portfolio & capital ratios Investment portfolio highlights Quarter-end capital ratios ($B, book value and portfolio metrics as of quarter-end) (%, as of period-end) Capital Ratios15,16 $95.1 12.1% 12.2% $93.2 11.7% 11.3% 11.9% 11.9% $87.4 16% 16% Non-HQLA 19% 4Q18 3Q19 4Q19 CET1 (Std.) CET1 (Adv.) HQLA 7.2% 7.4% 81% 84% 84% 6.6% 7.0% 6.3% 6.2% 4Q18 3Q19 4Q19 4Q18 3Q19 4Q19 Portfolio Metrics: SLR (%) Tier 1 Leverage (%) HTM % 48% 42% 44% • All key capital ratios support ongoing capital returns Duration 3.1 2.6 2.7 – Returned a total of $686M, or ~109% total payout, to shareholders in 4Q19, including $500M of common share repurchases and $186M in common share dividends2 • Tier 1 Leverage and SLR ratios in 4Q19 impacted by the repurchase of preferred stock Refer to the Appendix included with this presentation for endnotes 1 to 17. 12

 
FY2020 Outlook FY2019 review FY2020 outlook • FY equity market daily averages: S&P 500 up 6%; • Slow global growth 7 Operating MSCI EAFE down (4)%; MSCI EM down (5)% • Current forward rate curve environment • Three Fed Fund Rate cuts • Modest uplift from equity markets • Average 10Y US Treasury rate 2.14% • Continued low market volatility • Fee revenue: $9,147M Fee revenue • Fee revenue: Up 1-3% YoY • Down (3)% YoY Net interest • NII: $2,566M • NII: Down (5-7)% YoY income • Down (4)% YoY Tax rate • Effective tax rate: 16.5% • Effective tax rate: 17-19% 2 17 Capital return • Returned ~$2.3B, or ~108% total payout • Continued active capital return Targeting ~(1)% reduction in expenses ex-notable items Incremental investments & variable costs • Expand CRD and our front-to-back Alpha strategy ~3-4% ~(4-5)% • Drive innovation and enhance client service $8,675M Expense ↓~(1)% • Upgrade and modernize technology management infrastructure (Expenses ex-notable itemsA) Optimization savings • Focus on resource discipline and process re- engineering • Enable productivity and IT optimization FY2019 Incremental Optimization FY2020E investments & savings variable costs A Expenses ex-notable items, as presented, is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items to GAAP expenses and further explanations of non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 17. 13

 
Summary FY2019 results reflect swift management actions to turnaround financial performance • Improved 2H19 fee revenue as a result of management actions and moderating fee pressure – Servicing fees up 2% QoQ in 4Q19 reflecting stronger markets, new business growth and moderating fee pressure • Navigated the interest rate environment and enhanced NII performance with additional deposit gathering initiatives and asset growth • FY2019 expenses are down (2)% ex-notable items and CRD, exceeding initial target of down (1)%A – Total in-year expense savings of ~$415M achieved5 • Returned ~$2.3B, or ~108% payout, to shareholders in FY2019, consisting of ~$1.6B in common share repurchases and ~$0.7B in common share dividends2 • FY2019 EPS ex-notable items of $6.17 and ROE of 10.8%A Opportunities for continued progress in 2020 • Continued focus on reigniting servicing fee growth and deepening client relationships • Execute further on our front-to-back Alpha platform strategy • Expect FY2020 expenses ex-notable items to be down (1)% YoY while increasing productivity and enhancing client serviceA A EPS and ROE ex-notable items, and quarterly expenses ex-notable items and CRD are non-GAAP measures; refer to the Appendix for a reconciliation of ex-notable items to GAAP expenses and explanations of non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 17. 14

 
Appendix Medium-term financial targets 16 Reconciliation of notable items 17 Endnotes 18 – 19 Forward-looking statements 20 Non-GAAP measures 21 Definitions 22 15

 
Medium-term financial targetsA Our strategic priorities will deliver growth, drive innovation and enhance shareholder value Revenue growth 4–5% with CRD Pre-tax margin Further improve by an additional 2%pts EPS growth 10–15% ROE 12–15% Capital return Targeting total payout ratio greater than or equal to 80%B A Financial targets to be met within a three-year time horizon ending 2021 or on a run-rate basis for 2022. Financial targets do not reflect items outside of the normal course of business. Revenue and EPS growth targets stated on a YoY basis. Pre-tax margin stated relative to 3Q18YTD. B Payouts calculated over CCAR cycles. CCAR cycles run from mid-year to mid-year. Refer to endnote 17 for additional details. 16

 
Reconciliation of notable items Quarterly reconciliation6 (Dollars in millions) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Total revenue, GAAP-basis 3,056 3,063 2,989 3,023 2,932 2,873 2,903 3,048 Add: Legal and related 8 Less: Other income (44) Total revenue, excluding notable items 3,056 3,063 2,989 3,031 2,932 2,873 2,903 3,004 Total expenses, GAAP basis 2,268 2,170 2,091 2,486 2,293 2,154 2,180 2,267 Less: Notable expense items: Repositioning charges: Compensation and employee benefits (61) (198) (98) Occupancy (16) (25) (12) Repositioning charges (77) (223) (110) Acquisition and restructuring costs (24) (9) (12) (27) (29) Legal and related (42) (14) (18) Business exit (24) Total expenses, excluding notable items 2,268 2,093 2,091 2,173 2,270 2,142 2,135 2,128 CRD expenses (39) (41) (46) (56) (58) State Street expenses related to CRD: intangible asset amortization costs (18) (15) (17) (17) (16) Total expenses, excluding notable items and CRD and CRD-related expenses 2,268 2,093 2,091 2,116 2,214 2,079 2,062 2,054 Seasonal expenses (148) (137) Total expenses, excluding notable items, CRD and CRD-related expenses and seasonal expense items 2,120 2,093 2,091 2,116 2,077 2,079 2,062 2,054 Net income available to common shareholders, GAAP-basis 603 697 708 396 452 537 528 632 Notable items as reconciled above: pre-tax 77 321 23 12 45 95 Tax impact on notable items as reconciled above (16) (73) (2) (3) (12) (25) Preferred securities cost 22 Net income available to common shareholders, excluding notable items 603 758 708 644 473 546 561 724 Year-end reconciliation6 (Dollars in millions) 2018 2019 Total revenue, GAAP-basis 12,131 11,756 Add: Legal and related 8 Less: Other income (44) Total revenue, excluding notable items 12,139 11,712 Total expenses, GAAP basis 9,015 8,894 Less: Notable expense items: Repositioning charges: Compensation and employee benefits (259) (98) Occupancy (41) (12) Repositioning charges (300) (110) Acquisition and restructuring costs (24) (77) Legal and related (42) (32) Business exit (24) Total expenses, excluding notable items 8,625 8,675 CRD expenses (39) (201) CRD related expenses: intangible asset amortization costs (18) (65) Total expenses, excluding notable items and CRD and CRD-related expenses 8,568 8,409 Net income available to common shareholders, GAAP-basis 2,404 2,149 Notable items as reconciled above: pre-tax 398 175 Tax impact on notable items as reconciled above (89) (42) Preferred securities cost 22 Net income available to common shareholders, excluding notable items 2,713 2,304 Refer to the Appendix included with this presentation for endnotes 1 to 17. 17

 
Endnotes 1. New asset servicing mandates, including announced front-to-back investment servicing clients, may be subject to completion of definitive agreements, approval of applicable boards and shareholders and customary regulatory approvals. New asset servicing mandates and servicing assets remaining to be installed in future periods exclude new business which has been contracted, but for which the client has not yet provided permission to publicly disclose and is not yet installed. These excluded assets, which from time to time may be significant, will be included in new asset servicing mandates and reflected in servicing assets remaining to be installed in the period in which the client provides its permission. Servicing mandates and servicing assets remaining to be installed in future periods are presented on a gross basis and therefore also do not include the impact of clients who have notified us during the period of their intent to terminate or reduce their relationship with State Street, which from time to time may be significant. New business in assets to be serviced is reflected in our AUC/A after we begin servicing the assets, and new business in assets to be managed is reflected in our AUM after we begin managing the assets. As such, only a portion of any new asset servicing and asset management mandates may be reflected in our AUC/A and AUM as of any particular date specified. Generally, our servicing fee revenues are affected by several factors including changes in market valuations, client activity and asset flows, net new business and the manner in which we price our services. We provide a range of services to our clients, including core custody services, accounting, reporting and administration and middle office services, and the nature and mix of services provided affects our servicing fees. The basis for fees will differ across regions and clients. The industry in which we operate has historically faced pricing pressure, and our servicing fee revenues are also affected by such pressures today. Consequently, no assumption should be drawn as to future revenue run rate from announced servicing wins or new servicing business yet to be installed, as the amount of revenue associated with AUC/A can vary materially. Management fees generally are affected by our level of AUM and differ based upon the nature, type and investment strategy of the investment product. Management fee revenue is more sensitive to market valuations than servicing fee revenue, as a higher proportion of the underlying services provided, and the associated management fees earned, are dependent on equity and fixed-income security valuations. Additional factors, such as the relative mix of assets managed, may have a significant effect on our management fee revenue. While certain management fees are directly determined by the values of AUM and the investment strategies employed, management fees may reflect other factors, including performance fee arrangements, as well as our relationship pricing for clients. 2. State Street’s common stock and other stock dividends, including the declaration, timing and amount, remain subject to consideration and approval by State Street’s Board of Directors at the relevant times. State Street's $2B common stock repurchase authorization was effective beginning July 1, 2019 and covers the period ending June 30, 2020. Stock purchases may be made using various types of transactions, including open-market purchases, accelerated share repurchases or other transactions off the market, and may be made under Rule 10b5-1 trading programs. The timing of stock purchases, type of transaction and number of shares purchased will depend on several factors, including market conditions and State Street’s capital position, its financial performance, the amount of common stock issued as part of employee compensation programs and investment opportunities. The common stock purchase program does not have specific price targets and may be suspended at any time. 3. FY2018 information based on estimated proforma financial results for CRD under the ASC606 accounting standard. Proforma results include certain assumptions and estimates and are unaudited. State Street acquired CRD on October 1, 2018. 4. CRD annual contract value bookings, as presented in this presentation, represent signed annual recurring revenue contract value excluding bookings with affiliates, including SSGA. CRD annual contract value bookings in FY2019 of $37M excludes $28M of bookings with affiliates, including SSGA. CRD annual contract value bookings in 4Q19 of $23M excludes $0.1M of bookings with affiliates, including SSGA. CRD revenue derived from affiliate agreements is eliminated in consolidation for financial reporting purposes. 5. FY2019 expense program savings are stated on a gross basis. Process re-engineering and automation savings, as presented in this presentation, can include high-cost location workforce reductions, reducing manual/bespoke activities, reducing redundant activities, streamlining operational centers and moves to common platforms/retiring legacy applications. Resource discipline benefits, as presented in this presentation, can include reducing senior management headcount, rigorous performance management, vendor management and optimization of real estate. 6. During 1Q19, we voluntarily changed our accounting method under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 323, Investments - Equity Method and Joint Ventures, for investments in low income housing tax credit from the equity method of accounting to the proportional amortization method of accounting. This change in accounting method has been applied retrospectively to all prior periods. Refer to the Form 8-K filed on March 5, 2019 for further details. 7. The index names listed are service marks of their respective owners. 8. Industry data is provided for illustrative purposes only and is not intended to reflect the Company's or its clients' activity. Source: Investment Company Institute. Investment Company Institute (ICI) data includes funds not registered under the Investment Company Act of 1940. Mutual fund data represents estimates of net new cash flow, which is new sales minus redemptions combined with net exchanges, while exchange-traded fund (ETF) data represents net issuance, which is gross issuance less gross redemptions. Data for mutual funds that invest primarily in other mutual funds and ETFs that invest primarily in other ETFs were excluded from the series. ICI classifies mutual funds and ETFs based on language in the fund prospectus. The long term fund flows reported by ICI are composed of North America Market flows mainly in Equities, Hybrids and Fixed Income Asset Classes. 4Q19 represents the three month period from October 2019 through December 2019, the last date for which information is available with December 2019 estimates. 9. Industry data is provided for illustrative purposes only and is not intended to reflect State Street’s or its clients' activity. Source: © Copyright 2019, Broadridge Financial Solutions, Inc. Funds of funds have been excluded from Broadridge data (to avoid double counting). Therefore a market total is the sum of all the investment categories excluding the three funds of funds categories (inhouse, ex- house and hedge). ETFs are included in Broadridge’s database on mutual funds, but this excludes exchange-traded commodity products that are not mutual funds. The long term fund flows reported by Broadridge are composed of EMEA Market flows mainly in Equities, Fixed Income, and Multi Asset Classes. 4Q19 represents the rolling three month period from September 2019 through November 2019, the last date for which information is available. 10. FX trading services includes Brokerage & other revenue. 18

 
Endnotes 11. For 4Q19, CRD standalone results include revenue of $126M, operating expenses of $58M and pre-tax income of $68M, which includes $5M of revenue associated with affiliates, including SSGA, that is eliminated in consolidation for financial reporting purposes. On a consolidated basis, CRD revenue contributed $121M, including $119M in Software and processing fees and $2M in FX trading services. For FY2019, CRD standalone results include revenue of $401M, operating expenses of $201M and pre-tax income of $200M, which includes $16M of revenue associated with affiliates, including SSGA, that is eliminated in consolidation for financial reporting purposes. On a consolidated basis, CRD revenue contributed $385M, including $370M in Software and processing fees and $15M in FX trading services. 12. Average contract term and deal size comparison based on new contracts between FY2017 to 3Q18 (CRD pre-acquisition) and 4Q18 to FY2019 (CRD post-acquisition). Contracts exclude affiliates. 13. Revenue synergy target of $75-85M in 2021 mainly represents opportunities to enhance the distribution of State Street products and capabilities to CRD clients, cross sell CRD into State Street client base, expand share of wallet across our combined client base, bundle services to clients seeking an integrated experience and expand combined and integrated capabilities into new client segments. Cost synergy target of ~$55-65M in 2021 is net of expenses and cost to achieve, excluding restructuring charges, on a pre-tax basis. All targets as announced on July 20, 2018. 14. Other includes other expenses and amortization of other intangible assets. 15. Unless otherwise noted, all capital ratios referenced on this slide and elsewhere in this presentation refer to State Street Corporation, or State Street, and not State Street Bank and Trust Company, or State Street Bank. The lower of capital ratios calculated under the Basel III advanced approaches and under the Basel III standardized approach are applied in the assessment of our capital adequacy for regulatory purposes. Standardized approach ratios were binding for 4Q18 to 3Q19, while Advanced approaches ratios were binding for 4Q19. Refer to the Addendum included with this presentation for a further description of these ratios. December 31, 2019 capital ratios are presented as of quarter-end and are preliminary estimates. 16. Estimated pro-forma fully phased-in capital ratios including SLR as of December 31, 2017 (fully phased-in as of January 1, 2018, as per the phase-in requirements of both the Basel and SLR final rules) reflect capital and total risk-weighted assets calculated under the Basel III final rule and preliminary estimates as calculated under the SLR final rule. 17. Subject to regulatory non-objection, including on the basis of annual CCAR process conducted by the Board of Governors of the Federal Reserve System. CCAR cycles run from mid-year to mid-year. FY2020 payout and return outlook also subject to CCAR scenarios yet to be published by the Federal Reserve. 19

 
Forward-looking statements This presentation (and the conference call referenced herein) contains forward-looking statements within the meaning of United States securities laws, including statements about our goals and expectations regarding our business, financial and capital condition, results of operations, strategies, the financial and market outlook, dividend and stock purchase programs, governmental and regulatory initiatives and developments, expense reduction programs, new client business, and the business environment. Forward-looking statements are often, but not always, identified by such forward-looking terminology as “outlook,” “guidance,” “expect,” “priority,” “objective,” “intend,” “plan,” “forecast,” “believe,” “anticipate,” “estimate,” “seek,” “may,” “will,” “trend,” “target,” “strategy” and “goal,” or similar statements or variations of such terms. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our expectations or beliefs as of any time subsequent to the time this presentation is first issued. Important factors that may affect future results and outcomes include, but are not limited to: 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; 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; 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 software and processing fees; 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; the level, volatility and uncertainty of interest rates; the expected discontinuation of Interbank Offered Rates (IBORs) including LIBOR; the valuation of the U.S. dollar relative to other currencies in which we record revenue or accrue expenses; 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; 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; 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; 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; 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; 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; changes in law or regulation, or the enforcement of law or regulation, that may adversely affect our business activities or those of our clients or our counterparties, and the products or services that we sell, including, without limitation, additional or increased taxes or assessments thereon, capital adequacy requirements, margin requirements and changes that expose us to risks related to the adequacy of our controls or compliance programs; 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; 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; 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; 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; 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; 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 control risks related to use of technology, including cyber-crime and inadvertent data disclosures; 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; the results of, and costs associated with, governmental or regulatory inquiries and investigations, litigation and similar claims, disputes, or civil or criminal proceedings; 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; 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; the potential for losses arising from our investments in sponsored investment funds; 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; our ability to anticipate and manage the level and timing of redemptions and withdrawals from our collateral pools and other collective investment products; the credit agency ratings of our debt and depositary obligations and investor and client perceptions of our financial strength; adverse publicity, whether specific to us or regarding other industry participants or industry-wide factors, or other reputational harm; our ability to control operational risks, data security breach risks and outsourcing risks, our ability to protect our intellectual property rights, the possibility of errors in the quantitative models we use to manage our business and the possibility that our controls will prove insufficient, fail or be circumvented; 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; 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; 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; 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; 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; 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; changes in accounting standards and practices; and 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. Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in our 2018 Annual Report on Form 10-K and our subsequent SEC filings. We encourage investors to read these filings, particularly the sections on risk factors, for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this presentation should not by relied on as representing our expectations or beliefs as of any time subsequent to the time this presentation is first issued, and we do not undertake efforts to revise those forward-looking statements to reflect events after that time. 20

 
Non-GAAP measures In addition to presenting State Street's financial results in conformity with U.S. generally accepted accounting principles, or GAAP, management also presents certain financial information on a basis that excludes or adjusts one or more items from GAAP. This latter basis is a non-GAAP presentation. In general, our non- GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of revenue and expenses outside of State Street’s normal course of business or other notable items, such as acquisition and restructuring charges, repositioning charges, gains/losses on sales, as well as, for selected comparisons, seasonal items. For example, we sometimes present expenses on a basis we may refer to as “expenses ex-notable items", which exclude notable items and, to provide additional perspective on both prior year quarter and sequential quarter comparisons, also exclude seasonal items and expenses related to our Charles River Development acquisition (completed in October 2018). Management believes that this presentation of financial information facilitates an investor's further understanding and analysis of State Street's financial performance and trends with respect to State Street’s business operations from period-to-period, including providing additional insight into our underlying margin and profitability. In addition, Management may also provide additional non-GAAP measures. For example, we present capital ratios, calculated under regulatory standards scheduled to be effective in the future or other standards, that management uses in evaluating State Street’s business and activities and believes may similarly be useful to investors. Additionally, we may present revenue and expense measures on a constant currency basis to identify the significance of changes in foreign currency exchange rates (which often are variable) in period-to-period comparisons. This presentation represents the effects of applying prior period weighted average foreign currency exchange rates to current period results. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. Refer to the Addendum for reconciliations of our non-GAAP financial information. To access the Addendum go to http://investors.statestreet.com and click on “Filings & Reports – Quarterly Earnings”. 21

 
Definitions AUC/A Assets under custody and/or administration AUM Assets under management Barclays Agg Barclays Agg represents Barclays Global Aggregate Bond Index Bps Basis points, with one basis point representing one hundredth of one percent CCAR Comprehensive Capital Analysis and Review CET1 Common equity tier 1 ratio CRD Charles River Development Diluted earnings per share (EPS) Net income available to common shareholders divided by diluted average common shares outstanding for the noted period EM Emerging markets EOP End of period ETF Exchange-traded fund Fee operating leverage Rate of growth of total fee revenue less the rate of growth of expenses, relative to the successive prior year period, as applicable FX Foreign exchange FY Full-year GAAP Generally accepted accounting principles in the United States HTM Held-to-maturity HQLA High quality liquid assets Net interest income (NII) Income earned on interest bearing assets less interest paid on interest bearing liabilities. Net interest margin (NIM) Net interest income divided by average interest-earning assets nm Not meaningful Operating leverage Rate of growth of total revenue less the rate of growth of total expenses, relative to the successive prior year period, as applicable Payout ratio Total payout ratio is equal to common stock dividends and common stock purchases as a percentage of net income available to common shareholders Pre-tax operating margin Income before income tax expense divided by total revenue %P ts Percentage points is the difference from one percentage value subtracted from another Quarter-over-quarter (QoQ) Sequential quarter comparison Return on equity (ROE) Net income less dividends on preferred stock divided by average common equity Seasonal Expenses Seasonal deferred incentive compensation expenses for retirement-eligible employees and payroll taxes SSGA State Street Global Advisors T1L Tier 1 leverage ratio Year-over-year (YoY) Current period compared to the same period a year ago Year-to-date (YTD) The cumulative amount of time within a fiscal year up to the end of the quarter indicated (i.e., 4Q19YTD is equivalent to the twelve months ended December 31, 2019) 22