Attachment: 8-K

Exhibit
a1q19sttlogoa25.gif
 
Exhibit 99.1
State Street Corporation
One Lincoln Street
Boston, MA 02111
NYSE: STT
         www.statestreet.com




Boston, MA… April 17, 2020 News Release
STATE STREET REPORTS FIRST-QUARTER 2020 EPS OF $1.62, UP 37% YEAR-ON-YEAR
TOTAL FEE REVENUE UP 6% YEAR-ON-YEAR, DRIVEN BY HIGHER THAN USUAL FX TRADING SERVICES REVENUE OF $459 MILLION, UP 64% YEAR-ON-YEAR
EXPENSES DOWN 2% YEAR-ON-YEAR, DOWN 1% EX-NOTABLES(a)
AVERAGE DEPOSITS OF $180 BILLION UP 16% YEAR-ON-YEAR, REFLECTING MARCH INFLOWS
MAINTAINED STRONG CAPITAL LEVELS WITH ESTIMATED CET1 OF 10.7%
Ron O'Hanley, Chairman and Chief Executive Officer: "The COVID-19 pandemic is an unprecedented challenge for the global economy. I am immensely proud of our employees for their outstanding performance on behalf of our clients while working under trying conditions. State Street operated effectively and responded quickly to help stabilize the financial markets and support our employees, clients and communities. Our operational resilience, experience, and business continuity plans, as well as our strong balance sheet and associated capital and liquidity positions, helped prepare us for these extraordinary times and have positioned us to confidently navigate volatile market conditions, serve our clients, and efficiently execute against our strategy."
O'Hanley added: "While our first quarter results were somewhat impacted by the COVID-19 pandemic, our overall strong year-over-year performance reflects the strength, diversity and durability of our business model. Compared to 4Q19, market valuations and client flows impacted servicing and management fees, offset by significant client activity, with heightened volatility levels driving strong fee revenue growth in our foreign exchange trading services business. Similarly, while lower rates were a headwind for net interest income during the quarter, we also saw significant deposit inflows and greater client usage of our strong balance sheet. Our costs remain contained, with expenses down 2% year-over-year. Although the near-term outlook for financial markets is uncertain and we must be cautious about the pace and timing of the economic recovery, State Street's commitment and ability to be an essential partner to its clients in these challenging days is unwavering and creates a strong foundation for future growth."
FINANCIAL HIGHLIGHTS
(Table presents summary results, $ in millions, except per share amounts, or where otherwise noted)
1Q20
 
4Q19
 
1Q19
 
 % QoQ
 
 % YoY
 
Income statement:
 
 
 
 
 
 
 
 
 
 
Total fee revenue
$
2,399

 
$
2,368

 
$
2,260

 
1.3
 %
 
6.2
 %
 
Net interest income
664

 
636

 
673

 
4.4

 
(1.3
)
 
Other income
2

 
44

 
(1
)
 
nm

 
nm

 
Total revenue
3,065

 
3,048

 
2,932

 
0.6

 
4.5

 
Provision for credit losses(1)
36

 
6

 
—

 
nm

 
nm

 
Total expenses
2,255

 
2,407

 
2,293

 
(6.3
)
 
(1.7
)
 
Net income
634

 
564

 
508

 
12.4

 
24.8

 
 
 
 
 
 
 
 
 
 
 
 
Financial ratios and other metrics:
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
1.62

 
$
1.35

 
$
1.18

 
20.0
 %
 
37.3
 %
 
Return on average common equity
10.9
%
 
9.0
%
 
8.7
%
 
190

bps
220

bps
Pre-tax margin
25.3

 
20.9

 
21.7

 
440

 
360

 
AUC/A ($ billions)
31,864

 
34,358

 
32,643

 
(7.3
)%
 
(2.4
)%
 
AUM ($ billions)
2,689

 
3,116

 
2,805

 
(13.7
)
 
(4.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Prior to the adoption of ASU 2016-13, the provision for unfunded commitments was recorded within other expenses in the consolidated statement of income. Upon adoption of ASU 2016-13 in 1Q20, the entire provision for credit losses is recorded within provision for credit losses in the consolidated statement of income. For purposes of this presentation on a like-for-like basis, the provision for credit losses includes ($4) million and $3 million for 1Q19 and 4Q19, respectively, for unfunded commitments included within other expenses.  See Allowance for credit losses within the Addendum to this News Release.


(a) See 1Q20 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.
Investor Contact: Ilene Fiszel Bieler +1 617/664-3477
     Media Contact: Marc Hazelton +1 617/513-9439

1
                    

1Q20 HIGHLIGHTS
(all comparisons are to 1Q19, unless otherwise noted)

Response to the COVID-19 pandemic
•
Protected the health and safety of our employees.
•
Maintained business continuity, resiliency, and operational effectiveness despite unprecedented volumes and disruptions.
•
Supported our clients, the financial markets, and broader economy by meeting increased demand for liquidity and financing by successfully employing innovative FX and markets technology and capabilities.
•
Provided liquidity to clients by facilitating more than 50% of Money Market Mutual Fund Liquidity Facility (MMLF) usage and providing administrative and custodial services to the Federal Reserve's Commercial Paper Funding Facility (CPFF).

AUC/A and AUM
•
Investment Servicing AUC/A as of quarter-end decreased (2)% to $31.9 trillion, primarily due to lower end of period equity market levels and a previously announced client transition, partially offset by higher end of period fixed income market levels.
•
Investment Management AUM as of quarter-end decreased (4)% to $2.7 trillion, primarily due to lower end of period equity market levels, partially offset by net inflows.

New business
•
Investment Servicing mandates announced in 1Q20 totaled $171 billion with quarter-end servicing assets remaining to be installed in future periods of $1.1 trillion.
•
Investment Management net inflows in 1Q20 of $39 billion were driven by cash and institutional inflows, partially offset by ETF outflows.
•
Charles River Development (CRD) 1Q20 new bookings, excluding bookings with affiliates, of $5 million with strong front-to-back State Street AlphaSM pipeline.

Revenue
•
Fee revenue increased 6% reflecting higher servicing fees, management fees, and record FX trading services revenue amidst significant market volatility towards quarter-end, partially offset by lower software and processing fees and securities finance revenue.
•
Net interest income (NII) decreased (1)%, primarily due to the impact of lower market rates, partially offset by stronger deposit balances, reflecting period-end 1Q20 inflows, and episodic market-related benefits.
◦
Compared to 4Q19, NII increased 4%, largely driven by stronger deposit balances and episodic market-related benefits, partially offset by long-term debt issuances.

Provision for credit losses
•
Total provision for credit losses, calculated under the Current Expected Credit Loss (CECL) accounting standard adopted on January 1, 2020, increased $36 million primarily driven by the impact of COVID-19 driven changes in State Street's economic outlook as of quarter-end on estimated lifetime losses under the CECL standard.






2
                    

Expenses
•
Total expenses were down (2)% and (1)% ex-notables, primarily driven by savings from resource discipline, process re-engineering and automation initiatives.

Notable Items
(Dollars in millions, except EPS amounts)
Quarters
1Q20
4Q19
1Q19
Repositioning costs:
 
 
 
Compensation & employee benefits
$
—

$
(98
)
$
—

Occupancy
—

(12
)
—

Total repositioning costs
—

(110
)
—

 
 
 
 
 
 
 
 
Acquisition and restructuring costs
(11
)
(29
)
(9
)
Legal and related costs
—

(140
)
(14
)
Gain on junior subordinated debt
—

44

—

Notable items (pre-tax)
$
(11
)
$
(235
)
$
(23
)
 
 
 
 
Preferred securities redemption (after-tax) (b)
(9
)
(22
)
—

 
 
 
 
 
 
 
 
EPS impact ($s)
$
(0.05
)
$
(0.63
)
$
(0.06
)
 
 
 
 

Capital
•
ROE of 10.9% in 1Q20, increased 2.2%pts compared to 1Q19 and increased 1.9%pts compared to 4Q19.
•
Returned $683 million to shareholders in 1Q20, consisting of $500 million in common share repurchases and $183 million in common share dividends.
•
Estimated Common Equity Tier 1 (CET1) of 10.7% (Standardized), Tier 1 Leverage ratio of 6.1% and Supplementary Leverage Ratio (SLR) of 5.4% (c) at quarter-end.


























(b) $9 million included in dividends on preferred stock impacting net income available to common shareholders in 1Q20 is related to the redemption of all outstanding Series C preferred stock $22 million included in dividends on preferred stock impacting net income available to common shareholders in 4Q19 is related to the redemption of all outstanding Series E preferred stock.
(c) Under the Section 402 central bank deposits relief that will come into effect on April 1, 2020, 1Q20 SLR would have been 7.1%.

3
                    

MARKET DATA
The following table provides a summary of selected financial information, including market indices and foreign exchange rates.
(Dollars in billions, except market indices and foreign exchange rates)
1Q20

 
4Q19

 
1Q19

 
 % QoQ

 
 % YoY

 
 
 
 
 
 
 
 
 
 
Assets under Custody and/or Administration (AUC/A)(1) (2)
$
31,864

 
$
34,358

 
$
32,643

 
(7.3
)%
 
(2.4
)%
Assets under Management (AUM)(2)
2,689

 
3,116

 
2,805

 
(13.7
)
 
(4.1
)
 
 
 
 
 
 
 
 
 
 
Market Indices:(3)
 
 
 
 
 
 
 
 
 
S&P 500 daily average
3,056

 
3,083

 
2,721

 
(0.9
)
 
12.3

S&P 500 EOP
2,585

 
3,231

 
2,834

 
(20.0
)
 
(8.8
)
MSCI EAFE daily average
1,868

 
1,962

 
1,833

 
(4.8
)
 
1.9

MSCI EAFE EOP
1,560

 
2,037

 
1,875

 
(23.4
)
 
(16.8
)
MSCI Emerging Markets daily average
1,030

 
1,051

 
1,033

 
(2.0
)
 
(0.3
)
MSCI Emerging Markets EOP
849

 
1,115

 
1,058

 
(23.9
)
 
(19.8
)
Barclays Capital Global Aggregate Bond Index EOP
510

 
512

 
489

 
(0.4
)
 
4.3

Foreign Exchange Volatility Indices:(3)
 
 
 
 
 
 
 
 
 
JPM G7 Volatility Index daily average
7.2

 
6.0

 
7.4

 
20.0

 
(2.7
)
JPM Emerging Market Volatility Index daily average
8.3

 
7.2

 
8.8

 
15.3

 
(5.7
)
 
 
 
 
 
 
 
 
 
 
Average Foreign Exchange Rate:
 
 
 
 
 
 
 
 
 
Euro vs. USD
1.103

 
1.107

 
1.136

 
(0.4
)
 
(2.9
)
GBP vs. USD
1.280

 
1.288

 
1.302

 
(0.6
)
 
(1.7
)
(1) Includes assets under custody of $23,812 billion, $26,195 billion and $24,569 billion, as of 1Q20, 4Q19, and 1Q19, respectively.
(2) As of period-end.
(3) The index names listed in the table are service marks of their respective owners.

INDUSTRY FLOW DATA

The following table represents industry flow data.
(Dollars in billions)
1Q20

4Q19

3Q19

2Q19

1Q19

North America - ICI Market Data:(1)
 
 
 
 
 
Long Term Funds
$
(347.1
)
$
(51.2
)
$
(51.6
)
$
(38.2
)
$
41.8

Money Market
765.4

168.7

224.5

137.0

54.0

ETF
58.3

126.5

84.8

65.4

45.7

Total ICI Flows
$
476.6

$
244.0

$
257.7

$
164.2

$
141.5

 
 
 
 
 
 
Europe - Broadridge Market Data:(1)(2)
 
 
 
 
 
Long Term Funds
$
130.7

$
143.9

$
49.4

$
27.5

$
5.7

Money Market
30.8

(12.1
)
78.9

1.6

(9.0
)
Total Broadridge Flows
$
161.5

$
131.8

$
128.3

$
29.1

$
(3.3
)
(1) Industry data is provided for illustrative purposes only and is not intended to reflect the Company's or its clients' activity.
(2) 1Q20 data is on a rolling 3 month basis and includes December 2019 through February 2020 for EMEA (Copyright 2020 Broadridge Financial Solutions, Inc.).

4
                    

INVESTMENT SERVICING AUC/A
The following table presents AUC/A information by product and financial instrument.
(Dollars in billions)
1Q20

4Q19

1Q19

 % QoQ

 % YoY

Assets Under Custody and/or Administration(1)
 
 
 
 
 
By Product Classification:
 
 
 
 
 
Mutual funds
$
8,056

$
9,221

$
8,586

(12.6
)%
(6.2
)%
Collective funds, including ETFs
8,662

9,796

9,436

(11.6
)
(8.2
)
Pension products
6,730

6,924

6,513

(2.8
)
3.3

Insurance and other products
8,416

8,417

8,108

—

3.8

Total Assets Under Custody and/or Administration
$
31,864

$
34,358

$
32,643

(7.3
)%
(2.4
)%
By Financial Instrument:
 
 
 
 
 
Equities
$
16,267

$
19,301

$
18,924

(15.7
)%
(14.0
)%
Fixed-income
11,096

10,766

9,831

3.1

12.9

Short-term and other investments
4,501

4,291

3,888

4.9

15.8

Total Assets Under Custody and/or Administration
$
31,864

$
34,358

$
32,643

(7.3
)%
(2.4
)%
(1) As of period-end.
INVESTMENT MANAGEMENT AUM
The following tables present 1Q20 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 December 31, 2019
$
1,991

$
468

$
324

$
157

$
176

 
$
3,116

Net asset flows:
 
 
 
 
 
 
 
Long-term institutional(2)
19

(10
)
(1
)
1

1

 
10

ETF
(13
)
(3
)
9

—

4

 
(3
)
Cash fund
—

—

32

—

—

 
32

Total flows, net
$
6

$
(13
)
$
40

$
1

$
5

 
$
39

Market appreciation/(depreciation)
(419
)
6

2

(16
)
(9
)
 
(436
)
Foreign exchange impact
(17
)
(3
)
(2
)
(1
)
(7
)
 
(30
)
Total market/foreign exchange impact
$
(436
)
$
3

$
—

$
(17
)
$
(16
)
 
$
(466
)
 
 
 
 
 
 
 
 
Ending balance as of March 31, 2020
$
1,561

$
458

$
364

$
141

$
165

 
$
2,689


(Dollars in billions)
 1Q20

 4Q19

 3Q19

 2Q19

 1Q19

Beginning balance
$
3,116

$
2,953

$
2,918

$
2,805

$
2,511

Net asset flows:
 
 
 
 
 
Long-term institutional(2)
10

(16
)
(14
)
16

52

ETF
(3
)
24

12

1

(3
)
Cash fund
32

(11
)
15

3

24

Total flows, net
$
39

$
(3
)
$
13

$
20

$
73

Market appreciation/(depreciation)
(436
)
149

40

86

223

Foreign exchange impact
(30
)
17

(18
)
7

(2
)
Total market and foreign exchange impact
$
(466
)
$
166

$
22

$
93

$
221

 
 
 
 
 
 
Ending balance
$
2,689

$
3,116

$
2,953

$
2,918

$
2,805

 
 
 
 
 
 
(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)
1Q20

4Q19

1Q19

 
 % QoQ
 
% YoY
 
Servicing fees
$
1,287

$
1,299

$
1,251

 
(0.9
)%
 
2.9
 %
 
Management fees
449

465

420

 
(3.4
)
 
6.9

 
Foreign exchange trading services
459

274

280

 
67.5

 
63.9

 
Securities finance revenue
92

111

118

 
(17.1
)
 
(22.0
)
 
Software and processing fees
112

219

191

 
(48.9
)
 
(41.4
)
 
Total fee revenue
$
2,399

$
2,368

$
2,260

 
1.3

 
6.2

 
 
 
 
 
 
 
 
 
 
Net interest income
664

636

673

 
4.4

 
(1.3
)
 
Other income
2

44

(1
)
 
nm

 
nm

 
Total Revenue
$
3,065

$
3,048

$
2,932

 
0.6

 
4.5

 
 
 
 
 
 
 
 
 
 
Net interest margin (FTE)(c)
1.30
%
1.36
%
1.54
%
 
(6
)
bps
(24
)
bps

Servicing fees were up 3% compared to 1Q19, primarily driven by client activity and flows, higher average market levels, and net new business, partially offset by pricing headwinds. Servicing fees were down (1)% compared to 4Q19, largely due to lower average market levels and pricing headwinds, partially offset by higher client activity.

Management fees increased 7% compared to 1Q19, 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 decreased (3)% compared to 4Q19, primarily driven by mix changes away from higher fee institutional products and lower average market levels.

Foreign exchange trading services increased 64% compared to 1Q19 and 68% compared to 4Q19, each mainly reflecting higher FX volume amidst significant market volatility towards quarter-end.

Securities finance decreased (22)% compared to 1Q19 driven by lower spreads and Enhanced Custody balances and (17)% compared to 4Q19 driven by lower spreads and balances.

Software and processing fees decreased (41)% compared to 1Q19, mainly driven by market-related adjustments and tax advantaged investments. Software and processing fees decreased (49)% compared to 4Q19, largely reflecting the absence of 4Q19 seasonal CRD activity and market-related adjustments. CRD contributed $91 million of revenue on a consolidated basis in 1Q20(d).

Net interest income (NII) decreased (1)% compared to 1Q19, primarily due to the impact of lower market rates, partially offset by stronger deposit balances reflecting period-end 1Q20 inflows, and episodic market-related benefits. NII increased 4% compared to 4Q19, largely driven by stronger deposit balances reflecting period-end 1Q20 inflows, and episodic market-related benefits, partially offset by long-term debt issuances. Net interest margin (NIM)(c) decreased 24 basis points compared to 1Q19, primarily due to lower NII and an increase in interest-earning assets as a result of leveraging our balance sheet to support clients. NIM decreased 6 basis points compared to 4Q19, primarily due to higher interest-earning assets, partially offset by higher NII.






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

6
                    

PROVISION FOR CREDIT LOSSES
(Dollars in millions)
1Q20

4Q19

1Q19

 
 % QoQ

 
 % YoY

 
Allowance for credit losses:
 
 
 
 
 
 
 
 
Beginning balance(1)
$
93

$
86

$
83

 
8.1
%
 
12.0
%
 
Provision for credit losses(2)
36

6

—

 
nm

 
nm

 
Charge-offs
(5
)
(1
)
—

 
nm

 
nm

 
Other(3)
—

—

—

 
nm

 
nm

 
Ending balance(4)
$
124

$
91

$
83

 
36.3
%
 
49.4
%
 
 
 
 
 
 
 
 
 
 
(1) We adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2020, Allowance for Credit Losses. Prior to 2020, we recognized an allowance for loan losses under an incurred loss model. Upon adoption, we increased the allowance and reduced retained earnings by approximately $2.6 million. As such, the ending balance for 4Q19 will not agree to the opening balance for 1Q20.
(2) Prior to the adoption of ASU 2016-13, the provision for unfunded commitments was recorded within other expenses in the consolidated statement of income. Upon adoption of ASU 2016-13 in 1Q20, the entire provision for credit losses is recorded within provision for credit losses in the consolidated statement of income. For purposes of this presentation, provision for credit losses includes ($4) million and $3 million for 1Q19 and 4Q19, respectively, for unfunded commitments included within other expenses.  See Allowance for credit losses within the Addendum to this News Release.

(3) Consists primarily of FX translation.
(4) The allowance for credit losses on unfunded commitments is included within Other liabilities in the Consolidated Statement of Condition.
nm = not meaningful

•
Total provision for credit losses, calculated under the Current Expected Credit Loss (CECL) accounting standard adopted on January 1, 2020, increased $36 million compared to 1Q19 and $30 million compared to 4Q19, primarily driven by the impact of COVID-19 driven changes in State Street's economic outlook as of quarter-end on estimated lifetime losses under the CECL standard. The Company's adoption of CECL resulted in a day one increase in the allowance for credit losses and a decrease in retained earnings of approximately $3 million.

EXPENSES
(Dollars in millions)
1Q20

4Q19

1Q19

 
 % QoQ

 
 % YoY

 
Compensation and employee benefits
$
1,208

$
1,145

$
1,229

 
5.5
 %
 
(1.7
)%
 
Information systems and communications
385

362

362

 
6.4

 
6.4

 
Transaction processing services
254

242

242

 
5.0

 
5.0

 
Occupancy
109

126

116

 
(13.5
)
 
(6.0
)
 
Acquisition and restructuring costs
11

29

9

 
(62.1
)
 
22.2

 
Amortization of other intangible assets
58

58

60

 
—

 
(3.3
)
 
Other
230

445

275

 
(48.3
)
 
(16.4
)
 
Total Expenses
$
2,255

$
2,407

$
2,293

 
(6.3
)%
 
(1.7
)%
 
Total expenses, excluding notable items
$
2,244

$
2,128

$
2,270

 
5.5


(1.1
)
 
 
 
 
 
 
 
 
 
 
Effective tax rate
18.1
%
11.6
%
20.1
%
 
650

bps
(200
)
bps

Compensation and employee benefits decreased (2)% compared to 1Q19, primarily driven by optimization savings. Compensation and employee benefits were up 6% compared to 4Q19, mainly driven by seasonal expenses.

Information systems and communications increased 6% compared to 1Q19, largely reflecting software costs and technology infrastructure investments. Information systems and communications increased 6% compared to 4Q19, primarily driven by the absence of 4Q19 supplier renegotiation credits.


Transaction processing services increased 5% compared to both 1Q19 and 4Q19, each primarily reflecting higher transaction volume and broker fees.

Occupancy decreased (6)% compared to 1Q19, due to footprint optimization and decreased (13)% compared to 4Q19, due to footprint optimization and the absence of 4Q19 repositioning costs.

Other expenses decreased (16)% compared to 1Q19, primarily driven by lower marketing spend and travel costs. Compared to 4Q19, other expenses were down (48)%, mainly reflecting the absence of 4Q19 notable items, the absence of 4Q19 State Street Foundation funding, as well as lower marketing spend, travel costs, and professional fees.

The effective tax rate in 1Q20 was 18.1% compared to 20.1% in 1Q19 and 11.6% in 4Q19. Compared to 1Q19, the effective tax rate decreased due to a favorable determination of prior year tax. The 4Q19 effective tax rate included the impacts of a foreign legal entity restructuring.


7
                    

CAPITAL AND LIQUIDITY
The following table presents preliminary estimates of regulatory capital ratios for State Street Corporation.
March 31, 2020
1Q20

4Q19

1Q19

Basel III Standardized Estimated:
 
 
 
Common Equity Tier 1 ratio
10.7
%
11.7
%
11.5
%
Tier 1 capital ratio
12.9

14.6

15.0

Total capital ratio
14.1

15.7

15.9

 
 
 
 
Basel III Advanced Approaches:
 
 
 
Common Equity Tier 1 ratio
11.1

11.7

12.1

Tier 1 capital ratio
13.3

14.5

15.9

Total capital ratio
14.4

15.6

16.7

 
 
 
 
Tier 1 leverage ratio
6.1

6.9

7.4

Supplementary leverage ratio(1)
5.4

6.1

6.6

 
 
 
 
Liquidity coverage ratio
109
%
110
%
110
%
(1) Under the Section 402 central bank deposits relief that will come into effect on April 1, 2020, 1Q20 SLR would have been 7.1%.

Standardized capital ratios were binding for the period. Standardized CET1 ratio declined compared to 4Q19, driven primarily by increased risk-weighted assets. Tier 1 Leverage and Supplementary Leverage ratios decreased quarter-on-quarter driven primarily by increased leverage assets and the redemption of the Company's $500 million Series C preferred stock in 1Q20.

Preliminary estimated average liquidity coverage ratio (LCR) for State Street Corporation of approximately 109%, which is in line with prior periods.





















8
                    

INVESTOR CONFERENCE CALL AND QUARTERLY WEBSITE DISCLOSURE
State Street will webcast an investor conference call today, Friday, April 17th, 2020, at 10:00 a.m. EDT, 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 7446536.

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 7446536.

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 1Q20, State Street expects to publish its updates during the period beginning today and ending on or about May 31, 2020.

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $31.86 trillion in assets under custody and/or administration and $2.69 trillion* in assets under management as of March 31, 2020, 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 March 31, 2020 includes approximately $50 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. This is a non-GAAP presentation. See the Addendum to this News Release for an explanation and reconciliations of our non-GAAP measures.
•
CRD annual contract value bookings, as presented in this News Release, represent signed annual recurring revenue contract value excluding bookings with affiliates, including SSGA. CRD revenue derived from affiliate agreements is eliminated in consolidation for financial reporting purposes.
•
For 1Q20, on a consolidated basis, CRD revenue contributed $95 million, including $91 million in Software and processing fees and $4 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. In March 2020, State Street suspended its common stock purchase program as part of the decision by all Financial Services Forum members to suspend repurchases in light of the COVID-19 pandemic.

•
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.
•
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 ratios were binding for 1Q20. Refer to the Addendum included with this News Release for additional information.
•
All earnings per share amounts represent fully diluted earnings per common share.

10
                    

•
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 and is indicative of only selected segments of the entire industry.
◦
Investment Company Institute (ICI) data includes long term funds, ETFs and money market funds, as well as 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. 1Q20 represents the three month period from January 2020 through March 2020, the last date for which information is available with March 2020 estimates.
◦
Broadridge flows data © Copyright 2020, 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;
•
the significant risks and uncertainties for our business, results of operations and financial condition, as well as our regulatory capital and liquidity ratios and other regulatory requirements in the United States and internationally caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its influence on financial markets, the effectiveness of our work from home arrangements and staffing levels in operational facilities, the impact of market participants on which we rely and actions taken by governmental authorities and other third parties in response to the pandemic;
•
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;

11
                    

•
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 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;

12
                    

•
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 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;

13
                    

•
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 2019 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
Exhibit 99.2
 
STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
March 31, 2020

 
Table of Contents
 
 
GAAP-Basis Financial Information:
 
4-Year Summary of Results
Consolidated Financial Highlights
Consolidated Results of Operations
Consolidated Statement of Condition
Average Statement of Condition - Rates Earned and Paid - Fully Taxable-Equivalent Basis
Assets Under Custody and/or Administration
Assets Under Management
Industry Flow Data by Asset Class
 
 
Investment Portfolio:
 
Investment Portfolio Holdings by Asset Class
Investment Portfolio Non-U.S. Investments
Allowance for Credit Losses
 
 
Non-GAAP Financial Information:
 
Reconciliations of Non-GAAP Financial Information
Reconciliation of Pre-tax Margin Excluding Notable Items
Reconciliation of Notable Items
Reconciliations of Constant Currency FX Impacts
 
 
Capital:
 
Reconciliation of Tangible Common Equity Ratio
Regulatory Capital
Reconciliations of Supplementary Leverage Ratios
 
 
This financial information should be read in conjunction with State Street's news release dated April 17, 2020.
 
 



STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
4-YEAR SUMMARY OF RESULTS
 
 
 
 
 
(Dollars in millions, except per share amounts, or where otherwise noted)
 
2016
 
2017
 
2018
 
2019
Year ended December 31:
 
 
 
 
 
 
 
 
Total fee revenue
 
$
8,200

 
$
9,001

 
$
9,454

 
$
9,147

Net interest income
 
2,084

 
2,304

 
2,671

 
2,566

Other income
 
7

 
(39
)
 
6

 
43

Total revenue
 
10,291

 
11,266

 
12,131

 
11,756

Provision for credit losses
 
10

 
2

 
15

 
10

Total expenses
 
8,077

 
8,269

 
9,015

 
9,034

Income before income tax expense
 
2,204

 
2,995

 
3,101

 
2,712

Income tax expense
 
67

 
839

 
508

 
470

Net income from non-controlling interest
 
1

 
—

 
—

 
—

Net income
 
2,138

 
2,156

 
2,593

 
2,242

Net income available to common shareholders
 
$
1,963

 
$
1,972

 
$
2,404

 
$
2,009

Per common share:
 
 
 
 
 
 
 
 
Diluted earnings per common share
 
$
4.96

 
$
5.19

 
$
6.39

 
$
5.38

Average diluted common shares outstanding (in thousands)
 
396,090

 
380,213

 
376,476

 
373,666

Cash dividends declared per common share
 
$
1.44

 
$
1.60

 
$
1.78

 
$
1.98

Closing price per share of common stock (at year end)
 
77.72

 
97.61

 
63.07

 
79.10

Average balance sheet:
 
 
 
 
 
 
 
 
Investment securities
 
$
100,738

 
$
95,779

 
$
88,070

 
$
91,768

Total assets
 
229,727

 
219,450

 
223,385

 
223,334

Total deposits
 
170,485

 
163,808

 
161,408

 
158,262

Ratios and other metrics:
 
 
 
 
 
 
 
 
Return on average common equity
 
10.4
%
 
10.5
%
 
12.1
%
 
9.4
%
Pre-tax margin
 
21.4

 
26.6

 
25.6

 
23.1

Pre-tax margin, excluding notable items(1)
 
26.2

 
28.7

 
28.8

 
25.8

Net interest margin, fully taxable-equivalent basis
 
1.13

 
1.29

 
1.47

 
1.42

Common equity tier 1 ratio(2)(3)
 
11.7

 
12.3

 
12.1

 
11.7

Tier 1 capital ratio(2)(3)
 
14.8

 
15.5

 
16.0

 
14.5

Total capital ratio(2)(3)
 
16.0

 
16.5

 
16.9

 
15.6

Tier 1 leverage ratio(2)(3)
 
6.5

 
7.3

 
7.2

 
6.9

Supplementary leverage ratio(2)(3)
 
5.9

 
6.5

 
6.3

 
6.1

Assets under custody and/or administration (in trillions)
 
$
28.77

 
$
33.12

 
$
31.62

 
$
34.36

Assets under management (in trillions)
 
2.47

 
2.78

 
2.51

 
3.12

 
 
 
 
 
 
 
 
 
(1) 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.
(2) 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.
(3) 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)
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee revenue
 
$
2,260

 
$
2,260

 
$
2,259

 
$
2,368

 
$
2,399

 
 
6.2
 %
 
 
1.3
 %
 
Net interest income
 
673

 
613

 
644

 
636

 
664

 
 
(1.3
)
 
 
4.4

 
Other income
 
(1
)
 
—

 
—

 
44

 
2

 
 
nm

 
 
nm

 
Total revenue
 
2,932

 
2,873

 
2,903

 
3,048

 
3,065

 
 
4.5

 
 
0.6

 
Provision for credit losses(1)
 
4

 
1

 
2

 
3

 
36

 
 
nm

 
 
nm

 
Total expenses(2)
 
2,293

 
2,154

 
2,180

 
2,407

 
2,255

 
 
(1.7
)
 
 
(6.3
)
 
Income before income tax expense
 
635

 
718

 
721

 
638

 
774

 
 
21.9

 
 
21.3

 
Income tax expense
 
127

 
131

 
138

 
74

 
140

 
 
10.2

 
 
89.2

 
Net income
 
508

 
587

 
583

 
564

 
634

 
 
24.8

 
 
12.4

 
Net income available to common shareholders
 
$
452

 
$
537

 
$
528

 
$
492

 
$
580

 
 
28.3

 
 
17.9

 
Per common share:
 
 
 
 
 
 
 
 
 
 
 
 


 
 


 
Diluted earnings per common share
 
$
1.18

 
$
1.42

 
$
1.42

 
1.35

 
$
1.62

 
 
37.3

 
 
20.0

 
Average diluted common shares outstanding (in thousands)
 
381,703

 
377,577

 
370,595

 
365,851

 
357,993

 
 
(6.2
)
 
 
(2.1
)
 
Cash dividends declared per common share
 
$
.47

 
$
.47

 
$
.52

 
$
.52

 
$
.52

 
 
10.6

 
 
—

 
Closing price per share of common stock (as of quarter end)
 
65.81

 
56.06

 
59.19

 
79.10

 
53.27

 
 
(19.1
)
 
 
(32.7
)
 
Average for the quarter:
 
 
 
 
 


 
 
 
 
 
 


 
 


 
Investment securities
 
$
88,273

 
$
89,930

 
$
93,588

 
$
95,186

 
$
97,560

 
 
10.5

 
 
2.5

 
Total assets
 
219,560

 
221,514

 
223,273

 
228,886

 
251,181

 
 
14.4

 
 
9.7

 
Total deposits
 
155,343

 
156,570

 
157,226

 
163,829

 
180,160

 
 
16.0

 
 
10.0

 
Securities on loan (dollars in billions):
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
Average securities on loan
 
$
368

 
$
389

 
$
388

 
$
376

 
$
378

 
 
2.7

 
 
0.5

 
End-of-period securities on loan
 
398

 
396

 
397

 
380

 
388

 
 
(2.5
)
 
 
2.1

 
Ratios and other metrics:
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
Return on average common equity
 
8.7
%
 
10.1
%
 
9.7
%
 
9.0
%
 
10.9
%
 
 
220

bps
 
190

bps
Pre-tax margin
 
21.7

 
25.0

 
24.8

 
20.9

 
25.3

 
 
360

 
 
440

 
Pre-tax margin, excluding notable items(3)
 
22.5

 
25.4

 
26.4

 
29.1

 
25.6

 
 
310

 
 
(350
)
 
Net interest margin, fully taxable-equivalent basis
 
1.54

 
1.38

 
1.42

 
1.36

 
1.30

 
 
(24
)
 
 
(6
)
 
Common equity tier 1 ratio(4)
 
12.1

 
12.3

 
12.2

 
11.7

 
11.1

 
 
(100
)
 
 
(60
)
 
Tier 1 capital ratio(4)
 
15.9

 
15.9

 
15.9

 
14.5

 
13.3

 
 
(260
)
 
 
(120
)
 
Total capital ratio(4)
 
16.7

 
16.6

 
16.5

 
15.6

 
14.4

 
 
(230
)
 
 
(120
)
 
Tier 1 leverage ratio(4)
 
7.4

 
7.6

 
7.4

 
6.9

 
6.1

 
 
(130
)
 
 
(80
)
 
Supplementary leverage ratio(4)
 
6.6

 
6.7

 
6.6

 
6.1

 
5.4

 
 
(120
)
 
 
(70
)
 
Assets under custody and/or administration (in billions)
 
$
32,643

 
$
32,754

 
$
32,899

 
$
34,358

 
$
31,864

 
 
(2.4
)%
 
 
(7.3
)%
 
Assets under management (in billions)
 
2,805

 
2,918

 
2,953

 
3,116

 
2,689

 
 
(4.1
)
 
 
(13.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) In accordance with ASU 2016-13, the provision for credit losses for 1Q20 includes the provision on funded and unfunded commitments as well as HTM securities. The provision for credit losses on unfunded commitments of ($4 million), $4 million, zero and $3 million for 1Q19, 2Q19, 3Q19 and 4Q19, respectively, is included within other expenses.
(2) 4Q19 expenses include legal and related charges of approximately $140 million, 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
(Dollars in millions, except per share amounts, or where otherwise noted)

1Q19

2Q19

3Q19

4Q19
 
1Q20
 
1Q20
vs.
1Q19

1Q20
vs.
4Q19
Fee revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Servicing fees
 
$
1,251

 
$
1,252

 
$
1,272

 
$
1,299

 
$
1,287

 
2.9
 %
 
 
(0.9
)%
 
Management fees
 
420

 
441

 
445

 
465

 
449

 
6.9

 
 
(3.4
)
 
Foreign exchange trading services
 
280

 
273

 
284

 
274

 
459

 
63.9

 
 
67.5

 
Securities finance
 
118

 
126

 
116

 
111

 
92

 
(22.0
)
 
 
(17.1
)
 
Software and processing fees
 
191

 
168

 
142

 
219

 
112

 
(41.4
)
 
 
(48.9
)
 
Total fee revenue
 
2,260

 
2,260

 
2,259

 
2,368

 
2,399

 
6.2

 
 
1.3

 
Net interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
1,027

 
1,007

 
1,001

 
906

 
868

 
(15.5
)
 
 
(4.2
)
 
Interest expense
 
354

 
394

 
357

 
270

 
204

 
(42.4
)
 
 
(24.4
)
 
Net interest income
 
673

 
613

 
644

 
636

 
664

 
(1.3
)
 
 
4.4

 
Other income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains (losses) related to investment securities, net
 
(1
)
 
—

 
—

 
—

 
2

 
nm

 
 
—

 
Other income
 
—

 
—

 
—

 
44

 
—

 
—

 
 
(100.0
)
 
Total other income
 
(1
)
 
—

 
—

 
44

 
2

 
nm

 
 
nm

 
Total revenue
 
2,932

 
2,873

 
2,903

 
3,048

 
3,065

 
4.5

 
 
0.6

 
Provision for credit losses(1)
 
4

 
1

 
2

 
3

 
36

 
nm

 
 
nm

 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
 
1,229

 
1,084

 
1,083

 
1,145

 
1,208

 
(1.7
)
 
 
5.5

 
Information systems and communications
 
362

 
365

 
376

 
362

 
385

 
6.4

 
 
6.4

 
Transaction processing services
 
242

 
245

 
254

 
242

 
254

 
5.0

 
 
5.0

 
Occupancy
 
116

 
115

 
113

 
126

 
109

 
(6.0
)
 
 
(13.5
)
 
Acquisition and restructuring costs
 
9

 
12

 
27

 
29

 
11

 
22.2

 
 
(62.1
)
 
Amortization of other intangible assets
 
60

 
59

 
59

 
58

 
58

 
(3.3
)
 
 
—

 
Other
 
275

 
274

 
268

 
445

 
230

 
(16.4
)
 
 
(48.3
)
 
Total expenses
 
2,293

 
2,154

 
2,180

 
2,407

 
2,255

 
(1.7
)
 
 
(6.3
)
 
Income before income tax expense
 
635

 
718

 
721

 
638

 
774

 
21.9

 
 
21.3

 
Income tax expense
 
127

 
131

 
138

 
74

 
140

 
10.2

 
 
89.2

 
Net income
 
$
508

 
$
587

 
$
583

 
$
564

 
$
634

 
24.8

 
 
12.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 








4


STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
CONSOLIDATED RESULTS OF OPERATIONS (Continued)
 
 
Quarters
 
% Change
 
(Dollars in millions, except per share amounts, or where otherwise noted)
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
Adjustments to net income:












 
 









Dividends on preferred stock(2)(3)

$
(55
)

$
(50
)

$
(55
)

$
(72
)
 
$
(53
)

(3.6
)%


(26.4
)%


Earnings allocated to participating securities

(1
)

—


—


—

 
(1
)

—



nm



Net income available to common shareholders

$
452


$
537


$
528


$
492

 
$
580


28.3



17.9



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per common share:












 
 









Basic earnings

$
1.20


$
1.44


$
1.44


$
1.36

 
$
1.64


36.7



20.6



Diluted earnings

1.18


1.42


1.42


1.35

 
1.62


37.3



20.0



Average common shares outstanding (in thousands):












 
 









Basic

377,915


373,773


366,732


361,439

 
353,746


(6.4
)


(2.1
)


Diluted

381,703


377,577


370,595


365,851

 
357,993


(6.2
)


(2.1
)


Cash dividends declared per common share

$
.47


$
.47


$
.52


$
.52

 
$
.52


10.6



—



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

65.81


56.06


59.19


79.10

 
53.27


(19.1
)


(32.7
)


Financial ratios:












 
 









Effective tax rate

20.1
%

18.1
%

19.2
%

11.6
%
 
18.1
%

(200
)
bps

650

bps

Return on average common equity

8.7


10.1


9.7


9.0

 
10.9


220



190



Return on tangible common equity(4)

15.0


15.8


16.3


16.3

 
18.7


370



240



Pre-tax margin

21.7


25.0


24.8


20.9

 
25.3


360



440



Pre-tax margin, excluding notable items(5)

22.5


25.4


26.4


29.1

 
25.6


310



(350
)


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) In accordance with ASU 2016-13, the provision for credit losses for 1Q20 includes the provision on funded and unfunded commitments as well as HTM securities. The provision for credit losses on unfunded commitments of ($4 million), $4 million, zero and $3 million for 1Q19, 2Q19, 3Q19 and 4Q19, respectively, is included within other expenses.
(2) We redeemed all outstanding Series C noncumulative perpetual preferred stock on March 16, 2020 at a redemption price of $500 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 approximately $9 million resulted in an EPS impact of approximately ($.03) per share in 2020.
(3) 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 approximately $22 million resulted in an EPS impact of approximately ($.06) per share in 2019.
(4) 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.
(5) Notable items include acquisition and restructuring costs and other notable items. Refer to Reconciliations of non-GAAP Financial Information pages for details.
nm Denotes not meaningful
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


5

STATE STREET CORPORATION
 
EARNINGS RELEASE ADDENDUM
 
CONSOLIDATED STATEMENT OF CONDITION
 
 
 
 
 
 
 
As of
 
% Change
 
(Dollars in millions, except per share amounts)
 
March 31, 2019(1)
 
June 30, 2019(1)
 
September 30, 2019
 
December 31, 2019
 
March 31, 2020
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
4,000

 
$
3,110

 
$
3,598

 
$
3,302

 
$
4,932

 
23.3
 %
 
49.4
 %
 
Interest-bearing deposits with banks
 
53,864

 
62,534

 
62,324

 
68,965

 
147,735

 
174.3

 
114.2

 
Securities purchased under resale agreements
 
1,522

 
1,732

 
3,041

 
1,487

 
1,037

 
(31.9
)
 
(30.3
)
 
Trading account assets
 
856

 
894

 
839

 
914

 
872

 
1.9

 
(4.6
)
 
Investment securities:
 
 
 
 
 

 

 
 
 
 
 
 
 
Investment securities available-for-sale
 
49,002

 
53,242

 
54,757

 
53,815

 
55,843

 
14.0

 
3.8

 
Investment securities held-to-maturity purchased under money market liquidity facility(2)
 
—

 
—

 
—

 
—

 
26,808

 
100.0

 
100.0

 
Investment securities held-to-maturity(3)
 
41,145

 
39,236

 
39,119

 
41,782

 
41,150

 
—

 
(1.5
)
 
Total investment securities
 
90,147

 
92,478

 
93,876

 
95,597

 
123,801

 
37.3

 
29.5

 
Loans
 
23,381

 
25,421

 
27,009

 
26,309

 
32,379

 
38.5

 
23.1

 
Allowance for loan losses(4)
 
70

 
72

 
71

 
74

 
97

 
38.6

 
31.1

 
Loans, net
 
23,311

 
25,349

 
26,938

 
26,235

 
32,282

 
38.5

 
23.0

 
Premises and equipment, net(5)
 
2,230

 
2,244

 
2,306

 
2,282

 
2,225

 
(0.2
)
 
(2.5
)
 
Accrued interest and fees receivable
 
3,277

 
3,202

 
3,258

 
3,231

 
3,274

 
(0.1
)
 
1.3

 
Goodwill
 
7,549

 
7,565

 
7,500

 
7,556

 
7,506

 
(0.6
)
 
(0.7
)
 
Other intangible assets
 
2,208

 
2,155

 
2,077

 
2,030

 
1,963

 
(11.1
)
 
(3.3
)
 
Other assets
 
39,368

 
40,277

 
38,849

 
34,011

 
36,900

 
(6.3
)
 
8.5

 
Total assets
 
$
228,332

 
$
241,540

 
$
244,606

 
$
245,610

 
$
362,527

 
58.8

 
47.6

 
Liabilities:
 
 
 
 
 

 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 

 
 
 
 
 
 
 
 
 
   Non-interest-bearing
 
$
35,295

 
$
34,278

 
$
33,719

 
$
34,031

 
$
69,404

 
96.6

 
103.9

 
   Interest-bearing -- U.S.
 
62,988

 
68,964

 
72,260

 
77,504

 
110,106

 
74.8

 
42.1

 
   Interest-bearing -- Non-U.S.
 
64,188

 
67,352

 
64,907

 
70,337

 
77,594

 
20.9

 
10.3

 
Total deposits(6)
 
162,471

 
170,594

 
170,886

 
181,872

 
257,104

 
58.2

 
41.4

 
Securities sold under repurchase agreements
 
1,420

 
1,829

 
1,330

 
1,102

 
5,373

 
278.4

 
387.6

 
Short-term borrowings under money market liquidity facility
 
—

 
—

 
—

 
—

 
25,665

 
100.0

 
100.0

 
Other short-term borrowings
 
947

 
4,939

 
7,073

 
839

 
4,835

 
410.6

 
476.3

 
Accrued expenses and other liabilities
 
27,274

 
27,350

 
28,653

 
24,857

 
30,151

 
10.5

 
21.3

 
Long-term debt
 
11,182

 
11,374

 
11,455

 
12,509

 
15,538

 
39.0

 
24.2

 
Total liabilities
 
203,294

 
216,086

 
219,397

 
221,179

 
338,666

 
66.6

 
53.1

 
Shareholders' equity:
 
 
 
 
 

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

 
 
 
 
 
 
 
 
 
Series C, 5,000 shares issued and outstanding
 
491

 
491

 
491

 
491

 
—

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

 
742

 
742

 
742

 
742

 
—

 
—

 
Series E, 7,500 shares issued and outstanding
 
728

 
728

 
728

 
—

 
—

 
(100.0
)
 
—

 
Series F, 7,500 shares issued and outstanding
 
742

 
742

 
742

 
742

 
742

 
—

 
—

 
Series G, 5,000 shares issued and outstanding
 
493

 
493

 
493

 
493

 
493

 
—

 
—

 
Series H, 5,000 shares issued and outstanding
 
494

 
494

 
494

 
494

 
494

 
—

 
—

 
Common stock, $1 par, 750,000,000 shares authorized(7)(8)
 
504

 
504

 
504

 
504

 
504

 
—

 
—

 
Surplus
 
10,082

 
10,109

 
10,117

 
10,132

 
10,155

 
0.7

 
0.2

 
Retained earnings
 
20,911

 
21,274

 
21,612

 
21,918

 
22,315

 
6.7

 
1.8

 
Accumulated other comprehensive income (loss)
 
(1,180
)
 
(874
)
 
(985
)
 
(876
)
 
(920
)
 
(22.0
)
 
5.0

 
Treasury stock, at cost(9)
 
(8,969
)
 
(9,249
)
 
(9,729
)
 
(10,209
)
 
(10,664
)
 
18.9

 
4.5

 
Total shareholders' equity
 
25,038

 
25,454

 
25,209

 
24,431

 
23,861

 
(4.7
)
 
(2.3
)
 
Total liabilities and equity
 
$
228,332

 
$
241,540

 
$
244,606

 
$
245,610

 
$
362,527

 
58.8

 
47.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Certain previously reported amounts presented in this earnings release addendum have been reclassified to conform to current-period presentation.
 
 
 
 
(2)Fair value of Investment securities held-to-maturity purchased under money market liquidity facility
 
$
—

 
$
—

 
$
—

 
$
—

 
$
26,808

 
 
 
 
 
(3) Fair value of investment securities held-to-maturity
 
40,971

 
39,473

 
39,535

 
42,157

 
42,201

 
 
 
 
 
(4) Total allowance for credit losses including off-balance sheet commitments
 
83

 
88

 
86

 
91

 
124

 
 
 
 
 
(5) Accumulated depreciation for premises and equipment
 
3,937

 
4,091

 
4,235

 
4,367

 
4,459

 
 
 
 
 
(6) Average total deposits
 
155,343

 
156,570

 
157,226

 
163,829

 
180,160

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

 
503,879,642

 
503,879,642

 
503,879,642

 
503,879,642

 
 
 
 
 
(8) Total common shares outstanding
 
376,720,715

 
372,572,622

 
363,623,285

 
357,389,416

 
351,943,858

 
 
 
 
 

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
 
 
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
(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 balance
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with banks
 
$
48,856

 
0.99
%
 
$
48,074

 
0.91
%
 
$
45,791

 
0.85
%
 
$
51,284

 
0.69
 %
 
$
67,120

 
0.49
 %
 
37.4
 %
 
30.9
 %
 
Securities purchased under resale agreements(2)
 
2,775

 
14.33

 
1,975

 
18.30

 
3,149

 
12.75

 
2,124

 
14.00

 
1,805

 
14.38

 
(35.0
)
 
(15.0
)
 
Trading account assets
 
866

 
—

 
892

 
—

 
880

 
—

 
897

 
—

 
915

 
—

 
5.7

 
2.0

 
Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agencies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct obligations
 
15,427

 
1.79

 
13,960

 
1.83

 
13,614

 
1.83

 
14,017

 
1.83

 
14,102

 
1.79

 
(8.6
)
 
0.6

 
Mortgage-and asset-backed securities
 
39,216

 
3.06

 
41,905

 
2.83

 
44,357

 
2.71

 
44,009

 
2.60

 
43,947

 
2.66

 
12.1

 
(0.1
)
 
State and political subdivisions(3)
 
1,914

 
3.43

 
1,909

 
3.34

 
1,839

 
3.27

 
1,815

 
3.20

 
1,782

 
3.05

 
(6.9
)
 
(1.8
)
 
Other investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset-backed securities
 
9,078

 
2.47

 
9,335

 
2.54

 
9,913

 
2.39

 
10,593

 
2.28

 
10,645

 
1.94

 
17.3

 
0.5

 
Collateralized mortgage-backed securities and obligations
 
980

 
3.78

 
918

 
3.69

 
871

 
3.31

 
818

 
2.95

 
741

 
2.69

 
(24.4
)
 
(9.4
)
 
Investment securities held-to-maturity purchased under money market liquidity facility
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2,111

 
1.52

 
100.0

 
100.0

 
Other debt investments and equity securities(3)
 
21,658

 
1.04

 
21,903

 
1.05

 
22,994

 
1.04

 
23,934

 
1.07

 
24,232

 
1.00

 
11.9

 
1.2

 
Total investment securities
 
88,273

 
2.30

 
89,930

 
2.23

 
93,588

 
2.16

 
95,186

 
2.08

 
97,560

 
2.03

 
10.5

 
2.5

 
Loans(4)
 
23,056

 
3.49

 
23,824

 
3.33

 
23,926

 
3.24

 
25,461

 
2.86

 
28,468

 
2.62

 
23.5

 
11.8

 
Other interest-earning assets
 
15,286

 
2.89

 
15,104

 
3.02

 
13,990

 
3.02

 
12,295

 
2.13

 
10,764

 
1.70

 
(29.6
)
 
(12.5
)
 
Total interest-earning assets
 
179,112

 
2.34

 
179,799

 
2.26

 
181,324

 
2.20

 
187,247

 
1.93

 
206,632

 
1.70

 
15.4

 
10.4

 
Cash and due from banks
 
3,078

 
 
 
4,011

 
 
 
3,114

 
 
 
3,358

 
 
 
3,856

 
 
 
25.3

 
14.8

 
Other assets
 
37,370

 
 
 
37,704

 
 
 
38,835

 
 
 
38,281

 
 
 
40,693

 
 
 
8.9

 
6.3

 
Total assets
 
$
219,560

 
 
 
$
221,514

 
 
 
$
223,273

 
 
 
$
228,886

 
 
 
$
251,181

 
 
 
14.4

 
9.7

 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
 
$
64,531

 
0.83
%
 
$
66,502

 
0.91
%
 
$
67,170

 
0.83
%
 
$
71,910

 
0.64
 %
 
$
80,247

 
0.50
 %
 
24.4

 
11.6

 
Non-U.S.(5)
 
59,775

 
0.26

 
61,303

 
0.39

 
61,355

 
0.21

 
62,737

 
(0.04
)
 
64,340

 
(0.20
)
 
7.6

 
2.6

 
Total interest-bearing deposits(5)
 
124,306

 
0.56

 
127,805

 
0.66

 
128,525

 
0.53

 
134,647

 
0.32

 
144,587

 
0.19

 
16.3

 
7.4

 
Securities sold under repurchase agreements
 
1,773

 
2.66

 
1,488

 
2.19

 
1,998

 
1.45

 
1,208

 
1.18

 
1,773

 
0.55

 
—

 
46.8

 
Short-term borrowings under money market liquidity facility
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2,187

 
1.11

 
100.0

 
100.0

 
Other short-term borrowings
 
1,157

 
1.34

 
2,041

 
1.22

 
1,788

 
1.68

 
1,110

 
1.17

 
2,960

 
1.32

 
155.8

 
166.7

 
Long-term debt
 
10,955

 
3.89

 
11,228

 
3.78

 
11,415

 
3.48

 
12,286

 
3.34

 
13,288

 
2.64

 
21.3

 
8.2

 
Other interest-bearing liabilities
 
4,642

 
5.31

 
3,979

 
6.47

 
3,691

 
7.62

 
4,106

 
4.85

 
3,434

 
3.55

 
(26.0
)
 
(16.4
)
 
Total interest-bearing liabilities
 
142,833

 
1.00

 
146,541

 
1.08

 
147,417

 
0.96

 
153,357

 
0.70

 
168,229

 
0.49

 
17.8

 
9.7

 
Non-interest bearing deposits
 
31,037

 
 
 
28,765

 
 
 
28,701

 
 
 
29,182

 
 
 
35,573

 
 
 
14.6

 
21.9

 
Other liabilities
 
20,921

 
 
 
21,188

 
 
 
21,935

 
 
 
21,140

 
 
 
23,052

 
 
 
10.2

 
9.0

 
Preferred shareholders' equity
 
3,690

 
 
 
3,690

 
 
 
3,690

 
 
 
3,541

 
 
 
2,861

 
 
 
(22.5
)
 
(19.2
)
 
Common shareholders' equity
 
21,079

 
 
 
21,330

 
 
 
21,530

 
 
 
21,666

 
 
 
21,466

 
 
 
1.8

 
(0.9
)
 
Total liabilities and shareholders' equity
 
$
219,560

 
 
 
$
221,514

 
 
 
$
223,273

 
 
 
$
228,886

 
 
 
$
251,181

 
 
 
14.4

 
9.7

 
Excess of rate earned over rate paid
 
 
 
1.34
%
 
 
 
1.18
%
 
 
 
1.24
%
 
 
 
1.23
 %
 
 
 
1.21
 %
 
 
 
 
 
Net interest margin
 
 
 
1.54
%
 
 
 
1.38
%
 
 
 
1.42
%
 
 
 
1.36
 %
 
 
 
1.30
 %
 
 
 
 
 
Net interest income, fully taxable-equivalent basis
 
 
 
$
678

 
 
 
$
618

 
 
 
$
648

 
 
 
$
640

 
 
 
$
668

 
 
 
 
 
Tax-equivalent adjustment
 
 
 
(5
)
 
 
 
(5
)
 
 
 
(4
)
 
 
 
(4
)
 
 
 
(4
)
 
 
 
 
 
Net interest income, GAAP-basis(5)
 
 
 
$
673

 
 
 
$
613

 
 
 
$
644

 
 
 
$
636

 
 
 
$
664

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 $59 billion, $75 billion, $118 billion and $94 billion in the first, second, third and fourth quarters of 2019, respectively, and approximately $124 billion in the first quarter of 2020. Excluding the impact of netting, the average interest rates would be approximately 0.64%, 0.47%, 0.33% and 0.31% in the first, second, third and fourth quarters of 2019, respectively, and approximately 0.21% in the first quarter of 2020.
 
(3)State and political subdivisions consists of municipal bonds and clipper tax exempt bonds.Other debt investments and equity securities consists of non-U.S. government and agency securities, corporate bonds, covered bonds and other.
(4) Average loans are presented on a gross basis. We adopted ASU 2016-13 on January 1, 2020, Allowance for Credit Losses. Prior to 2020, we recognized Allowance for loan losses. Average loans net of allowance for loan losses amount to approximately $23.0 million, $23.8 million, $23.9 million and $25.4 million in the first, second, third and fourth quarters of 2019, respectively, and net of ECL of approximately $28.4 million in the first quarter of 2020.
 
(5) Average rates includes the impact of FX swap expense of approximately $39 million, $59 million, $37 million and $18 million in the first, second, third and fourth quarters of 2019, respectively, and approximately ($2) million in the first quarter of 2020. Average rates for total interest-bearing deposits excluding the impact of FX swap expense were approximately 0.43%, 0.47%, 0.42% and 0.27% for the first, second, third and fourth quarters of 2019, respectively, and approximately 0.19% for the first quarter of 2020.
 

7

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
ASSETS UNDER CUSTODY AND/OR ADMINISTRATION
 
 
 
Quarters
 
% Change
 
(Dollars in billions)
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
Assets Under Custody and/or Administration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By Product Classification:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual funds
 
$
8,586

 
$
8,645

 
$
8,687

 
$
9,221

 
$
8,056

 
(6.2
)%
 
(12.6
)%
 
Collective funds, including ETFs
 
9,436

 
9,272

 
9,224

 
9,796

 
8,662

 
(8.2
)
 
(11.6
)
 
Pension products
 
6,513

 
6,542

 
6,817

 
6,924

 
6,730

 
3.3

 
(2.8
)
 
Insurance and other products
 
8,108

 
8,295

 
8,171

 
8,417

 
8,416

 
3.8

 
—

 
Total Assets Under Custody and/or Administration
 
$
32,643

 
$
32,754

 
$
32,899

 
$
34,358

 
$
31,864

 
(2.4
)
 
(7.3
)
 
By Financial Instrument:
 
 
 
 
 


 
 
 
 
 
 
 
 
 
Equities
 
$
18,924

 
$
18,504

 
$
18,243

 
$
19,301

 
$
16,267

 
(14.0
)
 
(15.7
)
 
Fixed-income
 
9,831

 
10,089

 
10,413

 
10,766

 
11,096

 
12.9

 
3.1

 
Short-term and other investments
 
3,888

 
4,161

 
4,243

 
4,291

 
4,501

 
15.8

 
4.9

 
Total Assets Under Custody and/or Administration
 
$
32,643

 
$
32,754

 
$
32,899

 
$
34,358

 
$
31,864

 
(2.4
)
 
(7.3
)
 
By Geographic Location(1):
 
 
 
 
 


 
 
 
 
 
 
 
 
 
Americas
 
$
23,979

 
$
23,989

 
$
23,888

 
$
25,018

 
$
22,787

 
(5.0
)
 
(8.9
)
 
Europe/Middle East/Africa
 
6,875

 
6,937

 
7,091

 
7,325

 
7,112

 
3.4

 
(2.9
)
 
Asia/Pacific
 
1,789

 
1,828

 
1,920

 
2,015

 
1,965

 
9.8

 
(2.5
)
 
Total Assets Under Custody and/or Administration
 
$
32,643

 
$
32,754

 
$
32,899

 
$
34,358

 
$
31,864

 
(2.4
)
 
(7.3
)
 
Assets Under Custody(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By Product Classification:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual funds
 
$
7,966

 
$
8,012

 
$
8,060

 
$
8,447

 
$
7,416

 
(6.9
)
 
(12.2
)
 
Collective funds, including ETFs
 
7,445

 
7,614

 
7,668

 
8,216

 
7,191

 
(3.4
)
 
(12.5
)
 
Pension products
 
5,307

 
5,236

 
5,457

 
5,554

 
5,395

 
1.7

 
(2.9
)
 
Insurance and other products
 
3,851

 
3,909

 
3,893

 
3,978

 
3,810

 
(1.1
)
 
(4.2
)
 
Total Assets Under Custody
 
$
24,569

 
$
24,771

 
$
25,078

 
$
26,195

 
$
23,812

 
(3.1
)
 
(9.1
)
 
By Geographic Location(1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas
 
$
18,784

 
$
18,911

 
$
19,048

 
$
19,838

 
$
17,701

 
(5.8
)
 
(10.8
)
 
Europe/Middle East/Africa
 
4,462

 
4,515

 
4,615

 
4,858

 
4,666

 
4.6

 
(4.0
)
 
Asia/Pacific
 
1,323

 
1,345

 
1,415

 
1,499

 
1,445

 
9.2

 
(3.6
)
 
Total Assets Under Custody
 
$
24,569

 
$
24,771

 
$
25,078

 
$
26,195

 
$
23,812

 
(3.1
)
 
(9.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Geographic mix is generally based on the domicile of the entity servicing the funds and is not necessarily representative of the underlying asset mix.
 
(2) Assets under custody are a component of assets under custody and/or administration presented above.
 
 

8

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
ASSETS UNDER MANAGEMENT
 
 
 
 
Quarters
 
% Change
 
(Dollars in billions)
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
Assets Under Management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By Asset Class and Investment Approach:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Active
 
$
85

 
$
86

 
$
84

 
$
88

 
$
68

 
(20.0
)%
 
(22.7
)%
 
Passive(1)
 
1,694

 
1,757

 
1,747

 
1,903

 
1,493

 
(11.9
)
 
(21.5
)
 
Total Equity
 
1,779

 
1,843

 
1,831

 
1,991

 
1,561

 
(12.3
)
 
(21.6
)
 
Fixed-Income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Active
 
88

 
93

 
92

 
89

 
89

 
1.1

 
—

 
Passive
 
341

 
357

 
367

 
379

 
369

 
8.2

 
(2.6
)
 
Total Fixed-Income
 
429

 
450

 
459

 
468

 
458

 
6.8

 
(2.1
)
 
Cash(2)
 
314

 
319

 
336

 
324

 
364

 
15.9

 
12.3

 
Multi-Asset-Class Solutions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Active
 
22

 
23

 
23

 
24

 
21

 
(4.5
)
 
(12.5
)
 
Passive
 
125

 
132

 
134

 
133

 
120

 
(4.0
)
 
(9.8
)
 
Total Multi-Asset-Class Solutions
 
147

 
155

 
157

 
157

 
141

 
(4.1
)
 
(10.2
)
 
Alternative Investments(3):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Active
 
21

 
21

 
22

 
21

 
20

 
(4.8
)
 
(4.8
)
 
Passive(1)
 
115

 
130

 
148

 
155

 
145

 
26.1

 
(6.5
)
 
Total Alternative Investments
 
136

 
151

 
170

 
176

 
165

 
21.3

 
(6.3
)
 
Total Assets Under Management
 
$
2,805

 
$
2,918

 
$
2,953

 
$
3,116

 
$
2,689

 
(4.1
)
 
(13.7
)
 
By Geographic Location:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
$
1,899

 
$
1,965

 
$
1,999

 
$
2,115

 
$
1,847

 
(2.7
)
 
(12.7
)
 
Europe/Middle East/Africa
 
447

 
471

 
476

 
493

 
416

 
(6.9
)
 
(15.6
)
 
Asia/Pacific
 
459

 
482

 
478

 
508

 
426

 
(7.2
)
 
(16.1
)
 
Total Assets Under Management
 
$
2,805

 
$
2,918

 
$
2,953

 
$
3,116

 
$
2,689

 
(4.1
)
 
(13.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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
 
$
45

 
$
48

 
$
56

 
$
56

 
$
59

 
31.1
 %
 
5.4
 %
 
Cash
 
8

 
9

 
9

 
9

 
18

 
125.0

 
100.0

 
Equity
 
535

 
548

 
553

 
618

 
474

 
(11.4
)
 
(23.3
)
 
Fixed-Income
 
73

 
77

 
80

 
85

 
78

 
6.8

 
(8.2
)
 
Total Exchange-Traded Funds
 
$
661

 
$
682

 
$
698

 
$
768

 
$
629

 
(4.8
)
 
(18.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Exchange-traded funds are a component of assets under management presented above.

9

STATE STREET CORPORATION
 
EARNINGS RELEASE ADDENDUM
 
INDUSTRY FLOW DATA BY ASSET CLASS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in billions)
 
Quarters
 
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
North America - ICI Market Data(1)(2)(3)
 
 
 
 
 
 
 
 
 
 
Long Term Funds(2)
 
$
41.8

 
$
(38.2
)
 
$
(51.6
)
 
$
(51.2
)
 
$
(347.1
)
 
 
Money Market
 
54.0

 
137.0

 
224.5

 
168.7

 
765.4

 
 
ETF
 
45.7

 
65.4

 
84.8

 
126.5

 
58.3

 
 
 
Total ICI Flows
 
$
141.5

 
$
164.2

 
$
257.7

 
$
244.0

 
$
476.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Europe - Broadridge Market Data(1)(4)(5)
 
 
 
 
 
 
 
 
 
 
Long Term Funds(4)
 
$
5.7

 
$
27.5

 
$
49.4

 
$
143.9

 
$
130.7

 
 
Money Market
 
(9.0
)
 
1.6

 
78.9

 
(12.1
)
 
30.8

 
 
 
Total Broadridge Flows
 
$
(3.3
)
 
$
29.1

 
$
128.3

 
$
131.8

 
$
161.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Industry data is provided for illustrative purposes only. It is not intended to reflect State Street’s or its clients' activity and is indicative of only selected segments of the entire industry.
(2) Source: Investment Company Institute (ICI). ICI data includes long term funds, ETFs and money market funds, as well as 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.
(3) 1Q20 represents the three month period from January 2020 through March 2020, the last date for which information is available with March 2020 estimates.
(4) Source: © Copyright 2020, 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). Broadridge data includes funds for long term funds and money market funds. Broadridge’s long term funds data are also segmented by passive and active funds which includes ETFs. 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.
(5) 1Q20 represents the rolling three month period from December 2019 through February 2020, the last date for which information is available.
 
 
 
 
 
 
 
 
 
 
 
 
 
 

10

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
 
Fair Value
 
% Total
 
Net Unrealized Pre-tax MTM Gain/(Loss)
(In millions)(1)
 
Fixed Rate/
Floating Rate(2)
Available-for-sale investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & agency securities
 
24
%
 
18
%
 
35
%
 
12
%
 
9
%
 
—
%
 
3
%
 
$
21.4

 
38.3
%
 
$
289

 
100% / 0%
Asset-backed securities
 
—

 
89

 
11

 
—

 
—

 
—

 
—

 
5.9

 
10.6

 
(177
)
 
0% / 100%
Student loans
 
—

 
58

 
42

 
—

 
—

 
—

 
—

 
0.5

 
0.8

 
(12
)
 
 
Credit cards
 
—

 
100

 
—

 
—

 
—

 
—

 
—

 
0.1

 
0.2

 
(5
)
 
 
Auto & equipment
 
—

 
74

 
26

 
—

 
—

 
—

 
—

 
0.9

 
1.7

 
(6
)
 
 
Non-U.S. residential mortgage backed securities
 
—

 
94

 
6

 
—

 
—

 
—

 
—

 
1.7

 
3.0

 
(18
)
 
 
Collateralized loan obligation
 
—

 
100

 
—

 
—

 
—

 
—

 
—

 
2.7

 
4.8

 
(136
)
 
 
Other
 
—

 
—

 
100

 
—

 
—

 
—

 
—

 
0.1

 
0.2

 
(1
)
 
 
Mortgage-backed securities
 
100

 
—

 
—

 
—

 
—

 
—

 
—

 
15.6

 
28.0

 
530

 
99% / 1%
Agency MBS
 
100

 
—

 
—

 
—

 
—

 
—

 
—

 
15.6

 
28.0

 
530

 
 
Non-agency MBS
 
—

 
100

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
CMBS
 
97

 
3

 
—

 
—

 
—

 
—

 
—

 
2.8

 
5.0

 
(9
)
 
23% / 73%
Corporate bonds
 
—

 
—

 
10

 
38

 
51

 
—

 
—

 
4.4

 
7.9

 
(46
)
 
98% / 2%
Covered bonds
 
—

 
100

 
—

 
—

 
—

 
—

 
—

 
0.5

 
0.8

 
3

 
14% / 86%
Municipal bonds
 
—

 
24

 
71

 
5

 
—

 
—

 
—

 
0.8

 
1.5

 
41

 
100% / 0%
Clipper tax-exempt bonds
 
—

 
12

 
60

 
22

 
6

 
—

 
—

 
0.9

 
1.7

 
—

 
0% / 100%
Other
 
—

 
89

 
11

 
—

 
—

 
—

 
—

 
3.4

 
6.2

 
13

 
96% / 4%
Total available-for-sale portfolio
 
42
%
 
23
%
 
18
%
 
8
%
 
8
%
 
—
%
 
1
%
 
$
55.8

 
100.0
%
 
$
644

 
82% / 18%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value
 
$
23.5

 
$
13.0

 
$
10.0

 
$
4.5

 
$
4.2

 
$
0.1

 
$
0.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UST/AGY
 
AAA
 
AA
 
A
 
BBB
 
<BBB
 
NR
 
Amortized Cost
 
% Total
 
Net Unrealized Pre-tax MTM Gain/(Loss)
(In millions)(1)
 
Fixed Rate/
Floating Rate(2)
Held-to-maturity investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & agency securities
 
97
%
 
3
%
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
$
9.5

 
14.0
%
 
$
171

 
100% / 0%
Asset-backed securities
 
—

 
26

 
66

 
2

 
4

 
1

 
—

 
4.4

 
6.5

 
(105
)
 
0% / 100%
Student loans
 
—

 
26

 
70

 
—

 
3

 
1

 
—

 
4.1

 
6.0

 
(147
)
 
 
Other
 
—

 
30

 
21

 
29

 
9

 
11

 
—

 
0.3

 
0.5

 
42

 
 
Mortgage-backed securities
 
100

 
—

 
—

 
—

 
—

 
—

 
—

 
23.9

 
35.2

 
868

 
99% / 1%
Agency MBS
 
100

 
—

 
—

 
—

 
—

 
—

 
—

 
23.8

 
35.1

 
853

 
 
Non-agency MBS
 
—

 
—

 
6

 
13

 
17

 
50

 
14

 
0.1

 
0.2

 
15

 
 
CMBS
 
85

 
15

 
—

 
—

 
—

 
—

 
—

 
3.4

 
4.8

 
117

 
77% / 23%
Held-to-maturity under money market liquidity facility
 
—

 
—

 
1

 
—

 
—

 
—

 
99

 
26.8

 
39.5

 
(4
)
 
100% / 0%
Total held-for-maturity portfolio
 
53
%
 
3
%
 
5
%
 
—
%
 
—
%
 
—
%
 
39
%
 
$
68.0

 
100.0
%
 
$
1,047

 
92% / 8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortized Cost
 
$
35.9

 
$
1.9

 
$
3.2

 
$
0.1

 
$
0.2

 
$
0.1

 
$
26.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) At March 31, 2020, the after-tax unrealized MTM gain/(loss) includes after-tax unrealized gain on securities available-for-sale of $477 million, after-tax unrealized gain on securities held-to-maturity of $775 million and after-tax unrealized loss primarily related to securities previously transferred from available-for-sale to held-to-maturity of ($20) million.
(2) At March 31, 2020, fixed-to-floating rate securities had a book value of approximately $271 million or .22% of the total portfolio.

11

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
INVESTMENT PORTFOLIO NON-U.S. INVESTMENTS
 
 
 
 
 
 
 
FV for AFS and AC for HTM
(Dollars in billions)
 
FV for AFS and AC for HTM
 
Average Rating
 
Gov't/Agency(1)(2)
 
ABS
FRMBS
 
ABS
All Other
 
Corporate Bonds
 
Covered Bonds
 
Other
 
MMLF
Germany
 
$
3.2

 
 AA
 
$
2.6

 
$
—

 
$
0.6

 
$
0.1

 
$
—

 
$
—

 
$
—

Canada
 
3.2

 
AAA
 
2.9

 
—

 
—

 
0.2

 
—

 
—

 
0.1

United Kingdom
 
3.2

 
 AAA
 
2.1

 
0.5

 
0.2

 
0.3

 
—

 
—

 
—

France
 
2.4

 
AA
 
1.3

 
—

 
0.6

 
0.2

 
0.2

 
—

 
0.1

Australia
 
2.4

 
 AAA
 
0.7

 
1.0

 
—

 
0.2

 
—

 
0.6

 
—

Japan
 
2.2

 
 AA
 
1.4

 
—

 
—

 
—

 
—

 
—

 
0.8

Spain
 
1.6

 
BBB
 
1.4

 
0.1

 
0.1

 
—

 
—

 
—

 
—

Austria
 
1.4

 
AA
 
1.4

 
—

 
—

 
—

 
—

 
—

 
—

Netherlands
 
1.3

 
 AA
 
0.6

 
0.3

 
—

 
0.4

 
—

 
—

 
—

Belgium
 
1.2

 
AA
 
1.1

 
—

 
—

 
—

 
0.2

 
—

 
—

Ireland
 
1.2

 
A
 
1.2

 
—

 
—

 
—

 
—

 
—

 
—

Italy
 
1.1

 
A
 
0.7

 
0.1

 
0.3

 
—

 
—

 
—

 
—

Finland
 
1.0

 
AA
 
0.9

 
—

 
—

 
—

 
—

 
—

 
—

Hong Kong
 
0.6

 
 AA
 
0.6

 
—

 
—

 
—

 
—

 
—

 
—

Other
 
1.3

 
 AA
 
0.5

 
—

 
—

 
0.2

 
0.1

 
—

 
0.4

Total Non-U.S. Investments(3)
 
$
27.3

 
 
 
$
19.4

 
$
2.0

 
$
1.8

 
$
1.6

 
$
0.5

 
$
0.6

 
$
1.4

U.S. Investments
 
96.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio
 
$
123.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Sovereign debt is reflected in the government / agency column.
 
 
(2) As of March 31, 2020, the fair value included $6.0 billion of supranational and non-U.S. agency bonds.
 
 
(3) Country of collateral used except for corporates where country of issuer is used.
 
 





12

STATE STREET CORPORATION
 
EARNINGS RELEASE ADDENDUM
 
ALLOWANCE FOR CREDIT LOSSES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters
 
% Change
 
(Dollars in millions)
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance(1)
 
$
83

 
$
83

 
$
88

 
$
86

 
$
93

 
12.0
%
 
8.1
%
 
Provision for credit losses (funded commitments)
 
4

 
1

 
2

 
3

 
29

 
nm

 
nm

 
Provision for credit losses (unfunded commitments)(2)
 
(4
)
 
4

 
—

 
3

 
3

 
nm

 
nm

 
Provision for credit losses (held-to-maturity securities)
 
—

 
—

 
—

 
—

 
4

 
nm

 
nm

 
Total provision
 
—

 
5

 
2

 
6

 
36

 
nm

 
nm

 
Charge-offs
 
—

 
—

 
(2
)
 
(1
)
 
(5
)
 
nm

 
nm

 
Other(3)
 
—

 
—

 
(2
)
 
—

 
—

 
nm

 
nm

 
Ending balance(4)
 
$
83

 
$
88

 
$
86

 
$
91

 
$
124

 
49.4

 
36.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
$
70

 
$
72

 
$
71

 
$
74

 
$
97

 
38.6

 
31.1

 
Held-to-maturity securities
 
—

 
—

 
—

 
—

 
4

 
nm

 
nm

 
Unfunded (Off-Balance Sheet) Commitments
 
13

 
16

 
15

 
17

 
22

 
69.2

 
29.4

 
All Other
 
—

 
—

 
—

 
—

 
1

 
nm

 
nm

 
Ending balance(4)
 
$
83

 
$
88

 
$
86

 
$
91

 
$
124

 
49.4

 
36.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) We adopted ASU 2016-13 on January 1, 2020, Allowance for Credit Losses. Prior to 2020, we recognized allowance for loan losses under an incurred loss model. Upon adoption, we increased the allowance and reduced retained earnings by approximately $2.6 million. As such, the ending balance for 4Q19 will not agree to the opening balance for 1Q20.
 
(2) Prior to the adoption of ASU 2016-13, the provision for unfunded commitments was recorded within Other expenses in the consolidated statement of income. Upon adoption of ASU 2016-13 in 1Q20, the provision for all assets within scope is recorded within Provision for credit losses in the consolidated statement of income.
 
(3) Consists primarily of FX translation.
 
(4) The allowance for credit losses on unfunded commitments is included within Other liabilities in the Consolidated Statement of Condition.
 
nm Not meaningful
 


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 "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. 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
 
(Dollars in millions)

1Q19

2Q19

3Q19
 
4Q19
 
1Q20
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
Fee Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total fee revenue, GAAP-basis
 
$
2,260

 
$
2,260

 
$
2,259

 
$
2,368

 
$
2,399

 
6.2
 %
 
 
1.3
 %
 
 
Add: legal and related
 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
Total fee revenue, excluding notable items
 
$
2,260

 
$
2,260

 
$
2,259

 
$
2,368

 
$
2,399

 
6.2

 
 
1.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue, GAAP-basis
 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,048

 
$
3,065

 
4.5
 %
 
 
0.6
 %
 
 
Add: legal and related
 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
Less: other income
 
—

 
—

 
—

 
(44
)
 
—

 
 
 
 
 
 
 
Total revenue, excluding notable items
 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,004

 
$
3,065

 
4.5

 
 
2.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total expenses, GAAP-basis
 
$
2,293

 
$
2,154

 
$
2,180

 
$
2,407

 
$
2,255

 
(1.7
)%
 
 
(6.3
)%
 
 
Less: Notable expense items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs(1)
 
(9
)
 
(12
)
 
(27
)
 
(29
)
 
(11
)
 
 
 
 
 
 
 
Repositioning charges
 
—

 
—

 
—

 
(110
)
 
—

 
 
 
 
 
 
 
Legal and related
 
(14
)
 
—

 
(18
)
 
(140
)
 
—

 
 
 
 
 
 
 
Total expenses, excluding notable items
 
$
2,270

 
$
2,142

 
$
2,135

 
$
2,128

 
$
2,244

 
(1.1
)

 
5.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Operating Leverage, GAAP-Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total fee revenue, GAAP-basis
 
$
2,260

 
$
2,260

 
$
2,259

 
$
2,368

 
$
2,399

 
6.2
 %
 
 
1.3
 %
 
 
Total expenses, GAAP-basis
 
2,293

 
2,154

 
2,180

 
2,407

 
2,255

 
(1.7
)
 
 
(6.3
)
 
 
Fee operating leverage, GAAP-basis
 
 
 
 
 
 
 
 
 
 
 
790

bps
 
760

bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Operating Leverage, excluding notable items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total fee revenue, excluding notable items (as reconciled above)
 
$
2,260

 
$
2,260

 
$
2,259

 
$
2,368

 
$
2,399

 
6.2
 %
 
 
1.3
 %
 
 
Total expenses, excluding notable items (as reconciled above)
 
2,270

 
2,142

 
2,135

 
2,128

 
2,244

 
(1.1
)
 
 
5.5

 
 
Fee operating leverage, excluding notable items
 
 
 
 
 
 
 
 
 
 
 
730

bps
 
(420
)
bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Leverage, GAAP-Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue, GAAP-basis
 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,048

 
$
3,065

 
4.5
 %
 
 
0.6
 %
 
 
Total expenses, GAAP-basis
 
2,293

 
2,154

 
2,180

 
2,407

 
2,255

 
(1.7
)
 
 
(6.3
)
 
 
Operating leverage, GAAP-basis
 
 
 
 
 
 
 
 
 
 
 
620

bps
 
690

bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Leverage, excluding notable items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue, excluding notable items (as reconciled above)
 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,004

 
$
3,065

 
4.5
 %
 
 
2.0
 %
 
 
Total expenses, excluding notable items (as reconciled above)
 
2,270

 
2,142

 
2,135

 
2,128

 
2,244

 
(1.1
)
 
 
5.5

 
 
Operating leverage, excluding notable items
 
 
 
 
 
 
 
 
 
 
 
560

bps
 
(350
)
bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

14

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
RECONCILIATIONS OF NON-GAAP FINANCIAL INFORMATION (Continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters
 
% Change
 
(Dollars in millions, except per Earnings per share, or where otherwise noted)
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
Net Income Available to Common Shareholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Available to Common Shareholders, GAAP-basis
 
$
452

 
$
537

 
$
528

 
$
492

 
$
580

 
28.3
 %
 
 
17.9
 %
 
 
Less: Notable items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs(1)
 
9

 
12

 
27

 
29

 
11

 
 
 
 
 
 
 
Repositioning charges
 
—

 
—

 
—

 
110

 
—

 
 
 
 
 
 
 
Legal and related
 
14

 
—

 
18

 
140

 
—

 
 
 
 
 
 
 
Other income
 
—

 
—

 
—

 
(44
)
 
—

 
 
 
 
 
 
 
Preferred securities redemption(2)
 
—

 
—

 
—

 
22

 
9

 
 
 
 
 
 
 
Tax impact of notable items
 
(2
)
 
(3
)
 
(12
)
 
(25
)
 
(3
)
 
 
 
 
 
 
 
Net Income Available to Common Shareholders, excluding notable items
 
$
473

 
$
546

 
$
561

 
$
724

 
$
597

 
26.2

 
 
(17.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted Earnings per Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share, GAAP-basis
 
$
1.18

 
$
1.42

 
$
1.42

 
$
1.35

 
$
1.62

 
37.3
 %
 
 
20.0
 %
 
 
Less: Notable items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs(1)
 
0.02

 
0.03

 
0.06

 
0.06

 
0.02

 
 
 
 
 
 
 
Repositioning charges
 
—

 
—

 
—

 
0.22

 
—

 
 
 
 
 
 
 
Legal and related
 
0.04

 
—

 
0.03

 
0.38

 
—

 
 
 
 
 
 
 
Other income
 
—

 
—

 
—

 
(0.09
)
 
—

 
 
 
 
 
 
 
Preferred securities redemption(2)(3)
 
—

 
—

 
—

 
0.06

 
0.03

 
 
 
 
 
 
 
Diluted earnings per share, excluding notable items
 
$
1.24

 
$
1.45

 
$
1.51

 
$
1.98

 
$
1.67

 
34.7

 
 
(15.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax Margin:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax margin, GAAP-basis
 
21.7
%
 
25.0
%
 
24.8
 %
 
20.9
 %
 
25.3
 %
 
360

bps
 
440

bps
 
Less: Notable items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs(1)
 
0.3

 
0.4

 
1.0

 
1.0

 
0.3

 
 
 
 
 
 
 
Repositioning charges
 
—

 
—

 
—

 
3.6

 
—

 
 
 
 
 
 
 
Legal and related
 
0.5

 
—

 
0.6

 
4.7

 
—

 
 
 
 
 
 
 
Other income
 
—

 
—

 
—

 
(1.1
)
 
—

 
 
 
 
 
 
 
Pre-tax margin, excluding notable items
 
22.5
%
 
25.4
%
 
26.4
 %
 
29.1
 %
 
25.6
 %
 
310

 
 
(350
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on Average Common Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average common equity, GAAP-basis
 
8.7
%
 
10.1
%
 
9.7
 %
 
9.0
 %
 
10.9
 %
 
220

bps
 
190

bps
 
Less: Notable items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and restructuring costs(1)
 
0.2

 
0.2

 
0.5

 
0.5

 
0.2

 
 
 
 
 
 
 
Repositioning charges
 
—

 
—

 
—

 
2.0

 
—

 
 
 
 
 
 
 
Legal and related
 
0.2

 
—

 
0.3

 
2.6

 
—

 
 
 
 
 
 
 
Other income
 
—

 
—

 
—

 
(0.8
)
 
—

 
 
 
 
 
 
 
Preferred securities redemption(2)(3)
 
—

 
—

 
—

 
0.4

 
0.2

 
 
 
 
 
 
 
Tax impact of notable items
 
—

 
—

 
(0.2
)
 
(0.4
)
 
(0.1
)
 
 
 
 
 
 
 
Return on average common equity, excluding notable items
 
9.1
%
 
10.3
%
 
10.3
 %
 
13.3
 %
 
11.2
 %
 
210

 
 
(210
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Acquisition and restructuring costs of approximately $11 million in 1Q20, consisting of acquisition costs primarily related to CRD.
(2) We redeemed all outstanding Series C noncumulative perpetual preferred stock on March 16, 2020 at a redemption price of $500 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 approximately $9 million resulted in an EPS impact of approximately ($.03) per share in 2020.
(3) 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 approximately $22 million resulted in an EPS impact of approximately ($.06) per share in 2019.

15

STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
RECONCILIATION OF PRE-TAX MARGIN EXCLUDING NOTABLE ITEMS
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
2016(1)
 
2017
 
2018(1)
 
2019
Total revenue:
 
 
 
 
 
 
 
 
Total revenue, GAAP-basis
 
$
10,291

 
$
11,266

 
$
12,131

 
$
11,756

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

 
—

 
 
Add: Impact of tax legislation
 
—

 
20

 
—

 
—

 
 
Add: Legal and related
 
43

 
—

 
8

 
—

 
 
Less: Other income
 
—

 
—

 
—

 
(44
)
Total revenue, excluding notable items
 
10,281

 
11,230

 
12,139

 
11,712

 
 
 
 
 
 
 
 
 
 
 
Provision for credit losses
 
10

 
2

 
15

 
10

Total expenses:
 
 
 
 
 
 
 
 
Total expenses, GAAP-basis
 
8,077

 
8,269

 
9,015

 
9,034

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

 
(42
)
 
(172
)
 
 
Repositioning charges(1)
 
11

 
—

 
(324
)
 
(110
)
 
 
Acceleration of deferred cash awards
 
(249
)
 
—

 
—

 
—

Total expenses, excluding notable items
 
7,574

 
8,003

 
8,625

 
8,675

Income before income tax expense, excluding notable items
 
$
2,697

 
$
3,225

 
$
3,499

 
$
3,027

 
 
 
 
 
 
 
 
 
Income before income tax expense, GAAP-basis
 
$
2,204

 
$
2,995

 
$
3,101

 
$
2,712

 
 
 
 
 
 
 
 
 
 
 
Pre-tax margin, excluding notable items
 
26.2
%
 
28.7
%
 
28.8
%
 
25.8
%
Pre-tax margin, GAAP-basis
 
21.4

 
26.6

 
25.6

 
23.1

 
(1) Includes charges in 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
 
(Dollars in millions)
 
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
Total revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue, GAAP-basis
 
 
$
2,932

 
$
2,873

 
$
2,903

 
$
3,048

 
$
3,065

 
4.5
 %
 
0.6
 %
 
Add: legal and related
 
 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
Less: other income
 
 
—

 
—

 
—

 
(44
)
 
—

 
 
 
 
 
Total revenue, excluding notable items
 
 
2,932

 
2,873

 
2,903

 
3,004

 
3,065

 
4.5

 
2.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total expenses, GAAP basis
 
 
$
2,293

 
$
2,154

 
$
2,180

 
$
2,407

 
$
2,255

 
(1.7
)
 
(6.3
)
 
Less: Notable expense items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repositioning charges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
 
 
—

 
—

 
—

 
(98
)
 
—

 
—

 
(100.0
)
 
Occupancy
 
 
—

 
—

 
—

 
(12
)
 
—

 
—

 
(100.0
)
 
Repositioning charges
 
 
—

 
—

 
—

 
(110
)
 
—

 
—

 
(100.0
)
 
Acquisition and restructuring costs
 
 
(9
)
 
(12
)
 
(27
)
 
(29
)
 
(11
)
 
22.2

 
(62.1
)
 
Legal and related
 
 
(14
)
 
—

 
(18
)
 
(140
)
 
—

 
(100.0
)
 
(100.0
)
 
Total expenses, excluding notable items
 
 
2,270

 
2,142

 
2,135

 
2,128

 
2,244

 
(1.1
)
 
5.5

 
CRD expenses
 
 
(41
)
 
(46
)
 
(56
)
 
(58
)
 
(58
)
 
41.5

 
—

 
CRD related expenses: intangible asset amortization costs
 
 
(15
)
 
(17
)
 
(17
)
 
(16
)
 
(17
)
 
13.3

 
6.3

 
Total expenses, excluding notable items and CRD and CRD related expenses
 
 
2,214

 
2,079

 
2,062

 
2,054

 
2,169

 
(2.0
)
 
5.6

 
Seasonal expenses
 
 
(137
)
 
—

 
—

 
—

 
(151
)
 
10.2

 
—

 
Total expenses, excluding notable items, seasonal items, CRD and CRD related expenses
 
 
2,077

 
2,079

 
2,062

 
2,054

 
2,018

 
(2.8
)
 
(1.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Available to Common Shareholders, GAAP-basis
 
 
$
452

 
$
537

 
$
528

 
$
492

 
$
580

 
28.3

 
17.9

 
Notable items as reconciled above: pre-tax
 
 
23

 
12

 
45

 
235

 
11

 
 
 
 
 
Tax impact on notable items as reconciled above
 
 
(2
)
 
(3
)
 
(12
)
 
(25
)
 
(3
)
 
 
 
 
 
Preferred security cost
 
 
—

 
—

 
—

 
22

 
9

 
 
 
 
 
Net Income Available to Common Shareholders, excluding notable items
 
 
473

 
546

 
561

 
724

 
597

 
26.2

 
(17.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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)
 
1Q19
 
4Q19
 
1Q20
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
 
1Q20
vs.
1Q19
 
1Q20
vs.
4Q19
GAAP-Basis Results:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Servicing fees
 
$
1,251

 
$
1,299

 
$
1,287

 
$
(6
)
 
$
(2
)
 
$
1,293

 
$
1,289

 
3.4
 %
 
(0.8
)%
Management fees
 
420

 
465

 
449

 
(3
)
 
(2
)
 
452

 
451

 
7.6

 
(3.0
)
Foreign exchange trading services
 
280

 
274

 
459

 
—

 
—

 
459

 
459

 
63.9

 
67.5

Securities finance
 
118

 
111

 
92

 
—

 
—

 
92

 
92

 
(22.0
)
 
(17.1
)
Software and processing fees
 
191

 
219

 
112

 
(1
)
 
(1
)
 
113

 
113

 
(40.8
)
 
(48.4
)
Total fee revenue
 
2,260

 
2,368

 
2,399

 
(10
)
 
(5
)
 
2,409

 
2,404

 
6.6

 
1.5

Net interest income
 
673

 
636

 
664

 
(5
)
 
(3
)
 
669

 
667

 
(0.6
)
 
4.9

Total other income
 
(1
)
 
44

 
2

 
—

 
—

 
2

 
2

 
nm

 
nm

Total revenue
 
$
2,932

 
$
3,048

 
$
3,065

 
$
(15
)
 
$
(8
)
 
$
3,080

 
$
3,073

 
5.0

 
0.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
 
$
1,229

 
$
1,145

 
$
1,208

 
$
(12
)
 
$
(6
)
 
$
1,220

 
$
1,214

 
(0.7
)
 
6.0

Information systems and communications
 
362

 
362

 
385

 
(1
)
 
—

 
386

 
385

 
6.6

 
6.4

Transaction processing services
 
242

 
242

 
254

 
(1
)
 
—

 
255

 
254

 
5.4

 
5.0

Occupancy
 
116

 
126

 
109

 
(1
)
 
(1
)
 
110

 
110

 
(5.2
)
 
(12.7
)
Acquisition and restructuring costs
 
9

 
29

 
11

 
—

 
—

 
11

 
11

 
22.2

 
(62.1
)
Amortization of other intangible assets
 
60

 
58

 
58

 
—

 
—

 
58

 
58

 
(3.3
)
 
—

Other
 
275

 
445

 
230

 
(1
)
 
—

 
231

 
230

 
(16.0
)
 
(48.3
)
Total expenses
 
$
2,293

 
$
2,407

 
$
2,255

 
$
(16
)
 
$
(7
)
 
$
2,271

 
$
2,262

 
(1.0
)
 
(6.0
)
 
 
 
 
 
 
 
 
 
 
 
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)
 
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
Consolidated total assets
 
 
$
228,332

 
$
241,540

 
$
244,606

 
$
245,610

 
$
362,527

 
Less:
 
 
 
 
 
 
 
 
 
 
 
 
   Goodwill
 
 
7,549

 
7,565

 
7,500

 
7,556

 
7,506

 
   Other intangible assets
 
 
2,208

 
2,155

 
2,077

 
2,030

 
1,963

 
Cash balances held at central banks in excess of required reserves
 
 
44,294

 
52,847

 
57,330

 
65,812

 
144,955

 
Adjusted assets
 
 
174,281

 
178,973

 
177,699

 
170,212

 
208,103

 
   Plus related deferred tax liabilities
 
 
464

 
464

 
462

 
475

 
476

 
Total tangible assets
A
 
$
174,745

 
$
179,437

 
$
178,161

 
$
170,687

 
$
208,579

 
Consolidated total common shareholders' equity
 
 
$
21,348

 
$
21,764

 
$
21,519

 
$
21,469

 
$
21,390

 
Less:
 
 
 
 
 
 
 
 
 
 
 
 
   Goodwill
 
 
7,549

 
7,565

 
7,500

 
7,556

 
7,506

 
   Other intangible assets
 
 
2,208

 
2,155

 
2,077

 
2,030

 
1,963

 
Adjusted equity
 
 
11,591

 
12,044

 
11,942

 
11,883

 
11,921

 
   Plus related deferred tax liabilities
 
 
464

 
464

 
462

 
475

 
476

 
Total tangible common equity
B
 
$
12,055

 
$
12,508

 
$
12,404

 
$
12,358

 
$
12,397

 
Tangible common equity ratio
B/A
 
6.9
%
 
7.0
%
 
7.0
%
 
7.2
%
 
5.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP-basis:
 
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
 
 
$
452

 
$
537

 
$
528

 
$
492

 
$
580

 
Return on tangible common equity
 
 
15.0
%
 
15.8
%
 
16.3
%
 
16.3
%
 
18.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

19

 
STATE STREET CORPORATION
EARNINGS RELEASE ADDENDUM
REGULATORY CAPITAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters
 
 
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
1Q20
 
(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)
 
RATIOS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
 
12.1
%
 
11.5
%
 
12.3
%
 
11.5
%
 
12.2
%
 
11.3
%
 
11.7
%
 
11.7
%
 
11.1
%
 
10.7
%
 
Tier 1 capital
 
15.9

 
15.0

 
15.9

 
14.9

 
15.9

 
14.6

 
14.5

 
14.6

 
13.3

 
12.9

 
Total capital
 
16.7

 
15.9

 
16.6

 
15.5

 
16.5

 
15.3

 
15.6

 
15.7

 
14.4

 
14.1

 
Tier 1 leverage
 
7.4

 
7.4

 
7.6

 
7.6

 
7.4

 
7.4

 
6.9

 
6.9

 
6.1

 
6.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supporting Calculations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
 
$
11,899

 
$
11,899

 
$
12,367

 
$
12,367

 
$
12,229

 
$
12,229

 
$
12,213

 
$
12,213

 
$
12,115

 
$
12,115

 
Total risk-weighted assets
 
98,023

 
103,643

 
100,699

 
107,972

 
100,327

 
108,701

 
104,364

 
104,005

 
109,268

 
112,740

 
Common equity tier 1 risk-based capital ratio
 
12.1
%
 
11.5
%
 
12.3
%
 
11.5
%
 
12.2
%
 
11.3
%
 
11.7
%
 
11.7
%
 
11.1
%
 
10.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital
 
$
15,589

 
$
15,589

 
$
16,058

 
$
16,058

 
$
15,919

 
$
15,919

 
$
15,175

 
$
15,175

 
$
14,586

 
$
14,586

 
Total risk-weighted assets
 
98,023

 
103,643

 
100,699

 
107,972

 
100,327

 
108,701

 
104,364

 
104,005

 
109,268

 
112,740

 
Tier 1 risk-based capital ratio
 
15.9
%
 
15.0
%
 
15.9
%
 
14.9
%
 
15.9
%
 
14.6
%
 
14.5
%
 
14.6
%
 
13.3
%
 
12.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital
 
$
16,386

 
$
16,460

 
$
16,672

 
$
16,748

 
$
16,530

 
$
16,612

 
$
16,275

 
$
16,360

 
$
15,770

 
$
15,877

 
Total risk-weighted assets
 
98,023

 
103,643

 
100,699

 
107,972

 
100,327

 
108,701

 
104,364

 
104,005

 
109,268

 
112,740

 
Total risk-based capital ratio
 
16.7
%
 
15.9
%
 
16.6
%
 
15.5
%
 
16.5
%
 
15.3
%
 
15.6
%
 
15.7
%
 
14.4
%
 
14.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital
 
$
15,589

 
$
15,589

 
$
16,058

 
$
16,058

 
$
15,919

 
$
15,919

 
$
15,175

 
$
15,175

 
$
14,586

 
$
14,586

 
Adjusted quarterly average assets
 
210,099

 
210,099

 
212,127

 
212,127

 
213,997

 
213,997

 
219,624

 
219,624

 
239,861

 
239,861

 
Tier 1 leverage ratio
 
7.4
%
 
7.4
%
 
7.6
%
 
7.6
%
 
7.4
%
 
7.4
%
 
6.9
%
 
6.9
%
 
6.1
%
 
6.1
%
 
(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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2020 (Dollars in millions)
 
 
State Street Corporation
 
 
 
State Street Bank
Tier 1 Capital
 
A
$
14,586

 
 
 
$
17,343

On-and off-balance sheet leverage exposure
 
 
279,651

 
 
 
275,814

Less: regulatory deductions
 
 
(9,275
)
 
 
 
(8,837
)
Total assets for SLR
 
B
270,376

 
 
 
266,977

Supplementary Leverage Ratio
 
A/B
5.4
%
 
 
 
6.5
%
 
 
 
 
 
 
 
 
As of December 31, 2019 (Dollars in millions)
 
 
State Street Corporation
 
 
 
State Street Bank
Tier 1 Capital
 
C
15,175

 
 
 
16,617

On-and off-balance sheet leverage exposure
 
 
257,124

 
 
 
253,500

Less: regulatory deductions
 
 
(9,262
)
 
 
 
(8,837
)
Total assets for SLR
 
D
247,862

 
 
 
244,663

Supplementary Leverage Ratio
 
C/D
6.1
%
 
 
 
6.8
%
 
 
 
 
 
 
 
 
As of September 30, 2019 (Dollars in millions)
 
 
State Street Corporation
 
 
 
State Street Bank
Tier 1 Capital
 
E
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
 
F
242,028

 
 
 
238,684

Supplementary Leverage Ratio
 
E/F
6.6
%
 
 
 
7.3
%
 
 
 
 
 
 
 
 
As of June 30, 2019 (Dollars in millions)
 
 
State Street Corporation
 
 
 
State Street Bank
Tier 1 Capital
 
G
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
 
H
239,303

 
 
 
236,138

Supplementary Leverage Ratio
 
G/H
6.7
%
 
 
 
7.5
%
 
 
 
 
 
 
 
 
As of March 31, 2019 (Dollars in millions)
 
 
State Street Corporation
 
 
 
State Street Bank
Tier 1 Capital
 
I
$
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
 
J
235,988

 
 
 
233,489

Supplementary Leverage Ratio
 
I/J
6.6
%
 
 
 
7.4
%

21
stt1q20earningspresentat
April 17, 2020 1Q 2020 Financial Highlights (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 first quarter 2020 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

 
State Street’s response to the COVID-19 pandemic • Proactive deployment of safe workspace and extensive work from home operations to protect the health and safety of our employees; leveraging experience from large China operations since mid-January to Maintaining mitigate operational disruptions across the globe business continuity, • Business continuity program supporting ongoing business activities operational – Global ‘follow the sun’ and split operating model allows for segmentation of operations across three capabilities and major Hubs and 15 operational sites employee safety – ~90% of employees working from home; IT increased capacity for remote access solutions, with automated processes and global processing centers supporting operations • Meeting increased client demand; successful execution of investment services including higher client volumes, trade settlements and NAV computation amidst heightened market volatility and volumes – Effectively managed a surge demand on operations: ~50% increase in back office transactions and >80% increase in middle office transactionsA Supporting our • Supporting client FX flows and record volumes through sophisticated technology infrastructure and B clients, the financial breadth of offerings, venues and currencies markets and • Supporting clients' liquidity and financing needs with innovative solutions, reporting and lending broader economy – Providing liquidity to clients by facilitating >50% of Money Market Liquidity Facility usage and providing administrative and custodial services to the Federal Reserve’s Commercial Paper Funding Facility – Accommodating flight-to-quality deposits onto our balance sheet, with an increase of ~50% in balances during MarchC – Deploying balance sheet in support of clients to meet financing needs A Transaction volume comparison based on daily average volumes in March 2020 as compared to 5-month daily average volumes from October 2019 to February 2020 in our processing Centers of Excellence. B Record FX volume in the FX Sales and Trading business. C Deposit balance comparison based on an end of period spot basis from February to March 2020. 3

 
1Q20 highlights All comparisons are to corresponding prior year periods unless noted otherwise • EPS of $1.62, up 37% YoY; $1.67 excluding notable items, up 35% YoY; ROE of 10.9%A • Total revenue of $3.1B Financial – Up 5% YoY primarily driven by higher FX volume and improved servicing and management fees, partially performance offset by lower software and processing fees and a lower interest rate environment – Up 1% QoQ primarily driven by higher FX volume and deposit balances, partially offset by weaker equity market levels and lower software and processing fees • AUC/A of $31.9T, with servicing wins of $171B and new business yet to be installed of $1.1T at quarter-end1 1 Business • AUM of $2.7T at quarter-end, with net inflows of $39B metrics • FX volumes and custody transaction volumes up 40-50%B • CRD bookings of ~$5M with continued strong front-to-back State Street AlphaSM pipelineC • Expenses ex-notable items of $2.2B, down (1)% YoY and down (2)% QoQ excluding seasonal expensesA – Expense savings of ~$120M achieved YTD3 Efficiency – IT optimization and operational productivity savings on track and capital – Identifying further expense action opportunities in light of the current revenue environment • Strong capital ratios support clients, financial markets and the broader economy4 A Financial metrics ex-notable items are non-GAAP measures; refer to the Appendix for explanations and reconciliations of our non-GAAP measures. B March 2020 FX Sales and Trading volume up 40% when compared to a 5 month average from October 2019 to February 2020. Daily average of back office transaction volumes in March increased ~50% compared to a 5 month daily average from October 2019 to 4 February 2020. C CRD annual contract value bookings of $5M excludes $2M of bookings with affiliates, including SSGA. Refer to endnote 2 for further details. Refer to the Appendix included with this presentation for endnotes 1 to 12.

 
Summary of 1Q20 results Quarters % ∆ ($M, except EPS data, or w here otherw ise noted) 1Q19 4Q19 1Q20 1Q19 4Q19 Revenue: Notable Items Servicing fees $1,251 $1,299 $1,287 3% (1)% D Management fees 420 465 449 7 (3) ($M, except EPS data) Quarters 1Q19 4Q19 1Q20 Foreign exchange trading services 280 274 459 64 68 Securities finance 118 111 92 (22) (17) Repositioning costs: Software and processing fees 191 219 112 (41) (49) Compensation & - $(98) - Total fee revenue 2,260 2,368 2,399 6 1 employee benefits Net interest income 673 636 664 (1) 4 Occupancy - (12) - Total repositioning Other income (1) 44 2 nm nm - (110) - costs Total revenue $2,932 $3,048 $3,065 5% 1% A Acquisition and Provision for credit losses $4 $3 $36 nm nm (9) (29) (11) restructuring costs Total expensesB $2,293 $2,407 $2,255 (2)% (6)% Net income $508 $564 $634 25% 12% Legal and related costs (14) (140) - Diluted earnings per share $1.18 $1.35 $1.62 37% 20% Gain on Junior 5 - 44 - Return on average common equity 8.7% 9.0% 10.9% 2.2%pts 1.9%pts Subordinated Debt Pre-tax margin 21.7% 20.9% 25.3% 3.6%pts 4.4%pts Notable items (pre-tax) $(23) $(235) $(11) Tax rate 20.1% 11.6% 18.1% (2.0)%pts 6.5%pts Preferred securities - (22) (9) Memo (ex-notable items except where otherwise noted, non-GAAP) C: redemption (after-tax) Total revenue $2,932 $3,004 $3,065 5% 2% Total expenses 2,270 2,128 2,244 (1) 5 EPS Impact $(0.06) $(0.63) $(0.05) EPS $1.24 $1.98 $1.67 35 (16) Pre-tax margin 22.5% 29.1% 25.6% 3.1%pts (3.5)%pts A In accordance with ASU 2016-13, the Provision for credit losses for 1Q20 includes the provision on funded and unfunded commitments as well as HTM securities. For 1Q19 and 4Q19, the provision for credit B C losses on unfunded commitments of $(4)M and $3M, respectively, is included within Total expenses. 1Q19 and 1Q20 include $137M and $151M, respectively, of seasonal compensation expenses. This is a 5 non-GAAP presentation; quarterly expenses ex-notable items, as presented, are calculated as expenses less notable items; refer to the Appendix for a reconciliation of ex-notable items to GAAP expenses and further explanations of non-GAAP measures. D Refer to the Addendum for further details on notable items. Refer to the Appendix included with this presentation for endnotes 1 to 12.

 
AUC/A and AUM levels declined YoY and QoQ due to lower equity market levels A AUC/A and AUM Market indices6 ($T, as of period-end) 1Q20 vs AUC/A • (2)% decrease from 1Q19 primarily (% change) 1Q19 4Q19 -2% driven by: – Lower end of period equity market levels EOP (9)% (20)% -7% S&P 500 and a previously announced client Daily Avg 12 (1) $34.4 transition, partially offset by higher end of $32.6 $31.9 EOP (17) (23) period fixed income market levels MSCI EAFE Daily Avg 2 (5) • (7)% decrease from 4Q19 largely EOP (20) (24) MSCI EM reflecting: Daily Avg - (2) – Lower end of period equity market levels 1Q19 4Q19 1Q20 and client flows Barclays Global Agg EOP 4 - AUM ($B, as of period-end) 7 Select North America industry flows -4% • (4)% decrease from 1Q19 reflecting: -14% – Lower end of period equity market levels, Total flows partially offset by net inflows ($B) $3,116 1Q19 4Q19 1Q20 $2,805 $2,689 Long Term Funds $42 $(51) $(347) • (14)% decrease from 4Q19 primarily due to: Money Market 54 169 765 – Lower end of period market levels and net ETF 46 127 58 outflows from ETFs, partially offset by net inflows from cash and institutional Total 142 244 477 1Q19 4Q19 1Q20 A Changes to AUC/A and AUM also reflect FX translation. Refer to the Appendix included with this presentation for endnotes 1 to 12. 6

 
Revenue: Servicing fee performance reflects increased client activity, new business growth and moderating fee pressure Servicing fees ($M) 1Q20 performance Servicing fees of $1,287M up 3% YoY, down (1)% QoQ Total YoY +5% $2,932 $2,873 $2,903 $3,048 $3,065 revenue QoQ +1% • Up 3% YoY primarily driven by higher client activity and flows, average market levels, and net new business, partially offset by +3% pricing headwinds -1% • Down (1)% QoQ largely due to lower average market levels and pricing headwinds, partially offset by higher client activity • Continued strong client interest in the front-to-back Alpha platform Servicing $1,299 $1,287 fees $1,251 $1,252 $1,272 • Total revenue and servicing fees were negatively impacted by FX A Mgmt translation when compared to 1Q19 by $15M and $6M, respectively fees, FX, SF Software AUC/A sales performance indicators & proc. ($B) 1Q19 2Q19 3Q19 4Q19 1Q20 NII AUC/A wins $120 $390 $1,031 $294 $171 1Q19 2Q19 3Q19 4Q19 1Q20 AUC/A to be installed 309 575 1,165 1,167 1,063 A Total revenue and servicing fees were negatively impacted by FX translation when compared to 4Q19 by $8M and $2M, respectively. 7

 
Revenue: Management, Markets, Software and processing fee revenue impacted by market volatility and levels Management, Markets, Software and processing fee A 1Q20 performance revenue ($M) Management, Markets, Software and processing fee Total $3,048 $3,065 revenue $2,932 revenue of $1,112M up 10% YoY and 4% QoQ • Management fees of $449M +10% – Up 7% YoY mainly due to higher average equity market levels and Servicing fees net inflows from ETF and cash, partially offset by mix changes away +4% from higher fee institutional products $1,112 – Down (3)% QoQ primarily driven by mix changes away from higher $1,009 $1,069 fee institutional products and lower average market levels, partially Mgmt. $465 $449 offset by the run rate impact of 4Q19 ETF inflows fees $420 • FX trading services of $459MB FX $280 $274 $459 – Up 64% YoY and 68% QoQ mainly reflecting higher FX volume SF $118 $111 $92 amidst significant volatility towards quarter-end Software & $191 $219 processing $112 • Securities finance of $92M – Down (22)% YoY primarily driven by lower spreads and Enhanced NII Custody balances – Down (17)% QoQ largely due to lower spreads and balances 1Q19 4Q19 1Q20 B • Software and processing fees of $112M 8 – Down (41)% YoY mainly from market-related adjustments and tax Mgmt. fees FX trading services (FX) Sec. finance (SF) advantaged investments – Down (49)% QoQ largely reflecting the absence of 4Q19 seasonal Software and processing CRD activity and market-related adjustments A Management fees, Markets, Software and processing fee revenue was negatively impacted by FX translation when compared to 1Q19 and 4Q19 by $4M and $3M, respectively. B For 1Q20, CRD standalone results include revenue of $100M, which includes $5M of revenue associated with affiliates, including SSGA, that is eliminated in consolidation for financial reporting purposes. On a consolidated basis, CRD 8 revenue contributed $95M, including $91M in Software and processing fees and $4M in FX trading services. Refer to the Appendix included with this presentation for endnotes 1 to 12.

 
Prior investments in our Global Markets infrastructure and increased engagement with clients built market share and supported higher than usual FX volume demand FX Sales and Trading FX Trading Platforms Euromoney RankingsC FX VolumeA FX VolumeA #1 in Real Money +40% +53% 2 years in a row 18.4% market share, ↑ 4.7%pts Direct FX FX Connect • Principal FX trading for • Multi-currency, multi-bank custody and non-custody FX trading platform, Real Money D clients; also includes: offering real-time FX Regional Rankings execution for Asset - Street FX: Our #1 in Americas Managers and Real Money automated FX platform #1 in EMEA clients - eFX: Electronic FX #2 in APAC trading, including streaming prices and Currenex algorithms • Automated, multi-source FX liquidity/FX trade D matching platform for Venue Rankings Custody FX (Indirect) Banks, Hedge Funds, #1 in E-Trading Real Money • Automated FX execution Corporates, Retail Brokers for custody clients and White Label clients #6 overall 5 month March 5 month March ↑ from #10 B B average 2020 average 2020 5.5% market share, ↑ 1.1%pts A FX volume data not drawn to scale. B 5 month average from October 2019 to February 2020. C Euromoney Survey rankings as of 2019. D Regional and venue rankings based on the Real Money survey results. 9

 
CRD performance and Alpha integration progress Quarterly metrics ($M) Achieving key milestones and business momentum Standalone CRD revenueA • Confident in achieving both revenue and expense synergy targets9 +1% • Robust pipeline, with one new Alpha client deal in 1Q20 -21% – New sovereign wealth fund client integrating front-to-back $126 $99 $91 $85 $100 services including Global Markets offering, demonstrating the value proposition of a combined brand • Second phase of Global Markets integration into the CRD platform 1Q19 2Q19 3Q19 4Q19 1Q20 underway in 2020 Pre-tax income $58 $45 $29 $68 $42 • CRD bookings of $5M Financial performance • New client contract term and deal sizes increasing post acquisition CRD financials 1Q19 4Q19 1Q20 • Continue to enhance platform economics and integrate suite of RevenueA $99 $126 $100 open-architecture strategic alliances Operating expenses 41 58 58 New bookings2 3 23 5 STT expenses related to CRD Amortization costs 15 16 17 Acquisition and restructuring costsB 9 29 11 A For 1Q20, CRD standalone results include revenue of $100M, operating expenses of $58M and pre-tax income of $42M, 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 $95M, including $91M in Software and processing fees and $4M in FX trading services. 10 B Acquisition and restructuring costs mainly related to CRD. Refer to the Appendix included with this presentation for endnotes 1 to 12.

 
Revenue: Despite lower market rates, NII up QoQ primarily due to strong deposit growth associated with flight-to-quality, and episodic market-related benefits NII and NIM ($M)A Balance sheet highlights Total revenue $2,932 $3,048 $3,065 1Q19 4Q19 1Q20 ($B) Avg Avg Avg EOP Servicing -1% fees Total assets $220 $229 $251 $363 Mgmt. +4% fees, FX, SF, Loans and leases 23 25 28 32 Software $673 $636 $664 & proc. Total deposits 155 164 180 257 NII Interest bearing deposits 124 135 145 188 1Q19 4Q19 1Q20 Non-Interest bearing deposits 31 29 36 69 NIM 1.54% 1.36% (FTE,%)A 1.30% Supporting clients with our balance sheet NII of $664M down (1)% YoY and up 4% QoQ • Flight-to-quality deposits • Down (1)% YoY primarily due to the impact of lower market rates, – Total average deposits increased 16% YoY and 10% QoQ, partially offset by stronger deposit balances and episodic market- driven by growth in both interest-bearing and non-interest related benefits of ~$20M in 1Q20 bearing balances • Up 4% QoQ largely driven by stronger deposit balances and • Continued to support client lending and increased size of the episodic market-related benefits of ~$20M in 1Q20, partially offset investment portfolio by long-term debt issuances • Loans and leases included higher than usual average and EOP overdrafts of $6B and $9B, respectively 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. 11

 
High quality loan portfolio primarily in support of client activity A Average loans by segment ($B) Average loans highlights $13 $13 High quality loan portfolio; 84% investment grade; majority of $12 credit extended primarily to existing clients 19% 81% 84% $84%9 • Fund Finance of $13B: $7 – Primarily includes ‘40 Act Funds $6B, PE Capital Call Finance $6B, $6 $5 $4 $4 and Business Development Companies $1B • Leverage Loans of $4B: $1 $2 $2 – High quality book with vast majority BB rating and above, 1Q19 4Q19 1Q20 underweight cyclical sectors Fund Finance Overdrafts/Other C Leveraged Loans CRE • Commercial Real Estate of $2B: – Average loan size of $52M; portfolio LTV of 52% YoY +23% – All U.S. major central business districts, existing buildings, Total $23 $25 $28 Loans QoQ +12% substantially leased, low leverage • Overdrafts and Other of $9BC: Allowance for credit losses and net charge-offs ($M) – Primarily overdrafts $6B (increased QoQ and YoY by 38% and $124 60%, respectively), Alternative Financing $2B, and Muni Finance $1B $91 $83 Continued to support clients during the COVID-19 pandemic; $5 $0 $1 saw limited draws on committed facilities given high quality 1Q19B 4Q19B 1Q20 client base Allowance for credit losses Net charge-offs A Includes drawn loans, gross. B Calculated under the incurred loss methodology. C Overdrafts and Other category includes Alternative Financing, Municipal Loans, Overdrafts, and other. 12

 
Expenses ex-notable items and seasonal expenses down YoY driven by expense management and discipline Expenses 1Q20 YoY: Expenses ex-notable items and seasonal (Ex-notable items and seasonal expenses, non-GAAP, $M)A expenses down (2)% • Compensation and benefits down (3)% YoY primarily driven by optimization -2% savingsB • Information systems and communications up 6% YoY largely reflecting software -2% costs and technology infrastructure investments • Transaction processing services up 5% YoY primarily reflecting higher $2,133 $2,128 $2,093 transaction volume and broker fees • Occupancy down (6)% YoY due to footprint optimization • Other down (10)% YoY mainly driven by lower marketing spend and travel $1,092 $1,047 $1,057 • Total GAAP expenses were positively impacted by FX translation when compared to 1Q19 by $16MC $362 $362 $385 1Q20 QoQ: Expenses ex-notable items and seasonal C $242 $242 $254 expenses down (2)% $116 $114 $109 • Compensation and benefits up 1% QoQ mainly due to higher incentive $321 $363 $288 compensationB 1Q19 4Q19 1Q20 • Information systems and communications up 6% QoQ primarily driven by the absence of 4Q19 supplier renegotiation credits GAAP Expense $2,293 $2,407 $2,255 • Transaction processing services up 5% QoQ mainly due to higher transaction volume and broker fees Head- 39,969 39,103 39,318 count • Occupancy down (4)% QoQ due to footprint optimization • Other down (21)% QoQ mainly reflecting the absence of the 4Q19 Foundation Comp. & ben. Info. sys. Tran. processing funding, lower marketing spend, travel and professional fees Occupancy Other10 • Headcount down (2)% YoY, but up 1% QoQ driven by an increase in Global Hubs A Quarterly expenses ex-notable items and seasonal expenses, as presented, is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items and seasonal expenses to GAAP expenses. B 1Q19 and 1Q20 exclude $137M and $151M, respectively, of seasonal compensation expenses. C Total GAAP expenses were positively impacted by FX translation when compared to 4Q19 by $7M. 13 Refer to the Appendix included with this presentation for endnotes 1 to 12.

 
Capital and liquidity management Investment portfolio highlightsA Quarter-end capital ratios11 ($B, portfolio metrics as of quarter-end) (%, as of period-end) B CET1 (Standardized) CET1 (Advanced) $123.8 12% 11.5% 11.7% 10.7% 12.1% 11.7% 11.1% $90.1 $95.6 ~$27B from 17% MMLF 8% Non-HQLA 16% require- ment 1Q19 4Q19 1Q20 1Q19 4Q19 1Q20 HQLA 84% 83% 88% SLR Tier 1 Leverage 6.6% 7.4% 6.9% 1Q19 4Q19 1Q20 6.1% 5.4%C 6.1% 5% HTM % 46% 44% 55% require- 4% ment require- ment Duration 2.8 2.7 2.2 1Q19 4Q19 1Q20 1Q19 4Q19 1Q20 Liquidity Coverage Ratio (LCR) • Capital ratios support clients, financial markets and the 110% 110% 109% broader economy 100% requirement – Returned a total of $683M to shareholders in 1Q20, including $500M of common share repurchases and $183M in common share dividends4 1Q19 4Q19 1Q20 A For purposes of this presentation, prior period balances have been revised to reflect the carrying value of the securities, including available-for-sale securities at fair value, rather than amortized cost. B Money Market Mutual Fund Liquidity Facility (MMLF) contributed ~$27B to the investment portfolio in 1Q20. Excluding MMLF, the investment portfolio size would be ~$97B, with a duration of 2.7 years and 42% HTM. 14 C Adjusted for the Section 402 central bank deposits relief that will come into effect on April 1, 2020, 1Q20 SLR would have been 7.1%. Refer to the Appendix included with this presentation for endnotes 1 to 12.

 
Summary 1Q20 financial performance • EPS of $1.62, up 37% YoY; ROE of 10.9% – Fee revenue increased QoQ due to higher FX trading services driven by higher than usual FX volume and high market volatility, partially offset by unfavorable equity markets impacting servicing, management and software and processing fees – Better than expected NII QoQ performance as lower interest rates were offset by higher deposit balances associated with flight-to- quality amidst the COVID-19 pandemic and episodic market-related benefits – Expenses ex-notable items and seasonal expenses down (2)% QoQ, reflecting ongoing expense management initiativesA • Returned $683M to shareholders in 1Q20, consisting of ~$500M in common share repurchases and ~$183M in common share dividends4 Supporting the financial system during challenging times • Meeting increased client demand; handled higher client volumes and trade settlements, and NAV computation amidst heightened market volatility and volumes • Supporting clients' liquidity and financing needs with innovative solutions, reporting and lending – Providing liquidity to clients by facilitating >50% of Money Market Liquidity Facility usage and providing administrative and custodial services to the Federal Reserve’s Commercial Paper Funding Facility – Flight-to-quality deposit growth and a high quality balance sheet A Financial metrics ex-notable items are non-GAAP measures; refer to the Appendix for explanations and reconciliations of our non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 12. 15

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

 
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. Timing to achieve all medium-term financial targets may become subject to uncertainties associated with the COVID-19 17 pandemic, including the overall magnitude and duration of its impact. B Payouts calculated over CCAR cycles. CCAR cycles run from mid-year to mid-year. Refer to endnote 12 for additional details.

 
Reconciliation of notable items Quarterly reconciliation (Dollars in millions, unless noted otherwise) 1Q19 2Q19 3Q19 4Q19 1Q20 Total revenue, GAAP-basis 2,932 2,873 2,903 3,048 3,065 Less: Other income (44) Total revenue, excluding notable items 2,932 2,873 2,903 3,004 3,065 Total expenses, GAAP basis 2,293 2,154 2,180 2,407 2,255 Less: Notable expense items: Repositioning charges: Compensation and employee benefits (98) Occupancy (12) Repositioning charges (110) Acquisition and restructuring costs (9) (12) (27) (29) (11) Legal and related (14) (18) (140) Total expenses, excluding notable items 2,270 2,142 2,135 2,128 2,244 Seasonal expenses (137) (151) Total expenses, excluding notable items and seasonal expense items 2,133 2,142 2,135 2,128 2,093 Pre-tax margin, GAAP-basis 21.7% 25.0% 24.8% 20.9% 25.3% Notable items as reconciled above 0.8% 0.4% 1.6% 8.2% 0.3% Pre-tax margin, excluding notable items 22.5% 25.4% 26.4% 29.1% 25.6% Net income available to common shareholders, GAAP-basis 452 537 528 492 580 Notable items as reconciled above: pre-tax 23 12 45 235 11 Tax impact on notable items as reconciled above (2) (3) (12) (25) (3) Preferred securities cost 22 9 Net income available to common shareholders, excluding notable items 473 546 561 724 597 Diluted EPS, GAAP-basis 1.18 1.42 1.42 1.35 1.62 Notable items as reconciled above 0.06 0.03 0.09 0.63 0.05 Diluted EPS, excluding notable items 1.24 1.45 1.51 1.98 1.67 18

 
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. CRD annual contract value bookings, as presented in this presentation, represent signed annual recurring revenue contract value excluding bookings with affiliates, including SSGA. CRD revenue derived from affiliate agreements is eliminated in consolidation for financial reporting purposes. 3. Expense savings are stated on a gross basis. 4. 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. The common stock purchase program does not have specific price targets and may be suspended at any time. In March 2020, State Street suspended its common stock purchase program as part of the decision by all Financial Services Forum members to suspend repurchases in light of the COVID-19 pandemic. 5. 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. 6. The index names listed are service marks of their respective owners. 7. Industry data is provided for illustrative purposes only. It is not intended to reflect State Street’s or its clients' activity and is indicative of only selected segments of the entire industry. Source: Investment Company Institute (ICI). ICI data includes long term funds, ETFs and money market funds, as well as 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. 1Q20 represents the three month period from January 2020 through March 2020, the last date for which information is available with March 2020 estimates. 8. FX trading services includes Brokerage and other revenue. 9. 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. 10. Other includes other expenses and amortization of intangible assets. 11. 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 1Q19 and 1Q20, while Advanced approaches ratios were binding for 4Q19. Refer to the Addendum included with this presentation for a further description of these ratios. March 31, 2020 capital ratios are presented as of quarter-end and are preliminary estimates. 12. 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; the significant risks and uncertainties for our business, results of operations and financial condition, as well as our regulatory capital and liquidity ratios and other regulatory requirements in the United States and internationally caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its influence on financial markets, the effectiveness of our work from home arrangements and staffing levels in operational facilities, the impact of market participants on which we relay and actions taken by governmental authorities and other third parties in response to the pandemic; 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 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 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; 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 2019 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. 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 22

 
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