Annual Report 2024
It all starts
Contents
2
Message From Our Chairman and CEO
14
Financial Highlights
18
Who We Are
20
Message From Our
Independent Lead Director
24
Business Review
46
Financial Review (Form 10-K)
In a world of complexity, investors rely on us to deliver with certainty — safeguarding
their assets, supporting their ambitions, and standing by them with unwavering
commitment. Trust is the foundation of our work — a responsibility we uphold every
day with our clients, our employees, our shareholders, and the communities in
which we operate.
with trust
Appendices
1
Corporate Information
2
Board of Directors
3
Executive Leadership
4
Global Locations
2024 ANNUAL REPORT
A year of strong
momentum
and growth
A MESSAGE TO OUR SHAREHOLDERS
Ronald P. O’Hanley
CHAIRMAN AND CEO
State Street’s principal banking entity bears the
name “State Street Bank and Trust.” The word
“Trust” is more than a name — it embodies
our business and serves as the foundation of
every State Street relationship. Trust is not
taken nor assumed; it is earned through making
and keeping promises, consistent execution,
unwavering integrity, and a steadfast commitment
to our clients and their desired outcomes, which
in turn, fosters long-term growth and lasting value
to our shareholders.
Our clients rely on us as an essential partner,
confident in our service quality and operational
excellence — enabled by top-tier talent, scale,
and technology. By delivering on this promise, we
create enduring value for our clients and grow
alongside them.
Without trust, partnership does not exist — and
partnerships have never been more critical than
today. Whether in times of stability or periods
of disruption, strong and reliable partners help
minimize vulnerabilities, marshal resources
and expertise, and drive resilience. This principle
is true across industries, and our clients are
no exception as they navigate an ever-evolving
market and operating landscape.
The global economy is different from just a
few years ago. Macro forces — from geopolitical
reordering, surging debt levels, shifting demo-
graphics, rapid technology change, and evolving
trade and immigration policies — are reshaping
the investment landscape. These trends have the
potential to significantly impact global growth,
inflation, and market stability.
2
STATE STREET CORPORATION
As our clients refine their investment strategies
accordingly, the increasing complexity of their
portfolios makes operational efficiency and
innovation critical priorities. In this environment,
state-of-the-art investment and servicing capa
bilities are a decisive advantage.
At the same time, institutional investors face
mounting fee pressures, new technology
requirements, and rising costs, which are driving
increased demand for new operating models.
Clients seek end-to-end solutions that provide
critical infrastructure and technology, new
capabilities, efficiency, and better data manage
ment to drive smarter, more informed investment
decisions. These services not only improve
operational effectiveness and reduce costs, they
also provide access to advanced solutions
and specialized expertise — capabilities that are
difficult and costly to replicate without scale.
Our role extends far beyond providing services
or products — it requires strategic alignment,
acting as an extension of our clients’ teams,
proactively anticipating their needs, and develop
ing or codeveloping solutions to address them
effectively.
Our people truly excel in this space. Time and
time again, our teams bring deep expertise,
creativity, and forward-thinking innovation to
every challenge — pushing boundaries and
redefining the status quo. We embrace a holistic
approach to innovation, leveraging technology
and data while also rethinking operating models
and pioneering new ways of working. This focus
positions our clients — and consequently
State Street — for sustained, long-term success.
“Trust is not taken nor assumed; it is earned
through making and keeping promises, consistent
execution, unwavering integrity, and a steadfast
commitment to our clients and their desired
outcomes, which in turn, fosters long-term growth
and lasting value to our shareholders.”
3
2024 ANNUAL REPORT
Innovation is fundamental to how we create value.
It may take the form of continuous refinements,
or bold, transformational changes that reshape the
industry. In 2024, the investment world celebrated
the centennial anniversary of the mutual fund.
State Street played a pivotal role in what turned
out to be a stunning innovation, serving as the
custodian for the first U.S. open-ended mutual
fund, established in 1924. Today, we service
38 percent* of the U.S., 23 percent* of the global,
and 16 percent* of the Europe, the Middle East
and Africa (EMEA) mutual fund and undertakings
for collective investment in transferable securities
(UCITS) markets. This breakthrough laid the
groundwork for further innovation, including
exchange-traded funds (ETFs), where today we are
also the market leader serving over 40 percent*
of the global ETF market.
Over 30 years ago, State Street Global Advisors
launched SPY — the first U.S.-listed ETF. It has
since become the world’s most liquid and heavily
traded ETF. As the ETF marketplace has surged
to $14.7 trillion,* State Street has become the
world’s largest ETF servicer and the third-largest
sponsor/manager of ETFs.
These advancements have deepened financial
markets, increased access, expanded partici
pation, and fueled long-term wealth creation.
I take great pride in State Street’s role in the global
financial system — helping our clients create value
while contributing to a stronger, more impactful
investment ecosystem. In all that we do, we remain
guided by our purpose: to help create better
outcomes for the world’s investors and the
people they serve.
To fulfill our purpose, we operate through two
primary lines of business: Investment Servicing,
which includes our Investment Services and
Global Markets businesses, and Investment
Management through State Street Global Advisors.
In Investment Servicing, our clients depend on
us to provide mission-critical services that enable
them to focus on investing well on behalf of their
clients. Meanwhile, State Street Global Advisors —
the fourth-largest investment manager in the world,
efficiently allocates capital on behalf of clients,
manages risk, and facilitates long-term wealth
creation for millions of investors worldwide.
At the heart of our organization is a singular vision:
to be the leading partner and provider to asset
managers, asset owners, and wealth managers
globally with high-quality servicing, analytics,
financing, liquidity, and investment solutions.
This vision reflects our distinct value proposition —
one that unites our shared purpose, aspirations,
and expertise into a cohesive approach that
deepens partnerships and unlocks new oppor
tunities both inside and outside of State Street.
* As of December 31, 2024.
4
STATE STREET CORPORATION
Our strategic foundation
The operating environment in 2024 was broadly
constructive for State Street, allowing us to
build on our strong strategic foundation, reinforced
by years of investment. Ours is a business in
which a multi-year strategy and associated invest
ments — in service excellence, client relationships,
technology, and product and people capabilities —
compound over time, positioning us for sustained
success.
In 2024, we further strengthened our business
through key strategic actions, optimizing
performance via growth initiatives across each
of our businesses, deeper client engagement,
prudent deposit pricing, investment portfolio
repositioning, accelerated innovation, and
advancing our multi-year transformation and
productivity initiatives.
In last year’s annual report, I outlined key strategic
priorities for 2024; we executed well against each:
• Delivering sustained fee revenue growth
• Extending market leadership in our Global Markets
and Investment Management businesses
• Enhancing productivity while providing our
clients service and operational excellence
• Building out even more technological
capabilities to support growth, manage risk,
and improve resilience
• Fostering a workplace culture that accelerates
business performance; sharpens accountability;
and attracts, retains, and inspires top talent
“Our role extends far beyond providing services or
products — it requires strategic alignment, acting
as an extension of our clients’ teams, proactively
anticipating their needs, and developing or co-
developing solutions to address them effectively.”
5
2024 ANNUAL REPORT
Through this disciplined execution coupled with
service excellence, we delivered strong financial
performance, deepened client relationships,
and sustained business momentum, reinforcing the
long-term value of investing in State Street.
2024 financial performance1
2024 was an outstanding year for State Street
financial performance, underscoring the strength of
our franchise and the effectiveness of our strategy.
Full-year earnings per share (EPS) rose to $8.21 in
2024, up from $5.58 in 2023. Excluding notable
items, EPS grew 13 percent year-over-year to
$8.67, while pre-tax margin expanded by more
than a full percentage point to 28 percent.
Full-year return on average tangible common
equity reached 18 percent, or 19 percent,
excluding notable items.
Our strong performance and balance sheet
allowed us to return $2.2 billion of capital to share-
holders, through common share repurchases
and dividends, including a 10 percent increase
in our declared quarterly common dividend per
share beginning in the third quarter.
I am particularly pleased with our broad-based
revenue growth. Full-year fee revenue increased
7 percent compared to 2023, while total revenue
grew 9 percent and net interest income (NII)
grew 6 percent. Excluding notable items,
fee revenue and total revenue each increased
by 6 percent year-over-year. Every revenue line
contributed positively, including double-digit
growth in management fees, foreign exchange
(FX) trading services, and front-office software
and data revenue. Additionally, we delivered a
second consecutive year of record NII.
1 Excluding notable items is a non-GAAP presentation. Refer to reconciliations of non-GAAP financial information included in “Financial Highlights.”
Please also refer to Item 8 of the Form 10-K with this annual report for the GAAP-basis presentation of our consolidated financial statements for the
years ended December 31, 2023 and 2024.
“2024 was an outstanding year for State Street
financial performance, underscoring the
strength of our franchise and the effectiveness
of our strategy.”
6
STATE STREET CORPORATION
We carefully managed our expense base to support
revenue growth, achieving positive fee and total
operating leverage2 in 2024. Excluding notable
items, we realized 205 basis points of positive fee
and 200 basis points of total operating leverage,
even as expenses increased by 4 percent year-
over-year, driven in part by higher revenue-related
costs. As we continue positioning our business
for sustainable growth, expense discipline remains
a top priority.
Our assets under custody and/or administration
(AUC/A) reached $46.6 trillion at year-end,
reflecting an 11 percent increase year-over-year,
primarily driven by higher period-end market
levels and client flows.
At State Street Global Advisors, total 2024
year-end assets under management3 (AUM) grew
to $4.7 trillion, up 15 percent year-over-year,
primarily due to higher period-end market
levels and net inflows of $146 billion. Notably,
we achieved record full year ETF net inflows
of $109 billion, and grew market share in our
strategically important U.S. Low-Cost ETF suite
and the EMEA region.
Strong business momentum
Our Investment Services business remains
State Street’s largest revenue generator. In 2024,
we again advanced and executed against our
strategy to drive sustainable revenue growth and
strengthen our market position.
2 Fee/total operating leverage is the rate of growth of fee/total revenue less the rate of growth of total expenses, relative to the corresponding prior
year period, as applicable.
3 Assets under management as of December 31, 2024, includes approximately $82 billion of assets with respect to SPDR products for which State
Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are
affiliated.
28%
Pre-tax margin,
excluding notables
$2.2B
Of capital returned to shareholders
7
2024 ANNUAL REPORT
Service quality is key to our value proposition,
and it is what unites us as an organization. 2024
marked our second consecutive year of increased
client satisfaction and loyalty, a testament to our
continued service momentum. Service excellence
leads to better client retention, reduces fee
pressure, broadens relationships, and earns us the
right to win new business. Further underscoring
service quality, we achieved our servicing fee
revenue retention target of 97 percent.
Our enhanced client service is also reflected
in our servicing sales performance. In 2024,
we delivered on our ambitious fee revenue
sales goals, with the vast majority in back-office
revenues, aligning with our goal of prioritizing
faster time-to-revenue products. Additionally, our
AUC/A pipeline continued to grow, reflecting
continued market demand and reinforcing confi
dence in our long-term servicing fee performance.
Front-office software and data revenue grew
10 percent year-over-year, and we achieved
record new bookings in the fourth quarter.
Charles River Development delivered important
new enhancements to its core software,
expanded its wealth capabilities, and explored
new partnership opportunities in wealth distri-
bution for Global Advisors products. Front-office
software and data revenue was $639 million in
2024, representing over 6 percent of our total fee
revenue, and we are well along in our strategy
to build a $1 billion business.
In 2024, we celebrated the five-year anniversary
of State Street Alpha® — a key example of how
we successfully incubate, scale, and integrate
innovative solutions into our core business.
State Street Alpha has matured into a critical
element of our value proposition, offering a
configurable, open-architecture platform that
enhances data integration and streamlines
investment activities. It provides a clear competi
tive advantage, helping to retain business, win
new long-term relationships, and deepen existing
client relationships.
“Service quality is key to our value proposition,
and it is what unites us as an organization.
2024 marked our second consecutive year of
increased client satisfaction and loyalty,
a testament to our continued service momentum.”
8
STATE STREET CORPORATION
This was evident in 2024, with a significant new
mandate that began as a front-office Charles
River Development client, but has now expanded
our relationship to include middle- and back-
office services, including custody, all underpinned
by our Alpha data platform and data services.
State Street Alpha contributed to half of our
AUC/A wins in 2024, with seven new mandates,
bringing our total number of Alpha clients
to 35 — 25 of which were live on our platform
at year-end.
Our Global Markets business continued to innovate
while remaining focused on supporting clients
and expanding wallet share. We strengthened our
leadership position in FX, digital platforms,
differentiated research, and our top-ranked agency
lending program, which leverages the scale of
our custody business. We also advanced targeted
strategic initiatives including closing the acqui-
sition of CF Global Trading, enhancing our ability
to enable agency-based trading across multiple
asset classes and geographies.
Through focused execution and strong market
demand, we achieved notable business growth,
including an 11 percent increase in FX trading
services revenue. These results reflect our
commitment to strategic decision-making and
client-driven innovation.
Global Advisors also had an exceptional year in
2024, with management fees reaching an all-time
high for State Street. We generated $146 billion
in net new assets, delivering more than 3 percent
organic AUM growth for the second consecutive
year, supported by achieving heightened client
loyalty levels.
We implemented our strategy to accelerate
innovation, expand capabilities, and enhance
client solutions, positioning the business
for continued growth. We are already realizing
early benefits from these initiatives. In 2024,
Global Advisors launched more than 90 products
worldwide — more than in the past three years
combined.
97%
Servicing
fee revenue
retention
35
Total number
of State Street
Alpha clients
90
Products launched
by Global Advisors
9
2024 ANNUAL REPORT
We also leveraged our “ETF as a Service” model,
where Global Advisors manages partner
ETFs on its platform while Investment Services
provides administrative services — unlocking
the broader value of One State Street for
our clients. We continued our long history of
democratizing investing and broadening our
market base by innovating in new target date
structures that provide longevity protection to
retirement investors as well as exploring
mechanisms to broaden access to high-quality
alternatives strategies.
Client experience and operations
Our commitment to clients is at the core of our
identity, deeply embedded in our culture, and is
fundamental to our success. Every day, I witness
our employees’ dedication firsthand — putting
clients at the center of every decision, delivering
exceptional service quality execution, and
exceeding expectations in even the smallest
interactions. The client experience is woven
into every aspect of our organization, from the
insights we share and the technology we
advance, to the efficiencies we drive and the
risk management strategies we implement.
Trust is built and strengthened through this
holistic approach — where trusted human
expertise and operational excellence combine
to create lasting value.
As a global financial services company, we are
in the knowledge business. Helping clients
achieve better outcomes requires more than just
execution — it requires actionable insight.
We provide industry-leading thought leadership
that enhances our clients’ understanding of
market trends and key industry developments
to enable them to invest better.
This commitment to knowledge-sharing fosters
meaningful dialogue, equipping our clients with the
intelligence and strategic foresight they need to
navigate complexity and gain a competitive edge.
One of the most significant industry milestones
of 2024 was the transition to T+1 settlement,
a fundamental shift that reshaped operational
processes for global investors. This change
provided State Street with an opportunity to
reaffirm our role as an essential partner to our
clients. Our proactive approach and operational
expertise enabled clients to navigate this
change seamlessly, reinforcing our value and
demonstrating the strength of our firm-wide
capabilities. It was a powerful demonstration of
effective client engagement and industry
leadership.
Our license to operate relies on our unwavering
commitment to risk excellence and upholding the
trust of clients and regulators. This responsibility
is even more critical given our designation as a
Global Systemically Important Financial Institution.
Risk management is embedded in our culture
and reflected in our continued investment in
maintaining a robust risk and control environment.
We consistently enhance our infrastructure,
technology, operating standards, and governance
to fortify and strengthen an already strong control
framework — reinforcing confidence in our ability
to operate with prudence and stability.
In 2024, we advanced our technology modern-
ization and rationalization efforts, consolidating
our physical technology landscape while investing
in more agile and efficient applications.
10
STATE STREET CORPORATION
Resiliency remains a priority, and we continue to
drive improvements that enhance the stability
and performance of our platforms. We also utilized
artificial intelligence and machine learning to
optimize workflows, accelerate technology
development, free up resource capacity, and
enable employees to focus on more strategic,
meaningful, and high-value work. With a strong
foundation of talent and cutting-edge technology,
we are primed to sustain and extend our industry
leadership.
Our operation is our product, and in 2024,
we made significant progress in our end-to-end
transformation and simplification of our global
operating model. By streamlining and optimizing
our operating model, we delivered better service,
and improved client outcomes, while achieving
productivity savings. In 2024, we realized
approximately $500 million in recurring savings
through our productivity initiatives, which
funded significant investments in our business.
Our strategic investments included enhancing
State Street Alpha, expanding servicing capabilities
for private markets, and strengthening our digital
and custody capabilities to drive future growth.
Beyond business growth, we also continued to
fortify cybersecurity and resiliency, as well as
enhance product offerings in payments, cash,
and custody services.
In 2024, we further optimized our India operations
by assuming control of a second operations joint
venture, building on our successful consolidation
of a separate operations joint venture in 2023.
These actions provide expanded scale and
streamline our operating model, enabling faster
decision-making and delivering a smoother, more
efficient experience for clients. Furthermore,
we expect the consolidation of our India operations
joint ventures to unlock additional efficiencies and
productivity savings in the years ahead.
“Every day, I witness our employees’ dedication
firsthand — putting clients at the center of every
decision, delivering exceptional service quality
execution, and exceeding expectations in even
the smallest interactions.”
11
2024 ANNUAL REPORT
Our people and communities
Our people are the driving force behind our
success. I want to express my sincerest gratitude
to each of them for their unwavering commitment
to delivering on State Street’s purpose, vision,
and strategic priorities. Each of our approximately
53,000 employees play a vital part in earning our
clients’ trust, shaping their experience, and thus
driving our business forward. Our culture is the
foundation that enables our strategy, reinforcing
accountability; strengthening business perform
ance; and allowing us to attract, develop, motivate,
and retain world-class talent.
Businesses thrive when the communities in which
they operate are strong. To support our comm-
unities, State Street Foundation invested nearly
$22 million in 2024 to create brighter futures,
with a primary focus on education and workforce
readiness initiatives around the globe.
Our employees further amplified this impact
through their own philanthropic giving, matched
by State Street Foundation. Even more impactful
is the over 100,000 hours of volunteer time
by our employees in 2024 — not only their time
but also their expertise and skills to drive
meaningful, positive change in the communities
where they live and work.
Helping to build capabilities within the financial
services industry extends opportunity, fuels
innovation, strengthens economic resilience, and
drives long-term growth. In 2024, we deployed
$100 million in deposits with community-based
depository institutions, providing critical capital
directly to underbanked communities to stimulate
local economic development.
“Businesses thrive when
the communities in which
they operate are strong.”
100K
Hours of volunteer
time by our
employees
12
STATE STREET CORPORATION
We also continued our program to access a
broad investor base by partnering with a diverse
syndicate of underwriters for our corporate-
issued securities, reinforcing our commitment
to accessing additional talent within the financial
services industry.
Attracting and retaining high-quality talent is
critical to State Street’s business success.
State Street has an unwavering commitment to
creating a workplace in which talented people
feel valued, respected, and engaged. An inclusive
workplace where everyone feels a sense of
belonging drives value for our clients, employees,
shareholders, and communities.
A future built on strength
I will conclude where I began — by reaffirming
that trust is the foundation of our business
and the driving force behind sustainable growth
and long-term business success. Our strong
performance in 2024 exemplifies our ability to
earn, deepen, and uphold that trust through
consistent high-quality execution. Thanks to
our extraordinary employees, we not only served
our clients well but also achieved key strategic
milestones, fortifying our foundation for even
greater success in 2025 and beyond.
As we look ahead, we remain focused on three
strategic priorities:
• Delivering sustained revenue growth
• Achieving operational excellence
• Fostering a high-performing culture
Being an essential partner carries a dual mandate:
to deliver exceptional service to our clients —
so they, in turn, can better serve their clients —
while also driving sustainable growth and
value for you, our shareholders. Over our nearly
233-year history, we have grown and evolved
alongside the global economy, pioneering innova
tions that have transformed modern investing.
As we continue shaping the future, we do so with
an understanding that our potential is even greater
than our accomplishments.
With a compelling growth strategy strengthened
by a distinctive value proposition, and an
unwavering commitment to our clients, employees,
and shareholders, we are effectively positioning
our firm for long-term sustainable growth.
Thank you for your continued partnership
and trust.
Forward-looking statements
This annual report contains forward-looking statements as
defined by U.S. securities laws. These statements are not
guarantees for future performance, are inherently uncertain,
are based on assumptions that are difficult to predict, and
have a number of risks and uncertainties.
Further, they speak only as of the time this annual report is
first published, and State Street does not undertake efforts
to revise forward-looking statements. Refer to Item 1A of the
Form 10-K included with this annual report for details.
Ronald P. O’Hanley
CHAIRMAN AND CEO
13
2024 ANNUAL REPORT
2024
18.9%
2024
11.7%
2024
27.6%
$8.67
2024
$7.66
2023
26.4%
2023
11.3%
2023
18.3%
2023
Diluted earnings
per share*
Pre-tax margin*
Return on
average common
equity*
Return on
average tangible
common equity*
* Excluding notable items is a non-GAAP presentation. Refer to the reconciliations of non-GAAP financial information included below. Please also refer to
Item 8 of the Form 10-K included with this annual report for the GAAP-basis presentation of our consolidated financial statements for the years ended
December 31, 2023 and 2024.
Financial Highlights
Non-GAAP, excluding notables
14
STATE STREET CORPORATION
nm Denotes not meaningful
Years Ended
(Dollars in millions)
2023
2024
% Change
TOTAL EXPENSES:
Total expenses, GAAP-basis
$9,583
$9,530
(0.6)%
Less: Notable items
Acquisition and restructuring costs(4)
15
-
nm
Deferred compensation expense acceleration(5)
-
(79)
nm
Repositioning (charges)/release(6)
(203)
2
nm
FDIC special assessment(7)
(387)
(99)
nm
Other notable items(8)
(45)
(12)
(73.3)
Total expenses, excluding notable items
$8,963
$9,342
4.2%
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 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.
15
2024 ANNUAL REPORT
Years Ended
(Dollars in millions, except per-share amounts)
2023
2024
% Change
DILUTED EARNINGS PER SHARE:
Diluted earnings per share, GAAP-basis
$5.58
$8.21
47.1%
Less: Notable items
Foreign exchange trading services(1)
-
(0.04)
Other fee revenue(2)
-
(0.16)
(Gains) losses related to investment securities net(3)
0.66
0.20
Acquisition and restructuring costs(4)
(0.03)
-
Deferred compensation expense acceleration(5)
-
0.19
Repositioning charges(6)
0.47
-
FDIC special assessment(7)
0.89
0.24
Other notable items(8)
0.09
0.03
Diluted earnings per share, excluding notable items
$7.66
$8.67
13.2%
PRE-TAX MARGIN:
Pre-tax margin, GAAP-basis
19.4%
26.1%
6.7% pts
Less: Notable items
Foreign exchange trading services(1)
-
(0.1)
Other fee revenue(2)
-
(0.5)
(Gains) losses related to investment securities net(3)
2.3
0.6
Acquisition and restructuring costs(4)
(0.1)
-
Deferred compensation expense acceleration(5)
-
0.6
Repositioning charges(6)
1.6
-
FDIC special assessment(7)
3.0
0.8
Other notable items(8)
0.2
0.1
Pre-tax margin, excluding notable items
26.4%
27.6%
1.2% pts
RETURN ON AVERAGE COMMON EQUITY:
Return on average common equity, GAAP-basis
8.2%
11.1%
2.9% pts
Less: Notable items
Foreign exchange trading services(1)
-
(0.1)
Other fee revenue(2)
-
(0.2)
(Gains) losses related to investment securities net(3)
1.3
0.3
Acquisition and restructuring costs(4)
(0.1)
-
Deferred compensation expense acceleration(5)
-
0.3
Repositioning charges(6)
0.9
-
FDIC special assessment(7)
1.7
0.4
Other notable items(8)
-
0.05
Tax impact of notable items
(1.0)
(0.2)
Return on average common equity, excluding notable items
11.3%
11.7%
0.4% pts
16
STATE STREET CORPORATION
(1) Amount in 2024 consists of a $15 million revenue-related recovery associated with the proceeds from a 2018 foreign exchange benchmark litigation
resolution, which is reflected in foreign exchange trading services revenue.
(2) Amount in 2024 consists of a $66 million gain on sale of equity investment, which is reflected in other fee revenue.
(3) In 2024 and 2023, loss on the sale of investment securities of $81 million and $294 million, respectively, related to the repositioning of the investment
portfolio, which is reflected in other income.
(4) Acquisition and restructuring costs related to the BBH Investor Services acquisition transaction that State Street is no longer pursuing.
(5) Deferred compensation expense acceleration of $79 million in 2024 related to prior period incentive compensation awards to align State Street’s
deferred pay mix with peers.
(6) Amount in 2024 includes a $15 million release related to compensation and employee benefits, partially offset by $13 million related to occupancy
costs associated with real estate footprint and the amount in 2023 includes $182 million of compensation and benefits expenses related to workforce
rationalization, and $21 million of occupancy charges related to real estate footprint optimization.
(7) Amounts in 2024 and 2023 related to the FDIC special assessment and subsequent true-up reflected in other expenses.
(8) The amount in 2024 includes a $12 million charge reflected in other expenses, associated with operating model changes, and the amount in 2023
includes charges of $41 million in information systems and communications and $4 million, net, in other expenses, primarily associated with operating
model changes.
(9) Refer to Reconciliations of non-GAAP Financial Information pages in State Street’s fourth-quarter 2024 and full-year 2024 financial information
addendum for a reconciliation of net income available to common shareholders, excluding notable items.
(10) Return on average tangible common equity, excluding notable items — non-GAAP is calculated by dividing annual net income available to common
shareholders, excluding notable items for the relevant period by average tangible common equity.
Years Ended
(Dollars in millions, except where otherwise noted)
2023
2024
AVERAGE TANGIBLE COMMON EQUITY:
Average common shareholders’ equity
$22,201
$22,339
Less:
Average goodwill
7,536
7,721
Average other intangible assets
1,460
1,206
Plus related deferred tax liabilities
492
462
Average tangible common shareholders’ equity - non-GAAP
$13,697
$13,874
Net income available to common shareholders
$1,821
$2,483
Net income available to common shareholders, excluding notable items(9)
2,500
2,623
Return on average tangible common equity - non-GAAP
13.3 %
17.9 %
Return on average tangible common equity, excluding notable items - non-GAAP(10)
18.3 %
18.9 %
Reconciliation of return on average tangible common equity
The return on average tangible common equity (ROTCE) is a ratio that management believes provides context about State
Street’s use of equity. ROTCE is calculated by dividing annual net income available to common shareholders by annual average
tangible common equity. Average tangible common equity is a non-GAAP measure which reduces average common shareholders’
equity, by average goodwill and other intangible assets, net of related deferred taxes. Since there is no authoritative requirement
to calculate the ROTCE ratio, our ROTCE ratio is not necessarily comparable to similar measures disclosed or used by other
companies in the financial services industry. ROTCE is a non-GAAP financial measure 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.
Reconciliation with respect to the calculation of the ROTCE ratio is presented below.
17
2024 ANNUAL REPORT
>232
Years of
experience
4th
Largest asset
manager globally2
~53,000
Employees
worldwide
1st
Front-to-back
investment platform3
WHO WE ARE
Trust is ear
18
STATE STREET CORPORATION
100+
Markets where
we do business
3rd
#1
ETF servicer4
>11%
Of the world’s assets
entrusted to us1
1 Represents State Street AUC/A divided by Global Financial Assets, including Global Equity, Global Debt Securities, and Global Broad Money (M3),
as of December 31, 2023. Sources: SIFMA Markets Factbook, 2024; Organisation for Economic Co-operation and Development (OECD), World
Bank. This represents State Street’s assets under custody and administration AUC/A ($46.6 trillion) as of December 31, 2024.
2 Pensions & Investments Research Center as of December 31, 2023.
3 From a single provider.
4 State Street analysis of ETFGI Global Insights Report as of December 31, 2024.
Photos of Ron O’Hanley and Lori Heinel courtesy of Future Investment Initiative, 2024.
ned
every day
19
2024 ANNUAL REPORT
To my fellow
shareholders
Amelia C. Fawcett
INDEPENDENT LEAD DIRECTOR
Trust forms the foundation of State Street’s
business model, driving every relationship we
build — with clients, regulators, investors,
and employees alike. My fellow board members
and I recognize its importance and understand
that without it, we cannot endure. The board
is entrusted with the responsibility of overseeing
State Street’s long-term growth and resilience,
underpinned by a disciplined governance frame-
work. Importantly, we play a vital role in providing
independent perspectives for the development
and execution of our multi-year strategy, aligning
it with our purpose and vision, and adapting it
to the challenges and opportunities that affect
our clients, and in turn, State Street.
Simply put, our job is to empower management
to leverage every tool at their disposal, including
innovative strategies, to drive our company
forward. It is through effectively and continuously
executing these responsibilities that we further
strengthen the trust and confidence placed in us.
As I reflect on 2024, it stands out as a year of
broad-based growth and momentum. Strategic
execution and investment translated into
measurable results — from delivering against
our full year servicing sales goal, to continued
solid momentum in front-office software and
data, to Global Markets’ notable revenue growth
in foreign exchange trading services, to Global
Advisors’ management fees reaching an all-time
high — it was a year full of accomplishments.
20
STATE STREET CORPORATION
While strategy aids in defining priorities, it is the
power of execution that elevates, distinguishes,
and delivers sustainable performance. Our clients
rely on us as an essential partner to help them
navigate complexity with expertise and precision so
they can focus on what matters most — serving
their clients. I am particularly pleased with the
ongoing enhancements in service quality, continued
progress in the transformation and simplification
of our global operating model, and sustained
focus on innovation. State Street’s legacy is rooted
in a culture of firsts — pioneering transformational
innovations that have reshaped our industry and
set new standards over many decades — and we
have no plans to relent.
This spirit of forward-thinking industry leadership
prepares us for whatever the future may bring
and also inspires us to define it.
Together, these efforts position State Street well
for sustainable growth and long-term shareholder
value creation.
On behalf of the entire board, I would like to thank
Ron and the leadership team for their execution
against our strategic priorities and for their wisdom
in shaping a company that is agile yet grounded,
innovative yet enduring, and united in our purpose:
to help create better outcomes for the world’s
investors and the people they serve.
“Trust forms the foundation of State Street’s
business model, driving every relationship
we build — with clients, regulators, investors,
and employees alike. My fellow board
members and I recognize its importance and
understand that without it, we cannot endure.”
21
2024 ANNUAL REPORT
I also extend my deep appreciation to my fellow
board members — a remarkable group of insight-
ful, accomplished, and collaborative leaders.
At the heart of our success are our employees,
whose dedication, expertise, and unwavering
commitment strengthen the trust our stakeholders
place in us, and for that, I express my deepest
admiration and thanks.
And of course, I am grateful to you, our share
holders, for your continued confidence and
trust in State Street to deliver enduring value.
Amelia C. Fawcett
INDEPENDENT LEAD DIRECTOR
22
STATE STREET CORPORATION
essential partner to help
navigate complexity with
expertise and precision s
they can focus on what m
most—serving their clien
Our clients rely on us as a
partner to help them nav
complexity with expertis
precision so they can foc
most — serving their clie
Our clients rely on us as a
“Our clients rely on us as an essential partner to
help them navigate complexity with expertise and
precision so they can focus on what matters most —
serving their clients.”
23
2024 ANNUAL REPORT
diligence / strength
precision / collabora
quality / stability / ex
igh Trust is essential
service / reliability /
confidence / commit
expertise / partnersh
STATE STREET CORPORATION
24
/ growth / innovatio
ation / excellence / fo
xpertise / dedication
to our success heart
transparency / integ
tment / accountabilit
hip
Business Review
26
Investment Services
32
Investment Management
38
Global Markets
44
Technology and Operations
25
2024 ANNUAL REPORT
Achieving excellence:
Innovation, market
expansion, and improved
performance
INVESTMENT SERVICES
State Street’s Investment Services business
provides a full range of products and services
across the front, middle, and back office for
public and alternative assets, as well as multi-
asset class investments.
We are a leading partner to global investment
and wealth managers, asset owners, central
banks, and other official and public institutions.
By providing critical infrastructure and expertise,
we help clients streamline their operating
models, harness data to make better-informed
investment decisions, and capitalize on growth
opportunities in evolving market environments.
Our ambition is clear and unrelenting: to deliver
superior, differentiated experiences for our clients
through every interaction, understand our clients’
needs, reaffirm our commitment to them every
day, and reinforce their trust in State Street as an
essential and reliable partner.
Outstanding full-year results
The Investment Services business was integral
to the firm’s overall growth and success in 2024,
with assets under custody and/or administration
(AUC/A) reaching $46.6 trillion at year-end,
up 11 percent compared to 2023. In line with our
strategy, we achieved robust fee revenue sales,
largely driven by our core back-office business.
New AUC/A business wins totaled $2.3 trillion,
nearly half of which was propelled by our
State Street Alpha® front-to-back platform.
Software and processing fee revenue increased
9 percent, supported by growth in front-office
software and data services associated with our
Charles River Development company.
26
STATE STREET CORPORATION
Our impressive new busi
performance in 2024 und
scores the strength of ou
strategic investments and
relentless focus on enhan
client service. This mom
reflects our commitment
“Our impressive new business performance
in 2024 underscores the strength of our
strategic investments and relentless focus on
enhancing client service. This momentum
reflects our commitment to driving
innovation and long-term growth across
every facet of our business.”
Joerg Ambrosius
PRESIDENT OF INVESTMENT SERVICES
27
2024 ANNUAL REPORT
Highlighting the success of our efforts to
improve servicing capabilities and the client
experience through our technology-led operating
model, we achieved a substantial increase in
client satisfaction across multiple facets of
servicing, including service quality, technology,
responsiveness, and communication.
Optimizing our capabilities and
solutions for client success
We expanded our capabilities in high-demand
segments and increased resiliency across our
critical business functions — leveraging
technology including artificial intelligence and
automation to streamline delivery and further
enhance client service.
Our comprehensive back-office solutions are
a key driver of new business, accounting for
nearly 85 percent of our servicing sales in 2024,
and anchor our front-to-back value proposition.
We invested in our back-office services during
the year, specifically in support of our clients’
growing investments in private markets and
exchange-traded funds (ETFs).
Our private markets business represents
significant long-term growth potential for the
firm and contributed approximately 9 percent
of full-year servicing fees in 2024. To capitalize
on this opportunity, we refined our product
and platform capabilities to better support
clients’ private market investments and position
their portfolios for success.
$46.6T
AUC/A at year-end
$2.3T
AUC/A total wins
28
STATE STREET CORPORATION
We have deep insights into fast-changing industry
regulations and their impact on our clients’
businesses. Ahead of the May 28,
2024 move to a T+1 settlement cycle, we
successfully rolled out solutions to help
clients manage associated challenges while
continuing to deliver competitive services
aligned to priority segments and markets.
Regulation also impacted digital asset develop-
ments in 2024. As the No. 1 servicer1 of ETFs,
we deepened our position in the digital asset
ETF space (e.g., Bitcoin and Ethereum ETFs),
where our service offerings include custody of
cash, fund accounting, transfer agency, ETF
basket services, and electronic order taking.
In addition, our partnership with Taurus, a global
leader in digital asset infrastructure, elevates
our capabilities as we seek to provide clients with
best-in-class solutions in the emerging digital
asset space.
Unleashing the transformative power of Alpha
State Street Alpha is a cornerstone of our business
and growth strategy, helping clients more efficiently
manage their end-to-end investment process.
Through real-time access to Alpha’s unified data
and insights across the front, middle, and back
office, and among asset classes, clients can make
better-informed investment decisions. We achieved
seven new mandates in 2024, bringing our total
to 35 — 25 of which were live on our platform at
year-end.
1 State Street analysis of ETFGI Global Insights Report, December 31, 2024.
35
Total Alpha clients
No. 1
ETF servicer
29
2024 ANNUAL REPORT
Marking its fifth anniversary in 2024, the Alpha
platform delivers comprehensive private and
public market investment solutions globally,
further strengthening its distinctive service
offering — a key competitive differentiator for
State Street.
Last year, we further invested in the platform,
expanding Alpha’s public asset capabilities
across cash, equities, fixed-income, and complex
over-the-counter derivatives. We continue to
augment the data tools and private market
solutions delivered on the platform, with a focus
on supporting clients’ expanding private market
investment strategies and enabling adoption
across our client base to fuel business growth.
Looking ahead
We are committed to being an essential partner
in our clients’ success, with a clear focus on
accelerating fee revenue growth. Leveraging
our position as an industry leader, our priorities
center on enhancing service quality, continuing
to elevate client satisfaction, and advancing
innovation through a tech-led strategy that
strengthens operational efficiency, resilience,
and sustainable long-term growth.
In 2025, we will continue to augment our offerings
for private market assets and ETFs, providing
comprehensive solutions that meet the evolving
needs of our clients and enable them to capitalize
on new opportunities.
Furthering our goal of expanding into profitable
new segments, we will leverage the Charles River
Wealth platform — along with our asset servicing
leadership and State Street Global Advisors’
presence in the wealth services market — to offer
tailored solutions for wealth managers.
Additionally, we will continue to advance our
initiatives around data commercialization,
increasing our capacity to empower clients with
sophisticated insights and innovative solutions
that address their most pressing challenges.
This translates into new revenue streams, improved
client retention, and a stronger competitive
edge for our firm — critical drivers of long-term
value creation.
By embracing innovation and deepening client
partnerships, we remain poised to anticipate
market shifts and achieve meaningful outcomes
for our clients and shareholders while shaping
the future of asset servicing.
9%
Software and processing
fee revenue
+
30
STATE STREET CORPORATION
Top Industry Awards
RECOGNIZING OUR CORE CAPABILITIES
Best Global Custodian in APAC
Asia Asset Management’s
Best of the Best Awards 2024
Best Custodian in APAC (28 years)
Asia Asset Management’s
Best of the Best Awards 2024
Best Middle- and Back-Office Services
Provider in APAC
Asia Asset Management’s
Best of the Best Awards 2024
Asset Servicing Deal of the Year (APAC)
Global Custodian Leaders in
Custody Asia Awards 2024
Best Global Custodian
(International Clients) in APAC
The Asset – AAA Sustainable
Investing Awards 2024
Best Middle-Office Tech
Provider in Canada
ETF Express Canadian Awards 2024
Best Administrator —
Over $30 Billion Single Manager
HFM Asia Services Awards 2024
Best ETF Back-Office Tech Provider
ETF Express U.S. Awards 2024
Best ETF Middle-Office Tech Provider
ETF Express U.S. Awards 2024
Best Overall ETF Administrator
ETF Express U.S. Awards 2024
Best ETF Administrator — Equity ETFs
ETF Express U.S. Awards 2024
Best ETF Administrator — Fixed Income ETFs
ETF Express U.S. Awards 2024
31
2024 ANNUAL REPORT
INVESTMENT MANAGEMENT
State Street Global Advisors, the corporation’s
investment management business, is a pioneer
in indexing and quantitative investing, and the
creator of the first U.S.-listed exchange-traded
fund (ETF).
As the world’s fourth largest investment manager,1
we offer a broad range of investment solutions
that span the entire risk-return spectrum and
cover all major asset classes across geographies,
investment styles, and vehicles.
Our primary objective is to be the leading partner
and provider of innovative investment exposures
and solutions to our clients.
Achieving strong growth and
improved performance
Global Advisors achieved robust performance
in 2024, including $146 billion in net inflows.
Total revenues climbed 13 percent year-over-year
to an all-time high of $2.3 billion. Assets under
management (AUM) grew by 15 percent year-
over-year to $4.7 trillion.
Building on the prior year’s success, the SPDR
ETF business continued to reach new milestones —
generating $109 billion in flows and driving
ETF AUM to $1.6 trillion. Our flagship Gold ETF,
which celebrated its 20th anniversary in 2024,
gathered nearly $2 billion in net new assets.
1 Pensions & Investments Research Center, as of December 31, 2023.
Maximizing value:
Sustained growth,
strategic execution,
and market leadership
STATE STREET CORPORATION
32
We achieved significant
in 2024, with year-end A
increasing by 15 percent
trillion. This included m
percent
organic growth for the
second consecutive year
reflecting our continued
momentum and deepen
relationships worldwide
“We achieved significant growth in 2024,
with year-end AUM increasing by
15 percent to $4.7 trillion. This included
more than 3 percent organic growth for
the second consecutive year, reflecting
our continued momentum and deepening
client relationships worldwide.”
Yie-Hsin Hung
CHIEF EXECUTIVE OFFICER, STATE STREET GLOBAL ADVISORS
33
2024 ANNUAL REPORT
The Cash business delivered $32 billion in flows,
building on the prior year’s record net inflows.
Index Fixed Income strategies saw net inflows of
$36 billion, while our U.S. retirement business
continued its upward trajectory with $28 billion in
net new defined contribution asset flows, largely
driven by target date funds. Our Institutional
business in Europe, the Middle East, and Africa
achieved record annual net inflows of $66 billion.
Optimizing strategies for client success
As trusted partners to our clients, we leveraged
our deep understanding of their needs and
challenges to deliver innovative products
and identify emerging opportunities for them —
reinforcing our commitment to aiding their
success in any economic environment.
While 2024 delivered strong equity performance
with new highs and solid returns, clients remained
focused on concentration risk, valuations,
and inflation.
We saw strong demand for both index products
and strategies that provided attractive risk/return
profiles, such as our refined equity strategies.
Overall, our active equity capabilities performed
well, with 92 percent of our strategies out-
performing their benchmarks on an AUM basis.
Fixed-income investors turned to our cash and
short-duration products in search of stability and
preservation of value amid inflationary pressures
and interest rate uncertainty. Additionally, we saw
rising demand for fixed-income indexing and
systematic strategies, alongside growing interest
in niche exposures such as emerging markets
debt, private credit, and senior loans.
$4.7T
Total AUM at year-end
$13T
ETF trading volume
34
STATE STREET CORPORATION
Propelling growth through strategic
partnerships and market expansion
Through strategic alliances, we delivered
innovative investment solutions that generate
substantial value and unlock new growth
opportunities for clients globally.
Our partnership with Raiz bolstered digital
and micro-investment offerings for Australian
retail investors, while our work with Fideuram
Asset Management introduced Europe’s
first “ETF as a Service,” delivering tailored
solutions for wealth managers.
We established a strategic relationship with
Envestnet, a leading provider of integrated
technology, data, and wealth solutions, to broaden
our access to independent wealth advisory
and high-net-worth distribution channels.
In addition, we deepened our engagement in
the retirement and income solutions space
through key partnerships. Our collaboration with
PensionBee, a global leader in the consumer
retirement market, increases access for millions
of Americans by offering target date model
portfolios built with our ETFs for individual
retirement accounts. Further, our partnership
with Micruity, a pioneer in retirement income
technology solutions, improves defined
contribution plan participant decision-making
through comprehensive and customizable
support for income modeling, education,
and election tools.
In collaboration with Apollo Global Management,
we launched a groundbreaking ETF offering
designed to make investment-grade private credit
investments available to everyday investors.
Lori Heinel
GLOBAL CHIEF INVESTMENT OFFICER
STATE STREET GLOBAL ADVISORS
“We remain committed to partnering with our clients to provide them and
the investors they serve with tailored solutions that help them achieve
their unique goals and objectives.”
35
2024 ANNUAL REPORT
Additionally, our alliance with Bridgewater
Associates further demonstrates our efforts
to democratize access to institutional-caliber
investment strategies, enabling all investors to
build more diversified and resilient portfolios.
These partnerships exemplify our ability to
integrate our expertise with that of other leading
providers to quickly deploy differentiated
solutions to meet investors’ evolving needs
globally and at scale.
Innovating for growth in shifting markets
Amid changing market dynamics, individual
investors continued to seek the right balance
between investment outperformance and saving
for retirement. In response, we expanded our
product suite, focusing on key growth areas such
as fixed income, global wealth, and ETFs.
Notable additions to our SPDR ETF
portfolio include:
• MyIncome: Actively managed corporate
and municipal target-maturity bond ETFs,
enabling investors to build customized bond
ladder portfolios tailored to their cash flow
and liquidity needs
• SSGA US Equity Premium Income (SPIN):
Actively managed ETF designed to generate
augmented income through a dynamic call
writing program
• Bloomberg Enhanced Roll Yield Commodity
Strategy No K-1 (CERY): ETF tracking the total
return performance of the Bloomberg
Enhanced Roll Yield Total Return Index
To help investors capitalize on digital asset
growth and diversification, we launched three
SPDR actively managed technology-focused
ETFs: Galaxy Digital Asset Ecosystem ETF
(DECO), Galaxy Hedged Digital Asset Ecosystem
ETF (HECO), and Galaxy Transformative Tech
Accelerators ETF (TEKX).
“Our goal is to empower investors at every level by making
wealth-building more accessible, driving long-term value
for our clients and shareholders.”
Anna Paglia
CHIEF BUSINESS OFFICER, STATE STREET GLOBAL ADVISORS
STATE STREET CORPORATION
36
In 2024, we demonstrated our ability to innovate
at scale and remain agile in a dynamic market by
launching more than 90 new products globally —
surpassing the combined total of all new product
launches over the prior three years. This achieve-
ment highlights our commitment to responding
swiftly to emerging opportunities and evolving
client needs, reinforcing our leadership in driving
innovation within the asset management industry.
Empowering investors with proxy voting choice
With our commitment to enabling all investors
to achieve their stewardship objectives, we have
maintained industry leadership in providing an
Investor Voting Choice option across more
than 80 percent of eligible equity index assets.
That means that individual investors, even in
our ETFs, have the opportunity to choose their
specific proxy voting policy from a broad range
of options.
Looking ahead
Building on our record performance, we are
steadfast in driving strategic growth and deliver-
ing innovative solutions that create value for our
clients. In 2025, we will expand our presence in
high-priority segments, including private markets,
fixed income, ETFs and wealth, while targeting
fast-growing markets in Asia Pacific and the
Middle East. Additionally, we will continue apace
with new products. We will focus on expanding
our distribution relationships around the world
to broaden our engagement with a wider range
of investors.
We will continue to take a multi-asset-class
approach in delivering custom and tailored
portfolio solutions, integrating alternative asset
classes into more of our offerings to help drive
success for our clients and shareholders.
Guided by our vision to be the world’s leading
partner and provider of investment exposures
and tailored solutions, we remain committed
to providing our clients with thoughtful insights,
relevant investment ideas, and stability in an
ever-evolving market landscape.
$2.3B
Net revenues
$146B
Net inflows
13%
Revenue growth
37
2024 ANNUAL REPORT
GLOBAL MARKETS
With the goal of enhancing and preserving the
value of client portfolios, Global Markets delivers
foreign exchange (FX) trading, securities finance
solutions, agency execution services, and
cutting-edge trading platforms across client
types, including asset managers, asset owners,
alternatives asset managers, and corporates.
These solutions are supported by our extensive
proprietary research and insights.
In 2024, we helped clients achieve their investment
goals by providing a comprehensive suite
of products and solutions spanning liquidity,
financing, and research. At the same time,
we prioritized generating value for the firm, aligning
client outcomes with strategic priorities.
Our efforts resulted in an 11 percent increase in
FX trading services revenue, and contributed to
a second consecutive year of record net interest
income. These gains were driven by strong
trading volume and disciplined execution focused
on delivering long-term growth for clients.
Advancing innovation to support client success
Throughout the year, volatility, regulatory changes,
and geopolitical uncertainty shaped global capital
markets, challenging investors to adopt shorter
settlement cycles, adapt to market complexities,
and manage risk effectively. We provided investors
with much-needed liquidity, financing, and
research through a diverse range of solutions,
including electronic trading platforms and liquidity
trading tools.
Driving strategic impact:
Partnership, innovation,
and expertise
STATE STREET CORPORATION
38
We equip investors to act
with precision and with
confidence. Through dif
strategies and actionable
insights — powered by
State Street Associates’ p
research — we provide c
“We equip investors to act with precision
and confidence. Through differentiated
strategies and actionable insights —
powered by State Street Associates’
proprietary research — we provide clients
with an information edge to navigate and
stay ahead of shifting market dynamics.”
Anthony Bisegna
HEAD OF GLOBAL MARKETS
39
2024 ANNUAL REPORT
By investing in transformative technologies
and tailored solutions, we helped clients
improve their investment outcomes and achieve
sustainable growth.
In 2024, we continued to strategically refine and
expand our product capabilities and geographical
reach to drive growth and better outcomes for our
clients. We delivered partnered trading solutions
across multiple asset classes and strategies,
helping our clients navigate regulatory challenges,
such as the transition to T+1 settlement cycles.
To address the growing complexity faced by
buy-side trading desks, we have expanded our
algo and electronic trading solutions across
global markets.
Additionally, we developed high-performing
algorithm monitoring capabilities and refined
our venue/order routing logic to support
more accurate analysis.
Amid rising demand for greater efficiency
and accuracy in an ever-evolving financial
landscape, we executed several strategic
initiatives, including:
• StreetFXSM and Indirect FX: Service options
that address the risks and challenges of
the T+1 settlement cycle, reducing operational
bottlenecks and enhancing trade execution
speed
• BestXecutorSM: A first-of-its-kind decision
augmentation tool that improves trading
precision and reduces execution costs across
client portfolios
11%
FX trading services revenue
+
40
STATE STREET CORPORATION
• LINKTM: A new smart desktop platform that
brings together State Street Global Markets’ suite
of trading, analytics, and research solutions into
a single, seamless digital environment
• FX Portfolio Algo: A workflow solution that
allows traders to optimize a large number of
trades simultaneously
Expanding global reach and strengthening
market leadership
In 2024, we reinforced our support for European
investors by increasing access to our innovative
strategies, including FX, secured fund financing,
sponsored member repo, and partnered trading,
aligning with market trends and evolving
investment priorities.
In Asia Pacific, we became the first registered
foreign institution to participate in the onshore inter-
bank FX market in Korea and expanded our capa-
bilities to access the Korean FX market offshore.
We augmented our award-winning suite of elect-
ronic trading platforms, GlobalLINK, improving
transparency and efficiency for clients worldwide.
For instance, during the year, GlobalLINK’s Fund
Connect ETF portal supported several new
ETF launches, including the debut of the first
U.S.-listed Bitcoin ETFs.
Informing smarter decisions through
fact-based research
State Street Associates brings together leading
academics with deep industry expertise to deliver
unique insights and advanced research tools that
help clients navigate market complexities and
make better decisions. In 2024, this hub for
quantitative research continued to add value for
clients by providing them differentiated analysis
and data, together with proprietary market
indicators, which empower them to meet their
investment goals.
To help investors navigate an increasingly complex
global landscape, we announced a new acad-
emic partnership with Daniel Drezner, professor
of International Politics at The Fletcher School of
Law and Diplomacy at Tufts University, bringing
fresh perspectives on geopolitical risk. He joins
a team of renowned academics with specialized
expertise in asset allocation, risk management,
portfolio construction, private markets, sustain-
able investing, investor behavior, distributed
ledger technology, media sentiment, inflation,
and economics.
Underscoring the depth and relevance of our
research, our academic partners and internal
subject-matter experts provided clients with
topical insights on market and investment trends
at our 2024 Research Retreat, held annually
in key global financial hubs.
In addition to expanding our research collab-
orations, we enhanced our suite of capabilities
that aid investors in managing risk and
capturing opportunities.
41
2024 ANNUAL REPORT
In 2024, we launched multiple key market
indicator tools to improve decision-making
and accuracy, including:
• Relevance-Based Prediction API:
The first in a suite of application program-
ming interface (API) engines that allows
clients to apply our proprietary relevance-
based prediction analytics to their own data,
research, and workflows
• Machine Learning Stock Selection Model:
A powerful model that blends data and
metrics with macro intelligence designed
to predict sector-relative performance of
U.S. large-cap stocks
• Stock Explorer: A stock screening tool
to analyze and predict sector-specific
relationships between drivers and returns
in U.S. large-cap equities
These innovations reflect our commitment
to acting as a trusted partner to institutional
investors, helping them leverage advanced
tools and proprietary data to achieve superior
investment outcomes.
Looking ahead
In 2025, Global Markets will aim to capture greater
market share by investing in our core offerings
and expanding our reach across new products,
markets, and client segments.
As part of our growth strategy, our efforts are
centered on deepening market engagement and
driving further product innovation. Through these
efforts, we will broaden our presence in key
regions, including the Middle East, Continental
Europe, Asia Pacific, and Latin America.
As a trusted partner to investors, we will continue
to optimize our platform with next-generation tools
and services, fostering deeper client relationships
and equipping clients with an information edge.
No. 1
FX Trading Technology Solution
Euromoney 2024 FX Awards
42
STATE STREET CORPORATION
Top Industry Awards
FX SALES AND TRADING
Best FX Bank for Client Service
Euromoney FX 2024 Awards
Best Technology Provider for
FX Data Management
Euromoney FX 2024 Awards
Northbound Top FX Settlement Bank
for the 5th consecutive year
Bond Connect Awards 2024
Currency Manager of the Year
European Pensions Awards 2024
GLOBALLINKTM
Best FX Trading Technology Solution
Euromoney FX 2024 Awards
NOVA Award for Innovation Across
Financial Markets for the 2nd consecutive year
TabbFORUM Awards 2024
Best Execution Product of the Year (BestX®)
Risk Markets Technology Awards 2024
Best Bank of Post-Trade Services
(TradeNeXusSM and StreetFXSM)
FX Markets Asia Awards 2024
Editor’s Choice Awards for ETF Initiative
of the Year (Fund Connect®)
Global Custodian Annual Leaders Awards 2024
GLOBAL MARKETS RESEARCH
Best FX Bank for Research
Euromoney FX 2024 Awards
Harry Markowitz Award (The Determinants of Inflation)
Journal of Investment Management, awarded 2024
FINANCING SOLUTIONS
Best in Securities Lending for the 10th consecutive year
The Asset’s Triple A Sustainable Investing Awards 2024
Ranked No. 1 Counterparty on Drawn Balances with
Closed-End Funds, as of first half of 2024
Fitch Ratings
Asian Lender of the Year
Securities Finance Times Industry Excellence
Awards 2024
Operations Team of the Year
Securities Finance Times Industry Excellence
Awards 2024
Best Securities Financing House for the 2nd
consecutive year, winner, 15 of the last 19 years
Asia Asset Management 2024 Best of the Best Awards
43
2024 ANNUAL REPORT
ANNUAL REPORT
43
TECHNOLOGY AND OPERATIONS
Advancing our
technology-driven
transformation
Building trust on a centuries-strong foundation
Technology is central to our enterprise, enabling
execution at scale while fostering resilience,
efficiency, and innovation. Responsible for more
than 11 percent of the world’s financial assets,
State Street serves a vital role in the global
financial system.1 Our ability to earn and sustain
trust — through secure, seamless, and efficient
service delivery — relies on the strength of our
technology and operations infrastructure.
Transforming our operating model
As we continue to modernize our operations,
we remain committed to building the industry’s
most sophisticated, intelligent, and inte-
grated technology platform to support evolving
client needs.
In 2024, we accelerated our transition to a
platform-based operating model, centralizing
and standardizing key functions to enhance
efficiency and interoperability across our
business. These efforts streamline workflows
and reinforce our ability to deliver scalable,
high-impact solutions.
Enabling client-centric innovation
Our client-focused, technology-driven
architecture accelerates product innovation,
reduces time to market, and enables rapid
expansion at scale. These developments
increase our capacity to solve our clients’
most pressing challenges.
44
STATE STREET CORPORATION
Strengthening resilience and risk management
The financial landscape is increasingly complex,
requiring heightened security and regulatory
discipline. In 2024, we advanced our cybersecurity
frameworks, governance controls, and risk re-
mediation measures to optimize operational
integrity and protect against emerging threats.
By embedding cutting-edge risk oversight mech-
anisms, we design our global platform to uphold
high standards of readiness and business con-
tinuity aligned with client and regulator expectations.
A trusted partner for the future
For nearly 233 years, State Street has been
an essential partner, providing stability and
innovation in an evolving financial landscape.
Our integrated technology and operations
framework empowers clients with the
service, tools, and confidence to navigate
change, adapt with agility, and seize new
growth opportunities.
Our technology transformation continues
to drive efficiency, resilience, innovation,
and operational excellence — creating long-
term value for our clients and shareholders.
1 Represents State Street AUC/A divided by Global Financial Assets, including Global Equity, Global Debt Securities, and Global Broad Money (M3),
as of December 31, 2023. Sources: SIFMA Markets Factbook, 2024; Organisation for Economic Co-operation and Development (OECD), World Bank.
This represents State Street’s assets under custody and administration AUC/A ($46.6 trillion) as of December 31, 2024.
“At State Street, our transformation journey
extends beyond creating efficiencies. We are
reshaping our operating model to enhance
our competitive edge — for our clients and our
firm — while delivering exceptional value
and fostering innovation.”
Mostapha Tahiri
CHIEF OPERATING OFFICER
45
2024 ANNUAL REPORT
Trust is our
46
STATE STREET CORPORATION
greatest asset
Financial Review
Form 10-K
47
2024 ANNUAL REPORT
48
STATE STREET CORPORATION
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission File No. 001-07511
STATE STREET CORPORATION
(Exact name of Registrant as Specified in its Charter)
MA
04-2456637
(State or other jurisdiction of incorporation)
(I.R.S. Employer Identification No.)
One Congress Street
Boston, MA
02114
(Address of principal executive offices)
(Zip Code)
(617) 786-3000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading
Symbol(s)
Name of each exchange on which
registered
Common Stock, $1 par value per share
STT
New York Stock Exchange
Depositary Shares, each representing a 1/4,000th ownership interest in a share of
STT.PRG
New York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series G, without
par value per share
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the per share price ($74.00) at which the common equity
was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter (June 28, 2024) was approximately $22.09 billion.
The number of shares of the registrant’s common stock outstanding as of January 31, 2025 was 288,469,096.
Portions of the following documents are incorporated by reference into Parts of this Report on Form 10-K, to the extent noted in such Parts, as indicated below:
(1) The registrant’s definitive Proxy Statement for the 2025 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A on or before April 30, 2025 (Part III).
STATE STREET CORPORATION
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
December 31, 2024
TABLE OF CONTENTS
Page
Forward-Looking Statements
4
Risk Factors Summary
4
PART I
Item 1
Business
6
Item 1A
Risk Factors
20
Item 1B
Unresolved Staff Comments
50
Item 1C
Cybersecurity
50
Item 2
Properties
51
Item 3
Legal Proceedings
51
Item 4
Mine Safety Disclosures
51
Supplemental Item
Information about our Executive Officers
52
PART II
Item 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
55
Item 6
[Reserved]
58
Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
58
General
58
Overview of Financial Results
59
Consolidated Results of Operations
62
Total Revenue
62
Net Interest Income
70
Provision for Credit Losses
73
Expenses
73
Repositioning Charges
74
Income Tax Expense
74
Line of Business Information
74
Investment Servicing
75
Investment Management
75
Financial Condition
76
Investment Securities
77
Loans
80
Risk Management
81
Credit and Counterparty Risk Management
87
Liquidity Risk Management
91
Operational Risk Management
97
Information Technology Risk Management
98
Market Risk Management
99
Model Risk Management
106
Strategic Risk Management
107
Capital
108
Off-Balance Sheet Arrangements
117
Significant Accounting Estimates
117
Recent Accounting Developments
119
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
120
Item 8
Financial Statements and Supplementary Data
120
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
121
Consolidated Statement of Income
123
Consolidated Statement of Comprehensive Income
124
Consolidated Statement of Condition
125
State Street Corporation | 2
Consolidated Statement of Changes in Shareholders’ Equity
126
Consolidated Statement of Cash Flows
127
Note 1. Summary of Significant Accounting Policies
128
Note 2. Fair Value
130
Note 3. Investment Securities
136
Note 4. Loans and Allowance for Credit Losses
141
Note 5. Goodwill and Other Intangible Assets
146
Note 6. Other Assets
147
Note 7. Deposits
147
Note 8. Short-Term Borrowings
148
Note 9. Long-Term Debt
149
Note 10. Derivative Financial Instruments
150
Note 11. Offsetting Arrangements
154
Note 12. Commitments and Guarantees
157
Note 13. Contingencies
158
Note 14. Variable Interest Entities
159
Note 15. Shareholders’ Equity
161
Note 16. Regulatory Capital
163
Note 17. Net Interest Income
165
Note 18. Equity-Based Compensation
165
Note 19. Employee Benefits
167
Note 20. Occupancy Expense and Information Systems and Communications
Expense
167
Note 21. Expenses
168
Note 22. Income Taxes
169
Note 23. Earnings Per Common Share
170
Note 24. Line of Business Information
171
Note 25. Revenue from Contracts with Customers
173
Note 26. Non-U.S. Activities
176
Note 27. Parent Company Financial Statements
177
Note 28. Subsequent Events
178
Supplemental Financial Data
179
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
183
Item 9A
Controls and Procedures
183
Item 9B
Other Information
186
Item 9C
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
186
PART III
Item 10
Directors, Executive Officers and Corporate Governance
186
Item 11
Executive Compensation
186
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
186
Item 13
Certain Relationships and Related Transactions, and Director Independence
187
Item 14
Principal Accounting Fees and Services
187
PART IV
Item 15
Exhibits, Financial Statement Schedules
188
Item 16
Form 10-K Summary
188
EXHIBIT INDEX
189
SIGNATURES
192
State Street Corporation | 3
Forward-Looking Statements
This Form 10-K, as well as other reports and
proxy materials submitted by us under the Securities
Exchange Act of 1934, registration statements filed by
us under the Securities Act of 1933, our annual report
to shareholders and other public statements we may
make, may contain statements (including statements
in our Management’s Discussion and Analysis
included in such reports, as applicable) that are
considered “forward-looking statements” within the
meaning of U.S. securities laws, including statements
about our goals and expectations regarding our
business, financial and capital condition, results of
operations,
strategies,
cost
savings
and
transformation
initiatives,
investment
portfolio
performance, dividend and stock purchase programs,
acquisitions, outcomes of legal proceedings, market
growth, joint ventures and divestitures, client growth,
new
technologies,
services
and
opportunities,
sustainability and impact, human capital and climate,
as well as industry, governmental, regulatory,
economic
and
market
trends,
initiatives
and
developments, the business environment and other
matters that do not relate strictly to historical facts.
Terminology such as “expect,” “outlook,” “will,”
“goal,” “target,” “strategy” “may,” “estimate,” “plan,”
“intend,” “objective,” “forecast,” “believe,” “priority,”
“anticipate,” “seek,” and “trend,” or similar statements
or variations of such terms, are intended to identify
forward-looking statements, although not all forward-
looking statements contain such terms.
Forward-looking statements are subject to
various risks and uncertainties, which change over
time, are based on management’s expectations and
assumptions at the time the statements are made and
are not guarantees of future results. Management’s
expectations and assumptions, and the continued
validity of the forward-looking statements, are subject
to change due to a broad range of factors affecting
the
U.S.
and
global
economies,
regulatory
environment and the equity, debt, currency and other
financial markets, as well as factors specific to State
Street and its subsidiaries, including State Street
Bank. Factors that could cause changes in the
expectations or assumptions on which forward-
looking statements are based cannot be foreseen
with certainty and include the factors described under
the headings “Risk Factors Summary” and “Risk
Factors” and elsewhere in this Form 10-K, including
under “Management’s Discussion and Analysis.”
Actual
outcomes
and
results
may
differ
materially from what is expressed in our forward-
looking statements and from our historical financial
results due to the factors discussed in this section
and elsewhere in this Form 10-K or disclosed in our
other SEC filings. Forward-looking statements in this
Form 10-K should not be relied on as representing
our expectations or assumptions as of any time
subsequent to the time this Form 10-K is filed with the
SEC. We undertake no obligation to revise our
forward-looking statements after the time they are
made. The factors discussed herein are not intended
to be a complete statement of all risks and
uncertainties that may affect our businesses. We
cannot
anticipate
all
developments
that
may
adversely affect our business or operations or our
consolidated results of operations, financial condition
or cash flows.
Forward-looking statements should not be
viewed as predictions and should not be the primary
basis on which investors evaluate State Street. Any
investor in State Street should consider all risks and
uncertainties disclosed in our SEC filings, including
our filings under the Securities Exchange Act of 1934,
in particular our annual reports on Form 10-K, our
quarterly reports on Form 10-Q and our current
reports on Form 8-K, or registration statements filed
under the Securities Act of 1933, all of which are
accessible on the SEC’s website at www.sec.gov or
on the “Filings & reports” tab of our website at
investors.statestreet.com.
Risk Factors Summary
The following is a summary of material risks we
are exposed to in the course of our business activities
and which could have an adverse effect on our
business or consolidated results of operations or
financial condition. It does not contain all of the
information that may be important to you and should
be read together with the more detailed discussion of
risks under the heading “Risk Factors,” as well as
elsewhere in this Form 10-K under the heading
“Management’s Discussion and Analysis.”
Strategic Risks
•
We are subject to intense competition, which
could negatively affect our profitability;
•
We are subject to significant pricing pressure
and variability in our financial results and our
AUC/A and AUM;
•
Our development and completion of new
products and services, including State Street
Alpha® and those related to wealth servicing,
alternative investment management or digital
assets or incorporating artificial intelligence,
may
impose
costs
on
us,
involve
dependencies on third parties and may
expose us to increased risks;
•
Acquisitions,
strategic
alliances,
joint
ventures and divestitures, and the integration,
retention and development of the benefits of
these transactions, pose risks for our
business; and
State Street Corporation | 4
•
Competition for qualified members of our
workforce is intense, and we may not be able
to attract and retain the highly skilled people
we need to support our business.
Financial Market Risks
•
We could be adversely affected by political,
geopolitical, economic and market conditions
including, for example, as a result of liquidity
or capital deficiencies (actual or perceived)
by other financial institutions and related
market and government actions, the ongoing
conflicts in Ukraine and in the Middle East,
major
political
shifts
domestically
or
internationally, actions taken by central banks
to address inflationary and growth pressures,
changes in monetary policy or periods of
significant volatility in the markets for equity,
fixed income and other assets classes
globally or within specific markets;
•
We have significant global operations, and
clients, that can be adversely impacted by
disruptions in key economies, including local,
regional
and
geopolitical
developments
affecting those economies;
•
Our
investment
securities
portfolio,
consolidated
financial
condition
and
consolidated results of operations could be
adversely affected by changes in the financial
markets, governmental action or monetary
policy. For example, among other risks,
changes in prevailing interest rates or market
conditions have led, and were they to occur
in the future could further lead, to decreases
in our NII or to portfolio management
decisions resulting in reductions in our capital
or liquidity ratios;
•
Our business activities expose us to interest
rate risk;
•
We
assume
significant
credit
risk
of
counterparties,
who
may
also
have
substantial financial dependencies on other
financial
institutions,
and
these
credit
exposures and concentrations could expose
us to financial loss;
•
Our fee revenue represents a significant
portion of our revenue and is subject to
decline based on, among other factors,
market and currency declines, investment
activities and preferences of our clients and
their business mix;
•
If we are unable to effectively manage our
capital and liquidity, our financial condition,
capital ratios, results of operations and
business prospects could be adversely
affected;
•
Our calculations of risk exposures, total RWA
and capital ratios depend on data inputs,
formulae,
models,
correlations
and
assumptions that are subject to change,
which could materially impact our risk
exposures, our total RWA and our capital
ratios from period to period;
•
We may need to raise additional capital or
debt in the future, which may not be available
to us or may only be available on unfavorable
terms; and
•
If we experience a downgrade in our credit
ratings, or an actual or perceived reduction in
our financial strength, our borrowing and
capital costs, liquidity and reputation could be
adversely affected.
Compliance and Regulatory Risks
•
Our business and capital-related activities,
including common share repurchases, may
be
adversely
affected
by
regulatory
requirements and considerations, including
capital, credit and liquidity;
•
We face extensive and changing government
regulation and supervision in the U.S. and
non-U.S. jurisdictions in which we operate,
which
may
increase
our
costs
and
compliance risks and may affect our business
activities and strategies;
•
Our businesses may be adversely affected by
government enforcement and litigation;
•
Our businesses may be adversely affected by
increased
and
conflicting
political
and
regulatory scrutiny of asset management,
stewardship and corporate sustainability or
ESG practices;
•
Any misappropriation of the confidential
information we possess could have an
adverse impact on our business and could
subject us to regulatory actions, litigation and
other adverse effects;
•
Changes
in
accounting
standards
may
adversely affect our consolidated results of
operations and financial condition;
•
Changes in tax laws, rules or regulations,
challenges to our tax positions and changes
in the composition of our pre-tax earnings
may increase our effective tax rate;
•
We could face liabilities for withholding and
other
non-income
taxes,
including
in
connection with our services to clients, as a
result of tax authority examinations; and
•
Our businesses may be negatively affected
by adverse publicity or other reputational
harm.
State Street Corporation | 5
Operational, Cyber and Technology Risks
•
Attacks or unauthorized access to our or our
business partners’ or clients’ information
technology systems or facilities, such as
cyber-attacks or other disruptions to our or
their operations, could result in significant
costs, reputational damage and impacts on
our business activities;
•
Our business may be negatively affected by
risks associated with strategic initiatives we
are employing to enhance the effectiveness
and efficiency of our operations and of our
cybersecurity and technology infrastructure;
•
Our risk management framework, models
and processes may not be effective in
identifying or mitigating risk and reducing the
potential for related losses, and a failure or
circumvention
of
our
controls
and
procedures, or errors or delays in our
operational and transaction processing, or
those of third parties, could have an adverse
effect on our business, financial condition,
operating results and reputation;
•
Shifting and maintaining operational activities
to
non-U.S.
jurisdictions,
changing
our
operating model, and outsourcing to, or
insourcing from, third parties expose us to
increased operational risk, geopolitical risk
and reputational harm and may not result in
expected
cost
savings
or
operational
improvements;
•
Long-term contracts and customizing service
delivery for clients expose us to increased
operational risk, pricing and performance risk;
•
The quantitative models we use to manage
our business may contain errors that could
adversely impact our business, financial
condition, operating results and regulatory
compliance, and lapses in disclosure controls
and procedures or internal control over
financial reporting could occur, any of which
could result in material harm;
•
We may not be able to protect our intellectual
property, and we are subject to claims of third
party intellectual property rights;
•
Our reputation and business prospects may
be damaged if investors in the collective
investment pools we sponsor or manage
incur substantial losses in these investment
pools or are restricted in redeeming their
interests in these investment pools;
•
The
impacts
of
global
regulatory
requirements and expectations, shifting client
preferences, and disclosure requirements
related to climate risks, and sustainability
standards could adversely affect us; and
•
We may incur losses or face negative
impacts on our business as a result of
unforeseen events, including terrorist attacks,
geopolitical events, acute or chronic physical
risk events, including natural disasters,
pandemics, global conflicts, or a banking
crisis, which may have a negative impact on
our business and operations.
PART I
ITEM 1. BUSINESS
OVERVIEW
State Street Corporation is one of the world’s
leading providers of financial services to institutional
investors, including investment services, markets and
financing solutions and investment management. Our
clients - asset managers and owners, insurance
companies, wealth managers, official institutions and
central banks - rely on us to deliver solutions that
support
their
business
objectives
across
the
investment life cycle. Leveraging our strength and
scale,
innovation
and
platforms,
and
industry
expertise, we are an essential partner to our clients.
In all aspects of our business, we work toward a
singular purpose: to help create better outcomes for
the world’s investors and the people they serve.
Through our subsidiaries, including our principal
banking subsidiary, State Street Bank and Trust
Company, referred to as State Street Bank, we
operate in more than 100 geographic markets
worldwide, including the United States, Canada, Latin
America, Europe, the Middle East and Asia. We
provide a broad range of financial products and
services to institutional investors globally, with $46.56
trillion of AUC/A and $4.72 trillion of AUM as of
December 31, 2024.
We had consolidated total assets of $353.24
billion, consolidated total deposits of $261.92 billion,
consolidated total shareholders’ equity of $25.33
billion and approximately 53,000 employees as of
December 31, 2024.
State Street Corporation, referred to as the
Parent Company, was organized in 1969 under the
laws of the Commonwealth of Massachusetts, and is
a bank holding company that has elected to be
treated as a financial holding company under the
Bank Holding Company Act of 1956. The Parent
Company is a source of financial and managerial
strength to our subsidiaries. We conduct our business
primarily through State Street Bank, which traces its
beginnings to 1792, with the founding of our oldest
ancestor bank, Union Bank. State Street Bank’s
current charter was authorized by a special Act of the
Massachusetts Legislature in 1891, and its present
name was adopted in 1960. State Street Bank
operates as a specialized bank, referred to as a trust
State Street Corporation | 6
or custody bank, that services and manages assets
on behalf of its institutional clients.
Our corporate headquarters is located at One
Congress Street, Boston, Massachusetts 02114
(telephone (617) 786-3000). For purposes of this
Form 10-K, unless the context requires otherwise,
references to “State Street,” “we,” “us,” “our” or similar
terms mean State Street Corporation and its
subsidiaries on a consolidated basis.
ADDITIONAL INFORMATION
On the “Filings & reports” tab of our website at
investors.statestreet.com, we make available, free of
charge, all reports we electronically file with, or
furnish to, the SEC including our Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, as well as any
amendments to those reports, as soon as reasonably
practicable after those documents have been filed
with, or furnished to, the SEC. These documents are
also
accessible
on
the
SEC’s
website
at
www.sec.gov.
We
have
included
the
website
addresses of State Street (including references to
investors.statestreet.com) and the SEC in this report
as inactive textual references only. Information on
those websites (or any other) is not incorporated by
reference in this Form 10-K.
We have Corporate Governance Guidelines, as
well as written charters for the Examining and Audit
Committee, the Executive Committee, the Human
Resources Committee, the Nominating and Corporate
Governance Committee, the Risk Committee and the
Technology and Operations Committee of our Board
of Directors, or Board, and a Code of Ethics for
Senior Financial Officers, a Standard of Conduct for
Directors and a Standard of Conduct for our
employees. Each of these documents is accessible
on the “Corporate governance” tab of our website at
investors.statestreet.com.
We provide additional disclosures required by
applicable bank regulatory standards, including
supplemental qualitative and quantitative information
with respect to regulatory capital (including market
risk associated with our trading activities), the LCR
and the NSFR, summary results of annual State
Street-run stress tests that we conduct under the
Dodd-Frank Act, and resolution plan disclosures
required under the Dodd-Frank Act. These additional
disclosures are accessible on the “Filings & reports”
tab of our website at investors.statestreet.com.
We use acronyms and other defined terms for
certain business terms and abbreviations, as defined
on the acronyms list and glossary under Item 8 in this
Form 10-K.
LINES OF BUSINESS
Our operations are organized into two lines of
business: Investment Servicing and Investment
Management, which are defined based on products
and services provided.
Investment Servicing
Our Investment Servicing line of business
provides a broad range of services and market and
financing solutions to institutional clients, including
mutual funds, collective investment funds and other
investment pools, corporate and public retirement
plans, insurance companies, investment managers,
foundations and endowments worldwide.
Through State Street Investment Services, State
Street Global Markets® and State Street Alpha®, we
offer a full range of back- and middle-office solutions,
including custody, accounting and fund administration
services for traditional and alternative assets, as well
as multi-asset class investments; recordkeeping,
client reporting and investment book of record,
transaction management, loans, cash, derivatives
and collateral services; investor services operations
outsourcing; performance, risk and compliance
analytics; financial data management to support
institutional investors; foreign exchange, brokerage
and other trading services; securities finance,
including prime services products; and deposit and
short-term investment facilities.
Together with our middle- and back-office
services, CRD’s front- and middle-office technology
offerings form the foundation of State Street Alpha®.
Our State Street Alpha platform combines portfolio
management, trading and execution, analytics and
compliance tools, and advanced data aggregation
and integration with other industry platforms and
providers. Included in CRD’s technology offerings are
Charles River Investment Management Solution, a
front-office technology offering that automates and
simplifies the institutional investment process across
asset classes, from portfolio management and risk
analytics through trading and post-trade settlement,
with integrated compliance and managed data
throughout; Charles River for Private Markets, an
investment management solution for institutions
investing in Private Credit, Private Equity, Real
Estate, Infrastructure, and Funds; and Charles River
Wealth
Management
Solution,
which
provides
portfolio
management,
trading
compliance
and
manager/sponsor
communication
capabilities
to
wealth managers, private banks and financial
advisors.
As the digital asset space continues to mature,
we are building solutions to service, tokenize and
safekeep digital assets. Our vision is to enable core
digital asset infrastructure as a trusted provider of
end-to-end solutions on a secure, interoperable
blockchain.
We provide some or all of our Investment
Servicing products and services to clients in the
United States and in many other markets, including,
State Street Corporation | 7
among others, Australia, Canada, China, Cayman
Islands, France, Germany, Ireland, Italy, Japan,
Luxembourg, South Korea and the United Kingdom.
As of December 31, 2024, we serviced AUC/A of
approximately
$46.56
trillion,
comprising
approximately
$33.29
trillion
in
the Americas,
approximately $10.18 trillion in Europe and the Middle
East and approximately $3.09 trillion in the Asia-
Pacific region.
Investment Management
Our Investment Management line of business
provides a comprehensive range of investment
management solutions and products for our clients
through State Street Global Advisors. Our investment
management solutions include strategies across
equity,
fixed
income,
cash,
multi-asset
and
alternatives; products such as SPDR® ETFs and
index funds; and services including defined benefit,
defined
contribution,
and
Outsourced
Chief
Investment Officer. As of December 31, 2024, State
Street Global Advisors had approximately $4.72
trillion in AUM.
Additional
information
about
our
lines
of
business is provided under “Line of Business
Information”
included
in
our
Management’s
Discussion and Analysis, and in Note 24 to the
consolidated financial statements in this Form 10-K.
Additional information about our non-U.S. activities is
included in Note 26 to the consolidated financial
statements in this Form 10-K.
COMPETITION
We operate in a highly competitive environment
in all areas of our business globally. Our competitors
include a broad range of financial institutions and
servicing companies, including other custodial banks,
deposit-taking institutions, investment management
firms, insurance companies, mutual funds, broker/
dealers, investment banks, benefits consultants,
investment analytics businesses, business service
and software companies, technology companies, data
providers and information services firms. As our
businesses grow and markets evolve, we may
encounter increasing and new forms of competition
around the world.
We believe that many key factors drive
competition in the markets for our business.
Technological expertise, economies of scale, required
levels of capital, pricing, quality and scope of
services, and sales and marketing are critical to our
Investment Servicing line of business. For our
Investment Management line of business, key
competitive factors include expertise, experience,
availability of related service offerings, quality of
service, price, efficiency of our products and services,
and performance.
Our success and competitive position may
depend on our ability to develop and market new and
innovative services, to adopt or develop new
technologies, including those incorporating artificial
intelligence, to implement efficiencies into our
operational processes, to bring new services to
market in a timely fashion at competitive prices, to
integrate existing and future products and services
effectively into State Street Alpha and State Street
Digital, to continue to expand our relationships with
existing clients and to attract new clients, to maintain
and enhance our reputation, to manage risk and to
effectively and efficiently operate in a highly
regulated environment.
As a G-SIB, we are subject to extensive
regulation and supervision with respect to our
operations and activities. Not all of our competitors
have similarly been designated as systemically
important nor are all of them subject to the same
degree of regulation as a bank or financial holding
company; therefore some of our competitors may not
be subject to the same limitations, requirements and
standards with respect to their operations and
activities. Most other financial institutions designated
as systemically important have substantially greater
financial resources and a broader base of operations
than we do and are, consequently, in a better
competitive position to manage and bear the costs of
this
enhanced
regulatory
requirement.
See
“Supervision and Regulation” in this Item for more
information.
HUMAN CAPITAL
Our human capital strategy is a meaningful
driver of our overall enterprise strategy and our long-
term
performance.
Our
employees
drive
the
company’s value proposition, innovate better ways to
serve our clients and act as custodians of our
reputation. We seek to empower our employees by
providing development and learning opportunities to
help each person reach their full potential. The Board
of Directors’ Human Resources Committee oversees
our human capital management strategy and receives
regular updates on matters such as engagement,
culture,
talent
management,
retention
and
productivity.
We aim to promote strong levels of employee
commitment and connection to the company by
providing an environment that supports our diverse
employee population in amplifying behaviors that
drive our business strategy. We believe that an
inclusive culture where employees feel valued,
engaged and empowered makes State Street a more
desirable place to work, helps us attract and retain
employees as they grow in their careers, and fosters
an environment that enhances each individual’s
sense of belonging, productivity and professional
satisfaction. The integrity and ethical decision-making
of our employees is paramount for our culture. We
want our employees to know their opinions matter
and are respected, to feel comfortable asking
State Street Corporation | 8
questions and raising concerns, and to have no fear
of retaliation.
Our talent management efforts are focused on
recruiting, developing and retaining top talent and
industry leaders in markets that align with current and
future demands and the evolution of our business.
Our objective is to seek a wide pool of talent globally,
so we are well positioned to be an essential partner to
our clients. To support the retention and ongoing
development of our employees, we offer competitive
compensation and benefits, a wide range of learning
and development offerings, and strong support by
involved and well-trained leaders. We carefully
monitor our hiring, promotion and turnover rates and
implement programs to help retain, develop and
enhance the skills of our employees, including
through a focus on internal mobility.
Our approach is centered on skills that are
aligned with our corporate strategy and designed to
address the rapidly changing, technology-centric
demands of the financial services industry. We also
regularly monitor our compensation program to
maintain
competitiveness
and
to
reward
high
performance.
Driving improvements in both individual and
organizational productivity is a key enabler of our
overall human capital management strategy, and we
are focused on strategic workforce planning, building
upon current headcount budgeting and forecasting
activities. Our productivity efforts aim to promote the
optimal effectiveness and efficiency of our human
capital through clear alignment between our business
strategy and our organizational structure, geographic
footprint,
performance
management,
people
development and reward systems. We focus on
cultivating a high performing workforce that drives
innovation and profitable growth, is responsive to
changing client and business needs and is structured
and resourced to deliver desired outcomes.
Our employee population at December 31, 2024
increased approximately 13% to approximately
53,000 employees, compared to December 31, 2023,
primarily reflecting the consolidation of an operations
joint venture in India in the second quarter of 2024.
Approximately 77% of our employees are located
outside the United States.
SUPERVISION AND REGULATION
We are registered with the Federal Reserve as a
bank holding company pursuant to the Bank Holding
Company Act of 1956. The Bank Holding Company
Act generally limits the activities in which bank
holding companies and their non-banking subsidiaries
may engage to managing or controlling banks and to
a range of activities that are considered to be closely
related to banking. Bank holding companies that have
elected to be treated as financial holding companies,
such as the Parent Company, may engage in a
broader range of activities considered to be “financial
in nature.” The regulatory limits on our activities also
apply to non-banking entities that we are deemed to
“control” for purposes of the Bank Holding Company
Act, which may include companies of which we own
or control 5% or more of a class of voting shares. The
Federal Reserve may order a bank holding company
to terminate any activity, or its ownership or control of
a non-banking subsidiary, if the Federal Reserve finds
that the activity, ownership or control constitutes a
serious risk to the financial safety, soundness or
stability of a banking subsidiary or is inconsistent with
sound banking principles or statutory purposes. The
Bank Holding Company Act also requires a bank
holding company to obtain prior approval of the
Federal Reserve before it acquires substantially all
the assets of any bank, or ownership or control of
more than 5% of the voting shares of any bank.
The Parent Company has elected to be treated
as a financial holding company and, as such, may
engage in a broader range of non-banking activities
than permitted for bank holding companies that have
not elected to become financial holding companies
and their subsidiaries. Financial holding companies
may engage directly or indirectly, either de novo or by
acquisition, in activities that are defined by the
Federal Reserve to be financial in nature, provided
that the financial holding company gives the Federal
Reserve after-the-fact notice of the new activities.
Activities defined to be financial in nature include, but
are not limited to: providing financial or investment
advice; dealing in or making markets in securities;
making merchant banking investments, subject to
significant limitations; underwriting; and any activities
previously found by the Federal Reserve to be closely
related to banking. In order to maintain our status as
a financial holding company, we and each of our U.S.
depository institution subsidiaries are expected to be
well capitalized and well managed, as defined in
applicable regulations and determined in part by the
results of regulatory examinations, and must comply
with Community Reinvestment Act obligations. Failure
to maintain these standards may result in restrictions
on our activities and may ultimately permit the
Federal Reserve to take enforcement actions against
us and restrict our ability to engage in activities
defined to be financial in nature.
The scope of the laws and regulations and the
intensity of the supervision to which our business is
subject has increased since the 2008 financial crisis.
Regulatory
enforcement
and
fines
have
also
increased across the banking and financial services
sector. Many of these changes have occurred as a
result of the Dodd-Frank Wall Street Reform and
Consumer
Protection
Act
of
2010
and
its
implementing regulations, most of which are now in
place, and subsequently the enhancement of the
Economic Growth, Regulatory Relief, and Consumer
Protection Act. Developments at the federal banking
agencies
that
regulate
banking
organizations,
State Street Corporation | 9
including the Federal Reserve, the FDIC and the
OCC (U.S. Agencies), or in the financial system more
generally, may result in increased prudential and
conduct
oversight,
more
extensive
regulatory
requirements, changing interpretations of existing
rules and guidelines, and potentially more stringent
enforcement and more severe penalties. Irrespective
of any specific regulatory change, we expect that our
business will remain subject to extensive regulation
and supervision.
Many aspects of our business are subject to
regulation
by
other
U.S.
federal
and
state
governmental and regulatory agencies and self-
regulatory
organizations
(including
securities
exchanges), and by non-U.S. governmental and
regulatory agencies and self-regulatory organizations.
Some aspects of our public disclosure, corporate
governance principles and internal control systems
are subject to the Sarbanes-Oxley Act of 2002 (SOX),
the Dodd-Frank Act and regulations and rules of the
SEC and the New York Stock Exchange.
Regulatory
Capital
Adequacy
and
Liquidity
Standards
Basel III Rule
We are subject to the Basel III framework (Basel
III rule) in the United States. The provisions of the
Basel
III
rule
related
to
minimum
capital
requirements, capital buffers and methodologies for
calculating regulatory capital were fully implemented
as of 2019. We are also subject to the market risk
capital rule as implemented by the U.S. Agencies.
As required by the Dodd-Frank Act, we are
subject to a standardized “capital floor,” also referred
to as the Collins Amendment, in the assessment of
our regulatory capital adequacy. Thus, our risk-based
capital ratios for regulatory assessment purposes are
the lower of each ratio calculated under the
standardized
approach
and
the
advanced
approaches. We are also subject to various capital
buffer
requirements
described
below
in
this
“Supervision and Regulation” section.
In July 2023, the U.S. Agencies issued a
proposed rule to implement the Basel III endgame
agreement (2023 Basel III Endgame Proposal) for
large banks, and separately proposed revisions to the
U.S. G-SIB capital surcharge framework (2023 G-SIB
Surcharge Proposal). The 2023 Basel III Endgame
Proposal would, among other things, eliminate the
advanced approaches for monitoring risk-based
capital adequacy in favor of a new standardized
expanded risk-based approach that includes new
standardized approaches for operational risk and
CVA risk RWA components, and would also replace
the existing market risk rule with the new fundamental
review of the trading book (FRTB) framework. The G-
SIB Surcharge Proposal would, among other things,
measure the G-SIB surcharge in more granular 0.1%
increments as opposed to the 0.5% increments that
currently apply.
Recent public statements by U.S. banking
officials indicate that the 2023 Basel III Endgame
Proposal and 2023 G-SIB Surcharge Proposal are
under reconsideration. However, the timing and
content of any potential re-proposal, and the effects
of any re-proposal on State Street, remain uncertain
at this stage.
Risk Weighted Assets
The existing Basel III rule provides two
frameworks for the calculation of RWA for purposes of
bank regulatory capital: the “standardized” approach
and the “advanced” approaches, which are applicable
to advanced approaches banking organizations, like
us.
The
standardized
approach
prescribes
standardized risk weights for certain on- and off-
balance sheet exposures in the calculation of RWA.
The advanced approaches consist of the Advanced
Internal Ratings-Based Approach (AIRB) used for the
calculation of RWA related to credit risk and the
Advanced Measurement Approach (AMA) used for
the calculation of RWA related to operational risk.
Minimum Risk-Based Capital Requirements
Among other things, the Basel III rule (as
amended) requires:
•
a minimum CET1 risk-based capital ratio of
4.5% and a minimum SLR of 3% for
advanced approaches banking organizations;
•
a minimum Tier 1 risk-based capital ratio of
6%;
•
a minimum total capital ratio of 8%; and
•
the stress capital and countercyclical capital
buffers, referenced below, as well as a G-SIB
surcharge and the enhanced SLR (which acts
as an SLR buffer) described in “Capital” in
“Financial Condition” in our Management’s
Discussion and Analysis in this Form 10-K.
Under the Basel III rule, our total regulatory
capital is composed of three tiers: CET1 capital, Tier
1 capital (which includes CET1 capital), and Tier 2
capital. The total of Tier 1 and Tier 2 capital, adjusted
as applicable, is referred to as total regulatory capital.
CET1 capital is composed of core capital
elements, such as qualifying common shareholders'
equity and related surplus plus retained earnings and
the cumulative effect of foreign currency translation
plus net unrealized gains (losses) on debt and equity
securities classified as AFS, less treasury stock and
less goodwill and other intangible assets, net of
related deferred tax liabilities. Tier 1 capital is
composed of CET1 capital plus additional Tier 1
capital instruments which, for us, includes three
series of preferred equity outstanding as of December
31, 2024. Tier 2 capital includes certain eligible
State Street Corporation | 10
subordinated
long-term
debt
instruments. Total
regulatory capital consists of Tier 1 capital and Tier 2
capital.
Certain other items, if applicable, must be
deducted from Tier 1 and Tier 2 capital, including
certain investments in the capital of unconsolidated
banking, financial and insurance entities and the
amount of expected credit losses that exceeds
recorded allowances for loan and other credit losses.
Expected credit losses are calculated for wholesale
credit exposures by formula in conformity with the
Basel III rule.
G-SIB Surcharge
The eight U.S. bank holding companies deemed
to be G-SIBs, including us, are required to calculate
the G-SIB surcharge annually according to two
methods, and be bound by the higher of the two:
•
Method 1: Assesses systemic importance
based
upon
five
equally-weighted
components:
size,
interconnectedness,
complexity, cross-jurisdictional activity and
substitutability; or
•
Method 2: Alters the calculation from Method 1
by factoring in a short-term wholesale funding
score in place of substitutability and applying a
fixed
coefficient
to
each
of
the
five
components.
Method 2 is the binding methodology for us as of
December 31, 2024. Our current G-SIB surcharge,
through December 31, 2025, is 1.0%. Based upon
preliminary calculations using data as of December
31, 2024, we currently anticipate that our surcharge
will remain at 1.0% through December 31, 2026;
however, that calculation has not yet been finalized
and is subject to many financial, balance sheet,
market and other factors, and consequently there is a
risk that a higher G-SIB surcharge (e.g., 1.5%) may
result from the final calculation. If our Method 1 or
Method 2 score changes year-over-year such that we
would become subject to a higher surcharge, the
higher surcharge would not become effective for two
years from the “as of” date (e.g., a higher surcharge
calculated as of December 31, 2024 would not
become effective until January 1, 2027). If, however,
our Method 1 or Method 2 score changes year-over-
year such that we would become subject to a lower
surcharge, we would be subject to the lower
surcharge beginning one full year from the “as of”
date (e.g., a lower surcharge calculated as of
December 31, 2024 would become effective January
1, 2026).
Stress Capital Buffer
On March 4, 2020, the U.S. Agencies issued
the SCB final rule that replaced, under the
standardized approach, the fixed capital conservation
buffer (2.5%) with an SCB calculated as the
difference between the institution’s starting and
lowest projected CET1 ratio under the severely
adverse
scenario
of
the
Federal
Reserve’s
supervisory stress test plus planned common stock
dividend payments (as a percentage of RWA) from
the fourth through seventh quarter of the supervisory
stress testing planning horizon. Based on our results
from the 2024 supervisory stress test, our SCB for the
period of October 1, 2024 through September 30,
2025 is set at the prescribed minimum floor of 2.5%
of RWA. For additional information about the SCB
final rule, refer to “Capital Planning, Stress Tests and
Dividends” in this “Supervision and Regulation”
section.
Under the SCB final rule, a banking organization
would be able to make capital distributions and
discretionary bonus payments without specified
quantitative limitations (although subject to other
potential regulatory constraints, such as supervisory
limitations), as long as it maintains its required SCB
plus the applicable G-SIB surcharge (plus any
potentially applicable countercyclical capital buffer)
over the minimum required risk-based capital ratios
and as long as it satisfies all leverage based capital
requirements and buffers. From time to time, under
certain economic conditions, banking regulators may
establish a minimum countercyclical capital buffer up
to a maximum of 2.5% of total RWA. The
countercyclical capital buffer was initially set by
banking regulators at zero, and has not been
increased since its inception.
Assuming a countercyclical buffer of 0%, the
minimum capital ratios as of January 1, 2025,
including a capital conservation buffer and an SCB of
2.5% for advanced and standardized approaches,
respectively, and a G-SIB surcharge of 1.0%, are
8.0% for CET1 capital, 9.5% for Tier 1 risk-based
capital and 11.5% for total risk-based capital, in order
for us to make capital distributions and discretionary
bonus payments without limitation.
Leverage Ratios
We are subject to a minimum Tier 1 leverage
ratio and SLR. The Tier 1 leverage ratio is based on
Tier 1 capital and adjusted quarterly average on-
balance sheet assets. The Tier 1 leverage ratio differs
from the SLR primarily in that the denominator of the
Tier 1 leverage ratio is a quarterly average of on-
balance sheet assets, while the SLR additionally
includes off-balance sheet exposures. We must
maintain a minimum Tier 1 leverage ratio of 4%.
We are also subject to a minimum SLR of 3%,
and as a U.S. G-SIB, we must maintain a 2% SLR
buffer in order to avoid any limitations on distributions
to shareholders and discretionary bonus payments to
certain executives. If we do not maintain this buffer,
limitations on these distributions and discretionary
bonus payments would be increasingly stringent
based upon the extent of the shortfall.
State Street Corporation | 11
Under a final rule adopted by the U.S. Agencies
pursuant to the EGRRCPA, central bank deposits are
excluded from a custodial banking organization’s total
leverage exposure for purposes of calculating the
SLR. This exclusion is not applicable to total leverage
exposure under the calculation of Tier 1 leverage.
The rule became effective on April 1, 2020. For the
quarter ended December 31, 2024, we excluded
$87.5 billion of average balances held on deposit at
central banks from the denominator used in the
calculation of our SLR based on this custodial
banking exclusion. The TLAC and LTD that State
Street
is
required
to
hold
under
SLR-based
requirements reflect the exclusion of certain central
bank balances as a consequence of the rule.
The SA-CCR final rule that went into effect for us
on January 1, 2022, also requires us to incorporate
the SA-CCR into the calculation of our total leverage
exposure for the purpose of calculating SLR.
Total Loss-Absorbing Capacity
The Federal Reserve has implemented rules on
TLAC, LTD and clean holding company requirements
for U.S. domiciled G-SIBs, such as us. The TLAC rule
imposes: (1) external TLAC requirements (i.e.,
combined eligible Tier 1 regulatory capital and LTD);
(2) separate external LTD requirements; and (3) clean
holding
company
requirements
that
impose
restrictions on certain types of liabilities and limit non-
TLAC related third party liabilities to 5% of external
TLAC.
Among other things, the TLAC rule requires us
to comply with minimum requirements for external
TLAC and external LTD. Specifically, since January
2023, we must hold:
(1) combined eligible Tier 1 regulatory capital and
LTD in the amount equal to the greater of
21.5% of total RWA (18.0% minimum plus a
2.5% capital conservation buffer plus a G-SIB
surcharge calculated for these purposes
under Method 1 of 1.0% plus any applicable
counter-cyclical buffer, which is currently 0%)
and 9.5% of total leverage exposure (7.5%
minimum plus the enhanced SLR buffer of
2.0%), as defined by the SLR rule; and
(2) qualifying external LTD equal to the greater of
7.0% of RWA (6.0% minimum plus a G-SIB
surcharge calculated for these purposes
under Method 2 of 1.0%) and 4.5% of total
leverage exposure, as defined by the SLR
rule.
Additionally, certain large banking organizations,
such as us and State Street Bank, are required to
make
deductions
from
regulatory
capital
for
investments in certain unsecured debt instruments
issued by bank holding companies and U.S.
intermediate holding companies of foreign banks that
are subject to the Federal Reserve’s TLAC and LTD
requirements, as well as foreign G-SIBs.
Liquidity Coverage Ratio and Net Stable Funding
Ratio
In addition to capital standards, the Basel III
framework
introduced
two
quantitative
liquidity
standards: the LCR and the NSFR.
We are subject to the rule issued by the U.S.
Agencies implementing the LCR in the United States.
The LCR is intended to promote the short-term
resilience
of
internationally
active
banking
organizations, like us, to improve the banking
industry’s ability to absorb shocks arising from market
stress over a 30 calendar day period and improve the
measurement and management of liquidity risk.
The LCR measures an institution’s HQLA
against its net cash outflows under a prescribed
stress environment. We report LCR to the Federal
Reserve daily and are required to calculate and
maintain an LCR that is equal to or greater than
100%. In addition, we publicly disclose certain
qualitative and quantitative information about our LCR
consistent with the quarterly disclosure requirements
of the Federal Reserve’s final rule.
Compliance with the LCR has required that we
maintain an investment portfolio that contains an
adequate amount of HQLA. In general, HQLA
investments generate a lower investment return than
other types of investments, resulting in a negative
impact on our NII and our NIM. In addition, the level
of HQLA we are required to maintain under the LCR
is dependent upon our client relationships and the
nature of services we provide, which may change
over time. Deposits resulting from certain services
provided (“operational deposits”) are treated as more
resilient during periods of stress than other deposits.
As a result, if balances of operational deposits
increased relative to our total client deposit base, we
would expect to require less HQLA in order to
maintain our LCR. Conversely, if balances of
operational deposits decreased relative to our total
client deposit base, we would expect to require more
HQLA.
In addition, as a large banking organization, we
are subject to the NSFR rule approved by the U.S.
Agencies. The NSFR rule requires large banking
organizations to maintain a minimum amount of
available stable funding, which is a weighted measure
of a company’s funding sources over a one-year time
horizon,
calculated
by
applying
standardized
weightings to the company’s equity and liabilities
based on their expected stability. The amount of
stable funding can be no less than the amount of
required stable funding, which is calculated by
applying
standardized
weightings
to
assets,
derivatives exposures and certain other items based
on their liquidity characteristics. As a U.S. G-SIB, we
State Street Corporation | 12
are required to maintain an NSFR that is equal to or
greater than 100%. We publicly disclose certain
qualitative and quantitative information about our
NSFR consistent with the semi-annual disclosure
requirements of the Federal Reserve’s final rule.
Additional information about our NSFR is provided in
“Asset Liquidity” in “Liquidity Risk Management” in
our Management’s Discussion and Analysis in this
Form 10-K.
Capital Planning, Stress Tests and Dividends
Pursuant to the Dodd-Frank Act, in March 2020,
the Federal Reserve adopted capital planning and
stress test requirements for large bank holding
companies, including us, which form part of the
Federal Reserve’s annual stress testing and capital
planning framework. The Federal Reserve conducts
its own stress tests of our business operations using
supervisory models, referred to as supervisory stress
tests, the results of which it uses to calibrate our
annual SCB, subject to a minimum of 2.5%. In
addition, under the Federal Reserve’s capital plan
rule, we must conduct periodic stress testing of our
business operations and submit an annual capital
plan to the Federal Reserve, taking into account the
results of separate stress tests designed by us and by
the Federal Reserve. The Federal Reserve conducts
a qualitative assessment of our capital plan as part of
the annual supervisory process known as CCAR, to
evaluate the strength of our capital planning
practices, including our ability to identify, measure,
and determine the appropriate amount of capital for
our risks, and controls and governance supporting
capital planning.
The Federal Reserve’s final SCB rule integrates
its annual capital planning and stress testing
requirements with certain ongoing regulatory capital
requirements and applies to certain bank holding
companies, including us. The standardized approach
SCB equals the greater of (i) 2.5%; and (ii) the
maximum decline in our CET1 capital ratio under the
severely adverse scenario over the supervisory stress
test measurement period, plus the ratio of (a) the sum
of the dollar amount of our planned common stock
dividends for the fourth through seventh quarters of
the supervisory stress test projection period to (b) our
projected RWA for the quarter in which our projected
CET1 capital ratio reaches its minimum in the
supervisory stress test.
The final rule made related changes to capital
planning and stress testing processes for bank
holding companies subject to the SCB requirement.
In particular, the final rule assumes that bank holding
companies maintain a constant level of assets and
RWA throughout the supervisory stress test projection
period. In addition, under the final rule the SCB
incorporates the dollar amount of four quarters of
planned common stock dividends, as described
above.
The final rule did not change regulatory capital
requirements under the advanced approaches, the
Tier 1 leverage ratio or the SLR.
Our SCB requirement was 2.5% for the period
from October 1, 2023 through September 30, 2024.
On June 26, 2024, we were notified by the Federal
Reserve of the results from the 2024 supervisory
stress test. Our SCB calculated under the 2024
supervisory stress test was below the 2.5% minimum,
resulting in an SCB at that floor, which remains in
effect for the period from October 1, 2024 through
September 30, 2025.
In addition to the SCB requirement, we continue
to be subject to CCAR's capital plan requirements
and the supervisory assessment of our capital
planning activities. Under the capital planning
requirements, our annual capital plan must include a
description of all of our planned capital actions over a
nine-quarter planning horizon, including any capital
qualifying instruments, any capital distributions, such
as payments of dividends on, or repurchases of, our
stock, and any similar action that the Federal Reserve
determines could affect our consolidated capital. The
capital plan must include a discussion of how we will
maintain capital above the minimum regulatory capital
ratios, including the minimum ratios under the Basel
III rule, and serve as a source of strength to State
Street Bank under supervisory stress scenarios.
Changes in our strategy, merger or acquisition activity
or unanticipated uses of capital could result in a
change in our capital plan and its associated capital
actions, including capital raises or modifications to
planned capital actions, such as repurchases of our
stock, and may require resubmission of the capital
plan to the Federal Reserve if, among other reasons,
we
would
not
meet
our
regulatory
capital
requirements after making the proposed capital
distribution.
In addition to its stress testing and capital
planning requirements, the Federal Reserve has the
authority to prohibit or to limit the payment of
dividends, the repurchase of common stock, or other
capital actions that reduce capital by the banking
organizations it supervises, including the Parent
Company and State Street Bank, if, in the Federal
Reserve’s opinion, the capital action would constitute
an unsafe or unsound practice in light of the financial
condition of the banking organization. All of these
policies and other requirements could affect our
ability to pay dividends and repurchase our stock or
require us to provide capital assistance to State
Street Bank and any other banking subsidiary. Our
common stock and other stock dividends, including
the declaration, timing and amount thereof, remain
subject to consideration and approval by our Board of
Directors at the relevant times.
The EGRRCPA modified certain aspects of the
Federal
Reserve’s
stress-testing
requirements,
reducing the number of scenarios in the supervisory
State Street Corporation | 13
stress test from three to two and modifying our
obligation to perform company-run stress-tests from
semi-annually to annually. The Federal Reserve
adopted a final rule in October 2019 that, among
other things, implemented this modification.
Enhanced Prudential Standards
The Dodd-Frank Act, as amended by the
EGRRCPA, establishes a systemic risk regime to
which large bank holding companies with $100 billion
or more in consolidated assets, such as us, are
subject. U.S. G-SIBs, such as us, are subject to the
most stringent requirements, including heightened
capital, leverage, liquidity and risk management
requirements and single-counterparty credit limits
(SCCL).
Under the Federal Reserve’s regulation, we are
required to comply with various liquidity-related risk
management standards and maintain a liquidity buffer
of unencumbered highly liquid assets based on the
results of internal liquidity stress testing. This liquidity
buffer is in addition to other liquidity requirements,
such as the LCR and the NSFR. The regulations also
establish requirements and responsibilities for our risk
committee and mandate risk management standards.
The Federal Reserve has established a rule that
imposes
contractual
requirements
on
certain
“qualified financial contracts” to which U.S. G-SIBs,
including us, and their subsidiaries are parties. Under
the rule, certain qualified financial contracts generally
must expressly provide that transfer restrictions and
default rights against a U.S. G-SIB, or a subsidiary of
a U.S. G-SIB, are limited to the same extent as they
would be under the Federal Deposit Insurance Act
and Title II of the Dodd-Frank Act and their
implementing regulations. In addition, certain qualified
financial contracts may not, among other things,
permit the exercise of any cross-default right against
a U.S. G-SIB or a subsidiary of a U.S. G-SIB based
on an affiliate’s entry into insolvency, resolution or
similar proceedings, subject to certain creditor
protections.
The systemic-risk regime also provides that for
U.S. G-SIBs deemed to pose a grave threat to U.S.
financial stability, the Federal Reserve, upon an
FSOC vote, must limit that institution’s ability to
merge, restrict its ability to offer financial products,
require it to terminate activities, impose conditions on
activities or, as a last resort, require it to dispose of
assets. Upon a grave threat determination by the
FSOC, the Federal Reserve must issue rules that
require financial institutions subject to the systemic-
risk regime to maintain a debt-to-equity ratio of no
more than 15 to 1 if the FSOC considers it necessary
to mitigate the risk of the grave threat. The Federal
Reserve also has the ability to establish further
standards, including those regarding contingent
capital, enhanced public disclosures and limits on
short-term
debt,
including
off-balance
sheet
exposures.
As a G-SIB, we are subject to enhanced
supervision and prudential standards. Our status as a
G-SIB has also resulted in heightened expectations of
our U.S. and international regulators with respect to
our capital and liquidity management and our
compliance and risk oversight programs. These
heightened
expectations
have
increased
our
regulatory compliance costs, including personnel,
technology and systems, as well as significant
additional implementation and related costs to
enhance
our
regulatory
compliance
programs.
Regulatory compliance requirements are anticipated
to remain at least at the elevated levels we have
experienced over the past several years.
Failure to meet current and future regulatory
capital requirements could subject us to a variety of
enforcement actions, including the termination of
State Street Bank’s deposit insurance by the FDIC,
and to certain restrictions on our business, including
those that are described above in this “Supervision
and Regulation” section.
Not all of our competitors have similarly been
designated as systemically important nor are all of
them subject to the same degree of regulation as a
bank or financial holding company, and therefore
some of our competitors may not be subject to the
same additional capital requirements.
For additional information about our regulatory
capital position and our regulatory capital adequacy,
as well as current and future regulatory capital
requirements,
refer
to
“Capital”
in
“Financial
Condition” in our Management’s Discussion and
Analysis, and Note 16 to the consolidated financial
statements in this Form 10-K.
The Volcker Rule
We are subject to the Volcker Rule and
implementing regulations. The Volcker Rule prohibits
banking entities, including us and our affiliates, from
engaging in certain prohibited proprietary trading
activities, as defined in the Volcker Rule regulations,
subject to exemptions for market-making related
activities, risk-mitigating hedging, underwriting and
certain other activities. The Volcker Rule also requires
banking entities to either restructure or divest certain
ownership interests in, and relationships with,
covered funds (as such terms are defined in the
Volcker Rule regulations).
The Volcker Rule regulations require banking
entities to establish extensive programs designed to
promote compliance with the restrictions of the
Volcker Rule. Consequently, Volcker Rule compliance
entails both the cost of implementing a compliance
program and loss of certain revenue and future
opportunities.
State Street Corporation | 14
Recovery and Resolution Planning
Under Section 165(d) of the Dodd-Frank Act, we
are required to submit a resolution plan on a biennial
basis jointly to the Federal Reserve and the FDIC (the
“Agencies”). The purpose of our resolution plan is to
describe our preferred resolution strategy and to
demonstrate that we have the resources and
capabilities to execute on that strategy in the event of
major financial distress. Through resolution planning,
we seek to maintain our role as a key infrastructure
provider within the financial system, while minimizing
risk to the financial system.
The U.S. Agencies’ final rule from 2019 requires
U.S. G-SIBs to file a full resolution plan and a
targeted resolution plan on an alternating basis in the
relevant submission years. We submitted our full
165(d) resolution plan by July 1, 2023. Feedback
letters from the U.S. Agencies on the results of the
2023 plan submissions were released to each of the
U.S. G-SIBs on June 21, 2024. We have no identified
shortcomings or deficiencies. Our next 165(d)
resolution plan submission to the U.S. Agencies is a
targeted resolution plan due by July 1, 2025.
In the event of material financial distress, our
preferred resolution strategy is the single point of
entry strategy (the “SPOE Strategy”). The SPOE
Strategy provides that prior to the bankruptcy of the
Parent Company and pursuant to a support
agreement among the Parent Company, SSIF (a
direct subsidiary of the Parent Company), our
Beneficiary Entities (as defined below) and certain of
our other entities, SSIF is obligated, up to its available
resources, to recapitalize and/or provide liquidity to
State Street Bank and the other entities benefiting
from such capital and/or liquidity support (collectively
with State Street Bank, “Beneficiary Entities”), in
amounts designed to prevent the Beneficiary Entities
from themselves entering into resolution proceedings.
Following the recapitalization of, or provision of
liquidity to the Beneficiary Entities, the Parent
Company would enter into a bankruptcy proceeding
under the U.S. Bankruptcy Code. The Beneficiary
Entities and our other subsidiaries would be
transferred to a newly organized holding company
held by a reorganization trust for the benefit of the
Parent Company’s claimants.
Under the support agreement, the Parent
Company has pre-funded SSIF by contributing certain
of its assets (primarily its liquid assets, cash deposits,
investments in intercompany debt, investments in
marketable securities, and other cash and non-cash
equivalent investments) to SSIF at the time it entered
into the support agreement and continues to
contribute such assets, to the extent available, on an
ongoing
basis.
In
consideration
for
these
contributions, SSIF has agreed in the support
agreement to provide capital and liquidity support to
the Parent Company and all of the Beneficiary
Entities in accordance with the Parent Company’s
capital and liquidity policies. Under the support
agreement, the Parent Company is only permitted to
retain cash needed to meet its upcoming obligations
and to fund expected expenses during a potential
bankruptcy proceeding. SSIF has provided the Parent
Company with a committed credit line and issued
(and may issue) one or more promissory notes to the
Parent Company (the “Parent Company Funding
Notes”) that together are intended to allow the Parent
Company to continue to meet its obligations
throughout the period prior to the occurrence of a
“Recapitalization Event”, which is defined under the
support agreement as the earlier occurrence of: (1)
one or more capital and liquidity thresholds being
breached or (2) the authorization by the Parent
Company’s Board of Directors for the Parent
Company to commence bankruptcy proceedings. The
support agreement does not obligate SSIF to
maintain any specific level of resources and SSIF
may not have sufficient resources to implement the
SPOE Strategy.
In the event a Recapitalization Event occurs, the
obligations outstanding under the Parent Company
Funding Notes would automatically convert into or be
exchanged for capital contributed to SSIF. The
obligations of the Parent Company and SSIF under
the support agreement are secured through a security
agreement that grants a lien on the assets that the
Parent Company and SSIF would use to fulfill their
obligations under the support agreement to the
Beneficiary Entities. SSIF is a distinct legal entity
separate from the Parent Company and the Parent
Company’s other affiliates.
In accordance with our policies, we are required
to monitor, on an ongoing basis, the capital and
liquidity needs of State Street Bank and our other
Beneficiary Entities. To support this process, we have
established a trigger framework that identifies key
actions that would need to be taken or decisions that
would need to be made if certain events tied to our
financial condition occur. The trigger thresholds are
set at levels intended to provide for the availability of
sufficient capital and liquidity to enable an orderly
resolution without extraordinary government support
that results in us emerging from resolution as a
stabilized institution with market confidence restored.
Upon the occurrence of a Recapitalization
Event: (1) SSIF would not be authorized to provide
any further liquidity to the Parent Company; (2) the
Parent Company would be required to contribute to
SSIF any remaining assets it is required to contribute
to SSIF under the support agreement (which
specifically exclude amounts designated to fund
expected expenses during a potential bankruptcy
proceeding); (3) SSIF would be required to provide
capital and liquidity support to the Beneficiary Entities
to support such entities’ continued operation to the
State Street Corporation | 15
extent of its available resources and consistent with
the support agreement; and (4) the Parent Company
would be expected to commence Chapter 11
proceedings under the U.S. Bankruptcy Code. No
person or entity, other than a party to the support
agreement, should rely on any of our affiliates being
or remaining a Beneficiary Entity or receiving capital
or
liquidity
support
pursuant
to
the
support
agreement, including in evaluating any of our entities
from a creditor’s perspective or determining whether
to enter into a contractual relationship with any of our
entities.
State Street Bank is also required to submit to
the FDIC a plan for resolution in the event of its
failure, referred to as an IDI plan. We submitted our
last IDI plan by December 1, 2023. Following the
notice of proposed rulemaking from August 2023, the
FDIC amended and restated its rule on IDI plans in
June 2024. The final rule became effective on
October 1, 2024 and requires IDI subsidiaries of U.S.
G-SIBs, such as State Street Bank, to file their IDI
plans on a biennial basis, with the first IDI plan
submission under the final rule due by July 1, 2026.
Additionally, we are required to submit a
recovery plan periodically to the Federal Reserve.
This plan includes strategies designed to respond to
stress factors at an early stage and stabilize and
maintain
operational
continuity
and
market
confidence. Our recovery strategies are intended to
be implemented before our resolution plan is
triggered. We are also engaged in recovery planning
requirements in certain international jurisdictions
where we operate.
Orderly Liquidation Authority
Under the Dodd-Frank Act, certain financial
companies, including bank holding companies such
as the Parent Company, and certain covered
subsidiaries, can be subjected to the orderly
liquidation authority. For the FDIC to be appointed as
our receiver, two-thirds of the FDIC Board and two-
thirds of the Federal Reserve Board must recommend
appointment, and the U.S. Treasury Secretary, in
consultation with the U.S. President, must then make
certain extraordinary financial distress and systemic
risk determinations. Absent such actions, we, as a
bank holding company, would remain subject to the
U.S. Bankruptcy Code.
If the FDIC were appointed as the receiver of the
Parent Company pursuant to the orderly liquidation
authority, the FDIC would have considerable powers
to resolve the Parent Company, including: (1) the
power to remove officers and directors responsible for
the Parent Company’s failure and to appoint new
directors and officers; (2) the power to assign assets
and liabilities to a third party or bridge financial
company without the need for creditor consent or
prior court review; (3) the ability to differentiate
among similarly situated creditors, subject to a
minimum recovery right to receive at least what they
would have received in bankruptcy liquidation; and (4)
broad powers to administer the claims process to
determine distributions from the assets of the
receivership to creditors not transferred to a third
party or bridge financial institution.
Although the orderly liquidation authority went
into effect in 2010, rulemaking is proceeding
incrementally, with some regulations finalized and
others planned but not yet proposed. The FDIC
released its proposed SPOE strategy for resolution of
a SIFI under the orderly liquidation authority in
December 2013 and a comprehensive report on the
orderly resolution of a U.S. G-SIB using SPOE as the
presumptive strategy in April 2024. The FDIC’s
releases outline how it would likely use its powers
under the orderly liquidation authority to resolve a
SIFI by placing its top-tier U.S. holding company in
receivership and keeping its operating subsidiaries
open
and
out
of
insolvency
proceedings
by
transferring the operating subsidiaries to a new bridge
holding
company,
recapitalizing
the
operating
subsidiaries and imposing losses on the shareholders
and creditors of the holding company in receivership
according to their statutory order of priority.
Derivatives
Title VII of the Dodd-Frank Act imposed a
comprehensive regulatory structure on the OTC
derivatives
market,
including
requirements
for
clearing, exchange trading, capital, margin, reporting
and record-keeping. Title VII also requires certain
persons to register as a major swap participant, a
swap dealer or a securities-based swap dealer. The
CFTC, the SEC, and other U.S. regulators have
largely
completed
the
implementation
of
key
provisions of Title VII.
State Street Bank has registered with the CFTC
as a swap dealer. As a registered swap dealer, State
Street Bank is subject to significant regulatory
obligations regarding its swap activity and the
supervision, examination and enforcement powers of
the CFTC and other regulators. The CFTC has
granted State Street Bank a limited-purpose swap
dealer
designation.
Under
this
limited-purpose
designation, interest rate swap activity conducted by
State Street Bank’s Global Treasury group is not
subject to certain of the swap regulatory requirements
otherwise applicable to swaps entered into by a
registered swap dealer, subject to a number of
conditions. For all other swap transactions, our swap
activities remain subject to all applicable swap dealer
regulations.
Subsidiaries
The Federal Reserve is the primary federal
banking agency responsible for regulating us and our
subsidiaries, including State Street Bank, with respect
State Street Corporation | 16
to both our U.S. and non-U.S. operations. Our
banking subsidiaries are subject to supervision and
examination by various regulatory authorities and
have regulatory requirements that may differ from the
Parent Company.
State Street Bank
State Street Bank is a member of the Federal
Reserve System, its deposits are insured by the FDIC
and it is subject to applicable federal and state
banking laws and to supervision and examination by
the
Federal
Reserve,
the
Massachusetts
Commissioner of Banks, as well as the FDIC and the
regulatory authorities of those states and countries in
which State Street Bank operates a branch.
As with the Parent Company, State Street Bank
is subject to the Basel III framework in the United
States and the market risk capital rule jointly issued
by U.S. Agencies. As required by the Dodd-Frank Act,
State Street Bank, as an advanced approaches
banking organization, is subject to a “capital floor,”
also referred to as the Collins Amendment, in the
assessment of its regulatory capital adequacy
described above in this “Supervision and Regulation”
section.
Under the Basel III rule, State Street Bank’s
regulatory capital calculations, including any additions
or deductions from capital for regulatory purposes,
are consistent with the calculations of the Parent
Company. For additional information about the 2023
Basel III Endgame Proposal, refer to “Basel III Rule”
above in this “Supervision and Regulation” section.
Similar to our Parent Company, State Street
Bank is subject to the Tier 1 leverage ratio and the
SLR. However, as State Street Bank is an IDI
subsidiary of a U.S. G-SIB, it is required to maintain a
minimum Tier 1 leverage ratio of 5% and a minimum
SLR of 6% to be considered well capitalized.
For the purposes of calculating the SLR, State
Street Bank is similarly subject to the U.S. Agencies’
final rule that excludes qualifying central bank
deposits from a custodial banking organization’s total
leverage exposure. For the quarter ended December
31, 2024, State Street Bank excluded $87.5 billion of
average balances held on deposit at central banks
from the denominator used in the calculation of our
SLR based on this custodial banking exclusion.
Pursuant to the U.S. Agencies’ LCR and NSFR
final rules, as a subsidiary of a U.S. G-SIB, State
Street Bank is similarly required to maintain an LCR
and NSFR, respectively, equal to or greater than
100%.
We and our subsidiaries that are not subsidiaries
of State Street Bank are affiliates of State Street Bank
under federal banking laws, which impose restrictions
on various types of transactions, including loans,
extensions of credit, investments or asset purchases
by or from State Street Bank, on the one hand, to us
and those of our subsidiaries, on the other.
Transactions of this kind between State Street Bank
and its affiliates generally are limited with respect to
each affiliate to 10% of State Street Bank’s capital
and surplus, as defined by the aforementioned
banking laws, are limited in the aggregate for all
affiliates to 20% of State Street Bank’s capital and
surplus, and in some cases are also subject to strict
collateral
requirements.
Derivatives,
securities
borrowing
and
securities
lending
transactions
between State Street Bank and its affiliates became
subject to these restrictions pursuant to the Dodd-
Frank Act. The Dodd-Frank Act also expanded the
scope of transactions required to be collateralized. In
addition, the Volcker Rule generally prohibits similar
transactions between the Parent Company or any of
its affiliates and covered funds for which we or any of
our affiliates serve as the investment manager,
investment adviser, commodity trading advisor or
sponsor and other covered funds organized and
offered pursuant to specific exemptions in the Volcker
Rule regulations.
Federal
law
also
requires
that
certain
transactions by a bank with affiliates be on terms and
under circumstances, including credit standards, that
are substantially the same, or at least as favorable to
the bank, as those prevailing at the time for
comparable transactions involving other non-affiliated
companies.
Alternatively,
in
the
absence
of
comparable transactions, the transactions must be on
terms and under circumstances, including credit
standards, that in good faith would be offered to, or
would apply to, non-affiliated companies.
State Street Bank is also prohibited from
engaging in certain tie-in arrangements in connection
with any extension of credit or lease or sale of
property or furnishing of services. Federal law
provides for a depositor preference on amounts
realized from the liquidation or other resolution of any
depository institution insured by the FDIC.
Other Subsidiaries
Our other subsidiary trust companies are subject
to supervision and examination by the OCC, the
Federal Reserve or by the appropriate state banking
regulatory authorities of the states in which they are
organized and operate. Our continental European
banking subsidiary, State Street Bank International
GmbH is a significant entity in accordance with
European banking regulations and accordingly is
supervised directly by the European Central Bank.
State Street Bank International GmbH operates in
several countries including Germany, Luxembourg,
Italy, France and Switzerland. In the United Kingdom,
the branch of State Street Bank is dually regulated by
the Prudential Regulatory Authority and the Financial
Conduct Authority, in Ireland our depositary and fund
administration companies are regulated by the
Central Bank of Ireland and in Canada our trust
company
is
regulated
by
the
Office
of
the
State Street Corporation | 17
Superintendent of Financial Institutions. Our other
subsidiaries internationally engaged in our investment
servicing activities are regulated by applicable
authorities in the jurisdictions of their activities. Our
subsidiaries involved in our investment management
and securities and markets businesses are regulated
by
governments,
securities
exchanges,
self-
regulatory organizations, central banks and regulatory
bodies in U.S. federal and state and non-U.S.
jurisdictions, especially in those jurisdictions in which
we maintain an office.
Many aspects of our investment management
activities are subject to U.S. federal and state, as well
as non-U.S., laws and regulations primarily intended
to benefit the investment holder, rather than our
shareholders. These laws and regulations generally
grant supervisory agencies and bodies broad
administrative powers, including the power to limit or
restrict
us
from
conducting
our
investment
management activities in the event that we fail to
comply with such laws and regulations, and
examination authority. Our business related to
investment management and trusteeship of collective
trust funds and separate accounts offered to
employee benefit plans is subject to the Employee
Retirement Income Security Act (ERISA), and is
regulated by the U.S. Department of Labor (DOL).
The majority of our non-U.S. asset servicing
operations are conducted pursuant to the Federal
Reserve’s Regulation K through State Street Bank’s
Edge Act subsidiary or through international branches
of State Street Bank. An Edge Act corporation is a
corporation organized under federal law that conducts
foreign business activities. In general, banks may not
make investments in their Edge Act corporations (and
similar state law corporations) that exceed 20% of
their capital and surplus, as defined in the relevant
banking regulations, and the investment of any
amount in excess of 10% of capital and surplus
requires the prior approval of the Federal Reserve.
In addition to our non-U.S. operations conducted
pursuant to Regulation K, we also make new
investments abroad directly (through us or through
our non-banking subsidiaries) pursuant to the Federal
Reserve’s Regulation Y, or through international bank
branch expansion, neither of which is subject to the
investment
limitations
applicable
to
Edge Act
subsidiaries.
Additionally, Massachusetts has its own bank
holding company statute, under which we, among
other things, may be required to obtain prior approval
by the Massachusetts Board of Bank Incorporation for
an acquisition of more than 5% of any additional
bank's voting shares, or for other forms of bank
acquisitions.
Anti-Money
Laundering
and
Financial
Transparency
Certain of our subsidiaries are subject to the
Bank Secrecy Act of 1970, as amended by the USA
PATRIOT Act of 2001, and related regulations, which
contain AML and financial transparency provisions
and which require implementation of an AML
compliance program, including processes for verifying
client identification and monitoring client transactions
and detecting and reporting suspicious activities. AML
laws outside the United States contain similar
requirements. State Street Corporation and its
subsidiaries are also required to comply with
sanctions laws and regulations administered and
imposed by the U.S. government, including the U.S.
Treasury Department’s OFAC and the Department of
State, as well as comparable sanctions programs
imposed by foreign governments and multilateral
bodies. We have implemented an enterprise-wide
AML and sanctions compliance program, including
policies, procedures and internal controls that are
designed to promote compliance with applicable AML
laws and regulations and sanctions. AML laws and
regulations applicable to our operations may be more
stringent than similar requirements applicable to our
non-regulated competitors or financial institutions
principally operating in other jurisdictions.
Compliance with applicable AML and related
requirements is a common area of review for financial
regulators, and any failure by us to comply with these
requirements could result in fines, penalties, lawsuits,
regulatory
sanctions,
difficulties
in
obtaining
governmental approvals, restrictions on our business
activities or harm to our reputation. As an example, In
June 2024, we entered into a settlement agreement
with the U.S. Department of Treasury’s OFAC to
resolve its investigation into apparent violations of
OFAC’s
Ukraine-/Russia-Related
Sanctions
Regulations. In connection with the settlement, we
paid a civil monetary penalty of $7.45 million and
made certain compliance commitments.
Deposit Insurance
The Dodd-Frank Act made permanent the
general $250,000 deposit insurance limit for insured
deposits. The FDIC’s Deposit Insurance Fund (DIF) is
funded by assessments on FDIC IDIs. The FDIC
assesses DIF premiums based on an IDI’s average
consolidated total assets, less the average tangible
equity of the IDI during the assessment period. For
larger institutions, such as State Street Bank,
assessments are determined based on regulatory
ratings and forward-looking financial measures to
calculate the assessment rate, which is subject to
adjustments by the FDIC, and the assessment base.
The FDIC is required to determine whether and
to what extent adjustments to the assessment base
are appropriate for “custody banks” that satisfy
State Street Corporation | 18
specified institutional eligibility criteria. The FDIC has
concluded that certain liquid assets could be
excluded from the deposit insurance assessment
base of custody banks. This, subject to change by the
FDIC, has the effect of reducing the amount of DIF
insurance premiums due from custody banks. State
Street Bank qualifies as a custody bank for this
purpose. The custody bank assessment adjustment
may not exceed total transaction account deposits
identified by the institution as being directly linked to a
fiduciary or custody and safekeeping asset.
Following the failures of Silicon Valley Bank and
Signature Bank and the resulting losses to the DIF in
the first half of 2023, the FDIC adopted a final rule on
November
16,
2023
to
implement
a
special
assessment to recover the cost associated with
protecting their uninsured depositors. Under the final
rule, the assessment base for the special assessment
is equal to an IDI’s estimated uninsured deposits
reported as of December 31, 2022, adjusted to
exclude the first $5 billion of uninsured deposits. The
$5 billion exclusion is applied once to the aggregate
uninsured deposits of a consolidated banking
organization. The FDIC will collect the special
assessment over an initial, eight-quarter collection
period and currently projects that the special
assessment will be collected for an additional two
quarters beyond the initial eight-quarter collection
period, at a lower rate, subject to change depending
on any adjustments to the loss estimate, mergers,
failures, or amendments to reported estimates of
uninsured deposits. The final rule was effective on
April 1, 2024, with the first collection for the special
assessment reflected on the invoice for the first
quarterly assessment period of 2024 (i.e., January 1
through March 31, 2024), with a payment date of
June 28, 2024.
In 2023, we recognized a pre-tax expense within
other expenses of approximately $387 million,
reflecting State Street Bank’s allocation of the special
assessment at that time, consistent with the
calculation methodology noted above. In 2024, we
recognized an additional pre-tax expense within other
expenses of approximately $99 million, primarily
reflecting the FDIC’s February 2024 disclosed
increase to its estimate of losses to the DIF. The total
expense for the special assessment remains subject
to any actions by the FDIC, to cease collection early,
extend the special assessment period, or impose a
one-time final shortfall special assessment, including
as a result of updates to the estimated losses.
Prompt Corrective Action
The FDIC Improvement Act of 1991 requires the
appropriate federal banking regulator to take “prompt
corrective action” with respect to a depository
institution if that institution does not meet certain
capital adequacy standards, including minimum
capital ratios. While these regulations apply only to
banks, such as State Street Bank, the Federal
Reserve is authorized to take appropriate action
against a parent bank holding company, such as our
Parent Company, based on the under-capitalized
status of any banking subsidiary. In certain instances,
we would be required to guarantee the performance
of a capital restoration plan if one of our banking
subsidiaries were undercapitalized.
Support of Subsidiary Banks
Under Federal Reserve regulations, a bank
holding company such as our Parent Company is
required to act as a source of financial and
managerial strength to its banking subsidiaries. This
requirement was added to the Federal Deposit
Insurance Act by the Dodd-Frank Act. This means
that we have a statutory obligation to commit
resources to State Street Bank and any other banking
subsidiary in circumstances in which we otherwise
might not do so absent such a requirement. In the
event of bankruptcy, any commitment by us to a
federal bank regulatory agency to maintain the capital
of a banking subsidiary will be assumed by the
bankruptcy trustee and will be entitled to a priority
payment.
Insolvency
of
an
Insured
U.S.
Subsidiary
Depository Institution
If the FDIC is appointed the conservator or
receiver
of
an
FDIC-insured
U.S.
subsidiary
depository institution, such as State Street Bank,
upon its insolvency or certain other events, the FDIC
has the ability to transfer any of the depository
institution’s assets and liabilities to a new obligor
without the approval of the depository institution’s
creditors, enforce the terms of the depository
institution’s contracts pursuant to their terms or
repudiate or disaffirm contracts or leases to which the
depository institution is a party. Additionally, the
claims of holders of deposit liabilities and certain
claims for administrative expenses against an IDI
would be afforded priority over other general
unsecured
claims
against
such
an
institution,
including claims of debt holders of the institution and,
under current interpretation, depositors in non-U.S.
branches and offices, in the liquidation or other
resolution of such an institution by any receiver. As a
result, such persons would be treated differently from
and could receive, if anything, substantially less than
the depositors in U.S. offices of the depository
institution.
Cybersecurity and Data Privacy
The financial services industry faces increased
global regulatory focus regarding cybersecurity and
data privacy. Many aspects of our businesses are
subject to cybersecurity and data privacy legal and
regulatory requirements enacted by U.S. federal and
state governments and other non-U.S. jurisdictions.
These requirements impose, among other things,
mandatory cybersecurity and data privacy obligations,
State Street Corporation | 19
including providing for individual rights, enhanced
governance and accountability requirements, and
significant fines and litigation risk for noncompliance.
In addition, several jurisdictions have enacted or
proposed localization requirements and restrictions
on cross-border transfers of personal information that
may restrict our ability to conduct business in those
jurisdictions or create additional financial, legal and
regulatory burdens to do so. For example, in the
European Union, we are subject to the GDPR, which
requires, among other things, a comprehensive
privacy, data protection and cybersecurity program to
protect the personal and sensitive data of residents of
the
European
Economic
Area.
Following
the
withdrawal of the United Kingdom from the European
Union, we are also subject to the U.K. General Data
Protection Regulation (a version of the GDPR as
implemented into U.K. law).
The U.S. Agencies finalized a rule in November
2021 requiring banking organizations to notify their
primary federal regulators as soon as possible and no
later than 36 hours after identifying a “computer-
security incident” that has materially affected, or is
reasonably likely to materially affect, the viability of
their operations, their ability to deliver banking
products and services or the stability of the financial
sector. The final rule became effective April 1, 2022.
In March 2022, the Cyber Incident Reporting for
Critical Infrastructure Act (CIRCIA) was signed into
law
and
requires,
among
other
things,
the
Cybersecurity and Infrastructure Security Agency
(CISA) to develop and implement regulations for
covered entities to report certain covered cyber
incidents within 72 hours from the time the company
reasonably believes the incident occurred (and within
24 hours of making a ransom payment as a result of
a ransomware attack). On April 4, 2024, the CISA
proposed a rule under the CIRCIA that would clarify
the scope of cyber incidents to be reported and would
further define covered entities subject to the CIRCIA
to expressly include companies in the financial
services industry that are required to report cyber
incidents to their primary federal regulators, such as
us and State Street Bank. In addition, the SEC
adopted new rules on July 26, 2023 that require
registrants to publicly disclose on a Form 8-K material
cybersecurity incidents within four business days of
determining that such an incident is material.
In November 2022, the European Union adopted
DORA, which requires, among other things, financial
institutions to follow certain rules regarding protection,
detection,
containment,
recovery
and
repair
capabilities
with
respect
to
information
and
communication technology-related incidents.
Further, the European Union also adopted the
NIS 2 Directive in November 2022, which requires,
among other things, operators of essential services in
certain sectors, as identified by the applicable E.U.
member states (which have included certain financial
sectors), to take appropriate and proportionate
technical, operational and organizational security
measures and notify relevant national authorities of
any incidents that have a significant impact on the
provision of their services without undue delay. The
NIS 2 Directive required E.U. member states to
transpose the NIS 2 Directive into their national laws
by October 17, 2024, and on November 28, 2024, the
European Commission sent a formal notice of
infringement to the E.U. member states who have
failed to do so, providing an additional two months to
complete such transposition.
In addition, numerous jurisdictions have passed
laws, rules and regulations regarding cybersecurity
and data privacy risk management, and many are
considering new or updated requirements that could
impact our businesses, particularly as the application,
interpretation and enforcement of these laws, rules
and regulations are often uncertain and evolving.
Further discussion of cybersecurity and data
privacy risk management is provided in “Information
Technology Risk Management” included in our
Management’s Discussion and Analysis in this Form
10-K.
ECONOMIC CONDITIONS AND GOVERNMENT
POLICIES
Economic policies of the U.S. government and
its agencies influence our operating environment.
Monetary policy conducted by the Federal Reserve
directly affects the level of interest rates, which may
affect overall credit conditions of the economy.
Monetary policy is applied by the Federal Reserve
through open market operations in U.S. government
securities, changes in reserve requirements for
depository institutions, and changes in the discount
rate and availability of borrowing from the Federal
Reserve. Government regulation of banks and bank
holding companies is intended primarily for the
protection of depositors of the banks, rather than for
the shareholders of the institutions and therefore may,
in some cases, be adverse to the interests of those
shareholders. We are similarly affected by the
economic policies of non-U.S. government agencies,
such as the ECB.
ITEM 1A. RISK FACTORS
Risk Factors
In the normal course of our business activities,
we are exposed to a variety of risks. The following is
a discussion of material risk factors applicable to us.
Additional information about our risk management
framework is included under “Risk Management” in
Management’s Discussion and Analysis in this Form
10-K. Additional risks beyond those described in our
Management’s Discussion and Analysis or in the
following discussion may apply to our activities or
operations as currently conducted, or as we may
conduct them in the future, or in the markets in which
State Street Corporation | 20
we operate or may in the future operate.
Strategic Risks
We are subject to intense competition in all
aspects of our business, which could negatively
affect our ability to maintain or increase our
profitability.
The markets in which we operate across all
facets of our business are both highly competitive and
global. These markets are changing as a result of
financial and technological innovation and new and
evolving laws and regulations applicable to financial
services
institutions.
Market
changes,
macroeconomic developments and other factors
cannot always be anticipated, and may adversely
affect the demand for, and profitability of, the products
and services that we offer. In addition, new market
entrants and competitors may address or influence
changes in the markets more rapidly than we do, may
have materially greater resources to invest in
infrastructure and product development than we do,
or may provide clients with a more attractive or cost-
efficient offering of products and services, adversely
affecting our business. Our efforts to develop and
market new products, particularly in the “Fintech”
sector including through State Street Alpha and State
Street Digital or in attractive areas of focus such as
wealth
servicing
and
alternative
investment
management, may position us in new markets with
pre-existing competitors with strong market position.
We have also experienced, and anticipate that we will
continue to experience, significant pricing pressure in
many of our core businesses, particularly our
custodial and investment management services. This
pricing pressure has and may continue to impact our
revenue growth and operational margins and may
limit the positive impact of new client demand and
growth in AUC/A. Many of our businesses compete
with other domestic and international banks and
financial services companies, such as custody banks,
investment advisors, broker/dealers, outsourcing
companies, information providers, data analytics and
processing companies. Further consolidation within
the financial services industry could also pose
challenges to us in the markets we serve, including
potentially increased downward pricing pressure
across our businesses.
Some
of
our
competitors,
including
our
competitors in core services, have substantially
greater capital resources than we do, are not subject
to
as
stringent
capital
or
other
regulatory
requirements as we are, or may not be as
constrained as we are by these requirements due to
the relative size of our balance sheet. In some of our
businesses, we are service providers to significant
competitors.
These
competitors
are
in
some
instances significant clients, and the retention of
these clients involves additional risks, such as the
avoidance of actual or perceived conflicts of interest
and the maintenance of high levels of service quality
and intra-company confidentiality. Our relationships
with
other
businesses,
including
competitors,
necessarily involve the sharing of confidential
information,
and
we
cannot
be
certain,
notwithstanding
the
existence
of
confidentiality
obligations on the part of those other businesses, that
our information will not be used to the competitive
advantage of others. The ability of a competitor to
offer comparable or improved products or services at
a lower price would likely negatively affect our ability
to maintain or increase our profitability. Many of our
core services are subject to contracts that have
relatively short terms or may be terminated by our
client after a short notice period. In addition, pricing
pressures as a result of the activities of competitors,
client pricing reviews, and rebids, as well as the
introduction of new products, may result in a
reduction in the prices we can charge for our products
and services.
We are subject to variability in our assets under
custody and/or administration and assets under
management, and in our financial results, due to
the significant size of our relationship with many
of our institutional clients, and are also subject to
significant pricing pressure due to trends in the
market
for
custodial
services
and
the
considerable market influence exerted by those
clients.
Our clients include institutional investors, such
as mutual funds, collective investment funds, UCITS,
hedge funds and other investment pools, corporate
and public retirement plans, insurance companies,
official institutions, foundations, endowments and
investment managers. In both our asset servicing and
asset management businesses, we endeavor to
attract institutional investors controlling large and
diverse pools of assets, as those clients typically
have the opportunity to benefit from the full range of
our expertise and service offerings. Due to the large
pools of assets controlled by these clients, the loss or
gain of one client, or even a portion of the assets
controlled by one client, or a client’s decision to in-
source certain services that we provide, could have a
significant effect on our AUC/A or our AUM, as
applicable, in the relevant period. Loss of all or a
portion of the servicing of a client’s assets can occur
for a variety of reasons. For example, as previously
disclosed in early 2021, due to a decision to diversify
providers, one of our large asset servicing clients is
moving a significant portion of its ETF assets
currently with State Street to one or more other
providers. The transition began in 2022. Prior to the
commencement of the transition of assets, we
estimated that the financial impact of this transition
represented approximately 1.9% of our 2021 total fee
revenue. Our AUM or AUC/A are also affected by
decisions by institutional owners to favor or disfavor
certain
investment
instruments
or
categories.
State Street Corporation | 21
Similarly, if one or more clients change the asset
class in which a significant portion of assets are
invested (e.g., by shifting investments from emerging
markets to the United States), those changes could
have a significant effect on our results of operations
in the relevant period, as our fee rates often change
based on the type of asset classes we are servicing
or managing. As our fee revenue is significantly
impacted by our levels of AUC/A and AUM, changes
in levels of different asset classes could have a
corresponding significant effect on our results of
operations in the relevant period. Large institutional
clients also, by their nature, are often able to exert
considerable market influence, and this, combined
with strong competitive forces in the markets for our
services, has resulted in, and may continue to result
in, significant pressure to reduce the fees we charge
for our services in both our asset servicing and asset
management lines of business. Our historical focus
on the segments of the market for investor services
represented by very large asset managers and asset
owners causes us to be particularly impacted by this
industry trend. Many of these large clients are also
under competitive and regulatory pressures that are
driving them to manage the expenses that they and
their investment products incur more aggressively,
which in turn exacerbates their pressures on our fees.
As a result, the servicing fees we generate from any
particular client, or any specific client mandate over
time, may be less than the servicing fees we expect
as a result of that client or mandate at the time we
win that business.
Development and completion of new products
and services, including State Street Alpha and
those related to wealth servicing, alternative
investment management or digital assets or
incorporating artificial intelligence, may impose
costs on us, involve dependencies on third
parties and may expose us to increased risks.
Our financial performance depends, in part, on
our ability to develop and market new and innovative
services and to adopt or develop new technologies
that differentiate our products, appeal to varied
market segments or provide cost efficiencies, while
avoiding
increased
related
expenses.
This
dependency is exacerbated in the current “Fintech”
environment, where financial institutions are investing
significantly in evaluating new technologies, such as
distributed ledger technology (e.g., blockchain and
artificial intelligence), and developing potentially
industry-changing products, services and standards.
The introduction of new products and services can
require significant time and resources, including
regulatory approvals and the development and
implementation of technical data management,
control and model validation requirements and
effective security and resiliency elements. New
products and services, such as State Street Alpha
and those related to wealth servicing, alternative
investment
management
or
digital
assets
or
incorporating artificial intelligence, often also involve
dependencies on third parties to, among other things,
access
innovative
technologies,
develop
new
distribution channels or form collaborative product
and service offerings, and can require complex
strategic alliances and joint venture relationships.
Substantial risks and uncertainties are associated
with the introduction of new products and services,
strategic alliances and joint ventures, including rapid
technological change in the industry, our ability to
access and use technical, data and other information
from our clients, significant and ongoing investments
required to bring new products and services to market
in a timely manner at competitive prices, sharing of
benefits in those relationships, conflicts with existing
business partners and clients, understanding third
party rights, delineating ownership and exit rights,
protection
of
intellectual
property
and
other
confidential information, competition for employees
with the necessary expertise and experience, and
maintaining sales and other materials that fully and
accurately describe the product or service and its
underlying risks and are compliant with applicable
regulations. New products or services may fail to
operate or perform as expected and may not be
suitable for the intended client or may not produce
anticipated efficiencies, savings or benefits for either
the client or us. Our failure to manage these risks and
uncertainties also exposes us to enhanced risk of
operational lapses and third party claims, which may
result in the recognition of financial statement
liabilities.
Regulatory
and
internal
control
requirements,
capital
requirements,
competitive
alternatives, vendor relationships and shifting market
preferences may also determine if such initiatives can
be brought to market in a manner that is timely and
attractive to our clients. Failure to successfully
manage all of the above risks in the development and
implementation of new products or services, including
State Street Alpha and those related to wealth
servicing, alternative investment management or
digital assets or incorporating artificial intelligence,
could have a material adverse effect on our business
and reputation, consolidated results of operations or
financial condition.
Acquisitions, strategic alliances, joint ventures
and divestitures pose risks for our business.
We acquire complementary businesses and
technologies, enter into strategic alliances and divest
portions of our business. These transactions include
joint ventures that we may subsequently acquire in
full, change our ownership level of or divest entirely.
We undertake transactions of varying sizes to, among
other reasons, gain advantages of scale, expand our
geographic footprint, access new clients, distribution
channels, technologies or services, enhance our
operating model, expand or enhance our product
offerings, develop closer or more collaborative
State Street Corporation | 22
relationships with our business partners, efficiently
deploy capital or leverage cost savings or other
business or financial opportunities. We may not
complete these transactions following announcement
or we may not achieve the expected benefits of these
transactions, which could result in increased costs,
lowered revenues, ineffective deployment of capital,
regulatory
concerns,
exit
costs
or
diminished
competitive position or reputation.
Transactions of this nature also involve a
number of risks and financial, accounting, tax,
regulatory, strategic, client relationship, managerial,
operational, cybersecurity, cultural and employment
challenges,
which
could
adversely
affect
our
consolidated results of operations and financial
condition. For example, the businesses that we
acquire or our strategic alliances or joint ventures
may under-perform relative to the price paid or the
resources committed by us; we may not achieve
anticipated
revenue
growth,
cost
savings
or
operational improvements or efficiencies; or we may
otherwise be adversely affected by acquisition-related
charges. The intellectual property of an acquired
business may be an important component of the
value that we agree to pay for it. However, such
acquisitions are subject to the risks that the acquired
business may not own the intellectual property that
we believe we are acquiring, that the intellectual
property is dependent on licenses from third parties,
that the acquired business infringes on the intellectual
property rights of others, that the technology does not
have the acceptance in the marketplace that we
anticipated or that the technology requires significant
investment to remain competitive. Similarly, such
transactions present risks to our ability to retain the
acquired clients and talent, which may be essential to
achieve our financial and other objectives in the
acquisition. The integration of an acquired business’
information technology infrastructure into ours has in
the past and may in the future also expose us to
additional cybersecurity and resiliency risks. Further,
past acquisitions have resulted in the recognition of
goodwill and other significant intangible assets in our
consolidated statement of condition. For example, we
recorded
goodwill
and
intangible
assets
of
approximately $2.46 billion associated with our
acquisition of CRD in 2018. These assets are not
eligible for inclusion in regulatory capital under
applicable requirements. In addition, we may be
required to record impairment in our consolidated
statement of income in future periods if we determine
that the value of these assets has declined.
Divestitures additionally present risks of client
dissatisfaction or loss, loss or restricted access to
intellectual property and key talent, challenges
presented by the post-divestiture operating model,
contractual
arrangements
or
responsibility
for
contingent or other liabilities of the divested business
or reduced opportunities due to the effects of non-
competition or other restrictive covenants.
Through our acquisitions or joint ventures, we
may also assume unknown or undisclosed business,
operational, tax, regulatory and other liabilities, fail to
properly assess known contingent liabilities or
assume businesses with internal control deficiencies.
While in most of our transactions we seek to mitigate
these risks through, among other things, due
diligence, indemnification provisions or insurance,
these or other risk-mitigating provisions we put in
place may not be sufficient to address these liabilities
and contingencies and involve credit and execution
risks associated with successfully seeking recourse
from a third party, such as the seller or an insurance
provider. Other major financial services firms have
paid significant penalties to resolve government
investigations into matters conducted in significant
part by acquired entities.
Various regulatory approvals or consents, formal
or informal, are generally required prior to closing of
these transactions, which may include approvals,
non-objections or regulatory exceptions from the
Federal Reserve and other U.S. and non-U.S.
regulatory authorities. These regulatory authorities
may impose conditions on the completion of the
acquisition or require changes to its terms that
materially affect the terms of the transaction or our
ability to capture some of the opportunities presented
by the transaction, or may not approve, or may take
substantial time to review, the transaction. Any such
conditions, or any associated regulatory delays, could
limit the benefits of the transaction. U.S. anti-trust and
banking agencies continue to express concerns about
the growth of large banking institutions, and
competition authorities in many jurisdictions have
increased the scrutiny and standards they apply in
their review of transactions. Acquisitions or joint
ventures we announce may not be completed if we
do not receive the required regulatory approvals, if
regulatory approvals are significantly delayed or if
other closing conditions are not satisfied.
As an example, after consideration of both
regulatory
feedback
and
potential
transaction
modifications
to
address
that
feedback,
we
determined in November 2022 to no longer pursue
our acquisition of the Brown Brothers Harriman’s
Investor Services business announced in September
2021. Any failure to complete a transaction presents
reputational, counterparty and competitive risks that
could affect our business, results of operations and
financial condition, potentially materially, and may
also challenge our ability to enter into future
transactions on terms acceptable to us.
The
integration
and
the
retention
and
development of the benefits of our acquisitions
State Street Corporation | 23
result in risks to our business and other
uncertainties.
In
recent
years,
we
have
undertaken
acquisitions, including our 2024 acquisition of CF
Global, our 2021 acquisition of Mercatus and our
2018 acquisition of CRD. The integration of
acquisitions presents risks that differ from the risks
associated with our ongoing operations. Integration
activities are complicated and time consuming and
can involve significant unforeseen costs. We may not
be
able
to
effectively
assimilate
services,
technologies, key personnel or businesses of
acquired companies into our business or service
offerings as anticipated, and we may not achieve
related revenue growth or cost savings. We also face
the risk of being unable to retain, or cross-sell our
products or services to, the clients of acquired
companies or joint ventures and the risk of being
unable to cross-sell acquired products or services to
our existing clients. In particular, some clients,
including significant clients, of an acquired business
may have the right to transition their business to other
providers on short notice for convenience, fiduciary or
other reasons and may take the opportunity of the
acquisition or market, commercial, relationship,
service satisfaction or other developments following
the acquisition to terminate, reduce or renegotiate the
fees or other terms of our relationship. Any such client
losses, reductions or renegotiations likely will reduce
the expected benefits of the acquisition, including
revenues, cross-selling opportunities and market
share, cause impairment to goodwill and other
intangibles or result in reputational harm, which
effects could be material, and we may not have
recourse against the seller of the business or the
client. The risk of client loss is even greater where the
client is a competitor of ours or has key strategic
commercial
relationships
with
our
competitors.
Acquisitions of Investment Servicing businesses
entail information technology systems conversions,
which involve operational risks, as well as fiduciary
and other risks associated with client retention.
Acquisitions
of Asset
Management
businesses
similarly involve fiduciary and similar risks associated
with client retention, distribution channels and
additional servicing opportunities, as well as potential
cultural conflicts. Acquisitions of technology firms can
involve extensive information technology integration,
with associated risk of defects, security breaches and
resiliency lapses and product enhancement and
development activities, the costs of which can be
difficult to estimate, as well as heightened cultural
and
compliance
concerns
in
integrating
an
unregulated firm into a bank regulatory environment.
Joint ventures involve all of these risks, as well as
risks associated with shared control and decision-
making (even in majority-owned situations), minority
rights and exit rights, which can delay, challenge or
foreclose execution on material opportunities or
initiatives, create regulatory risks and limit divestment
opportunities.
With any acquisition, the integration of the
operations and resources of the businesses could
result in the loss of key employees, the disruption of
our and the acquired company’s ongoing businesses
or inconsistencies in standards, controls, procedures
or policies that could adversely affect our ability to
maintain relationships with clients, business partners
or employees, maintain regulatory compliance or
achieve the anticipated benefits of the acquisition.
Integration efforts may also divert management
attention and resources.
Competition
for
qualified
members
of
our
workforce is intense, and we may not be able to
attract and retain the personnel we need to
support our business.
Our success depends, in large part, on our
ability to attract and retain qualified personnel.
Competition for labor in most activities in which we
engage can be intense, including for both individuals
identified as key talent and for other personnel. We
may not be able to hire people or retain them,
particularly in light of challenges associated with
compensation restrictions applicable, or which may
become applicable, to banks and some asset
managers and that are not applicable to other
financial services firms in all jurisdictions or to
technology or other firms with which we compete for
personnel,
generally.
This
can
be
particularly
constraining when competing for skill sets which are
in high demand, such as technology and information
security. The unexpected loss of services of
personnel in business units, control functions,
information technology, operations or other areas
could have a material adverse impact on our
business and operations because of the loss of skills,
knowledge of our markets, operations and clients,
years of industry experience and, in some cases, the
difficulty of promptly finding qualified replacement
personnel.
These
adverse
impacts
may
be
exacerbated by increased costs and expenses driven
by
the
competitive
labor
market
in
several
jurisdictions in which we operate, particularly with
regard to the ability to meet compensation and hybrid
working expectations. In addition, the loss of
personnel, either individually or as a group, could
adversely affect our clients’ perception of our ability to
continue to manage certain types of investment
management or servicing mandates to provide other
services to them or to maintain a culture of innovation
and proficiency.
State Street Corporation | 24
Financial Market Risks
Political, geopolitical and economic conditions
and developments could adversely affect us,
particularly if we face increased uncertainty and
unpredictability in managing our businesses.
Domestic or international markets can suffer
from substantial volatility, illiquidity, or disruption,
particularly as a result of political or geopolitical
events, high inflation, slowing economic growth,
uncertainty
associated
with
changes
in
U.S.
Presidential Administrations, concerns related to the
U.S. trade policy, federal debt ceiling and monetary
policy uncertainty across key central banks. If such
volatility, illiquidity or disruption were to result in an
adverse economic environment in the United States
or in international markets or result in a lack of
confidence
in
the
financial
stability
of
major
developed or emerging markets, such developments
could have an adverse effect on our business, as well
as the businesses of our clients and our significant
counterparties, and could also increase the difficulty
and
unpredictability
of
aligning
our
business
strategies, our infrastructure and our operating costs
in light of uncertain market and economic conditions.
Market disruptions can adversely affect our
consolidated results of operations if the value of our
AUC/A or AUM decline, while the costs of providing
the related services remain constant or increase.
They may also result in investor preference trends
towards asset classes and markets deemed more
secure, such as cash or non-emerging markets, with
respect to which our fee rates are often lower. These
factors could reduce the profitability of our asset-
based fee revenue and could also adversely affect
our transaction-based revenue, such as revenues
from securities finance and foreign exchange
activities, and the volume of transactions that we
execute for or with our clients. Further, the degree of
volatility in foreign exchange rates can affect our
foreign exchange trading revenue. In general,
increased currency volatility tends to increase our
market risk but also increases our opportunity to
generate foreign exchange revenue. Conversely,
periods of lower currency volatility tend to decrease
our market risk but also decrease our foreign
exchange revenue.
In addition, as our business grows globally and a
significant percentage of our revenue is earned (and
of our expenses paid) in currencies other than U.S.
dollars, our exposure to foreign currency volatility
could affect our levels of consolidated revenue, our
consolidated expenses and our consolidated results
of operations, as well as the value of our investment
in our non-U.S. operations and our non-U.S.
investment portfolio holdings. The extent to which
changes in the strength of the U.S. dollar relative to
other currencies affect our consolidated results of
operations, including the degree of any offset
between increases or decreases to both revenue and
expenses, will depend upon the nature and scope of
our
operations
and
activities
in
the
relevant
jurisdictions during the relevant periods, which may
vary from period to period.
As our product offerings expand, in part as we
seek to take advantage of perceived opportunities
arising under various regulatory reforms and resulting
market changes, the degree of our exposure to
various market and credit risks will evolve, potentially
resulting in greater revenue volatility.
We have significant global operations, and
clients, that can be adversely impacted by
disruptions in key economies, including local,
regional and geopolitical developments affecting
those economies.
Economic conditions across the world face
continued uncertainty due to, among other things,
elevated geopolitical risks in multiple regions,
including Ukraine, Israel and the Middle East, among
others, an uncertain monetary policy environment,
and slowing growth and heightened volatility in key
emerging markets. New or continued economic
deterioration may increase concerns about sovereign
debt
sustainability,
interdependencies
among
financial institutions and sovereigns, and political and
other risks. Continued uncertainty in the external
environment has led to increased concern around the
near- to medium-term outlook for economic progress
in the regions in which we operate, including the
United States, Europe, the Middle East and Asia.
Given the scope of our global operations,
economic or market uncertainty, volatility, illiquidity or
disruption resulting from these and related factors
could have a material adverse impact on our
consolidated results of operations or financial
condition, with a greater relative impact as compared
to our peers.
Our investment securities portfolio, consolidated
financial condition and consolidated results of
operations could be adversely affected by
changes in the financial markets, governmental
action or monetary policy. For example, among
other risks, changes in prevailing interest rates or
other market conditions have led, and were they
to occur in the future could further lead, to
decreases in our NII or to portfolio management
decisions resulting in reductions in our capital or
liquidity ratios.
Our investment securities portfolio represented
approximately 30% of our total assets as of
December 31, 2024. The gross interest income
associated with our investment portfolio represented
approximately 17% of our total gross revenue for the
year ended December 31, 2024 and has represented
as much as 31% of our total gross revenue in the
State Street Corporation | 25
fiscal years since 2007. As such, our consolidated
financial condition and results of operations are
materially exposed to the risks associated with our
investment portfolio, including changes in interest
rates, credit spreads, credit performance (including
risk of default), and credit ratings, our access to
liquidity and foreign exchange markets and mark- to-
market valuations, and our ability to profitably
manage changes in repayment rates of principal with
respect to our portfolio securities. Uncertain economic
and monetary policy environments continue to drive
risks for ongoing NII volatility. Managing reinvestment
for both higher and lower rate outcomes will continue
to be a challenge. Our consolidated financial
condition and consolidated results of operations,
including our capital ratios and share repurchase
program, may differ from or be exacerbated by the
effects of changes in interest rates and also may be
volatile and difficult to predict, presenting even further
challenges. In addition, certain regulatory liquidity
standards, such as the LCR, require that we maintain
minimum levels of HQLA in our investment portfolio,
which generally generate lower rates of return than
other investment assets. This has resulted in
increased levels of HQLA as a percentage of our
investment portfolio and an associated negative
impact on our NII and our NIM. As a result, we may
not be able to attain our prior historical levels of NII
and NIM. For additional information regarding these
liquidity requirements, refer to the “Liquidity Coverage
Ratio and Net Stable Funding Ratio” section of
“Supervision and Regulation” in Business in this Form
10-K. We may enter into derivative transactions to
hedge or manage our exposure to interest rate risk,
as well as other risks, such as foreign exchange risk
and credit risk. Derivative instruments that we hold for
these or other purposes may not achieve their
intended results and could result in unexpected
losses or stresses on our liquidity or capital
resources.
Our investment securities portfolio represents a
greater proportion of our consolidated statement of
condition and our loan portfolio represents a smaller
proportion (approximately 12% of our total assets as
of December 31, 2024), in comparison to many other
major financial institutions. In some respects, the
accounting
and
regulatory
treatment
of
our
investment securities portfolio may be less favorable
to us than a more traditional held-for-investment
lending portfolio. For example, under the Basel III
rule, after-tax changes in the fair value of AFS
investment securities are recognized in AOCI and
included in Tier 1 capital. Since loans held for
investment are not subject to a fair value accounting
framework, changes in the fair value of loans (other
than expected credit losses) are not similarly included
in the determination of Tier 1 capital under the Basel
III rule. Due to this differing treatment, we may
experience increased variability in our Tier 1 capital
relative to other major financial institutions for which
loan-and-lease
portfolios
represent
a
larger
proportion of their consolidated total assets than ours.
Additionally, accounting rules may constrain our
ability to sell HTM securities, for example to generate
liquidity in times of stress or if we are unable to
monetize through repurchase agreements or use of
the Federal Reserve’s discount window or other
federal facilities at which we can pledge securities
classified as HTM. Any decision to sell investment
securities classified as HTM would likely require us to
recognize all HTM securities at fair value, with any
difference between amortized cost and fair value
recognized in either AOCI (if transferred to AFS
classification)
or
through
earnings.
Securities
classified as AFS that have experienced a reduction
in fair value below their amortized cost, reflect our
determination, as of the relevant period end, that we
did not have the intent to sell, nor was it more likely
than not that we will be required to sell, any of those
securities. If that determination changes in the future,
we could be required to recognize a loss in earnings
for the entire difference between fair value and
amortized
cost
of
those
securities.
Potential
regulatory changes could also result in a decrease in
our ability to include HQLA classified as HTM in our
calculation of LCR, which could materially impact the
calculation of that ratio.
Additional risks associated with our investment
portfolio include:
•
Asset class concentration. Our investment
portfolio
continues
to
have
significant
concentrations
in
several
classes
of
securities, including agency residential MBS,
commercial MBS and other ABS, and
securities with concentrated exposure to
consumers. These classes and types of
securities experienced significant liquidity,
valuation and credit quality deterioration
during the financial crisis that began in
mid-2007.
We
also
hold
non-U.S.
government securities, non-U.S. MBS and
ABS with exposures to European countries,
whose
sovereign-debt
markets
have
experienced increased stress at times since
2011 and may continue to experience stress
in the future. For further information, refer to
the risk factor titled “We have significant
global operations and clients, that can be
adversely impacted by disruptions in key
economies, including local, regional and
geopolitical developments affecting those
economies”. Further, we hold a portfolio of
U.S. state and municipal bonds, the value of
which may be affected by the budget deficits
that a number of states and municipalities
currently face, resulting in risks associated
with this portfolio.
•
Effects of market conditions. If market
conditions
deteriorate,
our
investment
State Street Corporation | 26
portfolio could experience a decline in market
value, whether due to a decline in liquidity or
an increase in the yield required by investors
to hold such securities, regardless of our
credit view of our portfolio holdings. In
addition, in general, deterioration in credit
quality,
or
changes
in
management’s
expectations regarding repayment timing or
in management’s investment intent to hold
securities to maturity, in each case with
respect to our portfolio holdings, could result
in recognition of an allowance for expected
credit losses or an impairment. Similarly, if a
material portion of our investment portfolio
were to experience credit deterioration, our
capital ratios as calculated pursuant to the
Basel III rule could be adversely affected.
This risk is greater with portfolios of
investment securities that contain credit risk
than
with
holdings
of
U.S.
Treasury
securities. Both AFS and HTM securities in
our investment portfolio carry liquidity risk if
there is lower demand for either the sale or
sale under repurchase agreement of these
securities.
•
Effects of interest rates. Our investment
portfolio is further subject to changes in both
U.S. and non-U.S. (primarily in Europe)
interest rates, and could be negatively
affected by changes in those rates, whether
or not expected. This is particularly true in the
case of a quicker-than-anticipated decrease
in interest rates, which would negatively
affect our investment portfolio reinvestment,
NII and NIM, or persistently low or negative
rates of interest on certain investments. The
latter has been the case, for example, with
respect to past ECB monetary policy,
including negative interest rates in some
jurisdictions. The effect on our NII has been
exacerbated by the effects in recent fiscal
years of the strong U.S. dollar relative to
other currencies, particularly the Euro. If
European interest rates remain low or
decrease and the U.S. dollar strengthens
relative to the Euro, the negative effects on
our NII likely will continue or increase. The
overall level of NII can also be impacted by
the size and mix (i.e., interest bearing vs.
non-interest bearing) of our deposit base, as
further increases in interest rates could lead
to reduced deposit levels and also lower
overall NII. Further, a reduction in deposit
levels could increase the requirements under
the regulatory liquidity standards requiring us
to invest a greater proportion of our
investment portfolio holdings in HQLA that
have lower yields than other investable
assets. See also, “Our business activities
expose us to interest rate risk” in this section.
Our business activities expose us to interest rate
risk.
In our business activities, we assume interest
rate risk by investing short-term deposits received
from our clients in our investment portfolio of longer-
and intermediate-term assets. Our NII and NIM, and
ability to attract deposits from our clients, are affected
by among other things, the levels of interest rates in
global markets, changes in the relationship between
short- and long-term interest rates, the direction and
speed of interest rate changes and the asset and
liability spreads relative to the currency and
geographic mix of our interest-earning assets and
interest-bearing
liabilities.
These
factors
are
influenced, among other things, by a variety of
economic and market forces and expectations,
including monetary policy and other activities of
central banks, such as the Federal Reserve and ECB,
that we do not control. Our ability to anticipate
changes in these factors or to hedge the related on-
and off-balance sheet exposures, and the cost of any
such hedging activity, can significantly influence the
success of our asset and liability management
activities and the resulting level of our NII and NIM.
The impact of changes in interest rates and related
factors will depend on the relative duration and fixed-
or floating-rate nature of our assets and liabilities.
Sustained lower interest rates, a flat or inverted yield
curve and narrow credit spreads generally have a
constraining effect on our NII. In addition, our ability
to reduce deposit rates in response to declines in
prevailing interest rates and other market and related
factors is limited by client relationship considerations.
The impact of interest rates on our investment
portfolio and consolidated financial results, including
AOCI, can also affect our ability to maintain our
capital ratios within our target ranges as well as the
amount and timing of our future share repurchases.
For example, in the first half of 2022 unrealized
losses on AFS securities within AOCI, driven by the
significant increase in interest rates across the yield
curve, contributed to a decrease in CET1 capital. For
additional information about the effects on interest
rates on our business, refer to the Market Risk
Management
section,
“Asset
and
Liability
Management
Activities”
in
our
Management’s
Discussion and Analysis in this Form 10-K.
We
assume
significant
credit
risk
of
counterparties, many of which are major financial
institutions. These financial institutions and other
counterparties
may
also
have
substantial
financial
dependencies
with
other
financial
institutions and sovereign entities. These credit
exposures and concentrations could expose us to
financial loss.
State Street Corporation | 27
The financial markets are characterized by
extensive
interdependencies
among
numerous
parties, including banks, central banks, broker/
dealers, insurance companies and other financial
institutions. These financial institutions also include
collective investment funds, such as mutual funds,
UCITS
and
hedge
funds
that
share
these
interdependencies.
Many
financial
institutions,
including collective investment funds, also hold, or
are exposed to, loans, sovereign debt, fixed-income
securities, derivatives, counterparty and other forms
of credit risk in amounts that are material to their
financial condition. As a result of our own business
practices and these interdependencies, we and many
of our clients have concentrated counterparty
exposure to other financial institutions and collective
investment funds, particularly large and complex
institutions, sovereign issuers, mutual funds, UCITS
and hedge funds. Although we have procedures for
monitoring
both
individual
and
aggregate
counterparty risk, significant individual and aggregate
counterparty exposure is inherent in our business, as
our focus is on servicing large institutional investors.
In the normal course of our business, we
assume concentrated credit risk at the individual
obligor,
counterparty
or
group
level.
Such
concentrations may be material. Our material
counterparty exposures change daily, and the
counterparties or groups of related counterparties to
which our risk exposure is concentrated are also
variable during any reported period; our largest
exposures tend to be to other financial institutions.
Concentration
of
counterparty
exposure
presents significant risks to us and to our clients
because the failure or perceived weakness of our
counterparties (or in some cases of our clients’
counterparties) has the potential to expose us to risk
of financial loss. Changes in market perception of the
financial strength of particular financial institutions or
sovereign issuers can occur rapidly, are often based
on a variety of factors and are difficult to predict.
This was observed during the financial crisis that
began in 2007-2008, when economic, market,
political and other factors contributed to the
perception
of
many
financial
institutions
and
sovereign issuers as being less credit worthy. This led
to credit downgrades of numerous large U.S. and
non-U.S. financial institutions and several sovereign
issuers (which exposure stressed the perceived
creditworthiness of financial institutions, many of
which invest in, accept collateral in the form of, or
value other transactions based on the debt or other
securities issued by sovereigns) and substantially
reduced value and liquidity in the market for their
credit instruments. These or other factors could again
contribute to similar consequences or other market
risks associated with reduced levels of liquidity. As a
result, we may be exposed to increased counterparty
risks, either resulting from our role as principal or
because of commitments we make in our capacity as
agent for some of our clients.
Additional areas where we experience exposure
to credit risk include:
•
Short-term credit: The degree of client
demand for short-term credit tends to
increase during periods of market turbulence,
which may expose us to further counterparty-
related risks. For example, investors in
collective investment vehicles for which we
act as a custodian may experience significant
redemption activity due to adverse market or
economic news. Our relationship with our
clients and the nature of the settlement
process for some types of payments may
result in the extension of short-term credit in
such
circumstances.
We
also
provide
committed lines of credit to support such
activity. For some types of clients, we provide
credit to allow them to leverage their
portfolios, which may expose us to potential
loss if the client experiences investment
losses or other credit difficulties.
•
Industry and country risks: In addition to our
exposure to financial institutions, we are from
time to time exposed to concentrated credit
risk at an industry or country level. This
concentration risk also applies to groups of
unrelated counterparties that may have
similar investment strategies involving one or
more particular industries, regions, or other
characteristics.
These
unrelated
counterparties may concurrently experience
adverse effects to their performance, liquidity
or reputation due to events or other factors
affecting such investment strategies. Though
potentially not material individually (relative to
any one such counterparty), our credit
exposures to such a group of counterparties
could expose us to a single market or political
event or a correlated set of events that, in the
aggregate, could have a material adverse
impact on our business.
•
Subcustodian risks: With the exception of the
United States, Canada, Germany and the
United Kingdom, we maintain subcustodian
relationships in all jurisdictions in which our
clients invest, including emerging and other
underdeveloped
markets,
and
markets
subject to sanctions. Our use of unaffiliated
subcustodians exposes us to operational,
reputational and regulatory risk, as we are
dependent
upon
the
subcustodians
in
performing several of our services to clients
in those markets. Operational risk includes
risks of the legal and regulatory systems and
market practices of the jurisdictions in which
State Street Corporation | 28
the subcustodians operate. Our operating
model exposes us to risk of unaffiliated
subcustodians to a degree greater than some
of our competitors who have banking
operations in more jurisdictions than we do.
The risks of maintaining custody services in
such markets are amplified due to evolving
regulatory and sanctions requirements with
respect to our financial exposures in the
event those subcustodians, or we, are unable
to return, transfer or reinvest clients’ assets.
In some regulatory regimes, such as the
European Union’s UCITS V directive, we are
subject
to
requirements
that
we
be
responsible for resulting losses suffered by
our clients, and we may agree to similar or
more stringent standards with clients that are
not subject to such regulations. In addition, to
the extent we maintain currencies on our
consolidated balance sheet (where the client
deposit liability is with State Street and State
Street, as principal, maintains cash on
deposit with a subcustodian or clearing
agency)
or
are
subject
to
regulatory
requirements to return assets placed in
custody, we are also subject to the risk of
credit exposure to such subcustodians and
clearing agencies. Depending upon the
currency and jurisdiction of the client, a
significant portion of our deposit exposure in
non-U.S. currencies is recognized on our
consolidated
balance
sheet.
In
some
jurisdictions, such as Russia, sanctions
programs or government intervention inhibit
our clients’ and our ability to access or
transfer cash or securities held for clients
through
subcustodians
and
clearing
agencies. If such client deposit liabilities are
on our consolidated balance sheet, we
maintain a corresponding amount of cash on
deposit with the subcustodian or clearing
agency, which increases our credit exposure
to that entity and can accumulate over time
based
upon
distributions
on,
or
other
activities related to, our clients’ assets. If the
subcustodian or clearing agency were to
become insolvent in circumstances not
involving expropriation of assets or other
circumstances
that
excuse
performance
under force majeure or other provisions, the
risk of loss on such cash on deposit would be
ours rather than the clients. Currently, we
hold cash on deposit with our subcustodian
and clearing agencies in Russia, which
amount is expected to increase materially
over time as long as the sanctions and other
restrictions remain in effect, and which
currently is subject to restrictions on our
ability
to
access
such
deposits.
Our
subcustodians are also directly affiliated with
or are subsidiaries of large, global financial
institutions with whom we have other credit
exposures. This credit exposure to these
financial institutions or subcustodians can
limit the financial relationship we may have
with these counterparties and has in the past
made,
and
may
in
the
future
make,
compliance with specific U.S. regulatory
single counterparty credit limits (SCCL) more
challenging. For additional information, see
Note
1
to
the
consolidated
financial
statements in this Form 10-K.
•
Settlement
risks:
We
are
exposed
to
settlement risks, particularly in our payments
and
foreign
exchange
activities. Those
activities may lead to extension of credit and
consequent losses in the event of a
counterparty breach or an operational error,
including the failure to provide credit. Due to
our membership in several industry clearing
or settlement exchanges, we may be required
to guarantee obligations and liabilities, or
provide financial support, in the event that
other members do not honor their obligations
or
default.
Moreover,
not
all
of
our
counterparty exposure is secured, and even
when our exposure is secured, the realizable
value of the collateral may have declined by
the time we exercise our rights against that
collateral. This risk may be particularly acute
if we are required to sell the collateral into an
illiquid or temporarily-impaired market or with
respect to clients protected by sovereign
immunity. We are exposed to risk of short-
term credit or overdraft of our clients in
connection with the process to facilitate
settlement of trades and related foreign
exchange
activities,
particularly
when
contractual settlement has been agreed with
our clients. The occurrence of overdrafts at
peak volatility could create significant credit
exposure to our clients depending upon the
value of such clients’ collateral at the time.
Our
settlement-related
activities
and
obligations are also subject to regulatory risk,
including the risk of regulators globally
accelerating the timeline to settlement, such
as the SEC’s recent rule to shorten the
standard settlement cycle for securities
transactions in the United States from trade
date plus two business days (T+2) to trade
date plus one business day (T+1) in May
2024. This rule presents the risk of non-
compliance, as well as careful coordination
with and dependencies on other industry
participants and additional risks associated
with
technology
development
and
State Street Corporation | 29
implementation, change management and
operational errors, any of which could be
material in light of the magnitude and volume
of
our
settlement-related
activities
and
obligations. These risks will also be relevant
in other jurisdictions that may similarly
change their settlement cycles.
•
Securities lending and repurchase agreement
indemnification: On behalf of clients enrolled
in our securities lending program, we lend
securities to banks, broker/dealers and other
institutions. In the event of a failure of the
borrower to return such securities, we
typically agree to indemnify our clients for the
amount by which the fair market value of
those securities exceeds the proceeds of the
disposition of the collateral posted by the
borrower in connection with such transaction.
We also lend and borrow securities as
principal, and in connection with those
transactions receive a security interest in
securities held by the borrowers in their
securities portfolios and advance cash or
securities as collateral to securities lenders.
Borrowers are generally required to provide
collateral equal to a contractually agreed
percentage equal to or in excess of the fair
market value of the loaned securities. As the
fair market value of the loaned securities or
collateral changes, additional collateral is
provided by the borrower or a portion of
collateral is returned to the borrower. In
addition, our agency securities lending clients
often purchase securities or other financial
instruments from financial counterparties,
including broker/dealers, under repurchase
arrangements, frequently as a method of
reinvesting the cash collateral they receive
from lending their securities. Under these
arrangements, the counterparty is obligated
to repurchase these securities or financial
instruments from the client at the same price
(plus an agreed rate of return) at some point
in the future. The value of the collateral is
intended
to
exceed
the
counterparty’s
payment obligation, and collateral is adjusted
daily to account for shortfall under, or excess
over, the agreed-upon collateralization level.
As with the securities lending program, we
agree to indemnify our clients from any loss
that would arise on a default by the
counterparty
under
these
repurchase
arrangements if the proceeds from the
disposition of the securities or other financial
assets held as collateral are less than the
amount of the repayment obligation by the
client’s counterparty. In such instances of
counterparty default, for both securities
lending and repurchase agreements, we,
rather than our client, are exposed to the
risks associated with collateral value.
•
Repurchase and resale transactions: We
enter into repurchase and resale transactions
in eligible securities with sponsored clients
and with other FICC members and, pursuant
to FICC Government Securities Division
rules, submit, novate and net the transactions
when specific netting criteria are met. We
may sponsor clients to clear their eligible
repurchase or resale transactions with FICC,
backed by our guarantee to FICC of the
prompt and full payment and performance of
our sponsored member clients’ respective
obligations. Although we obtain a security
interest from our sponsored clients in the
collateral that they receive, we are exposed
to the associated risks, including insufficiency
of the value of collateral.
•
Stable value arrangements: We enter into
stable value wrap derivative contracts with
unaffiliated stable value funds that allow a
stable value fund to provide book value
coverage to its participants. During the 2008
financial crisis, the book value of obligations
under many of these contracts exceeded the
market value of the underlying portfolio
holdings. Concerns regarding the portfolio of
investments protected by such contracts, or
regarding
the
investment
manager
overseeing such an investment option, may
result in redemption demands from stable
value products covered by benefit-responsive
contracts at a time when the portfolio’s
market value is less than its book value,
potentially exposing us to risk of loss.
•
Private equity subscription finance credit
facilities: We provide credit facilities to private
equity funds. The portfolio consists of capital
call lines of credit, the repayment of which is
dependent on the receipt of capital calls from
the underlying limited partner investors in the
funds managed by these firms.
•
U.S. municipal obligations remarketing credit
facilities: We provide credit facilities in
connection with the remarketing of U.S.
municipal obligations, potentially exposing us
to credit exposure to the municipalities
issuing such bonds and contingent liquidity
risk.
•
Leveraged loans: We invest in leveraged
loans, both in the United States and in
Europe. We invest in these loans to non-
investment
grade
borrowers
through
participation in loan syndications in the non-
investment grade lending market. We rate
State Street Corporation | 30
these loans as “speculative” under our
internal risk-rating framework, and these
loans have significant exposure to credit
losses relative to higher-rated loans. We are
therefore at a higher risk of default with
respect to these investments relative to other
of our investments activities. In addition,
unlike other financial institutions that may
have an active role in managing individual
loan compliance, our investment in these
loans is generally as a passive investor with
limited control. Over time, our allowance for
credit losses related to these loans has
increased, and may in the future further
increase, through additional provisions for
credit losses.
•
Commercial
real
estate:
We
finance
commercial and multi-family properties, which
serve as collateral for our loans. Although
collateralized, these loans may become
under-secured if the value of the collateral
was
over-estimated
or
declines.
Loan
payments are dependent on the successful
operation and management of the underlying
collateral property to generate sufficient cash
flow to repay the loan in a timely fashion. A
material decline in real estate markets or
economic conditions could negatively impact
value or property performance, which could
adversely impact timely loan repayment,
which may result in increased provision for
credit losses on loans, and actual losses,
either of which would have an adverse impact
on our net income. We have observed these
effects in 2024 and 2023, resulting in
commercial real estate-related allowance for
credit losses of $102 million as of December
31, 2024. Were conditions, or our evaluation
of conditions, in those or other markets to
worsen in 2025 or subsequent years, we
could experience similar or more significant
effects during those periods.
•
Unavailability of netting: We are generally not
able to net exposures across counterparties
that are affiliated entities and may not be able
in all circumstances to net exposures to the
same legal entity across multiple products. As
a consequence, we may incur a loss in
relation to one entity or product even though
our exposure to an entity’s affiliates or across
product types is over-collateralized. In some
cases, for example in our securities finance
and foreign exchange activities, we are able
to enter into netting agreements that allow us
to net offsetting exposures and payment
obligations against one another. In the event
we become unable, due to operational
constraints, actions by regulators, changes in
accounting principles, law or regulation (or
related interpretations) or other factors, to net
some or all of our offsetting exposures and
payment
obligations
under
those
agreements, we would be required to gross
up our assets and liabilities on our statement
of condition and our calculation of RWA,
accordingly. This would result in a potentially
adverse impact on our regulatory ratios,
including LCR, and present increased credit,
liquidity, asset and liability management and
operational risks, some of which could be
material.
Under currently prevailing regulatory restrictions
on credit exposure, we are required to limit our
exposures to specific issuers or counterparties or
groups
of
counterparties,
including
financial
institutions and sovereign issuers. These credit
exposure restrictions have and may further adversely
affect certain of our businesses, may require that we
expand our credit exposure to a broader range of
issuers and counterparties, including issuers and
counterparties that represent increased credit risk,
may reduce or foreclose our ability to enter into
advantageous transactions or ventures with particular
counterparties and may require that we modify our
operating models or the policies and practices we use
to manage our consolidated statement of condition.
The effects of these considerations may increase
when evaluated under a stressed environment in
stress testing, including CCAR. In addition, we are an
adherent to the International Swaps and Derivatives
Association 2015 Universal Resolution Stay Protocol
and as such are subject to restrictions against the
exercise of rights and remedies against fellow
adherents, including other major financial institutions,
in the event they or an affiliate of theirs enters into
resolution. Although our overall business is subject to
these factors, several of our activities are particularly
sensitive to them including our currency trading
business and our securities finance business. For a
discussion of regulatory requirements applicable to
our
counterparty
exposures,
see
“Enhanced
Prudential
Standards”
under
“Supervision
and
Regulation” in Business in this Form 10-K.
Given
the
limited
number
of
strong
counterparties in the current market, we are not able
to mitigate all of our and our clients’ counterparty
credit risk.
Fee revenue represents a significant majority of
our consolidated revenue and is subject to
decline, among other things, in the event of a
reduction in, or changes to, the level or type of
investment activity by our clients.
We rely primarily on fee-based services to derive
our revenue. This contrasts with commercial banks
that may rely more heavily on interest-based sources
of revenue, such as loans. During 2024, total fee
revenue represented approximately 78% of our total
revenue. Fee revenue generated by our Investment
State Street Corporation | 31
Servicing and Investment Management businesses is
augmented by foreign exchange trading services,
securities finance, software and processing fees and
other fee revenue. The level of these fees is
influenced by several factors, including the mix and
volume of our AUC/A and our AUM, the value and
type of securities positions held (with respect to AUC/
A)
and
the
volume
of
our
clients’
portfolio
transactions, and the types of products and services
used by our clients. Our fee revenue would be
negatively affected, potentially materially, by a decline
in the market value of client portfolios resulting from a
broad market correction or otherwise, especially in
equity markets.
In addition, our clients include institutional
investors, such as mutual funds, collective investment
funds, UCITS, hedge funds and other investment
pools,
corporate
and
public
retirement
plans,
insurance companies, foundations, endowments and
investment managers. Economic, market or other
factors that reduce the level or rates of savings in or
with those institutions, either through reductions in
financial asset valuations or through changes in
investor preferences, could materially reduce our fee
revenue and have a material adverse effect on our
consolidated results of operations.
If we are unable to effectively manage our capital
and liquidity, including by continuously attracting
deposits and other short-term funding, our
consolidated financial condition, including our
regulatory capital ratios, our consolidated results
of operations and our business prospects, could
be adversely affected.
Liquidity management, including on an intra-day
basis, is critical to the management of our
consolidated statement of condition and to our ability
to service our client base. We generally use our
liquidity to:
•
meet clients’ demands for return of their
deposits;
•
extend credit to our clients in connection with
our investor services businesses; and
•
fund the pool of long- and intermediate-term
assets that are included in the investment
securities and loan portfolio carried in our
consolidated statement of condition.
Because the demand for credit by our clients,
particularly settlement related extensions of credit, is
difficult to predict and control, and may be at its peak
at times of disruption in the securities markets, and
because the average maturity of our investment
securities and loan portfolios is longer than the
contractual maturity of our client deposit base, we
need to continuously attract, and are dependent on
access to, various sources of short-term funding.
Since the 2008 financial crisis, the level of client
deposits held by us has tended to increase during
times of market disruption; however, since such
deposits are considered to be transitory, we have
historically deposited so-called excess deposits with
U.S. and non-U.S. central banks and in other highly
liquid instruments. These levels of excess client
deposits, when they manifest, have increased our NII
but have adversely affected our NIM. There can be no
assurance that client behavior in a market disruption
will be similar in the future or that our level of deposit
funding will not decrease.
In managing our liquidity, our primary source of
short-term funding is client deposits, which are
predominantly
transaction-based
deposits
by
institutional investors. Our ability to continue to attract
these deposits, and other short-term funding sources
such as certificates of deposit, is subject to variability
based on a number of factors, including volume and
volatility in global financial markets, the volume of
client settlement related activities, the interest rates
that we are prepared to pay for these deposits, the
loss or gain of one or more clients, client interest in
reducing
non-interest-bearing
deposits,
the
perception of safety of these deposits or short-term
obligations
relative
to
alternative
short-term
investments available to our clients, including the
capital markets, and the classification of certain
deposits
for
regulatory
purposes
and
related
discussions we may have from time to time with
clients regarding better balancing our clients’ cash
management needs with our economic and regulatory
objectives.
The Parent Company is a non-operating holding
company and generally maintains only limited cash
and other liquid resources at any time primarily to
meet anticipated near-term obligations. To effectively
manage our liquidity, we routinely transfer assets
among affiliated entities, subsidiaries and branches.
Internal or external factors, such as regulatory
requirements and standards, including resolution
planning and restrictions on dividend distributions,
influence our liquidity management and may limit our
ability to effectively transfer liquidity internally which
could, among other things, restrict our ability to fund
operations, dividends or stock repurchases or pay
interest on debt securities or require us to seek
external and potentially more costly capital and
impact our liquidity position.
In addition, while not obligations of ours, the
investment products that we manage for third parties
may be exposed to liquidity risks. These products
may be funded on a short-term basis or the clients
participating in these products may have a right to the
return of cash or assets on limited notice. These
business activities include, among others, securities
finance collateral pools, money market and other
short-term investment funds and liquidity facilities
utilized in connection with municipal bond programs.
If clients demand a return of their cash or assets,
State Street Corporation | 32
particularly on limited notice, and these investment
pools do not have the liquidity to support those
demands, we could be forced to sell investment
securities held by these asset pools at unfavorable
prices, damaging our reputation as a service provider
and potentially exposing us to claims related to our
management of the pools.
The availability and cost of credit in short-term
markets are highly dependent on the markets’
perception of our liquidity and creditworthiness. Our
efforts to monitor and manage our liquidity risk,
including on an intra-day basis, may not be
successful or sufficient to deal with dramatic or
unanticipated changes in the global securities
markets or other event-driven reductions in liquidity.
As a result of such events, among other things, our
cost of funds may increase, thereby reducing our NII,
or we may need to dispose of a portion of our
investment securities portfolio, which, depending on
market conditions, could result in a loss from such
sales of investment securities being recorded in our
consolidated statement of income.
Our calculations of credit, market and operational
risk exposures, total RWA and capital ratios for
regulatory purposes depend on data inputs,
formulae, models, correlations and assumptions
that are subject to change over time, which
changes, in addition to our consolidated financial
results,
could
materially
impact
our
risk
exposures, our total RWA and our capital ratios
from period to period.
To calculate our credit, market and operational
risk exposures, our total RWA and our capital ratios
for regulatory purposes, the current Basel III rule
involves the use of current and historical data,
including our own loss data and similar information
from other industry participants, market volatility
measures,
interest
rates
and
spreads,
asset
valuations, credit exposures and the creditworthiness
of our counterparties. These calculations also involve
the use of quantitative formulae, statistical models,
historical correlations and significant assumptions.
We refer to the data, formulae, models, correlations
and assumptions, as well as our related internal
processes, as our “advanced systems.” While our
advanced systems are generally quantitative in
nature, significant components involve the exercise of
judgment based on, among other factors, our and the
financial services industry’s evolving experience. Any
of these judgments or other elements of our
advanced
systems
may
not,
individually
or
collectively, precisely represent or calculate the
scenarios, circumstances, outputs or other results for
which they are designed or intended. Collectively,
they represent only our estimate of associated risk.
In addition, our advanced systems are subject to
update and periodic revalidation in response to
changes in our business activities and our historical
experiences, forces and events experienced by the
market broadly or by individual financial institutions,
changes in regulations and regulatory interpretations
and other factors, and are also subject to continuing
regulatory review and approval. For example, a
significant operational loss experienced by another
financial institution, even if we do not experience a
related loss, could result in a material change in the
output of our advanced systems and a corresponding
material change in our risk exposures, our total RWA
and our capital ratios compared to prior periods. An
operational loss that we experience could also result
in a material change in our capital requirements for
operational risk under the advanced approaches,
depending on the severity of the loss event, its
characterization among the seven Basel-defined
UOM, and the stability of the distributional approach
for a particular UOM. This change in our capital
requirements could be without direct correlation to the
effects of the loss event or the timing of such effects
on our results of operations. Due to the influence of
changes in our advanced systems, whether resulting
from changes in data inputs, regulation or regulatory
supervision or interpretation, specific to us or more
general market, or individual financial institution-
specific, activities or experiences, or other updates or
factors, we expect that our advanced systems and
our credit, market and operational risk exposures, our
total RWA and our capital ratios calculated under the
Basel III rule will change, and may be volatile, over
time, and that those latter changes or volatility could
be material as calculated and measured from period
to period.
We may need to raise additional capital or debt in
the future, which may not be available to us or
may only be available on unfavorable terms.
We may need to raise additional capital or debt
in order to maintain our credit ratings, in response to
regulatory changes, including capital rules, or for
other purposes, including financing acquisitions and
joint ventures and optimizing capital management.
However, our ability to access the capital
markets, if needed, on a timely basis or at all will
depend on a number of factors, such as the state of
the financial markets and securities law requirements
and standards. In the event of rising interest rates,
disruptions in financial markets, negative perceptions
of our business or our financial strength, or other
factors that would increase our cost of borrowing, we
cannot be sure of our ability to raise additional capital
or debt, if needed, on terms acceptable to us. Any
diminished ability to raise additional capital or debt, if
needed, could adversely affect our business and our
ability to implement our business plan, capital plan
and strategic goals, including the financing of
acquisitions and joint ventures, our efforts to maintain
State Street Corporation | 33
regulatory compliance and optimize our capital
management activities.
Any downgrades in our credit ratings, or an
actual or perceived reduction in our financial
strength, could adversely affect our borrowing
costs, capital costs and liquidity position and
cause reputational harm.
Major independent rating agencies publish credit
ratings for our debt obligations based on their
evaluation of a number of factors, some of which
relate to our performance and other corporate
developments, including financings, acquisitions and
joint ventures, and some of which relate to general
industry conditions. For example, between November
2023 and November 2024, Moody’s Investors Service
advised that its outlooks for State Street Bank’s long-
term issuer and deposit ratings, and State Street
Corporation’s
senior
unsecured
ratings,
were
negative. We anticipate that the rating agencies will
continue to review our ratings regularly based on our
consolidated results of operations and developments
in our businesses, including regulatory considerations
such as resolution planning. One or more of the major
independent credit rating agencies have in the past
downgraded, and may in the future downgrade, our
credit ratings, or have negatively revised their outlook
for our credit ratings. The current market and
regulatory environment and our exposure to financial
institutions
and
other
counterparties,
including
sovereign entities, increase the risk that we may not
maintain our current ratings, and we cannot provide
assurance that we will continue to maintain our
current credit ratings. Downgrades in our credit
ratings may adversely affect our borrowing costs, our
capital costs and our ability to raise capital and, in
turn, our liquidity. A failure to maintain an acceptable
credit rating may also preclude us from being
competitive in various products.
Additionally, our counterparties, as well as our
clients, rely on our financial strength and stability and
evaluate the risks of doing business with us. If we
experience diminished financial strength or stability,
actual or perceived, due to the effects of market or
regulatory developments, announced or rumored
business developments, consolidated results of
operations, a decline in our stock price or a
downgrade to our credit rating, our counterparties
may be less willing to enter into transactions, secured
or unsecured, with us, our clients may reduce or
place limits on the level of service we provide to them
or seek to transfer the business, in whole or in part, to
other service providers or our prospective clients may
select other service providers. Any, or all of these
may have adverse effects on our business and
reputation.
The risk that we may be perceived as less
creditworthy than other market participants is higher
as a result of recent market developments, which
include an environment in which the consolidation,
and in some instances failure, of financial institutions,
including major global financial institutions, has
resulted in a smaller number of much larger
counterparties and competitors. If our counterparties
perceive us to be a less viable counterparty, our
ability to enter into financial transactions on terms
acceptable to us or our clients, on our or our clients’
behalf, will be materially compromised. If our clients
reduce their deposits with us or select other service
providers for all or a portion of the services we
provide to them, our revenues will decrease
accordingly.
Compliance and Regulatory Risks
Our
business
and
capital-related
activities,
including
our
ability
to
return
capital
to
shareholders and repurchase our capital stock,
may be adversely affected by our implementation
of regulatory capital and liquidity standards that
we must meet or as a result of regulatory capital
stress testing.
Basel III and Dodd-Frank Act
We are required to calculate our risk-based
capital ratios under both the Basel III advanced
approaches and the Basel III standardized approach,
and we are subject to the more stringent of the risk-
based capital ratios calculated under the advanced
approaches
and
those
calculated
under
the
standardized approach in the assessment of our
capital adequacy.
Banking regulators could change the Basel III
rule or their interpretations as they apply to us,
including
changes
to
these
standards
or
interpretations made in regulations implementing
provisions of the Dodd-Frank Act, which could
adversely affect us and our ability to comply with the
Basel III rule.
For example, in July 2023, the U.S. Agencies
issued the 2023 Basel III Endgame Proposal to
implement the Basel III endgame agreement for large
banks. The 2023 Basel III Endgame Proposal would
introduce
the
expanded
risk-based
approach,
reflecting new RWA methodologies that generally
align with changes to the global Basel Accord
adopted by the BCBS. The 2023 Basel III Endgame
Proposal would, among other things, eliminate the
current Basel III rule’s advanced approaches and
effectively replace it with the expanded risk-based
approach, which more heavily relies on standardized
methodologies. As compared with the standardized
approach, the proposed expanded approach includes
more granular risk weights for credit risk and
introduces a new market risk framework. In addition,
the proposed expanded risk-based approach includes
new standardized approaches for operational risk and
CVA RWA components.
State Street Corporation | 34
For
additional
information
on
these
requirements, including the 2023 Basel III Endgame
Proposal and its potential re-proposal, refer to the
“Regulatory
Capital
Adequacy
and
Liquidity
Standards”
section
under
“Supervision
and
Regulation” in Business in this Form 10-K.
Along with the Basel III rule, banking regulators
also introduced additional requirements, such as the
SLR, LCR and NSFR, each of which presents
compliance risks.
For example, these regulatory requirements
could have a material effect on our business
activities, including the management and composition
of our investment securities portfolio and our ability to
extend credit through committed facilities, loans to
our clients or our principal securities lending activities
as the structure of our balance sheet changes. In
addition, further capital and liquidity requirements are
being implemented or are under consideration by
U.S. and international banking regulators. Any of
these rules, or any additional regulatory initiatives
introduced under the current administration, could
have a material effect on our capital and liquidity
planning
and
related
activities,
including
the
management and composition of our investment
securities portfolio and our ability to extend committed
contingent credit facilities to our clients. The full
effects of these rules, and of other regulatory
initiatives related to capital or liquidity, on us and
State Street Bank are subject to further regulatory
guidance, action or rule-making.
In implementing various aspects of these capital
and
liquidity
regulations,
we
are
making
interpretations of the regulatory intent. The Federal
Reserve may determine that we are not in
compliance with their expectations regarding the
capital rules or the liquidity rules and may require us
to take actions to come into compliance that could
adversely affect our business operations, our
regulatory capital structure, our capital ratios or our
financial performance, or otherwise restrict our growth
plans or strategies.
Systemic Importance
As a G-SIB, we are generally subject to the most
stringent provisions under the Basel III rule. For
example, we are subject to the Federal Reserve's
rules on the implementation of capital surcharges for
U.S. G-SIBs, and on TLAC, LTD and clean holding
company requirements for U.S. G-SIBs which we
refer to as the “TLAC rule”. For additional information
on these requirements, including the 2023 G-SIB
Surcharge Proposal, refer to the “Regulatory Capital
Adequacy and Liquidity Standards” section under
“Supervision and Regulation” in Business in this Form
10-K.
Not all of our competitors have similarly been
designated as systemically important nor are all of
them subject to the same degree of regulation as a
bank or financial holding company, and therefore
some of our competitors are not subject to the same
additional capital requirements.
Supervisory Stress Testing and Capital Planning
We are required by the Federal Reserve to
conduct periodic stress testing of our business
operations and to develop an annual capital plan and
are subject to supervisory stress testing, all as part of
the Federal Reserve’s stress testing and capital
planning processes. The stress testing and capital
planning
processes,
the
severity
and
other
characteristics of which may evolve from year-to-year,
are used by the Federal Reserve to evaluate our
management of capital and the adequacy of our
regulatory capital and to determine the SCB that we
must maintain above our minimum regulatory capital
requirements in order for us to make capital
distributions and discretionary bonuses without
limitation. The results of the supervisory stress testing
process are difficult to predict due, among other
things, to the Federal Reserve’s use of proprietary
stress models that differ from our internal models.
The results of the Federal Reserve’s supervisory
stress tests may result in an increase in our SCB
requirement. The amounts of the planned capital
actions in our capital plan in any year, including stock
repurchases and dividends, may be substantially
reduced from the amounts included in prior capital
plans. These reductions may reflect changes in one
or more different factors, including our business
prospects and related capital needs, our capital
position, proposed acquisitions or other uses of
capital, the models used in our capital planning
process, the supervisory models used by the Federal
Reserve to stress our balance sheet, the Federal
Reserve’s hypothetical economic scenarios for the
supervisory stress testing process, the Federal
Reserve’s stress testing instructions and the Federal
Reserve’s supervisory expectations for the capital
planning process. Any of these potential events could
require us, as applicable, to revise our stress-testing
or capital-management approaches, resubmit our
capital plan or postpone, cancel or alter our planned
capital actions. In addition, changes in our business
strategy, merger or acquisition activity or uses of
capital could result in a change in our capital plan and
its associated capital actions, and may require us to
resubmit our capital plan to the Federal Reserve,
which could prompt the Federal Reserve to
recalculate our SCB requirement. We are also subject
to asset quality reviews and stress testing by the ECB
and in the future we may be subject to similar reviews
and testing by other regulators.
Our implementation of capital and liquidity
requirements may not be approved or may be
objected to by the Federal Reserve, and the Federal
Reserve may impose capital requirements in excess
of our expectations or require us to maintain levels of
liquidity that are higher than we may expect and
State Street Corporation | 35
which
may
adversely
affect
our
consolidated
revenues. In the event that our implementation of
capital and liquidity requirements under regulatory
initiatives,
or
our
current
capital
structure
is
determined not to conform with current and future
capital requirements, our ability to deploy capital in
the operation of our business or our ability to
distribute capital to shareholders or to repurchase our
capital stock may be constrained, and our business
may be adversely affected. In addition, we may
choose to forgo business opportunities, due to their
impact on our capital plan or stress tests, including
our SCB requirement. Likewise, in the event that
regulators in other jurisdictions in which we have
banking subsidiaries determine that our capital or
liquidity levels do not conform with current and future
regulatory requirements, our ability to deploy capital,
our levels of liquidity or our business operations in
those jurisdictions may be adversely affected.
For additional information about the above
matters, refer to “Regulatory Capital Adequacy and
Liquidity
Standards”
under
“Supervision
and
Regulation”
in
Business
and
“Capital”
under
“Financial
Condition”
in
our
Management’s
Discussion and Analysis in this Form 10-K.
We face extensive and changing government
regulation and supervision in the U.S. and non-
U.S. jurisdictions in which we operate, which may
increase our costs and expose us to risks related
to compliance.
Most of our businesses are subject to extensive
regulation and supervision by multiple regulatory and
supervisory bodies, and many of the clients to which
we provide services are themselves subject to a
broad range of regulatory requirements. These
regulations may affect the scope of, and the manner
and terms of delivery of, our services. As a financial
institution with substantial international operations, we
are subject to extensive regulation and supervisory
oversight, both inside and outside of the U.S. This
regulation and supervisory oversight affects, among
other things, the scope of our activities and client
services, our capital operational and organizational
structures, our ability to fund the operations of our
subsidiaries, our lending practices, our dividend
policy, our common share repurchase actions, the
manner in which we market our services, our
acquisition activities and our interactions with foreign
regulatory agencies and officials.
In particular, we are registered with the Federal
Reserve as a bank holding company pursuant to the
Bank Holding Company Act of 1956. The Bank
Holding Company Act generally limits the activities in
which we and our non-banking subsidiaries may
engage to managing or controlling banks and to
activities considered to be closely related to banking.
As a bank holding company that has elected to be
treated as a financial holding company under the
Bank Holding Company Act, we and some of our non-
banking subsidiaries may also engage in a broader
range of activities considered to be “financial in
nature.” Financial holding company status may be
denied if we and our banking subsidiaries do not
remain well capitalized and well managed or fail to
comply
with
Community
Reinvestment
Act
obligations.
We are unable to predict what, if any, changes to
the regulatory environment may be enacted by
Congress, both chambers of which will have a
majority from the same political party, or the new
presidential administration and what the impact of any
such changes will be on our results of operations or
financial condition, including increased expenses or
changes in the demand for our services or our ability
to engage in transactions, to expand our business or
operate in non-United States jurisdictions, or on the
U.S.-domestic or global economies or financial
markets.
Moreover, the turnover of the presidential
administration is expected to result in certain changes
in the leadership and senior staffs of the federal
banking agencies. Such changes are likely to impact
the
rulemaking,
supervision,
examination
and
enforcement priorities and policies of the agencies. In
addition, changes in key personnel at the agencies
that regulate such banking organizations, including
the federal banking agencies, may result in differing
interpretations of existing rules and guidelines and
potentially
different
enforcement
priorities
than
previously. The potential impact of any changes in
agency
personnel,
policies,
priorities
and
interpretations on the financial services sector,
including us, cannot be predicted. Furthermore,
fiduciary, anti-competitive, voting power, governance,
and other concerns with ESG investment strategies,
as well as corporate sustainability and diversity,
equity and inclusion practices and programs, continue
to be the subject of legislative, regulatory and
administrative debate globally, particularly at the
federal and state level in the United States, the
outcomes of which could impact both our asset
management business and the clients that we
service, as well as, our investment servicing activities
more broadly and our corporate activities, practices
and programs. Additional attention or publicity
associated with our asset management business due
to this debate may result in additional scrutiny of, and
litigation or regulatory enforcement regarding, those
or other of our asset management activities or our
corporate, Investment Servicing or other activities,
practices or programs.
We expect that our business will remain subject
to extensive regulation and supervision. Several other
aspects of the regulatory environment in which we
operate, and related risks, are discussed below.
State Street Corporation | 36
Additional information is provided under “Supervision
and Regulation” in Business in this Form 10-K.
Resolution Planning
We are required to periodically submit a plan for
rapid and orderly resolution in the event of material
financial distress or failure commonly referred to as a
resolution plan or a living will to the Federal Reserve
and the FDIC under Section 165(d) of the Dodd-
Frank Act. Through resolution planning, we seek, in
the event of insolvency, to maintain State Street
Bank’s role as a key infrastructure provider within the
financial system, while minimizing risk to the financial
system and maximizing value for the benefit of our
stakeholders. Significant management attention and
resources are devoted in an effort to meet regulatory
expectations with respect to resolution planning.
In the event of material financial distress or
failure, our preferred resolution strategy is the SPOE
Strategy.
Our
resolution
plan,
including
our
implementation of the SPOE Strategy with a secured
support agreement, may result in significant risks,
including that: (1) the SPOE Strategy and the
obligations under the related secured support
agreement may result in the recapitalization of and/or
provision of liquidity to State Street Bank and our
other material entities and the commencement of
bankruptcy proceedings by the Parent Company at
an earlier stage of financial stress than might
otherwise occur without such mechanisms in place;
(2) as an expected effect of the SPOE Strategy,
together
with
applicable
TLAC
regulatory
requirements, our losses will be imposed on Parent
Company shareholders and the holders of long-term
debt and other forms of TLAC securities currently
outstanding or issued in the future by the Parent
Company, as well as on any other Parent Company
creditors, before any of our losses are imposed on
the holders of the debt securities of State Street Bank
or certain of the Parent Company’s other operating
subsidiaries or any of their depositors or creditors and
before U.S. taxpayers are put at risk; (3) there can be
no
assurance
that
there
would
be
sufficient
recapitalization resources available to ensure that
State Street Bank and our other material entities are
adequately capitalized following the triggering of the
requirements to provide capital and/or liquidity under
the secured support agreement; and (4) there can be
no assurance that credit rating agencies, in response
to our resolution plan or the secured support
agreement, will not downgrade, place on negative
watch or change their outlook on our debt credit
ratings, generally or on specific debt securities.
Additional information about the SPOE Strategy,
including related risks, is provided under “Recovery
and Resolution Planning” in Business in this Form 10-
K.
Systemic Importance
Our qualification in the United States as a SIFI,
and our designation by the Financial Stability Board
as a G-SIB, to which certain regulatory capital
surcharges may apply, subjects us to incrementally
higher capital and prudential requirements, increased
scrutiny of our activities and potential additional
regulatory requirements or heightened regulatory
expectations as compared to those applicable to
some of the financial institutions with which we
compete as a custodian or asset manager. This
qualification and designation also has significantly
increased, and may continue to increase, our
expenses associated with regulatory compliance,
including personnel and systems, as well as
implementation and related costs to enhance our
programs.
Global and Non-U.S. Regulatory Requirements
The breadth of our business activities, together
with the scope of our global operations and varying
business practices in relevant jurisdictions, increase
the complexity and costs of meeting our regulatory
compliance obligations, including in areas that are
receiving significant regulatory scrutiny. We are,
therefore, subject to related risks of non-compliance,
including
fines,
penalties,
lawsuits,
regulatory
sanctions, difficulties in obtaining governmental
approvals, limitations on our business activities or
reputational harm, any of which may be significant.
For example, the global nature of our client base
requires us to comply with complex laws and
regulations of multiple jurisdictions relating to
economic sanctions and money laundering. In
addition, we are required to comply not only with the
U.S. Foreign Corrupt Practices Act, but also with the
applicable anti-corruption laws of other jurisdictions in
which we operate. Beyond the risks of non-
compliance, these requirements potentially expose us
to increased counterparty credit risk and exposures to
our clients created due to complications associated
with compliance, including country risk, market risk,
restrictions on asset transfers and inability to access
assets. Further, our global operating model requires
that we comply with information security, resiliency
and outsourcing oversight requirements, including
with
respect
to
affiliated
entities,
of
multiple
jurisdictions and enable our clients to comply with
information security, resiliency and outsourcing
oversight
requirements
imposed
upon
them.
Regulatory scrutiny of compliance with these and
other laws and regulations is increasing and may, in
some respects, impede the implementation of our
global operating model that is central to both delivery
of client service requirements and cost efficiency. We
sometimes face inconsistent laws and regulations
across the various jurisdictions in which we operate.
The evolving regulatory landscape may interfere with
our ability to conduct our operations, hamper our
State Street Corporation | 37
pursuit of a common global operating model or
impede our ability to compete effectively with other
financial institutions operating in those jurisdictions
which may be subject to different regulatory
requirements than apply to us. In particular, non-U.S.
regulations and initiatives that may be inconsistent or
conflict with current or proposed regulations in the
United States could create increased compliance and
other costs that would adversely affect our business,
operations or profitability. Geopolitical events also
have the potential to increase the complexity and cost
of regulatory compliance.
In addition to U.S. regulatory initiatives, we are
further affected by non-U.S. regulatory initiatives,
including the implementation of the Basel prudential
framework, the E.U. Digital Operational Resilience
Act, Corporate Sustainability Reporting Directive and
Sustainable Finance Disclosures Regulation, as well
as proposals for amending the AIFM Directive and
under the Capital Markets Union Action Plan. Recent,
proposed or potential regulations in the United States
and European Union with respect to the supervision
of digital assets and of climate and environmental
risks,
short-term
wholesale
funding,
such
as
repurchase agreements or securities lending, or other
non-bank finance activities, could also adversely
affect not only our own operations but also the
operations of the clients to which we provide services.
Concerns regarding the liquidity and valuation of
prime money market funds and similar products, as
well as potential related regulation, may adversely
impact the cash management products we offer. In
addition, anti-competitive, voting power, governance
and
other
concerns
with
passive
investment
strategies continue to be the subject of legislative and
regulatory debate which could significantly impact
both our asset management business and the clients
that we service.
Consequences of Regulatory Environment and
Compliance Risks
Domestic and international regulatory reform
could limit our ability to pursue certain business
opportunities,
increase
our
regulatory
capital
requirements, alter the risk profile of certain of our
core activities and impose additional costs on us,
otherwise
adversely
affect
our
business,
our
consolidated results of operations or financial
condition and have other negative consequences,
including, a reduction of our credit ratings. Different
countries may respond to the market and economic
environment in different and potentially conflicting
manners,
which
could
increase
the
cost
of
compliance for us.
The evolving regulatory environment, including
changes to existing regulations and the introduction
of new regulations, may also contribute to decisions
we may make to suspend, reduce or withdraw from
existing businesses, activities, markets or initiatives.
In addition to potential lost revenue associated with
any such suspensions, reductions or withdrawals, any
such suspensions, reductions or withdrawals may
result in significant restructuring or related costs or
exposures or may result in inefficiencies or increased
costs due to associated changes in our operating
model.
If we do not comply with governmental
regulations, we may be subject to fines, penalties,
lawsuits, delays, or difficulties in obtaining regulatory
approvals or restrictions on our business activities or
harm to our reputation, which may significantly and
adversely affect our business operations and, in turn,
our
consolidated
results
of
operations.
The
willingness of regulatory authorities to impose
meaningful sanctions, and the level of fines and
penalties imposed in connection with regulatory
violations, has increased substantially since the 2008
financial crisis. Regulatory agencies may, at times,
limit our ability to disclose their findings, related
actions or remedial measures. Similarly, many of our
clients
are
subject
to
significant
regulatory
requirements and retain our services in order for us to
assist
them
in
complying
with
those
legal
requirements. Changes in these regulations can
significantly affect the services that we are asked to
provide, as well as our costs.
Adverse publicity and damage to our reputation
arising from the failure or perceived failure to comply
with legal, regulatory or contractual requirements
could affect our ability to attract and retain clients. If
we cause clients to fail to comply with any regulatory
requirements, we may be liable to them for losses
and expenses that they incur. In recent years,
regulatory oversight and enforcement have increased
substantially,
imposing
additional
costs
and
increasing the potential risks associated with our
operations. If this regulatory trend continues, it could
continue to adversely affect our operations and, in
turn, our consolidated results of operations and
financial condition.
For additional information, see the risk factor
“Our businesses may be adversely affected by
government enforcement and litigation.”
Our businesses may be adversely affected by
government enforcement and litigation.
The businesses in which we operate are highly-
regulated and subject to extensive external scrutiny
that may be directed generally to participants in the
businesses or markets in which we are involved or
may be specifically directed at us, including as a
result of whistleblower and qui tam claims. In the
course of our business, we are frequently subject to
various
regulatory,
governmental
and
law
enforcement inquiries, investigative demands and
subpoenas, and from time to time, our clients, or the
government on its own behalf or on behalf of our
State Street Corporation | 38
clients or others, make claims and take legal action
relating to, among other things, our performance of
our
fiduciary,
contractual,
legal
or
regulatory
responsibilities. Often, the announcement of any such
matters, or of any settlement of a claim or action,
whether it involves us or others in our industry, may
spur the initiation of similar claims by other clients or
governmental parties. Regulatory authorities have,
and are likely to continue to, initiate cross industry
reviews when a notable issue is identified at a
financial institution. Such inquiries involve costs and
management time and may lead to proceedings
relating to our own activities.
Regardless
of
the
outcome
of
any
governmental
enforcement
or
litigation
matter,
responding to such matters is time-consuming and
expensive and can divert the attention of senior
management and lead to unfavorable publicity.
Governmental enforcement and litigation matters can
involve claims for disgorgement, demands for
substantial monetary damages, the imposition of civil
or criminal penalties, and the imposition of remedial
sanctions or other required changes in our business
practices, any of which could result in increased
expenses, loss of client demand for our products or
services, or harm to our reputation. The exposure
associated with any proceedings that may be
threatened, commenced or filed against us could
have a material adverse effect on our consolidated
results of operations for the period in which we
establish a reserve with respect to such potential
liability or upon our reputation. In government
settlements since the 2008 financial crisis, the fines
imposed by authorities have increased substantially
and may exceed in some cases the profit earned or
harm caused by the regulatory or other breach. For
example, in 2021, we paid a $115 million penalty to
the office of the United States Attorney for the District
of Massachusetts to resolve potential criminal claims
arising from the previously disclosed invoicing matter.
In addition, in connection with the resolution of a
transition management matter, we agreed to pay a
fine of £22.9 million (approximately $37.8 million) to
the U.K. FCA in 2014 and fines of $32.3 million to
each of the Department of Justice and the SEC in
2017. As a further example, we paid an aggregate of
$575 million in 2016 to resolve a series of
investigations and governmental and private claims
alleging that our indirect foreign exchange rates prior
to 2008 were not adequately disclosed or were
otherwise improper. These matters have also resulted
in regulatory focus on the manner in which we charge
clients and related disclosures. This focus may lead
to increased and prolonged governmental inquiries
and client, qui tam and whistleblower claims
associated with the amount and disclosure of
compensation we receive for our products and
services.
Moreover, U.S., including federal and state, and
certain international governmental authorities have
increasingly brought criminal actions against financial
institutions,
and
criminal
prosecutors
have
increasingly sought and obtained criminal guilty
pleas, deferred prosecution agreements or other
criminal sanctions from financial institutions. For
example, in 2017 we entered into a deferred
prosecution agreement with the U.S. Department of
Justice in connection with the resolution of a
transition management matter and in May 2021, we
entered into a deferred prosecution agreement with
the office of the U.S. Attorney for the District of
Massachusetts in connection with the invoicing matter
and such agreement could increase the likelihood
that governmental authorities will seek criminal
sanctions against us in pending proceedings or future
litigation legal proceedings. Government authorities
may also pursue criminal claims against current or
former employees, and these matters can, among
other things, involve continuing reputational harm to
us. For example, four of our former employees were
indicted by U.S. prosecutors on charges of criminal
conspiracy in connection with their involvement in the
transition
management
matter.
Two
of
these
individuals pled guilty, and a third was convicted in
2018.
In many cases, we are required or may choose
to report inappropriate or non-compliant conduct to
the authorities, and our failure or delay to do so may
represent an independent regulatory violation or be
treated as an indication of non-cooperation with
governmental authorities. Even when we promptly
report a matter, we may nonetheless experience
regulatory fines, liabilities to clients, harm to our
reputation or other adverse effects. Moreover, our
settlement or other resolution of any matter with any
one or more regulators or other applicable party may
not forestall other regulators or parties in the same or
other jurisdictions from pursuing a claim or other
action against us with respect to the same or a similar
matter.
For
more
information
about
current
contingencies relating to legal proceedings, see Note
13 to the consolidated financial statements in this
Form 10-K. The resolution of certain pending or
potential legal or regulatory matters could have a
material adverse effect on our consolidated results of
operations for the period in which the relevant matter
is resolved or an accrual is determined to be required,
on our consolidated financial condition or on our
reputation.
In view of the inherent difficulty of predicting the
outcome of legal and regulatory matters, we cannot
provide assurance as to the outcome of any pending
or potential matter or, if determined adversely against
us, the costs associated with any such matter,
particularly where the claimant seeks very large or
State Street Corporation | 39
indeterminate damages or where the matter presents
novel legal theories, involves a large number of
parties, involves the discretion of governmental
authorities in seeking sanctions or negotiated
resolution or is at a preliminary stage. We may be
unable to accurately estimate our exposure to the
risks of legal and regulatory contingencies when we
record reserves for probable and estimable loss
contingencies. As a result, any reserves we establish
may not be sufficient to cover our actual financial
exposure. Similarly, our estimates of the aggregate
range of reasonably possible loss for legal and
regulatory contingencies are based upon then-
available information and are subject to significant
judgment and a variety of assumptions and known
and unknown uncertainties. The matters underlying
the estimated range will change from time to time,
and actual results may vary significantly from the
estimate at any time.
Our businesses may be adversely affected by
increased and conflicting political and regulatory
scrutiny of asset management, stewardship and
corporate sustainability or ESG practices in the
jurisdictions in which we operate.
Our Investment Management line of business
provides investment management strategies and
products that may incorporate the consideration of
sustainability or ESG factors into the investment
process. For clients and fund investors who want an
investment solution that purposefully takes into
consideration sustainability or ESG factors, we offer
investment funds and strategies that consider
sustainability or ESG factors as a material component
of the investment strategy or index methodology.
Where clients have delegated to us authority to vote
securities on their behalf at shareholder meetings of
the public companies held in their investment
portfolios, we may also take into consideration
sustainability or ESG issues that we believe are
relevant to the long-term performance of the
companies in which our clients invest. As part of our
asset stewardship program, we regularly engage with
representatives of companies held in client portfolios,
and these engagements may involve discussion of
risks and opportunities relating to sustainability or
ESG issues relevant to these companies. We have
also become members of various organizations
focused on climate change and other sustainability or
ESG issues.
Our sustainability- or ESG-related investment
management practices and historical memberships in
certain climate-oriented investor groups have recently
become the subject of significant scrutiny by
regulatory agencies and government officials. Certain
U.S. officials have suggested that sustainability- or
ESG-related
investing
practices,
including
memberships in certain climate-oriented investor
groups, may result in violations of law – including
antitrust laws – and breaches of fiduciary duty. Views
on sustainability or ESG practices, particularly those
related to climate issues, have also become political
issues, which can amplify the reputational risks
associated
with
such
allegations.
Overall
expectations of our stakeholders, including regulators
and clients, outside the United States, particularly in
Europe, concerning sustainability or ESG issues can
be markedly different from expectations in the United
States. Given we conduct our asset stewardship
activities on a global basis, conflicting U.S. and non-
U.S. global expectations complicate our ability to
mitigate the risks. We have received information
requests
from
various
government
entities
in
connection with their investigations of sustainability or
ESG investing practices and memberships in certain
climate-oriented investor groups. We are, therefore,
subject to related risks of non-compliance with
relevant legal requirements, including fines, penalties,
lawsuits, regulatory sanctions, difficulties in obtaining
governmental approvals, limitations on our business
activities or reputational harm, any of which may be
significant. We also face potential risks presented by
the adoption of proposed rules currently under
consideration by the SEC, which would impose new
disclosure requirements and naming conventions for
ESG-related funds and new disclosure requirements
for SEC-registered investment advisors. Regulations
in other jurisdictions could have similar effects or
present
conflicting
or
inconsistent
regulatory
obligations
across
jurisdictions.
We
also
face
potential risks associated with the enactment of
various state laws aimed at sustainability- or ESG-
related
investing
practices
and
proxy
voting.
Governmental enforcement action could also spark
civil litigation claims by clients and fund shareholders
asserting violations of law, fiduciary duties and
contractual obligations. Regardless of the outcome of
any governmental enforcement or litigation matter,
responding to such matters is time-consuming and
expensive and can divert the attention of senior
management. In Europe, we are subject to potential
fines and other regulatory consequences if regulators
conclude we are not managing or reducing climate
risk consistent with their expectations, not only in our
own operations, but also through the vendors we use
and, potentially, the clients we service.
State law and/or political pressure may also
prevent governmental clients from using service
providers, such as us, either as asset manager or
investment servicer, if the legislators or governmental
officials in such jurisdictions believe our sustainability-
or ESG-related practices are not consistent with
requirements under state law or the views of such
legislators or officials.
Adverse publicity and damage to our reputation
arising from the failure or perceived failure to comply
with legal, regulatory or contractual requirements
State Street Corporation | 40
could affect our ability to attract and retain clients.
Moreover, aside from any governmental enforcement
or litigation activity, public criticism levelled at
sustainability or ESG investing practices, including
memberships in certain climate-oriented investor
groups, could result in reduced investor demand for
sustainability- or ESG-related products, which could
in
turn
negatively
effect
our
assets
under
management and resulting fee revenues.
As a general matter, large index fund providers,
such as State Street Global Advisors, have been and
are expected to continue to be subject to legislative
and regulatory proposals, litigation or investigations
from both sides of the political spectrum due to a
perception that they exert inappropriate influence
over publicly traded companies.
For additional information, see the risk factor
“Our businesses may be adversely affected by
government enforcement and litigation.”
Any
theft,
loss,
damage
to
or
other
misappropriation or inadvertent disclosure of, or
inappropriate
access
to,
the
confidential
information we possess could have an adverse
impact on our business and could subject us to
regulatory actions, litigation and other adverse
effects.
Our businesses and relationships with clients
are dependent on our ability to maintain the
confidentiality of our and our clients’ trade secrets and
other
confidential
information
(including
client
transactional and holdings data and personal data
about our clients, our clients’ clients and our
employees). Although we are not aware of any
material incidents to date, unauthorized access, or
failure of our controls with respect to granting access
to our systems, or failure of our other data loss
prevention controls, have in the past occurred and
may in the future occur, resulting in theft, loss,
damage to or other misappropriation of such
information. Our personnel or our vendors have in
the past and may in the future, inadvertently or
deliberately, disclose client or other confidential
information and our systems or systems of our
vendors have in the past or may in the future be
inadvertently or deliberately exploited resulting in
disclosure of client or other confidential information.
Any theft, loss, damage to other misappropriation or
inadvertent disclosure of confidential information
could have a material adverse impact on our
competitive position, our relationships with our clients
and our reputation and could subject us to regulatory
inquiries, enforcement and fines, civil litigation and
possible financial liability or costs. To the extent any
of these events involve personal information, the risks
of enhanced regulatory scrutiny and the potential
financial liabilities are exacerbated, particularly under
data protection regulations such as the GDPR.
Changes in accounting standards may adversely
affect our consolidated financial statements.
New accounting standards, or changes to
existing accounting standards, resulting both from
initiatives of the FASB as well as changes in the
interpretation
of
existing
accounting
standards
potentially could affect our consolidated results of
operations, cash flows and financial condition. These
changes can materially affect how we record and
report our consolidated results of operations, cash
flows,
financial
condition
and
other
financial
information. In some cases, we could elect, or be
required, to apply a new or revised standard
retroactively, resulting in the revised treatment of
certain transactions or activities, and, in some cases,
the revision of our consolidated financial statements
for prior periods. For additional information regarding
changes in accounting standards, refer to the “Recent
Accounting Developments” section of Note 1 to the
consolidated financial statements in this Form 10-K.
Changes in tax laws, rules or regulations,
challenges to our tax positions with respect to
historical transactions, and changes in the
composition of our pre-tax earnings may increase
our effective tax rate and thus adversely affect
our consolidated financial statements.
Our businesses can be directly or indirectly
affected by new tax legislation, the expiration of
existing tax laws or the interpretation of existing tax
laws
worldwide.
The
U.S.
federal
and
state
governments and jurisdictions around the world
continue to review and enact proposals to amend tax
laws, rules and regulations, including those related to
corporate and global minimum taxes, applicable to
our businesses that could have a negative impact on
our capital or after-tax earnings. In the normal course
of our business, we are subject to review by U.S. and
non-U.S. tax authorities. A review by any such
authority could result in an increase in our recorded
tax liability. In addition to the aforementioned risks,
our effective tax rate is dependent on the nature and
geographic composition of our pre-tax earnings and
could be negatively affected by changes in these
factors.
We could face liabilities for withholding and other
non-income taxes as a result of tax authority
examinations.
In addition to income tax, we are at present, and
in the future will be, under audit or other examination,
and litigation or other dispute resolution proceedings,
with U.S. and non-U.S. tax authorities regarding non-
income-based tax matters. Our interpretations or
application of tax laws and regulations, including with
respect to withholding, transfer, wage, sales, use,
stamp, value added, service and other non-income
taxes, could differ from that of the relevant
governmental taxing authority, or we may experience
State Street Corporation | 41
timing or other compliance deficiencies in connection
with our efforts to comply with applicable tax laws and
regulations, which could result in the requirement to
pay additional taxes, penalties and/or interest, which
could be material. Our tax exposure may also be
impacted by tax positions taken by our clients and
counterparties.
Our businesses may be negatively affected by
adverse publicity or other reputational harm.
Our relationship with many of our clients is
predicated on our reputation as a fiduciary and a
service provider that adheres to the highest standards
of ethics, service quality and regulatory compliance,
as well as a leading provider of the products and
services we offer. Adverse publicity, regulatory actions
or fines, litigation, operational failures, loss of client
opportunities or market share, the failure to meet
client expectations or fiduciary or other obligations or
poor financial performance could materially and
adversely affect our reputation, our ability to attract
and retain clients or key employees or our sources of
funding for the same or other businesses. For
example, over the past decade we have experienced
adverse publicity with respect to our indirect foreign
exchange trading, and this adverse publicity has
contributed to a shift of client volume to other foreign
exchange
execution
methods.
Similarly,
governmental actions and reputational issues in our
transition management business in the United
Kingdom have adversely affected our transition
management revenue and, with criminal convictions
or guilty pleas of three of our former employees in
2018 and the deferred prosecution agreement we
entered into in early 2017 and the related SEC
settlement, these effects have the potential to
continue. The client invoicing matter we announced in
late 2015, and the related deferred prosecution
agreement entered into in May 2021, have had
similar effects. For additional information about these
matters, see the risk factor “Our businesses may be
adversely affected by government enforcement and
litigation.”
Preserving and enhancing our reputation also
depends on maintaining systems, procedures and
controls
that
address
known
risks,
regulatory
standards and client expectations, as well as our
ability to timely identify, understand and mitigate
additional risks that arise due to changes in our
businesses and the marketplaces in which we
operate, the regulatory environment and client
business practices.
Operational, Cyber and Technology Risks
Any failures of or damage to, attack on or
unauthorized
access
to
our
information
technology systems or facilities or disruptions to
our
continuous
operations,
including
the
systems, facilities or operations of third parties
with which we do business, such as resulting
from cyber-attacks, could result in significant
costs and reputational damage and impact our
ability to conduct our business activities.
Our
businesses
depend
on
information
technology infrastructure, both internal and external,
to, among other things, record and process a large
volume of increasingly complex transactions and
other data, in many currencies, on a daily basis,
across
numerous
and
diverse
markets
and
jurisdictions and to maintain that data securely. In
recent years, several financial services firms have
suffered successful cyber-attacks launched both
domestically and from abroad, resulting in the
disruption
of
services
to
clients,
loss
or
misappropriation of sensitive or private data and
reputational harm. We also have been the target of
certain cyber-attacks, and although we have not to
our knowledge suffered a material breach or
suspension of our systems, it is possible that we
could suffer such a breach or suspension in the future
or that we may be unaware of a prior attack. Cyber-
threats are sophisticated and continually evolving. We
may not implement effective systems and other
measures to effectively identify, detect, prevent,
mitigate, recover from or remediate all potential
cyber-threats or improve and adapt such systems and
measures as such threats evolve and advance.
A failure to protect the technology infrastructure,
systems and information of ours, our clients or others
against cybersecurity threats, could result in the theft,
loss, unauthorized access to, disclosure, misuse or
alteration of information, system failures or outages or
loss of access to information. The expectations of our
clients and regulators with respect to the resiliency of
our systems and the adequacy of our control
environment with respect to such systems has and is
expected to increase as the risk of cyber-attacks,
which is presently elevated due to the current
geopolitical environment and global human capital
footprint at State Street, and the consequences of
those attacks become more pronounced. We may not
be successful in meeting those expectations or in our
efforts to identify, detect, prevent, mitigate and
respond to such cyber-attacks or for our systems to
recover in a manner that does not disrupt our ability
to provide services to our clients. The failure to
maintain an adequate technology infrastructure and
applications with effective cybersecurity controls
could impact operations, adversely affect our financial
results, result in loss of business, damage our
reputation or impact our ability to comply with
State Street Corporation | 42
regulatory obligations, leading to regulatory fines and
sanctions. We may be required to expend significant
additional resources to investigate or remediate
vulnerabilities or other exposures arising from
cybersecurity threats.
Our networks, technology systems, facilities and
information have suffered and in the future may suffer
disruptions or otherwise fail to operate properly or
become disabled, overloaded or damaged as a result
of a number of factors, including events that are
wholly or partially beyond our control, which can
adversely affect our ability to process transactions,
provide
services,
maintain
systems
availability,
maintain information security, comply with internal
controls or regulations or otherwise appropriately
conduct our business activities. For example, in
addition to cyber-attacks, there could be sudden
increases in transaction or data volumes, electrical or
telecommunications outages, natural disasters, or
employee or contractor error or malfeasance. Third
parties may also attempt to place individuals within
State Street or fraudulently induce employees,
vendors, clients or other users of our systems to
disclose sensitive information in order to gain access
to our systems or data or that of our clients or other
parties. Any such disruptions or failures may require
us, among other things, to reconstruct lost data
(which may not be possible), reimburse our clients’
costs associated with such disruption or failure, result
in loss of client business or damage our information
technology infrastructure or those of our clients or
other parties. While we have not in the past suffered
material
harm
or
adverse
effects
from
such
disruptions or failures, we may not successfully
prevent, respond to or recover from such disruptions
or failures in the future, and any such disruption or
failure could adversely impact our ability to conduct
our businesses, damage our reputation and cause
losses, potentially materially.
The third parties with which we do business,
which facilitate our business activities, to whom we
outsource operations or other activities, from whom
we receive products or services or with whom we
otherwise engage or interact, including financial
intermediaries and technology infrastructure and
service providers, are also susceptible to the
foregoing risks (including the third parties with which
they are similarly interconnected or on which they
otherwise rely), and our or their business operations
and activities have been and may in the future be
adversely affected, perhaps materially, by failures,
terminations, errors or malfeasance by, or attacks or
constraints on, one or more financial, technology,
infrastructure
or
government
institutions
or
intermediaries
with
whom
we
or
they
are
interconnected or conduct business.
In particular, we, like other financial services
firms, will continue to face increasing cyber-threats,
including
computer
viruses,
malicious
code,
distributed denial of service attacks, phishing attacks,
ransomware, hacker attacks, limited availability of
services, unauthorized access, information security
breaches or employee or contractor error or
malfeasance that could result in the unauthorized
release, gathering, monitoring, misuse, loss or
destruction of our, our clients’ or other parties’
confidential, personal, proprietary or other information
or otherwise disrupt, compromise or damage our or
our clients’ or other parties’ business assets,
operations and activities. These and similar types of
threats are occurring globally with greater frequency
and intensity, and we may not anticipate or implement
effective preventative measures against, or identify
and detect one or more, such threats, particularly
because the techniques used change frequently or
may not be recognized until after they are launched.
Our status as a G-SIB likely increases the risk that we
are the target of such cyber-attacks. In addition, some
of our service offerings, such as data warehousing,
may also increase the risk that we are, and the
consequences of being, targeted. We may be
required to expend significant additional resources to
investigate or remediate vulnerabilities or other
exposures arising from cybersecurity threats. We
therefore could experience significant related costs
and legal and financial exposures, including lost or
constrained ability to provide our services or maintain
systems availability for clients, regulatory inquiries,
enforcements, actions and fines, litigation, damage to
our reputation or property and enhanced competition.
Due to our dependence on technology and the
important role it plays in our business operations, we
are attempting to improve and update our information
technology infrastructure, among other things: (1) as
some of our systems are approaching the end of their
useful life, are redundant or do not share data without
reconciliation; (2) to be more efficient, meet
increasing client and regulatory security, resiliency
and other expectations and support opportunities of
growth; and (3) to enhance resiliency and maintain
business continuity. Updating these systems involves
material costs and often involves implementation,
integration and security risks, including risks that we
may not adequately anticipate the market or
technological trends, regulatory expectations or client
needs or experience unexpected challenges that
could cause financial, reputational and operational
harm. Failing to properly respond to and invest in
changes and advancements in technology can limit
our ability to attract and retain clients, prevent us from
offering similar products and services as those
offered by our competitors, impair our ability to
maintain continuous operations, inhibit our ability to
meet regulatory requirements and subject us to
regulatory inquiries, the result of which could be
State Street Corporation | 43
significant costs or limitations on our business
activities.
Our business may be negatively affected by risks
associated with strategic initiatives we are
employing to enhance the effectiveness and
efficiency
of
our
operations
and
of
our
cybersecurity and technology infrastructure.
In order to maintain and grow our business, we
must make strategic decisions about our current and
future business plans and effectively execute upon
those plans. Strategic initiatives that we are currently
developing
or
executing
against
include
cost
initiatives, enhancements and efficiencies to our
operational processes, improvements to existing and
new service offerings and enhancements to existing
and development of new information technology and
other systems. Implementing strategic programs and
creating cost efficiencies involves certain strategic,
technological, operational and regulatory risks. Many
features of our present initiatives include investment
in systems integration and new technologies and also
the development of new, and the evolution of existing,
methods and tools to accelerate the pace of
innovation, the introduction of new services and
enhancements to the resiliency of our systems and
operations. These initiatives also may fail to meet
increasing regulatory and client expectations, may
take longer than anticipated to implement and may
result in increases in operating losses, inadvertent
data disclosures or other operating errors. Further,
savings achieved as a result of operational, systems
or other business process or organizational initiatives
may not persist for the anticipated periods. We may
not have sufficient resources to complete all of the
systems development or projects that might enhance
our product capabilities, resiliency of our operations
or cost initiatives and, consequently, management
makes judgments as to the priority to give to
competing
initiatives.
In
implementing
these
programs, we have material dependencies on third
parties with contractual limits on their responsibilities
to us. The transition to new operating processes and
cybersecurity or technology infrastructure may also
cause disruptions in our relationships with clients and
employees or loss of institutional understanding and
may
present
other
unanticipated
technical
or
operational hurdles. In addition, the relocation to or
expansion of servicing activities and other operations
in different geographic regions or vendors may entail
client, regulatory and other third party data use,
storage and security challenges, as well as other
regulatory compliance, business continuity and other
considerations. As a result, we may not achieve some
or all of the anticipated cost savings, process
improvement, compliance or other benefits and may
experience unanticipated challenges from clients,
regulators or other parties or reputational harm.
Further, some new products and services may quickly
be superseded in the marketplace, after significant
investment by us, by more effective innovative
technologies or solutions to which we may not have
access. In addition, some systems development
initiatives may not have access to significant
resources
or
management
attention
and,
consequently, may be delayed or unsuccessful. Many
of our systems require enhancements to meet the
requirements of evolving regulation and marketplace
demands, to enhance security and resiliency and
decommission obsolete technologies, to permit us to
optimize our use of capital or to reduce the risk of
operating error. In addition, the implementation of
complex products and services, such as State Street
Alpha, wealth servicing, digital asset servicing or
incorporating artificial intelligence requires substantial
systems development and expense. We may not
have the resources to pursue all of these objectives
simultaneously.
Our risk management framework, models and
processes may not be effective in identifying or
mitigating risk and reducing the potential for
related losses, and a failure or circumvention of
our controls and procedures, or errors or delays
in our operational and transaction processing, or
those of third parties, could have an adverse
effect on our business, financial condition,
operating results and reputation.
We have in the past failed and may in the future fail to
identify and manage risks related to a variety of
aspects of our business, including operational risk
and
resiliency,
information
technology
risk,
cybersecurity, interest rate risk, foreign exchange risk,
fiduciary risk, legal and compliance risk, liquidity risk
and credit risk. We have adopted various risk
frameworks,
controls,
procedures,
policies
and
systems to monitor and manage risk. We cannot
provide assurance that those frameworks, controls,
procedures, policies and systems are or will be
adequate to identify and mitigate internal and external
risks, including risks related to third-party service
providers, in our various businesses and corporate
functions. The risk of individuals, either employees or
contractors,
engaging
in
conduct
harmful
or
misleading to clients or to us, such as consciously
circumventing established control mechanisms, for
example
to
exceed
trading
or
investment
management limitations, commit fraud or improperly
sell products or services to clients, is particularly
challenging to manage through a risk framework,
controls or other measures. In addition, we are
subject to increasing resiliency risk and client and
regulatory
expectations,
requiring
continuous
reinvestment, enhancement and improvement in and
of our information technology and operational
infrastructure, controls and personnel which may not
be effectively or timely deployed or integrated.
Moreover, the financial and reputational impact of
control or conduct failures can be significant.
Transitions to new or evolving operational systems or
State Street Corporation | 44
processes
or
to
new
technologies,
and
the
introduction of new products and services client types
or jurisdictions, can exacerbate these risks. Persistent
or
repeated
issues
with
respect
to
controls,
information technology and resiliency or individual
conduct have raised and may in the future raise
concerns among regulators regarding our culture,
governance and control environment. There can be
no assurance that our efforts to address such risks
will be effective. While we seek to effectively manage
risks and their adverse impacts to our business,
financial condition, operating results and reputation,
the degree of protection that we are able to achieve
varies, and our potential exposure may be greater
than the revenue we anticipate that we will earn from
servicing our clients.
In addition, our businesses and the markets in
which we operate are continuously evolving. We will
need to make additional investments to develop an
appropriate operational infrastructure and to enhance
our risk management frameworks and capabilities to
support our businesses through their evolution, which
may increase the operating expenses of such
businesses. Moreover, we may fail to identify or fully
understand the implications of changes in our
businesses or the financial markets and fail to
adequately or timely enhance our risk framework to
address those changes. To the extent that our risk
framework is ineffective, either because it fails to
keep pace with changes in the financial markets,
regulatory or industry requirements, technology and
cybersecurity developments, our businesses, our
counterparties, clients or service providers or for
other reasons, we could incur losses, suffer
reputational damage or find ourselves out of
compliance with applicable regulatory or contractual
mandates or expectations, and subject to regulatory
inquiry or action against us.
Operational risk is inherent in all of our business
activities. As a leading provider of services to
institutional investors, we provide a broad array of
services that expose us to operational risk and
potential loss resulting from inadequate or failed
internal
processes,
employee
supervision
or
monitoring mechanisms, service-provider processes
or other systems or controls, which could materially
affect our future consolidated results of operations. In
addition, these services generate a broad array of
complex and specialized servicing, confidentiality and
fiduciary requirements, many of which involve the
opportunity for human, systems or process errors. We
face the risk that the policies, procedures and
controls we have established to, among other things,
manage operational, cyber, and technology risks, will
fail or be inadequate, in whole or in part, to mitigate
risk and may become outdated. Additionally, several
of our processes for specific clients, often large
clients with a high volume and large magnitude of
transactions and activities, are bespoke and require
additional attention, oversight and controls which
involve an enhanced risk of episodic or continued
failure as well as additional costs. Given the volume
and magnitude of transactions we process on a daily
basis, and our overall AUCA and AUM, operational
losses represent a potentially significant financial risk
for our business. Operational errors that result in us
remitting funds to a failing or bankrupt entity may be
irreversible, and may subject us to losses. In addition
to the financial losses associated with operational
errors, these errors present the risk of client
dissatisfaction and loss and reputational risk.
We may also be subject to disruptions from
external events that are wholly or partially beyond our
control, which could cause delays or disruptions to
operational
functions,
including
information
processing and financial market settlement functions.
In addition, our clients, vendors and counterparties
could suffer from such events. Should these events
affect us, or the clients, vendors or counterparties
with which we conduct business, our consolidated
results of operations could be negatively affected.
When we record balance sheet accruals for
probable and estimable loss contingencies related to
operational losses, we may be unable to accurately
estimate our potential exposure, and any accruals we
establish to cover operational losses may not be
sufficient to cover our actual financial exposure,
which could have a material adverse effect on our
consolidated results of operations.
Outsourcing of work to global hub locations may
expose us to increased operational risk and
reputational harm and may not result in expected
cost savings.
We manage our operations and expenses
across a global model, which may include migrating
certain business processes and business support
functions to emerging market-based geographic hub
locations, such as India, Poland and China, and by
outsourcing to vendors and joint ventures in various
jurisdictions. This effort, which includes our recent
consolidation of our joint ventures in India, exposes
us to the risk that we may not effectively transition the
relevant processes and activities, and that we may
not maintain service quality, control and effective
management or business resiliency within these
operations during and after transitions. These
migrations also involve risks that our outsourcing
vendors or joint ventures may not comply with their
servicing and other contractual obligations to us,
including
with
respect
to
indemnification
and
information security, and to the risk that we may not
satisfy applicable regulatory responsibilities regarding
the management and oversight of outsourcing
providers, joint ventures and other third parties. Our
geographic footprint also exposes us to the relevant
macroeconomic, political, legal and similar risks
generally
involved
in
doing
business
in
the
jurisdictions
in
which
we
establish
lower-cost
State Street Corporation | 45
locations or joint ventures or in which our outsourcing
vendors locate their operations, particularly in
locations where we have a concentration of our
operational activities, such as India, Poland and
China. The increased elements of risk that arise from
certain operating processes being conducted in some
jurisdictions could lead to an increase in reputational
risk. Given changes in client perception of geopolitical
risk, clients may question or object to some or many
of our services for them being conducted in particular
jurisdictions.
During
periods
of
transition
of
operations,
either
directly
or
via
changes
in
ownership, greater operational risk and client
concerns exist with respect to maintaining a high level
of service delivery and business continuity. The extent
and pace at which we are able to move functions to
lower-cost locations, joint ventures and outsourcing
providers may also be affected by political, regulatory
and client acceptance issues, including with respect
to data use, storage and security. Such relocation or
outsourcing of functions also entails costs, such as
technology, real estate and restructuring expenses,
which may offset or exceed the expected financial
benefits of the relocation or outsourcing. In addition,
the financial benefits of lower-cost locations and of
outsourcing may diminish over time or could be offset
in the event that the United States or other
jurisdictions impose tax, trade barrier or other
measures which seek to discourage the use of lower
cost jurisdictions.
Long-term contracts expose us to increased
operational risk, pricing and performance risk.
We frequently enter into long-term client
servicing contracts in our Investment Servicing
business, including with respect to our State Street
Alpha services. These include outsourcing and other
core services contracts and can involve information
technology
development.
These
arrangements
generally set forth our fee schedule for the term of the
contract
and,
absent
a
change
in
service
requirements, do not permit us to re-price the contract
for changes in our costs or for market pricing. The
long-term contracts for these relationships require, in
some cases, considerable up-front investment by us,
including technology and conversion costs, and carry
the risk that pricing for the products and services we
provide might not prove adequate to generate
expected operating margins over the term of the
contracts.
The profitability of these contracts is largely a
function of our ability to accurately calculate pricing
for our services, efficiently assume our contractual
responsibilities in a timely manner, control our costs
and maintain the relationship with the client for an
adequate period of time to recover our up-front
investment. Our estimate of the profitability of these
arrangements can be adversely affected by declines
in or inaccurate projections of the assets under the
clients’ management, whether due to general
declines in the securities markets or client-specific
issues.
In
addition,
the
profitability
of
these
arrangements may be based on our ability to cross-
sell additional services to these clients, and we may
be unable to do so. In addition, such contracts may
permit early termination or reduction in services in the
event that certain service levels are not met, which
termination or service reduction may result in loss of
upfront investment in onboarding the client.
Performance risk exists in each contract, given
our dependence on successful conversion and
implementation onto our own operating platforms of
the service activities provided. Our failure to meet
specified service levels or implementation timelines
may also adversely affect our revenue from such
arrangements, or permit early termination of the
contracts by the client. If the demand for these types
of services were to decline, we could see our revenue
decline.
The quantitative models we use to manage our
business may contain errors that result in
inadequate
risk
assessments,
inaccurate
valuations
or
poor
business
and
risk
management decisions, and lapses in disclosure
controls and procedures or internal control over
financial reporting could occur, any of which
could result in material harm.
We use quantitative models to help manage
many different aspects of our businesses. As inputs
to our overall assessment of capital adequacy,
outputs of models are used to measure the amount of
credit risk, market risk and operational risk we face.
We
also
use
models
for
interest
rate
risk
management and liquidity planning. During the
preparation of our consolidated financial statements,
we sometimes use models to measure the value of
asset and liability positions for which reliable market
prices are not available. We also use models to
support many different types of business decisions
including
trading
activities,
investment,
credit
underwriting, hedging, asset and liability management
and whether to change business strategy. We also
use
artificial
intelligence,
generative
artificial
intelligence
and
machine
learning
models
to
automate or enhance certain business processes.
Weaknesses in the underlying model including input
data, assumptions, parameters, or implementation, as
well as inappropriate model use, could result in
unanticipated and adverse consequences, including
material loss and material non-compliance with
regulatory requirements or expectations. Because of
our
widespread
usage
of
models,
potential
weaknesses in our model risk management practices
pose an ongoing risk to us.
We also use quantitative models in our risk
measurement and may fail to accurately quantify the
magnitude of the risks we face. Our measurement
methodologies rely on many assumptions and
State Street Corporation | 46
historical
analyses
and
correlations.
These
assumptions may be incorrect, and the historical
correlations on which we rely may not continue to be
relevant. Consequently, the measurements that we
make for regulatory purposes may not adequately
capture or express the true risk profiles of our
businesses. Moreover, as businesses and markets
evolve, our measurements may not accurately reflect
this evolution. While our risk measures may indicate
sufficient capitalization, they may underestimate the
level of capital necessary to conduct our businesses.
Additionally,
our
disclosure
controls
and
procedures
may
not
be
effective
in
every
circumstance, and, similarly, it is possible we may
identify a material weakness or significant deficiency
in internal control over financial reporting. Any such
lapses or deficiencies may materially and adversely
affect our business and consolidated results of
operations or consolidated financial condition, restrict
our ability to access the capital markets, require us to
expend significant resources to correct the lapses or
deficiencies, expose us to regulatory or legal
proceedings, subject us to fines, penalties or
judgments or harm our reputation.
We may not be able to protect our intellectual
property, and we are subject to claims of third-
party intellectual property rights.
Our potential inability to protect our intellectual
property and proprietary technology effectively may
allow competitors to duplicate our technology and
products and may adversely affect our ability to
compete with them. To the extent that we do not
protect our intellectual property effectively through
patents, maintaining trade secrets or other means in
all of the jurisdictions in which we operate or market
our products and services, other parties, including
former employees, with knowledge of our intellectual
property may seek to exploit our intellectual property
for their own or others’ advantage. In addition, we
may infringe on claims of third-party patents, and we
may face intellectual property challenges from other
parties, including clients or service providers with
whom we may engage in the development or
implementation of other products, services or
solutions or to whose information we may have
access for limited permitted purposes but with whom
we also compete. The risk of such infringement is
enhanced in the current competitive “Fintech”
environment,
particularly
with
respect
to
our
development of new products and services containing
significant technology elements and dependencies,
any of which could become the subject of an
infringement claim. We may not be successful in
defending against any such challenges or in obtaining
licenses to avoid or resolve any intellectual property
disputes. Third-party intellectual rights, valid or not,
may also impede our deployment of the full scope of
our
products
and
service
capabilities
in
all
jurisdictions in which we operate or market our
products and services.
Our reputation and business prospects may be
damaged if investors in the collective investment
pools we sponsor or manage incur substantial
losses in these investment pools or are restricted
in redeeming their interests in these investment
pools.
We manage assets on behalf of clients in
several forms, including in collective investment
pools, money market funds, securities finance
collateral pools, cash collateral and other cash
products and short-term investment funds. Our
management of collective investment pools exposes
us to reputational risk and operational losses. If
investors incur substantial investment losses in these
pools, receive redemptions as in-kind distributions
rather than in cash, or experience significant under-
performance relative to the market or our competitors’
products, our reputation could be significantly
harmed, which harm could significantly and adversely
affect the prospects of our associated business units.
Because we often implement investment and
operational decisions and actions over multiple
investment pools to achieve scale, we face the risk
that losses, even small losses, may have a significant
effect in the aggregate.
Within our Investment Management business,
we manage investment pools, such as mutual funds
exchange traded funds and collective investment
funds, that generally offer investors the ability to
redeem their investments on relatively short notice, in
many cases daily. This feature requires that we
manage those pools in a manner that takes into
account both maximizing the long-term return on the
investment pool and retaining sufficient liquidity to
meet reasonably anticipated liquidity requirements of
investors in such investment pools and regulatory
requirements. The importance of maintaining liquidity
varies by product type, but it is a particularly
important feature in certain money market funds and
other products designed to maintain a constant net
asset value of $1.00. In the past, we have imposed
restrictions on cash redemptions from the agency
lending collateral pools, as the per-unit market value
of those funds’ assets had declined below the
constant $1.00 the funds employ to effect purchase
and redemption transactions. Both the decline of the
funds’ net asset value below $1.00 and the imposition
of restrictions on redemptions had a significant client,
reputational and regulatory impact on us, and the
recurrence of such or similar circumstances in the
future could adversely impact our consolidated results
of operations and financial condition. We have also in
the past continued to process purchase and
redemption of units of investment products designed
to maintain a constant net asset value at $1.00
although the fair market value of the fund’s assets
State Street Corporation | 47
were less than $1.00. If in the future we were to
continue to process purchases and redemptions from
such products at $1.00 when the fair market value of
our collateral pools’ assets is less than $1.00, we
could be exposed to significant liability and our
reputation could be harmed.
If higher than normal demands for liquidity from
investors were to occur, managing the liquidity
requirements of our collective investment pools could
become more difficult. If such liquidity problems were
to recur, our relationships with our clients and
reputation with investors more generally may be
adversely affected, and, we could, in certain
circumstances, be required to consolidate the
investment pools into our consolidated statement of
condition, levels of redemption activity could increase,
and our consolidated results of operations and
business prospects could be adversely affected. In
addition, if a money market fund that we manage
were to have unexpected liquidity demands from
investors in the fund that exceeded available liquidity,
the fund could be required to sell assets to meet
those redemption requirements, and selling the
assets held by the fund at fair market value, if at all,
may then be difficult.
Because of the size of the investment pools that
we manage, we may not have the financial ability or
regulatory authority to support the liquidity or other
demands of the investors in such investment pools.
Any decision by us to provide financial support to an
investment pool to support our reputation in
circumstances where we are not statutorily or
contractually obligated to do so could result in the
recognition of significant losses, could adversely
affect the regulatory view of our capital levels or plans
and could, in some cases, require us to consolidate
the investment pools into our consolidated statement
of condition. Any failure of the pools to meet
redemption requests, or under-performance of our
pools relative to similar products offered by our
competitors, could harm our business and our
reputation.
We
may
incur
losses
arising
from
our
investments in sponsored investment funds,
which could be material to our consolidated
results of operations in the periods incurred.
In the normal course of business, we manage
various types of sponsored investment funds through
State Street Global Advisors. The services we provide
to these sponsored investment funds generate
management fee revenue, as well as servicing fees
from our other businesses. From time to time, we
may invest in the funds, which we refer to as seed
capital, in order for the funds to establish a
performance history for newly launched strategies.
These funds may meet the definition of variable
interest entities, as defined by U.S. GAAP, and if we
are deemed to be the primary beneficiary of these
funds, we may be required to consolidate these funds
in our consolidated financial statements under U.S.
GAAP. The funds follow specialized investment
company accounting rules which prescribe fair value
for the underlying investment securities held by the
funds.
In the aggregate, we expect any financial losses
that we realize over time from these seed
investments to be limited to the actual amount
invested in the consolidated fund. However, in the
event of a fund wind-down, gross gains and losses of
the fund may be recognized for financial accounting
purposes in different periods during the time the fund
is consolidated but not wholly owned. Although we
expect the actual economic loss to be limited to the
amount invested, our losses in any period for financial
accounting purposes could exceed the value of our
economic interests in the fund and could exceed the
value of our initial seed capital investment.
In instances where we are not deemed to be the
primary beneficiary of the sponsored investment fund,
we do not include the funds in our consolidated
financial statements. Our risk of loss associated with
investment in these unconsolidated funds primarily
represents our seed capital investment, which could
become realized as a result of poor investment
performance. However, the amount of loss we may
recognize during any period would be limited to the
carrying amount of our investment.
Climate change may increase the frequency and
severity of major weather events and the ongoing
transition to a low carbon economy may drive
regulatory and business model change that could
adversely affect our business operations and
resiliency, our clients, our counterparties or other
financial market participants and could adversely
affect our consolidated results of operations and
financial condition.
Our businesses and the activities of our clients,
our counterparties and financial market participants
on which we and they rely could be adversely
affected by major weather events, changing climate
patterns or other disruptions caused by climate
change affecting the regions, countries and locations
in which we or they have operations or other
interests. Potential events or disruptions of this nature
include
significant
rainfall,
flooding,
increased
frequency or intensity of wildfires, prolonged drought,
rising sea levels and rising heat index. These events
or disruptions, alone or in combination, also have the
potential to strain or deplete infrastructure and
response capabilities with respect to other weather
events, such as hurricanes and other storms. The
occurrence of any one or more of these events may
negatively affect our clients’, our counterparties’ or
financial markets participants’ (including providers of
State Street Corporation | 48
financial market infrastructure’s) facilities, operations
or personnel or may otherwise disrupt our or their
business
activities
and
resiliency
capabilities,
including our or their provision of products and
services or the value of our or their portfolio
investments,
perhaps
materially.
These
consequences, including a reduction in asset values
affecting the levels of our AUC/A or AUM and
repricing of credit risk of our counterparties or
reflected in our portfolio assets, could materially
adversely affect our results of operations or financial
condition.
In addition, impacts associated with a climate
transition, including climate change-related legislative
and regulatory initiatives and expectations, retrofitting
of assets, purchasing carbon credits or paying carbon
taxes, may result in operational changes and
additional expenditures that could adversely affect us.
For example, on October 24, 2023, the U.S. Agencies
jointly issued guidance on climate-related financial
risk management for large institutions, which applies
to us. Our reputation and business prospects may
also be damaged if we do not, or are perceived not
to, effectively prepare for the potential business and
operational opportunities and risks associated with
climate change, including through the development
and marketing of effective and competitive new
products and services designed to address our
clients’ climate risk-related needs. These risks include
negative
market
perception,
diminished
sales
effectiveness
and
regulatory
and
litigation
consequences associated with “greenwashing” claims
or driven by association with clients, industries or
products that may be inconsistent with our stated
positions on climate change issues.
Disclosure requirements and expectations related
to sustainability or ESG are increasing, evolving
and may diverge across jurisdictions. Our
inability
to
meet
these
requirements
and
expectations or to provide related information to
clients facing similar requirements could cause
regulatory or reputational harm and affect our
ability to attract and retain clients.
Requirements and expectations related to
disclosures around sustainability or ESG topics
continue to increase globally. These requirements are
distinct of typical financial reporting constructs, given
their focus on the disclosure of future sustainability-
or ESG-related goals and targets, the strategy and
governance designed to achieve those targets, and
reporting of relevant metrics delineating progress
towards those targets. Additionally, sustainability- or
ESG-related
disclosure
requirements
may
use
different definitions of materiality than those used for
financial statement disclosures, including a focus on
so-called “double materiality”, which can evaluate a
sustainability or ESG matter as material, regardless
of its direct affect on State Street, based on the
broader societal impact of the matter.
Given evolving requirements and the associated
standards, methodologies, processes, and controls
related to sustainability- and ESG-related disclosures
which may impact State Street or its clients, diverging
requirements
across
jurisdictions,
and
distinct
definitions and standards for materiality which could
result in conflicting disclosures across frameworks,
we may make incorrect or incomplete or fail to make
required disclosures which may result in regulatory or
reputational consequences or which may directly or
indirectly impact our ability to attract and retain
clients.
We may incur losses or face negative impacts on
our business and operations as a result of
unforeseen events, including terrorist attacks,
geopolitical events, acute or chronic physical risk
events, natural disasters, pandemics, global
conflicts or a banking crisis which may have a
negative impact on our business and operations.
Acts of terrorism, natural disasters or the
emergence of a new pandemic could significantly
affect our business. We have instituted disaster
recovery and continuity plans to address risks from
terrorism, natural disasters and pandemics; however,
anticipating or addressing all potential contingencies
is not possible for events of this nature. Acts of
terrorism, either targeted or broad in scope, or natural
disasters could damage our physical facilities, harm
our employees and disrupt our operations. A
pandemic, or concern about a possible pandemic,
could lead to operational difficulties and impair our
ability to manage our business. Acts of terrorism,
natural
disasters
and
pandemics
could
also
negatively affect our clients, counterparties and
service providers, as well as result in disruptions in
general economic activity and the financial markets.
State Street Corporation | 49
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity risk is an integral part of our enterprise risk management and is managed as part of our overall
information technology risk under the direction of our Chief Information Security Officer (CISO). Our CISO is an
executive vice president at State Street and is responsible for our overall information security program.
Before joining State Street, our CISO worked at a global information technology firm for more than 10 years,
holding various positions, including senior vice president and chief security officer, and, prior to that, chief
information security officer for that firm’s software division. Earlier on, she held leadership and general manager
roles at an information management firm and an information security firm, each based in both the United States and
Europe. She has worked with the World Economic Forum as a member of their Global Future Council on
Cybersecurity. She holds a Doctor of Philosophy in information security and a Bachelor of Science in computer
science.
We recognize the significance of cyber-attacks and take steps to mitigate the risks associated with them. We
invest in building and maintaining a mature cybersecurity program to leverage people, technology and processes to
protect our systems and the data in our care. We have also implemented a program to help us better measure and
manage cybersecurity risk, including those risks we face when we engage third parties for products and services.
We design our information and systems access restrictions referencing the National Institute of Standards and
Technology 800 53R5 and NIST CSF 2.0 Framework and use the supplemental requirements as implementation
guidance. Our information security policies and standards are reviewed and updated for new regulatory changes
and/or mandates. These standards are applicable to all corporate functions, business units, subsidiaries and
controlled affiliates across the enterprise. Annual audits are conducted by internal and external parties to measure
compliance and adherence to the standards.
All employees and third parties that have access to our systems or networks are required to adhere to our
cybersecurity policy and standards. Our centralized information security group provides education and training. This
training includes a required annual online training class for all employees and third parties that have access to our
systems or networks, multiple simulated phishing attacks and regular information security awareness materials.
Every employee and contractor has a defined role in protecting systems and information of State Street, our clients
and others. They are responsible for complying with the information security program, reporting suspected violations
and threats; and protecting the confidentiality of information assets of us, our clients and others at all times.
We employ Information Security Officers to help the business better understand and manage their information
security risks, as well as to work with the centralized Global Cybersecurity team to drive awareness and compliance
throughout the business.
We use independent third parties to perform ethical hacks of key systems and penetration tests of our network
and certain applications to help us better understand the effectiveness of our controls and to implement more
effective controls, and we engage with third parties to conduct reviews of our overall program to help us better align
our cybersecurity program with what is required of a large financial services organization.
We have an incident response program in place that is designed to enable a coordinated response to mitigate
the impact of cyber-attacks, recover from the attack and to drive the appropriate level of communication to internal
and external stakeholders, including timely reporting of material incidents in accordance with SEC rules.
The TORC, an executive management committee, assesses and manages the effectiveness of our
cybersecurity program, which is overseen by the TOPS of our Board. The TOPS receives regular cybersecurity
updates throughout the year and is responsible for reviewing and approving the cybersecurity policy on an annual
basis. We have not identified any risks from known cybersecurity threats, including as a result of any prior
cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our
operations, business strategy, results of operations or financial condition.
Additional information about our risk management governance and structure, including enterprise risk
management, as well as information technology specific risk management and governance, is provided under the
“Governance and Structure” and “Information Technology Risk Management” sections of Risk Management
included in Item 7, Management’s Discussion and Analysis in this Form 10-K.
State Street Corporation | 50
ITEM 2. PROPERTIES
As of December 31, 2024 and 2023, we occupied a total of approximately 5.7 million and 5.4 million square
feet, respectively, of office space, data centers and related facilities worldwide, of which approximately 4.9 million
and 4.6 million square feet, respectively, were leased. Our headquarters is located at One Congress Street, Boston,
Massachusetts. Various divisions of our two lines of business as well as support functions occupy approximately
517 thousand square feet leased in this building, which is a non-cancellable lease that expires in August 2038. An
additional approximate 1.4 million square feet is occupied in Eastern Massachusetts of which approximately 720
thousand square feet is owned. Outside the United States, we also occupy other principal leased space to support
our operations in Europe, the Middle East and Africa (EMEA), including Germany, Ireland, Luxembourg, Poland,
and the United Kingdom, and in Asia-Pacific, including China and India. The following table provides information
regarding our principal office space, data centers and related facilities by region as of December 31, 2024:
Owned
Leased
Total
Owned
Leased
Total
Americas
1
35
36
0.7
1.8
2.5
Europe/Middle East/Africa
1
30
31
0.1
1.1
1.2
Asia/Pacific
—
38
38
—
2.0
2.0
Total
2
103
105
0.8
4.9
5.7
Number of locations
Approximate Square Footage (in millions)
We believe that our owned and leased facilities globally are suitable and adequate for our business needs. We
do not delineate our facilities by line of business as they are occupied by both. Additional information about our
occupancy costs, including commitments under non-cancellable leases, is provided in Note 20 to the consolidated
financial statements included under Item 8 in this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
The information required by this Item is provided under “Legal and Regulatory Matters” in Note 13 to the
consolidated financial statements in this Form 10-K, and is incorporated herein by reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
State Street Corporation | 51
INFORMATION
ABOUT
OUR
EXECUTIVE
OFFICERS
The following table presents certain information
with respect to each of our executive officers as of
February 13, 2025.
Name
Age
Position
Ronald P. O’Hanley
67
Chairman, Chief Executive Officer and
President
Eric W. Aboaf
60
Vice Chairman and Chief Financial
Officer
Joerg Ambrosius
54
Executive Vice President and President
of Investment Services
Anthony C. Bisegna
61
Executive Vice President and Head of
State Street Global Markets
Ann Fogarty
58
Executive Vice President and Head of
Global Delivery
Brian Franz
59
Executive Vice President, Chief
Information Officer and Head of
Enterprise Resiliency
Kathryn M. Horgan
59
Executive Vice President and Chief
Human Resources and Citizenship
Officer
Bradford Hu
61
Executive Vice President and Chief
Risk Officer
Yie-Hsin Hung
62
President and Chief Executive Officer,
State Street Global Advisors
Donna Milrod
57
Executive Vice President and Chief
Product Officer
John Plansky
59
Executive Vice President and Head of
Wealth Services
Elizabeth Schaefer
50
Senior Vice President and Chief
Accounting Officer
Mark Shelton
57
Executive Vice President, General
Counsel and Secretary
Mostapha Tahiri
50
Executive Vice President and Chief
Operating Officer
Sarah Timby
55
Executive Vice President and Chief
Administrative Officer
All executive officers are appointed by the Board
of Directors and hold office at the discretion of the
Board. No family relationships exist among any of our
directors and executive officers.
Mr. O’Hanley joined State Street in April 2015
and since January 1, 2020 has served as the
Chairman of the Board and Chief Executive Officer,
reassuming the additional role of President effective
January 1, 2024. Prior to this role Mr. O’Hanley
served as President and Chief Executive Officer from
January 2019 to December 2020, as President and
Chief Operating Officer from November 2017 to
December 2018 and as Vice Chairman from January
1, 2017 to November 2017. He served as the Chief
Executive Officer and President of State Street Global
Advisors, the investment management arm of State
Street Corporation, from April 2015 to November
2017. Prior to joining State Street, Mr. O’Hanley was
president of Asset Management & Corporate Services
for Fidelity Investments, a financial and mutual fund
services corporation, from 2010 to February 2014.
From 1997 to 2010, Mr. O’Hanley served in various
positions at Bank of New York Mellon, a global
banking and financial services corporation, serving as
president and chief executive officer of BNY Asset
Management in Boston from 2007 to 2010.
Mr. Aboaf joined State Street in December 2016
as Executive Vice President and has served as
Executive Vice President and Chief Financial Officer
since February 2017. In May 2022, Mr. Aboaf was
appointed to the role of Vice Chairman, with
expanded responsibility for State Street’s Global
Markets and Global Credit Finance businesses. Prior
to joining State Street, Mr. Aboaf served as chief
financial officer of Citizens Financial Group, a
financial services and retail banking firm, from April
2015 to December 2016, with responsibility for all
finance functions and corporate development. From
2003 to March 2015, he served in several senior
management
positions
for
Citigroup,
a
global
investment
banking
and
financial
services
corporation, including as global treasurer and as the
chief financial officer of the institutional client group,
which included the custody business. On October 10,
2024, Eric Aboaf informed State Street of his intention
to step down from his roles as State Street's Vice
Chairman and Chief Financial Officer to take a
position with a firm outside of banking. Mr. Aboaf will
remain at State Street through the date this annual
report on Form 10-K is filed with the SEC. On
January 14, 2025, the Board appointed Mark R.
Keating as interim CFO, effective upon the date
following that Form 10-K filing date. Mr. Keating, 56,
has served as State Street’s Executive Vice President
and Chief Financial Officer for Investment Services,
since 2018.
Mr. Ambrosius joined State Street in June 2001
and has served as Executive Vice President and
President of Investment Services since December
2024. He had previously served as Chief Commercial
Officer and Head of State Street’s European business
since October 2022. Prior to that role, he served as
Executive Vice President and Head of the European
Business from June 2019 to July 2023 and as Senior
Vice President and Head of Global Securities
Services Europe from June 2016 to June 2019. Mr.
Ambrosius has also held several other senior
leadership positions during his over 20 years with
State Street. Prior to State Street, Mr. Ambrosius held
Vice President positions at Deutsche Bank, a global
financial services company.
Mr. Bisegna joined State Street in July 1987 and
has served as Executive Vice President and Head of
State Street Global Markets since September 2021.
Prior to this role, he served as Executive Vice
President and Global Head of Multi-Asset Class
Trading and Research from December 2018 to
September 2021. Mr. Bisegna has also held several
other senior positions during his over 35 years with
State Street. Prior to joining State Street, he was with
Chase Manhattan Bank, New York, a global financial
services firm, in their treasury operations.
State Street Corporation | 52
Ms. Fogarty joined State Street in March 2021
as Executive Vice President and Deputy Head of
Global Delivery. She assumed the role of Head of
Global Delivery in March 2022. Prior to joining State
Street, she served as Global Head of Operations for
BNY Mellon, a global banking and financial services
corporation, from February 2018 to February 2021.
Prior to this role, Ms. Fogarty served as Global Head
of Fund Accounting and Administration at BNY
Mellon, from March 2015 to February 2018. Ms.
Fogarty served in several other leadership roles with
BNY Mellon from January 2005 to February 2015.
She
also
served
as
Head
of
Hedge
Fund
Administration at AIB Capital Markets, a sister joint
venture to the AIB/BNY Trust Company, providing
Custody and Trustee Services, from January 1995 to
December 2002.
Mr. Franz joined State Street in January 2020 as
Executive Vice President and Chief Information
Officer. Prior to this role, Mr. Franz served as Chief
Productivity Officer and Chief Information Officer at
Diageo
PLC,
a
British
multinational
alcoholic
beverages company, with responsibility for enterprise
operations,
technology
and
business
service
functions. Prior to joining Diageo in 2008, he was
Chief Information Officer at PepsiCo International,
and before that in leadership roles at General Electric
(GE), including GE Capital, and AT&T.
Ms. Horgan joined State Street in April 2009 and
has served as Executive Vice President and Chief
Human Resources and Citizenship Officer since
March 2017. Prior to this role, she served as Chief
Operating Officer for State Street’s Global Human
Resources division from 2011 to March 2017 and
since 2012 has served as an Executive Vice
President. Prior to 2011, Ms. Horgan served as the
Senior Vice President of Human Resources for State
Street Global Advisors. Before joining State Street,
Ms. Horgan was the Executive Vice President of
human resources for Old Mutual Asset Management,
a
global,
diversified
multi-boutique
asset
management company, from 2006 to 2009.
Mr. Hu joined State Street in November 2021 as
Executive Vice President and has served as
Executive Vice President and Chief Risk Officer since
January 2022. Prior to joining State Street, Mr. Hu
was Chief Risk Officer of Citigroup, a global
investment
banking
and
financial
services
corporation, from January 2013 to December 2020,
and Chief Risk Officer of Citi Asia-Pacific, from
August 2008 to December 2012. Prior to that, Mr. Hu
held several senior leadership roles at Morgan
Stanley in the Global Equity, Global Capital Markets
and Investment Banking divisions.
Ms. Hung joined State Street in December 2022
as President and Chief Executive Officer of State
Street Global Advisors. Prior to joining State Street,
Ms. Hung served as Chief Executive Officer of New
York Life Investment Management (NYLIM), a global
investment management business that provides a
broad range of fixed income, alternatives, and equity
capabilities, from April 2015 to October 2022. Prior to
joining NYLIM in 2010, Ms. Hung held a number of
leadership positions at Bridgewater Associates and
Morgan Stanley.
Ms. Milrod joined State Street in December 2018
and has served as Executive Vice President and
Chief Product Officer since December 2022. Prior to
that role, she served as Executive Vice President and
Lead Executive for a large proposed investment
services acquisition from October 2021 to December
2022, as Executive Vice President, Head of Global
Clients Division and Head of Global Asset Managers
Segment from January 2021 to October 2021 and as
Executive Vice President and Head of the Global
Clients Division from December 2018 to October
2021. Prior to joining State Street, Ms. Milrod served
as Senior Advisor at Mckinsey & Company, a global
management consulting firm, from 2016 to 2018.
Prior to joining McKinsey & Company, she served in
multiple leadership positions at The Depository Trust
&
Clearing
Corporation,
a
post-trade
market
infrastructure for the global financial services industry,
from 2012 to 2016. Ms. Milrod also held several
leadership roles at Deutsche Bank, a global financial
services company, from 1999 to 2012.
Mr. Plansky joined State Street in January 2017
as head of State Street Global Exchange and since
December 2024 has served as Executive Vice
President and Head of Wealth Services. Prior to that
role, Mr. Plansky served as Executive Vice President
and Head of State Street Alpha from December 2020
to December 2024 and as Chief Executive Officer of
CRD from October 2018 to December 2020. Before
joining State Street, Mr. Plansky led the U.S. Strategy
business and U.S. Global Platforms business for
PricewaterhouseCoopers,
an
international
professional services firm, from April 2014 to
November 2016. Prior to the acquisition of Booz &
Co. by PricewaterhouseCoopers, he was a senior
partner at Booz & Co. leading the technology practice
and serving as a senior advisor to global financial
institutions.
Ms. Schaefer joined State Street in 2014 and
has served as Senior Vice President and Chief
Accounting Officer since June 2024. Prior to this role,
she served as State Street’s Senior Vice President
and Deputy Controller from July 2016 to June 2024.
Ms. Schaefer served as State Street’s interim Chief
Accounting Officer from September 2017 to May
2018. From 2014 to July 2016, Ms. Schaefer served
as State Street’s Director of SEC Reporting,
Accounting Policy & Regulatory Compliance. Prior to
joining State Street, she served in various roles at
American Express Company, a global services
company whose principal products and services are
State Street Corporation | 53
charge and credit card products and travel-related
services, including from August 2012 to December
2014,
senior
roles
within
the
Controllership
organization. Prior to that, Ms. Schaefer was a
Director in the Global Capital Markets Group at
PricewaterhouseCoopers LLP.
Mr. Shelton joined State Street in December
2023 as Executive Vice President and has served as
Executive Vice President, General Counsel and
Secretary since January 2024. Prior to this role, he
served
as
General
Counsel
for
Corporate
International
Business
and
Corporate
and
International Americas of Barclays Bank PLC
(Barclays), a global financial services company, from
July 2016 to November 2023 and before that he
served as Barclays’ Global and Regional General
Counsel for the Americas from March 2015 to June
2016. Prior to joining Barclays Bank PLC, Mr. Shelton
served as Partner in the Financial Institutions Group
of Gibson, Dunn & Crutcher LLP, an international law
firm, from February 2014 to February 2015. Before
joining Gibson, Dunn & Crutcher, he served as Global
Head of Investigations of UBS, a global financial
services company, from 2011 to January 2014 and as
Americas General Counsel from 2009 to 2011. Mr.
Shelton, also held several other senior positions
during his nearly 11-year tenure with UBS. Prior to
joining UBS in 2003, Shelton served as Partner at
Wilmer Cutler Pickering LLP, an international law firm,
from 1997 to 2003.
Mr. Tahiri joined State Street in September 2020
as Executive Vice President and Head of Asia Pacific
and has served as Executive Vice President and
Chief Operating Officer since January 2024. Prior to
that, Mr. Tahiri served in an expanded role as
Executive Vice President and Head of Asia Pacific,
the Middle East, and Africa from April 2023 to
December 2023. Before joining State Street, Mr.
Tahiri served as Head of Asia Pacific for BNP Paribas
Securities Services, a multi-asset servicing specialist
(BNP Paribas), where he was also a member of the
Executive Committee from February 2019 to August
2020. Prior to this role, he served as Head of
Institutional Investors & Digital Transformation, Asia
Pacific, of BNP Paribus, from October 2017 to
January 2019 and as CEO BNP Paribas Securities
Singapore & Head of Southeast Asia from September
2013 to Jun 2018. He also held several other
leadership positions during his tenure with BNP
Paribas Securities that started in February 2002.
Ms. Timby joined State Street in January 2020
and since January 2024 has served as Executive
Vice President and Chief Administrative Officer. Prior
to this role, Ms. Timby served as Executive Vice
President and Global Technology Services Chief
Information Officer and International & Global
Technology Risk Manager from May 2022 to
December
2023
and
as
International
Chief
Information Officer from January 2020 to May 2022.
Prior to joining State Street, she served as Managing
Director: Group Operations European Bank for
Reconstruction and Development for the European
Bank for Reconstruction and Development, a financial
services company, from January 2019 to January
2020. Before this role, Ms. Timby served as
Managing Director: Head of Investments & Corporate
Bank Know Your Customer Operations, with Barclays,
from March 2017 to December 2018. She also held
several other senior positions during her 30-year
tenure with Barclays.
State Street Corporation | 54
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
MARKET FOR REGISTRANT’S COMMON EQUITY
Our common stock is listed on the New York Stock Exchange under the ticker symbol STT. There were 1,888
shareholders of record as of January 31, 2025.
On January 19, 2024, we announced a new common share repurchase program, approved by our Board and
superseding all prior programs, authorizing the purchase of up to $5.0 billion of our common stock beginning in the
first quarter of 2024 with no set expiration date. During 2024, we repurchased $1.3 billion of our common stock
under our 2024 share repurchase authorization and expect common share repurchases to continue under this
program during 2025.
The following table presents the activity under our common share repurchase program for each of the months
in the quarter ended December 31, 2024.
(Dollars in millions except per share
amounts; shares in thousands)
Total Number of
shares purchased
Average price
per share
Total number of shares
purchased as part of publicly
announced program
Approximate dollar value of shares
that may yet be purchased under
publicly announced program(1)
Period:
October 1 - October 31, 2024
1,294
$
92.05
1,294
$
4,131
November 1 - November 30, 2024
2,460
95.93
2,460
3,895
December 1 - December 31, 2024
1,974
98.72
1,974
3,700
Total
5,728
$
96.01
5,728
$
3,700
(1) As of December 31, 2024, approximately $3.7 billion was remaining under the 2024 share repurchase authorization.
Stock purchases under our common stock repurchase programs 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 and amount of any stock purchases and the
type of transaction may not be ratable over the duration of the program, may vary from reporting period to reporting
period and will depend on several factors, including our capital position and our financial performance, investment
opportunities, market conditions, regulatory considerations including the nature and timing of implementation of
revisions to the Basel III framework, and the amount of common stock issued as part of employee compensation
programs. Our common stock purchase program does not have specific price targets and may be suspended at any
time. We may employ third-party broker/dealers to acquire shares on the open market in connection with our
common stock purchase programs.
Additional information about our common stock, including Board authorization with respect to purchases by us
of our common stock, is provided under “Capital” in “Financial Condition” in our Management’s Discussion and
Analysis and in Note 15 to the consolidated financial statements in this Form 10-K.
RELATED STOCKHOLDER MATTERS
As a bank holding company, our Parent Company is a legal entity separate and distinct from its principal
banking subsidiary, State Street Bank, and its non-banking subsidiaries. The right of the Parent Company to
participate as a shareholder in any distribution of assets of State Street Bank upon its liquidation, reorganization or
otherwise is subject to the prior claims by creditors of State Street Bank, including obligations for federal funds
purchased, securities sold under repurchase agreements and deposit liabilities.
Payment of dividends by State Street Bank is subject to the provisions of the Massachusetts banking law,
which provide that State Street Bank’s Board of Directors may declare, from State Street Bank’s “net profits,” as
defined below, cash dividends annually, semi-annually or quarterly (but not more frequently) and can declare non-
cash dividends at any time. Under Massachusetts banking law, for purposes of determining the amount of cash
dividends that are payable by State Street Bank, “net profits” is defined as an amount equal to the remainder of all
earnings from current operations plus actual recoveries on loans and investments and other assets, after deducting
from the total thereof all current operating expenses, actual losses, accrued dividends on preferred stock, if any, and
all federal and state taxes.
State Street Corporation | 55
No dividends may be declared, credited or paid so long as there is any impairment of State Street Bank’s
capital stock. The approval of the Massachusetts Commissioner of Banks is required if the total of all dividends
declared by State Street Bank in any calendar year would exceed the total of its net profits for that year combined
with its retained net profits for the preceding two years, less any required transfer to surplus or to a fund for the
retirement of any preferred stock.
Under Federal Reserve regulations, the approval of the Federal Reserve would be required for the payment of
dividends by State Street Bank if the total amount of all dividends declared by State Street Bank in any calendar
year, including any proposed dividend, would exceed the total of its net income for such calendar year as reported
in State Street Bank’s Consolidated Reports of Condition and Income for a Bank with Domestic and Foreign Offices
Only - FFIEC 031, commonly referred to as the “Call Report,” as submitted through the Federal Financial Institutions
Examination Council and provided to the Federal Reserve, plus its “retained net income” for the preceding two
calendar years. For these purposes, “retained net income,” as of any date of determination, is defined as an amount
equal to State Street Bank’s net income (as reported in its Call Reports for the calendar year in which retained net
income is being determined) less any dividends declared during such year. In determining the amount of dividends
that are payable, the total of State Street Bank’s net income for the current year and its retained net income for the
preceding two calendar years is reduced by any net losses incurred in the current or preceding two-year period and
by any required transfers to surplus or to a fund for the retirement of preferred stock.
Prior Federal Reserve approval also must be obtained if a proposed dividend would exceed State Street
Bank’s “undivided profits” (retained earnings) as reported in its Call Reports. State Street Bank may include in its
undivided profits amounts contained in its surplus account, if the amounts reflect transfers of undivided profits made
in prior periods and if the Federal Reserve’s approval for the transfer back to undivided profits has been obtained.
Under the PCA provisions adopted pursuant to the FDIC Improvement Act of 1991, State Street Bank may not
pay a dividend when it is deemed, under the PCA framework, to be under-capitalized, or when the payment of the
dividend would cause State Street Bank to be under-capitalized. If State Street Bank is under-capitalized for
purposes of the PCA framework, it must cease paying dividends for so long as it is deemed to be under-capitalized.
Once earnings have begun to improve and an adequate capital position has been restored, dividend payments may
resume in accordance with federal and state statutory limitations and guidelines.
For a discussion of the role of the Federal Reserve and its regulations in connection with the Parent
Company’s capital planning and dividend practices, see “Capital Planning, Stress Tests and Dividends” in
“Supervision and Regulation” in “Item 1. Business”. Information about dividends declared by our Parent Company
and dividends from our subsidiary banks is provided under “Capital” in “Financial Condition” in our Management’s
Discussion and Analysis, and in Note 15 to the consolidated financial statements in this Form 10-K, and is
incorporated herein by reference. Future dividend payments of State Street Bank and our non-banking subsidiaries
cannot be determined at this time. In addition, refer to “Capital Planning, Stress Tests and Dividends” in
“Supervision and Regulation” in Business in this Form 10-K and the risk factor “Our business and capital-related
activities, including our ability to return capital to shareholders and repurchase our capital stock, may be adversely
affected by our implementation of regulatory capital and liquidity standards that we must meet or as a result of
regulatory capital stress testing” in Risk Factors in this Form 10-K.
Information about our equity compensation plans is provided in Item 12, Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters, and in Note 18 to the consolidated financial
statements in this Form 10-K, and is incorporated herein by reference.
State Street Corporation | 56
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The graph below presents the cumulative total shareholder return on our common stock as compared to the
cumulative total return of the S&P 500 Index, the KBW Bank Index and a Peer Group over a five-year period. The
cumulative total shareholder return assumes the investment of $100 in our common stock and in each index on
December 31, 2019 and reinvestment of common stock dividends.
•
The KBW Bank Index is a modified cap-weighted index consisting of 24 exchange-listed stocks,
representing national money center banks and leading regional institutions, and is our primary comparator
group index.
•
The Peer Group is composed of The Bank of New York Mellon Corporation and Northern Trust Corporation.
Year Ended
Total Shareholder Return ($)
Comparison of Five-Year Cumulative Total Shareholder Return
State Street Corporation
S&P 500 Index
KBW Bank Index
Peer Group
2019
2020
2021
2022
2023
2024
50
75
100
125
150
175
200
225
250
2019
2020
2021
2022
2023
2024
State Street Corporation
$
100
$
95
$
125
$
108
$
111
$
145
S&P 500 Index
100
118
152
125
158
197
KBW Bank Index
100
90
124
98
97
133
Peer group
100
88
121
96
108
155
The following table compares the cumulative total shareholder return on our common stock to the cumulative
total return of the S&P 500 Index, the KBW Bank Index and a Peer Group over a one-year, three-year and five-year
period.
1 year
3 years
5 years
State Street Corporation
30 %
16 %
45 %
S&P 500 Index
25
29
97
KBW Bank Index
37
7
33
Peer group
44
28
55
State Street Corporation | 57
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
This Management's Discussion and Analysis
should be read in conjunction with our consolidated
financial statements and accompanying notes in this
Form 10-K. Certain previously reported amounts
presented in this Form 10-K have been reclassified to
conform to current-period presentation.
As of December 31, 2024, we had consolidated
total assets of $353.24 billion, consolidated total
deposits of $261.92 billion, consolidated total
shareholders’
equity
of
$25.33
billion
and
approximately 53,000 employees. Through our two
lines
of
business,
Investment
Servicing
and
Investment Management, we operate in more than
100 geographic markets worldwide, including the
United States, Canada, Latin America, Europe, the
Middle East and Asia.
For the description of our lines of business, refer
to “Lines of Business” in Item 1 in this Form 10-K. For
financial and other information about our lines of
business, refer to “Line of Business Information” in
this Management’s Discussion and Analysis and Note
24 to the consolidated financial statements in this
Form 10-K.
We
prepare
our
consolidated
financial
statements in conformity with U.S. GAAP. The
preparation of financial statements in conformity with
U.S. GAAP requires management to make estimates
and assumptions in its application of certain
accounting policies that materially affect the reported
amounts of assets, liabilities, equity, revenue and
expenses.
Information about the significant accounting
policies that require us to make judgments, estimates
and assumptions that are difficult, subjective or
complex about matters that are uncertain and may
change in subsequent periods is included under
“Significant
Accounting
Estimates”
in
this
Management’s Discussion and Analysis and in Note 1
to the consolidated financial statements in this Form
10-K.
Certain financial information provided in this
Form 10-K, including this Management’s Discussion
and Analysis, is presented using both a U.S. GAAP,
or reported basis, and a non-GAAP basis, including
certain non-GAAP measures used in the calculation
of identified regulatory ratios. We measure and
compare certain financial information on a non-GAAP
basis, including information that management uses in
evaluating our business and activities. Non-GAAP
financial information should be considered in addition
to, and not as a substitute for or as superior to,
financial information prepared in conformity with U.S.
GAAP. Any non-GAAP financial information presented
in this Form 10-K, including this Management’s
Discussion and Analysis, is reconciled to its most
directly comparable currently applicable regulatory
ratio or U.S. GAAP-basis measure. As part of our
non-GAAP-basis measures, we present a fully
taxable-equivalent
NII
that
reports
non-taxable
revenue, such as interest income associated with tax-
exempt investment securities, on a fully taxable-
equivalent basis, which we believe facilitates an
investor’s
understanding
and
analysis
of
our
underlying financial performance and trends.
In this Management’s Discussion and Analysis,
where we describe the effects of changes in foreign
currency translation, those effects are determined by
applying applicable weighted average FX rates from
the relevant 2023 period to the relevant 2024 period
results.
This Management’s Discussion and Analysis
contains statements that are considered “forward-
looking statements” within the meaning of U.S.
securities laws. These forward-looking statements
involve certain risks and uncertainties which could
cause actual results to differ materially. Additional
information about forward-looking statements and
related risks and uncertainties is provided in
“Forward-Looking
Statements”,
“Risk
Factors
Summary” and “Risk Factors” in this Form 10-K.
Information regarding additional disclosures and
materials available on our website is provided under
“Additional Information” in Item 1 in this Form 10-K.
State Street Corporation | 58
OVERVIEW OF FINANCIAL RESULTS
TABLE 1: OVERVIEW OF FINANCIAL RESULTS
Years Ended December 31,
(Dollars in millions, except per share
amounts)
2024
2023
2022
Total fee revenue
$ 10,156
$ 9,480
$ 9,606
Net interest income
2,923
2,759
2,544
Total other income
(79)
(294)
(2)
Total revenue
13,000
11,945
12,148
Provision for credit losses
75
46
20
Total expenses
9,530
9,583
8,801
Income before income tax expense
3,395
2,316
3,327
Income tax expense
708
372
553
Net income
$ 2,687
$ 1,944
$ 2,774
Adjustments to net income:
Dividends on preferred stock(1)
$ (202)
$ (122)
$ (112)
Earnings allocated to participating
securities(2)
(2)
(1)
(2)
Net income available to common
shareholders
$ 2,483
$ 1,821
$ 2,660
Earnings per common share:
Basic
$ 8.33
$ 5.65
$ 7.28
Diluted
8.21
5.58
7.19
Average common shares outstanding
(in thousands):
Basic
297,883
322,337
365,214
Diluted
302,226
326,568
370,109
Cash dividends declared per common
share
$ 2.90
$ 2.64
$ 2.40
Return on average common equity
11.1 %
8.2 %
11.1 %
Pre-tax margin
26.1
19.4
27.4
Return on average assets
0.9
0.7
1.0
Common dividend payout
35.3
47.3
33.4
Average common equity to average
total assets
7.2
8.1
8.3
(1) Additional information about our preferred stock dividends is provided in Note 15
to the consolidated financial statements in this Form 10-K.
(2) Represents the portion of net income available to common equity allocated to
participating securities, composed of unvested and fully vested SERP
(Supplemental executive retirement plans) shares and fully vested deferred
director stock awards, which are equity-based awards that contain non-forfeitable
rights to dividends, and are considered to participate with the common stock in
undistributed earnings.
The following section provides information
related to significant events, as well as highlights of
our consolidated financial results for the year ended
December 31, 2024 presented in Table 1: Overview
of Financial Results. More detailed information about
our consolidated financial results, including the
comparison of our financial results for the year ended
December 31, 2024 to those of the year ended
December 31, 2023, is provided under “Consolidated
Results of Operations”, “Line of Business Information”
and “Capital” sections which follow “Financial Results
and Highlights”, as well as in our consolidated
financial statements in this Form 10-K.
The comparison of our financial results for the
year ended December 31, 2023 to those of the years
ended December 31, 2022 is included in the
Management’s Discussion and Analysis in our Annual
Report on Form 10-K for the year ended December
31, 2023 filed with the SEC on February 15, 2024.
Financial Results and Highlights
2024 financial performance
•
EPS of $8.21, increased from $5.58 in 2023,
primarily reflecting higher total revenue and
lower total expenses, including the net impact
of notable items in the current and prior year
periods, which in aggregate represented
$1.62 of the EPS increase. See “Notable
Items” below.
•
Total revenue increased 9% compared to
2023, primarily driven by higher fee revenue
and NII and the impact of the loss on sale of
investment securities notable item in the prior
year period. The prior year notable item
represented 3% points of the increase.
•
Total expenses decreased 1% compared to
2023 as higher business investments, as well
as revenue and performance-related costs,
were more than offset by productivity savings
from organizational simplification, process
improvements and other initiatives, including
from the joint venture consolidations in India
and the net impact of notable items. The net
impact of notable items in the current and
prior year periods decreased expenses by
5% points in 2024 as compared to 2023.
•
Pre-tax margin of 26.1% increased from
19.4% in 2023, primarily reflecting higher
total revenue and lower total expenses.
Return on equity of 11.1% increased from
8.2% in 2023, primarily reflecting higher total
revenue and lower total expenses.
•
Operating leverage was 9.4% points, largely
reflecting the net impact of notable items in
the current and prior year periods, which
represented
7.4%
points
of
operating
leverage. Operating leverage represents the
difference between the percentage change in
total revenue and the percentage change in
total expenses, in each case relative to the
prior year period.
•
Fee operating leverage was 7.7% points,
largely reflecting the net impact of notable
items in the current and prior year periods,
which represented 5.6% points of fee
operating leverage. Fee operating leverage
represents
the
difference
between
the
percentage change in total fee revenue and
the percentage change in total expenses, in
each case relative to the prior year period.
•
Returned approximately $2.2 billion to our
shareholders in the form of common share
repurchases and common stock dividends
compared to approximately $4.6 billion in
2023.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 59
•
Completed the consolidation of our final joint
venture in India, further advancing the plan to
transform our operating model to unlock
efficiency
savings
and
improve
client
experience. The joint venture consolidation in
2024
increased
our
headcount
by
approximately 17% as of December 31,
2024, compared to December 31, 2023.
Associated headcount cost was previously
reflected in compensation and employee
benefits expenses.
Notable Items
•
The impact of notable items in 2024 includes:
◦
Other expenses of $111 million,
including a $99 million increase to
the 2023 FDIC special assessment,
and a $12 million charge associated
with operating model changes.
◦
Loss on sale of investment securities
of
$81
million
related
to
an
investment
portfolio
repositioning
reflected in other income.
◦
Deferred
compensation
expense
acceleration
of
approximately
$79 million, related to prior period
incentive compensation awards to
align our deferred pay mix with
peers.
◦
Gain on sale of an equity investment
of $66 million recorded in other fee
revenue.
◦
Revenue-related recovery of $15
million from settlement proceeds
associated
with
a
2018
FX
benchmark litigation resolution, which
is reflected in foreign exchange
trading services.
◦
Net
repositioning
release
of
$2 million, including a $15 million
release reflected in compensation
and employee benefits expenses,
partially offset by $13 million of
occupancy
charges
related
to
footprint optimization.
◦
The impact of notable items in 2023 includes:
◦
Loss on the sale of investment
securities of approximately $294
million related to an investment
portfolio repositioning.
◦
FDIC
special
assessment
of
$387
million
recorded
in
other
expenses, related to FDIC’s recovery
of estimated losses to the Deposit
Insurance Fund associated with the
closures of Silicon Valley Bank and
Signature Bank.
◦
Net
repositioning
charges
of
approximately $203 million, including
$182 million of compensation and
employee benefits expenses related
to workforce rationalization and $21
million of occupancy costs related to
real estate footprint optimization.
◦
Other net expenses of approximately
$30 million, including $41 million in
information
systems
and
communications and $4 million in
other expenses, primarily related to
operating model changes, partially
offset by a $15 million accrual
release
in
acquisition
and
restructuring costs.
Revenue
•
Total fee revenue increased 7% compared to
2023, primarily reflecting higher management
fees, foreign exchange trading services
revenue, other fee revenue and servicing
fees.
•
Servicing
fee
revenue
increased
2%
compared to 2023, as higher average market
levels and net new business, excluding a
previously disclosed client transition, were
partially offset by pricing headwinds, a
previously disclosed client transition and
lower
client
activity
and
adjustments,
including asset mix shift.
•
Management fee revenue increased 13%
compared to 2023, primarily due to higher
average market levels and net inflows.
•
Foreign exchange trading services revenue
increased 11% compared to 2023, primarily
due to higher client volumes, partially offset
by lower spreads associated with lower
average FX volatility.
•
Securities finance revenue increased 3%
compared to 2023, mainly due to higher client
lending balances, partially offset by lower
spreads
primarily
resulting
from
muted
industry specials activity.
▪
Software and processing fees revenue
increased 9% compared to 2023, primarily
due to higher front office software and data
revenue associated with CRD.
•
Other fee revenue increased $109 million
compared to 2023, primarily reflecting a $66
million gain on sale of an equity investment
and the absence of the impact of the
Argentine peso devaluation in the prior year
period.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 60
•
NII
increased
6%
compared
to
2023,
primarily due to higher investment securities
yields and loan growth, partially offset by
deposit mix shift towards interest-bearing
deposits.
•
Other income included a loss of $79 million
compared to a loss of $294 million in 2023,
mainly reflecting a loss on sale of investment
securities related to the repositioning of the
investment portfolio in both periods.
Provision for Credit Losses
•
In 2024, we recorded a $75 million provision
for credit losses, primarily reflecting an
increase in loan loss reserves associated
with certain commercial real estate and
leveraged loans, compared to $46 million in
2023.
Expenses
•
Total expenses decreased 1% compared to
2023, as higher business investments, as
well as revenue and performance-related
costs, were more than offset by productivity
savings from organizational simplification,
process improvements and other initiatives,
including from the joint venture consolidations
in India and the net impact of notable items.
The net impact of notable items in the current
and prior year periods decreased expenses
by 5% points in 2024 as compared to 2023.
AUC/A and AUM
•
AUC/A of $46.56 trillion as of December 31,
2024
increased
11%
compared
to
December 31, 2023, primarily due to higher
period-end market levels and client flows. In
2024, newly announced asset servicing
mandates totaled approximately $2.33 trillion
of AUC/A. We onboarded approximately
$1.35 trillion of AUC/A during 2024. Servicing
assets remaining to be installed in future
periods totaled approximately $2.99 trillion as
of December 31, 2024.
•
AUM of $4.72 trillion as of December 31,
2024
increased
15%
compared
to
December 31, 2023, primarily due to higher
period-end market levels and net inflows.
Capital
•
In
2024,
we
returned
approximately
$2.2 billion to our shareholders in the form of
common share repurchases and common
stock dividends compared to approximately
$4.6 billion in 2023.
◦
We declared aggregate common stock
dividends of $2.90 per share, totaling
$859 million compared to $2.64 per
share, totaling $837 million in 2023.
◦
We increased the quarterly common
stock dividend declared per common
share by 10% in the third quarter of 2024.
◦
We acquired an aggregate of 15.1 million
shares of common stock at an average
per share cost of $85.89 and an
aggregate
cost
of
approximately
$1.3 billion. In 2023, we acquired an
aggregate of 49.2 million shares of
common stock, at an average per share
cost of $77.22 and an aggregate cost of
approximately
$3.8
billion.
These
purchases were all conducted under the
share repurchase programs approved by
our Board of Directors.
•
Our standardized CET1 capital ratio was
10.9% as of December 31, 2024, compared
to 11.6% as of December 31, 2023, primarily
driven by increased capital return and higher
deployment of RWA for business growth,
partially offset by capital generated from
earnings. Our Tier 1 leverage ratio decreased
to 5.2% as of December 31, 2024, compared
to 5.5% as of December 31, 2023, mainly
driven by higher average balance sheet
levels. Given the current global economic
environment, and our plans for capital
actions, we expect our CET1 capital ratio and
Tier 1 leverage ratio to remain within or
above our target ranges of 10-11% and
5.25-5.75%, respectively.
•
On January 31, 2024, we issued 1.5 million
depositary shares, each representing a
1/100th ownership interest in a share of fixed
rate
reset,
non-cumulative
perpetual
preferred stock, Series I, without par value
per share, with a liquidation preference of
$100,000 per share (equivalent to $1,000 per
depositary share), and an initial dividend rate
of 6.700% per annual, in a public offering.
The net proceeds from the offering were
approximately $1.5 billion.
•
On March 15, 2024, we redeemed an
aggregate
$1.0
billion,
or
all
7,500
outstanding shares, of our non-cumulative
perpetual preferred stock, Series D, for a
cash redemption price of $100,000 per share
(equivalent to $25 per depository share), and
all 2,500 of the outstanding shares of our
noncumulative perpetual preferred stock,
Series F (represented by 250,000 depository
shares), for a cash redemption price of
$100,000 per share (equivalent to $1,000 per
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 61
depositary share), plus all declared and
unpaid dividends.
•
On
July
24,
2024,
we
issued
850,000
depositary
shares,
each
representing a 1/100th ownership interest in
a share of fixed rate reset, non-cumulative
perpetual preferred stock, Series J, without
par value per share, with a liquidation
preference of $100,000 per share (equivalent
to $1,000 per depositary share), in a public
offering. The net proceeds from the offering
were approximately $842 million.
•
On September 16, 2024, we redeemed an
aggregate
$500
million,
or
all
5,000
outstanding shares, of our non-cumulative
perpetual
preferred
stock,
Series
H
(represented by 500,000 depository shares),
for a cash redemption price of $100,000 per
share (equivalent to $1,000 per depository
share),
plus
all
declared
and
unpaid
dividends.
•
On
February
6,
2025,
we
issued
750,000
depositary
shares,
each
representing a 1/100th ownership interest in
a share of fixed rate reset, non-cumulative
perpetual preferred stock, Series K, without
par value per share, with a liquidation
preference of $100,000 per share (equivalent
to $1,000 per depositary share), in a public
offering. The net proceeds from the offering
were approximately $743 million.
Debt Issuances and Redemptions
•
On March 18, 2024, we issued $1 billion
aggregate principal amount of 4.993% fixed
rate senior notes due 2027.
•
On August 20, 2024, we issued $1 billion
aggregate principal amount of 4.530% fixed-
to-floating rate senior notes due 2029.
•
On October 22, 2024, we issued $1.2 billion
aggregate principal amount of 4.330% fixed
rate senior notes due 2027, $300 million
aggregate principal amount of floating rate
senior notes due 2027, and $800 million
aggregate principal amount of 4.675% fixed-
to-floating rate senior notes due 2032.
•
On November 1, 2024, we redeemed $1
billion aggregate principal amount of 2.354%
fixed-to-floating rate senior notes due 2025.
•
On November 25, 2024, State Street Bank
issued $300 million aggregate principal
amount of floating rate senior notes due
2026,
$1.15
billion
aggregate
principal
amount of 4.594% fixed rate senior notes due
2026 and $800 million aggregate principal
amount of 4.782% fixed rate senior notes due
2029.
•
On January 27, 2025, we redeemed $500
million aggregate principal amount of 4.857%
fixed-to-floating rate senior notes due 2026.
•
On February 6, 2025, we redeemed $300
million aggregate principal amount of 1.746%
fixed-to-floating rate senior notes due 2026.
CONSOLIDATED RESULTS OF OPERATIONS
This section discusses our consolidated results
of operations for 2024 compared to 2023 and should
be read in conjunction with the consolidated financial
statements
and
accompanying
notes
to
the
consolidated financial statements in this Form 10-K.
Total Revenue
TABLE 2: TOTAL REVENUE
Years Ended December 31,
%
Change
2024 vs.
2023
%
Change
2023 vs.
2022
(Dollars in
millions)
2024
2023
2022
Fee revenue:
Back office
services
$ 4,633
$ 4,561
$ 4,714
2 %
(3) %
Middle office
services
383
361
373
6
(3)
Servicing fees
5,016
4,922
5,087
2
(3)
Management
fees
2,124
1,876
1,939
13
(3)
Foreign
exchange trading
services
1,401
1,265
1,376
11
(8)
Securities
finance
438
426
416
3
2
Front office
software and
data
639
580
550
10
5
Lending related
and other fees
249
231
239
8
(3)
Software and
processing fees
888
811
789
9
3
Other fee
revenue
289
180
(1)
61
nm
Total fee revenue
10,156
9,480
9,606
7
(1)
Net interest
income:
Interest income
11,977
9,180
4,088
30
nm
Interest expense
9,054
6,421
1,544
41
nm
Net interest income
2,923
2,759
2,544
6
8
Other income:
Gains (losses)
from sales of
available-for-sale
securities, net
(79)
(294)
(2)
(73)
nm
Total other income
(79)
(294)
(2)
(73)
nm
Total revenue
$ 13,000
$ 11,945
$ 12,148
9
(2)
nm Not meaningful
Fee Revenue
Table 2: Total Revenue, provides the breakout of
fee revenue for the years ended December 31, 2024,
2023 and 2022. Servicing and management fees
collectively made up approximately 70%, 72% and
73% of the total fee revenue in 2024, 2023 and 2022,
respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 62
Servicing Fee Revenue
Servicing fees, as presented in Table 2: Total Revenue, increased 2% in 2024 compared to 2023, as higher
average market levels and net new business, excluding a previously disclosed client transition, were partially offset
by pricing headwinds, a previously disclosed client transition and lower client activity and adjustments, including
asset mix shift.
Servicing fees generated outside the United States were approximately 47% of total servicing fees in 2024,
compared to approximately 46% of total servicing fees in 2023.
Servicing fee revenue comprises revenue from a range of services provided to our clients, including certain
Alpha servicing mandates, consisting of core custody services, accounting, reporting and administration, which we
refer to collectively as back office services and middle office services. The nature and mix of services provided and
the asset classes for which the services are performed affect our servicing fees. The basis for fees will differ across
regions and clients. 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.
For servicing fees for which we have not yet issued an invoice to our clients as of period end, we include an
estimate of the impact of changes in market valuations, client activity and flows, net new business and changes in
pricing in our revenues.
Changes in Market Valuations
Our servicing fee revenue is impacted by both our levels and the geographic and product mix of our AUC/A.
Increases or decreases in market valuations have a corresponding impact on the level of our AUC/A and servicing
fee revenues, though the degree of impact will vary depending on asset types and classes, and geography of
assets held within our clients’ portfolios. For certain asset classes where the valuation process is more complex,
including alternative investments, or where our valuation is dependent on third party information, AUC/A is reported
on a time lag, typically one-month. For those asset classes, the impact of market levels on our reported AUC/A, and
therefore servicing fee revenue, does not reflect current period-end market levels.
Over the five years ended December 31, 2024, we estimate that worldwide equity and fixed income market
valuations impacted our servicing fees revenue by approximately 2% on average with a range of (4)% to 8%
annually and approximately 5% and 1% in 2024 and 2023, respectively. See Table 3: Daily Averages, Month-End
Averages and Year-End Equity Indices for selected indices. While the specific indices presented are indicative of
general market trends, the asset types and classes relevant to individual client portfolios can and do differ, and the
performance of associated relevant indices and of client portfolios can therefore differ from the performance of the
indices presented. In addition, our asset classifications may differ from those industry classifications presented.
Assuming that all other factors remain constant, including client activity, asset flows and pricing, we estimate,
using relevant information as of December 31, 2024, that a 10% increase or decrease in worldwide equity
valuations, on a weighted average basis, over the relevant periods for which our servicing fees are calculated,
would result in a corresponding change in our total servicing fee revenues, on average and over multiple quarters,
of approximately 3%. We estimate, similarly assuming all other factors remain constant and using relevant
information as of December 31, 2024, that changes in worldwide fixed income markets, which on a weighted
average basis and over time are typically less volatile than worldwide equity markets, have a smaller corresponding
impact on our servicing fee revenues on average and over time.
TABLE 3: DAILY AVERAGES, MONTH-END AVERAGES AND YEAR-END EQUITY INDICES(1)
Daily Averages of Indices
Month-End Averages of Indices
Year-End Indices
Years Ended December 31,
Years Ended December 31,
Years Ended December 31,
2024
2023
% Change
2024
2023
% Change
2024
2023
% Change
S&P 500®
5,428
4,284
27 %
5,460
4,323
26 %
5,882
4,770
23 %
MSCI EAFE®
2,326
2,093
11
2,337
2,101
11
2,262
2,236
1
MSCI® Emerging Markets
1,071
985
9
1,071
985
9
1,075
1,024
5
MSCI ACWI®
800
663
21
805
668
20
841
727
16
(1) The index names listed in the table are service marks of their respective owners.
TABLE 4: YEAR-END DEBT INDICES(1)
As of December 31,
2024
2023
% Change
Bloomberg U.S. Aggregate Bond Index®
2,189
2,162
1 %
Bloomberg Global Aggregate Bond Index®
463
471
(2)
(1) The index names listed in the table are service marks of their respective owners.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 63
Client Activity and Asset Flows
Client activity and asset flows are impacted by the number of transactions we execute on behalf of our clients,
including FX settlements, equity and derivative trades, and wire transfer activity, as well as actions by our clients to
change the asset class in which their assets are invested. Our servicing fee revenues are impacted by a number of
factors, including transaction volumes, asset levels and asset classes in which funds are invested, as well as
industry trends associated with these client-related activities.
Our clients may change the asset classes in which their assets are invested, based on their market outlook,
risk acceptance tolerance or other considerations. Over the five years ended December 31, 2024, we estimate that
client activity and asset flows, together, impacted our servicing fees revenue by approximately (1)% on average with
a range of (3)% to 1% annually and approximately 0% and (3)% in 2024 and 2023, respectively. See Table 5:
Industry Asset Flows for selected asset flow information. While the asset flows presented are indicative of general
market trends, the asset types and classes relevant to individual client portfolios can and do differ, and our flows
may differ from those market trends. In addition, our asset classifications may differ from those industry
classifications presented.
TABLE 5: INDUSTRY ASSET FLOWS
Years Ended December 31,
(In billions)
2024
2023
North America - (U.S. Domiciled) - Morningstar Direct Market Data(1)(2)(3)
Long-Term Funds(4)
$
(362.0) $
(489.7)
Money Market
678.6
907.3
Exchange-Traded Fund
1,111.1
590.3
Total Flows
$
1,427.7
$
1,007.9
EMEA - Morningstar Direct Market Data(1)(2)(5)
Long-Term Funds(4)
$
233.0
$
(72.3)
Money Market
245.7
217.8
Exchange-Traded Fund
251.3
146.0
Total Flows
$
730.0
$
291.5
(1) Industry data is provided for illustrative purposes only. It is not intended to reflect our activity or our clients’ activity and is indicative of only segments of the entire industry.
(2) Source: Morningstar. The data includes long-term mutual funds, ETFs and money market funds. Mutual fund data represents estimates of net new cash flow, which is new sales
minus redemptions combined with net exchanges, while ETF data represents net issuance, which is gross issuance less gross redemptions. Data for Fund of Funds, Feeder funds
and Obsolete funds were excluded from the series to prevent double counting. Data is from the Morningstar Direct Asset Flows database.
(3) The year ended December 31, 2024 data for North America (US domiciled) includes Morningstar direct actuals for January 2024 through November 2024 and Morningstar direct
estimates for December 2024.
(4) The long-term fund flows reported by Morningstar direct in North America are composed of US domiciled market flows mainly in Equities, Allocation and Fixed-Income asset
classes. The long-term fund flows reported by Morningstar direct in EMEA are composed of the European market flows mainly in Equities, Allocation and Fixed-Income asset
classes.
(5) The year ended December 31, 2024 data for Europe is on a rolling twelve month basis for December 2023 through November 2024, sourced by Morningstar.
Net New Business
Over the five years ended December 31, 2024, net new business, which includes business both won and lost,
has affected our servicing fee revenues by approximately 0% on average with a range of 0% to 1% annually and
approximately 0% and 1% in 2024 and 2023, respectively.
Gross investment servicing mandates were $2.33 trillion of AUC/A in 2024 and $1.90 trillion of AUC/A per year
on average over the five years ended December 31, 2024, ranging from approximately $0.79 trillion to $3.52 trillion
of AUC/A annually in any given year.
Servicing fee revenue associated with new servicing mandates may vary based on the breadth of services
provided, the time required to install the assets, and the types of assets installed.
Revenues associated with new mandates are not reflected in our servicing fee revenue until the assets have
been installed. Our installation timeline, in general, can range from 6 to 36 months, with the average installation
timeline being approximately 9 to 12 months over the past 2 full fiscal years. We expect that our more complex
installations, including new State Street Alpha mandates, will generally be on the longer end of the 6 to 36 months
range. With respect to the current asset mandates of approximately $2.99 trillion of AUC/A that are yet to be
installed as of December 31, 2024, we expect the conversion will mostly occur over the coming 24 months, with
approximately 60% expected to be installed in 2025 and approximately 30% in 2026, with the balance expected to
be installed largely in 2027. The expected timing of these installations is subject to change due to a variety of
factors, including adjusted implementation schedules agreed with clients, scope adjustments, and product and
functionality changes.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 64
Pricing
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 AUC/A wins, as the amount of revenue associated with AUC/A, once installed, can vary
materially. On average, over the five years ended December 31, 2024, we estimate that pricing pressure with
respect to existing clients has impacted our servicing fees by approximately (2)% annually, with the impact ranging
from (2)% to (3)% in any given year and approximately (3)% and (2)% in 2024 and 2023, respectively. Pricing
concessions can be a part of a contract renegotiation with a client including terms that may benefit us, such as
extending the term of our relationship with the client, expanding the scope of services that we provide or reducing
our dependency on manual processes through the standardization of the services we provide. In 2024, the impact
was primarily driven by several multi-year renewals of large strategic clients. The timing of the impact of additional
revenue generated by anticipated additional services and the amount of revenue generated may differ from
expectations due to the impact of pricing concessions on existing services due to the necessary time required to
onboard those new services or process changes, the nature of those services and client investment practices and
other factors. These same market pressures also impact the fees we negotiate when we win business from new
clients.
Historically, and based on an indicative sample of revenue, we estimate that approximately 60%, on average,
of our servicing fee revenues have been variable due to changes in asset valuations including changes in daily
average valuations of AUC/A; another approximately 20%, on average, of our servicing fees are impacted by the
volume of activity in the funds we serve; and the remaining approximately 20% of our servicing fees tend not to be
variable in nature nor impacted by market fluctuations or values.
In addition to the effects described above (i.e., client activity and asset flows, net new business and pricing) our
servicing fee revenue in any period will vary depending on the mix of products and services we provide to our
clients. The full impact of changes in market valuations and the volume of activity in the funds may not be fully
reflected in our servicing fee revenues in the periods in which the changes occur, particularly in periods of higher
volatility.
TABLE 6: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY PRODUCT(1)(2)
(In billions)
December 31, 2024
December 31, 2023
December 31, 2022
% Change
2024 vs. 2023
% Change
2023 vs. 2022
Collective funds, including ETFs
$
15,266
$
14,070
$
12,261
9 %
15 %
Mutual funds
12,301
11,009
9,610
12
15
Pension products
9,386
8,352
7,734
12
8
Insurance and other products
9,604
8,379
7,138
15
17
Total
$
46,557
$
41,810
$
36,743
11
14
TABLE 7: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY ASSET CLASS(2)
(In billions)
December 31, 2024
December 31, 2023
December 31, 2022
% Change
2024 vs. 2023
% Change
2023 vs. 2022
Equities
$
27,535
$
24,317
$
20,575
13 %
18 %
Fixed-income
11,933
11,043
10,318
8
7
Short-term and other investments
7,089
6,450
5,850
10
10
Total
$
46,557
$
41,810
$
36,743
11
14
TABLE 8: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY GEOGRAPHY(2)(3)
(In billions)
December 31, 2024
December 31, 2023
December 31, 2022
% Change
2024 vs. 2023
% Change
2023 vs. 2022
Americas
$
33,284
$
29,951
$
26,981
11 %
11 %
Europe/Middle East/Africa
10,179
8,913
7,136
14
25
Asia/Pacific
3,094
2,946
2,626
5
12
Total
$
46,557
$
41,810
$
36,743
11
14
(1) Certain previously reported amounts presented have been reclassified to conform to current-period presentation.
(2) Consistent with past practice, AUC/A values for certain asset classes are based on a lag, typically one-month.
(3) Geographic mix is generally based on the domicile of the entity servicing the funds and is not necessarily representative of the underlying asset mix.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 65
Asset servicing mandates newly announced in 2024 totaled approximately $2.33 trillion of AUC/A. Servicing
assets remaining to be installed in future periods totaled approximately $2.99 trillion as of December 31, 2024,
which will be reflected in AUC/A in future periods after installation and will generate servicing fee revenue in
subsequent periods. The full revenue impact of such mandates will be realized as the assets are installed and
additional services are added over that period.
New asset servicing mandates, including Alpha servicing mandates, may be subject to completion of definitive
agreements, consents or assignments, approval of applicable boards, shareholders and customary regulatory
approvals or other conditions, the failure to complete any of which will prevent the relevant mandate from being
installed and serviced. New asset servicing mandates and servicing assets remaining to be installed in future
periods exclude certain new business which has been contracted, but for which the client has not yet provided
permission to publicly disclose or anonymously reference. 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 may include assets associated with acquisitions or structured transactions
and are presented on a gross basis based on factors present on or about the time we determine the business to be
won by us and are not updated based on subsequent developments, including changes in assets, market
valuations, scope and, potentially, termination. Such assets therefore do not include the impact of clients who have
notified us during the period of their intent to terminate or reduce their relationship with us, which from time to time
may be significant.
With respect to these new servicing mandates, once installed we may provide various services, including back
office services such as custody and safekeeping, transaction processing and trade settlement, fund administration,
reporting and record keeping, security servicing, fund accounting, middle office services such as investment book of
records, transaction management, loans, cash derivatives and collateral services, recordkeeping, client reporting
and investment analytics, markets services such as FX trading services, liquidity solutions, currency and collateral
management and securities finance, and front office services such as portfolio management solutions, risk
analytics, scenario analysis, performance and attribution, trade order and execution management, pre-trade
compliance and ESG investment tools. Revenues associated with new servicing mandates may vary based on the
breadth of services provided, the timing of installation, and the types of assets.
As previously disclosed, in early 2021, due to a decision to diversify providers, one of our large asset servicing
clients is moving a significant portion of its ETF assets currently with State Street to one or more other providers.
Prior to the commencement of the transition of assets, which began in 2022, we estimated that the financial impact
of this transition represented approximately 1.9% of our 2021 total fee revenue. We began to see the impact of the
transition on our fee revenue and income growth trends primarily towards the end of 2023, with the remainder
expected to be realized through 2025 as the transition continues. On a full year run rate basis, we estimate that
2024 reflected approximately two-thirds of the revenue impact of the exiting business. We expect to continue as a
significant service provider for this client after this transition and for the client to continue to be meaningful to our
business.
Management Fee Revenue
Management fees increased 13% in 2024 compared to 2023, primarily due to higher average market levels
and net inflows.
Management fees generated outside the United States were approximately 25% of total management fees in
2024, compared to approximately 26% of total management fees in 2023.
Management fees generally are affected by our level of AUM, which we report based on month-end valuations.
Management fees for certain components of managed assets, such as ETFs, mutual funds and Undertakings for
Collective Investments in Transferable Securities, are affected by daily average valuations of AUM. 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.
Asset-based management fees for passively managed products, to which our AUM is currently primarily
weighted, are generally charged at a lower fee on AUM than for actively managed products. Actively managed
products may also include performance fee arrangements which are recorded when the fee is earned, based on
predetermined benchmarks associated with the applicable account’s performance.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 66
In light of the above, we estimate, using relevant information as of December 31, 2024 and assuming that all
other factors remain constant, including the impact of business won and lost and client flows, that:
•
A 10% increase or decrease in worldwide equity valuations, on a weighted average basis, over the relevant
periods for which our management fees are calculated, would result in a corresponding change in our total
management fee revenues, on average and over multiple quarters, of approximately 5%; and
•
Changes in worldwide fixed income markets, which on a weighted average basis and over time are typically
less volatile than worldwide equity markets, will have a significantly smaller corresponding impact on our
management fee revenues on average and over time.
Daily averages, month-end averages and year-end indices demonstrate worldwide changes in equity and debt
markets that affect our management fee revenue. Year-end indices affect the values of AUM as of those dates. See
Table 3: Daily Averages, Month-End Averages and Year-End Equity Indices for selected indices. While the specific
indices presented are indicative of general market trends, the asset types and classes relevant to individual client
portfolios can and do differ, and the performance of associated relevant indices and of client portfolios can therefore
differ from the performance of the indices presented. In addition, our asset classifications may differ from those
industry classifications presented.
TABLE 9: ASSETS UNDER MANAGEMENT BY ASSET CLASS AND INVESTMENT APPROACH
(In billions)
December 31, 2024
December 31, 2023
December 31, 2022
% Change
2024 vs. 2023
% Change
2023 vs. 2022
Equity:
Active
$
52
$
47
$
54
11 %
(13) %
Passive
2,955
2,466
2,075
20
19
Total equity
3,007
2,513
2,129
20
18
Fixed-income:
Active
31
71
83
(56)
(14)
Passive
585
538
471
9
14
Total fixed-income
616
609
554
1
10
Cash(1)
518
467
376
11
24
Multi-asset-class solutions:
Active
23
21
28
10
(25)
Passive
351
289
181
21
60
Total multi-asset-class solutions
374
310
209
21
48
Alternative investments(2):
Active
10
11
35
(9)
(69)
Passive(3)
190
192
178
(1)
8
Total alternative investments
200
203
213
(1)
(5)
Total
$
4,715
$
4,102
$
3,481
15
18
(1) Includes both floating- and constant-net-asset-value portfolios held in commingled structures or separate accounts.
(2) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager
for the SPDR® Gold Shares and SPDR®Gold MiniSharesSM Trust, but act as the marketing agent.
(3) AUM for passive alternative investments has been revised from prior presentations.
TABLE 10: GEOGRAPHIC MIX OF ASSETS UNDER MANAGEMENT(1)
(In billions)
December 31, 2024
December 31, 2023
December 31, 2022
% Change
2024 vs. 2023
% Change
2023 vs. 2022
Americas
$
3,468
$
3,028
$
2,545
15 %
19 %
Europe/Middle East/Africa(2)
713
577
510
24
13
Asia/Pacific
534
497
426
7
17
Total
$
4,715
$
4,102
$
3,481
15
18
(1) Geographic mix is based on client location or fund management location.
(2) AUM for passive alternative investments has been revised from prior presentations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 67
.
TABLE 11: EXCHANGE - TRADED FUNDS BY ASSET CLASS(1)
(In billions)
December 31, 2024
December 31, 2023
December 31, 2022
% Change
2024 vs. 2023
% Change
2023 vs. 2022
Alternative Investments(2)
$
90
$
73
$
67
23 %
9 %
Equity
1,310
1,038
817
26
27
Multi Asset
1
1
1
—
—
Fixed-Income
177
156
134
13
16
Total Exchange-Traded Funds
$
1,578
$
1,268
$
1,019
24
24
(1) ETFs are a component of AUM presented in the preceding table.
(2) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager for
the SPDR® Gold Shares and SPDR®Gold MiniSharesSM Trust, but act as the marketing agent.
TABLE 12: ACTIVITY IN ASSETS UNDER MANAGEMENT BY PRODUCT CATEGORY
(In billions)
Equity
Fixed-
Income
Cash(1)
Multi-Asset-Class
Solutions
Alternative
Investments(2)(3)
Total
Balance as of December 31, 2021
$
2,674
$
623
$
368
$
222
$
251
$
4,138
Long-term institutional flows, net(4)
(97)
18
1
19
—
(59)
Exchange-traded fund flows, net
—
22
—
—
—
22
Total flows, net
(97)
40
1
19
—
(37)
Market appreciation (depreciation)
(397)
(94)
9
(28)
(31)
(541)
Foreign exchange impact
(51)
(15)
(2)
(4)
(7)
(79)
Total market/foreign exchange impact
(448)
(109)
7
(32)
(38)
(620)
Balance as of December 31, 2022
2,129
554
376
209
213
3,481
Long-term institutional flows, net(4)
(98)
13
(1)
65
(26)
(47)
Exchange-traded fund flows, net
73
17
—
—
(2)
88
Cash fund flows, net
—
—
76
—
—
76
Total flows, net
(25)
30
75
65
(28)
117
Market appreciation (depreciation)
408
26
16
35
15
500
Foreign exchange impact
1
(1)
—
1
3
4
Total market/foreign exchange impact
409
25
16
36
18
504
Balance as of December 31, 2023
2,513
609
467
310
203
4,102
Long-term institutional flows, net(4)
(7)
(8)
1
34
(17)
3
Exchange-traded fund flows, net
85
24
—
—
—
109
Cash fund flows, net
—
—
32
—
—
32
Total flows, net
78
16
33
34
(17)
144
Market appreciation (depreciation)
457
4
21
32
21
535
Foreign exchange impact
(41)
(13)
(3)
(2)
(7)
(66)
Total market/foreign exchange impact
416
(9)
18
30
14
469
Balance as of December 31, 2024
$
3,007
$
616
$
518
$
374
$
200
$
4,715
(1) Includes both floating and constant-net-asset-value portfolios held in commingled structures or separate accounts.
(2) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager
for the SPDR® Gold Shares and SPDR®Gold MiniSharesSM Trust, but act as the marketing agent.
(3) AUM for passive alternative investments has been revised from prior presentations.
(4) Amounts represent long-term portfolios, excluding ETFs.
Foreign Exchange Trading Services
Foreign exchange trading services revenue, as presented in Table 2: Total Revenue, increased 11% in 2024
compared to 2023, primarily due to higher client volumes, partially offset by lower spreads associated with lower
average FX volatility. Foreign exchange trading services revenue comprises revenue generated by FX trading and
revenue generated by brokerage and other trading services, which made up 63% and 37%, respectively, of foreign
exchange trading services revenue in both 2024 and 2023.
We primarily earn FX trading revenue by acting as a principal market-maker through both “direct sales and
trading” and “indirect FX trading.”
•
Direct sales and trading: Represent FX transactions at negotiated rates with clients and investment
managers that contact our trading desk directly. Clients are able to choose their own execution time and
method, trading by voice or electronically on one of the several available multibank platforms. These
principal market-making activities include transactions for funds serviced by third party custodians or prime
brokers, as well as those funds under custody with us.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 68
•
Indirect FX trading: Represents FX transactions with clients, for which we are the funds’ custodian, or their
investment managers, routed to our FX desk through our asset-servicing operation. We execute indirect FX
trades as a principal at rates disclosed to our clients. Indirect FX is designed to address FX trades that
relate to the purchase, sale or holding of a security where clients chose their execution frequency (either
hourly or once per day), allowing us to offer straight-through processing and a fully automated service.
Our FX trading revenue is influenced by multiple factors, including: the volume and type of client FX
transactions and related spreads; currency volatility, reflecting market conditions; and our management of exchange
rate, interest rate and other market risks associated with our FX activities. The relative impact of these factors on
our total FX trading revenues often differs from period to period. For example, assuming all other factors remain
constant, increases or decreases in volumes or bid-offer spreads across product mix tend to result in increases or
decreases, as the case may be, in client-related FX revenue.
Our clients that utilize indirect FX trading can, in addition to executing their FX transactions through dealers not
affiliated with us, transition from indirect FX trading to either direct sales and trading execution, including our “Street
FX” service. Street FX, in which we continue to act as a principal market-maker, enables our clients to define their
FX execution strategy and automate the FX trade execution process, both for funds under custody with us as well
as those under custody at another bank.
We also earn foreign exchange trading services revenue through “electronic FX services” and “other trading,
transition management and brokerage revenue.”
•
Electronic FX services: Our clients may choose to execute FX transactions through one of our electronic
trading platforms (i.e., FX Connect, Currenex). These transactions generate revenue through a “click” fee.
•
Other trading, transition management and brokerage revenue: As our clients look to us to enhance and
preserve portfolio values, they may choose to utilize our Transition or Currency Management capabilities or
transact with our Equity Trade execution group. These transactions, which are not limited to foreign
exchange, generate revenue via commissions charged for trades transacted during the management of
these portfolios.
Fund Connect is another one of our electronic trading platforms: it is a global trading, analytics and cash
management tool with access to more than 400 money market funds from leading providers.
Securities Finance
Securities finance revenue, as presented in Table 2: Total Revenue, increased 3% in 2024 compared to 2023,
mainly due to higher client lending balances, partially offset by lower spreads primarily resulting from muted industry
specials activity.
Our securities finance business consists of three components:
(1) an agency lending program for State Street Global Advisors managed investment funds with a broad range
of investment objectives, which we refer to as the State Street Global Advisors lending funds;
(2) an agency lending program for third-party investment managers and asset owners, which we refer to as the
agency lending funds; and
(3) security lending transactions which we enter into as principal, which we refer to as our prime services
business.
Securities finance revenue earned from our agency lending activities, which is composed of our split of both
the spreads related to cash collateral and the fees related to non-cash collateral, is principally a function of the
volume of securities on loan, the interest rate spreads and fees earned on the underlying collateral and our share of
the fee split.
As principal, our prime services business borrows securities from the lending client or other market participants
and then lends such securities to the subsequent borrower, either our client or a broker/dealer. We act as principal
when the lending client is unable to, or elects not to, transact directly with the market and execute the transaction
and furnish the securities. In our role as principal, we provide support to the transaction through our credit rating.
While we source a significant proportion of the securities furnished by us in our role as principal from third parties,
we have the ability to source securities through assets under custody from clients who have designated us as an
eligible borrower.
Market influences may continue to affect client demand for securities finance, and as a result our revenue
from, and the profitability of, our securities lending activities in future periods. In addition, the constantly evolving
regulatory environment, including revised or proposed capital and liquidity standards, interpretations of those
standards, and our own balance sheet management activities, may influence modifications to the way in which we
deliver our agency lending or prime services businesses, the volume of our securities lending activity and related
revenue and profitability in future periods.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 69
Software and Processing Fees
Software and processing fees revenue, as presented in Table 2: Total Revenue, increased 9% in 2024
compared to 2023, primarily due to higher front office software and data revenue associated with CRD.
Software and processing fees revenue includes diverse types of fees and revenue, including fees from front
office software and data and lending related and other fees.
Front office software and data revenue, which primarily includes revenue from CRD, Alpha Data Platform and
Alpha Data Services, increased 10% in 2024 compared to 2023, primarily due to software-enabled revenue growth,
partially offset by lower on-premises renewals.
Revenue related to the front office solutions provided by CRD is primarily driven by the sale of term software
licenses and SaaS, including professional services such as consulting and implementation services, software
support and maintenance. Approximately 50%-70% of revenue associated with a sale of software to be installed on-
premises is recognized at a point in time when the customer benefits from obtaining access to and use of the
software license, with the percentage varying based on the length of the contract and other contractual terms. The
remainder of revenue for on-premise installations is recognized over the length of the contract as maintenance and
other services are provided. Upon renewal of an on-premises software contract, the same pattern of revenue
recognition is followed with 50%-70% recognized upon renewal and the remaining balance recognized over the
term of the contract. Revenue for a SaaS related arrangement, where the customer does not take possession of the
software, is recognized over the term of the contract as services are provided. Upon renewal of a SaaS
arrangement, revenue continues to be recognized as services are provided under the new contract. As a result of
these differences in how portions of CRD revenue are accounted for, CRD revenue may vary more than other
business units quarter to quarter.
Lending related and other fees increased 8% in 2024 compared to 2023, reflecting higher unfunded
commitments primarily relating to our fund finance products. Lending related and other fees primarily consists of fee
revenue associated with our fund finance, leveraged loans, municipal finance, insurance and stable value wrap
businesses.
Other Fee Revenue
Other fee revenue includes market-related adjustments and income associated with other equity method
investments.
Other fee revenue increased $109 million in 2024, compared to 2023, primarily reflecting a $66 million gain on
sale of an equity investment and the absence of the impact of the Argentine peso devaluation in the prior year
period.
Additional information about fee revenue is provided under “Line of Business Information” included in this
Management’s Discussion and Analysis.
Net Interest Income
See Table 2: Total Revenue, for the breakout of interest income and interest expense for the years ended
December 31, 2024, 2023 and 2022.
NII is defined as interest income earned on interest-earning assets less interest expense incurred on interest-
bearing liabilities. Interest-earning assets, which principally consist of investment securities, interest-bearing
deposits with banks, loans, resale agreements and other liquid assets, are financed primarily by client deposits,
short-term borrowings and long-term debt.
NIM represents the relationship between annualized FTE NII and average total interest-earning assets for the
period. It is calculated by dividing FTE NII by average interest-earning assets. Revenue that is exempt from income
taxes, mainly earned from certain investment securities (state and political subdivisions), is adjusted to an FTE
basis using the U.S. federal and state statutory income tax rates.
NII increased 6% in 2024 compared to 2023, primarily due to higher investment securities yields and loan
growth, partially offset by deposit mix shift towards interest-bearing deposits.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 70
See Table 13: Average Balances and Interest Rates - Fully Taxable-Equivalent Basis, for the breakout of NII on
a FTE basis for the years ended December 31, 2024, 2023 and 2022.
TABLE 13: AVERAGE BALANCES AND INTEREST RATES - FULLY TAXABLE-EQUIVALENT BASIS(1)
Years Ended December 31,
2024
2023
2022
(Dollars in millions; fully taxable-
equivalent basis)
Average
Balance
Interest
Revenue/
Expense
Rate
Average
Balance
Interest
Revenue/
Expense
Rate
Average
Balance
Interest
Revenue/
Expense
Rate
Interest-bearing deposits with banks
$
88,754
$
3,634
4.09 %
$
69,883
$
2,869
4.11 %
$
76,498
$
842
1.10 %
Securities purchased under resale
agreements(2)
6,789
686
10.10
1,764
312
17.67
2,116
188
8.88
Trading account assets
782
—
—
711
—
—
721
—
0.01
Investment securities:
Investment securities available for sale
53,572
2,682
5.01
42,850
1,748
4.08
53,613
733
1.37
Investment securities held-to-maturity
51,212
1,090
2.13
62,915
1,262
2.01
58,316
979
1.68
Total Investment securities
104,784
3,772
3.60
105,765
3,010
2.85
111,929
1,712
1.53
Loans
39,660
2,272
5.73
34,800
1,863
5.35
35,117
973
2.77
Other interest-earning assets(3)
25,300
1,616
6.39
18,098
1,131
6.25
20,850
383
1.84
Total interest-earning assets
266,069
11,980
4.50
231,021
9,185
3.98
247,231
4,098
1.66
Cash and due from banks
3,674
3,925
3,652
Other non-interest-earning assets
41,980
39,750
35,547
Total assets
$ 311,723
$ 274,696
$ 286,430
Interest-bearing deposits:
U.S.
$ 135,898
$
5,532
4.07 %
$ 110,204
$
3,976
3.61 %
$
98,252
$
887
0.90 %
Non-U.S.
64,144
1,095
1.71
62,689
1,015
1.62
76,842
80
0.10
Total interest-bearing deposits(4)(5)
200,042
6,627
3.31
172,893
4,991
2.89
175,094
967
0.55
Securities sold under repurchase
agreements
3,163
156
4.93
3,904
34
0.87
3,633
14
0.39
Federal funds purchased
—
—
—
65
3
4.82
—
—
—
Other short-term borrowings
11,425
577
5.05
1,120
40
3.60
1,188
26
2.18
Long-term debt
20,394
1,086
5.32
17,355
888
5.12
14,132
376
2.66
Other interest-bearing liabilities(6)
4,826
608
12.59
3,891
465
11.96
2,725
161
5.91
Total interest-bearing liabilities
239,850
9,054
3.77
199,228
6,421
3.22
196,772
1,544
0.78
Non-interest-bearing deposits(5)
25,569
32,218
47,780
Other non-interest-bearing liabilities
21,192
19,073
15,992
Preferred shareholders’ equity
2,773
1,976
1,976
Common shareholders’ equity
22,339
22,201
23,910
Total liabilities and shareholders’
equity
$ 311,723
$ 274,696
$ 286,430
Excess of rate earned over rate paid
0.73 %
0.75 %
0.87 %
Net interest income, fully taxable-
equivalent basis
$
2,926
$
2,764
$
2,554
Net interest margin, fully taxable-
equivalent basis
1.10 %
1.20 %
1.03 %
Tax-equivalent adjustment
(3)
(5)
(10)
Net interest income, GAAP basis
$
2,923
$
2,759
$
2,544
(1) Rates earned/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 $191.26 billion, $140.36 billion and $71.02 billion for the years ended
December 31, 2024, 2023 and 2022, respectively. Excluding the impact of netting, the average interest rates would be approximately 0.46%, 0.22% and 0.26% for the years
ended December 31, 2024, 2023 and 2022, respectively.
(3) Reflects the impact of balance sheet netting under enforceable netting agreements of approximately $6.96 billion, $4.94 billion and $5.39 billion for the years ended December
31, 2024, 2023 and 2022, respectively. Excluding the impact of netting, the average interest rates would be approximately 6.69%, 3.61% and 1.46% for the years ended
December 31, 2024, 2023 and 2022, respectively.
(4) Average rate includes the impact of FX swap costs of approximately ($274) million, $54 million and $20 million for the years ended December 31, 2024, 2023 and 2022,
respectively. Average rates for total interest-bearing deposits excluding the impact of FX swap costs were 3.45%, 2.86% and 0.55% for the years ended December 31, 2024, 2023
and 2022, respectively.
(5) Total deposits averaged $225.61 billion, $205.11 billion and $222.87 billion for the years ended December 31, 2024, 2023 and 2022, respectively.
(6) Reflects the impact of balance sheet netting under enforceable netting agreements of approximately $6.30 billion, $4.67 billion and $4.59 billion for the years ended December
31, 2024, 2023 and 2022, respectively. Excluding the impact of netting, the average interest rates would be approximately 7.30%, 5.43% and 2.20% for the years ended
December 31, 2024, 2023 and 2022, respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 71
Changes in the components of interest-earning
assets and interest-bearing liabilities are discussed in
more detail below. Additional information about the
components of interest income and interest expense
is provided in Note 17 to the consolidated financial
statements in this Form 10-K.
Average total interest-earning assets were
$266.07 billion in 2024 compared to $231.02 billion in
2023. The increase is primarily due to higher levels of
client deposits and an increase in short-term
wholesale funding.
Interest-bearing deposits with banks averaged
$88.75 billion in 2024 compared to $69.88 billion in
2023.
These
deposits
primarily
reflect
our
maintenance of cash balances at the Federal
Reserve, the European Central Bank (ECB) and other
non-U.S. central banks. The higher levels of average
cash balances reflect higher levels of client deposits
and funding levels.
Securities purchased under resale agreements
averaged $6.79 billion in 2024 compared to $1.76
billion in 2023, due to a shift to term repurchase
agreements, which reduces our ability to net against
resale agreement balances. Additionally, as a
member of FICC, we may net securities sold under
repurchase agreements against those purchased
under resale agreements with counterparties that are
also members of the clearing organization when
specific netting criteria are met. The impact of
balance sheet netting was $191.26 billion on average
in 2024 compared to $140.36 billion in 2023, primarily
driven by an increase in FICC repurchase agreement
volumes.
We are a direct and sponsoring member of
FICC. As a sponsoring member within FICC, we enter
into repurchase and resale transactions in eligible
securities with sponsored clients and with other FICC
members and, pursuant to FICC Government
Securities Division rules, submit, novate and net the
transactions. We may sponsor clients to clear their
eligible repurchase transactions with FICC, backed by
our guarantee to FICC of the prompt and full payment
and performance of our sponsored member clients’
respective obligations. We generally obtain a security
interest from our sponsored clients in the high quality
securities collateral that they receive, which is
designed to mitigate our potential exposure to FICC.
Additionally, as a member of certain industry
clearing and settlement exchanges, we may be
required to pay a pro rata share of the losses incurred
by the organization and provide liquidity support in
the event of the default of another member to the
extent that the defaulting member’s clearing fund
obligation and the prescribed loss allocation to FICC
is depleted. It is difficult to estimate our maximum
possible exposure under the membership agreement,
since this would require an assessment of future
claims that may be made against us that have not yet
occurred. We did not record any liabilities under these
arrangements as of both December 31, 2024 and
2023.
Average investment securities were $104.78
billion in 2024 compared to $105.77 billion in 2023.
While the overall size of the portfolio was relatively
flat in 2024 compared to 2023, it included higher U.S.
Treasury securities, offset by lower mortgage-backed
and non-U.S. sovereign and supranational securities.
Average loans increased to $39.66 billion in
2024 compared to $34.80 billion in 2023. Average
core loans, which exclude overdrafts and highlight our
efforts to grow our lending portfolio, averaged $36.14
billion in 2024 compared to $30.97 billion in 2023.
The increase is primarily due to growth in CLOs in
loan form and fund finance loans. Additional
information about these loans is provided in Note 4 to
the consolidated financial statements in this Form 10-
K.
Average other interest-earning assets, largely
associated
with
our
prime
service
business,
increased to $25.30 billion in 2024 from $18.10 billion
in 2023, primarily driven by an increase in the level of
cash collateral posted. Other interest-earning assets
primarily reflects prime services assets where cash
has been posted to borrow securities from lenders,
which are then lent by us, as principal, to borrowers.
This cash includes both cash from borrowers and
cash utilized from our balance sheet, and is
presented on a net basis on the balance sheet where
we have enforceable netting agreements. Non-
interest earning assets also includes a portion of our
prime services assets where borrower-provided non-
cash collateral has been utilized to borrow securities
from lenders, which we subsequently loan, as
principal, to our borrowers; in this structure our
investment portfolio securities are encumbered, but
this is not reflected on the balance sheet. Combined
with our prime services liabilities, revenue from these
activities generates securities finance fee revenue as
well as net interest income.
Average
total
interest-bearing
deposits
increased to $200.04 billion in 2024 from $172.89
billion in 2023. The increase is driven by active
engagement with our clients, rotation from non-
interest bearing deposits and a reduction in the
Federal Reserve’s overnight repurchase agreement
activity. Future interest-bearing deposit levels will be
influenced by the underlying asset servicing business,
client behavior, the mix of interest-bearing and non-
interest-bearing deposits and market conditions,
including the general levels of U.S. and non-U.S.
interest rates.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 72
Average other short-term borrowings increased
to $11.43 billion in 2024 from $1.12 billion in 2023,
due to increased wholesale funding. The increase is
driven by our effort to diversify our funding sources
through relatively low-cost channels, to further
support business growth.
Average long-term debt was $20.39 billion in
2024 compared to $17.36 billion in 2023. These
amounts
reflect
issuances,
redemptions
and
maturities of senior and subordinated debt during the
respective periods.
Average other interest-bearing liabilities, largely
associated with our prime services business, were
$4.83 billion in 2024 compared to $3.89 billion in
2023. Other interest-bearing liabilities is primarily
driven by cash received from our custody clients,
which is presented on a net basis where we have
enforceable netting agreements. Non-interest bearing
liabilities also include a portion of our prime services
liabilities where client-provided non-cash collateral
has been received and we have rehypothecation
rights. Securities received as collateral from our
custody clients where we have no rehypothecation
rights are used as a credit mitigant only and remain
off balance sheet.
Several factors could affect future levels of NII
and NIM, including the volume and mix of client
deposits and funding sources; central bank actions;
balance sheet management activities; changes in the
level and slope of U.S. and non-U.S. interest rates;
revised or proposed regulatory capital or liquidity
standards, or interpretations of those standards; the
yields earned on securities purchased compared to
the yields earned on securities sold or matured; and
changes in the type and amount of credit or other
loans we extend.
Based on market conditions and other factors,
including regulatory standards, we continue to
reinvest the majority of the proceeds from pay-downs
and maturities of investment securities in highly-rated
U.S. and non-U.S. securities, such as federal agency
MBS, sovereign debt securities and U.S. Treasury
and agency securities. The pace at which we
reinvest, and the types of investment securities
purchased will depend on the impact of market
conditions,
the
implementation
of
regulatory
standards, including interpretation of those standards
and other factors over time. We expect these factors
and the levels of global interest rates to impact our
reinvestment program and future levels of NII and
NIM.
Provision for Credit Losses
In 2024, we recorded a $75 million provision for
credit losses, primarily reflecting an increase in loan
loss reserves associated with certain commercial real
estate and leveraged loans, compared to $46 million
in 2023.
Additional information is provided under “Loans”
in “Financial Condition” in this Management’s
Discussion and Analysis and in Note 4 to the
consolidated financial statements in this Form 10-K.
Expenses
Table 14: Expenses, provides the breakout of
expenses for the years ended December 31, 2024,
2023 and 2022. Total expenses decreased 1%
compared to 2023, as higher business investments,
as well as revenue and performance-related costs,
were more than offset by productivity savings from
organizational simplification, process improvements
and other initiatives, including from the joint venture
consolidations in India and the net impact of notable
items. The net impact of notable items in the current
and prior year periods decreased expenses by 5%
points in 2024 as compared to 2023.
TABLE 14: EXPENSES
Years Ended December 31,
%
Change
2024 vs.
2023
%
Change
2023 vs.
2022
(Dollars in millions)
2024
2023
2022
Compensation and
employee benefits
$ 4,697
$ 4,744
$ 4,428
(1) %
7 %
Information systems and
communications
1,829
1,703
1,630
7
4
Transaction processing
services
998
957
971
4
(1)
Occupancy
437
426
394
3
8
Amortization of other
intangible assets
230
239
238
(4)
—
Acquisition and
restructuring costs
—
(15)
65
nm
nm
Other:
Professional services
465
428
375
9
14
Other
874
1,101
700
(21)
57
Total other
1,339
1,529
1,075
(12)
42
Total expenses
$ 9,530
$ 9,583
$ 8,801
(1)
9
Number of employees at
year-end
52,626
46,451
42,226
13
10
Compensation and employee benefits expenses
decreased 1% in 2024 compared to 2023, as higher
performance-based
incentive
compensation
and
employee benefits were more than offset by ongoing
organizational simplification, process improvements
and other initiatives, as well as net benefits from the
joint venture consolidations in India and lower net
impact of notable items. The net impact of notable
items in the current and prior year periods decreased
compensation and employee benefits expenses by
3% points in 2024 as compared to 2023.
Total headcount increased 13% as of December
31, 2024 compared to December 31, 2023, primarily
reflecting the consolidation of our second joint
venture in India in the second quarter of 2024.
Associated headcount cost was previously reflected
in compensation and employee benefits expenses.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 73
Information
systems
and
communications
expenses increased 7% in 2024 compared to 2023,
primarily
reflecting
higher
technology
and
infrastructure investments, the absence of episodic
vendor credits and notable items, partially offset by
vendor savings initiatives and optimization savings.
The absence of the prior year notable items
decreased information systems and communications
expenses by 3% points in 2024, as compared to
2023.
Transaction
processing
services
expenses
increased 4% in 2024 compared to 2023, primarily
due to higher revenue-related costs associated with
sub-custody, broker fees and market data costs.
Occupancy expenses increased 3% in 2024
compared to 2023, primarily driven by footprint
expansion related to the joint venture consolidations
in India, partially offset by footprint optimization and
one-time vendor credits.
Amortization
of
other
intangible
assets
decreased 4% in 2024 compared to 2023.
Other expenses decreased 12% in 2024
compared to 2023, primarily reflecting the impact of
the FDIC special assessment notable items in the
current and prior year periods, partially offset by
higher professional services, and higher sales,
marketing and other fund related expenses.
Repositioning Charges
In 2024, we recorded a net repositioning release
of $2 million, including a $15 million release reflected
in compensation and employee benefits expenses,
partially offset by $13 million of occupancy charges
related to footprint optimization.
In 2023, we recorded net repositioning charges
of approximately $203 million to enable the next
phase of our productivity efforts to streamline
operations and technology, and improve efficiency.
Expenses for 2023 included $182 million of
compensation and employee benefits expenses
related to workforce rationalization and $21 million of
occupancy costs related to real estate footprint
optimization.
The following table presents aggregate activity
for repositioning charges for the periods indicated:
TABLE 15: REPOSITIONING CHARGES
(In millions)
Employee
Related
Costs
Real Estate
Actions
Total
Accrual Balance at December
31, 2021
$
68
$
6
$
74
Accruals for Repositioning
Charges
58
20
78
Payments and other adjustments
(43)
(21)
(64)
Accrual Balance at December
31, 2022
83
5
88
Accruals for Repositioning
Charges
182
21
203
Payments and other adjustments
(58)
(25)
(83)
Accrual Balance at December
31, 2023
207
1
208
Accruals for Repositioning
Charges
(15)
13
(2)
Payments and other adjustments
(96)
(14)
(110)
Accrual Balance at December
31, 2024
$
96
$
—
$
96
Income Tax Expense
Income tax expense was $708 million in 2024
compared to $372 million in 2023. Our effective tax
rate was 20.8% in 2024 compared to 16.1% in 2023,
primarily due to lower impact of business tax credits,
an increase in foreign tax-related costs and a
decrease in discrete benefits.
Additional information regarding income tax
expense, including unrecognized tax benefits and tax
contingencies, is provided in Notes 13 and 22 to the
consolidated financial statements in this Form 10-K.
LINE OF BUSINESS INFORMATION
Our operations are organized into two lines of
business: Investment Servicing and Investment
Management, which are defined based on products
and services provided. The results of operations for
these
lines
of
business
are
not
necessarily
comparable with those of other companies, including
companies in the financial services industry. For the
description of our lines of business refer to “Lines of
Business” in Item 1 in this Form 10-K. Certain
amounts are not allocated to our two lines of
business. For further information, please refer to Note
24 to the consolidated financial statements in this
Form 10-K.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 74
Investment Servicing
TABLE 16: INVESTMENT SERVICING LINE OF BUSINESS RESULTS
(Dollars in millions, except where otherwise noted)
Years Ended December 31,
% Change
2024 vs. 2023
% Change
2023 vs. 2022
2024
2023
2022
Servicing fees
$
5,016
$
4,922
$
5,087
2 %
(3) %
Foreign exchange trading services
1,248
1,140
1,271
9
(10)
Securities finance
415
402
397
3
1
Software and processing fees
888
811
789
9
3
Other fee revenue
188
145
46
30
nm
Total fee revenue
7,755
7,420
7,590
5
(2)
Net interest income
2,899
2,740
2,551
6
7
Total other income
2
—
(2)
nm
nm
Total revenue
10,656
10,160
10,139
5
—
Provision for credit losses
75
46
20
63
nm
Total expenses
7,687
7,413
7,260
4
2
Income before income tax expense
$
2,894
$
2,701
$
2,859
7
(6)
Pre-tax margin
27 %
27 %
28 %
Average assets (in billions)
$
308.5
$
271.5
$
283.2
nm Not meaningful
Servicing Fees
Servicing fees, as presented in Table 16: Investment Servicing Line of Business Results, increased 2% in 2024
compared to 2023, primarily due to as higher average market levels and net new business, excluding a previously
disclosed client transition, were partially offset by pricing headwinds, a previously disclosed client transition and
lower client activity and adjustments, including asset mix shift.
For additional information about servicing fees and the impact of worldwide equity and fixed-income valuations
on our fee revenue, as well as other key drivers of our servicing fee revenue, refer to “Fee Revenue” in
“Consolidated Results of Operations” included in this Management’s Discussion and Analysis.
Expenses
Total expenses for Investment Servicing increased 4% in 2024 compared to 2023, as higher business
investments, as well as revenue and performance-related costs, were partially offset by productivity savings from
organizational simplification, process improvements and other initiatives, including from the joint venture
consolidations in India. Additional information about expenses is provided under “Expenses” in “Consolidated
Results of Operations” included in this Management’s Discussion and Analysis.
Investment Management
TABLE 17: INVESTMENT MANAGEMENT LINE OF BUSINESS RESULTS
(Dollars in millions, except where otherwise noted)
Years Ended December 31,
% Change 2024
vs. 2023
% Change 2023
vs. 2022
2024
2023
2022
Management fees(1)
$
2,124
$
1,876
$
1,939
13 %
(3) %
Foreign exchange trading services(2)
138
125
82
10
52
Securities finance
23
24
19
(4)
26
Other fee revenue(3)
35
35
(47)
—
nm
Total fee revenue
2,320
2,060
1,993
13
3
Net interest income
24
19
(7)
26
nm
Total revenue
2,344
2,079
1,986
13
5
Total expenses
1,655
1,540
1,396
7
10
Income before income tax expense
$
689
$
539
$
590
28
(9)
Pre-tax margin
29 %
26 %
30 %
Average assets (in billions)
$
3.2
$
3.2
$
3.2
(1) Includes revenues from SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust AUM where we are not the investment manager but act as the marketing agent.
(2) Includes revenue for reimbursements received for certain ETFs associated with State Street Global Advisors where we act as the distribution and marketing agent.
(3) Includes other revenue items that are primarily driven by equity market movements.
nm Not meaningful
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 75
Investment Management total revenue increased 13% in 2024 compared to 2023.
Management Fees
Management fees increased 13% in 2024 compared to 2023, primarily due to higher average market levels
and net inflows.
For additional information about the impact of worldwide equity and fixed-income valuations, as well as other
key drivers of our management fees revenue, refer to “Fee Revenue” in “Consolidated Results of Operations”
included in this Management’s Discussion and Analysis.
Expenses
Total expenses for Investment Management increased 7% in 2024 compared to 2023, reflecting higher
revenue-related fund expenses, performance-based incentive compensation, and salaries and employee benefits.
Additional information about expenses is provided under “Expenses” in “Consolidated Results of Operations”
included in this Management’s Discussion and Analysis.
For additional information about our two lines of business, as well as the revenues, expenses and capital
allocation methodologies associated with them, refer to Note 24 to the consolidated financial statements in this
Form 10-K.
FINANCIAL CONDITION
The structure of our consolidated statement of condition is primarily driven by the liabilities generated by our
Investment Servicing and Investment Management lines of business. Our clients’ needs and our operating
objectives determine the volume, mix and currency denomination of our assets and liabilities. As our clients execute
their worldwide cash management and investment activities, they utilize deposits and short-term investments that
constitute the majority of our liabilities. These liabilities are generally in the form of interest-bearing transaction
account deposits, which are denominated in a variety of currencies; non-interest-bearing demand deposits; and
repurchase agreements, which generally serve as short-term investment alternatives for our clients.
Deposits and other liabilities resulting from client initiated transactions are invested in assets that generally
have contractual maturities significantly longer than our liabilities; however, we evaluate the operational nature of
our deposits and seek to maintain appropriate short-term liquidity of those liabilities that are not operational in
nature and maintain longer-termed assets for our operational deposits. Our assets consist primarily of securities
held in our AFS or HTM portfolios and short-duration financial instruments, such as interest-bearing deposits with
banks and securities purchased under resale agreements. The actual mix of assets is determined by the
characteristics of the client liabilities and our desire to maintain a well-diversified portfolio of high-quality assets.
Additional information on our financial condition is presented in Table 13: Average Balances and Interest Rates
- Fully Taxable-Equivalent Basis. We believe the average statement of condition is a better measure of the balance
sheet trends as period-end balances can be impacted by the timing of client activities including deposits and
withdrawals.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 76
Investment Securities
TABLE
18:
CARRYING
VALUES
OF
INVESTMENT
SECURITIES
As of December 31,
(In millions)
2024
2023
2022
Available-for-sale:
U.S. Treasury and federal agencies:
Direct obligations
$ 23,525
$ 8,301
$ 7,981
Mortgage-backed securities(1)
10,566
10,755
8,509
Total U.S. Treasury and federal agencies
34,091
19,056
16,490
Non-U.S. debt securities:
Mortgage-backed securities
2,430
1,857
1,623
Asset-backed securities(2)
1,868
2,137
1,669
Non-U.S. sovereign, supranational and
non-U.S. agency
13,939
15,100
14,089
Other(3)
2,821
2,735
2,091
Total non-U.S. debt securities
21,058
21,829
19,472
Asset-backed securities:
Student loans(4)
90
114
115
Collateralized loan obligations(5)
3,453
2,527
2,355
Non-agency CMBS and RMBS(6)
4
249
231
Other
91
90
88
Total asset-backed securities
3,638
2,980
2,789
State and political subdivisions
56
355
823
Other U.S. debt securities(7)
52
306
1,005
Total available-for-sale securities(8)(9)
$ 58,895
$ 44,526
$ 40,579
Held-to-maturity:
U.S. Treasury and federal agencies:
Direct obligations
$ 5,417
$ 8,584
$ 11,693
Mortgage-backed securities(10)
36,101
39,472
42,307
Total U.S. Treasury and federal agencies
41,518
48,056
54,000
Non-U.S. debt securities:
Non-U.S. sovereign, supranational and
non-U.S. agency
3,673
5,757
6,603
Total non-U.S. debt securities
3,673
5,757
6,603
Asset-backed securities:
Student loans(4)
2,536
3,298
3,955
Non-agency CMBS and RMBS(11)
—
6
142
Total asset-backed securities
2,536
3,304
4,097
Total held-to-maturity securities(8)(12)
$ 47,727
$ 57,117
$ 64,700
(1) As of December 31, 2024, 2023 and 2022, the total fair value included $4.36 billion,
$5.54 billion and $6.78 billion, respectively, of agency CMBS and $6.20 billion,
$5.21 billion and $1.73 billion, respectively, of agency MBS.
(2) As of December 31, 2024, 2023 and 2022, the fair value includes non-U.S.
collateralized loan obligations of $0.70 billion, $1.02 billion and $0.86 billion, respectively.
(3) As of December 31, 2024, 2023 and 2022, the fair value includes non-U.S. corporate
bonds of $2.54 billion, $2.36 billion and $1.14 billion, respectively.
(4) Primarily comprised of securities guaranteed by the federal government with respect to
at least 97% of defaulted principal and accrued interest on the underlying loans.
(5) Excludes collateralized loan obligations in loan form. Refer to Note 4 for additional
information.
(6) Consists entirely of non-agency RMBS as of December 31, 2024 and entirely of non-
agency CMBS as of both December 31, 2023 and 2022.
(7) As of December 31, 2024, 2023 and 2022, the fair value of U.S. corporate bonds was
$0.05 billion, $0.31 billion and $1.01 billion, respectively.
(8) An immaterial amount of accrued interest related to HTM and AFS investment securities
was excluded from the amortized cost basis for the period ended December 31, 2024.
(9) As of December 31, 2024 and 2023, we had no allowance for credit losses on AFS
investment securities. As of December 31, 2022, we had an allowance for credit losses on
AFS investment securities of $2 million.
(10) As of December 31, 2024, 2023 and 2022, the total amortized cost included
$5.18 billion, $5.23 billion and $4.99 billion of agency CMBS, respectively.
(11) Consists entirely of non-agency RMBS as of December 31, 2023. As of December 31,
2022, the total amortized cost included $133 million of non-agency CMBS and $9 million
of non-agency RMBS.
(12) As of December 31, 2024, we had no allowance for credit losses on HTM investment
securities. As of December 31, 2023, we had an allowance for credit losses on HTM
investment securities of $1 million. As of December 31, 2022, we had no allowance for
credit losses on HTM investment securities.
Additional information about our investment
securities portfolio is provided in Note 3 to the
consolidated financial statements in this Form 10-K.
We manage our investment securities portfolio
by taking into consideration the interest rate and
duration characteristics of our client liabilities along
with the context of the overall structure of our
consolidated
statement
of
condition,
and
in
consideration of the global interest rate environment.
We consider a well-diversified, high-credit quality
investment securities portfolio to be an important
element in the management of our consolidated
statement of condition.
Average duration of our investment securities
portfolio, including the impact of hedges, was 2.2
years and 2.7 years as of December 31, 2024 and
2023, respectively.
Approximately 97% and 96% of the carrying
value of the portfolio was rated “AA” or higher as of
December 31, 2024 and 2023, respectively, as
follows:
TABLE 19: INVESTMENT PORTFOLIO BY EXTERNAL CREDIT
RATING
December 31,
2024
December 31,
2023
AAA(1)
88 %
85 %
AA
9
11
A
2
2
BBB
1
2
100 %
100 %
(1) Includes U.S. Treasury and federal agency securities that are split-rated,
“AAA” by Moody’s Investors Service and “AA+” by Standard & Poor’s and
also includes Agency MBS securities which are not explicitly rated but which
have an explicit or assumed guarantee from the U.S. government.
The following table presents the diversification of
the investment portfolio with respect to asset class
composition as of December 31, 2024 and 2023.
TABLE 20: INVESTMENT PORTFOLIO BY ASSET CLASS
December 31,
2024
December 31,
2023
U.S. Agency
Mortgage-backed securities
35 %
39 %
U.S. Treasuries
27
17
Non-U.S. sovereign, supranational
and non-U.S. agency
17
20
Asset-backed securities
10
10
Other credit
11
14
100 %
100 %
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 77
The following table presents the net unamortized
purchase premiums or discounts and net premium
amortization or discount accretion related to the
investment portfolio for the periods indicated:
TABLE 21: INVESTMENT SECURITIES NET PREMIUM
AMORTIZATION (DISCOUNT ACCRETION)
Years Ended December 31,
2024
2023
(Dollars in
millions)
MBS
Non-MBS
Total(1)
MBS
Non-MBS
Total(1)
Unamortized
purchase
premiums and
(discounts) at
period end
$
364
$
(599)
$
(235)
$
418
$
(264)
154
Net premium
amortization
(discount
accretion)
66
(316)
(250)
81
(78)
3
(1) Totals exclude premiums or discounts created from the transfer of securities from AFS
to HTM.
Non-U.S. Debt Securities
Approximately 23% and 27% of the aggregate
carrying value of our investment securities portfolio
was non-U.S. debt securities as of December 31,
2024 and 2023, respectively.
TABLE 22: NON-U.S. DEBT SECURITIES(1)
(In millions)
December 31, 2024
December 31, 2023
Available-for-sale:
Canada
$
3,237
$
4,020
United Kingdom
2,702
2,141
Australia
2,055
1,833
France
1,565
1,386
Germany
1,195
1,389
Netherlands
446
690
Austria
382
339
Finland
312
141
Spain
301
230
Sweden
263
270
Italy
231
412
Mexico
216
—
Brazil
181
257
Republic of Korea
168
223
Singapore
141
249
Japan
114
769
Other(2)
7,549
7,480
Total
$
21,058
$
21,829
Held-to-maturity:
Ireland
$
397
$
440
Belgium
254
459
France
206
524
Germany
201
212
Finland
124
131
Canada
104
112
Austria
67
150
Spain
—
805
Netherlands
—
177
Other(2)
2,320
2,747
Total
$
3,673
$
5,757
(1) Geography is determined primarily based on the domicile of collateral or issuer.
(2) As of December 31, 2024, other non-U.S. investments include $6.97 billion
supranational bonds in AFS securities and $2.32 billion supranational bonds in
HTM securities.
Approximately 90% and 86% of the aggregate
carrying value of these non-U.S. debt securities was
rated “AAA” or “AA” as of December 31, 2024 and
2023, respectively. The majority of these securities
comprised senior positions within the security
structures; these positions have a level of protection
provided through subordination and other forms of
credit protection. As of December 31, 2024 and 2023,
approximately 29% and 28%, respectively, of the
aggregate carrying value of these non-U.S. debt
securities was floating-rate.
As of December 31, 2024, our non-U.S. debt
securities had an average market-to-book ratio of
99.8%, and an aggregate pre-tax net unrealized loss
of $40 million, consisting of gross unrealized gains of
$109 million and gross unrealized losses of $149
million. These unrealized amounts included:
•
a pre-tax net unrealized gain of $26 million,
consisting of gross unrealized gains of $102
million and gross unrealized losses of $76
million, associated with non-U.S. AFS debt
securities; and
•
a pre-tax net unrealized loss of $66 million,
consisting of gross unrealized gains of $7
million and gross unrealized losses of $73
million, associated with non-U.S. HTM debt
securities.
As of December 31, 2024, the underlying
collateral for non-U.S. MBS and ABS primarily
included mortgages in Australia, the United Kingdom,
the Netherlands and Italy. The securities listed under
“Canada” were composed of Canadian government
securities, corporate debt, covered bonds and non-
U.S. agency securities. The securities listed under
“France” were composed of sovereign bonds,
corporate debt, covered bonds, ABS and non-U.S.
agency securities. The securities listed under
“Germany” were composed of non-U.S. agency
securities, ABS and corporate debt.
Municipal Obligations
We
carried
approximately
$56
million
of
municipal securities classified as state and political
subdivisions in our investment securities portfolio as
of December 31, 2024, as shown in Table 18:
Carrying Values of Investment Securities, all of which
were classified as AFS. As of December 31, 2024, we
also provided approximately $5.32 billion of credit and
liquidity facilities to municipal issuers.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 78
TABLE 23: STATE AND MUNICIPAL OBLIGORS(1)
(Dollars in millions)
Total Municipal
Securities
Credit and Liquidity
Facilities(2)
Total
% of Total Municipal
Exposure
December 31, 2024
State of Issuer:
Texas
$
—
$
2,006
$
2,006
37 %
New York
4
1,676
1,680
31
California
25
610
635
12
Total
$
29
$
4,292
$
4,321
December 31, 2023
State of Issuer:
Texas
$
112
$
2,387
$
2,499
37 %
New York
25
1,687
1,712
25
California
28
1,082
1,110
16
Total
$
165
$
5,156
$
5,321
(1) Represented 5% or more of our aggregate municipal credit exposure of approximately $5.38 billion and $6.80 billion across our businesses as of December 31, 2024 and 2023, respectively.
(2) Includes municipal loans which are also presented within Table 25: U.S. and Non-U.S. Loans.
Our aggregate municipal securities exposure presented in Table 23: State and Municipal Obligors, was
concentrated primarily with highly-rated counterparties, with approximately 93% of the obligors rated “AA” or higher
as of December 31, 2024. As of that date, approximately 45% and 54% of our aggregate municipal securities
exposure was associated with general obligation and revenue bonds, respectively. The portfolios are also diversified
geographically, with the states that represent our largest exposures widely dispersed across the United States.
Additional information with respect to our assessment of the allowance for credit losses on debt securities and
impairment of AFS securities is provided in Note 3 to the consolidated financial statements in this Form 10-K.
TABLE 24: CONTRACTUAL MATURITIES AND YIELDS
As of December 31, 2024
Under 1 Year
1 to 5 Years
6 to 10 Years
Over 10 Years
Total
(Dollars in millions)
Amount
Yield
Amount
Yield
Amount
Yield
Amount
Yield
Amount
Available-for-sale(1):
U.S. Treasury and federal agencies:
Direct obligations
$ 8,625
0.24 %
$ 13,474
3.35 %
$ 1,426
3.22 %
$
—
— %
$ 23,525
Mortgage-backed securities
49
5.23
1,819
4.99
2,493
4.91
6,205
5.18
10,566
Total U.S. treasury and federal agencies
8,674
15,293
3,919
6,205
34,091
Non-U.S. debt securities:
Mortgage-backed securities
58
4.43
427
5.20
38
5.37
1,907
4.84
2,430
Asset-backed securities
276
3.77
279
3.74
1,007
4.74
306
3.89
1,868
Non-U.S. sovereign, supranational and non-U.S. agency
2,700
0.87
10,136
2.95
1,103
2.52
—
—
13,939
Other
371
—
2,346
4.41
104
4.31
—
—
2,821
Total non-U.S. debt securities
3,405
13,188
2,252
2,213
21,058
Asset-backed securities:
Student loans
24
7.44
—
—
12
5.48
54
5.08
90
Collateralized loan obligations
37
5.87
78
6.06
1,877
5.87
1,461
5.96
3,453
Non-agency CMBS and RMBS
—
—
—
—
—
6.01
4
6.26
4
Other
—
—
91
5.28
—
—
—
—
91
Total asset-backed securities
61
169
1,889
1,519
3,638
State and political subdivisions(2)
30
3.74
26
5.93
—
—
—
—
56
Other U.S. debt securities
29
0.77
23
3.13
—
—
—
—
52
Total
$ 12,199
$ 28,699
$ 8,060
$ 9,937
$ 58,895
Held-to-maturity(1):
U.S. Treasury and federal agencies:
Direct obligations
$ 4,557
0.48 %
$
851
0.78 %
$
1
5.57 %
$
8
5.07 %
$ 5,417
Mortgage-backed securities
134
2.81
1,711
2.67
3,308
1.71
30,948
2.39
36,101
Total U.S. treasury and federal agencies
4,691
2,562
3,309
30,956
41,518
Non-U.S. debt securities:
Non-U.S. sovereign, supranational and non-U.S. agency
1,409
1.98
2,044
1.12
220
0.73
—
—
3,673
Total non-U.S. debt securities
1,409
2,044
220
—
3,673
Asset-backed securities:
Student loans
149
5.35
310
5.61
380
5.55
1,697
5.13
2,536
Total asset-backed securities
149
310
380
1,697
2,536
Total
$ 6,249
$ 4,916
$ 3,909
$ 32,653
$ 47,727
(1) The maturities of MBS, ABS and CMOs are based on expected principal payments.
(2) Yields were calculated on a FTE basis, using applicable statutory tax rates (21.0% as of December 31, 2024).
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 79
Loans
TABLE 25: U.S. AND NON- U.S. LOANS
As of December 31,
(In millions)
2024
2023
2022
Domestic(1):
Commercial and financial:
Fund finance(2)
$ 16,347
$ 13,697
$ 12,154
Leveraged loans
2,742
2,412
2,431
Overdrafts
1,208
1,225
1,707
Collateralized loan obligations in loan
form
50
150
100
Other(3)
3,220
2,512
1,871
Commercial real estate
2,842
3,069
2,985
Total domestic
26,409
23,065
21,248
Foreign(1):
Commercial and financial:
Fund finance(2)
6,601
4,956
3,949
Leveraged loans
1,082
1,194
1,118
Overdrafts
772
1,047
1,094
Collateralized loan obligations in loan
form
8,336
6,369
4,741
Total foreign
16,791
13,566
10,902
Total loans(4)
43,200
36,631
32,150
Allowance for loan losses
(174)
(135)
(97)
Loans, net of allowance
$ 43,026
$ 36,496
$ 32,053
(1) Domestic and foreign categorization is based on the borrower’s country of
domicile.
(2) Fund finance loans include primarily $11.54 billion private equity capital call
finance loans, $8.09 billion loans to real money funds and $1.44 billion loans to
business development companies as of December 31, 2024, compared to
$9.69 billion and $7.57 billion private equity capital call finance loans, $6.63 billion
and $6.61 billion loans to real money funds and $1.05 billion and $1.11 billion loans
to business development companies as of December 31, 2023 and 2022,
respectively.
(3) Includes $3.01 billion securities finance loans and $214 million loans to
municipalities as of December 31, 2024, $2.23 billion securities finance loans,
$276 million loans to municipalities and $5 million other loans as of December 31,
2023 and $1.51 billion securities finance loans, $321 million loans to municipalities
and $42 million other loans as of December 31, 2022.
(4) As of December 31, 2024, excluding overdrafts, floating rate loans totaled
$38.46 billion and fixed rate loans totaled $2.76 billion. We have entered into
interest rate swap agreements to hedge the forecasted cash flows associated with
EURIBOR indexed floating-rate loans. See Note 10 to the consolidated financial
statements in this Form 10-K for additional details.
We sold $300 million of total loans, which
consisted of $250 million of leveraged loans and $50
million of commercial real estate loans in 2024.
We had binding unfunded commitments as of
December 31, 2024 and 2023 of $104 million and
$121
million,
respectively,
to
participate
in
syndications
of
leveraged
loans.
Additional
information about these unfunded commitments is
provided in Note 12 to the consolidated financial
statements in this Form 10-K.
These leveraged loans, which are primarily rated
“speculative” under our internal risk-rating framework
(refer to Note 4 to the consolidated financial
statements in this Form 10-K), are externally rated
“BBB,” “BB” or “B,” with approximately 91% and 92%
of the loans rated “BB” or “B” as of December 31,
2024 and 2023, respectively. Our investment strategy
involves generally limiting our investment to larger,
more liquid credits underwritten by major global
financial institutions, applying our internal credit
analysis process to each potential investment and
diversifying our exposure by counterparty and
industry segment. However, these loans have
significant exposure to credit losses relative to higher-
rated loans in our portfolio.
As of December 31, 2024, the commercial real
estate
portfolio
consists
of,
by
asset
class,
approximately 38% multifamily residential, 36% office
buildings and 26% other asset classes, and the
portfolio does not have any construction exposure.
Additionally,
as
of
December
31,
2024,
the
commercial real estate loans are on properties
located in multiple markets across the United States,
with no significant concentrations (New York Metro is
the largest concentration at approximately 17%).
Despite not having a significant concentration in any
one market, a material decline in real estate markets
or economic conditions could negatively impact the
value or performance of one or more individual
properties, which could adversely impact timely loan
repayment, which may result in increased provisions
for credit losses. We observed these effects in certain
commercial real estate loans during 2024, resulting in
additional
provisions
for
credit
losses.
Were
conditions, or our evaluation of conditions, in those or
other markets to worsen during 2025 or subsequent
periods, we may increase our allowance for credit
losses during those periods.
Additional information about all of our loan
segments, as well as underlying classes, is provided
in Note 4 to the consolidated financial statements in
this Form 10-K.
TABLE 26: CONTRACTUAL MATURITIES FOR LOANS
As of December 31, 2024
(In millions)
Under 1
year
1 to 5
years
5 to 15
years
Total
Domestic:
Commercial and financial
$
15,280
$ 5,928
$ 2,359
$ 23,567
Commercial real estate
217
1,732
893
2,842
Total domestic
15,497
7,660
3,252
26,409
Foreign:
Commercial and financial
5,752
2,318
8,721
16,791
Total foreign
5,752
2,318
8,721
16,791
Total loans
$
21,249
$ 9,978
$ 11,973
$ 43,200
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 80
TABLE 27: CLASSIFICATION OF LOAN BALANCES DUE
AFTER ONE YEAR
As of December 31, 2024
(In millions)
Loans with
predetermined
interest rates
Loans with floating
or adjustable
interest rates
Domestic:
Commercial and financial
$
161
$
8,126
Commercial real estate
2,332
293
Total domestic
2,493
8,419
Foreign:
Commercial and financial
—
11,038
Total foreign
—
11,038
Total loans
$
2,493
$
19,457
Allowance for credit losses
TABLE 28: ALLOWANCE FOR CREDIT LOSSES
Years Ended December 31,
(In millions)
2024
2023
2022
Allowance for credit losses:
Beginning balance
$
150
$
121
$
108
Provision for credit losses
(funded commitments)(1)
81
56
16
Provisions for credit losses
(unfunded commitments)
(5)
(9)
4
Provisions for credit losses
(investment securities and all
other)
(1)
(1)
—
Charge-offs(2)
(42)
(17)
(7)
Ending balance
$
183
$
150
$
121
(1) The provision for credit losses is primarily related to commercial real estate and
leveraged loans.
(2) The charge-offs are primarily related to leveraged loans and a commercial real
estate loan.
As of December 31, 2024, the allowance for
credit losses increased $33 million compared to
December 31, 2023, reflecting provision for credit
losses of $75 million primarily due to an increase in
loan loss reserves associated with certain commercial
real estate and leveraged loans, partially offset by
charge-offs of $42 million, largely related to a single
property in the commercial real estate portfolio and
certain leveraged loans.
As of December 31, 2024, approximately
$68 million of our allowance for credit losses was
related to leveraged loans included in the commercial
and financial segment and $102 million was related to
commercial real estate loans, compared to $72
million and $60 million as of December 31, 2023,
respectively. The remaining $13 million and $18
million as of December 31, 2024 and 2023,
respectively, was related to other loans, off-balance
sheet commitments, interest-bearing deposits with
banks and other financial assets held at amortized
cost, including investment securities. As of December
31, 2024, the allowance for credit losses represented
0.4% of total loans.
As our view on current and future economic
conditions changes, our allowance for credit losses
related to these loans may be impacted through a
change to the provisions for credit losses, reflecting
factors such as credit migration within our loan
portfolio, as well as changes in management’s
economic outlook.
Additional information with respect to the
allowance for credit losses, net impairment losses
and gross unrealized losses related to investment
securities, is provided in “Allowance for Credit
Losses” under Significant Accounting Estimates and
Note 3 to the consolidated financial statements in this
Form 10-K.
RISK MANAGEMENT
Overview
In the normal course of our business activities,
we are exposed to a variety of risks, some that are
inherent in the financial services industry, and others
that are more specific to our business activities. Our
risk management framework focuses on material
risks, which include the following:
•
credit and counterparty risk;
•
liquidity
risk,
including
funding
and
management;
•
operational risk;
•
information technology risk;
•
resiliency risk;
•
market risk associated with our trading
activities;
•
market risk associated with our non-trading
activities, referred to as asset and liability
management, consisting primarily of interest
rate risk;
•
model risk;
•
strategic risk; and
•
reputational,
compliance,
fiduciary
and
business conduct risk.
Many of these risks, as well as certain factors
underlying each of them, could affect our businesses
and our consolidated financial statements, and are
discussed in detail under “Risk Factors” in this Form
10-K.
The
identification,
assessment,
monitoring,
mitigation and reporting of risks are essential to our
financial performance and successful management of
our businesses. Accordingly, the scope of our
business requires that we consider these risks as part
of
a
comprehensive
and
well-integrated
risk
management function.
These risks, if not effectively managed, can
result in losses to us as well as erosion of our capital
and damage to our reputation. Our approach to risk
management,
including
Board
and
senior
management oversight and a system of policies,
procedures, limits, risk measurement and monitoring
and internal controls, allows for an assessment of
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 81
risks within a framework for evaluating opportunities
for the prudent use of capital that appropriately
balances risk and return.
Our objective is to optimize our returns while
operating at a prudent level of risk. In support of this
objective,
we
have
instituted
a
risk
appetite
framework that aligns our business strategy and
financial objectives with the level of risk that we are
willing to incur.
We manage risk with a focus on the following
objectives:
•
A culture of risk awareness that extends
across all of our business activities;
•
The
identification,
classification
and
quantification of our material risks;
•
The establishment of our risk appetite and
associated limits and policies, and our
compliance with these limits;
•
The establishment of a risk management
structure that enables the control and
coordination
of
risk-taking
across
the
business lines;
•
The
implementation
of
stress
testing
practices and a dynamic risk-assessment
capability
(additional
information
with
respect to our stress-testing process and
practices is provided under “Capital” in this
Management’s Discussion and Analysis);
•
A direct link between risk and strategic
decision-making processes and incentive
compensation practices; and
•
The overall flexibility to adapt to the ever-
changing business and market conditions.
Our risk appetite framework outlines the
quantitative limits and qualitative goals that define the
level and type of risk we are willing to undertake in
the course of executing our business strategy, and
also serves as a guide in setting risk limits across our
business units. It further defines responsibilities for
measuring and monitoring risk against limits, and for
reporting, escalating, approving and addressing
exceptions.
Our
risk
appetite
framework
is
established by ERM, a corporate risk oversight group,
in conjunction with the MRAC and the RC of the
Board. The Board formally reviews and approves our
risk appetite statement annually, or more frequently in
response to shifts in endogenous or exogenous risk
conditions.
Governance and Structure
Our approach to risk management involves all
levels of management, from the Board and its
committees, including its E&A Committee, the RC, the
Human Resources Committee (HRC) and the TOPS,
to each business unit and employee. We allocate
responsibility for risk oversight so that risk/return
decisions are made under a process designed to
place appropriate personnel in positions of decision-
making authority and subject to robust review and
challenge.
Risk management is the responsibility of each
employee, and is implemented through three lines of
defense:
•
The business units, which own and manage
the risks inherent in their business, are
considered the first line of defense;
•
ERM and other support functions, such as
Compliance,
Finance
and
Vendor
Management, provide the second line of
defense; and
•
Corporate Audit is the third line of defense,
reports to the E&A committee of the Board
and is independent from the business units,
ERM
and
other
corporate
functions.
Corporate
Audit
provides
independent
assurance to the Board over the design and
operating
effectiveness
of
key
internal
controls included within the risk management
framework.
The responsibilities for effective review and
challenge reside with senior managers, management
oversight
committees,
Corporate
Audit
and,
ultimately, the Board and its committees.
Corporate-level risk committees provide focused
oversight, and establish corporate standards and
policies for specific risks, including credit, country,
market, liquidity, operational, cyber, information
technology as well as new business products,
regulatory compliance and ethics, vendor risk and
model risks. These committees have been delegated
the responsibility to develop recommendations and
remediation strategies to address issues that affect or
have the potential to affect us.
We maintain a risk governance committee
structure which serves as the formal governance
mechanism through which we seek to undertake the
consistent identification, management and mitigation
of various risks facing us in connection with our
business activities. This governance structure is
enhanced and integrated through multi-disciplinary
involvement, particularly through ERM. The following
chart presents this structure.
While our risk management program is designed
to manage the risks in our businesses, internal and
external factors may create risks that cannot always
be identified or anticipated.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 82
Board Committee Risk Governance Structure
Board Committees:
Risk Committee (RC)
Examining & Audit
Committee
(E&A Committee)
Human Resources
Committee (HRC)
Technology and
Operations Committee
(TOPS)
Management Risk Governance Committee Structure
Executive Management Committees:
Management Risk and Capital Committee
(MRAC)
Business Conduct
and Compliance
Committee
(BCCC)
Technology and Operational Risk
Committee
(TORC)
Risk Committees:
Asset-Liability
Committee (ALCO)
Financial Risk
Committee (FRC)
Fiduciary Risk
Committee
Operational Risk and
Controls Committee
Technology Risk
Committee
Recovery and
Resolution Planning
(RRP) Executive
Review Board
Basel Oversight
Committee
(BOC)
Compliance Program
Oversight Committee
Third Party and
Outsourcing Risk
Committee
Enterprise Resilience
Risk Committee
Stress-Testing
Steering Committee
Model Risk
Committee
(MRC)
Conduct Standards
Committee
Executive Operations
Management
Committee
Enterprise Data
Management
Committee
Country Risk
Committee
SSGA Risk
Committee
Legal Entity Oversight
Committee
Regulatory Reporting
Oversight Committee
New Business and
Product Committee
Incentive
Compensation Control
Committee
Global Financial
Crimes Compliance
Committee
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 83
Enterprise Risk Management
The goal of ERM is to ensure that risks are
proactively identified, well-understood and prudently
managed in support of our business strategy. ERM
provides risk oversight, support and coordination to
allow for the consistent identification, measurement
and management of risks across business units
separate from the business units’ activities, and is
responsible for the formulation and maintenance of
corporate-wide
risk
management
policies
and
guidelines.
Risk identification and assessments serve to
enable ERM’s understanding of business unit
strategy, risk profile, and potential exposures and
support the management of risk. This is achieved
through a series of risk assessments across our
business using techniques for the identification,
assessment, and measurement of risk across a
spectrum
of
potential
frequency
and
severity
combinations, including business-specific programs
to identify, assess and measure risk, such as new
business and product review and approval, new client
screening, and, as deemed appropriate, targeted risk
assessments.
Two
primary
risk
assessment
programs,
which
are
supplemented
by
other
business-specific programs, are the core of this
component:
•
The Material Risk Identification process
utilizes a bottom-up approach to identify our
most significant risk exposures across on-
and off-balance sheet risk-taking activities.
The program is designed to consider risks
that could have a material impact irrespective
of their likelihood or frequency. This can
include risks that may have an impact on
longer-term business objectives, such as
significant change management activities or
long-term strategic initiatives.
•
The Risk and Control Self-Assessment
program comprises a structured process to
identify, assess, and manage non-financial
risks (operational and compliance) within our
business lines and support functions. See
also “Operational Risk Management” below.
In addition, ERM establishes and reviews limits
and, in collaboration with business unit management,
monitors key risks. Ultimately, ERM works to validate
that risk-taking occurs within the risk appetite
statement approved by the Board and conforms to
associated risk policies, limits and guidelines.
The
CRO
is
responsible
for
our
risk
management globally, leads ERM and has a dual
reporting line to our CEO and the Board’s RC.
Board Committees
The Board has four committees which assist it in
discharging its responsibilities with respect to risk
management: the RC, the E&A Committee, the HRC
and the TOPS.
•
The RC is responsible for oversight related to
the operation of our global risk management
framework, including policies and procedures
establishing risk management governance
and processes and risk control infrastructure.
It is responsible for reviewing and discussing
with management our assessment and
management of all risks applicable to our
operations, including credit, market, interest
rate,
liquidity,
operational,
regulatory,
technology,
business,
compliance
and
reputation risks, and related policies. In
addition, the RC provides oversight of capital
policies, capital planning and balance sheet
management,
resolution
planning
and
monitors capital adequacy in relation to risk.
It is also responsible for discharging the
duties and obligations of the Board under
applicable
Basel
and
other
regulatory
requirements.
•
The E&A Committee oversees management’s
operation of our comprehensive system of
internal controls covering the integrity of our
consolidated
financial
statements
and
reports, compliance with laws, regulations
and corporate policies. The E&A Committee
acts on behalf of the Board in monitoring and
overseeing the performance of Corporate
Audit
and
in
reviewing
certain
communications with banking regulators. The
E&A Committee has direct responsibility for
the appointment, compensation, retention,
evaluation and oversight of the work of our
independent registered public accounting
firm,
including
sole
authority
for
the
establishment of pre-approval policies and
procedures for all audit engagements and
any non-audit engagements.
•
The HRC has direct responsibility for the
oversight of human capital management, all
compensation plans, policies and programs
in which executive officers participate and
incentive, retirement, welfare as well as
equity plans in which certain of our other
employees
participate.
In
addition,
it
oversees the alignment of our incentive
compensation arrangements with our safety
and soundness, including the integration of
risk management objectives, and related
policies, arrangements and control processes
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 84
consistent with applicable related regulatory
rules and guidance.
•
The TOPS leads and assists in the Board’s
oversight of technology and operational risk
management and the role of these risks,
including cyber risk, in executing our strategy
and
supporting
our
global
business
requirements. The TOPS reviews strategic
initiatives from a technology and operational
risk perspective and reviews and approves
technology-related risk matters. In addition,
the
TOPS
reviews
matters
related
to
corporate
information
security
and
cybersecurity programs, and their related
risks, operational and technology resiliency,
data and access management and third-party
risk management.
Executive Management Committees
MRAC is the senior management decision-
making body for risk and capital issues, and oversees
our financial risks, our consolidated statement of
condition, and our capital adequacy, liquidity and
recovery and resolution planning. Its responsibilities
include:
•
The approval of our global risk policies,
capital
and
liquidity
management
frameworks, including our risk appetite
framework;
•
The monitoring and assessment of our capital
adequacy based on internal policies and
regulatory requirements;
•
The
oversight
of
our
firm-wide
risk
identification, model risk governance, stress
testing
and
Recovery
and
Resolution
Planning programs; and
•
The ongoing monitoring and review of risks
undertaken within the businesses, and our
senior management oversight and approval
of risk strategies and tactics.
MRAC is co-chaired by our CRO and Chief
Financial Officer, who regularly present to the RC on
developments
in
the
risk
environment
and
performance trends in our key business areas.
BCCC provides oversight of the management of
culture, conduct and compliance risks, including
culture and conduct programs, frameworks and
compliance risk exposures that could result in
reputational risk. The BCCC is co-chaired by our
Chief Compliance Officer and our General Counsel.
TORC
provides
oversight
and
assesses
the
effectiveness of enterprise-wide technology and
operational risk management programs. TORC also
reviews areas of improvement to manage and control
technology and operational risk consistently across
the organization. TORC is co-chaired by the Chief
Operating Officer and the CRO.
Risk Committees
The following second line risk committees, under
the
oversight
of
the
respective
executive
management
committees,
have
focused
responsibilities for oversight of specific areas of risk
management:
Management Risk and Capital Committee
•
ALCO is the senior corporate oversight and
decision-making body for balance sheet
strategy, Global Treasury business activities
and risk management for interest rate risk,
liquidity risk and non-trading market risk.
ALCO’s
roles
and
responsibilities
are
designed to be complementary to, and in
coordination with the MRAC, which approves
the corporate risk appetite and associated
balance sheet strategy;
•
FRC provides second line oversight of
financial risk at State Street, supporting
alignment with our risk appetite and policies
and procedures. Key activities include risk
appetite development, limit setting and
breach
management,
risk
policies
and
procedures
oversight,
and
independent
stress-testing;
•
BOC provides oversight and governance
over Basel related regulatory requirements,
assesses compliance with respect to Basel
regulations
and
approves
all
material
methodologies and changes, policies and
reporting;
•
RRP Executive Review Board oversees the
development of recovery and resolution plans
as required by banking regulators;
•
MRC monitors the overall level of model risk
and
provides
oversight
of
the
model
governance process pertaining to all models,
including the validation of key models and the
ongoing monitoring of model performance.
The MRC may also, as appropriate, mandate
remedial actions and compensating controls
to be applied to models to address modeling
deficiencies as well as other issues identified;
•
Stress
Testing
Steering
Committee
provides primary supervision of our stress
testing
program,
including
stress
tests
performed in conformity with the Federal
Reserve’s CCAR process, and is responsible
for the overall management, review, and
approval
of
all
material
assumptions,
methodologies, and results of each stress
scenario;
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 85
•
State
Street
Global
Advisors
Risk
Committee is the most senior oversight and
decision-making
committee
for
risk
management within State Street Global
Advisors; the committee is responsible for
overseeing the alignment of State Street
Global Advisors’ strategy, and risk appetite,
as well as alignment with our corporate-wide
strategy and risk management standards;
•
New Business and Product Committee
provides oversight of the evaluation of the
risk inherent in proposed new products or
services, new business, and extensions of
existing products or services, including
economic
justification,
material
risk,
compliance,
regulatory
and
legal
considerations, and capital and liquidity
analyses;
•
Country Risk Committee oversees the
identification,
assessment,
monitoring,
reporting and mitigation, where necessary, of
country risks; and
•
Regulatory
Reporting
Oversight
Committee is responsible for providing
oversight of regulatory reporting and related
report
governance
processes
and
accountabilities.
Business Conduct and Compliance Committee
•
Fiduciary Risk Committee reviews and
assesses the fiduciary risk management
programs of those units in which we serve in
a fiduciary capacity;
•
Compliance
Program
Oversight
Committee provides review and oversight of
our compliance programs, including our
culture of compliance and high standards of
ethical behavior;
•
The
Conduct
Standards
Committee
provides oversight of our enforcement of
employee conduct standards;
•
Legal
Entity
Oversight
Committee
establishes standards with respect to the
governance of our legal entities, monitors
adherence to those standards, and oversees
the ongoing evaluation of our legal entity
structure,
including
the
formation,
maintenance and dissolution of legal entities;
•
The
Incentive
Compensation
Control
Committee serves as the forum for the
formal review and risk assessment of the
design, implementation and monitoring of
incentive compensation arrangements; and
•
The Global Financial Crimes Compliance
Committee provides oversight and strategic
direction for the Financial Crimes program,
comprised of the AML and Sanctions, Fraud,
Anti-Bribery and Corruption and Market
Surveillance programs.
Technology and Operational Risk Committee
•
Operational Risk and Controls Committee
along with the support of regional business or
entity-specific
working
groups
and
committees, is responsible for oversight of
our operational risk programs, including
determining that the implementation of those
programs is designed to identify, manage and
control operational risk in an effective and
consistent manner across the firm;
•
Technology Risk Committee is responsible
for
the
global
oversight,
review
and
monitoring
of
operational,
legal
and
regulatory compliance and reputational risk
that may result in a significant change to our
information technology or cyber risk profile or
a material financial loss or reputational
impact to global technology services. The
Committee serves as a forum to provide
regular reporting to TORC and escalate
technology and cyber risk and control issues
to TORC, as appropriate;
•
Enterprise Resilience Risk Committee
considers matters pertaining to business
continuity, operational resilience, and related
risks, including oversight in determining the
direction of the continuity program and
continuity strategy and approach;
•
Global Third Party and Outsourcing Risk
Committee is responsible for overseeing our
framework
and
processes
for
the
identification,
assessment,
and
ongoing
management of third party and outsourcing-
related risks. This committee is also a
decision-making body for third party risk
acceptance and the end-to-end third party
management process, including the oversight
of appropriate controls and risk mitigants that
comply with applicable regulatory standards;
•
Executive
Operations
Management
Committee is a forum for the development of
strategy, decision-making, and escalation for
operations, regulatory remediation, product
management, technology, and the operating
model; and
•
Enterprise Data Management Committee
oversees
the
enterprise-wide
data
management
strategy,
provides
senior
oversight of the programs associated with
enterprise-wide data management, serves as
an escalation point for material and emerging
enterprise-wide data management issues,
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 86
and determines / oversees enterprise-wide
data management priorities and strategy.
Credit and Counterparty Risk Management
Core Policies and Principles
We define credit risk as the risk of financial loss
if a counterparty, borrower or obligor, collectively
referred to as a counterparty, is either unable or
unwilling to repay borrowings or settle a transaction in
accordance with underlying contractual terms. We
assume credit risk in our traditional non-trading
lending activities, such as overdrafts, loans and
contingent commitments, in our investment securities
portfolio, where recourse to a counterparty exists, and
in our direct and indirect trading activities, such as
securities purchased under a resale agreement,
principal securities lending and FX and indemnified
agency securities lending. We also assume credit risk
in our day-to-day treasury and securities and other
settlement operations, in the form of deposit
placements and other cash balances, with central
banks or private sector institutions and fees
receivables.
We distinguish between three major types of
credit risk:
•
Default risk - the risk that a counterparty
fails to meet its contractual payment
obligations;
•
Country risk - the risk that we may suffer a
loss, in any given country, due to any of the
following reasons: deterioration of economic
conditions, political and social upheaval,
nationalization and appropriation of assets,
government repudiation of indebtedness,
exchange controls and disruptive currency
depreciation or devaluation; and
•
Settlement risk - the risk that the settlement
or clearance of transactions will fail, which
arises whenever the exchange of cash,
securities
or
other
assets
is
not
simultaneous.
The acceptance of credit risk by us is governed
by corporate policies and guidelines, which include
standardized procedures applied across the entire
organization. These policies and guidelines include
specific requirements related to each counterparty’s
risk profile; the markets served; counterparty, industry
and
country
concentrations;
and
regulatory
compliance. These policies and procedures also
implement a number of core principles, which include
the following:
•
We measure and consolidate credit risks
attributed to each counterparty, or group of
counterparties, in accordance with a “one-
obligor” principle that aggregates risks
across our business units;
•
ERM reviews and approves all material
extensions of credit, and material changes
to such extensions of credit (such as
changes in term, collateral structure or
covenants), in accordance with assigned
credit-approval authorities;
•
Credit-approval authorities are assigned to
individuals according to their qualifications,
experience
and
training,
and
these
authorities are periodically reviewed. Our
largest exposures require approval by the
Credit Committee, a subcommittee of the
FRC. With respect to small and low-risk
extensions of credit to certain types of
counterparties, approval authority may be
granted to individuals outside of ERM;
•
We
seek
to
avoid
or
limit
undue
concentrations of risk. Counterparty (or
groups of counterparties), industry, country
and product-specific concentrations of risk
are subject to frequent review and approval
in accordance with our risk policies and
appetite;
•
We
evaluate
the
creditworthiness
of
counterparties
through
a
detailed
risk
assessment, including the use of internal
risk-rating methodologies;
•
We review all extensions of credit and the
creditworthiness of counterparties at least
annually. The nature and extent of these
reviews are determined by the size, nature
and term of the extensions of credit and the
creditworthiness of the counterparty; and
•
We subject all corporate policies and
guidelines to annual review as an integral
part of our periodic assessment of our risk
appetite.
Our corporate policies and guidelines require
that all extensions of credit are consistent with the
bank’s standards, limit credit-related losses, and our
goal of maintaining a strong financial condition.
Structure and Organization
The Credit Risk group within ERM is responsible
for the assessment, approval and monitoring of credit
risk across our business. The group is managed
centrally, has dedicated teams in a number of
locations worldwide, and is responsible for related
policies and procedures, and for our internal credit-
rating systems and methodologies. In addition, the
group, in conjunction with the business units,
establishes measurements and limits to control the
amount of credit risk accepted across its various
business activities, both at the portfolio level and for
each
individual
counterparty
or
group
of
counterparties, to individual sectors, and also to
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 87
counterparties by product and country of risk. These
measurements and limits are reviewed periodically, or
at least annually.
In conjunction with other groups in ERM, the
Credit Risk group is responsible for the design,
implementation and oversight of our credit risk
measurement and management systems, including
data and assessment systems, quantification systems
and the reporting framework.
Various key committees within our company are
responsible for the oversight of credit risk and
associated credit risk policies, systems and models.
All credit-related activities are governed by our risk
appetite framework and our credit risk guidelines,
which define our general philosophy with respect to
credit risk and the manner in which we control,
manage and monitor such risks.
FRC and it's sub-committee, Credit Committee
have the primary responsibility for the oversight,
review and approval of the credit risk guidelines and
policies which are reviewed periodically, but at least
annually.
The Credit Committee, a subcommittee of the
FRC, has responsibility for assigning credit authority
and approving the largest and higher-risk extensions
of credit to individual counterparties or groups of
counterparties.
FRC provides periodic updates to MRAC and
the Board’s RC.
Credit Ratings
We perform initial and ongoing reviews to
exercise due diligence on the creditworthiness of our
counterparties when conducting any business with
them or approving any credit limits.
This due diligence process generally includes
the assignment of an internal credit rating, which is
determined by the use of internally developed and
validated methodologies, scorecards and a 15-grade
rating scale. This risk-rating process incorporates the
use
of
risk-rating
tools
in
conjunction
with
management judgment; qualitative and quantitative
inputs are captured in a replicable manner and,
following a formal review and approval process, an
internal credit rating based on our rating scale is
assigned. We generally rate our counterparties
individually, although some counterparties defined by
us as low-risk are rated on a pooled basis. Credit
ratings are reviewed and approved by the Credit Risk
group or its delegates. We evaluate and rate the
credit risk of our counterparties on an ongoing basis.
To facilitate comparability across the portfolio,
counterparties within a given sector are rated using a
risk-rating tool developed for that sector.
Our risk-rating models are subject to periodic
internal review and validation. The overall risk rating
methodology is reviewed and approved by the Credit
Risk Committee, a subcommittee of the FRC, on an
annual basis.
Risk Parameter Estimates
Our internal risk-rating system promotes a clear
and consistent approach to determining appropriate
credit risk classifications for our credit counterparties
and exposures. This allows us to track the changes in
risk associated with these counterparties and
exposures over time. This capability enhances our
ability to calculate both risk exposures and capital,
and enables better strategic decision-making across
the organization.
More specifically, our internal risk rating system
is used for the following purposes:
•
The assessment of the creditworthiness of
new counterparties and, in conjunction with
our risk appetite statement, the development
of appropriate credit limits for our products
and
services,
including
loans,
foreign
exchange, securities finance, placements
and repurchase agreements;
•
The automation of limit approvals for certain
low-risk counterparties, as defined in our
credit risk guidelines and based on the
counterparty’s probability-of-default;
•
The development of approval authority
matrices based on PD; riskier counterparties
with higher PDs require higher levels of
approval for a comparable PD and limit size
compared to less risky counterparties with
lower PDs;
•
The analysis of risk concentration trends
using historical PD and exposure-at-default
(EAD), data;
•
The
determination
of
the
level
of
management
review
of
short-duration
advances
depending
on
PD;
riskier
counterparties with higher rating class
values generally trigger higher levels of
management escalation for comparable
short-duration advances compared to less
risky counterparties with lower rating-class
values;
•
The monitoring of credit facility utilization
levels
using
EAD
values
and
the
identification
of
instances
where
counterparties have exceeded limits;
•
The
aggregation
and
comparison
of
counterparty exposures with risk appetite
levels to determine if businesses are
maintaining appropriate risk levels; and
•
The determination of our regulatory capital
requirements for the AIRB set forth in the
Basel framework.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 88
Credit Risk Mitigation
We seek to limit our credit exposure and reduce
any potential credit losses through the use of various
types of credit risk mitigation. The Basel III final rule
permits us to reflect the application of credit risk
mitigation when it meets the standards outlined
therein. Examples of forms of credit risk mitigation
include a security interest in financial and non-
financial assets (collateral), netting and guarantees.
Where permissible, we apply the recognition of
collateral, guarantees and netting to mitigate overall
risk within our counterparty credit portfolio. While
credit default swaps are permitted under the Basel III
final rule, we do not actively use credit default swaps
as a risk mitigation tool.
Collateral
In many parts of our business, we regularly
require or agree for collateral to be received from or
provided to clients and counterparties in connection
with contracts that involve credit risk. In our trading
businesses, this collateral is typically in the form of
cash, as well as highly-rated and/or liquid securities
(i.e. government securities and other bonds or equity
securities). Credit risks in our non-trading and
securities finance businesses are also often secured
by bonds and equity securities and by other types of
assets. Collateral serves to reduce the risk of loss
inherent in an exposure. However, changing market
values of the collateral we hold, unexpected
increases in the credit exposure to a client or
counterparty, reductions in the value or change in the
type of securities held by us, as well as operational
errors or errors in the manner in which we seek to
exercise our rights, may reduce the risk mitigation
effects of collateral. While collateral is often an
alternative source of repayment, it does not replace
the requirement within our policies and guidelines for
high-quality underwriting. We also may choose to
incur credit exposure without the benefit of collateral
or other risk mitigating credits rights.
Our credit risk guidelines require that the
collateral we accept for risk mitigation purposes is of
high quality, can be reliably valued and is supported
by a valid security interest that permits liquidation if or
when required. Generally, when collateral is of lower
quality, more difficult to value or more challenging to
liquidate, higher discounts to market values are
applied for the purposes of measuring credit risk. For
certain less liquid collateral, longer liquidation periods
are assumed when determining the credit exposure.
All types of collateral are assessed regularly by
ERM, as is the basis on which the collateral is valued.
Our assessment of collateral, including the ability to
liquidate collateral in the event of a counterparty
default, and also with regard to market values of
collateral under a variety of hypothetical market
conditions,
is
an
integral
component
of
our
assessment of risk and approval of credit limits. We
also seek to identify, limit and monitor instances of
“wrong-way” risk, where a counterparty’s risk of
default is positively correlated with the risk of our
collateral eroding in value.
We maintain policies and procedures requiring
that documentation used to collateralize a transaction
is legal, valid, binding and enforceable in the relevant
jurisdictions. We also conduct legal reviews to assess
whether our documentation meets these standards
on an ongoing basis.
Netting
Netting is a mechanism that allows institutions
and counterparties to net offsetting exposures and
payment obligations against one another through the
use of qualifying master netting agreements. A master
netting agreement allows for certain rights and
remedies upon a counterparty default, including the
right to net obligations arising under derivatives or
other transactions under such agreement. In such an
event, the netting of obligations would result in a
single net claim owed by, or to, the counterparty. This
is commonly referred to as “close-out netting,” and is
pursued wherever possible. We may also enter into
master agreements that allow for the netting of
amounts payable on a given day and in the same
currency, reducing our settlement risk. This is
commonly referred to as “payment netting,” and is
widely used in our foreign exchange activities.
As with collateral, we have policies and
procedures in place to apply close-out and payment
netting only to the extent that we have verified legal
validity and enforceability of the master agreement. In
the case of payment netting, operational constraints
may preclude us from reducing settlement risk,
notwithstanding the legal right to require the same
under the master netting agreement. In the event we
become unable, due to operational constraints,
actions
by
regulators,
changes
in
accounting
principles,
law
or
regulation
(or
related
interpretations) or other factors, to net some or all of
our offsetting exposures and payment obligations
under those agreements, we would be required to
gross up our assets and liabilities on our statement of
condition and our calculation of RWA, accordingly.
This would result in a potentially material change in
our regulatory ratios, including LCR, and present
increased
credit,
liquidity,
asset
and
liability
management and operational risks, some of which
could be material.
Guarantees
A guarantee is a financial instrument that results
in credit support being provided by a third party, (i.e.,
the protection provider) to the underlying obligor (the
beneficiary of the provided protection) on account of
an exposure owing by the obligor. The protection
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 89
provider may support the underlying exposure either
in whole or in part. Support of this kind may take
different forms. Typical forms of guarantees provided
to us include financial guarantees, letters of credit,
bankers’
acceptances,
purchase
undertaking
agreement contracts and insurance.
We have established a review process to
evaluate
guarantees
under
the
applicable
requirements
of
our
policies
and
Basel
III
requirements. Governance for this evaluation is
covered under policies and procedures that require
regular reviews of documentation, jurisdictions and
credit quality of protection providers.
Credit Limits
Central to our philosophy for our management of
credit risk is the approval and imposition of credit
limits, against which we monitor the actual and
potential future credit exposure arising from our
business activities with counterparties or groups of
counterparties. Credit limits are a reflection of our risk
appetite,
which
may
be
determined
by
the
creditworthiness of the counterparty, the nature of the
risk inherent in the business undertaken with the
counterparty, or a combination of relevant credit
factors. Our risk appetite for certain sectors and
certain countries and geographic regions may also
influence the level of risk we are willing to assume to
certain counterparties.
The analysis and approval of credit limits is
undertaken similarly across our businesses, although
the nature and extent of the analysis may vary, based
on the type, term and magnitude of the risk being
assumed. Credit limits and underlying exposures are
assessed and measured on both a gross and net
basis
where
appropriate,
with
net
exposure
determined by deducting the value of any collateral
held. For certain types of risk being assumed, we will
also assess and measure exposures under a variety
of
hypothetical
market
conditions.
Credit
limit
approvals across our business are undertaken by the
Credit Risk group, by individuals to whom credit
authority has been delegated, or by the Credit
Committee.
Credit limits are re-evaluated annually, or more
frequently as needed, and are revised periodically on
prevailing and anticipated market conditions, changes
in counterparty or country-specific credit ratings and
outlook, changes in our risk appetite for certain
counterparties,
sectors
or
countries,
and
enhancements
to
the
measurement
of
credit
utilization.
Reporting
Ongoing active monitoring and management of
our credit risk is an integral part of our credit risk
management framework. We maintain management
information systems to identify, measure, monitor and
report credit risk across businesses and legal entities,
enabling ERM and our businesses to have timely
access to information on credit limits and exposures.
Monitoring is performed along the dimensions of
counterparty, industry, country and product-specific
risks to facilitate the identification of concentrations of
risk and emerging trends.
Key aspects of this credit risk reporting structure
include governance and oversight groups and policies
that define standards for the reporting of credit risk,
data aggregation and sourcing systems.
The Credit Risk group routinely assesses the
composition of our overall credit risk portfolio for
alignment with our stated risk appetite. This
assessment includes routine analysis and reporting of
the portfolio, monitoring of market-based indicators,
the assessment of industry trends and developments
and regular reviews of concentrated risks. The Credit
Risk group is also responsible, in conjunction with the
business units, for defining the appetite for credit risk
in the major sectors in which we have a concentration
of business activities. These sector-level risk appetite
statements, which include counterparty selection
criteria and granular underwriting guidelines, are
reviewed periodically and approved by either the FRC
or Credit Committee.
Monitoring
Regular surveillance of credit and counterparty
risks is undertaken by our business units, the Credit
Risk group and designees with ERM, allowing for
oversight. This surveillance process includes, but is
not limited to, the following components:
•
Annual
Reviews. A
formal
review
of
counterparties is conducted at least annually
and
includes
a
review
of
operating
performance, primary risk factors and our
internal credit risk rating. This annual review
also includes a review of current and
proposed credit limits, an assessment of our
ongoing risk appetite and assessment that
supporting legal documentation remains
effective.
•
Interim Monitoring. Monitoring of our largest
and riskiest counterparties is undertaken
more
frequently,
utilizing
financial
information, market indicators and other
relevant credit and performance measures.
The nature and extent of this interim
monitoring is individually tailored to certain
counterparties and/or industry sectors to
identify material changes to the risk profile of
a counterparty (or group of counterparties)
and assign an updated internal risk rating in
a timely manner.
We maintain an active “surveillance list” for all
counterparties. The surveillance list status denotes a
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 90
concern with some aspect of a counterparty’s risk
profile that warrants closer monitoring of the
counterparty’s financial performance and related risk
factors. Our ongoing monitoring processes are
designed to facilitate the early identification of
counterparties
whose
creditworthiness
is
deteriorating; any counterparty may be placed on the
surveillance list by ERM at its sole discretion.
Counterparties on the surveillance list generally
correspond with the non-investment grade or near
non-investment grade ratings established by the
major
independent
credit-rating
agencies.
The
surveillance list also includes any counterparties
rated “Special Mention,” “Substandard,” “Doubtful”
and “Loss.”
The Credit Risk group maintains primary
responsibility for our surveillance list processes, and
generates a quarterly report of all surveillance list
counterparties. The surveillance list is formally
reviewed at least on a quarterly basis, with
participation from senior Credit Risk staff, and
representatives from the business units and our
corporate finance and legal groups as appropriate.
These meetings include a review of individual
surveillance list counterparties, together with credit
limits and prevailing exposures, and are focused on
actions to contain, reduce or eliminate the risk of loss
to us. Identified actions are documented and
monitored.
Controls
GCR provides a separate level of surveillance
and oversight over the integrity of our credit risk
management processes, including the internal risk-
rating system. GCR reviews counterparty credit
ratings for all identified sectors on an ongoing basis.
GCR is subject to oversight by the FRC, and provides
periodic updates to the Board’s RC.
Specific activities of GCR include the following:
•
Perform
separate
and
objective
assessments of our credit and counterparty
exposures to determine the nature and
extent of risk undertaken by the business
units;
•
Execute periodic credit process and credit
product reviews to assess the quality of
credit analysis, compliance with policies,
guidelines
and
relevant
regulation,
transaction
structures
and
underwriting
standards, and risk-rating integrity;
•
Identify
and
monitor
developing
counterparty, market and/or industry sector
trends to limit risk of loss and protect capital;
•
Deliver regular and formal reporting to
stakeholders,
including
exam
results,
identified issues and the status of requisite
actions to remedy identified deficiencies;
•
Allocate resources for specialized risk
assessments (on an as-needed basis); and
•
Liaise
with
assurance
partners
and
regulatory personnel on matters relating to
risk rating, reporting and measurement.
Allowance for Credit Losses
We record an allowance for credit losses related
to certain on-balance sheet credit exposures,
including our financial assets held at amortized cost,
as well as certain off-balance sheet credit exposures,
including unfunded commitments and letters of credit.
Review and evaluation of the adequacy of the
allowance for credit losses is ongoing throughout the
year, but occurs at least quarterly, and is based,
among other factors, on our evaluation of the level of
risk in the portfolio and the estimated effects of our
forecasts on our counterparties. We utilize multiple
economic scenarios, consisting of a baseline, upside
and downside scenarios, to develop our forecast of
expected losses.
In 2024, the allowance estimate reflected an
increase in loan loss reserves associated with certain
commercial
real
estate
and
leveraged
loans.
Allowance estimates are subject to uncertainties,
including those inherent in our model and economic
assumptions, and management may use qualitative
adjustments. If future data and forecasts deviate
relative to the forecasts utilized to determine our
allowance for credit losses as of December 31, 2024,
or if credit risk migration is higher or lower than
forecasted for reasons independent of the economic
forecast, our allowance for credit losses will also
change.
Additional information about the allowance for
credit losses is provided in Notes 3 and 4 to the
consolidated financial statements in this Form 10-K.
Liquidity Risk Management
Our liquidity framework contemplates areas of
potential risk to our liquidity based on our activities,
size and other appropriate risk-related factors. In
managing liquidity risk we employ limits, maintain
established metrics and early warning indicators and
perform routine stress testing to identify potential
liquidity needs. This process involves the evaluation
of a combination of internal and external scenarios
which assist us in measuring our liquidity position and
in identifying potential increases in cash needs or
decreases in available sources of cash, as well as the
potential impairment of our ability to access the global
capital markets.
We
manage
our
liquidity
on
a
global,
consolidated basis as well as on a stand-alone basis
at our Parent Company and at certain branches and
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 91
subsidiaries of State Street Bank. State Street Bank
generally has access to markets and funding sources
limited to banks, such as the federal funds market
and the Federal Reserve’s discount window. The
Parent Company is managed to a more conservative
liquidity profile, reflecting narrower market access.
Additionally, the Parent Company typically holds, or
has direct access to, primarily through SSIF, a direct
subsidiary of the Parent Company, and the support
agreement, as discussed in “Supervision and
Regulation” in Business in this Form 10-K, cash and
equivalents intended to meet its current debt
maturities and other cash needs, as well as those
projected over the next twelve-month period. Absent
financial distress at the Parent Company, the liquid
assets available at SSIF continue to be available to
the Parent Company. As of December 31, 2024, the
value of our Parent Company’s net liquid assets
totaled $438 million, compared with $659 million as of
December 31, 2023, excluding available liquidity
through SSIF. As of December 31, 2024, our Parent
Company and State Street Bank had approximately
$1.28 billion of senior notes or subordinated
debentures outstanding that will mature in the next
twelve months.
As a SIFI, our liquidity risk management
activities are subject to heightened and evolving
regulatory requirements, including interpretations of
those
requirements,
under
specific
U.S.
and
international regulations and also resulting from
published and unpublished guidance, supervisory
activities, such as stress tests, resolution planning,
examinations and other regulatory interactions.
Satisfaction of these requirements could, in some
cases, result in changes in the composition of our
investment portfolio, reduced NII or NIM, a reduction
in the level of certain business activities or
modifications to the way in which we deliver our
products and services. If we fail to meet regulatory
requirements to the satisfaction of our regulators, we
could receive negative regulatory stress test results,
incur a resolution plan deficiency or determination of
a non-credible resolution plan or otherwise receive an
adverse regulatory finding. Our efforts to satisfy, or
our failure to satisfy, these regulatory requirements
could materially adversely affect our business,
financial condition or results of operations.
Governance
Global
Treasury
is
responsible
for
our
management of liquidity. This includes the day-to-day
management of our global liquidity position, the
development and monitoring of early warning
indicators, key liquidity risk metrics, the creation and
execution of stress tests, the evaluation and
implementation of regulatory requirements, the
maintenance and execution of our liquidity guidelines
and contingency funding plan (CFP), and routine
management reporting to ALCO, MRAC and the
Board’s RC.
Global Treasury Risk Management, part of ERM,
provides separate oversight over the identification,
communication
and
management
of
Global
Treasury’s risks in support of our business strategy.
Global Treasury Risk Management reports to the
CRO.
Global
Treasury
Risk
Management’s
responsibilities relative to liquidity risk management
include the development and review of policies and
guidelines; the monitoring of limits related to
adherence to the liquidity risk guidelines and
associated reporting.
Liquidity Framework
We manage liquidity according to several
principles that are equally important to our overall
liquidity risk management framework:
•
Structural liquidity management addresses
liquidity by monitoring and directing the
composition of our consolidated statement of
condition. Structural liquidity is measured by
metrics such as the percentage of total
wholesale funds to consolidated total assets,
and the percentage of non-government
investment securities to client deposits. In
addition, on a regular basis and as described
below, our structural liquidity is evaluated
under various stress scenarios.
•
Tactical liquidity management addresses
our day-to-day funding requirements and is
largely driven by changes in our primary
source of funding, which are client deposits.
Fluctuations in client deposits may be
supplemented with short-term borrowings,
repurchase agreements, FHLB products and
certificates of deposit.
•
Stress testing and contingent funding
planning are longer-term strategic liquidity
risk management practices. Regular and ad
hoc liquidity stress testing are performed
under various severe but plausible scenarios
at the consolidated level and at significant
subsidiaries, including State Street Bank.
These tests contemplate severe market and
events specific to us under various time
horizons and severities. Tests contemplate
the impact of material changes in key funding
sources, credit ratings, additional collateral
requirements, contingent uses of funding,
systemic shocks to the financial markets and
operational failures based on market and
assumptions specific to us. The stress tests
evaluate the required level of funding versus
available sources in an adverse environment.
As stress testing contemplates potential
forward-looking scenarios, results also serve
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 92
as a trigger to activate specific liquidity stress
levels and contingent funding actions.
CFPs
are
designed
to
assist
senior
management with decision-making associated with
any contingency funding response to a possible or
actual crisis scenario. The CFPs define roles,
responsibilities and management actions to be taken
in the event of deterioration of our liquidity profile
caused by either an event specific to us or a broader
disruption in the capital markets. Specific actions are
linked to the level of stress indicated by these
measures or by management judgment of market
conditions.
Liquidity Risk Metrics
In managing our liquidity, we employ early
warning indicators and metrics intended to detect
situations which may result in a liquidity stress,
including changes in our stock price and spreads on
our long-term debt. Additional metrics that are critical
to the management of our consolidated statement of
condition and monitored as part of our routine liquidity
management include measures of our fungible cash
position, purchased wholesale funds, unencumbered
liquid assets, deposits and the total of investment
securities and loans as a percentage of total client
deposits.
Asset Liquidity
Central to the management of our liquidity is
asset liquidity, which consists primarily of HQLA.
HQLA is the amount of liquid assets that qualify for
inclusion in the LCR. As a banking organization, we
are subject to a minimum LCR under the LCR rule
approved by the U.S. Agencies. The LCR is intended
to promote the short-term resilience of internationally
active banking organizations, like us, to improve the
banking industry’s ability to absorb shocks arising
from market stress over a 30 calendar day period and
improve the measurement and management of
liquidity risk. The LCR measures an institution’s
HQLA against its net cash outflows. HQLA primarily
consists of unencumbered cash and certain high
quality liquid securities that qualify for inclusion under
the LCR rule. Net cash outflows are measured as
prescribed under the LCR rule which provides a
significant
benefit
for
deposits
classified
as
operational. We report the LCR to the Federal
Reserve
daily.
For
both
the
quarters
ended
December 31, 2024 and December 31, 2023,
average daily LCR for the Parent Company was
107% and 106%, respectively. The impact of higher
deposits on the Parent Company’s LCR is limited by
a cap, known as the transferability restriction, on the
HQLA from State Street Bank that can be recognized
at the Parent Company as defined in the U.S. LCR
Final Rule. This restriction limits the HQLA used in
the calculation of the Parent Company’s LCR to the
amount of net cash outflows of its principal banking
subsidiary (State Street Bank). The average HQLA,
post-prescribed haircuts for the Parent Company
under the LCR final rule definition was $142.34 billion
for the quarter ended December 31, 2024 compared
to $128.96 billion for the quarter ended December 31,
2023, primarily due to a decrease in client deposits
relative to the prior period. For the quarter ended
December 31, 2024, the LCR for State Street Bank
was approximately 134%.
In addition, as a large banking organization, we
are subject to the NSFR rule approved by the U.S.
Agencies. The NSFR rule requires large banking
organizations to maintain a minimum amount of
available stable funding, which is a weighted measure
of a company’s funding sources over a one-year time
horizon,
calculated
by
applying
standardized
weightings to the company’s equity and liabilities
based on their expected stability. The amount of
stable funding can be no less than the amount of
required stable funding, which is calculated by
applying
standardized
weightings
to
assets,
derivatives exposures and certain other items based
on their liquidity characteristics. As a U.S. G-SIB, we
are required to maintain an NSFR that is equal to or
greater than 100%. As a subsidiary of a U.S. G-SIB,
State Street Bank is similarly required to maintain an
NSFR that is equal to or greater than 100%. As of
December 31, 2024, both the Parent Company’s and
State Street Bank’s NSFR were above the 100%
minimum NSFR requirement. The average NSFR for
the Parent Company was 137% and 141% for the
three months ended December 31, 2024 and
September 30, 2024, respectively.
We maintained average cash balances in
excess of regulatory requirements governing deposits
with the Federal Reserve of approximately $86.88
billion at the Federal Reserve, the ECB and other
non-U.S. central banks for the quarter ended
December 31, 2024, and $69.28 billion for the quarter
ended December 31, 2023. The higher levels of
average cash balances with central banks reflect
higher levels of client deposits.
Liquid securities carried in our asset liquidity
include securities pledged without corresponding
advances from the Federal Reserve Bank of Boston
(FRBB), the FHLB, and other non-U.S. central banks.
State Street Bank is a member of the FHLB. This
membership allows for advances of liquidity in varying
terms against high-quality collateral, which helps
facilitate asset and liability management.
Access to primary, intraday and contingent
liquidity provided by these utilities is an important
source of contingent liquidity with utilization subject to
underlying conditions.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 93
In addition to the investment securities included
in our asset liquidity, we have other unencumbered
investment securities and certain loans that we can
pledge as collateral to access these various facilities.
These additional assets are available sources of
liquidity, although not as rapidly deployed as those
included in our LCR asset liquidity.
The average fair value of total unencumbered
securities was $63.23 billion for the quarter ended
December 31, 2024, compared to $76.86 billion for
the quarter ended December 31, 2023.
Measures of liquidity include LCR and NSFR,
which are described in “Supervision and Regulation”
in Business in this Form 10-K.
Uses of Liquidity
Significant uses of our liquidity could result from
the following: withdrawals of client deposits; draw-
downs by our custody clients of lines of credit;
advances to clients to settle securities transactions;
increases in our investment and loan portfolios; or
other permitted purposes. Such circumstances would
generally arise under stress conditions including
deterioration in credit ratings. A recurring use of our
liquidity involves our deployment of HQLA from our
investment portfolio to post collateral to financial
institutions serving as sources of securities under our
prime services program.
We had unfunded commitments to extend credit
with gross contractual amounts totaling $34.19 billion
and $34.20 billion and standby letters of credit
totaling $0.91 billion and $1.51 billion as of December
31, 2024 and 2023, respectively. These amounts do
not reflect the value of any collateral. As of
December 31, 2024, approximately 75% of our
unfunded commitments to extend credit and 33% of
our standby letters of credit expire within one year.
Since many of our commitments are expected to
expire or renew without being drawn upon, the gross
contractual amounts do not necessarily represent our
future cash requirements.
Information about our resolution planning and
the impact actions under our resolution plans could
have on our liquidity is provided in “Supervision and
Regulation” in Business in this Form 10-K.
Funding
Deposits
We provide products and services including
custody, accounting, administration, daily pricing, FX
services,
cash
management,
financial
asset
management, securities finance and investment
advisory services. As a provider of these products
and services, we generate client deposits, which have
generally provided a stable, low-cost source of funds.
As a global custodian, clients place deposits with our
entities in various currencies. As of both December
31, 2024 and December 31, 2023, approximately
70% of our average total deposit balances were
denominated in U.S. dollars, 15% in EUR, 10% in
GBP and 5% in all other currencies.
Short-Term Funding
Our on-balance sheet liquid assets are also an
integral component of our liquidity management
strategy. These assets provide liquidity through
maturities of the assets, but more importantly, they
provide us with the ability to raise funds by pledging
the securities as collateral for borrowings or through
outright sales. In addition, our access to the global
capital markets gives us the ability to source
incremental funding from wholesale investors through
relatively low-cost channels to further support
business growth. As discussed earlier under “Asset
Liquidity,” State Street Bank’s membership in the
FHLB allows for advances of liquidity with varying
terms against high-quality collateral. We had $9.8
billion and $2.5 billion outstanding of FHLB funding as
of December 31, 2024 and 2023, respectively. These
outstanding borrowings have initial maturities of
approximately twelve months and are recorded in
other short-term borrowings in the consolidated
statement of condition.
Short-term secured funding also comes in the
form of securities lent or sold under agreements to
repurchase. These transactions are short-term in
nature, generally overnight and are collateralized by
high-quality investment securities. These balances
were $3.68 billion and $1.87 billion as of December
31, 2024 and 2023, respectively.
State Street Bank continues to maintain a line of
credit with a financial institution of CAD $1.40 billion,
or approximately $0.97 billion, as of December 31,
2024, to support its Canadian securities processing
operations. The line of credit has no stated
termination date and is cancellable by either party
with prior notice. As of both December 31, 2024 and
2023, there was no balance outstanding on this line
of credit.
Long-Term Funding
We have the ability to issue debt and equity
securities
under
our
current
universal
shelf
registration statement to meet current commitments
and business needs. In addition, State Street Bank
also has current authorization from the Board to issue
unsecured senior debt. The total amount remaining
for issuance pursuant to this authority is $2.60 billion
as of December 31, 2024.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 94
On March 18, 2024, we issued $1 billion
aggregate principal amount of 4.993% fixed rate
senior notes due 2027.
On August 20, 2024, we issued $1 billion
aggregate principal amount of 4.530% fixed-to-
floating rate senior notes due 2029.
On October 22, 2024, we issued $1.2 billion
aggregate principal amount of 4.330% fixed rate
senior notes due 2027, $300 million aggregate
principal amount of floating rate senior notes due
2027, and $800 million aggregate principal amount of
4.675% fixed-to-floating rate senior notes due 2032.
On November 1, 2024, we redeemed $1 billion
aggregate principal amount of 2.354% fixed-to-
floating rate senior notes due 2025.
On November 25, 2024, State Street Bank
issued $300 million aggregate principal amount of
floating rate senior notes due 2026, $1.15 billion
aggregate principal amount of 4.594% fixed rate
senior notes due 2026 and $800 million aggregate
principal amount of 4.782% fixed rate senior notes
due 2029.
On January 27, 2025, we redeemed $500 million
aggregate principal amount of 4.857% fixed-to-
floating rate senior notes due 2026.
On February 6, 2025, we redeemed $300 million
aggregate principal amount of 1.746% fixed-to-
floating rate senior notes due 2026.
Agency Credit Ratings
Our ability to maintain consistent access to
liquidity is fostered by the maintenance of high
investment grade ratings as measured by major credit
rating agencies.
TABLE 29: CREDIT RATINGS
As of December 31, 2024
Standard &
Poor’s
Moody’s
Investors
Service
Fitch
State Street:
Senior debt
A
Aa3
AA-
Subordinated debt
A-
A2
A
Junior subordinated debt
BBB
A3
NR
Preferred stock
BBB
Baa1
BBB+
Outlook
Stable
Stable
Stable
State Street Bank:
Short-term deposits
A-1+
P-1
F1+
Long-term deposits
AA-
Aa1
AA+
Senior debt/Long-term
issuer
AA-
Aa2
AA
Subordinated debt
A
Aa3
NR
Outlook
Stable
Stable
Stable
Factors essential to maintaining high credit
ratings include:
•
diverse and stable core earnings;
•
relative market position;
•
strong risk management;
•
strong capital ratios;
•
diverse liquidity sources, including the
global
capital
markets
and
client
deposits;
•
strong liquidity monitoring procedures;
and
•
preparedness
for
current
or
future
regulatory developments.
High ratings limit borrowing costs and enhance
our liquidity by:
•
providing
confidence
for
unsecured
funding and depositors;
•
increasing the potential market for our
debt and improving our ability to offer
products;
•
facilitating reduced collateral haircuts in
secured lending transactions; and
•
engaging in transactions in which clients
value high credit ratings.
A downgrade or reduction in our credit ratings
could have a material adverse effect on our liquidity
by restricting our ability to access the capital markets,
which could increase the related cost of funds. In
turn, this could cause the sudden and large-scale
withdrawal of unsecured deposits by our clients,
which could lead to drawdowns of unfunded
commitments to extend credit or trigger requirements
under securities purchase commitments; or require
additional collateral or force terminations of certain
trading derivative contracts.
A majority of our derivative contracts have been
entered
into
under
bilateral
agreements
with
counterparties who may require us to post collateral
or terminate the transactions based on changes in
our credit ratings. We assess the impact of these
arrangements by determining the collateral that would
be required assuming a downgrade by major rating
agencies. The additional collateral or termination
payments related to our net derivative liabilities under
these arrangements that could have been called by
counterparties in the event of a downgrade in our
credit
ratings
below
levels
specified
in
the
agreements
is
provided
in
Note
10
to
the
consolidated financial statements in this Form 10-K.
Other funding sources, such as secured financing
transactions and other margin requirements, for
which there are no explicit triggers, could also be
adversely affected.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 95
Contractual Cash Obligations and Other Commitments
The long-term contractual cash obligations included within Table 30: Long-Term Contractual Cash Obligations
were recorded in our consolidated statement of condition as of December 31, 2024, except for the interest portions
of long-term debt and finance leases.
TABLE 30: LONG-TERM CONTRACTUAL CASH OBLIGATIONS
December 31, 2024
Payments Due by Period
(In millions)
Less than 1
year
1-3
years
4-5
years
Over 5
years
Total
Long-term debt(1)(2)
$
1,285
$
9,595
$
4,520
$
7,756
$
23,156
Operating leases
182
286
206
342
1,016
Finance lease and equipment financing
obligations(2)
55
26
—
—
81
Tax liability
—
22
—
—
22
Total contractual cash obligations
$
1,522
$
9,929
$
4,726
$
8,098
$
24,275
(1) Long-term debt excludes finance lease obligations and equipment financing (presented as a separate line item) and the effect of interest rate swaps. Interest payments were
calculated at the stated rate with the exception of floating-rate debt, for which payments were calculated using the indexed rate in effect as of December 31, 2024.
(2) Additional information about contractual cash obligations related to long-term debt and operating and finance leases is provided in Notes 9 and 20 to the consolidated financial
statements in this Form 10-K.
Total contractual cash obligations shown in Table 30: Long-Term Contractual Cash Obligations do not include:
•
Obligations which will be settled in cash, primarily in less than one year, such as client deposits, federal
funds purchased, securities sold under repurchase agreements and other short-term borrowings.
Additional information about deposits, federal funds purchased, securities sold under repurchase
agreements and other short-term borrowings is provided in Note 8 to the consolidated financial
statements in this Form 10-K.
•
Obligations related to derivative instruments because the derivative-related amounts recorded in our
consolidated statement of condition as of December 31, 2024 did not represent the amounts that may
ultimately be paid under the contracts upon settlement. Additional information about our derivative
instruments is provided in Note 10 to the consolidated financial statements in this Form 10-K. We have
obligations under pension and other post-retirement benefit plans, with additional information provided
in Note 19 to the consolidated financial statements in this Form 10-K, which are not included in Table
30: Long-Term Contractual Cash Obligations.
TABLE 31: OTHER COMMERCIAL COMMITMENTS
Duration of Commitment as of December 31, 2024
(In millions)
Less than
1 year
1-3
years
4-5
years
Over 5
years
Total amounts
committed(1)
Indemnified securities financing
$
310,814
$
—
$
—
$
—
$
310,814
Unfunded credit facilities
23,217
5,458
5,159
357
34,191
Standby letters of credit
300
554
54
—
908
Purchase obligations(2)
434
545
217
154
1,350
Total commercial commitments
$
334,765
$
6,557
$
5,430
$
511
$
347,263
(1) Total amounts committed reflect participations to independent third parties, if any.
(2) Amounts represent obligations pursuant to legally binding agreements, where we have agreed to purchase products or services with a specific minimum quantity defined at a
fixed, minimum or variable price over a specified period of time.
Additional information about the commitments presented in Table 31: Other commercial commitments, except
for purchase obligations, is provided in Note 12 to the consolidated financial statements in this Form 10-K.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 96
Operational Risk Management
Overview
Operational risk is the risk of loss resulting from
inadequate or failed internal processes, people and
systems or from external events.
In providing an array of products and services,
we are exposed to operational risk. Operational risk
may result from, but is not limited to, errors relating to
transaction processing, breaches of internal control
systems, or business interruption due to system
failures or other events. Operational risk also includes
potential legal or regulatory actions that could arise
as a byproduct of our failure to maintain and execute
an adequate system of internal control. In the case of
an operational risk event, we could suffer financial
loss and potential regulatory action, as well as
reputational damage.
Unforeseen external events, including natural
disasters,
terrorist
attacks,
pandemics,
global
conflicts, or other geopolitical events (including the
ongoing wars in Ukraine and in the Middle East), may
result in stress on the operating environment and
increase operational risk.
Operational risk encompasses fiduciary risk and
legal risk. Fiduciary risk is defined as the risk that we
fail to properly exercise our fiduciary duties in our
provision of products or services to clients. Legal risk
is the risk of loss resulting from failure to comply with
laws and contractual obligations.
Operational risk is inherent in the performance
of investment servicing and investment management
activities on behalf of our clients. Whether it be
fiduciary risk, risk associated with execution and
processing or other types of operational risk, a
consistent, transparent and effective operational risk
framework is key to identifying, monitoring and
managing operational risk. To mitigate these risks, we
have established policies, procedures, internal control
standards and an operational risk framework.
Controls are designed to manage operational risk at
levels appropriate to our business model, the
business environment and the markets in which we
operate taking into account factors such as regulation
and competition.
The organizational framework for operational
risk
is
based
on
risk
management
activities
comprising:
•
Governance:
We
have
established
governance structures to oversee and assess
our operational risk management activities
and our operational risk policy;
•
Accountability:
Business
managers
are
responsible for maintaining an effective
system of internal controls commensurate
with their risk profiles and in accordance with
State
Street
policies
and
procedures.
Operational risk management is the second
line function responsible for developing risk
management policies and tools for assessing,
measuring and monitoring operational risk;
and
•
Operational Risk Management Framework:
An established operational risk management
framework
supports
and
drives
the
identification, assessment, mitigation and
monitoring of operational risk.
Governance
Our Board is responsible for the approval and
oversight of our overall operational risk policy.
Our operational risk policy establishes our
approach to our management of operational risk
across our business. The policy identifies the
responsibilities of individuals and committees charged
with oversight of the management of operational risk,
and articulates a broad mandate that supports
implementation of the operational risk framework.
Executive management manages and oversees
our operational risk through membership on risk
management committees, including TORC and the
Operational Risk and Controls Committee, each of
which ultimately reports to a committee of the Board.
The Operational Risk and Controls Committee,
chaired by the global head of operational risk,
oversees the operational risk framework and policies,
reviews and monitors program outputs and metrics,
and monitors resolution of significant operational risk
matters.
Accountability
Accountability for managing operational risk
spans the first and second lines of defense:
•
The global head of Operational Risk, a
member
of
the
CRO’s
executive
management team, leads ERM’s corporate
ORM
group.
ORM
is
responsible
for
developing risk management policies and
tools for assessing, measuring, monitoring
and managing operational risk. The ORM
function includes risk oversight of all lines of
business and functions; and
•
Business Managers are responsible for
managing day to day operations, maintaining
an effective system of internal controls and
managing
operational
risks
within
risk
appetite in its normal course of business.
Corporate Audit, as a third line of defense,
performs separate reviews of the application of
operational
risk
management
practices
and
methodologies utilized across our business.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 97
Operational Risk Management Framework
The operational risk management framework
has been established in a structured manner to drive
the identification, assessment, mitigation, monitoring,
and reporting of operational risk. Operational risk
management framework includes key elements such
as risk and control self-assessment, capital analysis,
monitoring and reporting and documentation and
guidelines.
These
framework
components
are
described below.
Risk and Control Self-Assessment
The objective of the risk and control self-
assessment program is to proactively identify, assess
and manage operational risks and related controls
associated
with
day-to-day
operations. A
key
component of understanding how risks are managed
is to understand the effectiveness of controls.
Effectiveness of controls is concluded through testing,
both
internal
and
external,
business
control
assurance activities and self-assessments along with
other control function reviews, such as a SOX testing
program.
Capital Analysis
The primary measurement tool used to quantify
operational
risk
capital
and
RWA
related
to
operational risk under the advanced approaches is
the loss distribution approach (LDA) model. Such
required capital and RWA totaled $3.95 billion and
$49.35 billion, respectively, as of December 31, 2024,
compared to $3.50 billion and $43.77 billion,
respectively, as of December 31, 2023; refer to the
“Capital” section in “Financial Condition,” of this
Management’s Discussion and Analysis.
The LDA model incorporates the three required
operational risk elements described below:
•
Internal loss event data is collected from
across our business in conformity with our
operating loss policy that establishes the
requirements for collecting and reporting
individual loss events;
•
External loss event data from other financial
institutions supplements our internal loss data
pool with respect to loss event severity; and
•
Business environment and internal control
factors are those characteristics of a bank’s
internal and external operating environment
that bear an exposure to operational risk.
Monitoring and Reporting
The objective of risk monitoring is to proactively
monitor the changing business environment and
corresponding operational risk exposure. It is
achieved through monitoring tools that are designed
to help us understand changes in the business
environment, internal control factors, risk metrics, risk
assessments, exposures and operating effectiveness,
as well as details of loss events and progress on risk
initiatives implemented to mitigate potential risk
exposures.
Operational risk reporting is intended to provide
transparency, thereby enabling management to
manage risk, provide oversight and escalate issues in
a timely manner. It is designed to allow the business
units, executive management, and the Board’s control
functions and committees to gain insight into activities
that may result in risks and potential exposures.
Documentation and Guidelines
Documentation
and
guidelines
allow
for
consistency
and
repeatability
of
the
various
processes that support the operational risk framework
across our business.
Operational
risk
guidelines
document
our
practices and describe the key elements in a
business
unit’s
operational
risk
management
program. The purpose of the guidelines is to set forth
and define key operational risk terms, provide further
detail on our operational risk programs, and detail the
business units’ responsibilities to identify, assess,
measure, monitor and report operational risk. The
guideline supports our operational risk policy.
Data standards have been established with the
intent of maintaining consistent data repositories and
systems that are controlled, accurate and available
on a timely basis to support operational risk
management.
Information Technology Risk Management
Overview and Principles
We define information technology risk as the risk
associated with the use, ownership, operation and
adoption of information technology. Information
technology risk includes risks potentially triggered by
non-compliance
with
regulatory
obligations
or
expectations, information security or cyber incidents,
internal control and process gaps, operational events
and adoption of new business technologies.
The principal technology risks within our risk
policy and risk appetite framework include:
•
Third party risk;
•
Business
disruption
and
technology
resiliency risk;
•
Technology change management risk;
•
Cyber and information security risk;
•
Technology asset and configuration risk;
and
•
Technology obsolescence risk.
Governance
Our Board is responsible for the approval and
oversight of our overall technology risk framework
and program. It does so through its TOPS, which
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 98
reviews and approves our risk policy and appetite
framework annually as well as our cybersecurity
policy and related standards.
Our risk policy establishes our approach to our
management of technology risk across our business.
The policy identifies the responsibilities of individuals
and committees charged with oversight of the
management of technology risk and articulates a
broad mandate that supports implementation of the
risk framework.
Risk control functions in the business are
responsible for adopting and executing the risk
framework and reporting requirements. They do this,
in part, by developing and maintaining an inventory of
critical applications and supporting infrastructure, as
well
as
identifying,
assessing
and
measuring
technology risk. They are also responsible for
monitoring and evaluating risk on a continual basis
using key risk indicators, risk reporting and adopting
appropriate risk responses to risk issues.
Enterprise
Technology
Risk
Management
(ETRM) is the separate risk function responsible for
the technology risk management oversight and
appetite, and technology risk framework development
and
execution.
ETRM
also
performs
overall
technology risk monitoring and reporting to the Board,
and provides a separate view of the technology risk
posture to executive leadership.
We manage technology risks by:
•
Coordinating various risk assessment
and risk management activities, including
ERM operational risk programs;
•
Establishing, through TORC and TOPS of
the Board, the enterprise level technology
risk and cyber risk appetite and limits;
•
Producing enterprise level risk reporting,
aggregation, dashboards, profiles and
risk appetite statements;
•
Validating appropriateness of reporting of
information technology and cybersecurity
risks and risk acceptance to senior
management risk committees and the
Board;
•
Promoting a strong technology and
cybersecurity
risk
culture
through
communication;
•
Serving as an escalation and challenge
point
for
risk
policy
guidance,
expectations and clarifications;
•
Assessing effectiveness of key enterprise
information technology and cybersecurity
risk and internal control remediation
programs; and
•
Providing risk oversight, challenge and
monitoring for the Enterprise Continuity
Services
function
and
Third
Party
Management
program,
including
the
collection of risk appetite, metrics and
key risk indicators, and reviewing issue
management processes and consistent
program adoption.
Cybersecurity Risk Management
Cybersecurity risk is managed as part of our
overall information technology risk as outlined above.
For additional information about our cybersecurity risk
management program, refer to Item 1C in this Form
10-K.
The
TORC
assesses
and
manages
the
effectiveness of our cybersecurity program, which is
overseen by the TOPS of our Board. The TOPS
receives regular cybersecurity updates throughout the
year and is responsible for reviewing and approving
the policy on an annual basis.
Market Risk Management
Market risk is defined by the U.S. Agencies as
the risk of loss that could result from broad market
movements, such as changes in the general level of
interest rates, credit spreads, foreign exchange rates
or commodity prices. We are exposed to market risk
in both our trading and certain of our non-trading, or
asset and liability management, activities.
Information about the market risk associated
with our trading activities is provided below under
“Trading Activities.” Information about the market risk
associated with our non-trading activities, which
consists primarily of interest rate risk, is provided
below under “Asset and Liability Management
Activities.”
Trading Activities
In the conduct of our trading activities, we
assume market risk, the level of which is a function of
our overall risk appetite, business objectives and
liquidity needs, our clients’ requirements and market
volatility and our execution against those factors.
We engage in trading activities primarily to
support our clients’ needs and to contribute to our
overall corporate earnings and liquidity. In connection
with certain of these trading activities, we enter into a
variety of derivative financial instruments to support
our clients' needs and to manage our interest rate
and currency risk. These activities are generally
intended to generate foreign exchange trading
services revenue and to manage potential earnings
volatility. In addition, we provide services related to
derivatives in our role as both a manager and a
servicer of financial assets.
Our clients use derivatives to manage the
financial risks associated with their investment goals
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 99
and business activities. With the growth of cross-
border investing, our clients often enter into foreign
exchange forward contracts to convert currency for
international investments and to manage the currency
risk in their international investment portfolios. As an
active participant in the foreign exchange markets, we
provide
foreign
exchange
forward
and
option
contracts in support of these client needs, and act as
a dealer in the currency markets.
As part of our trading activities, we assume
positions in the foreign exchange and interest rate
markets by buying and selling cash instruments and
entering into derivative instruments, including foreign
exchange forward contracts, foreign exchange and
interest rate options and interest rate swaps, interest
rate forward contracts and interest rate futures. As of
December 31, 2024, the notional amount of these
derivative contracts was $2.70 trillion, of which $2.62
trillion was composed of foreign exchange forward,
swap and spot contracts. We seek to match positions
closely with the objective of mitigating related
currency and interest rate risk. All foreign exchange
contracts are valued daily at current market rates.
Governance
Our assumption of market risk in our trading
activities is an integral part of our corporate risk
appetite. The RC of the Board reviews and oversees
our management of market risk, including the
approval of key market risk policies and the receipt
and review of regular market risk reporting, as well as
periodic updates on selected market risk topics.
The Trading and Markets Risk Committee, a
sub-committee of the previously described FRC (refer
to “Risk Committees”), oversees all market risk-taking
activities across our business associated with trading.
The TMRC, which reports to the FRC, is composed of
members of ERM, our Global Markets business and
our Global Treasury group, other control functions, as
well as our senior executives who manage our trading
businesses and other members of management who
possess specialized knowledge. The TMRC meets
regularly to monitor the management of our trading
market risk activities.
Our business units identify, manage and are
responsible for the market risks inherent in their
businesses. A dedicated market risk management
group within ERM, and other groups within ERM,
work with those business units to assist them in the
identification, assessment, monitoring, management
and control of market risk, and assist business unit
managers with their market risk management and
measurement activities. ERM provides an additional
line of oversight, support and coordination designed
to promote the consistent identification, measurement
and management of market risk across business
units, separate from those business units’ discrete
activities.
The ERM market risk management group is
responsible for the management of corporate-wide
market risk, the monitoring of key market risks and
the development and maintenance of market risk
management policies, guidelines and standards
aligned with our corporate risk appetite. This group
also establishes and approves market risk tolerance
limits and trading authorities based on, but not limited
to, measures of notional amounts, sensitivity, VaR
and stress. Such limits and authorities are specified in
our trading and market risk guidelines which govern
our management of trading market risk.
Risk Appetite
Our corporate market risk appetite is specified in
policy statements that outline the governance,
responsibilities and requirements surrounding the
identification, measurement, analysis, management
and communication of market risk arising from our
trading activities. These policy statements also set
forth the market risk control framework designed to
monitor, support, manage and control this portion of
our risk appetite. All groups involved in the
management and control of market risk associated
with trading activities are required to comply with the
qualitative and quantitative elements of these policy
statements. Our trading market risk control framework
is composed of the following:
•
A trading market risk management process
led by ERM, separate from the business
units’ discrete activities;
•
Defined responsibilities and authorities for the
primary groups involved in trading market risk
management;
•
A
trading
market
risk
measurement
methodology that captures correlation effects
and allows aggregation of market risk across
risk types, markets and business lines;
•
Daily monitoring, analysis and reporting of
market risk exposures associated with trading
activities against market risk limits;
•
A defined limit structure and escalation
process in the event of a market risk limit
excess;
•
Use of VaR models to measure the one-day
market risk exposure of trading positions;
•
Use of VaR as a ten-day-based regulatory
capital measure of the market risk exposure
of trading positions;
•
Use of non-VaR-based limits and other
controls;
•
Use of stressed-VaR models, stress-testing
analysis and scenario analysis to support the
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 100
trading
market
risk
measurement
and
management process by assessing how
portfolios and global business lines perform
under extreme market conditions;
•
Use of back-testing as a diagnostic tool to
assess the accuracy of VaR models and
other risk management techniques; and
•
A new product approval process that requires
market risk teams to assess trading-related
market risks and apply risk tolerance limits to
proposed
new
products
and
business
activities.
We use our CAP to assess our overall capital
and liquidity in relation to our risk profile and provide
a comprehensive strategy for maintaining appropriate
capital and liquidity levels. With respect to market risk
associated
with
trading
activities,
our
risk
management and our calculations of regulatory
capital are based primarily on our internal VaR
models and stress testing analysis. As discussed in
detail under “Value-at-Risk and Stressed VaR” below,
VaR is measured daily by ERM.
The TMRC oversees our market risk exposure in
relation to limits established within our risk appetite
framework. These limits define threshold levels for
VaR- and stressed VaR-based measures and are
applicable to all trading positions subject to regulatory
capital requirements. These limits are designed to
mitigate undue concentration of market risk exposure,
in light of the primarily non-proprietary nature of our
trading activities. The risk appetite framework and
associated limits are reviewed and approved by the
Board’s RC.
Covered Positions
Our trading positions are subject to regulatory
market risk capital requirements if they meet the
regulatory definition of a “covered position.” A covered
position is generally defined by the U.S. Agencies as
an on- or off-balance sheet position associated with
the organization’s trading activities that is free of any
restrictions on its tradability, but does not include
intangible
assets,
certain
credit
derivatives
recognized
as
guarantees
and
certain
equity
positions not publicly traded. All FX and commodity
positions
are
considered
covered
positions,
regardless of the accounting treatment they receive.
The identification of covered positions for inclusion in
our market risk capital framework is governed by our
trading and market risk guidelines, which outline the
standards we use to determine whether a trading
position is a covered position.
Our covered positions consist primarily of the
trading portfolios held by our Global Markets
business. They also arise from certain positions held
by our Global Treasury group. These trading positions
include products such as foreign exchange spot,
foreign exchange forwards, non-deliverable forwards,
foreign exchange options, foreign exchange funding
swaps, currency futures, financial futures and interest
rate futures. New activities are analyzed to determine
if the positions arising from such new activities meet
the definition of a covered position and conform to our
trading and market risk guidelines. This documented
analysis, including any decisions with respect to
market risk treatments, must receive approval from
the Covered Positions Working Group which reports
to the BOC.
We use spot rates, forward points, yield curves
and discount factors imported from third-party
sources to measure the value of our covered
positions, and we use such values to mark our
covered positions to market on a daily basis. These
values are subject to separate validation by us in
order to evaluate reasonableness and consistency
with market experience. The mark-to-market gain or
loss on spot transactions is calculated by applying the
spot rate to the foreign currency principal and
comparing the resultant base currency amount to the
original transaction principal. The mark-to-market
gain or loss on a forward foreign exchange contract
or forward cash flow contract is determined as the
difference between the life-to-date (historical) value of
the cash flow and the value of the cash flow at the
inception of the transaction. The mark-to-market gain
or loss on interest rate swaps is determined by
discounting the future cash flows from each leg of the
swap transaction.
Value-at-Risk and Stressed VaR
We use a variety of risk measurement tools and
methodologies, including VaR, which is an estimate of
potential loss for a given period within a stated
statistical confidence interval. We use a risk
measurement methodology to measure trading-
related VaR daily. We have adopted standards for
measuring trading-related VaR, and we maintain
regulatory capital for market risk associated with our
trading
activities
in
conformity
with
currently
applicable bank regulatory market risk requirements.
We utilize an internal VaR model to calculate our
regulatory market risk capital requirements. We use a
historical simulation model to calculate daily VaR- and
stressed VaR-based measures for our covered
positions in conformity with regulatory requirements.
Our VaR model seeks to capture identified material
risk factors associated with our covered positions,
including risks arising from market movements such
as changes in foreign exchange rates, interest rates
and option-implied volatilities.
We have adopted standards and guidelines to
value our covered positions which govern our VaR-
and stressed VaR-based measures. Our regulatory
VaR-based measure is calculated based on historical
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 101
volatilities of market risk factors during a two-year
observation period calibrated to a one-tail, 99%
confidence interval and a ten-business-day holding
period. We also use the same platform to calculate a
one-tail, 99% confidence interval, one-business-day
VaR for internal risk management purposes. A 99%
one-tail confidence interval implies that daily trading
losses are not expected to exceed the estimated VaR
more than 1% of the time, or less than three business
days out of a year.
Our market risk models, including our VaR
model, are subject to change in connection with the
governance, validation and back-testing processes
described below. These models can change as a
result of changes in our business activities, our
historical experiences, market forces and events,
regulations and regulatory interpretations and other
factors. In addition, the models are subject to
continuing regulatory review and approval. Changes
in our models may result in changes in our
measurements
of
our
market
risk
exposures,
including VaR, and related measures, including
regulatory capital. These changes could result in
material changes in those risk measurements and
related measures as calculated and compared from
period to period.
Value-at-Risk Measures
VaR measures are based on the most recent
two
years
of
historical
price
movements
for
instruments and related risk factors to which we have
exposure. The instruments in question are limited to
foreign exchange spot, forward and options contracts
and interest rate contracts, including futures and
interest rate swaps. Historically, these instruments
have exhibited a higher degree of liquidity relative to
other available capital markets instruments. As a
result, the VaR measures shown reflect our ability to
rapidly adjust exposures in highly dynamic markets.
For this reason, risk inventory, in the form of net open
positions, across all currencies is typically limited. In
addition, long and short positions in major, as well as
minor, currencies provide risk offsets that limit our
potential downside exposure.
Our
VaR
methodology
uses
a
historical
simulation approach based on market-observed
changes in foreign exchange rates, U.S. and non-
U.S. interest rates and implied volatilities, and
incorporates the resulting diversification benefits
provided from the mix of our trading positions. Our
VaR model incorporates approximately 5,000 risk
factors and includes correlations among currency,
interest rates and other market rates.
All VaR measures are subject to limitations and
must be interpreted accordingly. Some, but not all, of
the limitations of our VaR methodology include the
following:
•
Compared to a shorter observation period, a
two-year observation period is slower to
reflect increases in market volatility (although
temporary increases in market volatility will
affect the calculation of VaR for a longer
period); consequently, in periods of sudden
increases in volatility or increasing volatility,
in each case relative to the prior two-year
period, the calculation of VaR may understate
current risk;
•
Compared to a longer observation period, a
two-year observation period may not reflect
as many past periods of volatility in the
markets, because such past volatility is no
longer
in
the
observation
period;
consequently, historical market scenarios of
high volatility, even if similar to current or
likely future market circumstances, may fall
outside the two-year observation period,
resulting in a potential understatement of
current risk;
•
The VaR-based measure is calibrated to a
specified level of confidence and does not
indicate the potential magnitude of losses
beyond this confidence level;
•
In certain cases, VaR-based measures
approximate the impact of changes in risk
factors on the values of positions and
portfolios; this may happen because the
number of inputs included in the VaR model
is necessarily limited; for example, yield
curve risk factors do not exist for all future
dates;
•
The use of historical market information may
not be predictive of future events, particularly
those that are extreme in nature; this
“backward-looking” limitation can cause VaR
to understate or overstate risk;
•
The effect of extreme and rare market
movements is difficult to estimate; this may
result from non-linear risk sensitivities as well
as the potential for actual volatility and
correlation levels to differ from assumptions
implicit in the VaR calculations; and
•
Intra-day risk is not captured.
We calculate a stressed VaR-based measure
using the same model we use to calculate VaR, but
with model inputs calibrated to historical data from a
range of continuous twelve-month periods that reflect
significant financial stress. The stressed VaR model is
designed to identify the second-worst outcome
occurring in the worst continuous one-year rolling
period since July 2007. This stressed VaR meets the
regulatory requirement as the rolling ten-day period
with an outcome that is worse than 99% of other
outcomes during that twelve-month period of financial
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 102
stress. For each portfolio, the stress period is
determined algorithmically by seeking the one-year
time horizon that produces the largest ten-business-
day VaR from within the available historical data. This
historical data set includes the financial crisis of 2008,
the highly volatile period surrounding the Eurozone
sovereign debt crisis and the Standard & Poor’s
downgrade of U.S. Treasury debt in August 2011. As
the historical data set used to determine the stress
period expands over time, future market stress events
will be incorporated.
Stress Testing
We have a corporate-wide stress testing
program in place that incorporates techniques to
measure the potential loss we could suffer in a
hypothetical scenario of adverse economic and
financial conditions. We also monitor concentrations
of risk such as concentration by branch, risk
component, and currency pairs. We conduct stress
testing on a daily basis based on selected historical
stress events that are relevant to our positions in
order to estimate the potential impact to our current
portfolio should similar market conditions recur, and
we also perform stress testing as part of the Federal
Reserve’s
CCAR
process.
Stress
testing
is
conducted, analyzed and reported at the corporate,
trading desk, division and risk-factor level (for
example, exchange risk, interest rate risk and
volatility risk).
Stress testing results and limits are actively
monitored on a daily basis by ERM and reported to
the TMRC. Limit breaches are addressed by ERM
risk managers in conjunction with the business units,
escalated as appropriate, and reviewed by the TMRC
if material. In addition, we have established several
action triggers that prompt immediate review by
management
and
the
implementation
of
a
remediation plan.
We perform scenario analysis daily based on
selected historical stress events that are relevant to
our positions in order to estimate the potential impact
to our current portfolio should similar market
conditions recur. Relevant scenarios are chosen from
an inventory of historical financial stresses and
applied to our current portfolio. These historical event
scenarios involve spot foreign exchange, credit,
equity, unforeseen geo-political events and natural
disasters,
and
government
and
central
bank
intervention scenarios. Examples of the specific
historical scenarios we incorporate in our stress
testing program may include the Asian financial crisis
of 1997, the September 11, 2001 terrorist attacks in
the United States and the 2008 financial crisis. We
continue to update our inventory of historical stress
scenarios as new stress conditions emerge in the
financial markets.
As each of the historical stress events is
associated with a different time horizon, in some
instances we normalize results by scaling down the
longer horizon events to a ten-day horizon and
keeping the shorter horizon events (i.e., events that
are shorter than ten days) at their original terms. We
also conduct sensitivity analysis daily to calculate the
impact of a large predefined shock in a specific risk
factor or a group of risk factors on our current
portfolio. These predefined shocks include parallel
and non-parallel yield curve shifts and foreign
exchange spot and volatility surface shifts. In a
parallel shift scenario, we apply a constant factor shift
across all yield curve tenors. In a non-parallel shift
scenario, we apply different shock levels to different
tenors of a yield curve, rather than shifting the entire
curve by a constant amount. Non-parallel shifts
include steepening, flattening and butterflies.
Validation and Back-Testing
We perform frequent back-testing to assess the
accuracy of our VaR-based model in estimating loss
at the stated confidence level. This back-testing
involves the comparison of estimated VaR model
outputs to daily, actual P&L outcomes observed from
daily market movements. We back-test our VaR
model using a “clean” P&L, which excludes non-
trading revenue such as fees, commissions and NII,
as well as estimated revenue from intraday trading.
Our VaR definition of trading losses excludes
items that are not specific to the price movement of
the trading assets and liabilities themselves, such as
fees, commissions, changes to reserves and gains or
losses from intraday activity.
We experienced one back-testing exception in
2024 and no back-testing exceptions in 2023. At a
99% confidence interval, the statistical expectation for
a VaR model is to witness one exception every
hundred trading days (or two to three exceptions per
year).
Our model validation process also evaluates the
integrity of our VaR models through the use of regular
outcome analysis. This outcome analysis includes
back-testing, which compares the VaR model’s
predictions to actual outcomes using out-of-sample
information. Consistent with regulatory guidance, the
back-testing compared a “clean” P&L, defined above,
with the one-day VaR produced by the model. The
back-testing was performed for a time period not
used for model development. The number of
occurrences
where
“clean”
trading-book
P&L
exceeded the one-day VaR was within our expected
VaR tolerance level.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 103
Market Risk Reporting
Our ERM market risk management group is responsible for market risk monitoring and reporting. We use a
variety of systems and controlled market feeds from third-party services to compile data for several daily, weekly
and monthly management reports.
The following tables present VaR and stressed VaR associated with our trading activities for covered positions
held during the years ended December 31, 2024 and 2023, respectively, as measured by our VaR methodology.
Diversification effect in the tables below represents the difference between total VaR and the sum of the VaRs for
each trading activity. This effect arises because the risks present in our trading activities are not perfectly correlated.
TABLE 32: TEN-DAY VALUE-AT-RISK ASSOCIATED WITH TRADING ACTIVITIES FOR COVERED POSITIONS
Year Ended December 31, 2024
As of
December 31,
2024
Year Ended December 31, 2023
As of
December 31,
2023
(In thousands)
Average
Maximum
Minimum
VaR
Average
Maximum
Minimum
VaR
Global Markets
$
13,909
$
31,813
$
6,253
$
12,890
$
11,697
$
23,797
$
5,106
$
9,029
Global Treasury
2,268
8,332
468
2,451
2,712
7,311
407
1,591
Diversification
(2,056)
(7,807)
(276)
(2,851)
(2,819)
(6,829)
(1,021)
(1,276)
Total VaR
$
14,121
$
32,338
$
6,445
$
12,490
$
11,590
$
24,279
$
4,492
$
9,344
TABLE 33: TEN-DAY STRESSED VALUE-AT-RISK ASSOCIATED WITH TRADING ACTIVITIES FOR COVERED POSITIONS
Year Ended December 31, 2024
As of
December 31,
2024
Year Ended December 31, 2023
As of
December 31,
2023
(In thousands)
Average
Maximum
Minimum
VaR
Average
Maximum
Minimum
VaR
Global Markets
$
44,313
$
72,735
$
16,172
$
41,379
$
42,569
$
103,551
$
19,606
$
62,724
Global Treasury
8,522
23,717
3,943
7,790
6,710
16,762
3,252
5,578
Diversification
(7,581)
(22,417)
(1,257)
(4,580)
(8,463)
(18,555)
(3,486)
(7,936)
Total Stressed VaR
$
45,254
$
74,035
$
18,858
$
44,589
$
40,816
$
101,758
$
19,372
$
60,366
The average and period-end stressed VaR-based measures were both approximately $45 million for the year
ended December 31, 2024, compared to $41 million and $60 million, respectively, for the year ended December 31,
2023. The increase in the average stressed VaR was primarily attributed to higher foreign exchange and interest
rate risk positions.
The VaR-based measures as presented in the preceding tables are primarily a reflection of the overall level of
market volatility and our appetite for taking market risk in our trading activities. While overall levels of volatility have
varied over the historical observation periods, smaller residual market risk positions during the quarter have led to a
reduction in VaR measures presented.
We have in the past and may in the future modify and adjust our models and methodologies used to calculate
VaR and stressed VaR, subject to regulatory review and approval, and any future modifications and adjustments
may result in changes in our VaR-based and stressed VaR-based measures.
The following tables present the VaR and stressed-VaR associated with our trading activities attributable to
foreign exchange risk, interest rate risk and volatility risk as of December 31, 2024 and 2023, respectively. The
totals of the VaR-based and stressed VaR-based measures for the three attributes in total exceeded the related total
VaR and total stressed VaR presented in the foregoing tables as of each period-end, primarily due to the benefits of
diversification across risk types. Diversification effect in the tables below represents the difference between total
VaR and the sum of the VaRs for each trading activity. This effect arises because the risks present in our trading
activities are not perfectly correlated.
TABLE 34: TEN-DAY VaR ASSOCIATED WITH TRADING ACTIVITIES BY RISK FACTOR(1)
Year Ended December 31, 2024
Year Ended December 31, 2023
(In thousands)
Foreign Exchange
Risk
Interest Rate Risk
Volatility Risk
Foreign Exchange
Risk
Interest Rate Risk
Volatility Risk
By component:
Global Markets
$
3,474
$
10,422
$
180
$
2,348
$
10,023
$
356
Global Treasury
409
2,505
—
496
1,446
—
Diversification
(388)
(2,920)
—
(324)
(831)
—
Total VaR
$
3,495
$
10,007
$
180
$
2,520
$
10,638
$
356
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 104
TABLE 35: TEN-DAY STRESSED VaR ASSOCIATED WITH TRADING ACTIVITIES BY RISK FACTOR(1)
Year Ended December 31, 2024
Year Ended December 31, 2023
(In thousands)
Foreign Exchange
Risk
Interest Rate Risk
Volatility Risk
Foreign Exchange
Risk
Interest Rate Risk
Volatility Risk
By component:
Global Markets
$
7,357
$
43,800
$
518
$
5,402
$
64,418
$
501
Global Treasury
6,246
7,202
—
4,978
6,347
—
Diversification
(5,017)
(8,671)
—
(2,891)
(6,209)
—
Total Stressed VaR
$
8,586
$
42,331
$
518
$
7,489
$
64,556
$
501
(1) For purposes of risk attribution by component, foreign exchange refers only to the risk from market movements in period-end rates. Forwards, futures, options and swaps with maturities
greater than period-end have embedded interest rate risk that is captured by the measures used for interest rate risk. Accordingly, the interest rate risk embedded in these foreign exchange
instruments is included in the interest rate risk component.
Asset and Liability Management Activities
The primary objective of asset and liability management is to provide sustainable NII under varying economic
conditions, while protecting the economic value of the assets and liabilities carried on our consolidated statement of
condition from the adverse effects of changes in interest rates. While many market factors affect the level of NII and
the economic value of our assets and liabilities, one of the most significant factors is our exposure to movements in
interest rates. Most of our NII is earned from the investment of client deposits generated by our businesses. We
invest these client deposits in assets that conform generally to the liquidity characteristics of our balance sheet
liabilities, as well as the currency composition of our significant non-U.S. dollar denominated client deposits.
We quantify NII sensitivity using an earnings simulation model that includes our expectations for new business
growth, changes in balance sheet mix and investment portfolio positioning. This measure compares our baseline
view of NII over a twelve-month horizon, based on our internal forecast of interest rates, to a wide range of rate
shocks. Our baseline view of NII is updated on a regular basis. Table 36, Key Interest Rates for Baseline Forecasts,
presents the spot and 12-month forward rates used in our baseline forecasts at December 31, 2024 and 2023. Our
baseline rate forecast as of December 31, 2024 was generally consistent with common market expectations for
global central bank actions at that point in time, which implied that rates have reached peak levels and rate cuts will
continue in 2025.
TABLE 36: KEY INTEREST RATES FOR BASELINE FORECASTS
December 31, 2024
December 31, 2023
Fed Funds Target
ECB Target(1)
10-Year Treasury
Fed Funds Target
ECB Target(1)
10-Year Treasury
Spot rates
4.50 %
3.00 %
4.57 %
5.50 %
4.00 %
3.88 %
12-month forward rates
4.00
1.75
4.59
4.25
2.75
3.87
(1) European Central Bank deposit facility rate.
In Table 37: Net Interest Income Sensitivity, we report the expected change in NII over the next twelve months
from instantaneous 100 basis point shocks to various tenors on the yield curve relative to our baseline rate forecast,
including the impacts from U.S. and non-U.S. rates. Each scenario assumes no management action is taken to
mitigate the adverse effects of changes in interest rates on our financial performance. While investment securities
balances and composition can fluctuate with the level of rates as prepayment assumptions change, for purposes of
this analysis our deposit balances and mix are assumed to remain consistent with the baseline forecast which
assumes client deposit balance rotation including reductions in non-interest-bearing deposit balances. The results of
these scenarios should not be extrapolated for other (e.g., more severe) shocks as the impact of interest rate
shocks may not be linear. In lower rate scenarios, the full impact of the shock is realized for all currencies even if the
result is negative interest rates.
TABLE 37: NET INTEREST INCOME SENSITIVITY
December 31, 2024
December 31, 2023
(In millions)
U.S. Dollar
All Other
Currencies
Total
U.S. Dollar
All Other
Currencies
Total
Rate change:
Benefit (Exposure)
Benefit (Exposure)
Parallel shifts:
+100 bps shock
$
19
$
292
$
311
$
(26)
$
274
$
248
–100 bps shock
(16)
(254)
(270)
4
(227)
(223)
Steeper yield curve:
+100 bps shift in long-end rates(1)
28
22
50
28
11
39
-100 bps shift in short-end rates(1)
13
(233)
(220)
35
(215)
(180)
Flatter yield curve:
+100 bps shift in short-end rates(1)
(9)
270
261
(53)
262
209
-100 bps shift in long-end rates(1)
(29)
(22)
(51)
(30)
(11)
(41)
(1) The short end is 0-3 months. The long end is 5 years and above. Interim term points are interpolated.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 105
Our overall balance sheet, including all currencies, continues to be asset sensitive with an NII benefit in higher
rate scenarios and NII exposure in lower rate scenarios. As of December 31, 2024, our USD balance sheet’s NII
sensitivity is relatively neutral given expectations for USD deposit betas and the repricing characteristics of our USD
assets. Compared to December 31, 2023, our USD NII turned asset sensitive largely driven by lower investment
portfolio duration and lower non-interest bearing deposits. As of December 31, 2024, non-USD NII benefits from
higher rate scenarios and is exposed to lower rates primarily driven by our sensitivities on the short-end of the yield
curve. Compared to December 31, 2023, our non-USD NII sensitivity increased, driven by higher deposit balances
and lower duration in the investment portfolio.
EVE sensitivity is a discounted cash flow model designed to estimate the fair value of assets and liabilities
under a series of interest rate shocks over a long-term horizon. In the following table, we report our EVE sensitivity
to 200 bps instantaneous rate shocks, relative to spot interest rates. EVE sensitivity is dependent on the timing of
interest and principal cash flows. Also, the measure only evaluates the spot balance sheet and does not include the
impact of new business assumptions.
TABLE 38: ECONOMIC VALUE OF EQUITY SENSITIVITY
As of December 31,
(In millions)
2024
2023
Rate change:
Benefit (Exposure)
+200 bps shock
$
(1,024) $
(1,447)
–200 bps shock
1,205
1,683
As of December 31, 2024, EVE sensitivity remains exposed to upward shifts in interest rates. Compared to
December 31, 2023, our sensitivity in the up 200bp shock scenario decreased, primarily driven by a decrease in the
duration of the investment portfolio.
Both NII sensitivity and EVE sensitivity are routinely monitored as market conditions change. For additional
information about our Asset and Liability Management Activities, refer to Management’s Discussion and Analysis of
Financial Condition and Results of Operations, “Risk Management.”
Model Risk Management
State Street uses models to support its financial decision-making and business activities. Model risk is the
potential for adverse outcomes due to incorrectly implemented or misused model outputs. Model Risk Management
(MRM) is a separate control function within Enterprise Risk Management (ERM) responsible for specifying and
maintaining the firmwide MRM policy and framework designed to monitor and control model risk within our risk
appetite.
The MRM framework includes:
•
Model risk governance that defines roles and responsibilities, including the authority to restrict model usage,
provides policies and guidance, monitors compliance, and reports regularly to relevant internal committees
and the Board of Directors on the overall degree of model risk across the firm;
•
Model development standards that focus on conceptual soundness and computational accuracy, data
quality, robustness, stability, and sensitivity to assumptions; and
•
Model validation standards designed to verify that models are conceptually sound, are computationally
accurate, are performing as expected, and are in line with their intended use, and evaluate the level of
model risk for each model by considering the model’s materiality, usage, performance, and sufficiency of
compensating controls among other factors
The MRM function is further responsible for model identification.
Governance
Models used in the regulatory capital calculation can only be deployed for use after undergoing a model
validation by ERM’s MRM group. The model validation results and/or a decision by the MRC must permit model
usage or the model may not be used.
ERM’s MRM group is responsible for defining the corporate-wide model risk management framework and
maintaining policies that are designed to achieve the framework’s objectives. All regulatory capital calculation
models, including any artificial intelligence and machine learning models, must comply with the model risk
management framework and corresponding policies. The group is responsible for overall model risk governance
capabilities, with particular emphasis in the areas of model identification, model validation, model risk reporting,
model performance monitoring, tracking of new model development status and committee-level review and
challenge.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 106
The MRC, which is composed of senior
managers representing MRM along with functional
areas and business units, reports to MRAC, and
provides guidance and oversight to the MRM
function.
Model Development and Ongoing Monitoring
Models
are
developed
under
guidelines
governing data sourcing, methodology selection and
model integrity testing. Model development includes a
statement of purpose to align development with
intended use. It may also include a comparison of
alternative approaches to promote a sound modeling
approach.
Model developers conduct an assessment of
data quality and relevance. The development teams
conduct a variety of tests of the accuracy, robustness
and stability of each model.
Model owners submit models to the MVG for
validation on a regular basis, as per the existing
policy. The model owners also conduct ongoing
monitoring of each model.
Model Validation
MVG is part of MRM within ERM and performs
model validations and reviews. MVG is independent,
as contemplated by applicable bank regulatory
requirements, of both the developers and users of the
models. MVG validates models through an evaluation
process that assesses the appropriateness, accuracy,
and
suitability
of
data
inputs,
methodologies,
documentation, assumptions, and processing code.
Model validation also encompasses an assessment
of model performance, sensitivity, and robustness, as
well as a model’s potential limitations given its
particular assumptions or deficiencies. Based on the
results of its review, MVG issues a model use
decision and may require remedial actions and/or
compensating controls on model use. MVG also
maintains a model risk rating system, which assigns a
risk rating to each model based on an assessment of
a model’s inherent and residual risks. These ratings
aid in the understanding and reporting of model risk
across the model portfolio, and enable the triaging of
needs for remediation.
Although model validation is the primary method
of subjecting models to independent review and
challenge, in practice, a multi-step governance
process provides the opportunity for challenge by
multiple parties. First, MVG conducts a model
validation and issues a model use decision. MVG
communicates their result as one of the following
three
outcomes:
“Approved,”
“Approved
with
conditions,” or “Not Approved”. There are three ways
in which a model can be deemed “Not approved for
Use” given a validation: 1) the aggregation of the
model scoring within MRM’s model risk rating system
is poor enough to result in a “high” rating, 2) the
scoring of one or more model risk rating system
element(s) is deemed “critical” resulting in an
automatic “high” rating irrespective of the other
elements as the “critical” element(s) undermines the
model, or 3) the remediation action is not properly
taken by the due date resulting in a severe
compliance breach that undercuts the model rating.
Second,
these
decisions
may
be
reviewed,
challenged, and confirmed by the MRC. Finally,
model use decisions, risk ratings, and overall levels of
model risk may be escalated to and reviewed by
MRAC. MRM also reports regularly on model risk
issues to the Board.
Strategic Risk Management
We define strategic risk as the current or
prospective impact on earnings or capital arising from
adverse business decisions, improper implementation
of strategic initiatives, or lack of responsiveness to
industry-wide changes. Strategic risks are influenced
by changes in the competitive environment; decline in
market performance or changes in our business
activities; and the potential secondary impacts of
reputational risks, not already captured as market,
interest rate, credit, operational, model or liquidity
risks.
We
incorporate
strategic
risk
into
our
assessment of our business plans and risk and
capital management processes. Management of
strategic risk is an integral component of all aspects
of our business.
Separating the effects of a potential material
adverse event into operational and strategic risk is
sometimes difficult. For instance, the direct financial
impact of an unfavorable event in the form of fines or
penalties would be classified as an operational risk
loss, while the impact on our reputation and
consequently the potential loss of clients and
corresponding decline in revenue would be classified
as a strategic risk loss. An additional example of
strategic risk is the integration of a major acquisition.
Failure to successfully integrate the operations of an
acquired business, and the resultant inability to retain
clients and the associated revenue, would be
classified as a loss due to strategic risk.
Strategic risk is managed with a long-term focus.
Techniques for its assessment and management
include the development of business plans, which are
subject to review and challenge from senior
management and the Board of Directors, as well as a
formal review and approval process for all new
business and product proposals. The potential impact
of the various elements of strategic risk is difficult to
quantify with any degree of precision. We use a
combination of historical earnings volatility, scenario
analysis, stress-testing and management judgment to
help assess the potential effect on us attributable to
strategic risk. Management and control of strategic
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 107
risks are generally the responsibility of the business
units, with oversight from the control functions, as
part of their overall strategic planning and internal risk
management processes.
CAPITAL
Managing
our
capital
involves
evaluating
whether our actual and projected levels of capital are
commensurate with our risk profile, are in compliance
with all applicable regulatory requirements, and are
sufficient to provide us with the financial flexibility to
undertake future strategic business initiatives. We
assess capital adequacy based on relevant regulatory
capital requirements, as well as our own internal
capital goals, targets and other relevant metrics.
Framework
Our objective with respect to management of our
capital is to maintain a strong capital base in order to
provide financial flexibility for our business needs,
including funding corporate growth and supporting
clients’ cash management needs, and to provide
protection against loss to depositors and creditors.
We strive to maintain an appropriate level of capital,
commensurate with our risk profile, on which an
attractive return to shareholders is expected to be
realized over both the short and long-term, while
protecting our obligations to depositors and creditors
and complying with regulatory capital requirements.
Our capital management focuses on our risk
exposures, the regulatory requirements applicable to
us with respect to multiple capital measures, the
evaluations and resulting credit ratings of the major
independent rating agencies, our return on capital at
both the consolidated and line-of-business level and
our capital position relative to our peers.
Assessment of our overall capital adequacy
includes the comparison of capital sources with
capital uses, as well as the consideration of the
quality and quantity of the various components of
capital. The assessment seeks to determine the
optimal level of capital and composition of capital
instruments to satisfy all constituents of capital, with
the lowest overall cost to shareholders. Other factors
considered in our assessment of capital adequacy
are strategic and contingency planning, stress testing
and planned capital actions.
Capital Adequacy Process (CAP)
Our primary federal banking regulator is the
Federal Reserve. Both we and State Street Bank are
subject
to
the
minimum
regulatory
capital
requirements established by the Federal Reserve and
defined in the Federal Deposit Insurance Corporation
Improvement Act. State Street Bank must exceed the
regulatory capital thresholds for “well capitalized” in
order for our Parent Company to maintain its status
as a financial holding company. Accordingly, one of
our primary objectives with respect to capital
management is to exceed all applicable minimum
regulatory capital requirements and for State Street
Bank to be “well capitalized” under the PCA
guidelines established by the FDIC. Our capital
management activities are conducted as part of our
corporate-wide CAP and associated Capital Policy
and Guidelines.
We consider capital adequacy to be a key
element of our financial well-being, which affects our
ability to attract and maintain client relationships;
operate effectively in the global capital markets; and
satisfy regulatory, security holders and shareholder
needs. Capital is one of several elements that affect
our credit ratings and the ratings of our principal
subsidiaries.
In conformity with our Capital Policy and
Guidelines, we strive to achieve and maintain specific
internal capital levels, not just at a point in time, but
over time and during periods of stress, to account for
changes in our strategic direction, evolving economic
conditions, and financial and market volatility. We
have developed and implemented a corporate-wide
CAP to assess our overall capital in relation to our
risk profile and to provide a comprehensive strategy
for maintaining appropriate capital levels. The CAP
considers material risks under multiple scenarios,
with
an
emphasis
on
stress
scenarios,
and
encompasses existing processes and systems used
to measure our capital adequacy.
Capital Contingency Planning
Contingency planning is an integral component
of capital management. The objective of contingency
planning is to monitor current and forecast levels of
select capital, liquidity and other measures that serve
as early indicators of a potentially adverse capital or
liquidity adequacy situation. These measures are one
of the inputs used to set our internal capital adequacy
level. We review these measures annually for
appropriateness and relevance in relation to our
financial budget and capital plan. In addition, we
maintain an inventory of capital contingency actions
designed to conserve or generate capital to support
the unique risks in our business model, our client and
investor demands and regulatory requirements.
Stress Testing
We administer a robust business-wide stress-
testing program that executes stress tests each year
to assess the institution’s capital adequacy and/or
future performance under adverse conditions. Our
stress testing program is structured around what we
determine to be the key risks inherent in our
business, as assessed through a recurring material
risk
identification
process.
The
material
risk
identification
process
represents
a
bottom-up
approach
to
identifying
the
institution’s
most
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 108
significant risk exposures across all on- and off-
balance sheet risk-taking activities, including credit,
market, liquidity, interest rate, operational, fiduciary,
business, reputation and regulatory risks. These key
risks serve as an organizing principle for much of our
risk management framework, as well as reporting,
including the “risk dashboard” provided to the Board.
In connection with the focus on our key risks,
each stress test incorporates idiosyncratic loss events
tailored to our unique risk profile and business
activities. Due to the nature of our business model
and our consolidated statement of condition, our risks
differ from those of a traditional commercial bank.
Over the past few years, stress scenarios have
included a deep recession in the United States,
including impacts from the COVID-19 pandemic, a
break-up of the Eurozone, a severe recession in
China and an oil shock precipitated by turmoil in the
Middle East/North Africa region.
The Federal Reserve requires bank holding
companies with total consolidated assets of $50
billion or more, which includes us, to submit a capital
plan on an annual basis. The Federal Reserve uses
its annual CCAR process, which incorporates
hypothetical financial and economic stress scenarios,
to review those capital plans and assess whether
banking
organizations
have
capital
planning
processes that account for idiosyncratic risks and
provide for sufficient capital to continue operations
throughout times of economic and financial stress. As
part of its CCAR process, the Federal Reserve
assesses each organization’s capital adequacy,
capital planning process and plans to distribute
capital, such as dividend payments or stock purchase
programs. Management and Board risk committees
review, challenge and approve CCAR results and
assumptions before submission to the Federal
Reserve.
Through the evaluation of our capital adequacy
and/or future performance under adverse conditions,
the stress testing process provides us important
insights for capital planning, risk management and
strategic decision-making.
Governance
In order to support integrated decision-making,
we have identified three management elements to aid
in the compatibility and coordination of our CAP:
•
Risk
Management
-
identification,
measurement, monitoring and forecasting of
different types of risk and their combined
impact on capital adequacy;
•
Capital management - determination of
optimal capital levels; and
•
Business Management - strategic planning,
budgeting,
forecasting
and
performance
management.
We have a hierarchical structure supporting
appropriate committee review of relevant risk and
capital information. The ongoing responsibility for
capital management rests with our Treasurer. The
Capital Management group within Global Treasury is
responsible for the Capital Policy and Guidelines,
development of the Capital Plan, the oversight of
global capital management and optimization.
The MRAC provides oversight of our capital
management, our capital adequacy, our internal
targets
and
the
expectations
of
the
major
independent credit rating agencies. In addition,
MRAC approves our balance sheet strategy and
related activities. The Board’s RC assists the Board in
fulfilling its oversight responsibilities related to the
assessment and management of risk and capital. Our
Capital Policy is reviewed and approved annually by
the Board’s RC.
Global Systemically Important Bank
We have been identified by the Financial
Stability Board and the Basel Committee on Banking
Supervision as a G-SIB. Our designation as a G-SIB
is based on a number of factors, as evaluated by
banking regulators, and requires us to maintain an
additional capital surcharge above the minimum
capital ratios set forth in the Basel III rule.
We and our depositary institution subsidiaries
are subject to the current Basel III minimum risk-
based capital and leverage ratio guidelines.
Additional information about G-SIBs is provided
under “Regulatory Capital Adequacy and Liquidity
Standards” in “Supervision and Regulation” in
Business in this Form 10-K.
Regulatory Capital
We and State Street Bank, as advanced
approaches banking organizations, are subject to the
U.S. Basel III framework. We are also subject to the
final market risk capital rule issued by the U.S.
Agencies.
The Basel III rule provides two frameworks for
monitoring capital adequacy: the “standardized
approach”
and
the
“advanced
approaches”,
applicable
to
advanced
approaches
banking
organizations, like us. The standardized approach
prescribes standardized calculations for credit risk
RWA, including specified risk weights for on and
certain off-balance sheet exposures. The advanced
approaches consist of the Advanced Internal Ratings-
Based Approach used for the calculation of credit risk
RWA, and the Advanced Measurement Approach
used for the calculation of operational risk RWA.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 109
As required by the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Dodd-Frank
Act) enacted in 2010, we and State Street Bank, as
advanced approaches banking organizations, are
subject to a “capital floor,” also referred to as the
Collins Amendment, in the assessment of our
regulatory capital adequacy, such that our risk-based
capital ratios for regulatory assessment purposes are
the lower of each ratio calculated under the advanced
approaches and the standardized approach. Under
the advanced approaches, State Street and State
Street Bank are subject to a 2.5% CCB requirement,
plus any applicable countercyclical capital buffer
requirement, which is currently set at 0%. Under the
standardized approach, State Street Bank is subject
to the same CCB and countercyclical capital buffer
requirements, but for State Street, the 2.5% CCB
requirement is replaced by the SCB requirement
according to the SCB rule issued in 2020. In addition,
State Street is subject to a G-SIB surcharge.
The SCB replaced, under the standardized
approach, the CCB with a buffer calculated as the
difference between the institution’s starting and
lowest projected CET1 ratio under the CCAR
severely adverse scenario plus planned common
stock dividend payments (as a percentage of RWA)
from the fourth through seventh quarter of the CCAR
planning horizon. The SCB requirement can be no
less than 2.5% of RWA. Breaching the SCB or other
regulatory buffer or surcharge will limit a banking
organization’s ability to make capital distributions and
discretionary bonus payments to executive officers.
Our SCB requirement was 2.5% for the period
from October 1, 2023 through September 30, 2024.
On June 26, 2024, we were notified by the Federal
Reserve of the results from the 2024 supervisory
stress test. Our SCB calculated under the 2024
supervisory stress test was below the 2.5% minimum,
resulting in an SCB at that floor, which remains in
effect for the period from October 1, 2024 through
September 30, 2025.
Our minimum risk-based capital ratios as of
January 1, 2024 include a CCB of 2.5% and a SCB of
2.5% for the advanced approaches and standardized
approach, respectively, a G-SIB surcharge of 1.0%,
and a countercyclical buffer of 0.0%. This results in
minimum risk-based ratios of 8.0% for the Common
Equity Tier 1 (CET1) capital ratio, 9.5% for the tier 1
capital ratio, and 11.5% for the total capital ratio.
Our
current
G-SIB
surcharge,
through
December 31, 2025, is 1.0%. Based upon preliminary
calculations using data as of December 31, 2024, we
currently anticipate that our surcharge will remain at
1.0% through December 31, 2026; however, that
calculation has not yet been finalized and is subject to
many financial, balance sheet, market and other
factors, and consequently there is a risk that a higher
G-SIB surcharge (e.g., 1.5%) may result from the final
calculation.
To maintain the status of the Parent Company
as a financial holding company, we and our IDI
subsidiaries are required, among other requirements,
to be “well capitalized” as defined by Regulation Y
and Regulation H.
The market risk capital rule requires us to use
internal models to calculate daily measures of VaR,
which reflect general market risk for certain of our
trading positions defined by the rule as “covered
positions,” as well as stressed-VaR measures to
supplement the VaR measures. The rule also
requires a public disclosure composed of qualitative
and quantitative information about the market risk
associated with our trading activities and our related
VaR and stressed-VaR measures. The qualitative and
quantitative information required by the rule is
provided under “Market Risk Management” included
in this Management’s Discussion and Analysis.
The following table presents the regulatory
capital structure and related regulatory capital ratios
for us and State Street Bank as of the dates
indicated. We are subject to the more stringent of the
risk-based
capital
ratios
calculated
under
the
standardized approach and those calculated under
the advanced approaches in the assessment of our
capital adequacy under applicable bank regulatory
standards.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 110
TABLE 39: REGULATORY CAPITAL STRUCTURE AND RELATED REGULATORY CAPITAL RATIOS
State Street Corporation
State Street Bank
(Dollars in millions)
Basel III
Advanced
Approaches
December 31,
2024
Basel III
Standardized
Approach
December 31,
2024
Basel III
Advanced
Approaches
December 31,
2023
Basel III
Standardized
Approach
December 31,
2023
Basel III
Advanced
Approaches
December 31,
2024
Basel III
Standardized
Approach
December 31,
2024
Basel III
Advanced
Approaches
December 31,
2023
Basel III
Standardized
Approach
December 31,
2023
Common shareholders’ equity:
Common stock and related surplus
$
11,226
$
11,226
$
11,245
$
11,245
$
13,333
$
13,333
$
13,033
$
13,033
Retained earnings
29,582
29,582
27,957
27,957
15,977
15,977
14,454
14,454
Accumulated other comprehensive income
(loss)
(2,100)
(2,100)
(2,354)
(2,354)
(1,805)
(1,805)
(2,097)
(2,097)
Treasury stock, at cost
(16,198)
(16,198)
(15,025)
(15,025)
—
—
—
—
Total
22,510
22,510
21,823
21,823
27,505
27,505
25,390
25,390
Regulatory capital adjustments:
Goodwill and other intangible assets, net of
associated deferred tax liabilities
(8,320)
(8,320)
(8,470)
(8,470)
(8,054)
(8,054)
(8,208)
(8,208)
Other adjustments(1)
(391)
(391)
(382)
(382)
(278)
(278)
(298)
(298)
Common equity tier 1 capital
13,799
13,799
12,971
12,971
19,173
19,173
16,884
16,884
Preferred stock
2,816
2,816
1,976
1,976
—
—
—
—
Tier 1 capital
16,615
16,615
14,947
14,947
19,173
19,173
16,884
16,884
Qualifying subordinated long-term debt
1,861
1,861
1,870
1,870
530
530
536
536
Adjusted allowance for credit losses
—
183
—
150
—
183
—
150
Total capital
$
18,476
$
18,659
$
16,817
$
16,967
$
19,703
$
19,886
$
17,420
$
17,570
Risk-weighted assets:
Credit risk(2)
$
63,252
$
124,281
$
61,210
$ 109,228
$
57,883
$
121,785
$
54,942
$ 107,067
Operational risk(3)
49,350
NA
43,768
NA
47,538
NA
42,297
NA
Market risk
2,000
2,000
2,475
2,475
2,000
2,000
2,475
2,475
Total risk-weighted assets
$
114,602
$
126,281
$ 107,453
$ 111,703
$
107,421
$
123,785
$
99,714
$ 109,542
Capital
Ratios:
2024 Minimum
Requirements
Including Capital
Conservation
Buffer and G-SIB
Surcharge(4)
2023 Minimum
Requirements
Including Capital
Conservation
Buffer and G-SIB
Surcharge(4)
Common
equity tier 1
capital
8.0 %
8.0 %
12.0 %
10.9 %
12.1 %
11.6 %
17.8 %
15.5 %
16.9 %
15.4 %
Tier 1
capital
9.5
9.5
14.5
13.2
13.9
13.4
17.8
15.5
16.9
15.4
Total capital
11.5
11.5
16.1
14.8
15.7
15.2
18.3
16.1
17.5
16.0
(1) Other adjustments within CET1 capital primarily include disallowed deferred tax assets, cash flow hedges that are not recognized at fair value on the balance sheet, and the overfunded portion
of our defined benefit pension plan obligation net of associated deferred tax liabilities.
(2) Under the advanced approaches, credit risk RWA includes a CVA which reflects the risk of potential fair value adjustments for credit risk reflected in our valuation of OTC derivative contracts.
We used a simple CVA approach in conformity with the Basel III advanced approaches.
(3) Under the current advanced approaches rules and regulatory guidance concerning operational risk models, RWA attributable to operational risk can vary substantially from period-to-period,
without direct correlation to the effects of a particular loss event on our results of operations and financial condition and impacting dates and periods that may differ from the dates and periods as
of and during which the loss event is reflected in our financial statements, with the timing and categorization dependent on the processes for model updates and, if applicable, model revalidation
and regulatory review and related supervisory processes. An individual loss event can have a significant effect on the output of our operational RWA under the advanced approaches depending
on the severity of the loss event and its categorization among the seven Basel-defined UOMs.
(4) Minimum requirements include a CCB of 2.5% and a SCB of 2.5% for the advanced approaches and the standardized approach, respectively, a G-SIB surcharge of 1.0% and a countercyclical
buffer of 0%. On June 26, 2024, we were notified by the Federal Reserve of the results from the 2024 supervisory stress test. Our SCB calculated under the 2024 supervisory stress test was well
below the 2.5% minimum, resulting in an SCB at that floor, which remains in effect for the period from October 1, 2024 through September 30, 2025.
NA Not applicable
Our CET1 capital increased $0.83 billion as of December 31, 2024 compared to December 31, 2023, primarily
due to an increase in net income and improved AOCI, partially offset by dividends declared and common share
repurchases in 2024. Our Tier 1 capital increased $1.67 billion as of December 31, 2024 compared to
December 31, 2023 under both the advanced approaches and standardized approach, due to the increase in CET1
capital and net issuance of preferred stock in 2024.
Our Tier 2 capital remained relatively flat as of December 31, 2024 compared to December 31, 2023, under the
advanced approaches and standardized approach.
Total capital increased under the advanced approaches and standardized approach, as of December 31, 2024
compared to December 31, 2023, by $1.66 billion and $1.69 billion, respectively, primarily due to the increase in
CET1 capital and net issuance of preferred stock in 2024.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 111
The table below presents a roll-forward of CET1 capital, Tier 1 capital and total capital for the years ended
December 31, 2024 and 2023.
TABLE 40: CAPITAL ROLL-FORWARD
(In millions)
Basel III
Advanced
Approaches
December 31,
2024
Basel III
Standardized
Approach
December, 31,
2024
Basel III
Advanced
Approaches
December 31,
2023
Basel III
Standardized
Approach
December 31,
2023
Common equity tier 1 capital:
Common equity tier 1 capital balance, beginning of period
$
12,971
$
12,971
$
14,547
$
14,547
Net income
2,687
2,687
1,944
1,944
Changes in treasury stock, at cost
(1,173)
(1,173)
(3,689)
(3,689)
Dividends declared
(1,062)
(1,062)
(958)
(958)
Goodwill and other intangible assets, net of associated deferred tax liabilities
150
150
75
75
Accumulated other comprehensive income (loss)(1)
254
254
1,357
1,357
Other adjustments(1)
(28)
(28)
(305)
(305)
Changes in common equity tier 1 capital
828
828
(1,576)
(1,576)
Common equity tier 1 capital balance, end of period
13,799
13,799
12,971
12,971
Additional tier 1 capital:
Tier 1 capital balance, beginning of period
14,947
14,947
16,523
16,523
Changes in common equity tier 1 capital
828
828
(1,576)
(1,576)
Net issuance (redemption) of preferred stock
840
840
—
—
Changes in tier 1 capital
1,668
1,668
(1,576)
(1,576)
Tier 1 capital balance, end of period
16,615
16,615
14,947
14,947
Tier 2 capital:
Tier 2 capital balance, beginning of period
1,870
2,020
1,376
1,496
Net issuance (redemption) and changes in long-term debt qualifying as tier 2
capital
(9)
(9)
494
494
Changes in allowance for credit losses
—
33
—
30
Changes in tier 2 capital
(9)
24
494
524
Tier 2 capital balance, end of period
1,861
2,044
1,870
2,020
Total capital:
Total capital balance, beginning of period
16,817
16,967
17,899
18,019
Changes in tier 1 capital
1,668
1,668
(1,576)
(1,576)
Changes in tier 2 capital
(9)
24
494
524
Total capital balance, end of period
$
18,476
$
18,659
$
16,817
$
16,967
(1) Accumulated other comprehensive income (loss) includes losses on cash flow hedges where the hedged exposures are not recognized at fair value on the balance sheet, which, under the
Capital Rule, must be excluded from CET1 capital. This adjustment is captured in the Other Adjustments line.
The following table presents a roll-forward of the Basel III advanced approaches and standardized approach
RWA for the years ended December 31, 2024 and 2023.
TABLE 41: ADVANCED & STANDARDIZED APPROACHES RISK-WEIGHTED ASSETS ROLL-FORWARD
(In millions)
Basel III
Advanced
Approaches
December 31,
2024
Basel III
Advanced
Approaches
December 31,
2023
Basel III
Standardized
Approach
December 31,
2024
Basel III
Standardized
Approach
December 31,
2023
Total risk-weighted assets, beginning of period
$
107,453
$
105,359
$
111,703
$
107,227
Changes in credit risk-weighted assets:
Net increase (decrease) in investment securities-wholesale
(585)
(1,927)
(1,000)
(1,614)
Net increase (decrease) in loans and overdrafts
919
405
2,241
1,734
Net increase (decrease) in securitization exposures
628
359
592
339
Net increase (decrease) in repo-style transaction exposures
(558)
932
2,968
1,851
Net increase (decrease) in over-the-counter derivatives exposures(1)
2,595
25
10,778
(311)
Net increase (decrease) in all other(2)
(957)
308
(526)
1,490
Net increase (decrease) in credit risk-weighted assets
2,042
102
15,053
3,489
Net increase (decrease) in market risk-weighted assets
(475)
987
(475)
987
Net increase (decrease) in operational risk-weighted assets
5,582
1,005
NA
NA
Total risk-weighted assets, end of period
$
114,602
$
107,453
$
126,281
$
111,703
(1) Under the advanced approaches, includes CVA RWA.
(2) Includes assets not in a definable category, non-material portfolio, cleared transactions, other wholesale, cash and due from banks, interest-bearing deposits with banks and equity exposures.
NA Not applicable.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 112
As of December 31, 2024, total advanced
approaches RWA increased $7.15 billion compared to
December 31, 2023, mainly due to an increase in
operational risk RWA. The increase in operational risk
RWA was primarily due to a model recalibration
driven largely by an increase in the value of loss due
to inflation and to reflect more recent loss history.
Credit risk RWA increased $2.04 billion compared to
December 31, 2023, mainly due to increase in over-
the-counter derivatives driven by market volatility.
As of December 31, 2024, total standardized
approach RWA increased $14.58 billion compared to
December 31, 2023, mainly driven by an increase in
credit risk RWA. The increase in credit risk RWA
mainly reflects higher derivatives RWA, driven by
market volatility, higher repo-style transaction RWA,
driven by volume, and higher loans RWA, driven by
private equity capital call finance loans and CLO
loans.
The regulatory capital ratios as of December 31,
2024, presented in Table 39: Regulatory Capital
Structure and Related Regulatory Capital Ratios, are
calculated under the advanced approaches and
standardized approach in conformity with the Basel III
final rule. The advanced approaches based ratios
reflect calculations and determinations with respect to
our capital and related matters as of December 31,
2024, based on our internal and external data,
quantitative formulae, statistical models, historical
correlations and assumptions, collectively referred to
as “advanced systems,” in effect and used by us for
those purposes as of the time we first reported such
ratios in a quarterly report on Form 10-Q or an annual
report on Form 10-K. Significant components of these
advanced systems involve the exercise of judgment
by us and our regulators, and our advanced systems
may
not,
individually
or
collectively,
precisely
represent or calculate the scenarios, circumstances,
outputs or other results for which they are designed
or intended.
Our advanced systems are subject to update
and periodic revalidation in response to changes in
our business activities and our historical experiences,
forces and events experienced by the market broadly
or by individual financial institutions, changes in
regulations and regulatory interpretations and other
factors, and are also subject to continuing regulatory
review and approval. For example, a significant
operational loss experienced by another financial
institution, even if we do not experience a related
loss, could result in a material change in the output of
our advanced systems and a corresponding material
change in our risk exposures, our total RWA and our
capital
ratios
compared
to
prior
periods. An
operational loss that we experience could also result
in a material change in our capital requirements for
operational risk under the advanced approaches,
depending on the severity of the loss event, its
characterization among the seven Basel-defined
UOM, and the stability of the distributional approach
for a particular UOM, and without direct correlation to
the effects of the loss event, or the timing of such
effects, on our results of operations.
Due to the influence of changes in these
advanced systems, whether resulting from changes in
data inputs, regulation or regulatory supervision or
interpretation, specific to us or market activities or
experiences or other updates or factors, we expect
that our advanced systems and our capital ratios
calculated in conformity with the Basel III final rule will
change and may be volatile over time, and that those
latter changes or volatility could be material as
calculated and measured from period to period. The
full effects of the Basel III final rule on us and State
Street Bank are therefore subject to further evaluation
and also to further regulatory guidance, action or rule-
making.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 113
Tier 1 and Supplementary Leverage Ratios
We are subject to a minimum Tier 1 leverage
ratio and SLR. The Tier 1 leverage ratio is based on
Tier 1 capital and adjusted quarterly average on-
balance sheet assets. The Tier 1 leverage ratio differs
from the SLR primarily in that the denominator of the
Tier 1 leverage ratio is a quarterly average of on-
balance sheet assets, while the SLR additionally
includes off-balance sheet exposures. We must
maintain a minimum Tier 1 leverage ratio of 4%.
We are also subject to a minimum SLR of 3%,
and as a U.S. G-SIB, we must maintain a 2% SLR
buffer in order to avoid any limitations on distributions
to shareholders and discretionary bonus payments to
certain executives. If we do not maintain this buffer,
limitations on these distributions and discretionary
bonus payments would be increasingly stringent
based upon the extent of the shortfall.
TABLE 42: TIER 1 AND SUPPLEMENTARY LEVERAGE
RATIOS
(Dollars in millions)
December 31,
2024
December 31,
2023
State Street:
Tier 1 capital
$
16,615
$
14,947
Average assets
327,181
278,659
Less: adjustments for deductions from
tier 1 capital and other
(8,711)
(8,852)
Adjusted average assets for Tier 1
leverage ratio
318,470
269,807
Additional SLR exposure
38,659
39,291
Adjustments for deductions of
qualifying central bank deposits
(87,496)
(69,579)
Total assets for SLR
$
269,633
$
239,519
Tier 1 leverage ratio(1)
5.2 %
5.5 %
Supplementary leverage ratio
6.2
6.2
State Street Bank(2):
Tier 1 capital
$
19,173
$
16,884
Average assets
323,086
275,324
Less: adjustments for deductions from
tier 1 capital and other
(8,332)
(8,506)
Adjusted average assets for Tier 1
leverage ratio
314,754
266,818
Additional SLR exposure
40,299
39,069
Adjustments for deductions of
qualifying central bank deposits
(87,496)
(69,579)
Total assets for SLR
$
267,557
$
236,308
Tier 1 leverage ratio (1)
6.1 %
6.3 %
Supplementary leverage ratio
7.2
7.1
(1) Tier 1 leverage ratios were calculated in conformity with the Basel III final rule.
(2) The SLR rule requires that, as of January 1, 2018, (i) State Street Bank
maintains an SLR of at least 6.0% to be well capitalized under the U.S. banking
regulators’ Prompt Corrective Action Framework and (ii) we maintain an SLR of at
least 5.0% to avoid limitations on capital distributions and discretionary bonus
payments. In addition to the SLR, State Street Bank is subject to a well capitalized
Tier 1 leverage ratio requirement of 5.0%.
Total Loss-Absorbing Capacity (TLAC)
The Federal Reserve’s final rule on TLAC, LTD
and clean holding company requirements for U.S.
domiciled G-SIBs, such as us, is intended to improve
the resiliency and resolvability of certain U.S. banking
organizations
through
enhanced
prudential
standards, and requires us, among other things, to
comply with minimum requirements for external TLAC
(combined eligible tier 1 regulatory capital and LTD)
and LTD. Specifically, we must hold:
Amount equal to:
External
TLAC
Greater of:
•
21.5% of total RWA (18.0% minimum plus
2.5% plus a G-SIB surcharge calculated for
these purposes under Method 1 of 1.0%
plus any applicable countercyclical buffer,
which is currently 0%); and
•
9.5% of total leverage exposure (7.5%
minimum plus the SLR buffer of 2.0%), as
defined by the SLR final rule.
Qualifying
external
LTD
Greater of:
•
7.0% of RWA (6.0% minimum plus a G-SIB
surcharge calculated for these purposes
under method 2 of 1.0%); and
•
4.5% of total leverage exposure, as defined
by the SLR final rule.
The following table presents external TLAC and
external LTD as of December 31, 2024.
TABLE 43: TOTAL LOSS-ABSORBING CAPACITY
As of December 31, 2024
(Dollars in millions)
Actual
Requirement
Total loss-absorbing
capacity:
Risk-weighted assets
$ 38,768
30.7 %
$ 27,150
21.5 %
Total leverage
exposure
38,768
14.4
25,615
9.5
Long-term debt:
Risk-weighted assets
18,828
14.9
8,840
7.0
Total leverage
exposure
18,828
7.0
12,133
4.5
Additional information about TLAC is provided
under
“Total
Loss-Absorbing
Capacity”
in
“Supervision and Regulation” in Business in this Form
10-K.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 114
Regulatory Developments
On July 27, 2023, the U.S. Agencies issued the 2023 Basel III Endgame Proposal for large banks, and
separately proposed revisions to the 2023 G-SIB Surcharge Proposal. The 2023 Basel III Endgame Proposal would,
among other things, eliminate the advanced approaches for monitoring risk-based capital adequacy in favor of a
new standardized expanded risk-based approach that includes new standardized approaches for operational risk
and CVA risk RWA components, and would also replace the existing market risk rule with the new FRTB framework.
The G-SIB Surcharge Proposal would, among other things, measure the G-SIB surcharge in more granular 0.1%
increments as opposed to the 0.5% increments that currently apply.
For additional information about regulatory developments, refer to the “Regulatory Capital Adequacy and
Liquidity Standards” section of “Supervision and Regulation” in Business in this Form 10-K.
Capital Actions
Preferred Stock
The following table summarizes selected terms of each of the series of the preferred stock issued and
outstanding as of December 31, 2024:
TABLE 44: PREFERRED STOCK ISSUED AND OUTSTANDING
Preferred
Stock(1):
Issuance Date
Depositary
Shares
Issued
Amount
outstanding
(in millions)
Ownership
Interest Per
Depositary
Share
Liquidation
Preference
Per Share
Liquidation
Preference
Per
Depositary
Share
Per Annum
Dividend Rate
Dividend
Payment
Frequency
Carrying
Value as of
December
31, 2024
(In millions)
Redemption
Date(2)
Series G
April 2016
20,000,000
$
500
1/4,000th
100,000
25
5.35%(3)
Quarterly:
March, June,
September
and December
$
493
March 15,
2026
Series I
January 2024
1,500,000
1,500
1/100th
100,000
1,000
6.700%
through
March
14,
2029;
resets March 15,
2029
and
every
subsequent
five
year anniversary at
five-
year
U.S.
Treasury rate plus
2.613%
Quarterly:
March, June,
September
and December
1,481
March 15,
2029
Series J
July 2024
850,000
850
1/100th
100,000
1,000
6.700%
through
September
14,
2029;
resets
September
15,
2029
and
every
subsequent
five
year anniversary at
the five-year U.S.
Treasury rate plus
2.628%
Quarterly:
March, June,
September
and December
842
September 15,
2029
(1) The preferred stock and corresponding depositary shares may be redeemed at our option in whole, but not in part, prior to the redemption date upon the occurrence of a regulatory capital
treatment event, as defined in the certificate of designation, at a redemption price equal to the liquidation price per share and liquidation price per depositary share plus any declared and unpaid
dividends, without accumulation of any undeclared dividends.
(2) On the redemption date, or any dividend payment date thereafter, the preferred stock and corresponding depositary shares may be redeemed by us, in whole or in part, at the liquidation price
per share and liquidation price per depositary share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.
(3) The dividend rate for the floating rate period of the Series G preferred stock that begins on March 15, 2026 and all subsequent floating rate periods will remain at the current fixed rate in
accordance with the LIBOR Act and the contractual terms of the Series G preferred stock.
On January 31, 2024, we issued 1.5 million depositary shares, each representing a 1/100th ownership interest
in a share of fixed rate reset, non-cumulative perpetual preferred stock, Series I, without par value per share, with a
liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share), in a public offering. The
aggregate proceeds, net of underwriting discounts, commissions and other issuance costs, were approximately $1.5
billion.
On March 15, 2024, we redeemed an aggregate $1.0 billion, or all 7,500 outstanding shares, of our non-
cumulative perpetual preferred stock, Series D (represented by 30,000,000 depository shares), for a cash
redemption price of $100,000 per share (equivalent to $25 per depository share), plus all declared and unpaid
dividends and all 2,500 of the outstanding shares of our noncumulative perpetual preferred stock, Series F
(represented by 250,000 depository shares), for a cash redemption price of $100,000 per share (equivalent to
$1,000 per depositary share) plus all declared and unpaid dividends.
On July 24, 2024, we issued 850,000 depositary shares, each representing a 1/100th ownership interest in a
share of fixed rate reset, non-cumulative perpetual preferred stock, Series J, without par value per share, with a
liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share), in a public offering. The
aggregate proceeds, net of underwriting discounts, commissions and other issuance costs, were approximately
$842 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 115
On September 16, 2024, we redeemed an aggregate $500 million, or all 5,000 outstanding shares, of our non-
cumulative perpetual preferred stock, Series H (represented by 500,000 depository shares), for a cash redemption
price of $100,000 per share (equivalent to $1,000 per depository share), plus all declared and unpaid dividends.
On February 6, 2025, we issued 750,000 depositary shares, each representing a 1/100th ownership interest in
a share of fixed rate reset, non-cumulative perpetual preferred stock, Series K, without par value per share, with a
liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share), in a public offering. The
aggregate proceeds, net of underwriting discounts, commissions and other issuance costs, were approximately
$743 million. Dividends on the Series K Preferred Stock will be payable quarterly at an initial rate of 6.450% per
annum commencing on June 15, 2025, with the first dividend payable on a pro-rata basis. Our preferred stock
dividends, including the declaration, timing and amount thereof, are subject to consideration and approval by the
Board at the relevant times.
The following table presents the dividends declared for each of the series of preferred stock issued and
outstanding for the periods indicated:
TABLE 45: PREFERRED STOCK DIVIDENDS
Years Ended December 31,
2024
2023
(Dollars in millions, except per
share amounts)
Dividends
Declared per
Share
Dividends
Declared per
Depositary
Share
Total
Dividends
Declared per
Share
Dividends
Declared per
Depositary
Share
Total
Preferred Stock:
Series D
$
1,475
$
0.37
$
11
$
5,900
$
1.48
$
44
Series F
2,336
23.36
6
8,935
89.35
23
Series G
5,350
1.34
27
5,350
1.34
27
Series H
6,251
62.51
31
5,625
56.25
28
Series I
5,863
58.63
88
—
—
—
Series J
2,643
26.43
22
—
—
—
Total
$
185
$
122
Common Stock
On January 19, 2024, we announced a new common share repurchase program, approved by our Board and
superseding all prior programs, authorizing the purchase of up to $5.0 billion of our common stock beginning in the
first quarter of 2024 with no set expiration date (the “2024 Program”). During 2024, we repurchased $1.3 billion of
our common stock under the 2024 Program and expect common share repurchases to continue under this program
during 2025.
In 2023, we repurchased $3.8 billion of our common stock under the previously approved common share
repurchase program authorizing the purchase of up to $4.5 billion of our common stock through December 31, 2023
(the “2023 Program”).
The tables below present the activity under our common share repurchase program for the period indicated:
TABLE 46: SHARES REPURCHASED
Year Ended December 31,
2024
2023
Shares
Acquired
(In millions)
Average Cost
per Share
Total
Acquired
(In millions)
Shares
Acquired
(In millions)
Average Cost
per Share
Total
Acquired
(In millions)
2024 Program
15.1
$
85.89
$
1,300
—
$
—
$
—
2023 Program
—
—
—
49.2
77.22
3,800
The table below presents the dividends declared on common stock for the periods indicated:
TABLE 47: COMMON STOCK DIVIDENDS
Years Ended December 31,
2024
2023
Dividends Declared
per Share
Total
(In millions)
Dividends Declared
per Share
Total
(In millions)
Common Stock
$
2.90
$
859
$
2.64
$
837
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 116
Federal and state banking regulations place
certain restrictions on dividends paid by subsidiary
banks to the parent holding company. In addition,
banking regulators have the authority to prohibit bank
holding companies from paying dividends. For
information concerning limitations on dividends from
our subsidiary banks, refer to “Related Stockholder
Matters”
included
under
Item
5,
Market
for
Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities,
and to Note 15 to the consolidated financial
statements in this Form 10-K. Our common stock and
preferred stock dividends, including the declaration,
timing
and
amount
thereof,
are
subject
to
consideration and approval by the Board at the
relevant times.
Stock purchases under our common share
repurchase program 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 and
amount of any stock purchases and the type of
transaction may not be ratable over the duration of
the program, may vary from reporting period to
reporting period and will depend on several factors,
including our capital position and our financial
performance,
investment
opportunities,
market
conditions, the nature and timing of implementation of
revisions to the Basel III framework and the amount
of common stock issued as part of employee
compensation
programs.
The
common
share
repurchase program does not have specific price
targets and may be suspended at any time.
OFF-BALANCE SHEET ARRANGEMENTS
On behalf of clients enrolled in our securities
lending program, we lend securities to banks, broker/
dealers and other institutions. In most circumstances,
we indemnify our clients for the fair market value of
those securities against a failure of the borrower to
return such securities. Though these transactions are
collateralized, the substantial volume of these
activities
necessitates
detailed
credit-based
underwriting
and
monitoring
processes.
The
aggregate amount of indemnified securities on loan
totaled $310.81 billion and $279.92 billion as of
December 31, 2024 and 2023, respectively. We
require the borrower to provide collateral in an
amount in excess of 100% of the fair market value of
the securities borrowed. We hold the collateral
received in connection with these securities lending
services as agent, and the collateral is not recorded
in our consolidated statement of condition. We
revalue the securities on loan and the collateral daily
to determine if additional collateral is necessary or if
excess collateral is required to be returned to the
borrower. We held, as agent, cash and securities
totaling $325.61 billion and $293.86 billion as
collateral for indemnified securities on loan as of
December 31, 2024 and 2023, respectively.
The cash collateral held by us as agent is
invested on behalf of our clients. In certain cases, the
cash collateral is invested in third-party repurchase
agreements, for which we indemnify the client against
loss of the principal invested. We require the
counterparty
to
the
indemnified
repurchase
agreement to provide collateral in an amount in
excess of 100% of the amount of the repurchase
agreement. In our role as agent, the indemnified
repurchase agreements and the related collateral
held by us are not recorded in our consolidated
statement of condition. Of the collateral of $325.61
billion and $293.86 billion, referenced above, $63.66
billion and $59.03 billion was invested in indemnified
repurchase agreements as of December 31, 2024
and 2023, respectively. We or our agents held $68.51
billion and $63.11 billion as collateral for indemnified
investments
in
repurchase
agreements
as
of
December 31, 2024 and 2023, respectively.
Additional information about our securities
finance
activities
and
other
off-balance
sheet
arrangements is provided in Notes 10, 12 and 14 to
the consolidated financial statements in this Form 10-
K.
SIGNIFICANT ACCOUNTING ESTIMATES
Our
consolidated
financial
statements
are
prepared in conformity with U.S. GAAP, and we apply
accounting policies that affect the determination of
amounts reported in the consolidated financial
statements.
Certain of our accounting policies, by their
nature, include significant accounting estimates and
assumptions which require management to make
judgments about the effects of matters that are
inherently
uncertain.
These
estimates
and
assumptions are based on information available as of
the date of the consolidated financial statements, and
changes in this information over time could materially
affect the amounts of assets, liabilities, equity,
revenue and expenses reported in subsequent
consolidated financial statements.
Based on the sensitivity of reported financial
statement amounts to the underlying estimates and
assumptions, the significant accounting estimates
identified by management are:
•
Recurring fair value measurements;
•
Allowance for credit losses;
•
Impairment of goodwill and other intangible
assets; and
•
Contingencies.
These estimates require the most subjective or
complex judgments, and could be most subject to
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 117
revision as new information becomes available. An
understanding of these estimates is essential to the
understanding of our reported results of operations
and financial condition.
The following is a discussion of the above-
mentioned
significant
accounting
estimates.
Additional information on our significant accounting
policies, including references to applicable footnotes,
is provided in Note 1 to the consolidated financial
statements in this Form 10-K.
Fair Value Measurements
We carry certain of our financial assets and
liabilities at fair value in our consolidated financial
statements on a recurring basis, including trading
account assets and liabilities, AFS debt securities,
certain equity securities and various types of
derivative financial instruments.
Changes in the fair value of these financial
assets
and
liabilities
are
recorded
either
as
components of our consolidated statement of income
or as components of other comprehensive income
within shareholders’ equity in our consolidated
statement of condition. In addition to those financial
assets and liabilities that we carry at fair value in our
consolidated financial statements on a recurring
basis, we estimate the fair values of other financial
assets and liabilities that we carry at amortized cost in
our consolidated statement of condition, and we
disclose these fair value estimates in the notes to our
consolidated financial statements. We estimate the
fair values of these financial assets and liabilities
using the definition of fair value described below.
U.S. GAAP defines fair value as the price that
would be received to sell an asset or paid to transfer
a liability in the principal or most advantageous
market for an asset or liability in an orderly
transaction between market participants on the
measurement date. When we measure fair value for
our financial assets and liabilities, we consider the
principal or the most advantageous market in which
we would transact; we also consider assumptions that
market participants would use when pricing the asset
or liability. When possible, we look to active and
observable markets to measure the fair value of
identical, or similar, financial assets and liabilities.
When identical financial assets and liabilities are not
traded in active markets, we look to market-
observable data for similar assets and liabilities. In
some instances, certain assets and liabilities are not
actively traded in observable markets; as a result, we
use alternate valuation techniques to measure their
fair value.
We categorize the financial assets and liabilities
that we carry at fair value in our consolidated
statement of condition on a recurring basis based on
U.S.
GAAP’s
prescribed
three-level
valuation
hierarchy. The hierarchy gives the highest priority to
quoted prices in active markets for identical assets or
liabilities (level 1) and the lowest priority to valuation
methods using significant unobservable inputs (level
3).
With respect to derivative instruments, we
evaluate the fair value impact of the credit risk of our
counterparties. We consider such factors as the
market-based
probability
of
default
by
our
counterparties, and our current and expected
potential
future
net
exposures
by
remaining
maturities,
in
determining
the
appropriate
measurements of fair value.
Additional information with respect to the assets
and liabilities carried by us at fair value on a recurring
basis is provided in Note 2 to the consolidated
financial statements in this Form 10-K.
Allowance for Credit Losses
We record an allowance for credit losses related
to certain on-balance sheet credit exposures,
including our financial assets held at amortized cost,
as well as certain off-balance sheet credit exposures,
including unfunded commitments and letters of credit.
Determining
the
appropriateness
of
the
allowance is complex and requires judgment by
management about the effect of matters that are
inherently uncertain. In future periods, factors and
forecasts then prevailing may result in significant
changes in the allowance for credit losses in those
future periods. We estimate credit losses over the
contractual life of the financial asset while factoring in
prepayment activity where supported by data over a
three year reasonable and supportable forecast
period. We utilize baseline, upside and downside
scenarios that are applied based on a probability
weighting, in order to better reflect management’s
expectation of expected credit losses given existing
market conditions and the changes in the economic
environment. The multiple scenarios are based on a
13-quarter horizon (or less depending on contractual
maturity) with reversion period set to be 27 quarters,
calculated by subtracting the 13-quarter period from
an average 10-year/40-quarter business cycle. The
contractual term excludes expected extensions,
renewals and modifications, but includes prepayment
assumptions where applicable.
Our allowance for credit losses is sensitive to a
number of inputs, including macroeconomic forecast
assumptions and credit rating migrations during the
period. Our macroeconomic forecasts used in
determining the December 31, 2024 allowance for
credit losses consisted of three scenarios reflecting
different assumptions in GDP and unemployment,
with the baseline scenario generally in line with
market consensus of economic forecasts for GDP
and unemployment. We placed the most weight on
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 118
our baseline scenario, with the remaining weighting
split between the upside and downside scenarios.
Keeping all other factors constant, we estimate
that if we had applied 100% weighting to the
downside scenario, the allowance for credit losses as
of
December
31,
2024
would
have
been
approximately $78 million higher. This estimate is
intended to reflect the sensitivity of the allowance for
credit losses to changes in our scenario weights and
is not intended to be indicative of future changes in
the allowance for credit losses.
Additional information about our allowance for
credit losses is provided in Notes 3 and 4 to the
consolidated financial statements in this Form 10-K.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the cost of an
acquisition over the fair value of the net tangible and
other intangible assets acquired at the acquisition
date. Other intangible assets represent purchased
long-lived
intangible
assets,
primarily
client
relationships, core deposit intangible assets and
technology that can be distinguished from goodwill
because of contractual rights or because the asset
can be exchanged on its own or in combination with a
related contract, asset or liability. Other intangible
assets are initially measured at their acquisition date
fair value, the determination of which requires
management judgment. Goodwill is not amortized,
while other intangible assets are amortized over their
estimated useful lives.
Management reviews goodwill for impairment
annually or more frequently if circumstances arise or
events occur that indicate an impairment of the
carrying amount may exist. We begin our review by
first assessing qualitative factors to determine
whether it is more likely than not that the fair value of
a reporting unit is less than its carrying amount.
Events
that
may
indicate
impairment
include:
significant or adverse changes in the business,
economic or political climate; an adverse action or
assessment
by
a
regulator;
unanticipated
competition; and a more-likely-than-not expectation
that we will sell or otherwise dispose of a business to
which the goodwill or other intangible assets relate. If
we conclude from the qualitative assessment of
goodwill impairment that it is more likely than not that
a reporting unit’s fair value is greater than its carrying
amount, quantitative tests are not required. However,
if we determine it is more likely than not that a
reporting unit’s fair value is less than its carrying
amount, then we complete a quantitative assessment
to determine if there is goodwill impairment. We may
elect to bypass the qualitative assessment and
complete a quantitative assessment in any given
year.
In 2024, we assessed goodwill for impairment
using a qualitative assessment. Based on our
evaluation of the qualitative factors noted above, we
determined it was more likely than not that the fair
value of each of the reporting units exceeded its
respective carrying amount. We determined there
was no goodwill impairment in 2024.
Other intangible assets are supported by the
future cash flows that are directly associated with and
expected to arise as a direct result of the use of the
intangible asset, less any costs associated with the
intangible asset’s eventual disposition. We evaluate
other intangible assets for impairment at the lowest
level for which there are identifiable cash flows that
are largely independent of the cash flows from other
groups of assets using the following process. First,
we routinely assess whether impairment indicators
are
present.
When
impairment
indicators
are
identified as being present, we compare the
estimated future net undiscounted cash flows of the
intangible asset with its carrying value. If the future
net undiscounted cash flows are greater than the
carrying value, then there is no impairment, but if the
intangible asset’s net undiscounted cash flows are
less than its carrying value, we are required to
calculate impairment. An impairment is recognized by
writing the intangible asset down to its fair value. We
evaluate intangible assets for indicators of impairment
on a quarterly basis. There were no impairments
taken on other intangible assets in 2024.
Additional information about goodwill and other
intangible assets, including information by line of
business, is provided in Note 5 to the consolidated
financial statements in this Form 10-K.
Contingencies
Information
on
significant
estimates
and
judgments related with establishing litigation reserves
is discussed in Note 13 of the consolidated financial
statements in this Form 10-K.
RECENT ACCOUNTING DEVELOPMENTS
Information with respect to recent accounting
developments is provided in Note 1 to the
consolidated financial statements in this Form 10-K.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 119
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information provided under “Market Risk Management” in “Financial Condition” in our Management’s
Discussion and Analysis in this Form 10-K, is incorporated by reference herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Additional information about restrictions on the transfer of funds from State Street Bank to the Parent Company
is provided under “Related Stockholder Matters” in Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities, and under “Capital” in “Financial Condition” in our
Management’s Discussion and Analysis in this Form 10-K.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
State Street Corporation | 120
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of State Street Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of condition of State Street Corporation (the
Corporation) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive
income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December
31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation
at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2024, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework), and our report dated February 13, 2025 expressed
an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express
an opinion on the Corporation’s financial statements based on our audits. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
State Street Corporation | 121
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of the critical audit matter does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to
which it relates.
Servicing Fee Revenue
Description of the
Matter
Revenue recognized by the Corporation as servicing fees was $5.016 billion for the year
ended December 31, 2024. As disclosed in Notes 24 and 25 of the financial statements,
servicing fee revenue involves revenue earned from various back and middle office
solutions including custody, accounting and fund administration, record keeping, client
reporting and investment book of record. The Corporation’s servicing fee revenue involves
a significant volume of contracts and transactions and is sourced from multiple systems
and processes across different business teams and geographies.
Auditing servicing fee revenue was complex and involved significant audit effort due to the
nature of the Corporation’s contracts, the volume of contracts, and the number of different
processes used to recognize revenue.
How We Addressed
the Matter in Our
Audit
We identified and obtained an understanding of the processes used by the Corporation to
recognize revenue transactions. We evaluated the design and tested the operating
effectiveness of controls over the Corporation’s processes for recognizing servicing fee
revenue, including, among others, controls over the review of client contracts, the
calculation and analysis of the key drivers of revenue (e.g., assets under custody), and the
flow of this information from the business teams to the department accruing revenue.
Among other procedures, to test servicing fee revenue, we selected and analyzed a
sample of client contracts to determine whether terms that may have an impact on revenue
recognition, including performance obligations and specified fees, were identified and
properly considered in the evaluation of the accounting for the contracts. In addition, we
reperformed the calculation of revenue for a sample of revenue transactions. We also
agreed the amounts recognized to source documents and tested the mathematical
accuracy of the recorded revenue. We obtained third party confirmation of the client
balance due for a sample of servicing fees receivable.
/s/ Ernst & Young LLP
We have served as the Corporation's auditor since 1972.
Boston, Massachusetts
February 13, 2025
State Street Corporation | 122
STATE STREET CORPORATION
CONSOLIDATED STATEMENT OF INCOME
Years Ended December 31,
(Dollars in millions, except per share amounts)
2024
2023
2022
Fee revenue:
Servicing fees
$
5,016
$
4,922
$
5,087
Management fees
2,124
1,876
1,939
Foreign exchange trading services
1,401
1,265
1,376
Securities finance
438
426
416
Software and processing fees
888
811
789
Other fee revenue
289
180
(1)
Total fee revenue
10,156
9,480
9,606
Net interest income:
Interest income
11,977
9,180
4,088
Interest expense
9,054
6,421
1,544
Net interest income
2,923
2,759
2,544
Other income:
Gains (losses) from sales of available-for-sale securities, net
(79)
(294)
(2)
Total other income
(79)
(294)
(2)
Total revenue
13,000
11,945
12,148
Provision for credit losses
75
46
20
Expenses:
Compensation and employee benefits
4,697
4,744
4,428
Information systems and communications
1,829
1,703
1,630
Transaction processing services
998
957
971
Occupancy
437
426
394
Acquisition and restructuring costs
—
(15)
65
Amortization of other intangible assets
230
239
238
Other
1,339
1,529
1,075
Total expenses
9,530
9,583
8,801
Income before income tax expense
3,395
2,316
3,327
Income tax expense
708
372
553
Net income
$
2,687
$
1,944
$
2,774
Net income available to common shareholders
$
2,483
$
1,821
$
2,660
Earnings per common share:
Basic
$
8.33
$
5.65
$
7.28
Diluted
8.21
5.58
7.19
Average common shares outstanding (in thousands):
Basic
297,883
322,337
365,214
Diluted
302,226
326,568
370,109
Cash dividends declared per common share
$
2.90
$
2.64
$
2.40
The accompanying notes are an integral part of these consolidated financial statements.
State Street Corporation | 123
STATE STREET CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Years Ended December 31,
(In millions)
2024
2023
2022
Net income
$
2,687
$
1,944
$
2,774
Other comprehensive income (loss), net of related taxes:
Foreign currency translation, net of related taxes of $153, ($19) and $47,
respectively
(228)
261
(441)
Net unrealized gains (losses) on investment securities, net of
reclassification adjustment and net of related taxes of $164, $335 and
($650), respectively
467
870
(1,767)
Net unrealized gains (losses) on cash flow hedges, net of related taxes of
$0, $85 and ($133), respectively
(1)
228
(357)
Net unrealized gains (losses) on retirement plans, net of related taxes of
$6, $0 and ($1), respectively
16
(2)
(13)
Other comprehensive income (loss)
254
1,357
(2,578)
Total comprehensive income
$
2,941
$
3,301
$
196
The accompanying notes are an integral part of these consolidated financial statements.
State Street Corporation | 124
STATE STREET CORPORATION
CONSOLIDATED STATEMENT OF CONDITION
December 31, 2024
December 31, 2023
$
3,145
$
4,047
112,957
87,665
6,679
6,692
768
773
58,895
44,526
47,727
57,117
43,026
36,496
2,715
2,399
4,034
3,806
7,691
7,611
1,089
1,320
64,514
44,806
$
353,240
$
297,258
(Dollars in millions, except per share amounts)
Assets:
Cash and due from banks
Interest-bearing deposits with banks
Securities purchased under resale agreements
Trading account assets
Investment securities available-for-sale (less allowance for credit losses of
$0 and $0)
Investment securities held-to-maturity (less allowance for credit losses of
$0 and $1) (fair value of $41,906 and $51,503)
Loans (less allowance for credit losses on loans of $174 and $135)
Premises and equipment (net of accumulated depreciation of $6,461
and $6,062)
Accrued interest and fees receivable
Goodwill
Other intangible assets
Other assets
Total assets
Liabilities:
Deposits:
Non-interest-bearing
$
33,180
$
32,569
Interest-bearing - U.S.
166,483
121,738
Interest-bearing - non-U.S.
62,257
66,663
Total deposits
261,920
220,970
Securities sold under repurchase agreements
3,681
1,867
Other short-term borrowings
9,840
3,660
Accrued expenses and other liabilities
29,201
28,123
Long-term debt
23,272
18,839
Total liabilities
327,914
273,459
Commitments, guarantees and contingencies (Notes 12 and 13)
Shareholders’ equity:
Preferred stock, no par, 3,500,000 shares authorized:
Series D, 7,500 shares issued and outstanding
—
742
Series F, 2,500 shares issued and outstanding
—
247
Series G, 5,000 shares issued and outstanding
493
493
Series H, 5,000 shares issued and outstanding
—
494
Series I, 15,000 shares issued and outstanding
1,481
—
Series J, 8,500 shares issued and outstanding
842
—
Common stock, $1 par, 750,000,000 shares authorized:
503,879,642 and 503,879,642 shares issued, and 288,766,452 and
301,944,043 shares outstanding
504
504
Surplus
10,722
10,741
Retained earnings
29,582
27,957
Accumulated other comprehensive income (loss)
(2,100)
(2,354)
Treasury stock, at cost (215,113,190 and 201,935,599 shares)
(16,198)
(15,025)
Total shareholders’ equity
25,326
23,799
Total liabilities and shareholders’ equity
$
353,240
$
297,258
The accompanying notes are an integral part of these consolidated financial statements.
State Street Corporation | 125
STATE STREET CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in millions, except per
share amounts, shares
in thousands)
Preferred
Stock
Common Stock
Surplus
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury Stock
Total
Shares
Amount
Shares
Amount
Balance at December 31, 2021
$
1,976
503,880
$
504
$ 10,787
$ 25,238
$
(1,133)
137,897
$ (10,009) $ 27,363
Net income
2,774
2,774
Other comprehensive (loss)
(2,578)
(2,578)
Cash dividends declared:
Common stock - $2.40 per share
(871)
(871)
Preferred stock
(112)
(112)
Common stock acquired
19,524
(1,500)
(1,500)
Common stock awards exercised
(43)
(2,565)
172
129
Other
(14)
(1)
(1)
1
(14)
Balance at December 31, 2022
$
1,976
503,880
$
504
$ 10,730
$ 27,028
$
(3,711)
154,855
$ (11,336) $ 25,191
Net income
1,944
1,944
Other comprehensive income
1,357
1,357
Cash dividends declared:
Common stock - $2.64 per share
(837)
(837)
Preferred stock
(122)
(122)
Common stock acquired
49,212
(3,837)
(3,837)
Common stock awards exercised
11
(2,133)
148
159
Other
(56)
2
—
(56)
Balance at December 31, 2023
$
1,976
503,880
$
504
$ 10,741
$ 27,957
$
(2,354)
201,936
$ (15,025) $ 23,799
Net income
2,687
2,687
Other comprehensive income
254
254
Preferred stock issued
2,323
2,323
Preferred stock redeemed
(1,483)
(17)
(1,500)
Cash dividends declared:
Common stock - $2.90 per share
(859)
(859)
Preferred stock
(185)
(185)
Common stock acquired
15,135
(1,312)
(1,312)
Common stock awards exercised
(21)
(1,950)
139
118
Other
2
(1)
(8)
—
1
Balance at December 31, 2024
$
2,816
503,880
$
504
$ 10,722
$ 29,582
$
(2,100)
215,113
$ (16,198) $ 25,326
The accompanying notes are an integral part of these consolidated financial statements.
State Street Corporation | 126
STATE STREET CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended December 31,
(In millions)
2024
2023
2022
Operating Activities:
Net income
$
2,687
$
1,944
$
2,774
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax (benefit)
145
(184)
(62)
Amortization of other intangible assets
230
239
238
Other non-cash adjustments for depreciation, amortization and accretion, net
375
643
918
Losses related to investment securities, net
79
294
2
Provision for credit losses
75
46
20
Change in trading account assets, net
5
(123)
108
Change in accrued interest and fees receivable, net
(224)
(359)
(156)
Change in collateral deposits, net
(12,109)
(2,246)
7,821
Change in unrealized (gains) losses on foreign exchange derivatives, net
(7,191)
2,146
(1,125)
Change in other assets, net
1,672
(1,839)
421
Change in accrued expenses and other liabilities, net
743
(128)
557
Other, net
303
257
438
Net cash (used in) provided by operating activities
(13,210)
690
11,954
Investing Activities:
Net (increase) decrease in interest-bearing deposits with banks
(25,292)
13,928
4,765
Net decrease (increase) in securities purchased under resale agreements
13
(1,477)
(2,203)
Proceeds from sales of available-for-sale securities
10,973
4,917
4,590
Proceeds from maturities of available-for-sale securities
18,517
15,703
17,254
Purchases of available-for-sale securities
(44,301)
(23,089)
(18,029)
Proceeds from maturities of held-to-maturity securities
9,330
9,474
9,817
Purchases of held-to-maturity securities
(5)
(1,582)
(8,564)
Sale of loans
246
506
1,786
Net increase in loans
(7,369)
(4,746)
(1,667)
Business acquisitions, net of cash acquired
(194)
(61)
—
Purchases of equity investments and other long-term assets
(143)
(136)
(250)
Purchases of premises and equipment, net
(926)
(816)
(734)
Other, net
(332)
117
51
Net cash (used in) provided by investing activities
(39,483)
12,738
6,816
Financing Activities:
Net (decrease) increase in time deposits
(19)
2,820
1,673
Net increase (decrease) in all other deposits
40,971
(17,311)
(21,244)
Net increase (decrease) in securities sold under repurchase agreements
1,814
690
(398)
Net increase in other short-term borrowings
6,180
1,563
1,969
Proceeds from issuance of long-term debt, net of issuance costs
6,523
6,221
3,731
Payments for long-term debt and obligations under finance leases
(2,046)
(2,545)
(1,567)
Payments for redemption of preferred stock
(1,500)
—
—
Proceeds from issuance of preferred stock, net of issuance costs
2,323
—
—
Repurchases of common stock
(1,319)
(3,781)
(1,500)
Repurchases of common stock for employee tax withholding
(83)
(95)
(123)
Payments for cash dividends
(1,033)
(970)
(972)
Other, net
(20)
57
—
Net cash provided by (used in) financing activities
51,791
(13,351)
(18,431)
Net (decrease) increase
(902)
77
339
Cash and due from banks at beginning of period
4,047
3,970
3,631
Cash and due from banks at end of period
$
3,145
$
4,047
$
3,970
Supplemental disclosure:
Interest paid
$
8,951
$
6,184
$
1,354
Income taxes paid, net
451
423
436
The accompanying notes are an integral part of these consolidated financial statements.
State Street Corporation | 127
Note 1. Summary of Significant Accounting
Policies
Basis of Presentation
The accounting and financial reporting policies
of State Street Corporation conform to U.S. GAAP.
State Street Corporation, the Parent Company, is a
financial holding company headquartered in Boston,
Massachusetts. Unless otherwise indicated or unless
the context requires otherwise, all references in these
notes to consolidated financial statements to “State
Street,” “we,” “us,” “our” or similar references mean
State Street Corporation and its subsidiaries on a
consolidated basis, including our principal banking
subsidiary, State Street Bank.
We have two lines of business:
Investment Servicing provides a broad range of
services and market and financing solutions to
institutional clients, including mutual funds, collective
investment funds and other investment pools,
corporate and public retirement plans, insurance
companies, investment managers, foundations and
endowments worldwide.
Through State Street Investment Services, State
Street Global Markets® and State Street Alpha®, we
offer a full range of back- and middle-office solutions,
including custody, accounting and fund administration
services for traditional and alternative assets, as well
as multi-asset class investments; recordkeeping,
client reporting and investment book of record,
transaction management, loans, cash, derivatives
and collateral services; investor services operations
outsourcing; performance, risk and compliance
analytics; financial data management to support
institutional investors; foreign exchange, brokerage
and other trading services; securities finance,
including prime services products; and deposit and
short-term investment facilities.
Together with our middle- and back-office
services, CRD’s front- and middle-office technology
offerings form the foundation of State Street Alpha®.
Our State Street Alpha platform combines portfolio
management, trading and execution, analytics and
compliance tools, and advanced data aggregation
and integration with other industry platforms and
providers. Included in CRD’s technology offerings are
Charles River Investment Management Solution, a
front-office technology offering that automates and
simplifies the institutional investment process across
asset classes, from portfolio management and risk
analytics through trading and post-trade settlement,
with integrated compliance and managed data
throughout; Charles River for Private Markets, an
investment management solution for institutions
investing in Private Credit, Private Equity, Real
Estate, Infrastructure, and Funds; and Charles River
Wealth
Management
Solution,
which
provides
portfolio
management,
trading
compliance
and
manager/sponsor
communication
capabilities
to
wealth managers, private banks and financial
advisors.
As the digital asset space continues to mature,
we are building solutions to service, tokenize and
safekeep digital assets. Our vision is to enable core
digital asset infrastructure as a trusted provider of
end-to-end solutions on a secure, interoperable
blockchain.
Investment
Management
provides
a
comprehensive range of investment management
solutions and products for our clients through State
Street Global Advisors. Our investment management
solutions include strategies across equity, fixed
income, cash, multi-asset and alternatives; products
such as SPDR® ETFs and index funds; and services
including defined benefit, defined contribution, and
Outsourced Chief Investment Officer.
Consolidation
Our consolidated financial statements include
the accounts of the Parent Company and its majority-
and
wholly-owned
and
otherwise
controlled
subsidiaries, including State Street Bank. All material
inter-company transactions and balances have been
eliminated. Certain previously reported amounts have
been
reclassified
to
conform
to
current-year
presentation.
We consolidate subsidiaries in which we
exercise control. Investments in unconsolidated
subsidiaries, recorded in other assets, generally are
accounted for under the equity method of accounting
if we have the ability to exercise significant influence
over the operations of the investee. For investments
accounted for under the equity method, our share of
income or loss is recorded in other fee revenue in our
consolidated statement of income. Investments not
meeting the criteria for equity-method treatment are
measured at fair value through earnings, except for
investments where a fair market value is not readily
available, which are accounted for under the cost
method of accounting.
Use of Estimates
The
preparation
of
consolidated
financial
statements in conformity with U.S. GAAP requires
management to make estimates and assumptions in
the application of certain of our significant accounting
policies that may materially affect the reported
amounts of assets, liabilities, equity, revenue and
expenses. As a result of unanticipated events or
circumstances, actual results could differ from those
estimates.
Foreign Currency Translation
The assets and liabilities of our operations with
functional currencies other than the U.S. dollar are
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 128
translated at month-end exchange rates, and revenue
and
expenses
are
translated
at
rates
that
approximate average monthly exchange rates. Gains
or losses from the translation of the net assets of
subsidiaries with functional currencies other than the
U.S. dollar, net of related taxes, are recorded in
AOCI, a component of shareholders’ equity.
Cash and Cash Equivalents
For purposes of the consolidated statement of
cash flows, cash and cash equivalents are defined as
cash and due from banks.
Sanctions programs or government intervention
may inhibit our ability to access cash and due from
banks in certain accounts. For example, as of
December 31, 2024 and 2023, we held such
accounts in Russia that were subject to sanctions
restrictions, inclusive of $0.8 billion and $1.5 billion,
respectively, with our subcustodian, which is an
affiliate of a large multinational bank, and with
western European-based clearing agencies, for a
total of approximately $1.3 billion and $1.9 billion,
respectively. The reduction in balances with our
subcustodian in Russia was a result of various
actions taken related to our contractual arrangements
that resulted in the derecognition of certain cash
balances and related client liabilities. Cash and due
from banks is evaluated as part of our allowance for
credit losses.
Interest-Bearing Deposits with Banks
Interest-bearing deposits with banks generally
consist of highly liquid, short-term investments
maintained at the Federal Reserve Bank and other
non-U.S. central banks with original maturities at the
time of purchase of one month or less.
Securities Purchased Under Resale Agreements
and
Securities
Sold
Under
Repurchase
Agreements
Securities purchased under resale agreements
and
sold
under
repurchase
agreements
are
accounted for as collateralized financing transactions,
and are recorded in our consolidated statement of
condition at the amounts at which the securities will
be subsequently resold or repurchased, plus accrued
interest. Our policy is to take possession or control of
securities
underlying
resale
agreements
either
directly or through agent banks, allowing borrowers
the right of collateral substitution and/or short-notice
termination. We revalue these securities daily to
determine if additional collateral is necessary from the
borrower to protect us against credit exposure. We
can use these securities as collateral for repurchase
agreements.
For
securities
sold
under
repurchase
agreements
collateralized
by
our
investment
securities portfolio, the dollar value of the securities
remains in investment securities in our consolidated
statement of condition. Where a master netting
agreement exists or when both parties are members
of a common clearing organization, resale and
repurchase agreements are recorded on a net basis
when specific netting criteria are met.
Fee and Net Interest Income
The majority of fees from investment servicing,
investment management, securities finance, trading
services and certain types of software and processing
fees are recorded in our consolidated statement of
income based on the consideration specified in
contracts with our customers, and excludes taxes
collected from customers subsequently remitted to
governmental authorities. We recognize revenue as
the services are performed or at a point in time
depending on the nature of the services provided.
Payments made to third party service providers are
generally recognized on a gross basis when we
control those services and are deemed to be the
principal. Additional information about revenue from
contracts with customers is provided in Note 25.
Interest income on interest-earning assets and
interest expense on interest-bearing liabilities are
recorded in our consolidated statement of income as
components of NII, and are generally based on the
effective yield of the related financial asset or liability.
Other Significant Policies
The following table identifies our other significant
accounting policies and the note and page where a
detailed description of each policy can be found:
Fair Value
Note
2
Page
130
Investment Securities
Note
3
Page
136
Loans and Allowance for Credit Losses
Note
4
Page
141
Goodwill and Other Intangible Assets
Note
5
Page
146
Derivative Financial Instruments
Note
10
Page
150
Offsetting Arrangements
Note
11
Page
154
Contingencies
Note
13
Page
158
Variable Interest Entities
Note
14
Page
159
Equity-Based Compensation
Note
18
Page
165
Income Taxes
Note
22
Page
169
Earnings Per Common Share
Note
23
Page
170
Revenue from Contracts with Customers
Note
25
Page
173
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 129
Recent Accounting Developments
Relevant standards that were adopted during the year ended December 31, 2024:
We adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment
Disclosures, effective December 31, 2024. The standard expands the reportable segment disclosure requirements,
primarily through enhanced disclosures about significant segment expenses. This includes disclosure of segment
expenses that are regularly provided to the CODM and other segment items that are included within each reported
measure of segment profit or loss. The standard requires disclosure of the CODM’s title and position and how the
CODM uses the reported measure of segment profit or loss in assessing segment performance and allocating
resources. Refer to Note 24 for additional information.
Relevant standards that were recently issued, but not yet adopted as of December 31, 2024
Standard
Description
Effective Date
Effects on the financial statements or other
significant matters
ASU
2024-03,
Income
Statement
(Subtopic
220-40):
Reporting
Comprehensive
Income - Expense
Disaggregation
Disclosures
The amendments require disclosure of information about
certain costs and expenses in both interim and annual
reporting periods. Specified information includes expense
amounts relating to purchases of inventory, employee
compensation, depreciation, intangible asset amortization,
and selling expenses with the definition thereof.
Annual reporting for
period
ending
December 31, 2027
and
for
interim
reporting in 2028
We are currently evaluating the disclosure impact
of the new standard.
ASU
2023-09,
Income Taxes (Topic
740): Improvements
to
Income
Tax
Disclosures
The amendments related to the rate reconciliation and
income taxes paid disclosures and require disclosures of
(1) consistent categories and greater disaggregation of
information in the rate reconciliation and (2) income taxes
paid disaggregated by jurisdiction. Additional amendments
require (1) disclosures of pretax income (or loss) and
income tax expense (or benefit) to be consistent with U.S.
Securities and Exchange Commission regulations, and (2)
remove disclosures that no longer are considered cost
beneficial or relevant.
Annual reporting for
period
ending
December 31, 2025
We are currently evaluating the disclosure impact
of the new standard.
Additionally, we continue to evaluate other accounting standards that were recently issued, but not yet adopted
as of December 31, 2024; none are expected to have a material impact to our financial statements.
Note 2. Fair Value
Fair Value Measurements
We carry trading account assets and liabilities, AFS debt securities, certain equity securities and various types
of derivative financial instruments, at fair value in our consolidated statement of condition on a recurring basis.
Changes in the fair values of these financial assets and liabilities are recorded either as components of our
consolidated statement of income or as components of AOCI within shareholders’ equity in our consolidated
statement of condition.
We measure fair value for the above-described financial assets and liabilities in conformity with U.S. GAAP
that governs the measurement of the fair value of financial instruments. Management believes that its valuation
techniques and underlying assumptions used to measure fair value conform to the provisions of U.S. GAAP. We
categorize the financial assets and liabilities that we carry at fair value based on a prescribed three-level valuation
hierarchy. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities
(level 1) and the lowest priority to valuation methods using significant unobservable inputs (level 3). If the inputs
used to measure a financial asset or liability cross different levels of the hierarchy, categorization is based on the
lowest-level input that is significant to the fair-value measurement. Management’s assessment of the significance of
a particular input to the overall fair-value measurement of a financial asset or liability requires judgment, and
considers factors specific to that asset or liability. The three levels of the valuation hierarchy are described below.
Level 1. Financial assets and liabilities with values based on unadjusted quoted prices for identical assets or
liabilities in an active market. Our level 1 financial assets and liabilities primarily include positions in U.S.
government securities and highly liquid U.S. and non-U.S. government fixed-income securities. Our level 1 financial
assets also include actively traded exchange-traded equity securities.
Level 2. Financial assets and liabilities with values based on quoted prices for similar assets and liabilities in
active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially
the full term of the asset or liability. Level 2 inputs include the following:
▪
Quoted prices for similar assets or liabilities in active markets;
▪
Quoted prices for identical or similar assets or liabilities in non-active markets;
▪
Pricing models whose inputs are observable for substantially the full term of the asset or liability; and
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 130
▪
Pricing models whose inputs are derived principally from, or corroborated by, observable market information
through correlation or other means for substantially the full term of the asset or liability.
Our level 2 financial assets and liabilities primarily include non-U.S. debt securities carried in trading account
assets and various types of fixed-income AFS investment securities, as well as various types of foreign exchange
and interest rate derivative instruments.
Fair value for our AFS investment securities categorized in level 2 is measured primarily using information
obtained from independent third parties. This third-party information is subject to review by management as part of a
validation process, which includes obtaining an understanding of the underlying assumptions and the level of
market participant information used to support those assumptions. In addition, management compares significant
assumptions used by third parties to available market information. Such information may include known trades or, to
the extent that trading activity is limited, comparisons to market research information pertaining to credit
expectations, execution prices and the timing of cash flows and, where information is available, back-testing.
Derivative instruments categorized in level 2 predominantly represent foreign exchange contracts used in our
trading activities, for which fair value is measured using discounted cash-flow techniques, with inputs consisting of
observable spot and forward points, as well as observable interest rate curves. With respect to derivative
instruments, we evaluate the impact on valuation of the credit risk of our counterparties. We consider factors such
as the likelihood of default by our counterparties, our current and potential future net exposures and remaining
maturities in determining the fair value. Valuation adjustments associated with derivative instruments were not
material to those instruments for the years ended December 31, 2024 and 2023.
Level 3. Financial assets and liabilities with values based on prices or valuation techniques that require inputs
that are both unobservable in the market and significant to the overall measurement of fair value. These inputs
reflect management’s judgment about the assumptions that a market participant would use in pricing the financial
asset or liability, and are based on the best available information, some of which may be internally developed. The
following provides a more detailed discussion of our financial assets and liabilities that we may categorize in level 3
and the related valuation methodology:
•
The fair value of certain foreign exchange contracts, primarily options, is measured using an option-pricing
model. Because of a limited number of observable transactions, certain model inputs are not observable,
such as implied volatility surface, but are derived from observable market information.
Our level 3 financial assets and liabilities are similar in structure and profile to our level 1 and level 2 financial
instruments, but they trade in less liquid markets, and the measurement of their fair value is therefore less
observable.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 131
The following tables present information with respect to our financial assets and liabilities carried at fair value in
our consolidated statement of condition on a recurring basis as of the dates indicated:
Fair Value Measurements on a Recurring Basis
As of December 31, 2024
(In millions)
Quoted Market
Prices in Active
Markets
(Level 1)
Pricing Methods
with Significant
Observable
Market Inputs
(Level 2)
Pricing Methods
with Significant
Unobservable
Market Inputs
(Level 3)
Impact of
Netting(1)
Total Net
Carrying Value
in Consolidated
Statement of
Condition
Assets:
Trading account assets:
U.S. government securities
$
34
$
—
$
—
$
34
Non-U.S. government securities
—
121
—
121
Other
—
613
—
613
Total trading account assets
34
734
—
768
Available-for-sale investment securities:
U.S. Treasury and federal agencies:
Direct obligations
23,525
—
—
23,525
Mortgage-backed securities
—
10,566
—
10,566
Total U.S. Treasury and federal agencies
23,525
10,566
—
34,091
Non-U.S. debt securities:
Mortgage-backed securities
—
2,430
—
2,430
Asset-backed securities
—
1,868
—
1,868
Non-U.S. sovereign, supranational and non-U.S.
agency
—
13,939
—
13,939
Other
—
2,821
—
2,821
Total non-U.S. debt securities
—
21,058
—
21,058
Asset-backed securities:
Student loans
—
90
—
90
Collateralized loan obligations
—
3,453
—
3,453
Non-agency CMBS and RMBS(2)
—
4
—
4
Other
—
91
—
91
Total asset-backed securities
—
3,638
—
3,638
State and political subdivisions
—
56
—
56
Other U.S. debt securities
—
52
—
52
Total available-for-sale investment securities
23,525
35,370
—
58,895
Other assets:
Derivative instruments:
Foreign exchange contracts
16
29,422
1
$
(18,262)
11,177
Interest rate contracts
5
23
—
(23)
5
Other derivative contracts
1
—
—
—
1
Total derivative instruments
22
29,445
1
(18,285)
11,183
Other
20
747
—
—
767
Total assets carried at fair value
$
23,601
$
66,296
$
1
$
(18,285) $
71,613
Liabilities:
Accrued expenses and other liabilities:
Derivative instruments:
Foreign exchange contracts
$
—
$
28,904
$
—
$
(22,527) $
6,377
Interest rate contracts
—
1
—
(1)
—
Other derivative contracts
—
219
—
—
219
Total derivative instruments
—
29,124
—
(22,528)
6,596
Total liabilities carried at fair value
$
—
$
29,124
$
—
$
(22,528) $
6,596
(1) Represents counterparty netting against level 2 financial assets and liabilities where a legally enforceable master netting agreement exists between us and the
counterparty. Netting also reflects asset and liability reductions of $1.86 billion and $6.10 billion, respectively, for cash collateral received from and provided to
derivative counterparties.
(2) Consists entirely of non-agency CMBS.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 132
Fair Value Measurements on a Recurring Basis
As of December 31, 2023
(In millions)
Quoted Market
Prices in Active
Markets
(Level 1)
Pricing Methods
with Significant
Observable
Market Inputs
(Level 2)
Pricing Methods
with Significant
Unobservable
Market Inputs
(Level 3)
Impact of
Netting(1)
Total Net
Carrying Value
in Consolidated
Statement of
Condition
Assets:
Trading account assets:
U.S. government securities
$
36
$
—
$
—
$
36
Non-U.S. government securities
—
138
—
138
Other
—
599
—
599
Total trading account assets
36
737
—
773
Available-for-sale investment securities:
U.S. Treasury and federal agencies:
Direct obligations
8,301
—
—
8,301
Mortgage-backed securities
—
10,755
—
10,755
Total U.S. Treasury and federal agencies
8,301
10,755
—
19,056
Non-U.S. debt securities:
Mortgage-backed securities
—
1,857
—
1,857
Asset-backed securities
—
2,137
—
2,137
Non-U.S. sovereign, supranational and non-U.S.
agency
—
15,100
—
15,100
Other
—
2,735
—
2,735
Total non-U.S. debt securities
—
21,829
—
21,829
Asset-backed securities:
Student loans
—
114
—
114
Collateralized loan obligations
—
2,527
—
2,527
Non-agency CMBS and RMBS(2)
—
249
—
249
Other
—
90
—
90
Total asset-backed securities
—
2,980
—
2,980
State and political subdivisions
—
355
—
355
Other U.S. debt securities
—
306
—
306
Total available-for-sale investment securities
8,301
36,225
—
44,526
Other assets:
Derivative instruments:
Foreign exchange contracts
—
19,690
4
$
(14,387)
5,307
Interest rate contracts
—
13
—
(13)
—
Total derivative instruments
—
19,703
4
(14,400)
5,307
Other
11
640
—
—
651
Total assets carried at fair value
$
8,348
$
57,305
$
4
$
(14,400) $
51,257
Liabilities:
Accrued expenses and other liabilities:
Trading account liabilities:
Derivative instruments:
Foreign exchange contracts
$
1
$
19,414
$
1
$
(11,909) $
7,507
Interest rate contracts
4
—
—
—
4
Other derivative contracts
—
182
—
—
182
Total derivative instruments
5
19,596
1
(11,909)
7,693
Total liabilities carried at fair value
$
5
$
19,596
$
1
$
(11,909) $
7,693
(1) Represents counterparty netting against level 2 financial assets and liabilities where a legally enforceable master netting agreement exists between us and the
counterparty. Netting also reflects asset and liability reductions of $3.90 billion and $1.41 billion, respectively, for cash collateral received from and provided to
derivative counterparties.
(2) Consists entirely of non-agency CMBS.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 133
Financial Instruments Not Carried at Fair Value
Estimates of fair value for financial instruments not carried at fair value in our consolidated statement of
condition are generally subjective in nature, and are determined as of a specific point in time based on the
characteristics of the financial instruments and relevant market information. Disclosure of fair value estimates is not
required by U.S. GAAP for certain items, such as lease financing, equity-method investments, obligations for
pension and other post-retirement plans, premises and equipment, other intangible assets and income-tax assets
and liabilities. Accordingly, aggregate fair-value estimates presented do not purport to represent, and should not be
considered representative of, our underlying “market” or franchise value. In addition, because of potential
differences in methodologies and assumptions used to estimate fair values, our estimates of fair value should not be
compared to those of other financial institutions.
We use the following methods to estimate the fair values of our financial instruments:
•
For financial instruments that have quoted market prices, those quoted prices are used to estimate fair
value;
•
For financial instruments that have no defined maturity, have a remaining maturity of 180 days or less,
or reprice frequently to a market rate, we assume that the fair value of these instruments approximates
their reported value, after taking into consideration any applicable credit risk; and
•
For financial instruments for which no quoted market prices are available, fair value is estimated using
information obtained from independent third parties, or by discounting the expected cash flows using an
estimated current market interest rate for the financial instrument.
The generally short duration of certain of our assets and liabilities results in a significant number of financial
instruments for which fair value equals or closely approximates the amount recorded in our consolidated statement
of condition. These financial instruments are reported in the following captions in our consolidated statement of
condition: cash and due from banks; interest-bearing deposits with banks; securities purchased under resale
agreements; accrued interest and fees receivable; deposits; securities sold under repurchase agreements; federal
funds purchased; and other short-term borrowings.
In addition, due to the relatively short duration of certain of our loans, we consider fair value for these loans to
approximate their reported value. The fair value of other types of loans, such as leveraged loans, commercial real
estate loans, purchased receivables and municipal loans is estimated using information obtained from independent
third parties or by discounting expected future cash flows using current rates at which similar loans would be made
to borrowers with similar credit ratings for the same remaining maturities. Commitments to lend have no reported
value because their terms are at prevailing market rates.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 134
The following tables present the reported amounts and estimated fair values of the financial assets and
liabilities not carried at fair value, as they would be categorized within the fair value hierarchy, as of the dates
indicated:
Fair Value Hierarchy
(In millions)
Reported
Amount
Estimated Fair
Value
Quoted Market
Prices in Active
Markets (Level 1)
Pricing Methods with
Significant
Observable Market
Inputs (Level 2)
Pricing Methods with
Significant
Unobservable Market
Inputs (Level 3)
December 31, 2024
Financial Assets:
Cash and due from banks
$
3,145
$
3,145
$
3,145
$
—
$
—
Interest-bearing deposits with banks
112,957
112,957
—
112,957
—
Securities purchased under resale agreements
6,679
6,679
—
6,679
—
Investment securities held-to-maturity
47,727
41,906
5,354
36,552
—
Net loans(1)
43,026
42,839
—
41,097
1,742
Other(2)
6,752
6,752
—
6,752
—
Financial Liabilities:
Deposits:
Non-interest-bearing
$
33,180
$
33,180
$
—
$
33,180
$
—
Interest-bearing - U.S.
166,483
166,483
—
166,483
—
Interest-bearing - non-U.S.
62,257
62,257
—
62,257
—
Securities sold under repurchase agreements
3,681
3,681
—
3,681
—
Other short-term borrowings
9,840
9,840
—
9,840
—
Long-term debt
23,272
23,078
—
22,882
196
Other(2)
6,752
6,752
—
6,752
—
(1) Includes $14 million of loans classified as held-for-sale that were measured at fair value in level 2 as of December 31, 2024.
(2) Represents a portion of underlying client assets related to our prime services business, which clients have allowed us to transfer and re-pledge.
Fair Value Hierarchy
(In millions)
Reported
Amount
Estimated Fair
Value
Quoted Market
Prices in Active
Markets (Level 1)
Pricing Methods with
Significant
Observable Market
Inputs (Level 2)
Pricing Methods with
Significant
Unobservable Market
Inputs (Level 3)
December 31, 2023
Financial Assets:
Cash and due from banks
$
4,047
$
4,047
$
4,047
$
—
$
—
Interest-bearing deposits with banks
87,665
87,665
—
87,665
—
Securities purchased under resale agreements
6,692
6,692
—
6,692
—
Investment securities held-to-maturity
57,117
51,503
8,409
43,094
—
Net loans
36,496
36,335
—
34,308
2,027
Other(1)
6,866
6,866
—
6,866
—
Financial Liabilities:
Deposits:
Non-interest-bearing
$
32,569
$
32,569
$
—
$
32,569
$
—
Interest-bearing - U.S.
121,738
121,738
—
121,738
—
Interest-bearing - non-U.S.
66,663
66,663
—
66,663
—
Securities sold under repurchase agreements
1,867
1,867
—
1,867
—
Other short-term borrowings
3,660
3,660
—
3,660
—
Long-term debt
18,839
18,417
—
18,216
201
Other(1)
6,866
6,866
—
6,866
—
(1) Represents a portion of underlying client assets related to our prime services business, which clients have allowed us to transfer and re-pledge.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 135
Note 3. Investment Securities
Investment securities held by us are classified as either trading account assets, AFS, HTM or equity securities
held at fair value at the time of purchase and reassessed periodically, based on management’s intent.
Generally, trading assets are debt and equity securities purchased in connection with our trading activities and,
as such, are expected to be sold in the near term. Our trading activities typically involve active and frequent buying
and selling with the objective of generating profits on short-term movements. AFS investment securities are those
securities that we intend to hold for an indefinite period of time. AFS investment securities include securities utilized
as part of our asset and liability management activities that may be sold in response to changes in interest rates,
prepayment risk, liquidity needs or other factors. HTM securities are debt securities that management has the intent
and the ability to hold to maturity.
Trading assets are carried at fair value. Both realized and unrealized gains and losses on trading assets are
recorded in other fee revenue in our consolidated statement of income. AFS securities are carried at fair value, with
any allowance for credit losses recorded through the consolidated statement of income and after-tax net unrealized
gains and losses are recorded in AOCI. Gains or losses realized on sales of AFS investment securities are
computed using the specific identification method and are recorded in gains (losses) from sales of available-for-sale
securities, net, in our consolidated statement of income. HTM investment securities are carried at cost, adjusted for
amortization of premiums and accretion of discounts, with any allowance for credit losses recorded through the
consolidated statement of income.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 136
The following table presents the amortized cost, fair value and associated unrealized gains and losses of AFS
and HTM investment securities as of the dates indicated:
December 31, 2024
December 31, 2023
Amortized
Cost
Gross
Unrealized
Fair
Value
Amortized
Cost
Gross
Unrealized
Fair
Value
(In millions)
Gains
Losses
Gains
Losses
Available-for-sale:
U.S. Treasury and federal agencies:
Direct obligations
$
23,539
$
38
$
52
$
23,525
$
8,427
$
39
$
165
$
8,301
Mortgage-backed securities(1)
10,699
21
154
10,566
10,870
49
164
10,755
Total U.S. Treasury and federal agencies
34,238
59
206
34,091
19,297
88
329
19,056
Non-U.S. debt securities:
Mortgage-backed securities
2,426
5
1
2,430
1,861
3
7
1,857
Asset-backed securities(2)
1,865
5
2
1,868
2,148
2
13
2,137
Non-U.S. sovereign, supranational and non-U.S.
agency
13,954
54
69
13,939
15,159
73
132
15,100
Other(3)
2,787
38
4
2,821
2,733
39
37
2,735
Total non-U.S. debt securities
21,032
102
76
21,058
21,901
117
189
21,829
Asset-backed securities:
Student loans(4)
89
1
—
90
113
1
—
114
Collateralized loan obligations(5)
3,447
6
—
3,453
90
—
—
90
Non-agency CMBS and RMBS(6)
1
3
—
4
252
—
3
249
Other
90
1
—
91
2,530
3
6
2,527
Total asset-backed securities
3,627
11
—
3,638
2,985
4
9
2,980
State and political subdivisions
56
—
—
56
356
—
1
355
Other U.S. debt securities(7)
53
—
1
52
314
—
8
306
Total available-for-sale securities(8)(9)
$
59,006
$
172
$
283
$
58,895
$
44,853
$
209
$
536
$
44,526
Held-to-maturity:
U.S. Treasury and federal agencies:
Direct obligations
$
5,417
$
—
$
55
$
5,362
$
8,584
$
—
$
163
$
8,421
Mortgage-backed securities(10)
36,101
2
5,677
30,426
39,472
7
5,271
34,208
Total U.S. Treasury and federal agencies
41,518
2
5,732
35,788
48,056
7
5,434
42,629
Non-U.S. debt securities:
Non-U.S. sovereign, supranational and non-U.S.
agency
3,673
7
73
3,607
5,757
8
153
5,612
Total non-U.S. debt securities
3,673
7
73
3,607
5,757
8
153
5,612
Asset-backed securities:
Student loans(4)
2,536
4
29
2,511
3,298
2
62
3,238
Non-agency CMBS and RMBS(11)
—
—
—
—
6
18
—
24
Total asset-backed securities
2,536
4
29
2,511
3,304
20
62
3,262
Total held-to-maturity securities(8)(12)
$
47,727
$
13
$ 5,834
$
41,906
$
57,117
$
35
$ 5,649
$
51,503
(1) As of December 31, 2024 and 2023, the total fair value included $4.36 billion and $5.54 billion, respectively, of agency CMBS and $6.20 billion and $5.21 billion, respectively, of
agency MBS.
(2) As of December 31, 2024 and 2023, the fair value includes non-U.S. collateralized loan obligations of $0.70 billion and $1.02 billion, respectively.
(3) As of December 31, 2024 and 2023, the fair value includes non-U.S. corporate bonds of $2.54 billion and $2.36 billion, respectively.
(4) Primarily comprised of securities guaranteed by the federal government with respect to at least 97% of defaulted principal and accrued interest on the underlying loans.
(5) Excludes collateralized loan obligations in loan form. Refer to Note 4 for additional information.
(6) Consists entirely of non-agency RMBS as of December 31, 2024 and entirely of non-agency CMBS as of December 31, 2023.
(7) As of December 31, 2024 and 2023, the fair value of U.S. corporate bonds was $0.05 billion and $0.31 billion, respectively.
(8) An immaterial amount of accrued interest related to HTM and AFS investment securities was excluded from the amortized cost basis for the period ended December 31, 2024.
(9) As of December 31, 2024 and 2023, we had no allowance for credit losses on AFS investment securities.
(10) As of December 31, 2024 and 2023, the total amortized cost included $5.18 billion and $5.23 billion of agency CMBS, respectively.
(11) Consists entirely of non-agency RMBS as of December 31, 2023.
(12) As of December 31, 2024, we had no allowance for credit losses on HTM investment securities. As of December 31, 2023, we had $1 million allowance for credit losses on
HTM investment securities.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 137
Aggregate investment securities with carrying values of approximately $86.70 billion and $71.30 billion as of
December 31, 2024 and 2023, respectively, were designated as pledged for public and trust deposits, short-term
borrowings and for other purposes as provided by law.
In 2024, 2023 and 2022, proceeds from sales of AFS securities were approximately $10.97 billion, $4.92 billion
and $4.59 billion, respectively, resulting in a pre-tax loss of approximately $79 million, $294 million and $2 million in
2024, 2023 and 2022, respectively. The pre-tax loss in 2024 was primarily driven by sales of U.S. Treasury, non-
U.S. agency, supranational and mortgage-backed securities as part of an investment portfolio repositioning in the
third quarter of 2024.
The following tables present the aggregate fair values of AFS investment securities that have been in a
continuous unrealized loss position for less than 12 months, and those that have been in a continuous unrealized
loss position for 12 months or longer, as of the dates indicated:
As of December 31, 2024
Less than 12 months
12 months or longer
Total
(In millions)
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Available-for-sale:
U.S. Treasury and federal agencies:
Direct obligations
$
8,113
$
25
$
2,435
$
27
$
10,548
$
52
Mortgage-backed securities
3,742
59
4,360
95
8,102
154
Total U.S. Treasury and federal agencies
11,855
84
6,795
122
18,650
206
Non-U.S. debt securities:
Mortgage-backed securities
730
1
225
—
955
1
Asset-backed securities
387
—
506
2
893
2
Non-U.S. sovereign, supranational and non-U.S. agency
4,695
49
2,695
20
7,390
69
Other
312
2
116
2
428
4
Total non-U.S. debt securities
6,124
52
3,542
24
9,666
76
Asset-backed securities:
Student loans
12
—
—
—
12
—
Collateralized loan obligations
684
—
—
—
684
—
Total asset-backed securities
696
—
—
—
696
—
State and political subdivisions
—
—
26
—
26
—
Other U.S. debt securities
3
—
49
1
52
1
Total
$
18,678
$
136
$
10,412
$
147
$
29,090
$
283
As of December 31, 2023
Less than 12 months
12 months or longer
Total
(In millions)
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Available-for-sale:
U.S. Treasury and federal agencies:
Direct obligations
$
333
$
2
$
5,416
$
163
$
5,749
$
165
Mortgage-backed securities
961
6
6,512
158
7,473
164
Total U.S. Treasury and federal agencies
1,294
8
11,928
321
13,222
329
Non-U.S. debt securities:
Mortgage-backed securities
424
1
719
6
1,143
7
Asset-backed securities
358
—
1,052
13
1,410
13
Non-U.S. sovereign, supranational and non-U.S. agency
3,972
7
5,788
125
9,760
132
Other
50
—
893
37
943
37
Total non-U.S. debt securities
4,804
8
8,452
181
13,256
189
Asset-backed securities:
Collateralized loan obligations
183
—
1,605
6
1,788
6
Non-agency CMBS and RMBS
35
—
180
3
215
3
Total asset-backed securities
218
—
1,785
9
2,003
9
State and political subdivisions
64
—
104
1
168
1
Other U.S. debt securities
3
—
303
8
306
8
Total
$
6,383
$
16
$
22,572
$
520
$
28,955
$
536
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 138
The following table presents the amortized cost and the fair value of contractual maturities of debt investment
securities as of December 31, 2024. The maturities of certain ABS, MBS and collateralized mortgage obligations are
based on expected principal payments. Actual maturities may differ from these expected maturities since certain
borrowers have the right to prepay obligations with or without prepayment penalties.
As of December 31, 2024
(In millions)
Under 1 Year
1 to 5 Years
6 to 10 Years
Over 10 Years
Total
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Available-for-sale:
U.S. Treasury and
federal agencies:
Direct obligations
$
8,619
$
8,625
$
13,485
$ 13,474
$
1,435
$
1,426
$
—
$
—
$
23,539
$ 23,525
Mortgage-backed
securities
49
49
1,824
1,819
2,517
2,493
6,309
6,205
10,699
10,566
Total U.S. Treasury and
federal agencies
8,668
8,674
15,309
15,293
3,952
3,919
6,309
6,205
34,238
34,091
Non-U.S. debt
securities:
Mortgage-backed
securities
58
58
427
427
38
38
1,903
1,907
2,426
2,430
Asset-backed
securities
276
276
279
279
1,005
1,007
305
306
1,865
1,868
Non-U.S. sovereign,
supranational and
non-U.S. agency
2,706
2,700
10,138
10,136
1,110
1,103
—
—
13,954
13,939
Other
371
371
2,314
2,346
102
104
—
—
2,787
2,821
Total non-U.S. debt
securities
3,411
3,405
13,158
13,188
2,255
2,252
2,208
2,213
21,032
21,058
Asset-backed securities:
Student loans
23
24
—
—
12
12
54
54
89
90
Collateralized loan
obligations
37
37
78
78
1,874
1,877
1,458
1,461
3,447
3,453
Non-agency CMBS
and RMBS
—
—
—
—
—
—
1
4
1
4
Other
—
—
90
91
—
—
—
—
90
91
Total asset-backed
securities
60
61
168
169
1,886
1,889
1,513
1,519
3,627
3,638
State and political
subdivisions
30
30
26
26
—
—
—
—
56
56
Other U.S. debt
securities
30
29
23
23
—
—
—
—
53
52
Total
$
12,199
$ 12,199
$
28,684
$ 28,699
$
8,093
$
8,060
$
10,030
$
9,937
$
59,006
$ 58,895
Held-to-maturity:
U.S. Treasury and
federal agencies:
Direct obligations
$
4,557
$
4,521
$
851
$
832
$
1
$
1
$
8
$
8
$
5,417
$
5,362
Mortgage-backed
securities
134
120
1,711
1,559
3,308
2,788
30,948
25,959
36,101
30,426
Total U.S. Treasury and
federal agencies
4,691
4,641
2,562
2,391
3,309
2,789
30,956
25,967
41,518
35,788
Non-U.S. debt
securities:
Non-U.S. sovereign,
supranational and
non-U.S. agency
1,409
1,397
2,044
1,998
220
212
—
—
3,673
3,607
Total non-U.S. debt
securities
1,409
1,397
2,044
1,998
220
212
—
—
3,673
3,607
Asset-backed securities:
Student loans
149
147
310
309
380
379
1,697
1,676
2,536
2,511
Total asset-backed
securities
149
147
310
309
380
379
1,697
1,676
2,536
2,511
Total
$
6,249
$
6,185
$
4,916
$
4,698
$
3,909
$
3,380
$
32,653
$ 27,643
$
47,727
$ 41,906
Interest income related to debt securities is recognized in our consolidated statement of income using the
effective interest method, or on a basis approximating a level rate of return over the contractual or estimated life of
the security. The level rate of return considers any non-refundable fees or costs, as well as purchase premiums or
discounts, adjusted as prepayments occur, resulting in amortization or accretion, accordingly.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 139
Allowance for Credit Losses on Debt Securities
and Impairment of AFS Securities
An allowance for credit losses is recognized on
HTM securities upon acquisition of the security, and
on AFS securities when the fair value and expected
future cash flows of the investment securities are less
than their amortized cost basis. Our assessment of
impairment involves an evaluation of economic and
security-specific factors. Such factors are based on
estimates,
derived
by
management,
which
contemplate current market conditions and security-
specific performance. To the extent that market
conditions
are
worse
than
management’s
expectations
or
due
to
idiosyncratic
bond
performance,
the
credit-related
component
of
impairment, in particular, could increase and would be
recorded in the provision for credit losses.
We conduct quarterly reviews of HTM securities
on a collective (pool) basis when similar risk
characteristics
exist
to
determine
whether
an
allowance for credit losses should be recognized.
HTM securities are evaluated for expected credit loss
utilizing a probability of default methodology, or
discounted
cash
flows
assessed
against
the
amortized cost of the investment security excluding
accrued interest.
We monitor the credit quality of the HTM
investment securities using a variety of methods,
including both external and internal credit ratings.
With respect to certain classes of debt
securities, primarily U.S. Treasuries and agency
securities (mainly issued by U.S. Government entities
and
agencies,
as
well
as
Group
of
Seven
sovereigns), we consider the history of credit losses,
current conditions and reasonable and supportable
forecasts, which may indicate that the expectation
that nonpayment of the amortized cost basis is or
continues to be zero. Therefore, for those securities,
we do not record expected credit losses.
As of December 31, 2024, we had no allowance
for credit losses on HTM investment securities. As of
December 31, 2023, we had $1 million allowance for
credit losses on HTM investment securities.
We have elected to not record an allowance on
accrued interest for HTM securities. Accrued interest
on these securities is reversed against interest
income when payment on a security is delinquent for
greater than 90 days from the date of payment.
An AFS security is impaired when the current
fair value of an individual security is below its
amortized cost basis. An allowance for credit losses
on impaired AFS securities is recorded when the
present value of expected future cash flows of the
investment security is less than its amortized cost
basis, limited to the amount by which the security’s
amortized cost basis exceeds the fair value.
Investment securities will be written down to fair value
through the consolidated statement of income when
management intends to sell (or may be required to
sell) the securities before they recover in value.
Our review of AFS investment securities for
credit impairment generally includes:
•
the identification and evaluation of securities
that have indications of potential impairment,
such as issuer-specific concerns, including
deteriorating
financial
condition
or
bankruptcy;
•
the analysis of expected future cash flows of
securities,
based
on
quantitative
and
qualitative factors;
•
the analysis of the collectability of those
future cash flows, including information about
past
events,
current
conditions,
and
reasonable and supportable forecasts;
•
the analysis of the underlying collateral for
MBS and ABS;
•
the analysis of individual impaired securities,
including the anticipated recovery period and
the magnitude of the overall price decline;
•
evaluation of factors or triggers that could
cause individual securities to be deemed
impaired and those that would not support
impairment; and
•
documentation of the results of these
analyses.
As of both December 31, 2024 and 2023, we
had no allowance for credit losses on AFS investment
securities.
Substantially all of our investment securities
portfolio is composed of debt securities. A critical
component of our assessment of impairment of these
debt securities is the identification of credit-impaired
securities for which management does not expect to
receive cash flows sufficient to recover the entire
amortized cost basis of the security.
As of December 31, 2024, 99% of our HTM and
AFS investment portfolio is publicly rated investment
grade.
After a review of the investment portfolio, taking
into consideration then-current economic conditions,
adverse situations that might affect our ability to fully
collect principal and interest, the timing of future
payments, the credit quality and performance of the
collateral underlying MBS and ABS and other relevant
factors, management considered the aggregate
decline in fair value of the investment securities
portfolio and the resulting gross pre-tax unrealized
losses of $6.12 billion and $6.19 billion related to
1,564 and 1,704 securities as of December 31, 2024
and 2023, respectively, to be primarily related to
changes in interest rates, and not the result of any
material changes in the credit characteristics of the
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 140
securities. The unrealized loss has not been
recognized
as
of
December
31,
2024,
as
management did not have the intent to sell, nor was it
more likely than not that we would be required to sell
these securities before the expected recovery of their
amortized cost basis.
Note 4. Loans and Allowance for Credit Losses
Loans are generally recorded at their principal
amount outstanding, net of the allowance for credit
losses, unearned income, and any net unamortized
deferred loan origination fees. Loans that are
classified as held-for-sale are measured at lower of
cost or fair value on an individual basis.
Interest income related to loans is recognized in
our consolidated statement of income using the
interest method, or on a basis approximating a level
rate of return over the term of the loan. Fees received
for providing loan commitments and letters of credit
that we anticipate will result in loans typically are
deferred and amortized to interest income over the
term of the related loan, beginning with the initial
borrowing. Fees on commitments and letters of credit
are amortized to software and processing fees over
the commitment period when funding is not known or
expected.
The following table presents our recorded
investment in loans, by segment, as of the dates
indicated:
(In millions)
December 31, 2024
December 31, 2023
Domestic(1):
Commercial and financial:
Fund finance(2)
$
16,347
$
13,697
Leveraged loans
2,742
2,412
Overdrafts
1,208
1,225
Collateralized loan obligations
in loan form
50
150
Other(3)
3,220
2,512
Commercial real estate
2,842
3,069
Total domestic
26,409
23,065
Foreign(1):
Commercial and financial:
Fund finance(2)
6,601
4,956
Leveraged loans
1,082
1,194
Overdrafts
772
1,047
Collateralized loan obligations
in loan form
8,336
6,369
Total foreign
16,791
13,566
Total loans(4)
43,200
36,631
Allowance for credit losses
(174)
(135)
Loans, net of allowance
$
43,026
$
36,496
(1) Domestic and foreign categorization is based on the borrower’s country of domicile.
(2) Fund finance loans include primarily $11.54 billion private equity capital call finance
loans, $8.09 billion loans to real money funds and $1.44 billion loans to business
development companies as of December 31, 2024, compared to $9.69 billion private
equity capital call finance loans, $6.63 billion loans to real money funds and $1.05 billion
loans to business development companies as of December 31, 2023.
(3) Includes $3.01 billion securities finance loans and $214 million loans to municipalities
as of December 31, 2024 and $2.23 billion securities finance loans, $276 million loans to
municipalities and $5 million other loans as of December 31, 2023.
(4) As of December 31, 2024, excluding overdrafts, floating rate loans totaled $38.46 billion
and fixed rate loans totaled $2.76 billion. We have entered into interest rate swap
agreements to hedge the forecasted cash flows associated with EURIBOR indexed
floating-rate loans. See Note 10 for additional details.
We segregate our loans into two segments:
commercial and financial loans and commercial real
estate loans. We further classify commercial and
financial loans as fund finance loans, leveraged
loans, collateralized loan obligations in loan form,
overdrafts and other loans. Fund finance loans are
composed of revolving credit lines providing liquidity
and leverage to mutual fund and private equity fund
clients.
These
classifications
reflect
their
risk
characteristics, their initial measurement attributes
and the methods we use to monitor and assess credit
risk.
Certain loans are pledged as collateral for
access to the Federal Reserve’s discount window. As
of December 31, 2024 and 2023, the loans pledged
as collateral totaled $13.90 billion and $13.00 billion,
respectively.
We generally place loans on non-accrual status
once principal or interest payments are 90 days
contractually past due, or earlier if management
determines that full collection is not probable. Loans
90 days past due, but considered both well-secured
and in the process of collection, may be excluded
from non-accrual status. When we place a loan on
non-accrual status, the accrual of interest is
discontinued and previously recorded but unpaid
interest is reversed and generally charged against
interest income. For loans on non-accrual status,
income is recognized on a cash basis after recovery
of principal, if and when interest payments are
received. Loans may be removed from non-accrual
status when repayment is reasonably assured and
performance under the terms of the loan has been
demonstrated. As of December 31, 2024, we had two
loans totaling $191 million on non-accrual status, of
which one loan totaling $101 million was more than
90 days contractually past due. As of December 31,
2023, we had three loans totaling $70 million on non-
accrual status.
In 2024, we purchased $3.72 billion of
collateralized loan obligations in loan form, which
were all investment grade as of December 31, 2024.
We sold $300 million of loans in 2024. We
recorded a charge-off against the allowance for these
loans of $37 million in 2024.
Allowance for Credit Losses
We recognize an allowance for credit losses in
accordance with ASC 326 for financial assets held at
amortized cost and off-balance sheet commitments.
The allowance for credit losses is reviewed on a
regular basis, and any provision for credit losses is
recorded to reflect the amount necessary to maintain
the allowance for expected credit losses at a level
which represents what management does not expect
to recover due to expected credit losses. For
additional discussion on the allowance for credit
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 141
losses for investment securities, please refer to Note
3.
When the allowance is recorded, a provision for
credit loss expense is recognized in net income. The
allowance for credit losses for financial assets
(excluding investment securities, as discussed in
Note 3) represents the portion of the amortized cost
basis, including accrued interest for financial assets
held at amortized cost, which management does not
expect to recover due to expected credit losses and is
presented on the statement of condition as an offset
to the amortized cost basis. The accrued interest
balance is presented separately on the statement of
condition within accrued interest and fees receivable.
The allowance for off-balance sheet commitments is
presented within other liabilities. Loans are charged
off to the allowance for credit losses in the reporting
period in which either an event occurs that confirms
the existence of a loss on a loan, including a sale of a
loan below its carrying value, or a portion of a loan is
determined to be uncollectible.
The allowance for credit losses may be
determined
using
various
methods,
including
discounted cash flow methods, loss-rate methods,
probability-of-default methods, and other quantitative
or qualitative methods as determined by us. The
method used to estimate expected credit losses may
vary depending on the type of financial asset, our
ability to predict the timing of cash flows, and the
information available to us.
The allowance for credit losses as reported in
our consolidated statement of condition is adjusted by
the provision for credit losses, which is reported in
earnings, and reduced by the charge-off of principal
amounts, net of recoveries.
We measure expected credit losses of financial
assets on a collective (pool) basis when similar risk
characteristics exist. Each reporting period, we
assess whether the assets in the pool continue to
display similar risk characteristics.
For a financial asset that does not share risk
characteristics with other assets, expected credit
losses are measured separately using one or more of
the methods noted above. As of December 31, 2024,
we had 4 loans totaling $48 million in the commercial
and
financial
segment
and
5
loans
totaling
$402 million in the commercial real estate segment
that no longer met the similar risk characteristics of
their collective pool. As of December 31, 2024,
$91 million of our allowance for credit losses was
related to these loans.
When the asset is collateral-dependent, which
means when the borrower is experiencing financial
difficulty and repayment is expected to be provided
substantially through the operation or sale of the
collateral, the allowance for credit losses are
determined based on the fair value of the collateral,
adjusted for the estimated costs to sell.
Determining
the
appropriateness
of
the
allowance is complex and requires judgment by
management about the effect of matters that are
inherently uncertain. In future periods, factors and
forecasts then prevailing may result in significant
changes in the allowance for credit losses in those
future periods.
We estimate credit losses over the contractual
life of the financial asset, while factoring in
prepayment activity, where supported by data, over a
three year reasonable and supportable forecast
period. We utilize a baseline, upside and downside
scenario which are applied based on a probability
weighting, in order to better reflect management’s
expectation of expected credit losses given existing
market conditions and the changes in the economic
environment. The multiple scenarios are based on a
three year horizon (or less depending on contractual
maturity) and then revert linearly over a two year
period to a ten-year historical average thereafter. The
contractual term excludes expected extensions,
renewals and modifications, but includes prepayment
assumptions where applicable.
As part of our allowance methodology, we
establish qualitative reserves to address any risks
inherent in our portfolio that are not addressed
through our quantitative reserve assessment. These
factors may relate to, among other things, legislation
changes or new regulation, credit concentration, loan
markets, scenario weighting and overall model
limitations. The qualitative adjustments are applied to
our portfolio of financial instruments under the
existing governance structure and are inherently
judgmental.
Credit Quality
Credit quality for financial assets held at
amortized
cost
is
continuously
monitored
by
management and is reflected within the allowance for
credit losses.
We use an internal risk-rating system to assess
our risk of credit loss for each loan. This risk-rating
process incorporates the use of risk-rating tools in
conjunction with management judgment. Qualitative
and quantitative inputs are captured in a systematic
manner, and following a formal review and approval
process, an internal credit rating based on our credit
scale is assigned.
When computing allowance levels, credit loss
assumptions are estimated using models that
categorize asset pools based on loss history,
delinquency status and other credit trends and risk
characteristics, including current conditions and
reasonable and supportable forecasts about the
future. Determining the appropriateness of the
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 142
allowance is complex and requires judgment by
management about the effect of matters that are
inherently uncertain. In future periods, evaluations of
the overall asset portfolio, in light of the factors and
forecasts then prevailing, may result in significant
changes in the allowance and credit loss expense in
those future periods.
Credit quality is assessed and monitored by
evaluating various attributes in order to enable timely
detection of any concerns with the customer’s credit
rating. The results of those evaluations are utilized in
underwriting new loans and transactions with
counterparties and in our process for estimation of
expected credit losses.
In assessing the risk rating assigned to each
individual loan, among the factors considered are the
borrower's
debt
capacity,
collateral
coverage,
payment
history
and
delinquency
experience,
financial
flexibility
and
earnings
strength,
the
expected amounts and source of repayment, the level
and nature of contingencies, if any, and the industry
and geography in which the borrower operates.
These factors are based on an evaluation of historical
and current information, and involve subjective
assessment and interpretation. Credit counterparties
are evaluated and risk-rated on an individual basis at
least annually. Management considers the ratings to
be current as of December 31, 2024.
Our internal risk rating methodology assigns risk
ratings to counterparties ranging from Investment
Grade, Speculative, Special Mention, Substandard,
Doubtful and Loss.
•
Investment Grade: Counterparties with strong
credit quality and low expected credit risk and
probability of default. Approximately 88% of
our loans were rated as investment grade as
of December 31, 2024 with external credit
ratings, or equivalent, of “BBB-” or better.
•
Speculative: Counterparties that have the
ability
to
repay
but
face
significant
uncertainties, such as adverse business or
financial circumstances that could affect
credit risk or economic downturns. Loans to
counterparties rated as speculative account
for approximately 11% of our loans as of
December 31, 2024, and are concentrated in
leveraged loans. Approximately 91% of those
leveraged loans have an external credit
rating, or equivalent, of “BB” or “B” as of
December 31, 2024.
•
Special
Mention:
Counterparties
with
potential weaknesses that, if uncorrected,
may result in deterioration of repayment
prospects.
•
Substandard:
Counterparties
with
well-
defined
weakness
that
jeopardizes
repayment with the possibility we will sustain
some loss.
•
Doubtful: Counterparties with well-defined
weakness
which
make
collection
or
liquidation in full highly questionable and
improbable.
•
Loss: Counterparties which are uncollectible
or have little value.
The following tables present our recorded loans
to counterparties by risk rating, as noted above, as of
the dates indicated:
December 31, 2024
Commercial
and Financial
Commercial
Real Estate
Total Loans
(In millions)
Investment grade
$
35,831
$
1,969
$
37,800
Speculative
4,278
409
4,687
Special mention
187
62
249
Substandard
48
211
259
Doubtful
—
191
191
Total(1)(2)
$
40,344
$
2,842
$
43,186
December 31, 2023
Commercial
and Financial
Commercial
Real Estate
Total Loans
(In millions)
Investment grade
$
29,737
$
2,287
$
32,024
Speculative
3,546
449
3,995
Special mention
242
62
304
Substandard
14
224
238
Doubtful
23
47
70
Total(1)
$
33,562
$
3,069
$
36,631
(1) Loans include $1.98 billion and $2.27 billion of overdrafts as of December 31,
2024 and 2023, respectively. Overdrafts are short-term in nature and do not
present a significant credit risk to us. As of December 31, 2024, $1.84 billion
overdrafts were investment grade and $0.14 billion overdrafts were speculative.
(2) Total does not include $14 million of loans classified as held-for-sale as of
December 31, 2024.
Financial assets held at amortized cost that are
not loans are disaggregated based on product type.
This includes our fees receivable balance, which
have had no history of credit losses, and are
evaluated collectively as a pool.
Securities purchased under a resale agreement
and securities-financing within our principal business
utilize the collateral maintenance provisions included
within ASC 326. An allowance for credit losses is
recognized for any remaining exposure based on
counterparty type.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 143
The allowance for credit losses for off-balance sheet credit exposures, recorded in accrued expenses and
other liabilities in our consolidated statement of condition, represents management’s estimate of credit losses
primarily in outstanding letters and lines of credit and other credit-enhancement facilities provided to our clients and
outstanding as of the balance sheet date. The allowance is evaluated quarterly by management. Factors considered
in evaluating the appropriate level of this allowance are similar to those considered with respect to the allowance for
credit losses on financial assets held at amortized cost. Provisions to maintain the allowance at a level considered
by us to be appropriate to absorb estimated credit losses in outstanding facilities are recorded in the provision for
credit losses in our consolidated statement of income.
The following table presents the amortized cost basis, by year of origination and credit quality indicator as of
December 31, 2024. For origination years before the fifth annual period, we present the aggregate amortized cost
basis of loans. For purchased loans, the date of issuance is used to determine the year of origination, not the date
of acquisition. For modified, extended or renewed lending arrangements, we evaluate whether a credit event has
occurred which would consider the loan to be a new arrangement.
(In millions)
2024
2023
2022
2021
2020
Prior
Revolving Loans
Total(1)
Domestic loans:
Commercial and financial:
Risk Rating:
Investment grade
$
1,946
$
223
$
89
$
47
$
6
$
197
$
18,044
$ 20,552
Speculative
1,834
173
154
387
53
155
136
2,892
Special mention
47
10
—
54
—
—
—
111
Substandard
—
—
12
—
—
—
—
12
Total commercial and financing
$
3,827
$
406
$
255
$
488
$
59
$
352
$
18,180
$ 23,567
Commercial real estate:
Risk Rating:
Investment grade
$
41
$
63
$
488
$
278
$
128
$
971
$
—
$
1,969
Speculative
—
153
20
69
100
67
—
409
Special mention
—
—
—
—
—
62
—
62
Substandard
—
—
—
—
—
211
—
211
Doubtful
—
—
—
—
—
191
—
191
Total commercial real estate
$
41
$
216
$
508
$
347
$
228
$
1,502
$
—
$
2,842
Non-U.S. loans:
Commercial and financial:
Risk Rating:
Investment grade
$
4,243
$
1,796
$
1,152
$
2,187
$
—
$
—
$
5,901
$ 15,279
Speculative
607
174
44
246
46
43
226
1,386
Special mention
—
35
26
15
—
—
—
76
Substandard
—
—
—
36
—
—
—
36
Total commercial and financing
$
4,850
$
2,005
$
1,222
$
2,484
$
46
$
43
$
6,127
$ 16,777
Total loans(2)
$
8,718
$
2,627
$
1,985
$
3,319
$
333
$
1,897
$
24,307
$ 43,186
(1) Any reserve associated with accrued interest is not material. As of December 31, 2024, accrued interest receivable of $327 million included in the amortized cost basis of loans
has been excluded from the amortized cost basis within this table.
(2) Total does not include $14 million of loans classified as held-for-sale as of December 31, 2024.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 144
The following table presents the amortized cost basis, by year of origination and credit quality indicator as of
December 31, 2023:
(In millions)
2023
2022
2021
2020
2019
Prior
Revolving Loans
Total(1)
Domestic loans:
Commercial and financial:
Risk Rating:
Investment grade
$
1,399
$
120
$
199
$
8
$
272
$
5
$
15,476
$ 17,479
Speculative
615
285
747
149
291
141
81
2,309
Special mention
—
4
164
—
16
—
—
184
Doubtful
5
—
18
—
—
—
—
23
Total commercial and financing
$
2,019
$
409
$
1,128
$
157
$
579
$
146
$
15,557
$ 19,995
Commercial real estate:
Risk Rating:
Investment grade
$
216
$
500
$
498
$
100
$
375
$
598
$
—
$
2,287
Speculative
—
20
31
50
49
299
—
449
Special mention
—
—
—
—
22
40
—
62
Substandard
—
—
—
—
95
129
—
224
Doubtful
—
—
—
—
—
47
—
47
Total commercial real estate
$
216
$
520
$
529
$
150
$
541
$
1,113
$
—
$
3,069
Non-U.S. loans:
Commercial and financial:
Risk Rating:
Investment grade
$
2,943
$
1,956
$
2,518
$
—
$
—
$
—
$
4,841
$ 12,258
Speculative
394
135
481
88
109
18
12
1,237
Special mention
—
—
29
29
—
—
—
58
Substandard
—
—
—
—
—
14
—
14
Total commercial and financing
$
3,337
$
2,091
$
3,028
$
117
$
109
$
32
$
4,853
$ 13,567
Total loans
$
5,572
$
3,020
$
4,685
$
424
$
1,229
$
1,291
$
20,410
$ 36,631
(1) Any reserve associated with accrued interest is not material. As of December 31, 2023, accrued interest receivable of $318 million included in the amortized cost basis of loans
has been excluded from the amortized cost basis within this table.
The following tables present the activity in the allowance for credit losses by portfolio and class for the years
ended December 31, 2024 and 2023:
Year End December 31, 2024
Commercial and Financial
(In millions)
Leveraged
Loans
Other Loans(1)
Commercial
Real Estate
Held-to-
Maturity
Securities
Off-Balance
Sheet
Commitments
Total
Allowance for credit losses:
Beginning balance
$
72
$
3
$
60
$
1
$
14
$
150
Provision
13
1
67
(1)
(5)
75
Charge-offs(2)
(17)
—
(25)
—
—
(42)
Ending balance
$
68
$
4
$
102
$
—
$
9
$
183
(1) Includes $3 million allowance for credit losses on Fund Finance loans and $1 million on other loans.
(2) Related to the sale of commercial real estate and leveraged loans in 2024.
Year Ended December 31, 2023
Commercial and Financial
(In millions)
Leveraged
Loans
Other
Loans(1)
Commercial
Real Estate
Available-for-
sale
securities
Held-to-
Maturity
Securities
Off-Balance
Sheet
Commitments
Total
Allowance for credit losses:
Beginning balance
$
73
$
4
$
19
$
2
$
—
$
23
$
121
Provision
16
(1)
41
(2)
1
(9)
46
Charge-offs(2)
(17)
—
—
—
—
—
(17)
Ending balance
$
72
$
3
$
60
$
—
$
1
$
14
$
150
(1) Includes $3 million allowance for credit losses on Fund Finance loans and $1 million on other loans.
(2) Related to the sale of leveraged loans in 2023.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 145
Loans are reviewed on a regular basis, and any
provisions for credit losses that are recorded reflect
management’s estimate of the amount necessary to
maintain the allowance for loan losses at a level
considered appropriate to absorb expected credit
losses in the loan portfolio. In 2024, we recorded a
$75 million provision for credit losses, primarily
reflecting
an
increase
in
loan
loss
reserves
associated with certain commercial real estate and
leveraged loans, compared to $46 million in 2023.
Allowance estimates remain subject to continued
model and economic uncertainty and management
may use qualitative adjustments in the allowance
estimates. If future data and forecasts deviate relative
to the forecasts utilized to determine our allowance
for credit losses as of December 31, 2024, or if credit
risk migration is higher or lower than forecasted for
reasons independent of the economic forecast, our
allowance for credit losses will also change.
Note 5. Goodwill and Other Intangible Assets
Goodwill represents the excess of the cost of an
acquisition over the fair value of the net tangible and
other intangible assets acquired. Other intangible
assets represent purchased long-lived intangible
assets, primarily client relationships, that can be
distinguished from goodwill because of contractual
rights or because the asset can be exchanged on its
own or in combination with a related contract, asset
or liability. Goodwill is not amortized, but is reviewed
for impairment annually or more frequently if
circumstances arise or events occur that indicate an
impairment of the carrying amount may exist. Other
intangible assets, which are subject to evaluation for
impairment, are mainly related to client relationships,
which are amortized on a straight-line basis over
periods ranging from five to twenty years, technology
assets, which are amortized on a straight-line basis
over periods ranging from three to ten years, and
core deposit intangible assets, which are amortized
on a straight-line basis over periods ranging from
sixteen to twenty-two years, with such amortization
recorded in other expenses in our consolidated
statement of income.
Impairment of goodwill is deemed to exist if the
carrying value of a reporting unit, including its
allocation of goodwill and other intangible assets,
exceeds its estimated fair value. Impairment of other
intangible assets is deemed to exist if the balance of
the other intangible asset exceeds the cumulative
expected undiscounted net cash inflows related to the
asset over its remaining estimated useful life. If these
reviews determine that goodwill or other intangible
assets are impaired, the value of the goodwill or the
other intangible asset is written down through a
charge to other expenses in our consolidated
statement of income. There were no impairments to
goodwill or other intangible assets in 2024, 2023 and
2022.
The following table presents changes in the
carrying amount of goodwill during the periods
indicated for each of our goodwill reporting units:
(In millions)
Investment
Servicing
Investment
Management
Total
Goodwill:
Ending balance
December 31, 2022
$
7,232
$
263
$
7,495
Acquisitions
44
—
44
Foreign currency translation
70
2
72
Ending balance
December 31, 2023
7,346
265
7,611
Acquisitions(1)
189
—
189
Foreign currency translation
(107)
(2)
(109)
Ending balance
December 31, 2024
$
7,428
$
263
$
7,691
(1) Investment Servicing includes the impact of the consolidation of one of our joint
ventures in India.
The following table presents changes in the net
carrying amount of other intangible assets during the
periods indicated:
(In millions)
Investment
Servicing
Investment
Management
Total
Other intangible assets:
Ending balance
December 31, 2022
$
1,495
$
49
$
1,544
Amortization
(217)
(22)
(239)
Foreign currency translation
15
—
15
Ending balance
December 31, 2023
1,293
27
1,320
Acquisitions
7
13
20
Amortization
(216)
(14)
(230)
Foreign currency translation
(21)
—
(21)
Ending balance
December 31, 2024
$
1,063
$
26
$
1,089
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 146
The following tables present the gross carrying
amount, accumulated amortization and net carrying
amount of other intangible assets by type as of the
dates indicated:
December 31, 2024
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
(In millions)
Other intangible
assets:
Client relationships
$
2,706
$
(1,919) $
787
Technology
401
(252)
149
Core deposits
677
(540)
137
Other
95
(79)
16
Total
$
3,879
$
(2,790) $
1,089
December 31, 2023
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
(In millions)
Other intangible
assets:
Client relationships
$
2,761
$
(1,808) $
953
Technology
402
(216)
186
Core deposits
690
(516)
174
Other
85
(78)
7
Total
$
3,938
$
(2,618) $
1,320
Amortization expense related to other intangible
assets was $230 million, $239 million and $238
million in 2024, 2023 and 2022, respectively.
Expected future amortization expense for other
intangible assets recorded as of December 31, 2024
is as follows:
(In millions)
Future Amortization
Years Ended December 31,
2025
$
225
2026
202
2027
168
2028
122
2029
64
Note 6. Other Assets
The following table presents the components of other
assets as of the dates indicated:
(In millions)
December 31,
2024
December 31,
2023
Securities borrowed(1)
$
37,451
$
23,131
Derivative instruments, net
11,183
5,307
Bank-owned life insurance
3,856
3,742
Investments in joint ventures and
other unconsolidated entities(2)
3,317
2,981
Collateral, net
3,216
2,983
Right-of-use assets
818
805
Prepaid expenses
738
598
Deferred tax assets, net of valuation
allowance(3)
701
1,034
Accounts receivable
504
611
Income taxes receivable
144
246
Receivable for securities settlement
57
1,082
Other(4)
2,529
2,286
Total
$
64,514
$
44,806
(1) Refer to Note 11, for further information on the impact of collateral on our
financial statement presentation of securities borrowing and securities lending
transactions.
(2) Includes equity securities without readily determinable fair values that are
accounted for under the ASC 321 measurement alternative of $341 million and
$183 million as of December 31, 2024 and 2023, respectively. For the year ended
December 31, 2024, no impairments were recognized in other fee revenue related
to such equity securities.
(3) Deferred tax assets and liabilities recorded in our consolidated statement of
condition are netted within the same tax jurisdiction.
(4) Includes advances of $1.04 billion and $1.15 billion as of December 31, 2024
and 2023, respectively.
Note 7. Deposits
We had $5.78 billion and $5.80 billion of time
deposits outstanding, of which $0.08 billion and
$0.06 billion were non-U.S. time deposits as of
December 31, 2024 and 2023, respectively. Time
deposits included amounts in excess of the FDIC
insurance limits, or other uninsured accounts not
subject to any country specific deposit insurance
limits, of $5.77 billion and $5.79 billion as of
December 31, 2024 and 2023, respectively. As of
December 31, 2024, uninsured time deposits of $1.07
billion were scheduled to mature in less than three
months, $2.41 billion in three to six months, and
$2.29 billion in six to twelve months. Demand deposit
overdrafts of $1.98 billion and $2.27 billion were
included as loan balances at December 31, 2024 and
2023, respectively.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 147
Note 8. Short-Term Borrowings
Our short-term borrowings include securities sold under repurchase agreements and FHLB and BTFP funding
recorded in other short-term borrowings.
Collectively, short-term borrowings had weighted-average interest rates of 5.03% and 1.52% in 2024 and 2023,
respectively.
The following tables present information with respect to the amounts outstanding and weighted-average
interest rates of the primary components of our short-term borrowings as of and for the years ended December 31:
(Dollars in millions)
Securities Sold Under
Repurchase Agreements
Other(1)
2024
2023
2024
2023
Balance as of December 31
$
3,681
$
1,867
$
9,815
$
3,500
Average outstanding during the year
3,163
3,904
11,128
849
Weighted-average interest rate as of year-end
5.62 %
.08 %
4.77 %
3.03 %
Weighted-average interest rate during the year
4.93
.87
5.19
5.12
(1) Primarily includes FHLB and Bank Term Funding Program borrowings.
Obligations to repurchase securities sold are recorded as a liability in our consolidated statement of condition.
Applicable securities with a fair value of $4.36 billion underlying the repurchase agreements remained in our
investment securities portfolio as of December 31, 2024.
The following table presents information about these securities and the carrying value of the related
repurchase agreements, including accrued interest, as of December 31, 2024.
Securities Sold
Repurchase Agreements(1)
(In millions)
Amortized
Cost
Fair Value
Amortized
Cost
Term maturity(2)
$
3,588
$
3,500
$
3,505
Overnight maturity
875
861
176
Total
$
4,463
$
4,361
$
3,681
(1) Collateralized by investment securities.
(2) Maturity is greater than 90 days.
We maintain an agreement with a clearing organization (FICC) that enables us to net securities purchased
under resale agreements and sold under repurchase agreements with counterparties that are also members of the
clearing organization when specific netting criteria are met. The impact of this netting was $191.26 billion on
average in 2024 compared to $140.36 billion in 2023, primarily due to higher FICC repo volumes.
State Street Bank currently maintains a line of credit of CAD $1.40 billion, or approximately $0.97 billion, as of
December 31, 2024, to support its Canadian securities processing operations. The line of credit has no stated
termination date and is cancellable by either party with prior notice. As of both December 31, 2024 and 2023, there
was no balance outstanding on this line of credit.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 148
Note 9. Long-Term Debt
(Dollars in millions)
As of December 31,
Issuance Date
Maturity Date
Coupon Rate
Seniority
Interest Due Dates
2024
2023
Parent Company and Non-Banking Subsidiary Issuances
August 18, 2015
August 18, 2025(1)
3.550 %
Senior notes
2/18; 8/18(2)
$
1,285
$
1,265
August 3, 2023
August 3, 2026
5.272 %
Senior notes
2/3; 8/3(2)
1,203
1,211
October 22, 2024
October 22, 2027
4.330 %
Senior notes
4/22, 10/22(2)
1,189
—
May 18, 2023
May 18, 2026
5.104 %
Fixed-to-floating rate senior notes
5/18; 11/18
999
998
May 18, 2023
May 18, 2034
5.159 %
Fixed-to-floating rate senior notes
5/18; 11/18
995
995
March 18, 2024
March 18, 2027
4.993 %
Senior notes
3/18, 9/18(2)
993
—
August 20, 2024
February 20, 2029
4.530 %
Fixed-to-floating rate senior notes
2/20; 8/20(2)
989
—
November 21, 2023
November 21, 2029
5.684 %
Fixed-to-floating rate senior notes
5/21; 11/21(2)
986
995
March 3, 2021
March 3, 2031(1)(3)
2.200 %
Senior subordinated notes
3/3; 9/3
845
845
October 22, 2024
October 22, 2032
4.675 %
Fixed-to-floating rate senior notes
4/22; 10/22(2)
789
—
January 24, 2020
January 24, 2030(1)
2.400 %
Senior notes
1/24, 7/24(2)
784
790
May 19, 2016
May 19, 2026(1)
2.650 %
Senior notes
5/19; 11/19(2)
728
719
January 26, 2023
January 26, 2034
4.821 %
Fixed-to-floating rate senior notes
1/26, 7/26(2)
702
731
August 4, 2022
August 4, 2033
4.164 %
Fixed-to-floating rate senior notes
2/4; 8/4(2)
665
687
February 7, 2022
February 7, 2028
2.203 %
Fixed-to-floating rate senior notes
2/7; 8/7(2)
619
605
December 3, 2018
December 3, 2029
4.141 %
Fixed-to-floating rate senior notes
6/3; 12/3(2)
535
556
November 1, 2019
November 1, 2034(3)
3.031 %
Fixed-to-floating rate senior
subordinated notes
5/1; 11/1(2)
523
528
April 30, 2007
June 15, 2047
Floating-rate
Junior subordinated debentures
3/15; 6/15; 9/15; 12/15
500
500
January 26, 2023
January 26, 2026
4.857 %
Fixed-to-floating rate senior notes
1/26, 7/26(2)
499
496
November 4, 2022
November 4, 2026
5.751 %
Fixed-to-floating rate senior notes
5/4; 11/4(2)
498
497
March 30, 2020
March 30, 2031
3.152 %
Fixed-to-floating rate senior notes
3/30, 9/30
498
498
May 13, 2022
May 13, 2033
4.421 %
Fixed-to-floating rate senior notes
5/13; 11/13
498
497
November 18, 2021
November 18, 2027
1.684 %
Fixed-to-floating rate senior notes
5/18; 11/18(2)
497
496
March 30, 2020
March 30, 2026
2.901 %
Fixed-to-floating rate senior notes
3/30; 9/30(2)
497
485
November 4, 2022
November 4, 2028
5.820 %
Fixed-to-floating rate senior notes
5/4; 11/4(2)
495
497
November 21, 2023
November 21, 2034(3)
6.123 %
Fixed-to-floating rate senior
subordinated notes
5/21; 11/21(2)
492
497
February 7, 2022
February 7, 2033
2.623 %
Fixed-to-floating rate senior notes
2/7; 8/7(2)
465
476
August 3, 2023
August 3, 2026
Floating-rate
Senior notes
2/3; 5/3; 8/3; 11/3
299
299
February 7, 2022
February 6, 2026
1.746 %
Fixed-to-floating rate senior notes
2/6; 8/6(2)
299
290
October 22, 2024
October 22, 2027
Floating-rate
Senior notes
1/22; 4/22; 7/22; 10/22
299
—
June 21, 1996
June 15, 2026(1)
7.350 %
Senior notes
6/15; 12/15
150
150
May 15, 1998
May 15, 2028
Floating-rate
Junior subordinated debentures
2/15; 5/15; 8/15; 11/15
100
100
December 15, 2014
December 16, 2024(1)
3.300 %
Senior notes
6/16; 12/16(2)
—
977
November 1, 2019
November 1, 2025(4)
2.354 %
Fixed-to-floating rate senior notes
5/1; 11/1(2)
—
972
State Street Bank issuances and lease obligations
November 25, 2024
November 25, 2026(1)
4.594 %
Senior notes
5/25, 11/25
1,146
—
November 25, 2024
November 23, 2029(1)
4.782 %
Senior notes
5/23, 11/23
796
—
November 25, 2024
November 25, 2026(1)
Floating-rate
Senior notes
2/25; 5/25; 8/25; 11/25
299
—
Long-term finance leases and equipment financing
116
187
Total long-term debt
$
23,272
$
18,839
(1) We may not redeem notes prior to their maturity.
(2) We have entered into interest rate swap agreements, recorded as fair value hedges, to modify our interest expense on these senior and subordinated notes from a fixed rate to a floating rate.
As of December 31, 2024 and 2023, the carrying value of long-term debt associated with these fair value hedges was $220 million and $184 million, respectively. Refer to Note 10 for additional
information about fair value hedges.
(3) The subordinated notes qualify for inclusion in tier 2 regulatory capital under current federal regulatory capital guidelines.
(4) We redeemed the notes prior to original maturity date.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 149
Parent Company and Non-Banking Subsidiaries
On January 27, 2025, we redeemed $500 million
aggregate principal amount of 4.857% fixed-to-
floating rate senior notes due 2026.
On February 6, 2025, we redeemed $300 million
aggregate principal amount of 1.746% fixed-to-
floating rate senior notes due 2026.
State Street Bank
As of December 31, 2024 and 2023, $79 million
and $130 million, respectively, of long-term finance
leases
was
related
to
information
technology
equipment.
Refer
to
Note
20
for
additional
information.
Note 10. Derivative Financial Instruments
We use derivative financial instruments to
support our clients’ needs and to manage our interest
rate, currency and other market risks. These financial
instruments consist of FX contracts such as forwards,
futures and options contracts; interest rate contracts
such as interest rate swaps (cross currency and
single currency) and futures; and other derivative
contracts. Derivative instruments used for risk
management purposes that are highly effective in
offsetting the risk being hedged are generally
designated
as
hedging
instruments
in
hedge
accounting relationships, while others are economic
hedges and not designated in hedge accounting
relationships.
Derivatives
in
hedge
accounting
relationships are disclosed according to the type of
hedge, such as fair value, cash flow or net
investment. Derivatives designated as hedging
instruments in hedge accounting relationships are
carried at fair value with change in fair value
recognized in the consolidated statement of income
or
other
comprehensive
income
(OCI),
as
appropriate. Derivatives not designated in hedge
accounting relationships include those derivatives
entered into to support client needs and derivatives
used to manage interest rate, currency and other
market risks associated with certain assets and
liabilities. Such derivatives are carried at fair value
with changes in fair value recognized in the
consolidated statement of income.
Derivatives
Not
Designated
as
Hedging
Instruments
We provide foreign exchange forward contracts
and options in support of our client needs, and also
act as a dealer in the currency markets. As part of our
trading activities, we assume positions in both the
foreign exchange and interest rate markets by buying
and selling cash instruments and using derivative
financial instruments, including foreign exchange
forward contracts, foreign exchange and interest rate
options, interest rate forward contracts, and interest
rate futures. The entire change in the fair value of
derivatives utilized in our trading activities are
recorded in foreign exchange trading services
revenue. We also utilize derivatives in our asset and
liability management activities and to manage other
market risks. The entire change in fair value of such
derivatives are recorded in net interest income and
other fee revenue, respectively.
We enter into stable value wrap derivative
contracts with unaffiliated stable value funds that
allow a stable value fund to provide book value
coverage to its participants. These derivatives
contracts qualify as guarantees as described in Note
12.
We grant deferred cash awards to certain of our
employees as part of our employee incentive
compensation plans. We account for these awards as
derivative financial instruments, as the underlying
referenced shares are not equity instruments of ours.
The fair value of these derivatives is referenced to the
value of units in State Street-sponsored investment
funds or funds sponsored by other unrelated entities.
We re-measure these derivatives to fair value
quarterly, and record the change in value in
compensation and employee benefits expenses in
our consolidated statement of income.
Derivatives Designated as Hedging Instruments
In connection with our asset and liability
management activities, we use derivative financial
instruments to manage our interest rate risk and
foreign currency risk for certain assets and liabilities.
At both the inception of the hedge and on an ongoing
basis, we formally assess and document the
effectiveness of a derivative designated in a hedging
relationship and the likelihood that the derivative will
be an effective hedge in future periods. We
discontinue hedge accounting prospectively when we
determine that the derivative is no longer highly
effective in offsetting changes in fair value or cash
flows of the underlying risk being hedged, the
derivative
expires,
terminates
or
is
sold,
or
management discontinues the hedge designation.
The risk management objective of a highly
effective hedging strategy that qualifies for hedge
accounting must be formally documented. The hedge
documentation
includes
the
derivative
hedging
instrument, the asset or liability or forecasted
transaction, type of risk being hedged and method for
assessing hedge effectiveness of the derivative
prospectively and retrospectively. We use quantitative
methods
including
regression
analysis
and
cumulative dollar offset method, comparing the
change in the fair value of the derivative to the
change in fair value or the cash flows of the hedged
item. We may also utilize qualitative methods such as
matching critical terms and evaluation of any changes
in those critical terms. Effectiveness is assessed and
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 150
documented quarterly and if determined that the
derivative is not highly effective at hedging the
designated risk hedge accounting is discontinued.
Fair Value Hedges
Derivatives designated as fair value hedges are
utilized to mitigate the risk of changes in the fair
values of recognized assets and liabilities, including
long-term debt and AFS securities. We use interest
rate and foreign exchange contracts in this manner to
manage our exposure to changes in the fair value of
hedged items caused by changes in interest rates
and foreign exchange rates, respectively.
Changes in the fair value of the derivative and
changes in fair value of the hedged item due to
changes in the hedged risk are recognized in
earnings in the same line item. If a hedge is
terminated,
but
the
hedged
item
was
not
derecognized, all remaining adjustments to the
carrying amount of the hedged item are amortized
over a period that is consistent with the amortization
of other discounts or premiums associated with the
hedged item.
Cash Flow Hedges
Derivatives designated as cash flow hedges are
utilized to offset the variability of cash flows of
recognized
assets,
liabilities
or
forecasted
transactions. We have entered into FX contracts to
hedge the change in cash flows attributable to FX
movements
in
foreign
currency
denominated
investment securities. Additionally, we have entered
into interest rate swap agreements to hedge the
forecasted cash flows associated with EURIBOR
indexed floating-rate loans, Deposit Facility Interest
Rate (DFR) indexed ECB deposits and Interest Rate
on Reserve Balances (IORB) indexed floating-rate
cash deposits held across the Federal Reserve Bank
system. The interest rate swaps synthetically convert
the interest receipts from a variable-rate to a fixed-
rate, thereby mitigating the risk attributable to
changes in the EURIBOR, DFR and IORB.
Changes in fair value of the derivatives
designated as cash flow hedges are initially recorded
in AOCI and then reclassified into earnings in the
same period or periods during which the hedged
forecasted transaction affects earnings and are
presented in the same income statement line item as
the earnings effect of the hedged item. If the hedge
relationship is terminated, the change in fair value on
the derivative recorded in AOCI is reclassified into
earnings consistent with the timing of the hedged
item. For hedge relationships that are discontinued
because a forecasted transaction is not expected to
occur according to the original hedge terms, any
related derivative values recorded in AOCI are
immediately recognized in earnings. The net loss
associated with cash flow hedges expected to be
reclassified from AOCI within 12 months of December
31, 2024 is approximately $136 million. The
maximum length of time over which forecasted cash
flows are hedged is 5 years.
Net Investment Hedges
Derivatives categorized as net investment
hedges are entered into to protect the net investment
in our foreign operations against adverse changes in
exchange rates. We use FX forward contracts to
convert the foreign currency risk to U.S. dollars to
mitigate our exposure to fluctuations in FX rates. The
changes in fair value of the FX forward contracts are
recorded, net of taxes, in the foreign currency
translation component of OCI.
The following table presents the aggregate
contractual, or notional, amounts of derivative
financial instruments including those entered into for
trading and asset and liability management activities
as of the dates indicated:
(In millions)
December 31,
2024
December 31,
2023
Derivatives not designated as
hedging instruments:
Interest rate contracts:
Futures
$
47,222
$
12,668
Foreign exchange contracts:
Forward, swap and spot
2,612,945
2,528,115
Options purchased
466
851
Options written
145
544
Futures
359
197
Other:
Futures
155
125
Stable value contracts(1)
25,271
28,704
Deferred value awards(2)
253
289
Derivatives designated as
hedging instruments:
Interest rate contracts:
Swap agreements
33,302
20,333
Foreign exchange contracts:
Forward and swap
10,260
9,777
(1) The notional value of the stable value contracts represents our maximum
exposure. However, exposure to various stable value contracts is generally
contractually limited to substantially lower amounts than the notional values.
(2) Represents grants of deferred value awards to employees; refer to
discussion in this note under “Derivatives Not Designated as Hedging
Instruments.”
Notional amounts are provided here as an
indication of the volume of our derivative activity and
serve as a reference to calculate the fair values of the
derivative.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 151
The following table presents the fair value of derivative financial instruments, excluding the impact of master
netting agreements, recorded in our consolidated statement of condition as of the dates indicated. Fair value
measurement for derivatives is further discussed in Note 2, and the impact of master netting agreements is provided
in Note 11.
Derivative Assets(1)
Derivative Liabilities(2)
(In millions)
December 31, 2024
December 31, 2023
December 31, 2024
December 31, 2023
Derivatives not designated as hedging instruments:
Foreign exchange contracts
$
29,116
$
19,498
$
28,904
$
19,153
Other derivative contracts
1
—
219
182
Total
$
29,117
$
19,498
$
29,123
$
19,335
Derivatives designated as hedging instruments:
Foreign exchange contracts
$
323
$
196
$
—
$
263
Interest rate contracts
28
13
1
4
Total
$
351
$
209
$
1
$
267
(1) Derivative assets are included within other assets in our consolidated statement of condition.
(2) Derivative liabilities are included within other liabilities in our consolidated statement of condition.
The following table presents the impact of our use of derivative financial instruments on our consolidated
statement of income for the periods indicated:
Years Ended December 31,
2024
2023
2022
(In millions)
Location of Gain (Loss) on
Derivative in Consolidated
Statement of Income
Amount of Gain (Loss) on Derivative Recognized in
Consolidated Statement of Income
Derivatives not designated as hedging
instruments:
Foreign exchange contracts
Foreign exchange trading services revenue
$
862
$
803
$
938
Foreign exchange contracts
Interest expense
274
(54)
(20)
Interest rate contracts
Foreign exchange trading services revenue
21
(2)
3
Other Derivative contracts
Other fee revenue
(12)
(3)
—
Interest rate contracts
Other fee revenue
—
—
1
Other derivative contracts(1)
Compensation and employee benefits
(189)
(121)
(89)
Total
$
956
$
623
$
833
(1) Amount in 2024 reflects a deferred compensation expense acceleration of $79 million, related to prior period incentive compensation awards to align our deferred pay mix with
peers.
The following tables show the carrying amount and associated cumulative basis adjustments related to the
application of hedge accounting that is included in the carrying amount of hedged assets and liabilities in fair value
hedging relationships:
December 31, 2024
Cumulative Fair Value Hedging Adjustment Increasing
(Decreasing) the carrying amount
(In millions)
Carrying Amount of Hedged
Assets/Liabilities
Active
De-designated(1)
Long-term debt
$
15,951
$
(323)
$
103
Available-for-sale securities(2)(3)
18,666
(376)
1
December 31, 2023
Cumulative Fair Value Hedging Adjustment Increasing
(Decreasing) the carrying amount
(In millions)
Carrying Amount of Hedged
Assets/Liabilities
Active
De-designated(1)
Long-term debt
$
12,463
$
(340)
$
156
Available-for-sale securities(2)(3)
11,260
(503)
3
(1) Represents hedged items no longer designated in qualifying fair value hedging relationships for which an associated basis adjustment exists at the balance sheet date.
(2) Included in these amounts is the amortized cost of the financial assets designated in under the portfolio layer hedging relationships (hedged item is the hedged layer of a closed
portfolio of financial assets expected to remain outstanding at the end of the hedging relationship). At December 31, 2024 and 2023, the amortized cost of the closed portfolios
used in these hedging relationships was $3.32 billion and $685 million, respectively, of which $1.82 billion and $400 million, respectively, was designated under the portfolio layer
hedging relationship. At December 31, 2024 and 2023, the cumulative adjustment associated with these hedging relationships was ($26) million and ($6) million, respectively.
(3) Carrying amount represents amortized cost.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 152
As of December 31, 2024 and 2023, the total notional amount of the interest rate swaps of fair value hedges
was $31.12 billion and $19.43 billion, respectively.
The following tables present the impact of our use of derivative financial instruments on our consolidated
statement of income for the periods indicated:
Years Ended December 31,
Years Ended December 31,
2024
2023
2022
2024
2023
2022
(In millions)
Location of
Gain (Loss) on
Derivative in
Consolidated
Statement of Income
Amount of Gain
(Loss) on Derivative
Recognized in
Consolidated
Statement of Income
Hedged Item in
Fair Value
Hedging
Relationship
Location of Gain
(Loss) on
Hedged Item in
Consolidated
Statement of Income
Amount of Gain
(Loss) on Hedged
Item Recognized in
Consolidated
Statement of Income
Derivatives designated
as fair value hedges:
Interest rate contracts
Net interest income
$
(55) $ (164) $
676
Available-for-
sale securities(1)
Net interest income
$
55
$
164
$
(676)
Interest rate contracts
Net interest income
17
202
(1,160) Long-term debt
Net interest income
(17)
(202)
1,160
Foreign exchange
contracts
Other fee revenue
21
—
—
Available-for-
sale securities
Other fee revenue
(21)
—
—
Total
$
(17) $
38
$ (484)
$
17
$
(38) $
484
(1) For the year ended December 31, 2024, approximately $93 million of net unrealized losses on AFS investment securities designated in fair value hedges were recognized in OCI compared to
approximately $122 million of net unrealized losses in the same period of 2023.
Years Ended December 31,
Years Ended December 31,
2024
2023
2022
Location of Gain or
(Loss) Reclassified
from Accumulated
Other Comprehensive
Income into Income
2024
2023
2022
(In millions)
Amount of Gain (Loss) Recognized in Other
Comprehensive Income on Derivative
Amount of Gain (Loss) Reclassified from
Accumulated Other Comprehensive
Income into Income
Derivatives designated as cash
flow hedges:
Interest rate contracts(1)
$
(6)
$
14
$
(598)
Net interest income
$
(200)
$
(210)
$
(43)
Foreign exchange contracts
59
91
156
Net interest income
254
2
92
Total derivatives designated as cash
flow hedges
$
53
$
105
$
(442)
$
54
$
(208)
$
49
Derivatives designated as net
investment hedges:
Foreign exchange contracts
$
540
$
(89)
$
291
$
—
$
—
$
—
Total derivatives designated as net
investment hedges
540
(89)
291
—
—
—
Total
$
593
$
16
$
(151)
$
54
$
(208)
$
49
(1) As of December 31, 2024, the maximum maturity date of the underlying hedged items is approximately 5.0 years.
Derivatives Netting and Credit Contingencies
Netting
Derivatives receivable and payable as well as cash collateral from the same counterparty are netted in the
consolidated statement of condition for those counterparties with whom we have legally binding master netting
agreements in place. In addition to cash collateral received and transferred presented on a net basis, we also
receive and transfer collateral in the form of securities, which mitigate credit risk but are not eligible for netting.
Additional information on netting is provided in Note 11.
Credit Contingencies
Certain of our derivatives are subject to master netting agreements with our derivative counterparties
containing credit risk-related contingent features, which requires us to maintain an investment grade credit rating
with the various credit rating agencies. If our rating falls below investment grade, we would be in violation of the
provisions, and counterparties to the derivatives could request immediate payment or demand full overnight
collateralization on derivative instruments in liability positions. The aggregate fair value of all derivatives with credit
contingent features and in a net liability position as of December 31, 2024 totaled approximately $7.41 billion,
against which we provided $5.66 billion of collateral in the normal course of business. If our credit related contingent
features underlying these agreements were triggered as of December 31, 2024, the maximum additional collateral
we would be required to post to our counterparties is approximately $1.75 billion.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 153
Note 11. Offsetting Arrangements
Certain of our transactions are subject to master netting agreements that allow us to net receivables and
payables by contract and settlement type. For those legally enforceable contracts, we net receivables and payables
with the same counterparty on our statement of condition.
In addition to netting receivables and payables with our derivatives counterparty where a legal and enforceable
netting arrangement exists, we also net related cash collateral received and transferred up to the fair value
exposure amount.
With respect to our securities financing arrangements, we net balances outstanding on our consolidated
statement of condition for those transactions that met the netting requirements and were transacted under a legally
enforceable netting arrangement with the counterparty.
Securities received as collateral under securities financing or derivatives transactions can be transferred as
collateral in many instances. The securities received as proceeds under secured lending transactions are recorded
at a value that approximates fair value in other assets in our consolidated statement of condition with a related
liability to return the collateral, if we have the right to transfer or re-pledge the collateral.
As of December 31, 2024 and 2023, the value of securities received as collateral from third parties where we
are permitted to transfer or re-pledge the securities totaled $11.41 billion and $10.67 billion, respectively, and the fair
value of the portion that had been transferred or re-pledged as of the same dates was $2.76 billion and $6.41 billion,
respectively.
The following tables present information about the offsetting of assets related to derivative contracts and
secured financing transactions, as of the dates indicated:
Assets:
December 31, 2024
Gross Amounts
of Recognized
Assets(1)(2)
Gross Amounts
Offset in Statement
of Condition(3)
Net Amounts of
Assets Presented in
Statement of
Condition
Gross Amounts Not Offset in
Statement of Condition
(In millions)
Cash and
Securities
Received(4)
Net Amount(5)
Derivatives:
Foreign exchange contracts
$
29,439
$
(16,424) $
13,015
$
—
$
13,015
Interest rate contracts(6)
28
(1)
27
—
27
Other derivative contracts
1
—
1
—
1
Cash collateral and securities netting
NA
(1,860)
(1,860)
(1,197)
(3,057)
Total derivatives
29,468
(18,285)
11,183
(1,197)
9,986
Other financial instruments:
Resale agreements and securities
borrowing(7)(8)
276,151
(232,021)
44,130
(42,589)
1,541
Total derivatives and other financial
instruments
$
305,619
$
(250,306) $
55,313
$
(43,786) $
11,527
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 154
Assets:
December 31, 2023
Gross Amounts
of Recognized
Assets(1)(2)
Gross Amounts
Offset in Statement
of Condition(3)
Net Amounts of
Assets Presented in
Statement of
Condition
Gross Amounts Not Offset in
Statement of Condition
(In millions)
Cash and
Securities
Received(4)
Net Amount(5)
Derivatives:
Foreign exchange contracts
$
19,694
$
(10,496) $
9,198
$
—
$
9,198
Interest rate contracts(6)
13
—
13
—
13
Cash collateral and securities netting
NA
(3,904)
(3,904)
(1,069)
(4,973)
Total derivatives
19,707
(14,400)
5,307
(1,069)
4,238
Other financial instruments:
Resale agreements and securities
borrowing(7)(8)
230,384
(200,561)
29,823
(28,016)
1,807
Total derivatives and other financial
instruments
$
250,091
$
(214,961) $
35,130
$
(29,085) $
6,045
(1) Amounts include all transactions regardless of whether or not they are subject to an enforceable netting arrangement.
(2) Refer to Note 1 and Note 2 for additional information about the measurement basis of derivative instruments.
(3) Amounts subject to netting arrangements which have been determined to be legally enforceable and eligible for netting in the consolidated statement of condition.
(4) Includes securities in connection with our securities borrowing transactions.
(5) Includes amounts secured by collateral not determined to be subject to enforceable netting arrangements.
(6) Variation margin payments presented as settlements rather than collateral.
(7) Included in the $44.13 billion as of December 31, 2024 were $6.68 billion of resale agreements and $37.45 billion of collateral provided related to securities
borrowing. Included in the $29.82 billion as of December 31, 2023 were $6.69 billion of resale agreements and $23.13 billion of collateral provided related to
securities borrowing. Resale agreements and collateral provided related to securities borrowing were recorded in securities purchased under resale agreements and
other assets, respectively, in our consolidated statement of condition. Refer to Note 12 for additional information with respect to principal securities finance
transactions.
(8) Offsetting of resale agreements primarily relates to our involvement in FICC, where we settle transactions on a net basis for payment and delivery through the
Fedwire system.
NA Not applicable
The following tables present information about the offsetting of liabilities related to derivative contracts and
secured financing transactions, as of the dates indicated:
Liabilities:
December 31, 2024
Gross Amounts of
Recognized
Liabilities(1)(2)
Gross Amounts
Offset in Statement of
Condition(3)
Net Amounts of
Liabilities Presented in
Statement of Condition
Gross Amounts Not Offset in
Statement of Condition
(In millions)
Cash and
Securities
Received(4)
Net Amount(5)
Derivatives:
Foreign exchange contracts
$
28,904
$
(16,424) $
12,480
$
—
$
12,480
Interest rate contracts(6)
1
(1)
—
—
—
Other derivative contracts
219
—
219
—
219
Cash collateral and securities
netting
NA
(6,103)
(6,103)
(1,572)
(7,675)
Total derivatives
29,124
(22,528)
6,596
(1,572)
5,024
Other financial instruments:
Repurchase agreements and
securities lending(7)(8)
250,032
(232,021)
18,011
(17,835)
176
Total derivatives and other financial
instruments
$
279,156
$
(254,549) $
24,607
$
(19,407) $
5,200
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 155
Liabilities:
December 31, 2023
Gross Amounts of
Recognized
Liabilities(1)(2)
Gross Amounts Offset
in Statement of
Condition(3)
Net Amounts of
Liabilities Presented in
Statement of Condition
Gross Amounts Not Offset in
Statement of Condition
(In millions)
Cash and Securities
Received(4)
Net Amount(5)
Derivatives:
Foreign exchange contracts
$
19,416
$
(10,496) $
8,920
$
—
$
8,920
Interest rate contracts(6)
4
—
4
—
4
Other derivative contracts
182
—
182
—
182
Cash collateral and securities netting
NA
(1,413)
(1,413)
(633)
(2,046)
Total derivatives
19,602
(11,909)
7,693
(633)
7,060
Other financial instruments:
Repurchase agreements and
securities lending(7)(8)
214,362
(200,561)
13,801
(13,306)
495
Total derivatives and other financial
instruments
$
233,964
$
(212,470) $
21,494
$
(13,939) $
7,555
(1) Amounts include all transactions regardless of whether or not they are subject to an enforceable netting arrangement.
(2) Refer to Note 1 and Note 2 for additional information about the measurement basis of derivative instruments.
(3) Amounts subject to netting arrangements which have been determined to be legally enforceable and eligible for netting in the consolidated statement of condition.
(4) Includes securities provided in connection with our securities lending transactions.
(5) Includes amounts secured by collateral not determined to be subject to enforceable netting arrangements.
(6) Variation margin payments presented as settlements rather than collateral.
(7) Included in the $18.01 billion as of December 31, 2024 were $3.68 billion of repurchase agreements and $14.33 billion of collateral received related to securities
lending transactions. Included in the $13.80 billion as of December 31, 2023 were $1.87 billion of repurchase agreements and $11.93 billion of collateral received
related to securities lending transactions. Repurchase agreements and collateral received related to securities lending were recorded in securities sold under
repurchase agreements and accrued expenses and other liabilities, respectively, in our consolidated statement of condition. Refer to Note 12 for additional information
with respect to principal securities finance transactions.
(8) Offsetting of repurchase agreements primarily relates to our involvement in FICC, where we settle transactions on a net basis for payment and delivery through the
Fedwire system.
NA Not applicable
The securities transferred under resale and repurchase agreements typically are U.S. Treasury, agency and
agency MBS. In our principal securities borrowing and lending arrangements, the securities transferred are
predominantly equity securities and some corporate debt securities. The fair value of the securities transferred may
increase in value to an amount greater than the amount received under our repurchase and securities lending
arrangements, which exposes us to counterparty risk. We require the review of the price of the underlying securities
in relation to the carrying value of the repurchase agreements and securities lending arrangements on a daily basis
and when appropriate, adjust the cash or security to be obtained or returned to counterparties that is reflective of
the required collateral levels.
The following table summarizes our repurchase agreements and securities lending transactions by category of
collateral pledged and remaining maturity of these agreements as of the periods indicated:
As of December 31, 2024
As of December 31, 2023
(In millions)
Overnight
and
Continuous
Up to 30
Days
30-90
Days
Greater
than 90
Days
Total
Overnight
and
Continuous
Up to 30
Days
30-90
Days
Greater
than 90
Days
Total
Repurchase agreements:
U.S. Treasury and agency
securities
$
223,095
$
350
$ 1,277
$
2,500
$ 227,222
$
196,212
$
—
$
185
$
1,360
$ 197,757
Non-US sovereign debt
—
—
—
—
—
—
—
—
—
—
Total
223,095
350
1,277
2,500
227,222
196,212
—
185
1,360
197,757
Securities lending
transactions:
US Treasury and agency
securities
152
—
—
—
152
6
—
—
—
6
Corporate debt securities
193
—
—
—
193
278
—
3
—
281
Equity securities
11,181
13
—
4,519
15,713
7,128
20
13
2,291
9,452
Other(1)
6,752
—
—
—
6,752
6,866
—
—
—
6,866
Total
18,278
13
—
4,519
22,810
14,278
20
16
2,291
16,605
Gross amount of
recognized liabilities for
repurchase agreements
and securities lending
$
241,373
$
363
$ 1,277
$
7,019
$ 250,032
$
210,490
$
20
$
201
$
3,651
$ 214,362
(1) Represents a security interest in underlying client assets related to our prime services business, which assets clients have allowed us to transfer and re-pledge.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 156
Note 12. Commitments and Guarantees
The following table presents the aggregate
gross contractual amounts of our off-balance sheet
commitments and guarantees, as of the dates
indicated:
(In millions)
December 31,
2024
December 31,
2023
Commitments:
Unfunded credit facilities
$
34,191
$
34,197
Guarantees(1):
Indemnified securities financing
$
310,814
$
279,916
Standby letters of credit
908
1,510
(1) The potential losses associated with these guarantees equal the gross
contractual amounts and do not consider the value of any collateral or reflect
any participations to independent third parties.
Unfunded Credit Facilities
Unfunded credit facilities consist primarily of
liquidity facilities provided to our fund and municipal
counterparties, as well as commitments to purchase
commercial real estate and leveraged loans that have
not yet settled.
As of December 31, 2024, approximately 75% of
our unfunded commitments to extend credit expire
within one year. Since many of these commitments
are expected to expire or renew without being drawn
upon, the gross contractual amounts do not
necessarily represent our future cash requirements.
Indemnified Securities Financing
On behalf of our clients, we lend their securities,
as agent, to brokers and other institutions. In most
circumstances, we indemnify our clients for the fair
market value of those securities against a failure of
the borrower to return such securities. We require the
borrowers to maintain collateral in an amount in
excess of 100% of the fair market value of the
securities borrowed. Securities on loan and the
collateral are revalued daily to determine if additional
collateral is necessary or if excess collateral is
required to be returned to the borrower. Collateral
received in connection with our securities lending
services is held by us as agent and is not recorded in
our consolidated statement of condition.
The cash collateral held by us as agent is
invested on behalf of our clients. In certain cases, the
cash collateral is invested in third-party repurchase
agreements, for which we indemnify the client against
the loss of the principal invested. We require the
counterparty
to
the
indemnified
repurchase
agreement to provide collateral in an amount in
excess of 100% of the amount of the repurchase
agreement. In our role as agent, the indemnified
repurchase agreements and the related collateral
held by us are not recorded in our consolidated
statement of condition.
The following table summarizes the aggregate
fair values of indemnified securities financing and
related collateral, as well as collateral invested in
indemnified repurchase agreements, as of the dates
indicated:
(In millions)
December
31, 2024
December
31, 2023
Fair value of indemnified securities
financing
$
310,814
$
279,916
Fair value of cash and securities
held by us, as agent, as collateral
for indemnified securities financing
325,611
293,855
Fair value of collateral for
indemnified securities financing
invested in indemnified repurchase
agreements
63,655
59,028
Fair value of cash and securities
held by us or our agents as
collateral for investments in
indemnified repurchase agreements
68,507
63,105
In certain cases, we participate in securities
finance transactions as a principal. As a principal, we
borrow securities from the lending client and then
lend such securities to the subsequent borrower,
either our client or a broker/dealer. Our right to
receive and obligation to return collateral in
connection with our securities lending transactions
are recorded in other assets and other liabilities,
respectively, in our consolidated statement of
condition. As of December 31, 2024 and 2023, we
had approximately $37.45 billion and $23.13 billion,
respectively, of collateral provided and approximately
$14.33 billion and $11.93 billion, respectively, of
collateral received from clients in connection with our
participation
in
principal
securities
finance
transactions.
Stable Value Protection
Stable value funds wrapped by us are high
quality diversified portfolios of short intermediate
duration fixed-income investments. Stable value
contracts are derivative contracts that also qualify as
guarantees. The notional amount under non-hedging
derivatives, provided in Note 10, generally represents
our maximum exposure under these derivatives
contracts. However, exposure to various stable value
contracts is contractually limited to substantially lower
amounts than the notional values, which represent
the total assets of the stable value funds.
Standby Letters of Credit
Standby
letters
of
credit
provide
credit
enhancement to our municipal clients to support the
issuance of capital markets financing.
FICC Guarantee
As a sponsoring member in the FICC member
program, we provide a guarantee to FICC in the
event a customer fails to perform its obligations under
a transaction. In order to minimize the risk associated
with this guarantee, sponsored members acting as
buyers generally grant a security interest in the
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 157
subject securities received under and held on their
behalf by State Street.
Additionally, as a member of certain industry
clearing and settlement exchanges, we may be
required to pay a pro rata share of the losses incurred
by the organization and provide liquidity support in
the event of the default of another member to the
extent that the defaulting member’s clearing fund
obligation and the prescribed loss allocation is
depleted. It is difficult to estimate our maximum
possible
exposure
under
the
membership
agreements, since this would require an assessment
of future claims that may be made against us that
have not yet occurred. At both December 31, 2024
and 2023, we did not record any liabilities under
these arrangements.
For additional information on our repurchase
and reverse repurchase agreements, please refer to
Note 11 to the consolidated financial statements in
this Form 10-K.
Note 13. Contingencies
Legal and Regulatory Matters
In the ordinary course of business, we and our
subsidiaries are involved in disputes, litigation, and
governmental
or
regulatory
inquiries
and
investigations, both pending and threatened. These
matters, if resolved adversely against us or settled,
may result in monetary awards or payments, fines
and penalties or require changes in our business
practices. The resolution or settlement of these
matters is inherently difficult to predict. Based on our
assessment of these pending matters, we do not
believe that the amount of any judgment, settlement
or other action arising from any pending matter is
likely to have a material adverse effect on our
consolidated financial condition. However, an adverse
outcome or development in certain of the matters
described below could have a material adverse effect
on our consolidated results of operations for the
period in which such matter is resolved, or an accrual
is determined to be required, on our consolidated
financial condition, or on our reputation.
We evaluate our needs for accruals of loss
contingencies
related
to
legal
and
regulatory
proceedings on a case-by-case basis. When we have
a liability that we deem probable, and we deem the
amount of such liability can be reasonably estimated
as of the date of our consolidated financial
statements, we accrue our estimate of the amount of
loss. We also consider a loss probable and establish
an accrual when we make, or intend to make, an offer
of settlement. Once established, an accrual is subject
to subsequent adjustment as a result of additional
information. The resolution of legal and regulatory
proceedings and the amount of reasonably estimable
loss (or range thereof) are inherently difficult to
predict, especially in the early stages of proceedings.
Even if a loss is probable, an amount (or range) of
loss might not be reasonably estimated until the later
stages of the proceeding due to many factors such as
the presence of complex or novel legal theories, the
discretion of governmental authorities in seeking
sanctions or negotiating resolutions in civil and
criminal matters, the pace and timing of discovery
and other assessments of facts and the procedural
posture of the matter (collectively, “factors influencing
reasonable estimates”).
As of December 31, 2024, our aggregate
accruals for loss contingencies for legal, regulatory
and related matters totaled approximately $15 million,
including potential fines by government agencies and
civil litigation with respect to the matters specifically
discussed below. To the extent that we have
established accruals in our consolidated statement of
condition for probable loss contingencies, such
accruals may not be sufficient to cover our ultimate
financial exposure associated with any settlements or
judgments. Any such ultimate financial exposure, or
proceedings to which we may become subject in the
future, could have a material adverse effect on our
businesses, on our future consolidated financial
statements or on our reputation.
As of December 31, 2024, for those matters for
which we have accrued probable loss contingencies
and for other matters for which loss is reasonably
possible (but not probable) in future periods, and for
which we are able to estimate a range of reasonably
possible loss, our estimate of the aggregate
reasonably possible loss (in excess of any accrued
amounts) ranges up to approximately $30 million. Our
estimate with respect to the aggregate reasonably
possible loss is based upon currently available
information and is subject to significant judgment and
a variety of assumptions and known and unknown
uncertainties,
which
may
change
quickly
and
significantly from time to time, particularly if and as
we engage with applicable governmental agencies or
plaintiffs in connection with a proceeding. Also, the
matters underlying the reasonably possible loss will
change from time to time. As a result, actual results
may vary significantly from the current estimate.
In certain pending matters, it is not currently
feasible to reasonably estimate the amount or a
range of reasonably possible loss, and such losses,
which may be significant, are not included in the
estimate of reasonably possible loss discussed
above. This is due to, among other factors, the
factors influencing reasonable estimates described
above. An adverse outcome in one or more of the
matters for which we have not estimated the amount
or a range of reasonably possible loss, individually or
in the aggregate, could have a material adverse effect
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 158
on our businesses, on our future consolidated
financial statements or on our reputation. Given that
our actual losses from any legal or regulatory
proceeding for which we have provided an estimate
of the reasonably possible loss could significantly
exceed such estimate, and given that we cannot
estimate reasonably possible loss for all legal and
regulatory proceedings as to which we may be
subject now or in the future, no conclusion as to our
ultimate exposure from current pending or potential
legal or regulatory proceedings should be drawn from
the current estimate of reasonably possible loss.
The following discussion provides information
with respect to significant legal, governmental and
regulatory matters.
Gomes, et al. v. State Street Corp.
Eight participants in our Salary Savings Program
filed a purported class action complaint in May 2021
on behalf of participants and beneficiaries who
participated in the program and invested in our
proprietary investment fund options between May
2015 and April 3, 2024. The complaint named the
plan sponsor as well as the committees overseeing
the plan and their respective members as defendants,
and alleged breach of fiduciary duty and violations of
other duties owed to retirement plan participants
under ERISA. We resolved this matter at a cost that
was within our established accruals for loss
contingencies.
Edmar Financial Company, LLC et al v. Currenex,
Inc. et al
In August 2021, two former Currenex clients filed
a putative civil class action lawsuit in the Southern
District of New York alleging antitrust violations, fraud
and a civil Racketeer Influenced and Corrupt
Organization Act violation against Currenex, State
Street and others.
Pension Risk Transfer Litigation
State Street Global Advisors Trust Company
(“SSGA”) is named as a defendant in a series of
purported class action complaints filed by participants
in pension plans where, in each case, SSGA was
hired as independent fiduciary on behalf of the
pension plan to conduct an ERISA-compliant due
diligence review of potential insurers who could
assume the plan’s liabilities and satisfy its payment
obligations through the purchase of a group annuity
contract,
consistent
with
DOL
guidance.
The
complaints, collectively, allege violations of ERISA’s
fiduciary and prohibited transaction rules against
SSGA, the plan sponsors, and others.
German Tax Matter
In connection with a routine audit including the
period 2013-2015, German tax authorities have
questioned whether State Street should have
withheld and be secondarily liable for certain taxes on
dividends paid on securities of German issuers held
as collateral over dividend record dates in client
lending transactions with counterparties outside of
Germany.
OFAC Matter
In June 2024, State Street entered into a
settlement agreement with the U.S. Department of
Treasury’s OFAC to resolve its investigation into
apparent violations of OFAC’s Ukraine-/Russia-
Related Sanctions Regulations. In connection with
the settlement, we paid a civil monetary penalty of
$7.45
million
and
made
certain
compliance
commitments.
State of Texas et al v. Blackrock, Inc. et al
In November 2024, eleven state Attorneys
General filed a complaint in Federal Court in the
Eastern District of Texas against State Street,
BlackRock and Vanguard, alleging antitrust violations
on the theory that the three companies conspired to
artificially suppress coal supply, resulting in harm to
American consumers in the form of higher electricity
costs.
Income Taxes
In determining our provision for income taxes,
we make certain judgments and interpretations with
respect to tax laws in jurisdictions in which we have
business operations. Because of the complex nature
of these laws, in the normal course of our business,
we are subject to challenges from U.S. and non-U.S.
income tax authorities regarding the amount of
income taxes due. These challenges may result in
adjustments to the timing or amount of taxable
income or deductions or the allocation of taxable
income among tax jurisdictions. We recognize a tax
benefit when it is more likely than not that our position
will result in a tax deduction or credit. Unrecognized
tax benefits were approximately $237 million as of
both December 31, 2024 and December 31, 2023.
We are presently under audit by a number of tax
authorities. The earliest tax year open to examination
in jurisdictions where we have material operations is
2017. Management believes that we have sufficiently
accrued liabilities as of December 31, 2024 for
potential tax exposures.
Note 14. Variable Interest Entities
We are involved, in the normal course of our
business, with various types of special purpose
entities, some of which meet the definition of VIEs.
When evaluating a VIE for consolidation, we must
determine whether or not we have a variable interest
in the entity. Variable interests are investments or
other interests that absorb portions of an entity’s
expected losses or receive portions of the entity’s
expected returns. If it is determined that we do not
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 159
have a variable interest in the VIE, no further analysis
is required and we do not consolidate the VIE. If we
hold a variable interest in a VIE, we are required by
U.S. GAAP to consolidate that VIE when we have a
controlling financial interest in the VIE and therefore
are deemed to be the primary beneficiary. We are
determined to have a controlling financial interest in a
VIE when we have both the power to direct the
activities of the VIE that most significantly impact the
VIE’s economic performance and the obligation to
absorb losses or the right to receive benefits of the
VIE that could potentially be significant to that VIE.
This determination is evaluated periodically as facts
and circumstances change.
Asset-Backed Investment Securities
We invest in various forms of ABS, which we
carry in our investment securities portfolio. These
ABS meet the U.S. GAAP definition of asset
securitization entities, which are considered to be
VIEs. We are not considered to be the primary
beneficiary of these VIEs since we do not have
control over their activities. Additional information
about our ABS is provided in Note 3.
Interests in Investment Funds
In the normal course of business, we manage
various types of investment funds through State
Street Global Advisors in which our clients are
investors, including State Street Global Advisors
commingled investment vehicles and other similar
investment structures. The majority of our AUM are
contained within such funds. The services we provide
to these funds generate management fee revenue.
From time to time, we may invest cash in the funds in
order for the funds to establish a performance history
for newly-launched strategies, referred to as seed
capital, or for other purposes.
With respect to our interests in funds that meet
the definition of a VIE, a primary beneficiary
assessment is performed to determine if we have a
controlling
financial
interest.
As
part
of
our
assessment,
we
consider
all
the
facts
and
circumstances
regarding
the
terms
and
characteristics of the variable interest(s), the design
and characteristics of the fund and the other
involvements of the enterprise with the fund. If
consolidation of certain funds is required, we retain
the specialized investment company accounting rules
followed by the underlying funds. When we no longer
control these funds due to a reduced ownership
interest or other reasons, the funds are de-
consolidated and accounted for under another
accounting method if we continue to maintain
investments in the funds.
As of both December 31, 2024 and 2023, we
had no consolidated funds. As of December 31, 2024
and 2023, we managed certain funds, considered
VIEs, in which we held a variable interest but for
which we were not deemed to be the primary
beneficiary. Our potential maximum loss exposure
related to these unconsolidated funds totaled $19
million and $18 million as of December 31, 2024 and
2023, respectively, and represented the carrying
value of our investments, which are recorded in other
assets in our consolidated statement of condition.
The amount of loss we may recognize during any
period is limited to the carrying amount of our
investments in the unconsolidated funds.
Our conclusion to consolidate a fund may vary
from period to period, most commonly as a result of
fluctuation in our ownership interest as a result of
changes in the number of fund shares held by either
us or by third parties. Given that the funds follow
specialized investment company accounting rules
which prescribe fair value, a de-consolidation
generally would not result in gains or losses for us.
The net assets of any consolidated fund are
solely available to settle the liabilities of the fund and
to settle any investors’ ownership redemption
requests, including any seed capital invested in the
fund by us. We are not contractually required to
provide financial or any other support to any of our
funds. In addition, neither creditors nor equity
investors in the funds have any recourse to our
general credit.
We also held investments in low-income
housing, production and investment tax credit entities,
considered VIEs for which we were not deemed to be
the primary beneficiary. As of December 31, 2024 and
2023, our potential maximum loss exposure related to
these unconsolidated entities totaled $1.10 billion and
$1.33 billion, respectively, most of which represented
the carrying value of our investments, which are
recorded in other assets in our consolidated
statement of condition.
We account for our low-income housing tax
credit investments (LIHTC) and production tax credit
investments under the proportional amortization
method. Under the proportional amortization method,
the initial cost of the investment is amortized based
on a percentage of the actual income tax credits and
other income tax benefits allocated in the current
period versus the total estimated income tax credits
and other income tax benefits expected to be
received over the life of the investment. The net
benefit,
representing
the
difference
between
amortization of the investment balance, recognition of
the income tax credits and recognition of other
income tax benefits from the investment is recognized
as a component of income tax expense.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 160
As of December 31, 2024, we had investments in LIHTC and production tax credit investments of $705 million
and $291 million, respectively, which are included in other assets in our consolidated statement of condition.
Contingent contributions related to the renewable energy production tax credit investments were $42 million at
December 31, 2024. These contributions are contingent on production and expected to be paid through 2034.
Deferred contributions related to LIHTC investments were $110 million at December 31, 2024. These deferred
contributions are payable in accordance with the respective agreements and are expected to be paid through 2042.
The following table presents the impact of our tax credit programs for which we have elected to apply
proportional amortization accounting on our consolidated statement of income for the periods indicated:
Years Ended December 31,
(In millions)
2024
2023
Income (loss) recorded on investments within other fee revenue
$
29
$
26
Income recorded in total revenue
29
26
Tax credits and benefits recognized in income tax expense
256
239
Proportional amortization recognized in income tax expense
(207)
(182)
Net benefits included in income tax expense
49
57
Net benefit attributable to tax-advantaged investments included in the consolidated statement of
income for which proportional amortization has been elected
$
78
$
83
Note 15. Shareholders’ Equity
Preferred Stock
The following table summarizes selected terms of each of the series of the preferred stock issued and
outstanding as of December 31, 2024:
Preferred
Stock(1):
Issuance Date
Depositary
Shares
Issued
Ownership
Interest Per
Depositary
Share
Liquidation
Preference
Per Share
Liquidation
Preference
Per
Depositary
Share
Per Annum Dividend Rate
Dividend
Payment
Frequency
Carrying
Value as of
December
31, 2024
(In millions)
Redemption Date(2)
Series G
April 2016
20,000,000
1/4,000th
100,000
25
5.35%(3)
Quarterly
$
493
March 15, 2026
Series I
January 2024
1,500,000
1/100th
100,000
1,000
6.700% through March 14,
2029; resets March 15, 2029
and every subsequent five
year anniversary at the five-
year U.S. Treasury rate plus
2.613%
Quarterly
1,481
March 15, 2029
Series J
July 2024
850,000
1/100th
100,000
1,000
6.700% through September 14,
2029; resets September 15,
2029 and every subsequent
five year anniversary at the
five-year U.S. Treasury rate
plus 2.628%
Quarterly
842
September 15, 2029
(1) The preferred stock and corresponding depositary shares may be redeemed at our option in whole, but not in part, prior to the redemption date upon the occurrence of a regulatory capital
treatment event, as defined in the certificate of designation, at a redemption price equal to the liquidation price per share and liquidation price per depositary share plus any declared and unpaid
dividends, without accumulation of any undeclared dividends.
(2) On the redemption date, or any dividend payment date thereafter, the preferred stock and corresponding depositary shares may be redeemed by us, in whole or in part, at the liquidation price
per share and liquidation price per depositary share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.
(3) The dividend rate for the floating rate period of the Series G preferred stock that begins on March 15, 2026 and all subsequent floating rate periods will remain at the current fixed rate in
accordance with the LIBOR Act and the contractual terms of the Series G preferred stock.
On January 31, 2024, we issued 1.5 million depositary shares, each representing a 1/100th ownership interest
in a share of fixed rate reset, non-cumulative perpetual preferred stock, Series I, without par value per share, with a
liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share), in a public offering. The
aggregate proceeds, net of underwriting discounts, commissions and other issuance costs, were approximately
$1.5 billion.
On March 15, 2024, we redeemed an aggregate $1.0 billion, or all 7,500 outstanding shares, of our non-
cumulative perpetual preferred stock, Series D (represented by 30,000,000 depository shares), for a cash
redemption price of $100,000 per share (equivalent to $25 per depository share), plus all declared and unpaid
dividends and all 2,500 of the outstanding shares of our noncumulative perpetual preferred stock, Series F
(represented by 250,000 depository shares), for a cash redemption price of $100,000 per share (equivalent to
$1,000 per depositary share) plus all declared and unpaid dividends.
On July 24, 2024, we issued 850,000 depositary shares, each representing 1/100th ownership interest in
shares of fixed rate reset, non-cumulative perpetual preferred stock, Series J, without par value per share, with a
liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share), in a public offering. The
aggregate proceeds, net of underwriting discounts, commissions and other issuance costs, were approximately
$842 million.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 161
On September 16, 2024, we redeemed an aggregate $500 million, or all 5,000 outstanding shares, of our non-
cumulative perpetual preferred stock, Series H (represented by 500,000 depository shares), for a cash redemption
price of $100,000 per share (equivalent to $1,000 per depository share), plus all declared and unpaid dividends.
On February 6, 2025, we issued 750,000 depositary shares, each representing a 1/100th ownership interest in
a share of fixed rate reset, non-cumulative perpetual preferred stock, Series K, without par value per share, with a
liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share), in a public offering. The
aggregate proceeds, net of underwriting discounts, commissions and other issuance costs, were approximately
$743 million. Dividends on the Series K Preferred Stock will be payable quarterly at an initial rate of 6.450% per
annum commencing on June 15, 2025, with the first dividend payable on a pro-rata basis. Our preferred stock
dividends, including the declaration, timing and amount thereof, are subject to consideration and approval by the
Board at the relevant times.
The following table presents the dividends declared for each of the series of preferred stock issued and
outstanding for the periods indicated:
Years Ended December 31,
2024
2023
(Dollars in millions, except per
share amounts)
Dividends
Declared per
Share
Dividends
Declared per
Depositary
Share
Total
Dividends
Declared per
Share
Dividends
Declared per
Depositary
Share
Total
Preferred Stock:
Series D
$
1,475
$
0.37
$
11
$
5,900
$
1.48
$
44
Series F
2,336
23.36
6
8,935
89.35
23
Series G
5,350
1.34
27
5,350
1.34
27
Series H
6,251
62.51
31
5,625
56.25
28
Series I
5,863
58.63
88
—
—
—
Series J
2,643
26.43
22
—
—
—
Total
$
185
$
122
Common Stock
On January 19, 2024, we announced a new common share repurchase program, approved by our Board and
superseding all prior programs, authorizing the purchase of up to $5.0 billion of our common stock beginning in the
first quarter of 2024 with no set expiration date the “2024 Program”). During 2024, we repurchased $1.3 billion of
our common stock under the 2024 Program and expect common share repurchases to continue under this program
during 2025.
In 2023, we repurchased $3.8 billion of our common stock under the previously approved common share
repurchase program authorizing the purchase of up to $4.5 billion of our common stock through December 31, 2023
(the “2023 Program”).
The tables below present the activity under our common share repurchase program for the period indicated:
Years Ended December 31,
2024
2023
Shares Acquired
(In millions)
Average Cost per
Share
Total Acquired
(In millions)
Shares Acquired
(In millions)
Average Cost per
Share
Total Acquired
(In millions)
2024 Program
15.1
$
85.89
$
1,300
—
$
—
$
—
2023 Program
—
—
—
49.2
77.22
3,800
The table below presents the dividends declared on common stock for the periods indicated:
Years Ended December 31,
2024
2023
Dividends Declared per
Share
Total (In millions)
Dividends Declared per
Share
Total (In millions)
Common Stock
$
2.90
$
859
$
2.64
$
837
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 162
Accumulated Other Comprehensive Income (Loss)
The following table presents the after-tax components of AOCI and changes for the periods indicated, net of
related taxes:
(In millions)
Net Unrealized
Gains (Losses)
on Cash Flow
Hedges
Net Unrealized
Gains (Losses)
on Investment
Securities(1)
Net Unrealized
Losses on
Retirement
Plans
Foreign
Currency
Translation
Net Unrealized
Gains (Losses) on
Hedges of Net
Investments in
Non-U.S.
Subsidiaries
Total
Balance as of December 31, 2021
$
(2) $
(50) $
(130) $
(1,019) $
68
$
(1,133)
Other comprehensive income (loss) before
reclassifications
(321)
(1,937)
(1)
(732)
291
(2,700)
Increase (decrease) due to amounts reclassified from
accumulated other comprehensive income
(36)
170
(12)
—
—
122
Other comprehensive income (loss)
(357)
(1,767)
(13)
(732)
291
(2,578)
Balance as of December 31, 2022
$
(359) $
(1,817) $
(143) $
(1,751) $
359
$
(3,711)
Other comprehensive income (loss) before
reclassifications
75
442
(3)
351
(90)
775
Increase (decrease) due to amounts reclassified from
accumulated other comprehensive income
153
428
1
—
—
582
Other comprehensive income (loss)
228
870
(2)
351
(90)
1,357
Balance as of December 31, 2023
$
(131) $
(947) $
(145) $
(1,400) $
269
$
(2,354)
Other comprehensive income (loss) before
reclassifications
39
15
14
(768)
540
(160)
Increase (decrease) due to amounts reclassified from
accumulated other comprehensive income
(40)
452
2
—
—
414
Other comprehensive income (loss)
(1)
467
16
(768)
540
254
Balance as of December 31, 2024
$
(132) $
(480) $
(129) $
(2,168) $
809
$
(2,100)
(1) Includes after-tax net unamortized unrealized gains (losses) of ($374) million, ($530) million and ($749) million as of December 31, 2024, 2023 and 2022, respectively, related to AFS
investment securities previously transferred to HTM.
The following table presents after-tax reclassifications into earnings for the periods indicated:
Years Ended December 31,
2024
2023
2022
(In millions)
Amounts Reclassified into Earnings
Affected Line Item in Consolidated Statement
of Income
Investment securities:
Net realized (gains) losses from sales of available-for-sale
securities, net of related taxes of $21, $81 and $1 respectively
$
59
$
213
$
1
Net gains (losses) from sales of available-for-
sale securities
Losses reclassified from accumulated other comprehensive
income into income, net of related taxes of $137, $81 and $96
respectively
393
215
169
Net interest income
Cash flow hedges:
(Gains)
losses
reclassified
from
accumulated
other
comprehensive income into income, net of related taxes of
($14), $55 and ($13) respectively
(40)
153
(36) Net interest income
Retirement plans:
Amortization of actuarial losses, net of related taxes of nil, nil
and $(1) respectively
2
1
(12) Compensation and employee benefits expenses
Total
amounts
reclassified
from
accumulated
other
comprehensive income
$
414
$
582
$
122
Note 16. Regulatory Capital
We are subject to various regulatory capital requirements administered by federal banking agencies. Failure to
meet minimum regulatory capital requirements can initiate certain mandatory and discretionary actions by regulators
that, if undertaken, could have a direct material effect on our consolidated financial condition. Under current
regulatory capital adequacy guidelines, we must meet specified capital requirements that involve quantitative
measures of our consolidated assets, liabilities and off-balance sheet exposures calculated in conformity with
regulatory accounting practices. Our capital components and their classifications are subject to qualitative
judgments by regulators about components, risk weightings and other factors.
As required by the Dodd-Frank Act, we and State Street Bank, as advanced approaches banking
organizations, are subject to a “capital floor” in the calculation and assessment of regulatory capital adequacy by the
U.S. Agencies. Beginning on January 1, 2015, we were required to calculate our risk-based capital ratios using both
the advanced approaches and the standardized approach. As a result, from January 1, 2015 going forward, our risk-
based capital ratios for regulatory assessment purposes are the lower of each ratio calculated under the
standardized approach and the advanced approaches.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 163
As of December 31, 2024, we and State Street Bank exceeded all regulatory capital adequacy requirements to
which we were subject. As of December 31, 2024, State Street Bank was categorized as “well capitalized” under the
applicable regulatory capital adequacy framework, and exceeded all “well capitalized” ratio guidelines to which it
was subject. Management believes that no conditions or events have occurred since December 31, 2024 that have
changed the capital categorization of State Street Bank.
The following table presents the regulatory capital structure, total RWA, related regulatory capital ratios and the
minimum required regulatory capital ratios for us and State Street Bank as of the dates indicated.
State Street Corporation
State Street Bank
(Dollars in millions)
Basel III
Advanced
Approaches
December 31,
2024
Basel III
Standardized
Approach
December 31,
2024
Basel III
Advanced
Approaches
December 31,
2023
Basel III
Standardized
Approach
December 31,
2023
Basel III
Advanced
Approaches
December 31,
2024
Basel III
Standardized
Approach
December 31,
2024
Basel III
Advanced
Approaches
December 31,
2023
Basel III
Standardized
Approach
December 31,
2023
Common shareholders’ equity:
Common stock and related surplus
$
11,226
$
11,226
$
11,245
$
11,245
$
13,333
$
13,333
$
13,033
$
13,033
Retained earnings
29,582
29,582
27,957
27,957
15,977
15,977
14,454
14,454
Accumulated other comprehensive income (loss)
(2,100)
(2,100)
(2,354)
(2,354)
(1,805)
(1,805)
(2,097)
(2,097)
Treasury stock, at cost
(16,198)
(16,198)
(15,025)
(15,025)
—
—
—
—
Total
22,510
22,510
21,823
21,823
27,505
27,505
25,390
25,390
Regulatory capital adjustments:
Goodwill and other intangible assets, net of
associated deferred tax liabilities
(8,320)
(8,320)
(8,470)
(8,470)
(8,054)
(8,054)
(8,208)
(8,208)
Other adjustments(1)
(391)
(391)
(382)
(382)
(278)
(278)
(298)
(298)
Common equity tier 1 capital
13,799
13,799
12,971
12,971
19,173
19,173
16,884
16,884
Preferred stock
2,816
2,816
1,976
1,976
—
—
—
—
Tier 1 capital
16,615
16,615
14,947
14,947
19,173
19,173
16,884
16,884
Qualifying subordinated long-term debt
1,861
1,861
1,870
1,870
530
530
536
536
Adjusted allowance for credit losses
—
183
—
150
—
183
—
150
Total capital
$
18,476
$
18,659
$
16,817
$
16,967
$
19,703
$
19,886
$
17,420
$
17,570
Risk-weighted assets:
Credit risk(2)
$
63,252
$ 124,281
$
61,210
$ 109,228
$
57,883
$ 121,785
$
54,942
$ 107,067
Operational risk(3)
49,350
NA
43,768
NA
47,538
NA
42,297
NA
Market risk
2,000
2,000
2,475
2,475
2,000
2,000
2,475
2,475
Total risk-weighted assets
$ 114,602
$ 126,281
$ 107,453
$ 111,703
$ 107,421
$ 123,785
$
99,714
$ 109,542
Adjusted quarterly average assets
$ 318,470
$ 318,470
$ 269,807
$ 269,807
$ 314,754
$ 314,754
$ 266,818
$ 266,818
Capital Ratios:
2024 Minimum
Requirements(4)
2023 Minimum
Requirements(4)
Common equity
tier 1 capital
8.0 %
8.0 %
12.0 %
10.9 %
12.1 %
11.6 %
17.8 %
15.5 %
16.9 %
15.4 %
Tier 1 capital
9.5
9.5
14.5
13.2
13.9
13.4
17.8
15.5
16.9
15.4
Total capital
11.5
11.5
16.1
14.8
15.7
15.2
18.3
16.1
17.5
16.0
Tier 1
leverage(5)
4.0
4.0
5.2
5.2
5.5
5.5
6.1
6.1
6.3
6.3
(1) Other adjustments within CET1 capital primarily include disallowed deferred tax assets, cash flow hedges that are not recognized at fair value on the balance sheet, and the overfunded portion
of our defined benefit pension plan obligation net of associated deferred tax liabilities.
(2) Under the advanced approaches, credit risk RWA includes a CVA which reflects the risk of potential fair value adjustments for credit risk reflected in our valuation of OTC derivative contracts.
We used a simple CVA approach in conformity with the Basel III advanced approaches.
(3) Under the current advanced approaches rules and regulatory guidance concerning operational risk models, RWA attributable to operational risk can vary substantially from period-to-period,
without direct correlation to the effects of a particular loss event on our results of operations and financial condition and impacting dates and periods that may differ from the dates and periods as
of and during which the loss event is reflected in our financial statements, with the timing and categorization dependent on the processes for model updates and, if applicable, model revalidation
and regulatory review and related supervisory processes. An individual loss event can have a significant effect on the output of our operational RWA under the advanced approaches depending
on the severity of the loss event and its categorization among the seven Basel-defined UOMs.
(4) Minimum requirements include a CCB of 2.5% and a SCB of 2.5% for the advanced approaches and the standardized approach, respectively, a G-SIB surcharge of 1.0% and a countercyclical
buffer of 0%. On June 26, 2024, we were notified by the Federal Reserve of the results from the 2024 supervisory stress test. Our SCB calculated under the 2024 supervisory stress test was well
below the 2.5% minimum, resulting in an SCB at that floor, which remains in effect for the period from October 1, 2024 through September 30, 2025.
(5) State Street Bank is required to maintain a minimum Tier 1 leverage ratio of 5% as it is the insured depository institution subsidiary of State Street Corporation, a U.S. G-SIB.
NA Not applicable
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 164
Note 17. Net Interest Income
The following table presents the components of
interest income and interest expense, and related NII,
for the periods indicated:
Years Ended December 31,
(In millions)
2024
2023
2022
Interest income:
Interest-bearing deposits with
banks
$ 3,634
$ 2,869
$
842
Investment securities:
Investment securities available-for-
sale
2,680
1,744
724
Investment securities held-to-
maturity
1,090
1,262
979
Total investment securities
3,770
3,006
1,703
Securities purchased under resale
agreements
686
312
188
Loans
2,271
1,862
972
Other interest-earning assets
1,616
1,131
383
Total interest income
11,977
9,180
4,088
Interest expense:
Interest-bearing deposits
6,627
4,991
967
Securities sold under repurchase
agreements
156
34
14
Federal funds purchased
—
3
—
Short-term borrowings
577
40
26
Long-term debt
1,086
888
376
Other interest-bearing liabilities
608
465
161
Total interest expense
9,054
6,421
1,544
Net interest income
$ 2,923
$ 2,759
$ 2,544
Note 18. Equity-Based Compensation
We record compensation expense for equity-
based
awards,
such
as
deferred
stock
and
performance awards, based on the closing price of
our common stock on the date of grant, adjusted if
appropriate, based on the eligibility of the award to
receive dividends.
Compensation expense related to equity-based
and cash-settled stock awards with service-only
conditions and terms that provide for a graded vesting
schedule is recognized on a straight-line basis over
the required service period for the entire award.
Compensation expense related to equity-based
awards with performance conditions and terms that
provide for a graded vesting schedule is recognized
over the requisite service period for each separately
vesting tranche of the award, and is based on the
probable outcome of the performance conditions at
each reporting date. Compensation expense is
adjusted for assumptions with respect to the
estimated amount of awards that will be forfeited prior
to vesting, and for employees who have met certain
retirement eligibility criteria. Compensation expense
for common stock awards granted to employees
meeting early retirement eligibility criteria is fully
expensed on the grant date.
Dividend equivalents for certain equity-based
awards are paid on stock units on a current basis
prior to vesting and distribution.
The 2017 Stock Incentive Plan, or 2017 Plan,
was amended and restated and approved by
shareholders in May 2023 for issuance of stock and
stock based awards. Awards may be made under the
2017 Plan for (i) up to 15.1 million shares of common
stock plus (ii) up to an additional 28.5 million shares
that were available to be issued under the 2006
Equity Incentive Plan, or 2006 Plan, or may become
available for issuance under the 2006 Plan due to
expiration, termination, cancellation, forfeiture or
repurchase of awards granted under the 2006 Plan.
As of December 31, 2024, a total of 20.8 million
shares from the 2006 Plan have been added to and
may be issued from the 2017 Plan. As of
December 31, 2024, a cumulative total of 24.7 million
shares have been awarded under the 2017 Plan,
compared to cumulative totals of 21.7 million shares
and 18.7 million shares as of December 31, 2023 and
2022, respectively.
The 2017 Plan allows for shares withheld in
payment of the exercise price of an award or in
satisfaction of tax withholding requirements, shares
forfeited due to employee termination, shares expired
under option awards, or shares not delivered when
performance conditions have not been met, to be
added back to the pool of shares available for
issuance under the 2017 Plan. From inception to
December 31, 2024, 7.0 million shares had been
awarded under the 2017 Plan but not delivered, and
have
become
available
for
re-issue.
As
of
December 31, 2024, a total of 18.3 million shares
were available for future issuance under the 2017
Plan.
For deferred stock awards granted under the
Plans, no common stock is issued at the time of grant
and the award does not possess dividend and voting
rights. Generally, these grants vest over zero to four
years. Performance awards granted are earned over
a performance period based on the achievement of
defined goals, generally over three years. Payment
for performance awards is made in shares of our
common stock equal to its fair market value per
share, based on the performance of certain financial
ratios, after the conclusion of each performance
period.
Beginning with 2012, malus-based forfeiture
provisions were included in deferred stock awards
granted to employees identified as “material risk-
takers,” as defined by management. These malus-
based forfeiture provisions provide for the reduction
or cancellation of unvested deferred compensation,
such as deferred stock awards and performance-
based awards, if it is determined that a material risk-
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 165
taker made risk-based decisions that exposed us to
inappropriate risks that resulted in a material
unexpected loss at the business-unit, line-of-business
or corporate level. In addition, awards granted to
certain of our senior executives, as well as awards
granted to individuals in certain jurisdictions, may be
subject to recoupment after vesting (if applicable) and
delivery to the individual in specified circumstances
generally relating to fraud or willful misconduct by the
individual that results in material harm to us or a
material financial restatement.
Compensation expense related to deferred stock
awards and performance awards, which we record as
a component of compensation and employee benefits
expense in our consolidated statement of income,
was $223 million, $208 million and $240 million for
the years ended December 31, 2024, 2023 and 2022,
respectively. Such expense for 2024, 2023 and 2022
excluded an expense of $3 million, $12 million and
$21 million, respectively, associated with acceleration
of expense in connection with targeted staff
reductions. This expense was included in the
severance-related
portion
of
the
associated
restructuring or repositioning charges recorded in
each respective year.
For the years ended December 31, 2024, 2023
and 2022, no stock appreciation rights were
exercised. As of December 31, 2024, there was no
unrecognized compensation cost related to stock
appreciation rights.
Shares
(In thousands)
Weighted-Average
Grant Date Fair
Value
Deferred Stock
Awards:
Outstanding as of
December 31, 2022
5,279
$
72.43
Granted
2,421
79.58
Vested
(2,587)
71.54
Forfeited
(145)
76.40
Outstanding as of
December 31, 2023
4,968
75.72
Granted
2,551
68.70
Vested
(2,513)
73.62
Forfeited
(147)
73.35
Outstanding as of
December 31, 2024
4,859
73.20
The total fair value of deferred stock awards
vested for the years ended December 31, 2024, 2023
and 2022, based on the weighted average grant date
fair value in each respective year, was $185 million,
$185 million and $217 million, respectively. As of
December
31,
2024,
total
unrecognized
compensation cost related to deferred stock awards,
net of estimated forfeitures, was $169 million, which
is expected to be recognized over a weighted-
average period of 2.2 years.
Shares
(In thousands)
Weighted-Average
Grant Date Fair Value
Performance Awards:
Outstanding as of
December 31, 2022
2,296
$
69.43
Granted
614
79.96
Forfeited
(17)
74.59
Paid out
(687)
62.99
Outstanding as of
December 31, 2023
2,206
74.33
Granted
363
63.49
Forfeited
(28)
80.01
Paid out
(502)
65.70
Outstanding as of
December 31, 2024
2,039
74.44
The total fair value of performance awards
vested for the years ended December 31, 2024, 2023
and 2022, based on the weighted average grant date
fair value in each respective year, was $33 million,
$43 million and $60 million, respectively. As of
December
31,
2024,
total
unrecognized
compensation cost related to performance awards,
net of estimated forfeitures, was $15 million, which is
expected to be recognized over a weighted-average
period of 1.8 years.
Shares
(In thousands)
Weighted-Average
Grant Date Fair Value
Cash-Settled
Restricted Stock
Awards:
Outstanding as of
December 31, 2022
35
$
79.99
Granted
24
83.80
Paid out
(32)
79.99
Outstanding as of
December 31, 2023
27
83.37
Granted
40
69.96
Paid out
(38)
76.11
Outstanding as of
December 31, 2024
29
74.52
The total fair value of cash-settled restricted
stock awards vested during both the years ended
December 31, 2024 and 2023, based on the weighted
average grant date fair value, was $3 million. As of
December 31, 2024, there was no unrecognized
compensation cost related to cash-settled restricted
stock awards.
We utilize either treasury shares or authorized
but unissued shares to satisfy the issuance of
common stock under our equity incentive plans. We
do not have a specific policy concerning purchases of
our common stock to satisfy stock issuances. We
have a general policy concerning purchases of our
common stock to meet issuances under our
employee benefit plans, including other corporate
purposes. Various factors determine the amount and
timing of our purchases of our common stock,
including regulatory reviews and approvals or non-
objections, our regulatory capital requirements, the
number of shares we expect to issue under employee
benefit plans, market conditions (including the trading
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 166
price of our common stock), and legal considerations.
These factors can change at any time, and the
number of shares of common stock we will purchase
or when we will purchase them cannot be assured.
Additional information on our common stock purchase
program is provided in Note 15.
Note 19. Employee Benefits
Defined
Benefit
Pension
and
Other
Post-
Retirement Benefit Plans
State Street Bank and certain of its U.S.
subsidiaries participate in a non-contributory, tax-
qualified defined benefit pension plan. The U.S.
defined benefit pension plan was frozen as of
December 31, 2007 and no new employees were
eligible to participate after that date. We have agreed
to contribute sufficient amounts as necessary to meet
the benefits paid to plan participants and to fund the
plan’s service cost, plus interest. U.S. employee
account balances earn annual interest credits until
the employee begins receiving benefits. Non-U.S.
employees participate in local defined benefit plans
which are funded as required in each local
jurisdiction. In addition to the defined benefit pension
plans, we have non-qualified unfunded SERPs that
provide certain officers with defined pension benefits
in excess of allowable qualified plan limits. State
Street Bank and certain of its U.S. subsidiaries also
participate in a post-retirement plan that provides
health care benefits for certain retired employees.
The total expense for these tax-qualified and non-
qualified plans was $17 million, $16 million and $21
million in 2024, 2023 and 2022, respectively.
We recognize the funded status of our defined
benefit pension plans and other post-retirement
benefit plans, measured as the difference between
the fair value of the plan assets and the projected
benefit obligation, in the consolidated statement of
position. The assets held by the defined benefit
pension plans are largely made up of common,
collective funds that are liquid and invest principally in
U.S.
equities
and
high-quality
fixed-income
investments. The majority of these assets fall within
Level 2 of the fair value hierarchy. The benefit
obligations associated with our primary U.S. and non-
U.S. defined benefit plans, non-qualified unfunded
supplemental retirement plans and post-retirement
plans were $1.10 billion, $19 million and less than $1
million, respectively, as of December 31, 2024 and
$1.16 billion, $25 million and $1 million, respectively,
as of December 31, 2023. As the primary defined
benefit plans are frozen, the benefit obligation will
only vary over time as a result of changes in market
interest rates, the life expectancy of the plan
participants and payments made from the plans. The
primary U.S. and non-U.S. defined benefit pension
plans were overfunded by $26 million and $10 million
as of December 31, 2024 and 2023, respectively. The
non-qualified supplemental retirement plans were
underfunded by $19 million and $25 million as of
December 31, 2024 and 2023, respectively. The other
post-retirement benefit plans were underfunded by
less
than
$1
million
and
$1
million
as
of
December 31, 2024 and 2023, respectively. The
underfunded status is included in other liabilities.
Defined Contribution Retirement Plans
We contribute to employer-sponsored U.S. and
non-U.S. defined contribution plans. Our contribution
to these plans was $212 million, $194 million and
$171 million in 2024, 2023 and 2022, respectively.
Note 20. Occupancy Expense and Information
Systems and Communications Expense
Occupancy expense and information systems
and communications expense include depreciation of
buildings,
leasehold
improvements,
computer
hardware and software, equipment, furniture and
fixtures, and amortization of lease right-of-use assets.
Total depreciation and amortization expense in 2024,
2023 and 2022 was $824 million, $829 million and
$842 million, respectively.
We use our incremental borrowing rate to
determine the present value of the lease payments
for finance and operating leases described below.
Additionally,
we
do
not
separate
nonlease
components such as real estate taxes and common
area maintenance from base lease payments.
As of December 31, 2024 and 2023, we had
finance leases for information technology equipment
of $67 million and $119 million, respectively, recorded
in premises and equipment, with the related liability of
$79 million and $130 million, respectively, recorded in
long-term debt, in our consolidated statement of
condition.
Finance lease right-of-use asset amortization is
recorded in information systems and communications
expense on a straight-line basis in our consolidated
statement of income over the respective lease term.
Lease payments are recorded as a reduction of the
liability, with a portion recorded as imputed interest
expense. Accumulated amortization of the finance
lease right-of-use assets was $135 million as of
December 31, 2024. Interest expense related to the
finance lease obligation reflected in NII was $3 million
and $5 million in 2024 and 2023, respectively.
As of December 31, 2024, aggregate net book
value of the operating lease right-of-use assets
recorded in other assets was $818 million, with the
related lease liability recorded in accrued expenses
and other liabilities in our consolidated statement of
condition.
We have entered into non-cancellable operating
leases for premises and equipment. Nearly all of
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 167
these leases include renewal options, and only those
reasonably certain of being exercised are included in
the term of the lease. Costs for operating leases are
recorded on a straight-line basis which includes both
interest expense and right-of-use asset amortization.
Operating lease costs for office space are recorded in
occupancy expense. Costs related to operating
leases for equipment are recorded in information
systems and communications expense.
As of December 31, 2024, we have additional
operating and finance leases, primarily for office
space and equipment, that have not yet commenced
with approximately $207 million of undiscounted
future minimum lease payments. These leases will
commence in fiscal year 2025 with lease terms
ranging from 3 to 11 years.
None of our leases contain residual value
guarantees.
The following table presents lease costs,
sublease rental income, cash flows and new leases
arising from lease transactions for 2024:
Years Ended December 31,
(In millions)
2024
2023
Finance lease:
Amortization of right-of-use assets
$
48
$
48
Interest on lease liabilities
3
5
Total finance lease expense
51
53
Sublease income
—
—
Net finance lease expense
51
53
Operating lease:
Operating lease expense
168
163
Sublease income
(17)
(23)
Net operating lease expense
151
140
Net lease expense
$
202
$
193
Cash paid for amounts included in the
measurement of lease liabilities:
Operating cash flows from finance
leases
$
3
$
5
Operating cash flows from operating
leases
179
197
Financing cash flows from finance
leases
46
45
Right-of-use assets obtained in
exchange for new lease obligations:
Operating leases
$
174
$
461
Finance leases
—
—
The following table presents future minimum
lease payments under non-cancellable leases as of
December 31, 2024:
(In millions)
Operating
Leases
Finance
Leases
Total
2025
$
182
$
55
$
237
2026
152
26
178
2027
134
—
134
2028
118
—
118
2029
88
—
88
Thereafter
342
—
342
Total future minimum lease
payments
1,016
81
1,097
Less imputed interest
(177)
(2)
(179)
Total
$
839
$
79
$
918
The following table presents details related to
remaining lease terms and discount rate as of
December 31, 2024 and 2023:
December 31,
2024
December 31,
2023
Weighted-average remaining
lease term (in years):
Finance leases
1.4
2.5
Operating leases
8.1
8.5
Weighted-average discount rate:
Finance leases
3 %
3 %
Operating leases
4 %
4 %
Note 21. Expenses
The following table presents the components of
other expenses for the periods indicated:
Years Ended December 31,
(In millions)
2024
2023
2022
Professional services
$
465
$
428
$
375
Regulatory fees and assessments(1)
142
464
83
Sales advertising and public
relations
142
142
99
Securities processing
78
49
63
Bank operations
51
45
41
Donations
28
27
27
Other
433
374
387
Total other expenses
$
1,339
$
1,529
$
1,075
(1) Includes an FDIC special assessment of $99 million and $387 million in 2024 and
2023, respectively, related to FDIC’s recovery of estimated losses to the Deposit
Insurance Fund associated with the closures of Silicon Valley Bank and Signature Bank
reflected in other expenses.
Repositioning Charges
In 2024, we recorded a net repositioning release
of $2 million, including a $15 million release reflected
in compensation and employee benefits expenses,
partially offset by $13 million of occupancy charges
related to footprint optimization.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 168
In 2023, we recorded net repositioning charges
of approximately $203 million to enable the next
phase of our productivity efforts to streamline
operations and technology, and improve efficiency.
Expenses for 2023 included $182 million of
compensation and employee benefits expenses
related to workforce rationalization and $21 million of
occupancy costs related to real estate footprint
optimization.
The following table presents aggregate activity
for repositioning charges for the periods indicated:
(In millions)
Employee
Related
Costs
Real Estate
Actions
Total
Accrual Balance at
December 31, 2021
$
68
$
6
$
74
Accruals for Repositioning
Charges
58
20
78
Payments and Other
Adjustments
(43)
(21)
(64)
Accrual Balance at
December 31, 2022
83
5
88
Accruals for Repositioning
Charges
182
21
203
Payments and Other
Adjustments
(58)
(25)
(83)
Accrual Balance at
December 31, 2023
207
1
208
Accruals for Repositioning
Charges
(15)
13
(2)
Payments and Other
Adjustments
(96)
(14)
(110)
Accrual Balance at
December 31, 2024
$
96
$
—
$
96
Note 22. Income Taxes
We use an asset-and-liability approach to
account for income taxes. Our objective is to
recognize the amount of taxes payable or refundable
for the current year through charges or credits to the
current tax provision, and to recognize deferred tax
assets and liabilities for future tax consequences of
temporary differences between amounts reported in
our consolidated financial statements and their
respective tax bases. The measurement of tax assets
and liabilities is based on enacted tax laws and
applicable tax rates. The effects of a tax position on
our consolidated financial statements are recognized
when we believe it is more likely than not that the
position will be sustained. A valuation allowance is
established if it is considered more likely than not that
all or a portion of the deferred tax assets will not be
realized. Deferred tax assets and liabilities recorded
in our consolidated statement of condition are netted
within the same tax jurisdiction.
The following table presents the components of
income tax expense (benefit) for the periods
indicated:
Years Ended December 31,
(In millions)
2024
2023
2022
Current:
Federal
$
108
$
160
$
161
State
68
79
112
Non-U.S.
387
317
342
Total current expense
563
556
615
Deferred:
Federal
77
(77)
(16)
State
2
(63)
(2)
Non-U.S.
66
(44)
(44)
Total deferred expense (benefit)
145
(184)
(62)
Total income tax expense
(benefit)
$
708
$
372
$
553
The following table presents a reconciliation of the
U.S. statutory income tax rate to our effective tax rate
based on income before income tax expense for the
periods indicated:
Years Ended December 31,
2024
2023
2022
U.S. federal income tax rate
21.0 %
21.0 %
21.0 %
Changes from statutory rate:
State taxes, net of federal benefit
1.8
2.4
3.1
Tax-exempt income
(1.0)
(1.5)
(1.0)
Business tax credits(1)
(2.0)
(3.6)
(4.0)
Foreign tax differential
1.0
(0.6)
—
Foreign tax credit (benefits)/
limitations(2)
0.6
(2.0)
(0.1)
Change in Valuation Allowance
(0.5)
(0.2)
(2.0)
Other, net
(0.1)
0.6
(0.4)
Effective tax rate
20.8 %
16.1 %
16.6 %
(1) Business tax credits include research, low-income housing, production
and investment tax credits.
(2) Foreign tax credit (benefits)/limitations includes the period expense for
global intangible low-taxed income.
Undistributed indefinitely reinvested earnings of
certain
foreign
subsidiaries
amounted
to
approximately $8.38 billion at December 31, 2024. As
a result, no provision has been recorded for state and
local or foreign withholding income taxes. If a
distribution were to occur, we would be subject to
state, local and to foreign withholding tax. It is
expected that any distribution will be exempt from
federal income tax. Although the foreign withholding
tax is generally creditable against U.S. federal income
tax, certain credit utilization limitations may result in a
net cost.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 169
The
following
table
presents
significant
components of our gross deferred tax assets and
gross deferred tax liabilities as of the dates indicated:
December 31,
(In millions)
2024
2023
Deferred tax assets:
Other amortizable assets
$
189
$
265
Tax credit carryforwards
577
673
Lease obligations
214
236
Deferred compensation
111
104
Restructuring charges and other reserves
227
224
NOL and other carryforwards
147
167
Pension plan
21
24
Foreign currency translation
63
51
Unrealized losses on investment securities, net
184
352
Total deferred tax assets
1,733
2,096
Valuation allowance for deferred tax assets
(172)
(200)
Deferred tax assets, net of valuation allowance
$
1,561
$
1,896
Deferred tax liabilities:
Fixed and intangible assets
$
634
$
574
Investment basis differences
47
40
Right-of-use Assets
198
214
Other
40
68
Total deferred tax liabilities
$
919
$
896
The table below summarizes the deferred tax
assets,
carryforwards
and
related
valuation
allowances recognized as of December 31, 2024:
(In millions)
Deferred
Tax Asset
Valuation
Allowance
Expiration
Other amortizable
assets
$
189
$
(72)
None
Tax credits
577
(8)
2042-2044
NOLs - Non-U.S.
130
(80)
2026-2042, None
NOLs - U.S.
14
(10)
2025-2043, None
Other carryforwards
2
(2)
None
Management considers the valuation allowance
adequate to reduce the total deferred tax assets to an
aggregate amount that will more likely than not be
realized.
Management
has
determined
that
a
valuation allowance is not required for the remaining
deferred tax assets because it is more likely than not
that there will be sufficient taxable income of the
appropriate nature within the carryforward periods to
realize these assets.
At December 31, 2024, 2023 and 2022, the
gross unrecognized tax benefits, excluding interest,
were $237 million, $237 million and $285 million,
respectively. Of this, the amounts that would reduce
the effective tax rate, if recognized, are $220 million,
$197 million and $272 million, respectively. The
reduction in the effective tax rate includes the federal
benefit for unrecognized state tax benefits.
The following table presents activity related to
unrecognized tax benefits as of the dates indicated:
December 31,
(In millions)
2024
2023
2022
Beginning balance
$
237
$
285
$
252
Decrease related to agreements with
tax authorities
(22)
(32)
(4)
Increase related to tax positions
taken during current year
36
39
48
Increase/(Decrease) related to tax
positions taken during prior years
11
(34)
8
Decreases related to a lapse of the
applicable statute of limitations
(25)
(21)
(19)
Ending balance
$
237
$
237
$
285
It is reasonably possible that of the $237 million
of unrecognized tax benefits as of December 31,
2024, up to $37 million could decrease within the next
12 months due to agreements with tax authorities and
the expiration of statutes of limitations. Management
believes that we have sufficient accrued liabilities as
of December 31, 2024 for tax exposures and related
interest expense.
Income tax expense included related interest
and penalties of approximately $8 million, $7 million
and $8 million in 2024, 2023 and 2022, respectively.
Total
accrued
interest
and
penalties
were
approximately $21 million as of both December 31,
2024 and 2023, and $15 million as of December 31,
2022.
Note 23. Earnings Per Common Share
Basic EPS is calculated pursuant to the two-
class method, by dividing net income available to
common shareholders by the weighted-average
common shares outstanding during the period.
Diluted EPS is calculated pursuant to the two-class
method, by dividing net income available to common
shareholders by the total weighted-average number
of common shares outstanding for the period plus the
shares representing the dilutive effect of equity-based
awards. The effect of equity-based awards is
excluded from the calculation of diluted EPS in
periods in which their effect would be anti-dilutive.
The two-class method requires the allocation of
undistributed net income between common and
participating shareholders. Net income available to
common shareholders, presented separately in our
consolidated statement of income, is the basis for the
calculation
of
both
basic
and
diluted
EPS.
Participating securities are composed of unvested
and fully vested SERP shares and fully vested
deferred director stock awards, which are equity-
based awards that contain non-forfeitable rights to
dividends, and are considered to participate with the
common stock in undistributed earnings.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 170
The following table presents the computation of
basic and diluted earnings per common share for the
periods indicated:
Years Ended December 31,
(Dollars in millions, except per
share amounts)
2024
2023
2022
Net income
$
2,687
$
1,944
$
2,774
Less:
Preferred stock dividends
(202)
(122)
(112)
Dividends and undistributed
earnings allocated to
participating securities(1)
(2)
(1)
(2)
Net income available to common
shareholders
$
2,483
$
1,821
$
2,660
Average common shares
outstanding (In thousands):
Basic average common shares
297,883
322,337
365,214
Effect of dilutive securities: equity-
based awards
4,343
4,231
4,895
Diluted average common shares
302,226
326,568
370,109
Anti-dilutive securities(2)
14
1,251
866
Earnings per common share:
Basic
$
8.33
$
5.65
$
7.28
Diluted(3)
8.21
5.58
7.19
(1) Represents the portion of net income available to common equity allocated to
participating securities, composed of unvested and fully vested SERP
(Supplemental executive retirement plans) shares and fully vested deferred
director stock awards, which are equity-based awards that contain non-forfeitable
rights to dividends, and are considered to participate with the common stock in
undistributed earnings.
(2) Represents equity-based awards outstanding, but not included in the
computation of diluted average common shares, because their effect was anti-
dilutive. Additional information about equity-based awards is provided in Note 18.
(3) Calculations reflect allocation of earnings to participating securities using the
two-class method, as this computation is more dilutive than the treasury stock
method.
Note 24. Line of Business Information
Our operations are organized into two lines of
business, which represent our reportable segments:
Investment Servicing and Investment Management,
which are defined based on products and services
provided. The results of operations for these lines of
business are not necessarily comparable with those
of other companies, including companies in the
financial services industry.
Investment Servicing provides a broad range of
services and market and financing solutions to
institutional clients, including mutual funds, collective
investment funds and other investment pools,
corporate and public retirement plans, insurance
companies, investment managers, foundations and
endowments worldwide.
Through State Street Investment Services, State
Street Global Markets® and State Street Alpha®, we
offer a full range of back- and middle-office solutions,
including custody, accounting and fund administration
services for traditional and alternative assets, as well
as multi-asset class investments; recordkeeping,
client reporting and investment book of record,
transaction management, loans, cash, derivatives
and collateral services; investor services operations
outsourcing; performance, risk and compliance
analytics; financial data management to support
institutional investors; foreign exchange, brokerage
and other trading services; securities finance,
including prime services products; and deposit and
short-term investment facilities.
Together with our middle- and back-office
services, CRD’s front- and middle-office technology
offerings form the foundation of State Street Alpha®.
Our State Street Alpha platform combines portfolio
management, trading and execution, analytics and
compliance tools, and advanced data aggregation
and integration with other industry platforms and
providers. Included in CRD’s technology offerings are
Charles River Investment Management Solution, a
front-office technology offering that automates and
simplifies the institutional investment process across
asset classes, from portfolio management and risk
analytics through trading and post-trade settlement,
with integrated compliance and managed data
throughout; Charles River for Private Markets, an
investment management solution for institutions
investing in Private Credit, Private Equity, Real
Estate, Infrastructure, and Funds; and Charles River
Wealth
Management
Solution,
which
provides
portfolio
management,
trading
compliance
and
manager/sponsor
communication
capabilities
to
wealth managers, private banks and financial
advisors.
As the digital asset space continues to mature,
we are building solutions to service, tokenize and
safekeep digital assets. Our vision is to enable core
digital asset infrastructure as a trusted provider of
end-to-end solutions on a secure, interoperable
blockchain.
Investment
Management
provides
a
comprehensive range of investment management
solutions and products for our clients through State
Street Global Advisors. Our investment management
solutions include strategies across equity, fixed
income, cash, multi-asset and alternatives; products
such as SPDR® ETFs and index funds; and services
including defined benefit, defined contribution, and
Outsourced Chief Investment Officer.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 171
Our investment servicing strategy is to focus on total client relationships and the full integration of our products
and services across our client base through cross-selling opportunities. In general, our clients will use a combination
of services, depending on their needs, rather than one product or service. For instance, a custody client may
purchase securities finance and cash management services from different business units. Products and services
that we provide to our clients are parts of an integrated offering to these clients. We price our products and services
on the basis of overall client relationships and other factors; as a result, revenue may not necessarily reflect the
stand-alone market price of these products and services within the business lines in the same way it would for
separate business entities.
Our servicing and management fee revenue from the Investment Servicing and Investment Management
business lines, including foreign exchange trading services and securities finance activities, represents
approximately 70% of our consolidated total revenue. The remaining 30% is composed of software and processing
fees, including front office software and data and lending related and other fees, as well as NII, which is largely
generated by our investment of client deposits, short-term borrowings and long-term debt in a variety of assets, and
net gains (losses) related to investment securities. These other revenue types are generally fully allocated to, or
reside in, Investment Servicing and Investment Management.
Revenue and expenses are directly charged or allocated to our lines of business through management
information systems. Our CODM is the chief executive officer. The line of business results are regularly provided to
the CODM to evaluate the performance of each line of business and to inform how resources are allocated between
those lines of business to best achieve management’s strategic and tactical goals. Capital is allocated based on the
relative risks and capital requirements inherent in each business line, along with management judgment. Capital
allocations may not be representative of the capital that might be required if these lines of business were separate
business entities.
The following is a summary of our line of business results for the periods indicated.
Years Ended December 31,
Investment
Servicing
Investment
Management
Other
Total
(Dollars in millions)
2024
2023
2022
2024
2023
2022
2024
2023
2022
2024
2023
2022
Revenue:
Servicing fees
$ 5,016
$ 4,922
$ 5,087
$
—
$
—
$
—
$
—
$
—
$
—
$ 5,016
$ 4,922
$ 5,087
Management fees
—
—
—
2,124
1,876
1,939
—
—
—
2,124
1,876
1,939
Foreign exchange trading
services
1,248
1,140
1,271
138
125
82
15
—
23
1,401
1,265
1,376
Securities finance
415
402
397
23
24
19
—
—
—
438
426
416
Software and processing
fees
888
811
789
—
—
—
—
—
—
888
811
789
Other fee revenue(1)
188
145
46
35
35
(47)
66
—
—
289
180
(1)
Total fee revenue
7,755
7,420
7,590
2,320
2,060
1,993
81
—
23
10,156
9,480
9,606
Net interest income
2,899
2,740
2,551
24
19
(7)
—
—
—
2,923
2,759
2,544
Total other income
2
—
(2)
—
—
—
(81)
(294)
—
(79)
(294)
(2)
Total revenue
10,656
10,160
10,139
2,344
2,079
1,986
—
(294)
23
13,000
11,945
12,148
Provision for credit losses
75
46
20
—
—
—
—
—
—
75
46
20
Expenses:
Compensation and
employee benefits
4,078
4,033
3,896
555
520
478
64
191
54
4,697
4,744
4,428
Information systems and
communications
1,743
1,568
1,535
86
94
95
—
41
—
1,829
1,703
1,630
Transaction processing
services
825
777
809
173
180
162
—
—
—
998
957
971
Other
1,041
1,035
1,020
841
746
661
124
398
91
2,006
2,179
1,772
Total expenses
7,687
7,413
7,260
1,655
1,540
1,396
188
630
145
9,530
9,583
8,801
Income before income
tax expense
$ 2,894
$ 2,701
$ 2,859
$ 689
$ 539
$ 590
$
(188)
$
(924)
$
(122)
$ 3,395
$ 2,316
$ 3,327
Pre-tax margin
27 %
27 %
28 %
29 %
26 %
30 %
26 %
19 %
27 %
Average assets (in billions)
$ 308.5
$ 271.5
$ 283.2
$ 3.2
$ 3.2
$ 3.2
$ 311.7
$ 274.7
$ 286.4
(1) Investment Management includes other revenue items that are primarily driven by equity market movements.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 172
The “Other” columns presented in the previous table, represent amounts that are not allocated to our two lines
of business. The following provides additional information about the items included in the line of business results
“Other” column for the periods indicated.
Years Ended December 31,
Other
(Dollars in millions)
2024
2023
2022
Fee revenue(1)
$
81
$
—
$
23
Other Income(2)
(81)
(294)
—
Deferred incentive compensation expense acceleration(3)
(79)
—
—
Net repositioning charges(4)
2
(203)
(70)
Net acquisition and restructuring costs(5)
—
15
(65)
FDIC special assessment and other(6)
(111)
(442)
(10)
Total
$
(188)
$
(924)
$
(122)
(1) Includes a $66 million gain on sale of equity investment and a $15 million revenue-related recovery associated with the proceeds from a 2018 foreign exchange benchmark litigation resolution,
which is reflected in foreign exchange trading services revenue.
(2) Includes the loss on the sale of investment securities of $81 million and $294 million in 2024 and 2023, respectively, related to the repositioning of the investment portfolio.
(3) Deferred compensation expense acceleration of $79 million in 2024 reflected in compensation and employee benefits, associated with an amendment of certain outstanding deferred cash
incentive compensation awards to align our deferred pay mix with peers.
(4) Net repositioning charges in 2024 includes a $15 million release reflected in compensation and employee benefits, partially offset by $13 million of occupancy charges related to footprint
optimization. Net repositioning charges in 2023 includes $182 million reflected in compensation and employee benefits expenses related to workforce rationalization and $21 million of occupancy
costs related to real estate footprint optimization.
(5) Acquisition and restructuring costs related to the Brown Brother Harriman Investor Services acquisition transaction that State Street is no longer pursuing.
(6) Includes an FDIC special assessment of $99 million and $387 million in 2024 and 2023, respectively, related to FDIC’s recovery of estimated losses to the Deposit Insurance Fund associated
with the closures of Silicon Valley Bank and Signature Bank reflected in other expenses. Other includes a $12 million charge in 2024 reflected in other expenses and $41 million in 2023 reflected
in information systems and communications, primarily related to operating model changes.
Note 25. Revenue from Contracts with Customers
We account for revenue from contracts with customers in accordance with ASC 606. The amount of revenue
that we recognize is measured based on the consideration specified in contracts with our customers, and excludes
taxes collected from customers subsequently remitted to governmental authorities. We recognize revenue when a
performance obligation is satisfied over time as the services are performed or at a point in time depending on the
nature of the services provided as further discussed below. Revenue recognition guidance related to contracts with
customers excludes our NII, revenue earned on security lending transactions entered into as principal, realized
gains/losses on securities, revenue earned on foreign exchange activity, loans and related fees, and gains/losses
on hedging and derivatives, to which we apply other applicable U.S. GAAP guidance.
For contracts with multiple performance obligations, or contracts that have been combined, we allocate the
contracts’ transaction price to each performance obligation using our best estimate of the standalone selling price.
Our contractual fees are negotiated on a customer by customer basis and are representative of standalone selling
price utilized for allocating revenue when there are multiple performance obligations.
Substantially all of our services are provided as a distinct series of daily performance obligations that the
customer simultaneously benefits from as they are performed. Payments may be made to third party service
providers and the expense is recognized gross when we control those services as we are deemed the principal.
Contract durations may vary from short- to long-term or may be open ended. Termination notice periods are in
line with general market practice and typically do not include termination penalties. Therefore, for substantially all of
our revenues, the duration of the contract and the enforceable rights and obligations do not extend beyond the
services that are performed daily or at the transaction level. In instances where we have substantive termination
penalties, the duration of the contract may extend through the date of substantive termination penalties.
Investment Servicing
Revenue from contracts with customers related to servicing fees is recognized over time as our customers
benefit from the custody, administration, accounting, transfer agency and other related asset services as they are
performed. At contract inception, no revenue is estimated as the fees are dependent on assets under custody and/
or administration and/or actual transactions which are susceptible to market factors outside of our control.
Therefore, revenue is recognized using a time-based output method as the customers benefit from the services
over time and as the assets under custody or transactions are known or determinable during each reporting period
based on contractual fee schedules. Payments made to third party service providers, such as sub-custodians, are
generally recognized gross as we control those services and are deemed to be a principal in such arrangements.
Foreign exchange trading services revenue includes revenue generated from providing access and use of
electronic trading platforms and other trading, transition management and brokerage services. Electronic FX
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 173
services are dependent on the volume of actual transactions initiated through our electronic exchange platforms.
Revenue is recognized over time using a time-based measure as access to, and use of, the electronic exchange
platforms is made available to the customer and the activity is determinable. Revenue related to other trading,
transition management and brokerage services is recognized when the customer obtains the benefit of such
services which may be over time or at a point in time upon trade execution.
Securities finance revenue is related to services for providing agency lending programs to State Street Global
Advisors managed investment funds and third-party investment managers and asset owners. This securities finance
revenue is recognized over time using a time-based measure as our customers benefit from these lending services.
Revenue related to the front office solutions provided by CRD is primarily driven by the sale of licenses and
SaaS arrangements, including professional services such as consulting and implementation services, software
support and maintenance. Revenue for a sale of software to be installed on premise is recognized at a point in time
when the customer benefits from obtaining access to and use of the software license. Revenue for a SaaS related
arrangement is recognized over time as services are provided.
Investment Management
Revenue from contracts with customers related to investment management, investment research and
investment advisory services provided through State Street Global Advisors is recognized over time as our
customers benefit from the services as they are performed. Substantially all of our investment management fees are
determined by the value of assets under management and the investment strategies employed. At contract
inception, no revenue is estimated as the fees are dependent on assets under management which are susceptible
to market factors outside of our control.
Therefore, substantially all of our Investment Management services revenue is recognized using a time-based
output method as the customers benefit from the services over time and as the assets under management are
known or determinable during each reporting period based on contractual fee schedules. Payments made to third
party service providers, such as payments to others in unitary fee arrangements, are generally recognized on a
gross basis when State Street Global Advisors controls those services and is deemed to be a principal in such
transactions.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 174
Revenue by category
In the following table, revenue is disaggregated by our two lines of business and by revenue stream for which
the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The
amounts in the “Other” columns were not allocated to our business lines.
Year Ended December 31, 2024
Investment Servicing
Investment Management
Other
Total
(Dollars in millions)
Topic
606
revenue
All other
revenue
Total
Topic
606
revenue
All other
revenue
Total
Topic
606
revenue
All other
revenue
Total
2024
Servicing fees
$
5,016
$
—
$
5,016
$
—
$
—
$
—
$
—
$
—
$
—
$
5,016
Management fees
—
—
—
2,124
—
2,124
—
—
—
2,124
Foreign exchange trading services
386
862
1,248
138
—
138
—
15
15
1,401
Securities finance
185
230
415
—
23
23
—
—
—
438
Software and processing fees
685
203
888
—
—
—
—
—
—
888
Other fee revenue
—
188
188
—
35
35
—
66
66
289
Total fee revenue
6,272
1,483
7,755
2,262
58
2,320
—
81
81
10,156
Net interest income
—
2,899
2,899
—
24
24
—
—
—
2,923
Total other income
—
2
2
—
—
—
—
(81)
(81)
(79)
Total revenue
$
6,272
$
4,384
$ 10,656
$
2,262
$
82
$
2,344
$
—
$
—
$
—
$ 13,000
Year Ended December 31, 2023
Investment Servicing
Investment Management
Other
Total
(Dollars in millions)
Topic
606
revenue
All other
revenue
Total
Topic
606
revenue
All other
revenue
Total
Topic
606
revenue
All other
revenue
Total
2023
Servicing fees
$
4,922
$
—
$
4,922
$
—
$
—
$
—
$
—
$
—
$
—
$
4,922
Management fees
—
—
—
1,876
—
1,876
—
—
—
1,876
Foreign exchange trading services
344
796
1,140
125
—
125
—
—
—
1,265
Securities finance
225
177
402
—
24
24
—
—
—
426
Software and processing fees
627
184
811
—
—
—
—
—
—
811
Other fee revenue
—
145
145
—
35
35
—
—
—
180
Total fee revenue
6,118
1,302
7,420
2,001
59
2,060
—
—
—
9,480
Net interest income
—
2,740
2,740
—
19
19
—
—
—
2,759
Total other income
—
—
—
—
—
—
—
(294)
(294)
(294)
Total revenue
$
6,118
$
4,042
$ 10,160
$
2,001
$
78
$
2,079
$
—
$
(294) $
(294) $ 11,945
Year Ended December 31, 2022
Investment Servicing
Investment Management
Other
Total
(Dollars in millions)
Topic
606
revenue
All other
revenue
Total
Topic
606
revenue
All other
revenue
Total
Topic
606
revenue
All other
revenue
Total
2022
Servicing fees
$
5,087
$
—
$
5,087
$
—
$
—
$
—
$
—
$
—
$
—
$
5,087
Management fees
—
—
—
1,939
—
1,939
—
—
—
1,939
Foreign exchange trading services
363
908
1,271
82
—
82
—
23
23
1,376
Securities finance
233
164
397
—
19
19
—
—
—
416
Software and processing fees
599
190
789
—
—
—
—
—
—
789
Other fee revenue
—
46
46
—
(47)
(47)
—
—
—
(1)
Total fee revenue
6,282
1,308
7,590
2,021
(28)
1,993
—
23
23
9,606
Net interest income
—
2,551
2,551
—
(7)
(7)
—
—
—
2,544
Total other income
—
(2)
(2)
—
—
—
—
—
—
(2)
Total revenue
$
6,282
$
3,857
$ 10,139
$
2,021
$
(35)
$
1,986
$
—
$
23
$
23
$ 12,148
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 175
Contract balances and contract costs
As of December 31, 2024 and 2023, net receivables of $3.08 billion and $2.72 billion, respectively, are
included in accrued interest and fees receivable and other assets, representing amounts billed or currently billable
related to revenue from contracts with customers. As performance obligations are satisfied, we have an
unconditional right to payment and billing is generally performed monthly or quarterly; therefore, we do not have
significant contract assets.
We had $144 million and $133 million of deferred revenue as of December 31, 2024 and 2023, respectively.
Deferred revenue is a contract liability which represents payments received and accounts receivable recorded in
advance of providing services and is included in accrued expenses and other liabilities in the consolidated
statement of condition. In the year ended December 31, 2024, we recognized revenue of $122 million relating to
deferred revenue of $133 million as of December 31, 2023.
Transaction price allocated to the remaining performance obligations represents future, non-cancellable
contracted revenue that has not yet been recognized, inclusive of deferred revenue that has been invoiced and non-
cancellable amounts that will be invoiced and recognized as revenue in future periods. As of December 31, 2024,
total remaining non-cancelable performance obligations for services and products not yet delivered, primarily
comprised of software license sales and SaaS, were approximately $1.87 billion. We expect to recognize
approximately half of this amount in revenue over the next three years, with the remainder to be recognized
thereafter.
No adjustments are made to the promised amount of consideration for the effects of a significant financing
component as the period between when we transfer a promised service to a customer and when the customer pays
for that service is expected to be one year or less.
Note 26. Non-U.S. Activities
We define our non-U.S. activities as those revenue-producing business activities that arise from clients that are
generally serviced or managed outside the U.S. Due to the integrated nature of our business, precise segregation of
our U.S. and non-U.S. activities is not possible.
Subjective estimates, assumptions and other judgments are applied to quantify the financial results and assets
related to our non-U.S. activities, including our application of funds transfer pricing, our asset and liability
management policies and our allocation of certain indirect corporate expenses. Management periodically reviews
and updates its processes for quantifying the financial results and assets related to our non-U.S. activities.
The following table presents our U.S. and non-U.S. financial results for the periods indicated:
Years Ended December 31,
2024
2023
2022
(In millions)
Non-U.S.(1)
U.S.
Total
Non-U.S.(1)
U.S.
Total
Non-U.S.(1)
U.S.
Total
Total revenue
$
5,485
$
7,515
$ 13,000
$
5,108
$
6,837
$ 11,945
$
5,170
$
6,978
$ 12,148
Income before income tax
expense
1,376
2,019
3,395
1,057
1,259
2,316
1,358
1,969
3,327
(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.
Non-U.S. assets were $88.35 billion and $89.85 billion as of December 31, 2024 and 2023, respectively.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 176
Note 27. Parent Company Financial Statements
The following tables present the financial statements of the Parent Company without consolidation of its
banking and non-banking subsidiaries, as of and for the years indicated:
Statement of Income - Parent Company
Years Ended December 31,
(In millions)
2024
2023
2022
Cash dividends from consolidated banking subsidiary
$
1,250
$
4,550
$
1,500
Cash dividends from consolidated non-banking subsidiaries and unconsolidated entities
58
320
198
Other, net
516
274
69
Total revenue
1,824
5,144
1,767
Interest expense
1,170
975
426
Other expenses
239
198
93
Total expenses
1,409
1,173
519
Income tax (benefit)
(232)
(224)
(121)
Income (loss) before equity in undistributed income of consolidated subsidiaries and
unconsolidated entities
647
4,195
1,369
Equity in undistributed income (loss) of consolidated subsidiaries and unconsolidated entities:
Consolidated banking subsidiary
1,522
(2,464)
1,275
Consolidated non-banking subsidiaries and unconsolidated entities
518
213
130
Net income
$
2,687
$
1,944
$
2,774
Statement of Condition - Parent Company
As of December 31,
(In millions)
2024
2023
Assets:
Interest-bearing deposits with consolidated banking subsidiary
$
438
$
659
Trading account assets
499
454
Investment securities available-for-sale
378
279
Investments in:
Consolidated banking subsidiary
27,504
25,391
Consolidated non-banking subsidiaries
10,487
10,055
Unconsolidated entities
114
111
Notes and other receivables from:
Consolidated banking subsidiary
170
2
Consolidated non-banking subsidiaries and unconsolidated entities
9,211
6,816
Other assets
127
230
Total assets
$
48,928
$
43,997
Liabilities:
Notes and other payables to:
Consolidated banking subsidiary
$
—
$
68
Consolidated non-banking subsidiaries and unconsolidated entities
2,063
896
Accrued expenses and other liabilities
652
615
Long-term debt
20,887
18,619
Total liabilities
23,602
20,198
Shareholders’ equity
25,326
23,799
Total liabilities and shareholders’ equity
$
48,928
$
43,997
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 177
Statement of Cash Flows - Parent Company
Years Ended December 31,
(In millions)
2024
2023
2022
Net cash provided by (used in) operating activities
$
622
$
4,194
$
1,608
Investing Activities:
Net increase (decrease) in interest-bearing deposits with consolidated banking subsidiary
221
(199)
22
Proceeds from sales and maturities of available-for-sale securities
1,120
830
780
Purchases of available-for-sale securities
(1,204)
(836)
(886)
Investments in consolidated banking and non-banking subsidiaries
(9,330)
(10,784)
(16,252)
Sale or repayment of investment in consolidated banking and non-banking subsidiaries
7,875
7,920
15,092
Net cash used in investing activities
(1,318)
(3,069)
(1,244)
Financing Activities:
Proceeds from issuance of long-term debt, net of issuance costs
4,281
6,221
3,731
Payments for long-term debt
(2,000)
(2,500)
(1,500)
Proceeds from issuance of preferred stock, net of issuance costs
2,350
—
—
Payments for redemption of preferred stock
(1,500)
—
—
Repurchases of common stock
(1,319)
(3,781)
(1,500)
Repurchases of common stock for employee tax withholding
(83)
(95)
(123)
Payments for cash dividends
(1,033)
(970)
(972)
Net cash provided by (used in) financing activities
696
(1,125)
(364)
Net change
—
—
—
Cash and due from banks at beginning of year
—
—
—
Cash and due from banks at end of year
$
—
$
—
$
—
Note 28. Subsequent Events
On January 27, 2025, we redeemed $500 million aggregate principal amount of 4.857% fixed-to-floating rate
senior notes due 2026.
On February 6, 2025, we redeemed $300 million aggregate principal amount of 1.746% fixed-to-floating rate
senior notes due 2026.
On February 6, 2025, we issued 750,000 depositary shares, each representing a 1/100th ownership interest in
a share of fixed rate reset, non-cumulative perpetual preferred stock, Series K, without par value per share, with a
liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share), in a public offering. The
aggregate proceeds, net of underwriting discounts, commissions and other issuance costs, were approximately
$743 million.
STATE STREET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
State Street Corporation | 178
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
Distribution of Average Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential
The following table presents consolidated average statements of condition and NII for the years indicated:
Years Ended December 31,
2024
2023
2022
(Dollars in millions; fully
taxable-equivalent basis)
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Assets:
Interest-bearing deposits with U.S. banks
$
49,279
$ 1,533
3.11 %
$
39,071
$
1,260
3.22 %
$
28,415
$
563
1.98 %
Interest-bearing deposits with non-U.S. banks
39,475
2,101
5.32
30,812
1,609
5.22
48,083
279
0.58
Securities purchased under resale agreements
6,789
686
10.10
1,764
312
17.67
2,116
188
8.88
Trading account assets
782
—
—
711
—
—
721
—
0.01
Investment securities:
U.S. Treasury and federal agencies(1)
70,914
2,013
2.84
69,890
1,594
2.28
73,261
1,126
1.54
State and political subdivisions(1)
265
9
3.52
621
14
2.33
1,053
33
3.15
Other investments
33,605
1,750
5.21
35,254
1,402
3.98
37,615
553
1.47
Loans
39,660
2,272
5.73
34,800
1,863
5.35
35,117
973
2.77
Other interest-earning assets
25,300
1,616
6.39
18,098
1,131
6.25
20,850
383
1.84
Total interest-earning assets(1)
266,069
11,980
4.50
231,021
9,185
3.98
247,231
4,098
1.66
Cash and due from banks
3,674
3,925
3,652
Other assets
41,980
39,750
35,547
Total assets
$ 311,723
$ 274,696
$ 286,430
Liabilities and shareholders’ equity:
Interest-bearing deposits:
Time
$
2,103
$
116
5.51 %
$
4,352
$
243
5.59 %
$
524
$
23
— %
Savings
133,795
5,416
4.05
105,852
3,733
3.53
97,728
864
0.88
Non-U.S.
64,144
1,095
1.71
62,689
1,015
1.62
76,842
80
0.10
Total interest-bearing deposits
200,042
6,627
3.31
172,893
4,991
2.89
175,094
967
0.55
Securities sold under repurchase agreements
3,163
156
4.93
3,904
34
0.87
3,633
14
0.39
Federal funds purchased
—
—
—
65
3
4.82
—
—
—
Other short-term borrowings
11,425
577
5.05
1,120
40
3.60
1,188
26
2.18
Long-term debt
20,394
1,086
5.32
17,355
888
5.12
14,132
376
2.66
Other interest-bearing liabilities
4,826
608
12.59
3,891
465
11.96
2,725
161
5.91
Total interest-bearing liabilities
239,850
9,054
3.77
199,228
6,421
3.22
196,772
1,544
0.78
Non-interest-bearing deposits:
Demand
23,695
30,065
46,730
Non-U.S.(2)
1,874
2,153
1,050
Other liabilities
21,192
19,073
15,992
Shareholders’ equity
25,112
24,177
25,886
Total liabilities and shareholders’ equity
$ 311,723
$ 274,696
$ 286,430
Net interest income, fully taxable-equivalent
basis
$ 2,926
$
2,764
$
2,554
Excess of rate earned over rate paid
0.73 %
0.75 %
0.87 %
Net interest margin(3)
1.10
1.20
1.03
(1) Fully taxable-equivalent revenue is a method of presentation in which the tax savings achieved by investing in tax-exempt investment securities and certain leases are included
in interest income with a corresponding charge to income tax expense. This method facilitates the comparison of the performance of these assets. The adjustments are computed
using a federal income tax rate of 21% for periods ending in 2024, 2023 and 2022, adjusted for applicable state income taxes, net of the related federal tax benefit. The fully
taxable-equivalent adjustments included in interest income presented above were $3 million, $5 million and $10 million for the years ended December 31, 2024, 2023 and 2022,
respectively, and were substantially related to tax-exempt securities (state and political subdivisions).
(2) Non-U.S. non-interest-bearing deposits were $2.14 billion, $2.81 billion and $2.30 billion as of December 31, 2024, 2023 and 2022, respectively.
(3) NIM is calculated by dividing fully taxable-equivalent NII by average total interest-earning assets.
State Street Corporation | 179
SUPPLEMENTAL FINANCIAL DATA (CONTINUED)
The following table summarizes changes in fully taxable-equivalent interest income and interest expense due
to changes in volume of interest-earning assets and interest-bearing liabilities, and due to changes in interest rates.
Changes attributed to both volumes and rates have been allocated based on the proportion of change in each
category.
Years Ended December 31,
2024 Compared to 2023
2023 Compared to 2022
(Dollars in millions; fully
taxable-equivalent basis)
Change in
Volume
Change in
Rate
Net (Decrease)
Increase
Change in
Volume
Change in
Rate
Net (Decrease)
Increase
Interest income related to:
Interest-bearing deposits with U.S. banks
$
329
$
(56)
$
273
$
211
$
486
$
697
Interest-bearing deposits with non-U.S. banks
452
40
492
(100)
1,430
1,330
Securities purchased under resale agreements
888
(514)
374
(31)
155
124
Trading account assets
—
—
—
—
—
—
Investment securities:
U.S. Treasury and federal agencies
23
396
419
(52)
520
468
State and political subdivisions
(8)
3
(5)
(14)
(5)
(19)
Other investments
(66)
414
348
(35)
884
849
Loans
260
149
409
(9)
899
890
Other interest-earning assets
450
35
485
(51)
799
748
Total interest-earning assets
2,328
467
2,795
(81)
5,168
5,087
Interest expense related to:
Deposits:
Time
(126)
(1)
(127)
—
220
220
Savings
985
698
1,683
72
2,797
2,869
Non-U.S.
24
56
80
(15)
950
935
Securities sold under repurchase agreements
(6)
128
122
1
19
20
Federal funds purchased
(3)
—
(3)
—
3
3
Other short-term borrowings
371
166
537
(1)
15
14
Long-term debt
155
43
198
86
426
512
Other interest-bearing liabilities
112
31
143
69
235
304
Total interest-bearing liabilities
1,512
1,121
2,633
212
4,665
4,877
Net interest income
$
816
$
(654)
$
162
$
(293)
$
503
$
210
State Street Corporation | 180
ACRONYMS
ABS
Asset-backed securities
IDI
Insured Depository Institution
AFS
Available-for-sale
LCR(1)
Liquidity coverage ratio
AML
Anti-money laundering
LDA model
Loss distribution approach model
AOCI
Accumulated other comprehensive income (loss)
LIBOR
London Interbank Offered Rate
ASU
Accounting Standards Update
LTD
Long-term debt
AUC/A
Assets under custody and/or administration
MBS
Mortgage-backed securities
AUM
Assets under management
MRAC
Management Risk and Capital Committee
BCCC
Business Conduct and Compliance Committee
MRC
Model Risk Committee
bps
Basis points
MRM
Model Risk Management
CAP
Capital adequacy process
MVG
Model Validation Group
CCAR
Comprehensive Capital Analysis and Review
NII
Net interest income
CCB
Capital conservation buffer
NIM
Net interest margin
CECL
Current Expected Credit Loss
NOL
Net Operating Loss
CET1(1)
Common equity tier 1
NSFR(1)
Net stable funding ratio
CFTC
Commodity Futures Trading Commission
OCC
Office of the Comptroller of the Currency
CLO
Collateralized loan obligation
OFAC
Office of Foreign Assets Control
CMBS
Commercial mortgage-backed securities
ORM
Operational risk management
CODM
Chief Operating Decision Maker
OTC
Over-the-counter
COSO
Committee of Sponsoring Organizations of the Treadway
Commission
PCA
Prompt corrective action
CRD
Charles River Development
PCAOB
Public Company Accounting Oversight Board
CRO
Chief Risk Officer
PD(1)
Probability-of-default
CVA
Credit valuation adjustment
P&L
Profit-and-loss
DOJ
Department of Justice
RC
Risk Committee
DORA
Digital Operational Resilience Act
RMBS
Residential mortgage-backed securities
E&A Committee
Examining and Audit Committee
RWA(1)
Risk-weighted asset
ECB
European Central Bank
SA-CCR
Standardized approach for counterparty credit risk
EGRRCPA
Economic Growth, Regulatory Relief, and Consumer
Protection Act
SaaS
Software as a service
EPS
Earnings per share
SCB
Stress Capital Buffer
ERM
Enterprise Risk Management
SEC
Securities and Exchange Commission
ESG
Environmental, social and governance
SIFI
Systemically important financial institutions
ETF
Exchange-Traded Fund
SLB
Stress Leverage Buffer
EURIBOR
Euro Interbank Offered Rate
SLR(1)
Supplementary leverage ratio
E.U.
European Union
SOFR
Secured Overnight Financing Rate
EVE
Economic value of equity
SPDR
Spider; Standard and Poor's depository receipt
FDIC
Federal Deposit Insurance Corporation
SPOE Strategy
Single Point of Entry Strategy
FHLB
Federal Home Loan Bank of Boston
SSIF
State Street Intermediate Funding, LLC
FICC
Fixed Income Clearing Corporation
TLAC(1)
Total loss-absorbing capacity
FRC
Financial Risk Committee
TMRC
Trading and Markets Risk Committee
FTE
Fully taxable-equivalent
TOPS
Technology and Operations Committee
FSOC
Financial Stability Oversight Council
TORC
Technology and Operational Risk Committee
FX
Foreign exchange
UCITS
Undertakings for Collective Investments in Transferable
Securities
GAAP
Generally accepted accounting principles
U.K.
United Kingdom
GCR
Global credit review
UOM
Unit of measure
GDPR
General data protection regulation
U.S.
United States of America
G-SIB
Global systemically important bank
USD
U.S. dollar
HQLA(1)
High-quality liquid assets
VaR
Value-at-Risk
HTM
Held-to-maturity
VIE
Variable interest entity
(1) As defined by the applicable U.S. regulations.
State Street Corporation | 181
GLOSSARY
Asset-backed securities: A financial security backed by collateralized
assets, other than real estate or mortgage backed securities.
Assets under custody and/or administration: Assets that we hold
directly or indirectly on behalf of clients under a safekeeping or
custody arrangement or for which we provide administrative services
for clients. To the extent that we provide more than one AUC/A service
(including back and middle office services) for a client’s assets, the
value of the asset is only counted once in the total amount of AUC/A.
Assets under management: The total market value of client assets
for which we provide investment management strategy services,
advisory services and/or distribution services generating management
fees based on a percentage of the assets’ market values. These client
assets are not included on our balance sheet. Assets under
management include managed assets lost but not liquidated. Lost
business occurs from time to time and it is difficult to predict the timing
of client behavior in transitioning these assets as the timing can vary
significantly.
Certificates of deposit: A savings certificate with a fixed maturity
date, specified fixed interest rate and can be issued in any
denomination aside from minimum investment requirements. A CD
restricts access to the funds until the maturity date of the investment.
Collateralized loan obligations: A loan or security backed by a pool
of debt, primarily senior secured leveraged loans. CLOs are similar to
collateralized mortgage obligations, except for the different type of
underlying loan. With a CLO, the investor receives scheduled loan or
debt payments from the underlying loans, assuming most of the risk in
the event borrowers default, but is offered greater diversity and the
potential for higher-than-average returns.
Commercial real estate: Property intended to generate profit from
capital gains or rental income. CRE loans are term loans secured by
commercial and multifamily properties. We seek CRE loans with
strong competitive positions in major domestic markets, stable cash
flows, modest leverage and experienced institutional ownership.
Deposit beta: A measure of how much of an interest rate increase is
expected to be passed on to client interest-bearing accounts, on
average.
Doubtful: Doubtful loans meet the same definition of substandard
loans (i.e., well-defined weaknesses that jeopardize repayment with
the possibility that we will sustain some loss) with the added
characteristic that the weaknesses make collection or liquidation in full
highly questionable and improbable.
Economic value of equity: A measure designed to estimate the fair
value of assets, liabilities and off-balance sheet instruments based on
a discounted cash flow model.
Exchange-Traded Fund: A type of exchange-traded investment
product that offer investors a way to pool their money in a fund that
makes investments in stocks, bonds, or other assets and, in return, to
receive an interest in that investment pool. ETF shares are traded on
a national stock exchange and at market prices that may or may not
be the same as the net asset value.
Exposure-at-default: A measure used in the calculation of regulatory
capital under Basel III final rule. It can be defined as the expected
amount of loss a bank may be exposed to upon default of an obligor.
Global systemically important bank: A financial institution whose
distress or disorderly failure, because of its size, complexity and
systemic interconnectedness, would cause significant disruption to the
wider financial system and economic activity, which will be subject to
additional capital requirements.
Held-to-maturity investment securities: We classify investments in
debt securities as held-to-maturity only if we have the positive intent
and ability to hold those securities to maturity. Investments in debt
securities classified as held-to-maturity are measured subsequently at
amortized cost in the statement of financial position.
High-quality liquid assets: Cash or assets that can be converted into
cash at little or no loss of value in private markets and are considered
unencumbered.
Investment grade: A rating of loans and leases to counterparties with
strong credit quality and low expected credit risk and probability of
default. It applies to counterparties with a strong capacity to support
the timely repayment of any financial commitment.
Liquidity coverage ratio: The ratio of encumbered high-quality liquid
assets divided by expected total net cash outflows over a 30-day stress
period. A Basel III framework requirement for banks and bank holding
companies to measure liquidity, it is designed to ensure that certain
banking institutions, including us, maintain a minimum amount of
unencumbered HQLA sufficient to withstand the net cash outflow under
a hypothetical standardized acute liquidity stress scenario for a 30-day
stress period.
Net asset value: The amount of net assets attributable to each share/
unit of the fund at a specific date or time.
Net stable funding ratio: The ratio of the amount of available stable
funding relative to the amount of required stable funding. This ratio
should be equal to at least 100% on an ongoing basis.
On-premises revenue: Revenue derived from locally installed
software.
Prime services: The securities lending business previously referred to
as enhanced custody.
Probability of default: A measure of the likelihood that a credit obligor
will enter into default status.
Qualified financial contracts: Securities contracts, commodity
contracts, forward contracts, repurchase agreements, swap
agreements and any other contract determined by the FDIC to be a
qualified financial contract.
Risk-weighted assets: A measurement used to quantify risk inherent
in our on and off-balance sheet assets by adjusting the asset value for
risk. RWA is used in the calculation of our risk-based capital ratios.
Software-enabled revenue: Includes SaaS, maintenance and support
revenue, FIX, brokerage, and value-add services.
Special mention: Loans that consist of counterparties with potential
weaknesses that, if uncorrected, may result in deterioration of
repayment prospects.
Speculative: Loans that consist of counterparties that face ongoing
uncertainties or exposure to business, financial, or economic
downturns. However, these counterparties may have financial
flexibility or access to financial alternatives, which allow for financial
commitments to be met.
Substandard: Loans that consist of counterparties with well-defined
weakness that jeopardizes repayment with the possibility we will
sustain some loss.
Supplementary leverage ratio: The ratio of our tier 1 capital to our
total leverage exposure, which measures our capital adequacy relative
to our on and off-balance sheet assets.
Total loss-absorbing capacity: The sum of our tier 1 regulatory
capital plus eligible external long-term debt issued by us.
Value-at-Risk: Statistical model used to measure the potential loss in
value of a portfolio that could occur in normal markets condition, over a
defined holding period, within a certain confidence level.
Variable interest entity: An entity that: (1) lacks enough equity
investment at risk to permit the entity to finance its activities without
additional financial support from other parties; (2) has equity owners
that lack the right to make significant decisions affecting the entity’s
operations; and/or (3) has equity owners that do not have an obligation
to absorb or the right to receive the entity’s losses or return.
State Street Corporation | 182
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
State Street has established and maintains disclosure controls and procedures that are designed to ensure
that material information related to State Street and its subsidiaries on a consolidated basis required to be disclosed
in its reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and
reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to State Street’s management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. For the year ended December 31, 2024,
State Street’s management carried out an evaluation, with the participation of the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of State Street’s disclosure controls and
procedures. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and
Chief Financial Officer concluded that State Street’s disclosure controls and procedures were effective as of
December 31, 2024.
State Street has also established and maintains internal control over financial reporting as a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated
financial statements for external purposes in conformity with U.S. GAAP. In the ordinary course of business, State
Street routinely enhances its internal controls and procedures for financial reporting by either upgrading its current
systems or implementing new systems. Changes have been made and may be made to State Street’s internal
controls and procedures for financial reporting as a result of these efforts. During the quarter ended December 31,
2024, no change occurred in State Street’s internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, State Street’s internal control over financial reporting.
State Street Corporation | 183
INTERNAL CONTROL OVER FINANCIAL REPORTING
Management’s Report on Internal Control Over Financial Reporting
The management of State Street is responsible for establishing and maintaining adequate internal control over
financial reporting.
State Street’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of America. State Street’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of State Street;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the United States of America, and that
receipts and expenditures of State Street are being made only in accordance with authorizations of management
and directors of State Street; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of State Street’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management assessed the effectiveness of State Street’s internal control over financial reporting as of
December 31, 2024 based on the framework set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control - Integrated Framework (2013).
Based on that assessment, management concluded that, as of December 31, 2024, State Street’s internal
control over financial reporting is effective.
The effectiveness of State Street’s internal control over financial reporting as of December 31, 2024 has been
audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their accompanying
report, which follows this report.
State Street Corporation | 184
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of State Street Corporation
Opinion on Internal Control Over Financial Reporting
We have audited State Street Corporation’s internal control over financial reporting as of December 31, 2024, based
on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, State Street
Corporation (the Corporation) maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the 2024 consolidated financial statements of the Corporation and our report dated February 13,
2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Corporation’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on
the Corporation’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 13, 2025
State Street Corporation | 185
ITEM 9B. OTHER INFORMATION
Securities Trading Plans of Directors and Executive Officers
A significant portion of the compensation of our executive officers is delivered in the form of deferred equity
awards, including deferred stock and performance-based restricted stock unit awards. This compensation design is
intended to align executive compensation with the performance experienced by our shareholders. Following the
delivery of shares of our common stock under those equity awards, once any applicable service-, time- or
performance-based vesting standards have been satisfied, our executive officers from time to time engage in the
open-market sale of some of those shares. Our executive officers may also engage from time to time in other
transactions involving our securities.
Transactions in our securities by our executive officers are required to be made in accordance with our
Securities Trading Policy, which, among other things, requires that the transactions be in accordance with applicable
U.S. federal securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1
under the Exchange Act provides an affirmative defense that enables prearranged transactions in securities in a
manner that avoids concerns about initiating transactions at a future date while possibly in possession of material
nonpublic information. Our Securities Trading Policy permits our executive officers to enter into trading plans
designed to comply with Rule 10b5-1.
During the fourth quarter of 2024, none of our executive officers or directors adopted or terminated a Rule
10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information concerning our directors will appear in our Proxy Statement for the 2025 Annual Meeting of
Shareholders, to be filed pursuant to Regulation 14A on or before April 30, 2025, referred to as the 2025 Proxy
Statement, under the caption “Election of Directors.” Information concerning compliance with Section 16(a) of the
Exchange Act, if required, will appear in our 2025 Proxy Statement under the caption “Delinquent Section 16(a)
Reports.” Information concerning our Code of Ethics for Senior Financial Officers and our Examining and Audit
Committee will appear in our 2025 Proxy Statement under the caption “Corporate Governance at State Street."
Information concerning our Securities Trading Policy will appear in our 2025 Proxy Statement under the caption
“Executive Equity Ownership Guidelines, Practices and Policies.” A copy of our Securities Trading Policy is filed as
Exhibit 19 to this Form 10-K. Such information is incorporated herein by reference.
Information about our executive officers is included under Part I.
ITEM 11. EXECUTIVE COMPENSATION
Information in response to this item will appear in our 2025 Proxy Statement under the captions “Executive
Compensation” and “Non-Management Director Compensation.” Such information (other than the information
required by Item 402(v) of Regulation S-K) is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Information concerning security ownership of certain beneficial owners and management will appear in our
2025 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management.”
Such information is incorporated herein by reference.
State Street Corporation | 186
RELATED STOCKHOLDER MATTERS
The following table presents the number of outstanding common stock awards, options, warrants and rights
granted by State Street to participants in our equity compensation plans, as well as the number of securities
available for future issuance under these plans, as of December 31, 2024. The table provides this information
separately for equity compensation plans that have and have not been approved by shareholders. Shares
presented in the table and in the footnotes following the table are stated in thousands of shares.
(Shares in thousands)
(a)
Number of securities
to be issued
upon exercise of
outstanding
options,
warrants and rights
(b)
Weighted-average
exercise price of
outstanding
options,
warrants and rights(1)
(c)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected
in column (a))
Plan category:
Equity compensation plans approved by shareholders
6,898 (2)
$
—
18,255
Equity compensation plans not approved by shareholders
7 (3)
—
—
Total
6,905
—
18,255
(1) Excludes deferred stock awards and performance awards for which there is no exercise price.
(2) Consists of 4,859 thousand shares subject to deferred stock awards, zero shares subject to stock options, zero stock appreciation rights and 2,039 thousand
shares subject to performance awards (assuming payout at 100% for all awards, including awards for which performance is uncertain).
(3) Consists of shares subject to deferral.
Individual directors who are not our employees have received stock awards and cash retainers, both of which
may be deferred. Directors may elect to receive shares of our common stock in place of cash. If payment is in the
form of common stock, the number of shares is determined by dividing the approved cash amount by the closing
price on the date of the annual shareholders’ meeting or date of grant, if different. All deferred shares, whether stock
awards or common stock received in place of cash retainers, are increased to reflect dividends paid on the common
stock and, for certain directors, may include share amounts in respect of an accrual under a terminated retirement
plan.
Pursuant to State Street’s Deferred Compensation Plan for Directors, non-employee directors may elect to
defer the receipt of 0% or 100% of their (1) retainers, (2) meeting fees or (3) annual equity grant award. Non-
employee directors also may elect to receive their retainers in cash or shares of common stock. Non-employee
directors who elect to defer the cash payment of their retainers or meeting fees may choose from four notional
investment fund returns for such deferred cash. Deferrals of common stock are adjusted to reflect the hypothetical
reinvestment in additional shares of common stock for any dividends or distributions on State Street common stock.
Deferred amounts will be paid (a) as elected by the non-employee director, on either the date of their termination of
service on the Board or on the earlier of such termination and a future date specified, and (b) in the form elected by
the non-employee director as either a lump sum or in installments over a two- to five-year period.
Stock awards totaling 287,895 shares of common stock were outstanding as of December 31, 2024; awards
made through June 30, 2003, totaling 7,294 shares outstanding as of December 31, 2024, have not been approved
by shareholders. There are no other equity compensation plans under which our equity securities are authorized for
issuance that have been adopted without shareholder approval. Awards of stock made or retainer shares paid to
individual directors after June 30, 2003 have been or will be made under our 1997, 2006 or 2017 Equity Incentive
Plan, which were approved by shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information concerning certain relationships and related transactions and director independence will appear in
our 2025 Proxy Statement under the caption “Corporate Governance at State Street.” Such information is
incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information concerning principal accounting fees and services and the Examining and Audit Committee’s pre-
approval policies and procedures will appear in our 2025 Proxy Statement under the caption “Examining and Audit
Committee Matters.” Such information is incorporated herein by reference.
State Street Corporation | 187
PART IV.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(A)(1) FINANCIAL STATEMENTS
The following consolidated financial statements of State Street are included in Item 8 hereof:
Report of Independent Registered Public Accounting Firm
Consolidated Statement of Income - Years ended December 31, 2024, 2023 and 2022
Consolidated Statement of Comprehensive Income - Years ended December 31, 2024, 2023 and 2022
Consolidated Statement of Condition - As of December 31, 2024 and 2023
Consolidated Statement of Changes in Shareholders’ Equity - Years ended December 31, 2024, 2023 and
2022
Consolidated Statement of Cash Flows - Years ended December 31, 2024, 2023 and 2022
Notes to Consolidated Financial Statements
(A)(2) FINANCIAL STATEMENT SCHEDULES
Certain schedules to the consolidated financial statements have been omitted if they were not required by
Article 9 of Regulation S-X or if, under the related instructions, they were inapplicable, or the information was
contained elsewhere herein.
(A)(3) EXHIBITS
The exhibits listed in the Exhibit Index preceding the signature page in this Form 10-K are filed herewith
or are incorporated herein by reference to other SEC filings.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
State Street Corporation | 188
EXHIBIT INDEX
* 3.1
Restated Articles of Organization, as amended
* 3.2
By-laws, as amended (filed as Exhibit 3.1 to State Street’s Current Report on Form 8-K (File
No.001-07511) filed with the SEC on December 16, 2022 and incorporated herein by reference)
* 4.1
Description of Securities Registered under Section 12 of the Exchange Act
* 4.2
Deposit Agreement dated April 11, 2016, among State Street Corporation, American Stock Transfer
& Trust Company, LLC (as depositary) and the holders from time to time of depositary receipts (filed
as Exhibit 4.1 to State Street’s Current Report on Form 8-K (File No. 001-7511) dated April 11, 2016
filed with the SEC on April 11, 2016 and incorporated herein by reference)
* 4.3
Deposit Agreement, dated January 31, 2024, among State Street Corporation, Equiniti Trust
Company, LLC (as depositary), and the holders from time to time of the depositary receipts (filed as
Exhibit 4.3 to State Street's Current Report on Form 8-K (File No. 001-07511), filed with the SEC on
January 31, 2024 and incorporated herein by reference)
* 4.4
Deposit Agreement, dated July 24, 2024, among State Street Corporation, Equiniti Trust Company,
LLC (as depositary), and the holders from time to time of the depositary receipts (filed as Exhibit 4.3
to State Street's Current Report on Form 8-K (File No. 001-07511), filed with the SEC on July 24,
2024 and incorporated herein by reference)
* 4.5
Deposit Agreement dated February 6, 2025, among State Street Corporation, Equiniti Trust
Company LLC (as depositary), and the holders from time to time of the depositary receipts (filed as
Exhibit 4.3 to State Street’s Current Report on Form 8-K (File No. 001-07511), filed with the SEC on
February 6, 2025 and incorporated herein by reference)
(Note: None of the instruments defining the rights of holders of State Street’s outstanding long-term
debt are in respect of indebtedness in excess of 10% of the total assets of State Street and its
subsidiaries on a consolidated basis. State Street hereby agrees to furnish to the SEC upon request
a copy of any other instrument with respect to long-term debt of State Street and its subsidiaries.)
* 10.1†
State Street’s Executive Supplemental Retirement Plan, as amended and restated, and First,
Second and Third Amendments thereto (filed as Exhibit 10.2 to State Street’s Annual Report on
Form 10-K (File No. 001-07511) for the year ended December 31, 2020 filed with the SEC on
February 19, 2021 and incorporated herein by reference)
* 10.2†
Supplemental Cash Incentive Plan, as amended, First and Second Amendments thereto, and form
of award agreement thereunder (filed as Exhibit 10.1 to State Street’s Quarterly Report on Form 10-
Q (File No. 001-07511) for the quarter ended March 31, 2024 filed with the SEC on May 2, 2024 and
incorporated herein by reference)
* 10.3A†
State Street’s Amended and Restated 2017 Stock Incentive Plan (filed as Exhibit 99.1 to State
Street’s Current Report on Form 8-K (File No. 001-07511) filed with the SEC on May 19, 2023 and
incorporated herein by reference)
* 10.3B†
Forms of Deferred Stock Award and Cash-Settled Restricted Stock Unit Award Agreements under
State Street’s Amended and Restated 2017 Stock Incentive Plan (filed as Exhibit 10.2 to State
Street’s Quarterly Report on Form 10-Q (File No. 001-07511) for the quarter ended March 31, 2024
filed with the SEC on May 2, 2024 and incorporated herein by reference)
* 10.3C†
Form of Restricted Stock Unit Award Agreement with Performance Criteria under State Street’s
Amended and Restated 2017 Stock Incentive Plan
* 10.3D†
State Street’s Performance-Based Restricted Stock Units Risk Adjustment Guidelines for EVPs in
EMEA, effective December 20, 2024
* 10.4†
State Street’s Management Supplemental Savings Plan, Amended and Restated Effective as of
September 1, 2024 (“MSSP”) (filed as Exhibit 4.3 to State Street’s Registration Statement on Form
S-8 filed with the SEC on September 20, 2024 and incorporated herein by reference)
* 10.5†
State Street’s Rabbi Trust Agreement applicable to the MSSP dated June 1, 2002 (filed as Exhibit
10.2 to State Street’s Quarterly Report on Form 10-Q (File No. 001-07511) for the quarter ended
September 30, 2024 filed with the SEC on October 31, 2024 and incorporated herein by reference)
State Street Corporation | 189
* 10.6†
Deferred Compensation Plan for Directors of State Street Corporation, Restated January 1, 2007, as
amended (filed as Exhibit 10.12 to State Street’s Annual Report on Form 10-K (File No. 001-07511)
for the year ended December 31, 2011 filed with the SEC on February 27, 2012 and incorporated
herein by reference)
* 10.7†
Deferred Compensation Plan for Directors of State Street Corporation, Restated January 1, 2021, as
amended (filed as Exhibit 10.1 to State Street’s Quarterly Report on Form 10-Q (File No. 001-07511)
for the quarter ended June 30, 2020 filed with the SEC on July 27, 2020 and incorporated herein by
reference)
* 10.8
Deferred Prosecution Agreement dated January 17, 2017 between State Street Corporation and the
U.S. Department of Justice and United States Attorney for the District of Massachusetts (filed as
Exhibit 10.14 to State Street’s Annual Report on Form 10-K (File No. 001-07511) for the year ended
December 31, 2016 filed with the SEC on February 17, 2017 and incorporated herein by reference)
* 10.9
Deferred Prosecution Agreement dated May 13, 2021 between State Street Corporation and the
Office of the United States Attorney for the District of Massachusetts (filed as Exhibit 10.1 to State
Street’s Current Report on Form 8-K (File No. 001-07511) filed with the SEC on May 14, 2021 and
incorporated herein by reference)
* 10.10†
Description of compensation arrangements for non-employee directors filed as Exhibit 10.2 to State
Street’s Quarterly Report on Form 10-Q (File No. 001-07511) for the quarter ended June 30, 2022
filed with the SEC on July 28, 2022 and incorporated herein by reference)
* 10.11†
State Street’s Rabbi Trust Agreement applicable to various nonqualified deferred compensation
plans, dated June 1, 2002, as amended effective January 1, 2013 (filed as Exhibit 10.22 to State
Street’s Annual Report on Form 10-K (File No. 001-07511) for the year ended December 31, 2017
filed with the SEC on February 26, 2018 and incorporated herein by reference)
* 10.12A†
Form of Indemnification Agreement between State Street Corporation and each of its directors (filed
as Exhibit 10.18A to State Street’s Annual Report on Form 10-K (File No. 001-07511) for the year
ended December 31, 2013 filed with the SEC on February 21, 2014 and incorporated herein by
reference)
* 10.12B†
Form of Indemnification Agreement between State Street Corporation and each of its executive
officers (filed as Exhibit 10.18B to State Street’s Annual Report on Form 10-K (File No. 001-07511)
for the year ended December 31, 2013 filed with the SEC on February 21, 2014 and incorporated
herein by reference)
* 10.12C†
Form of Indemnification Agreement between State Street Bank and Trust Company and each of its
directors (filed as Exhibit 10.18C to State Street’s Annual Report on Form 10-K (File No. 001-07511)
for the year ended December 31, 2013 filed with the SEC on February 21, 2014 and incorporated
herein by reference)
* 10.12D†
Form of Indemnification Agreement between State Street Bank and Trust Company and each of its
executive officers (filed as Exhibit 10.18D to State Street’s Annual Report on Form 10-K (File No.
001-07511) for the year ended December 31, 2013 filed with the SEC on February 21, 2014 and
incorporated herein by reference)
* 10.13†
Form of employment agreement for executive officers in the United States and Germany
* 10.14†
Employment Letter Agreement entered into with Bradford Hu dated October 20, 2021 (filed as
Exhibit 10.3 to State Street’s Quarterly Report on Form 10-Q (File No. 001-07511) for the quarter
ended March 31, 2024 filed with the SEC on May 2, 2024 and incorporated herein by reference)
* 10.15†
Employment Letter Agreement entered into with Joerg Ambrosius effective March 31, 2019
* 10.16†
Role-Based Allowance Agreements entered into with Joerg Ambrosius dated May 5, 2022 and
September 9, 2024
* 10.17†
Employment Letter Agreement entered into with Yie-Hsin Hung dated September 9, 2022 (filed as
Exhibit 10.13 to State Street’s Annual Report on Form 10-K (File No. 001-07511) for the year ended
December 31, 2023 filed with the SEC on February 15, 2024 and incorporated herein by reference)
* 10.18†
Employment Letter Agreement entered into with Eric Aboaf dated September 22, 2016 (filed as
Exhibit 10.1 to State Street's Current Report on Form 8-K (File No. 001-07511) dated September 28,
2016 filed with the SEC on September 28, 2016 and incorporated herein by reference)
State Street Corporation | 190
* 10.19†
State Street Corporation Incentive Compensation Program, Effective January 1, 2022, (filed as
Exhibit 10.17 to State Street’s Annual Report on Form 10-K (File No. 001-7511) for the year ended
December 31, 2022 filed with the SEC on February 16, 2023 and incorporated herein by reference)
* 10.20†
State Street Corporation Cash Award Plan, Effective January 1, 2019 (filed as Exhibit 10.25 to State
Street's Annual Report on Form 10-K (File No. 001-07511) for the year ended December 31, 2018
filed with the SEC on February 21, 2019 and incorporated herein by reference)
* 19
Securities Trading Policy
* 21
Subsidiaries of State Street Corporation
* 23
Consent of Independent Registered Public Accounting Firm
31.1
Rule 13a-14(a)/15d-14(a) Certification of Chairman, Chief Executive Officer and President
31.2
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32
Section 1350 Certifications
* 97
State Street Compensation Recovery Policy
* 101.INS
The instance document does not appear in the interactive data file because its XBRL tags are
embedded within the inline XBRL document
* 101.SCH
Inline XBRL Taxonomy Extension Schema Document
* 101.CAL
Inline XBRL Taxonomy Calculation Linkbase Document
* 101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
* 101.LAB
Inline XBRL Taxonomy Label Linkbase Document
* 101.PRE
Inline XBRL Taxonomy Presentation Linkbase Document
* 104
Cover Page Interactive Data File (formatted as Inline XBRL and included within the Exhibit 101
attachments)
†
Denotes management contract or compensatory plan or arrangement
*
Exhibit filed with the SEC, but not printed herein
Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline Extensible Business
Reporting Language): (i) consolidated statement of income for the years ended December 31, 2024, 2023 and
2022, (ii) consolidated statement of comprehensive income for the years ended December 31, 2024, 2023 and
2022, (iii) consolidated statement of condition as of December 31, 2024 and 2023, (iv) consolidated statement of
changes in shareholders’ equity for the years ended December 31, 2024, 2023 and 2022, (v) consolidated
statement of cash flows for the years ended December 31, 2024, 2023 and 2022, and (vi) notes to consolidated
financial statements.
State Street Corporation | 191
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, on February 13, 2025, hereunto duly
authorized.
STATE STREET CORPORATION
By
/s/ ERIC W. ABOAF
ERIC W. ABOAF,
Vice Chairman and Chief Financial Officer
By
/s/ ELIZABETH M. SCHAEFER
ELIZABETH M. SCHAEFER,
Senior Vice President and Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on
February 13, 2025, by the following persons on behalf of the registrant and in the capacities indicated.
OFFICERS:
/s/ RONALD P. O’HANLEY
/s/ ERIC W. ABOAF
RONALD P. O’HANLEY,
ERIC W. ABOAF,
Chairman, Chief Executive Officer and President
Vice Chairman and Chief Financial Officer
/s/ ELIZABETH M. SCHAEFER
ELIZABETH M. SCHAEFER,
Senior Vice President and Chief Accounting Officer
DIRECTORS:
/s/ MARIE A. CHANDOHA
/s/ WILLIAM L. MEANEY
MARIE A. CHANDOHA
WILLIAM L. MEANEY
/s/ DONNALEE A. DEMAIO
/s/ RONALD P. O’HANLEY
DONNALEE A. DEMAIO
RONALD P. O’HANLEY
/s/ PATRICK de SAINT-AIGNAN
/s/ SEAN P. O’SULLIVAN
PATRICK de SAINT-AIGNAN
SEAN P. O’SULLIVAN
/s/ AMELIA C. FAWCETT
/s/ JULIO A. PORTALATIN
AMELIA C. FAWCETT
JULIO A. PORTALATIN
/s/ WILLIAM C. FREDA
/s/ JOHN B. RHEA
WILLIAM C. FREDA
JOHN B. RHEA
/s/ PATRICIA M. HALLIDAY
/s/ GREGORY L. SUMME
PATRICIA M. HALLIDAY
GREGORY L. SUMME
/s/ SARA MATHEW
SARA MATHEW
State Street Corporation | 192
EXHIBIT 31.1
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Ronald P. O'Hanley, certify that:
1.
I have reviewed this Annual Report on Form 10-K of State Street Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present, in all material respects, the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant's internal control over financial reporting.
By:
/s/ RONALD P. O'HANLEY
Ronald P. O'Hanley,
Chairman, Chief Executive Officer and President
Date: February 13, 2025
EXHIBIT 31.2
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Eric W. Aboaf, certify that:
1.
I have reviewed this Annual Report on Form 10-K of State Street Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present, in all material respects, the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant's internal control over financial reporting.
By:
/s/ ERIC W. ABOAF
Eric W. Aboaf,
Vice Chairman and Chief Financial Officer
Date: February 13, 2025
EXHIBIT 32
SECTION 1350 CERTIFICATIONS
To my knowledge, this Annual Report on Form 10-K for the period ended December 31, 2024 fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information
contained in this Report fairly presents, in all material respects, the financial condition and results of operations of
State Street Corporation.
By:
/s/ RONALD P. O'HANLEY
Ronald P. O'Hanley,
Chairman, Chief Executive Officer and President
By:
/s/ ERIC W. ABOAF
Eric W. Aboaf,
Vice Chairman and Chief Financial Officer
Date: February 13, 2025
Date: February 13, 2025
Appendices
1
Corporate Information
2
Board of Directors
3
Executive Leadership
4
Global Locations
2024 ANNUAL REPORT
Corporate headquarters
State Street Corporation
One Congress Street
Boston, MA 02114-2016
Website: www.statestreet.com
General Inquiries: +1 617/786-3000
Annual meeting of shareholders
Wednesday, May 14, 2025, 9:00 a.m.
Conducted via live audio webcast at:
www.virtualshareholdermeeting.com/STT2025
Transfer agent
Registered shareholders wishing to change
name or address information on their shares,
transfer ownership of stock, deposit certificates,
report lost certificates, consolidate accounts,
authorize direct deposit of dividends, or receive
information on our dividend reinvestment plan
should contact:
Equiniti Trust Company, LLC
55 Challenger Road
Ridgefield Park, NJ 07660
EQ Shareholder Services Call Center
Phone (toll-free): +1 800/937-5449
Website: equiniti.com
Email: helpast@equiniti.com
Stock listing
State Street’s common stock is listed on the
New York Stock Exchange under the ticker
symbol STT.
APPENDIX 1
Corporate Information
STATE STREET CORPORATION
Shareholder information
For timely information about State Street’s
consolidated financial results and other matters
of interest to shareholders, and to request
copies of our news releases and financial reports
by mail, please visit our website at:
investors.statestreet.com
For copies of our Forms 10-Q, quarterly earnings
press releases, Forms 8-K, or additional copies
of this annual report, please visit our website or
write to Investor Relations at corporate headquar
ters at IR@statestreet.com. Copies are provided
without charge.
Investors and analysts interested in additional
financial information may contact our Investor
Relations department at corporate headquarters.
Phone: +1 617/664-3477.
2024 ANNUAL REPORT
APPENDIX 2
DonnaLee A. DeMaio
Retired Executive Vice President
and Global Chief Operating Officer,
American International Group, Inc.
(AIG), a leading global insurance
organization
Sara Mathew
Retired Chairman and Chief Executive
Officer, Dun & Bradstreet Corporation,
an international commercial data and
analytics firm
Marie A. Chandoha
Retired President and Chief
Executive Officer, Charles Schwab
Investment Management, Inc., the
investment management subsidiary
of Charles Schwab Corporation
William C. Freda
Retired Senior Partner and Vice
Chairman, Deloitte LLP, a global
professional services firm
Patricia Halliday
Retired Chief Risk Officer, Santander U.K.
plc and Santander U.K. Group Holdings plc,
both wholly-owned subsidiaries of Banco
Santander S.A , a retail and commercial
bank with a global presence based in Spain
Ronald P. O’Hanley
Chairman, Chief Executive Officer,
and President, State Street
Corporation
Amelia C. Fawcett
Lead Director, State Street Corporation,
Retired Chairman, Kinnevik AB,
a long-term-oriented investment
company based in Sweden
Patrick de Saint-Aignan
Retired Managing Director
and Advisory Director for
Morgan Stanley, a global financial
services firm
Board of Directors
STATE STREET CORPORATION
Sean O’Sullivan
Retired Group Managing Director
and Group Chief Operating Officer,
HSBC Holdings, plc., a banking and
financial services organization
William L. Meaney
President, Chief Executive Officer,
and Director, Iron Mountain, Inc.,
an information management and
data backup and recovery company
Gregory L. Summe
Managing Partner and Founder,
Glen Capital Partners, LLC, an
alternative asset investment fund
John B. Rhea
Partner, Centerview Partners LLC,
an independent investment banking
and advisory firm
Julio A. Portalatin
Retired President and Chief Executive
Officer, Mercer Consulting Group,
Inc., a business of Marsh & McLennan
Companies
2024 ANNUAL REPORT
APPENDIX 3
Ann Fogarty
Executive Vice President,
Head of Global Delivery
Joerg Ambrosius
Executive Vice President,
President of Investment Services
Kathryn Horgan
Executive Vice President,
Chief Human Resources,
and Citizenship Officer
Anthony C. Bisegna
Executive Vice President,
Head of State Street
Global Markets
W. Bradford Hu
Executive Vice President,
Chief Risk Officer
Yie-Hsin Hung
President and Chief
Executive Officer, State Street
Global Advisors
As of March 17, 2025
Ronald P. O’Hanley
Chairman, Chief Executive Officer,
and President, State Street
Corporation
Brian Franz
Executive Vice President,
Chief Information Officer and
Head of Enterprise Resiliency
Executive Leadership
STATE STREET CORPORATION
Mostapha Tahiri
Executive Vice President,
Chief Operating Officer
John Plansky
Executive Vice President,
Head of Wealth Services
Michael L. Richards
Executive Vice President,
Senior Advisor
Donna Milrod
Executive Vice President,
Chief Product Officer
Mark Shelton
Executive Vice President,
General Counsel,
and Secretary
Mark Keating
Executive Vice President,
Interim Chief Financial Officer
Sarah Timby
Executive Vice President,
Chief Administrative Officer
2024 ANNUAL REPORT
Australia
Brisbane City
Melbourne
Sydney
Austria
Vienna
Belgium
Brussels
Brazil
Sao Paulo
Brunei
Darussalam
Bandar Seri
Begawan
Canada
Montreal
Toronto
Vancouver
Cayman Islands
Grand Cayman
Channel Islands
Jersey
Saint Helier
Chile
Santiago
Colombia
Bogota
France
Paris
Germany
Frankfurt
Leipzig
Munich
India
Bangalore
Chennai
Coimbatore
Hyderabad
Mumbai
Pune
Ireland
Drogheda
Dublin
Kilkenny
Naas
Italy
Milan
Turin
Japan
Fukuoka
Tokyo
Luxembourg
Luxembourg
Malaysia
Kuala Lumpur
Mexico
Mexico City
Netherlands
Amsterdam
Oman
Muscat
People’s
Republic
of China
Beijing
Hangzhou
Hong Kong
Shanghai
Poland
Gdansk
Krakow
Portugal
Lisbon
Saudi Arabia
Riyadh
Singapore
Singapore
South Korea
Jeonju
Seoul
Switzerland
Zurich
Taiwan
Taipei City
Thailand
Bangkok
United Arab
Emirates
Abu Dhabi
Dubai
United Kingdom
England
London
Scotland
Edinburgh
United States
Arizona
Scottsdale
California
Irvine
Sacramento
Connecticut
Stamford
Georgia
Atlanta
Illinois
Chicago
Massachusetts
Boston
Burlington
Cambridge
Quincy
Missouri
Kansas City
New Hampshire
Nashua
New Jersey
Clifton
Jersey City
Princeton
New York
New York City
North Carolina
Charlotte
Pennsylvania
Berwyn
Texas
Austin
Washington, DC
APPENDIX 4
Global Locations
STATE STREET CORPORATION
2024 ANNUAL REPORT
State Street Corporation
One Congress Street, Boston, MA 02114
statestreet.com
©2025 State Street Corporation. All rights reserved
If you would like to join us in reducing the environmental
impact and cost to produce and mail proxy materials,
you can consent to receive all future proxy statements,
proxy cards, annual reports, and related materials
electronically via e-mail or the Internet.
To sign up for fast, secure, electronic delivery,
visit www.ProxyVote.com.
7688035.1.1.GBL.RTL Expiration date: 5/30/2026