State Street Reports Fourth-Quarter Earnings Per Share of $.57, Including a Net after-Tax...

State Street Reports Fourth-Quarter Earnings Per Share of $.57, Including a Net after-Tax Charge of $279 Million, or $.71 Per Share

2007 Revenue Climbs 32% Compared to 2006

$300 Billion in Assets from Wins in Servicing and $30 Billion in
Assets from Wins in Asset Management Sustain Momentum in Core Business
in Fourth Quarter
BOSTON--(Business Wire)--State Street Corporation today announced 2007 fourth-quarter
earnings per share of $0.57 on net income of $223 million, compared to
earnings per share of $0.91 on net income of $309 million in the
fourth quarter of 2006. Revenue in the fourth quarter is $2.479
billion compared to $1.622 billion in the fourth quarter of 2006.
Return on shareholders' equity is 7.7% in the fourth quarter of 2007
compared to 16.9% in the fourth quarter of 2006. Average shares
outstanding for the fourth quarter of 2007 are 392 million shares. For
the full year 2007, earnings of $3.45 per share on net income of
$1.261 billion compares with $3.26 per share on income from continuing
operations of $1.096 billion in 2006. Return on shareholders' equity
in 2007 is 13.4% compared with return on shareholders' equity from
continuing operations of 16.2% in 2006. Average shares for the full
year 2007 are 365 million shares.

Results presented on an "operating basis" for the fourth quarter
of 2007 exclude a previously announced after-tax charge of $279
million ($467 million on a pre-tax operating basis) associated with
the underperformance of certain active fixed-income strategies at
State Street Global Advisors (SSgA) and $57 million, or $38 million of
after-tax merger and integration costs related to the July 2, 2007,
acquisition of Investors Financial Services Corp. ("Investors
Financial"). Results presented on an "operating basis" for the fourth
quarter of 2006 exclude an $18 million adjustment to reduce income-tax
expense. Revenue for both quarters is presented on a fully
taxable-equivalent basis. Full-year 2007 results presented on an
"operating basis" exclude the $279 million after tax-charge associated
with State Street Global Advisors and $198 million, or $129 million of
after-tax merger and integration costs relating to the acquisition of
Investors Financial. Full-year 2006 results presented on an "operating
basis" exclude a $65 million adjustment to increase income-tax
expense. Revenue for both years is presented on a fully tax-equivalent
basis.

Management presents results on an operating basis in order to
provide financial information that is comparable from period to
period, and to present comparable financial trends with respect to our
ongoing business operations. Management believes such presentation
facilitates an investor's understanding and analysis of our underlying
performance and trends in addition to financial information prepared
in accordance with GAAP.

The following financial information is presented on an operating
basis. Earnings per share in the fourth quarter are $1.38 per share on
net income of $540 million, up 60% from $0.86 per share in the fourth
quarter of 2006. Revenue of $2.496 billion in the fourth quarter of
2007 is up 52.8% from $1.634 billion in the fourth quarter a year ago.
Expenses of $1.649 billion in the fourth quarter of 2007 are up 40.0%
from $1.178 billion in the year-ago quarter. For the fourth quarter of
2007, return on shareholders' equity is 18.7%, compared to 15.9% for
the fourth quarter of 2006.

The following financial information is presented on an operating
basis. Earnings for the full-year 2007 is $4.57 per share on net
income of $1.669 billion, up 32% from $3.46 per share on income from
continuing operations of $1.161 billion in 2006. Revenue in 2007 is up
32.1% to a record level of $8.394 billion from $6.356 billion in 2006.
Expenses in 2007 of $5.768 billion increased 27.0% from $4.540 billion
in 2006. Return on shareholders equity in 2007 is 17.7%, up from 17.1%
in 2006.

Commenting on the performance, Ronald E. Logue, State Street's
chairman and chief executive officer, said, "Nearly every revenue item
on our income statement increased in double digits this year, compared
to 2006, resulting in 32% growth in earnings per share on an operating
basis. While investment servicing and investment management fees were
both strong, revenue from trading services and securities finance
benefited from continuing market volatility, particularly in the
fixed-income markets in the second half of 2007. The consolidation of
Investors Financial continues on schedule, and the impact on our
bottom line in 2007 was dilution of $.06 per share, a significant
improvement from our original model of $0.14 per share dilutive. Our
strategy of more actively managing the balance sheet and the growth of
our non-US business contributed to an annual increase of 55% in fully
taxable-equivalent net interest revenue. Net interest margin equaled
1.71% for 2007. Additionally, our non-U.S. revenue now represents
approximately 41% of total revenue, up from 39% in 2006."

Logue added, "As we explained on our call earlier this month, we
expect that by establishing the fourth-quarter reserve to address the
legal exposure and other costs associated with the underperformance of
certain active fixed-income strategies at State Street Global
Advisors, we can address customer concerns and help to put the issue
behind us, particularly given the current momentum in our business.
Management fee revenue at SSgA grew 21% in 2007 compared to 2006, and
SSgA continues to be a strong contributor to State Street's results.
Total assets under management as of December 31, 2007, grew 13% from
the level at the end of 2006, and specifically SSgA's fixed income
assets increased 21% in the same period."

Logue concluded, "During 2008 we will build on the progress we
made in 2007, particularly outside the U.S. We continue to target
positive operating leverage on an annual basis. For 2008, due to the
acquisition of Investors Financial on July 2, 2007, our goal for
growth in revenue is 14% to 17%, up from our long-term goal of 8% to
12%. We expect earnings per share growth of 10% to 15% and return on
equity of 14% to 17%, both on an operating basis. Our 2008 target is
to achieve near the lower end of these ranges."

In reporting its financial results for the fourth quarter of 2007,
State Street has prepared information in four categories:

-- "Baseline" results are results on an operating basis excluding
the "Investors Financial" results described below and are
presented on a fully taxable-equivalent basis.

-- "Investors Financial" results are the revenue and expenses,
including financing costs and amortization of intangibles,
attributable to the Investors Financial business acquired on
July 2, 2007, but excluding merger and integration costs, all
presented on a fully taxable-equivalent basis. Per-share
amounts reflect the effect of the acquisition on outstanding
shares.

-- "Operating-basis" results are "reported" results excluding the
charge recorded in the fourth quarter of 2007 and merger and
integration costs. They are presented on a fully
taxable-equivalent basis.

-- "Reported" results are in accordance with U.S. generally
accepted accounting principles (GAAP).

Management believes that providing separate Investors Financial
results and baseline financial information further assists investors
and analysts in understanding the effect of that acquisition.

-0-
*T
$ in millions except per share data
For the three months ended
December 31, 2007
----------------------------------------------------------------------
Baseline Investors Operating Reported
(a) Financial (c)
(b)
------------------------------ ======== =========== ========= ========
Fee Revenue $1,709 $ 201 1,910 1,910
------------------------------ -------- ----------- --------- --------
All other revenue 546 40 586 569
------------------------------ -------- ----------- --------- --------
Total revenue 2,255 241 2,496 2,479
------------------------------ -------- ----------- --------- --------
Total expenses 1,482 167 1,649 2,173
------------------------------ -------- ----------- --------- --------
Income taxes 279 28 307 83
------------------------------ -------- ----------- --------- --------
Net income $ 494 $ 46 $ 540 $ 223
------------------------------ -------- ----------- --------- --------
Diluted EPS $ 1.39 $(.01) $ 1.38 $ .57
------------------------------ -------- ----------- --------- --------
*T

(a) represents State Street results on an "operating basis,"
further adjusted to exclude the " Investors Financial" results
described in the adjoining column, all presented on a fully taxable
equivalent basis.

(b) represents revenue and expenses, including financing costs and
amortization of intangibles, attributable to the Investors Financial
business acquired on July 2, 2007, but excluding merger and
integration costs. Presented on a fully taxable-equivalent basis.
Per-share amounts reflect the impact on outstanding shares from the
issuance of approximately 61 million shares for the acquisition.

(c) excludes the charge recorded in the fourth quarter of 2007 and
merger and integration costs, and presented on a fully
taxable-equivalent basis.

FOURTH-QUARTER RESULTS VS. YEAR-AGO QUARTER

Total revenue on a fully taxable-equivalent basis is $2.496
billion in the fourth quarter of 2007 is up from $1.634 billion, or
52.8%, from the fourth quarter of 2006. Expenses on an operating basis
are $1.649 billion, up 40.0% compared with $1.178 billion in the
fourth quarter of 2006. As a result, on an operating basis, State
Street generated about 1280 basis points of positive operating
leverage.

Servicing fees are $967 million, up $269 million or 39%, from $698
million in the year-ago quarter. The increase is attributable to
business from customers added from the Investors Financial
acquisition, business from new and existing clients and higher average
equity valuations. Total assets under custody at quarter end are
$15.30 trillion, a record level, up 29%, compared with $11.85 trillion
at the end of the year-ago quarter.

Daily average values for the S&P 500 Index are up 8%, for the
MSCI(R) EAFE Index(SM) are up 16%, and for the NASDAQ are up 13%
during the fourth quarter of 2007 from the year-ago quarter.

Management fees, generated by State Street Global Advisors, are
$297 million, up $44 million, or 17%, compared to $253 million in the
year-ago quarter. The increase in management fees reflects new
business from existing and new clients and an increase in average
month-end equity valuations, offset partially by lower performance
fees. Total assets under management at quarter end are $1.98 trillion,
up 13%, compared to $1.75 trillion at the end of the year-ago quarter.

Average month-end values compared to the fourth quarter of 2006,
are up 7% for the S&P 500 Index and up 13% for the NASDAQ; average
month-end values for the MSCI(R) EAFE Index(SM) are up 15%. The total
return of the Lehman US Aggregate bond index for the fourth quarter is
3.00%.

Trading services revenue, which includes foreign exchange trading
revenue and brokerage and other fee revenue, is up 73%, from $203
million to $352 million. The increase is driven by improved volumes
and higher volatility in foreign exchange, as well as an increase in
brokerage and other revenue principally due to the acquisition of
Currenex in March, 2007.

Securities finance revenue is $256 million in the quarter,
compared to $90 million in the year-ago quarter, an increase of 184%.
The increase primarily reflects improved spreads and increased demand
for securities on loan as a result of turmoil in the fixed-income
markets.

Processing and other revenue is down 38%, or $23 million to $38
million primarily due to increased costs of funding for our
asset-backed commercial paper.

Fully taxable-equivalent net interest revenue is $573 million, up
75% from $328 million in last year's fourth quarter. The increase is
due to reinvestment of assets at higher rates and lower-cost funding,
the impact of the Investors Financial acquisition, and favorable
spreads and increased volumes of non-US deposits.

The increase in expenses on an operating basis to $1.649 billion
in the fourth quarter of 2007 from $1.178 billion in the fourth
quarter of 2006 is primarily due to the inclusion of Investors
Financial's operating expenses for the second half of 2007. Baseline
expenses increased 26%.

Salaries and employee benefits expense on an operating basis
increased $240 million to $934 million, attributable to additions to
headcount from the Investors Financial acquisition. Transaction
processing expense increased 52% to $184 million principally due to
the acquisition. Also primarily as a result of the acquisition,
information systems and communications expense increased 24% to $148
million, and occupancy expenses of $107 million in 2007 quarter
compare to $94 million in the 2006 quarter. On an operating basis,
other expenses increased 84%, or $126 million, to $276 million,
primarily due to acquisition costs, fees, such as for professional
services and recruiting, and securities processing costs.

The effective tax rate was 27.1% in the fourth quarter of 2007
compared with 30.4% in the fourth quarter of 2006. We expect the rate
for 2008 to be 34.5%.

FOURTH-QUARTER RESULTS VS. THIRD QUARTER

On an operating basis, fourth-quarter earnings are $1.38 per share
as compared to third-quarter earnings of $1.15 per share, which
excluded $91 million, or $0.24 per share of after-tax merger and
integration costs. On an operating basis in both periods, earnings per
share would have increased 20%. Total revenue on a fully
tax-equivalent basis in the 2007 fourth quarter of $2.496 billion is
up 10.6%, or $239 million compared to $2.257 billion in the third
quarter. On an operating basis, expenses in the fourth quarter of 2007
are $1.649 billion up 6.5%, or $101 million, from third quarter
expenses of $1.548 billion.

Servicing fee revenue is up 3% due to business from new and
existing customers and higher average equity valuations. Management
fees are down 1% due to lower performance fees, offset partially by
new business wins and higher equity valuations. Trading services
revenue is up 10% to $352 million primarily due to higher volatility
and increased volumes and higher volatility in FX. Securities finance
revenue improved 55% to $256 million due to improved spreads.
Processing fees and other revenue declined 38% to $38 million due to
lower results from the structured products business and lower earnings
from joint-venture equity investments. Fully taxable-equivalent net
interest revenue increased 19% to $573 million due to reinvestment of
assets at higher rates and a higher level of lower-cost funding and
the impact of the Investors Financial acquisition.

Salaries and employee benefits expense is up 2% on an operating
basis due to higher headcount added to service new business. Occupancy
expense was down 2% due to lower operating costs. On an operating
basis, other expense increased 30%, or $63 million, to $276 million
primarily due to acquisition costs, fees, such as for professional
services and recruiting, and securities processing costs.

FULL YEAR 2007 VS. 2006

Total revenue on a fully taxable-equivalent basis increased 32.1%
from $6.356 billion to $8.394 billion. Servicing fees increased 24%,
from $2.723 billion to $3.388 billion. Management fees increased 21%,
from $943 million to $1.141 billion. Trading services revenue
increased 34%, from $862 million to $1.152 billion and securities
finance revenue increased 76%, from $386 million to $681 million.
Processing fees and other revenue decreased 13%, to $237 million from
$272 million. Fully taxable-equivalent net interest revenue increased
55%, from $1.155 billion to $1.788 billion.

On an operating basis, expenses increased 27.0%, from $4.540
billion to $5.768 billion, excluding merger and integration costs and
the impact of the charge. Operating expenses included an increase of
28% to $3.397 billion in salaries and employee benefits expense.
Transaction processing expense increased 25% to $619 million and
information systems and communications increased 9% to $546 million.
Occupancy expense increased 9% to $408 million. Other expenses
increased 54% to $798 million.

ADDITIONAL INFORMATION

All per share amounts represent diluted earnings per share based
on average shares outstanding for the respective period reported.
State Street expects to complete the previously announced $1 billion
accelerated share repurchase by January 18, 2008.

INVESTOR CONFERENCE CALL

State Street will webcast an investor conference call today,
Tuesday, January 15, 2008, at 9:30 a.m. EST, available at
www.statestreet.com/stockholder. The conference call will also be
available via telephone, at +1 719/457-2679 (confirmation code
4616472). Recorded replays of the conference call will be available on
the web site, and by telephone at +1 402/220-4230, beginning at 2:00
PM today. The telephone replay will be available for approximately two
weeks following the conference call. This press release and additional
financial information is available on State Street's website, at
www.statestreet.com/stockholder, under "Financial Reports."

State Street Corporation (NYSE: STT) is the world's leading
specialist in providing institutional investors with investment
servicing, investment management and investment research and trading
services. With $15.30 trillion in assets under custody and $1.98
trillion in assets under management at December 31, 2007, State Street
operates in 26 countries and more than 100 geographic markets
worldwide and employs 27,110 worldwide. For more information, visit
State Street's web site at www.statestreet.com or call 877/639-7788
(NEWS STT) toll-free in the United States and Canada, or +1
678/999-4577 outside those countries.

FORWARD-LOOKING STATEMENTS

This news announcement contains forward-looking statements as
defined by United States securities laws, including statements about
the financial outlook and business environment, exposure to claims and
the adequacy of our reserve. These statements are not guarantees of
future performance, are inherently uncertain, are based on current
assumptions that are difficult to predict and involve a number of
risks and uncertainties. Therefore, actual outcomes and results may
differ materially from what is expressed in those statements, and
those statements should not be relied upon as representing State
Street's expectations or beliefs as of any date subsequent to the date
of this release.

Important factors that may affect future results and outcomes
include:

-- State Street's ability to integrate and convert acquisitions
into its business, including the acquisition of Investors
Financial Services Corp.;

-- the level and volatility of interest rates, particularly in
the U.S. and Europe; the performance and volatility of
securities, currency and other markets in the U.S. and
internationally; and economic conditions and monetary and
other governmental actions designed to address those
conditions;

-- the liquidity of the US and European securities markets,
particularly the markets for fixed-income securities,
including asset-backed commercial paper; and the liquidity
requirements of our customers;

-- the credit quality and credit agency ratings of the securities
in our investment securities portfolio, a deterioration or
downgrade of which could lead to other-than-temporary
impairment of the respective securities and the recognition of
an impairment loss;

-- State Street's ability to attract non-interest bearing
deposits and other low-cost funds;

-- the results of litigation and similar disputes and the effect
that any such results may have on SSgA's reputation and its
ability to attract and retain customers;

-- the possibility that the ultimate costs of the legal exposure
associated with SSgA's actively managed fixed-income
strategies may exceed or be below the level of the reserve, in
view of the uncertainties of the timing and outcome of
litigation, and the amounts involved;

-- the possibility of further developments of the nature giving
rise to the legal exposure associated with SSgA's actively
managed fixed-income and other investment strategies;

-- the performance and demand for the investment products we
offer;

-- the competitive environment in which State Street operates;

-- the enactment of legislation and changes in regulation and
enforcement that impact State Street and its customers, as
well as the effects of legal and regulatory proceedings,
including litigation;

-- State Street's ability to continue to grow revenue, control
expenses and attract the capital necessary to achieve its
business goals and comply with regulatory requirements;

-- State Street's ability to control systemic and operating
risks;

-- trends in the globalization of investment activity and the
growth on a worldwide basis in financial assets;

-- trends in governmental and corporate pension plans and savings
rates;

-- changes in accounting standards and practices, including
changes in the interpretation of existing standards, that
impact State Street's consolidated financial statements; and

-- changes in tax legislation and in the interpretation of
existing tax laws by U.S. and non-U.S. tax authorities that
impact the amount of taxes due.

Other important factors that could cause actual results to differ
materially from those indicated by any forward-looking statements are
set forth in State Street's 2006 Annual Report on Form 10-K and its
subsequent SEC filings. State Street encourages investors to read its
10-K, particularly the section on Risk Factors, and its subsequent SEC
filings for additional information with respect to any forward-looking
statements and prior to making any investment decision. The
forward-looking statements contained in this press release speak only
as of the date hereof, January 15, 2008, and State Street will not
undertake efforts to revise those forward-looking statements to
reflect events after this date.

-0-
*T
STATE STREET CORPORATION
Earnings Press Release Addendum

Financial Highlights
December 31, 2007

Quarters Ended % Change
-------------------------------------------
Q4 Q4
2007 2007
(Dollars in millions, December September December vs. vs.
except per share amounts 31, 30, 31,
or where otherwise noted) Q3 Q4
2007 (1) 2007 (1) 2006 2007 2006
------------------------------------ ---------- ----------------------

Total Revenue $ 2,479 $ 2,240 $ 1,622 11% 53%
Total Expenses (2) (3) 2,173 1,689 1,178 29 84
Net Income 223 358 309 (38) (28)

Diluted Earnings Per Share
(4) $ .57 $ .91 $ .91 (37) (37)

Cash Dividends Declared Per
Share $ .23 $ .22 $ .21
Closing Price Per Share of
Common Stock (at quarter
end) 81.20 68.16 67.44

Return on Equity 7.7 % 12.6 % 16.9%

At Quarter End:
Assets Under Custody (AUC)
(in trillions) $ 15.30 $ 15.15 $ 11.85
Assets Under Management
(AUM) (in trillions) 1.98 2.00 1.75

Financial Trends:
Years Ended % Change
-------------------- ----------
2007
December December vs.
31, 31,
(Dollars in millions,
except per share amounts) 2007 (5) 2006 2006
------------------------------------ ---------- ----------

Total Revenue $ 8,336 $ 6,311 32%
Total Expenses (2) (3) 6,433 4,540 42
Income Tax Expense 642 675 (5)
Income from Continuing
Operations 1,261 1,096 15
Income from Discontinued
Operations - 10
Net Income 1,261 1,106

Diluted Earnings Per Share:
From Continuing Operations $ 3.45 $ 3.26 6
From Discontinued
Operations - .03
Net Income 3.45 3.29

Cash Dividends Declared Per
Share .88 .80 10

Return on Equity from
Continuing Operations 13.4 % 16.2 %
Return on Equity 13.4 16.4

(1) Quarters ended December 31 and September 30, 2007 include
financial results of Investors Financial, which State Street acquired
on July 2, 2007.
(2) Total expenses for the quarters ended December 31 and September
30, 2007 include merger and integration costs of $57 million and $141
million, respectively, or $38 million and $91 million after-tax,
respectively, recorded in connection with the acquisition of
Investors Financial. Total expenses for the year ended December 31,
2007 included merger and integration costs of $198 million, or $129
million after-tax.
(3) Total expenses for the quarter and year ended December 31, 2007
include a net charge of $467 million, or $279 million after-tax,
associated with certain active fixed-income strategies at State
Street Global Advisors.
(4) Diluted earnings per share for the quarters ended December 31 and
September 30, 2007 reflect the issuance of 60.8 million shares on
July 2, 2007 in connection with the completion of the acquisition of
Investors Financial.
(5) Financial results for the year ended December 31, 2007 include
results of Investors Financial for the quarters ended September 30
and December 31, 2007.
*T

-0-
*T
STATE STREET CORPORATION
Earnings Press Release Addendum

SELECTED FINANCIAL INFORMATION
Quarters and Years Ended December 31, 2007 and December 31, 2006

Quarters Ended Years Ended
-------------------------- --------------------------

(Dollars in December December
millions, 31, December 31, December
except per 2007 31, 2007 31,
share amounts) (1) 2006 % Change (2) 2006 % Change
-------------------------------- -------- ----------------- --------

Fee Revenue:
Servicing fees $ 967 $ 698 39% $ 3,388 $ 2,723 24%
Management fees 297 253 17 1,141 943 21
Trading
services 352 203 73 1,152 862 34
Securities
finance 256 90 184 681 386 76
Processing fees
and other 38 61 (38) 237 272 (13)
-------- -------- -------- --------
Total fee
revenue 1,910 1,305 46 6,599 5,186 27

Net Interest
Revenue:
Interest
revenue 1,454 1,226 19 5,212 4,324 21
Interest
expense 898 910 (1) 3,482 3,214 8
-------- -------- -------- --------
Net interest
revenue (3) 556 316 76 1,730 1,110 56
Provision for
loan losses - - - -
-------- -------- -------- --------
Net interest
revenue after
provision for
loan losses 556 316 76 1,730 1,110 56

Gains on sales
of available-
for-sale
investment
securities,
net 13 1 7 15
-------- -------- -------- --------
Total revenue 2,479 1,622 52.8 8,336 6,311 32.1

Operating
Expenses:
Salaries and
employee
benefits 793 694 14 3,256 2,652 23
Information
systems and
communications 148 119 24 546 501 9
Transaction
processing
services 184 121 52 619 496 25
Occupancy 107 94 14 408 373 9
Special charge 600 - - 600 - -
Merger and
integration
costs 57 - - 198 - -
Other 284 150 89 806 518 56
-------- -------- -------- --------
Total operating
expenses 2,173 1,178 84.5 6,433 4,540 41.7
-------- -------- -------- --------
Income from
continuing
operations
before income
tax expense 306 444 (31) 1,903 1,771 7
Income tax
expense from
continuing
operations 83 135 642 675
-------- -------- -------- --------
Income from
continuing
operations 223 309 (28) 1,261 1,096 15

Income from
discontinued
operations
before income
tax expense - - - 16
Income tax
expense from
discontinued
operations - - - 6
-------- -------- -------- --------
Income from
discontinued
operations - - - 10
-------- -------- -------- --------
Net income $ 223 $ 309 $ 1,261 $ 1,106
======== ======== ======== ========

Earnings Per
Share From
Continuing
Operations:
Basic $ .58 $ .93 (38) $ 3.50 $ 3.31 6
Diluted .57 .91 (37) 3.45 3.26 6

Earnings Per
Share From
Discontinued
Operations:
Basic $ - $ - $ - $ .03
Diluted - - - .03

Earnings Per
Share:
Basic $ .58 $ .93 $ 3.50 $ 3.34
Diluted .57 .91 3.45 3.29

Average Shares
Outstanding
(in
thousands):
Basic 385,200 331,421 360,675 331,350
Diluted 392,200 337,429 365,488 335,732

Consolidated Selected Financial Information presented above was
prepared in accordance with accounting principles generally accepted
in the United States.

(1) Quarter ended December 31, 2007 includes financial results of
Investors Financial, which State Street acquired on July 2, 2007.
(2) Year ended December 31, 2007 includes results of Investors
Financial for the quarters ended September 30 and December 31, 2007.
(3) Net interest revenue on a fully taxable-equivalent basis was $573
million and $328 million for the quarters ended December 31, 2007 and
2006, respectively, and $1.788 billion and $1.155 billion for the
years ended December 31, 2007 and 2006, respectively. These amounts
include taxable-equivalent adjustments of $17 million and $12 million
for the quarters ended December 31, 2007 and 2006, respectively, and
$58 million and $45 million for the year ended December 31, 2007 and
2006.
*T

-0-
*T
STATE STREET CORPORATION
Earnings Press Release Addendum

SELECTED FINANCIAL INFORMATION
Quarters Ended December 31, 2007 and September 30, 2007

Quarters Ended (1)
------------------------------

December
(Dollars in millions, except per share 31, September
amounts) 2007 30, 2007 % Change
----------------------------------------------------------------------

Fee Revenue:
Servicing fees $ 967 $ 937 3%
Management fees 297 299 (1)
Trading services 352 320 10
Securities finance 256 165 55
Processing fees and other 38 61 (38)
--------- ----------
Total fee revenue 1,910 1,782 7

Net Interest Revenue:
Interest revenue 1,454 1,383 5
Interest expense 898 919 (2)
--------- ----------
Net interest revenue (2) 556 464 20
Provision for loan losses - -
--------- ----------
Net interest revenue after provision for
loan losses 556 464 20

Gains (Losses) on sales of available-
for-sale investment securities, net 13 (6)
--------- ----------
Total revenue 2,479 2,240 10.7

Operating Expenses:
Salaries and employee benefits 793 916 (13)
Information systems and communications 148 145 2
Transaction processing services 184 165 12
Occupancy 107 109 (2)
Special charge 600 - -
Merger and integration costs 57 141 (60)
Other 284 213 33
--------- ----------
Total operating expenses 2,173 1,689 28.7
--------- ----------
Income before income tax expense 306 551 (44)
Income tax expense 83 193
--------- ----------
Net income $ 223 $ 358 (38)
========= ==========

Earnings Per Share:
Basic $ .58 $ .92 (37)
Diluted .57 .91 (37)

Average Shares Outstanding (in
thousands):
Basic 385,200 386,843
Diluted 392,200 392,150

Consolidated Selected Financial Information presented above was
prepared in accordance with accounting principles generally accepted
in the United States.

(1) Quarters ended December 31 and September 30, 2007 include
financial results of Investors Financial, which State Street acquired
on July 2, 2007.
(2) Net interest revenue on a fully taxable-equivalent basis was $573
million and $481 million for the quarters ended December 31 and
September 30, 2007, respectively. These amounts include taxable-
equivalent adjustments of $17 million.
*T

-0-
*T
STATE STREET CORPORATION
Earnings Press Release Addendum

SELECTED OPERATING-BASIS FINANCIAL INFORMATION
Quarters and Years Ended December 31, 2007 and December 31, 2006

Quarters Ended (1) Years Ended (1)
-------------------------- --------------------------

(Dollars in
millions, December December December December
except per 31, 31, 31, 31,
share amounts) 2007 2006 % Change 2007 2006 % Change
-------------------------------- -------- ----------------- --------

Fee Revenue:
Servicing fees $ 967 $ 698 39% $ 3,388 $ 2,723 24%
Management fees 297 253 17 1,141 943 21
Trading
services 352 203 73 1,152 862 34
Securities
finance 256 90 184 681 386 76
Processing fees
and other 38 61 (38) 237 272 (13)
-------- -------- -------- --------
Total fee
revenue 1,910 1,305 46 6,599 5,186 27

Net Interest
Revenue:
Interest
revenue,
operating
basis 1,471 1,238 19 5,270 4,369 21
Interest
expense 898 910 (1) 3,482 3,214 8
-------- -------- -------- --------
Net interest
revenue,
operating
basis 573 328 75 1,788 1,155 55
Provision for
loan losses - - - -
-------- -------- -------- --------
Net interest
revenue after
provision for
loan losses,
operating
basis 573 328 75 1,788 1,155 55

Gains on sales
of available-
for-sale
investment
securities,
net 13 1 7 15
-------- -------- -------- --------
Total revenue,
operating
basis 2,496 1,634 52.8 8,394 6,356 32.1

Operating
Expenses:
Salaries and
employee
benefits,
operating
basis 934 694 35 3,397 2,652 28
Information
systems and
communications 148 119 24 546 501 9
Transaction
processing
services 184 121 52 619 496 25
Occupancy 107 94 14 408 373 9
Other,
operating
basis 276 150 84 798 518 54
-------- -------- -------- --------
Total operating
expenses,
operating
basis 1,649 1,178 40.0 5,768 4,540 27.0
-------- -------- -------- --------
Income from
continuing
operations
before income
tax expense,
operating
basis 847 456 86 2,626 1,816 45
Income taxes
from
continuing
operations,
operating
basis 290 153 899 610
Taxable-
equivalent
adjustment 17 12 58 45
-------- -------- -------- --------
Net income from
continuing
operations,
operating
basis $ 540 $ 291 86 $ 1,669 $ 1,161 44
======== ======== ======== ========

Diluted
earnings per
share from
continuing
operations,
operating
basis $ 1.38 $ .86 60 $ 4.57 $ 3.46 32

Average diluted
shares
outstanding
(in thousands) 392,200 337,429 365,488 335,732

Return on
equity from
continuing
operations,
operating
basis 18.7% 15.9% 17.7% 17.1%

(1) Refer to the accompanying reconciliation of reported results to
operating-basis results.
*T

-0-
*T
STATE STREET CORPORATION
Earnings Press Release Addendum

SELECTED OPERATING-BASIS FINANCIAL INFORMATION
Quarters Ended December 31, 2007 and September 30, 2007

Quarters Ended
------------------------------

December
(Dollars in millions, except per share 31,
amounts) 2007 September
(1) 30, 2007 % Change
----------------------------------------------------------------------

Fee Revenue:
Servicing fees $ 967 $ 937 3%
Management fees 297 299 (1)
Trading services 352 320 10
Securities finance 256 165 55
Processing fees and other 38 61 (38)
--------- ----------
Total fee revenue 1,910 1,782 7

Net Interest Revenue:
Interest revenue, operating basis 1,471 1,400 5
Interest expense 898 919 (2)
--------- ----------
Net interest revenue, operating basis 573 481 19
Provision for loan losses - -
--------- ----------
Net interest revenue after provision for
loan losses, operating basis 573 481 19

Gains (Losses) on sales of available-
for-sale investment securities, net 13 (6)
--------- ----------
Total revenue, operating basis 2,496 2,257 10.6

Operating Expenses:
Salaries and employee benefits,
operating basis 934 916 2
Information systems and communications 148 145 2
Transaction processing services 184 165 12
Occupancy 107 109 (2)
Other, operating basis 276 213 30
--------- ----------
Total operating expenses, operating
basis 1,649 1,548 6.5
--------- ----------
Income from continuing operations before
income tax expense, operating basis 847 709 19
Income taxes from continuing operations 290 243
Taxable-equivalent adjustment 17 17
--------- ----------
Net income from continuing operations,
operating basis $ 540 $ 449 20
========= ==========

Diluted earnings per share from
continuing operations, operating basis $ 1.38 $ 1.15 20

Average diluted shares outstanding (in
thousands) 392,200 392,150

Return on equity from continuing
operations, operating basis 18.7% 15.8%

(1) Refer to the accompanying reconciliation of reported results to
operating-basis results.
*T

-0-
*T
STATE STREET CORPORATION
Earnings Press Release Addendum

RECONCILIATION OF REPORTED RESULTS TO OPERATING-BASIS RESULTS
Quarter and Year Ended December 31, 2007

----------------------------------------------------------------------
(Dollars in
millions,
except per
share Quarter Ended December 31, Year Ended December 31,
amounts) 2007 2007
----------- ----------------------------- ----------------------------

Reported Operating Reported Operating
Results Adjust- Results Results Adjust- Results
ments ments
-------- -------- --------- -------- -------- ----------
Fee
Revenue:
Servicing
fees $ 967 $ 967 $ 3,388 $ 3,388
Management
fees 297 297 1,141 1,141
Trading
services 352 352 1,152 1,152
Securities
finance 256 256 681 681
Processing
fees and
other 38 38 237 237
-------- -------- -------- ---------
Total fee
revenue 1,910 1,910 6,599 6,599

Net
Interest
Revenue:
Interest
revenue 1,454 $ 17(1) 1,471 5,212 $ 58(1) 5,270
Interest
expense 898 - 898 3,482 - 3,482
-------- -------- -------- -------- -------- ---------
Net
interest
revenue 556 17 573 1,730 58 1,788
Provision
for loan
losses - - - - - -
-------- -------- -------- -------- -------- ---------
Net interest
revenue
after
provision
for loan
losses 556 17 573 1,730 58 1,788

Gains on
sales of
available-
for-sale
investment
securities,
net 13 - 13 7 - 7
-------------------- -------- -------- -------- -------- ---------
Total
revenue 2,479 17 2,496 8,336 58 8,394

Operating
Expenses:
Salaries
and
employee
benefits 793 141(2) 934 3,256 141(2) 3,397
Infor-
mation
systems
and
commun-
ications 148 - 148 546 - 546
Trans-
action
processing
services 184 - 184 619 - 619
Occupancy 107 - 107 408 - 408
Special
charge 600 (600)(2) - 600 (600)(2) -
Merger and
integr-
ation costs 57 (57)(3) - 198 (198)(3) -
Other 284 (8)(2) 276 806 (8)(2) 798
-------- -------- -------- -------- ------------------
Total
operating
expenses 2,173 (524) 1,649 6,433 (665) 5,768
-------- -------- -------- -------- -------- ---------
Income from
continuing
operations
before
income taxes 306 541 847 1,903 723 2,626
Income
taxes from
continuing
operations 83 207 290 642 257 899
Taxable-
equivalent
adjustment - 17(1) 17 - 58(1) 58
-------- -------- -------- -------- ------------------
Net income
from
continuing
operations $ 223 $ 317 $ 540 $ 1,261 $ 408 $ 1,669
======== ======== ======== ======== ======== =========

Diluted
earnings
per share
from
continuing
operations $.57 $.81 $ 1.38 $ 3.45 $ 1.12 $ 4.57

Average
diluted
shares
outstanding
(in
thousands) 392,200 392,200 392,200 365,488 365,488 365,488

Return on
equity
from
continuing
operations 7.7% 11.0% 18.7% 13.4% 4.3% 17.7%

Reported results reflect State Street's Consolidated Statement of
Income prepared in accordance with accounting principles generally
accepted in the United States.
(1) Represents taxable-equivalent adjustment, which is not included in
reported results.
(2) Represents a net charge associated with certain active fixed-
income strategies at State Street Global Advisors.
(3) Represents merger and integration costs recorded in connection
with the acquisition of Investors Financial, which are direct and
incremental costs associated with the acquisition and do not include
ongoing expenses of the combined organization.
*T

-0-
*T
STATE STREET CORPORATION
Earnings Press Release Addendum

RECONCILIATION OF REPORTED RESULTS TO OPERATING-BASIS RESULTS
Quarter and Year Ended December 31, 2006

----------------------------------------------------------------------
(Dollars
in
millions,
except
per share Quarter Ended December 31,
amounts) 2006 Year Ended December 31, 2006
---------------------------------------- -----------------------------

Oper- Oper-
Reported Adjust- ating Reported Adjust- ating
Results ments Results Results ments Results
--------- -------- --------- --------- -------- ----------
Fee
Revenue:
Servicing
fees $ 698 $ 698 $ 2,723 $ 2,723
Management
fees 253 253 943 943
Trading
services 203 203 862 862
Securities
finance 90 90 386 386
Processing
fees and
other 61 61 272 272
--------- -------- --------- ---------
Total fee
revenue 1,305 1,305 5,186 5,186

Net
Interest
Revenue:
Interest
revenue 1,226 $ 12(1) 1,238 4,324 $ 45(1) 4,369
Interest
expense 910 - 910 3,214 - 3,214
--------- -------- -------- --------- -------- ---------
Net
interest
revenue 316 12 328 1,110 45 1,155
Provision
for loan
losses - - - - - -
--------- -------- -------- --------- -------- ---------
Net
interest
revenue
after
provision
for loan
losses 316 12 328 1,110 45 1,155

Gains on
sales of
available-
for-sale
inves-
tment
secur-
ities, net 1 - 1 15 - 15
------------------- -------- -------- --------- -------- ---------
Total
revenue 1,622 12 1,634 6,311 45 6,356

Operating
Expenses:
Salaries
and
employee
benefits 694 - 694 2,652 - 2,652
Infor-
mation
systems
and
communi-
cations 119 - 119 501 - 501
Trans-
action
proc-
essing
services 121 - 121 496 - 496
Occupancy 94 - 94 373 - 373
Other 150 - 150 518 - 518
--------- -------- -------- --------- -------- ---------
Total
operating
expenses 1,178 - 1,178 4,540 - 4,540
--------- -------- -------- --------- -------- ---------
Income
from
cont-
inuing
oper-
ations
before
income
taxes 444 12 456 1,771 45 1,816
Income
taxes
from
cont-
inuing
oper-
ations 135 18(2) 153 675 (65)(2) 610
Taxable-
equiv-
alent
adjus-
tment - 12(1) 12 - 45(1) 45
--------- -------- -------- --------- ------------------
Net income
from
cont-
inuing
oper-
ations $ 309 $ (18) $ 291 $ 1,096 $ 65 $ 1,161
========= ======== ======== ========= ======== =========

Diluted
earn-
ings per
share
from
cont-
inuing
oper-
ations $.91 $ (.05) $.86 $ 3.26 $.20 $ 3.46

Average
dil-
uted
shares
outst-
anding (in
thou-
sands) 337,429 337,429 337,429 335,732 335,732 335,732

Return on
equity
from
cont-
inuing
oper-
ations 16.9% (1.0)% 15.9% 16.2% .9% 17.1%

Reported results reflect State Street's Consolidated Statement of
Income prepared in accordance with accounting principles generally
accepted in the United States.
(1) Represents taxable-equivalent adjustment, which is not included in
reported results.
(2) Represents tax-related adjustments primarily related to the impact
of TIPRA and issues associated with leveraged lease transactions.
*T

-0-
*T
STATE STREET CORPORATION
Earnings Press Release Addendum

RECONCILIATION OF REPORTED RESULTS TO OPERATING-BASIS RESULTS
Quarter Ended September 30, 2007

--------------------------------
(Dollars in millions, except per Quarter Ended September 30,
share amounts) 2007
------------------------------------- --------------------------------

Reported Operating
Results Adjustments Results
-------- ----------- -----------
Fee Revenue:
Servicing fees $ 937 $ 937
Management fees 299 299
Trading services 320 320
Securities finance 165 165
Processing fees and other 61 61
-------- ----------
Total fee revenue 1,782 1,782

Net Interest Revenue:
Interest revenue 1,383 $ 17(1) 1,400
Interest expense 919 - 919
-------- -------- ----------
Net interest revenue 464 17 481
Provision for loan losses - - -
-------- -------- ----------
Net interest revenue after provision
for loan losses 464 17 481

Gains on sales of available-for-sale
investment securities, net (6) - (6)
--------- -------- ----------
Total revenue 2,240 17 2,257

Operating Expenses:
Salaries and employee benefits 916 - 916
Information systems and
communications 145 - 145
Transaction processing services 165 - 165
Occupancy 109 - 109
Merger and integration costs 141 (141)(2) -
Other 213 - 213
-------- -------- ----------
Total operating expenses 1,689 (141) 1,548
-------- -------- ----------
Income from continuing operations
before income taxes 551 158 709
Income taxes from continuing
operations 193 50 243
Taxable-equivalent adjustment - 17(1) 17
-------- -------- ----------
Net income from continuing operations $ 358 $ 91 $ 449
======== ======== ==========

Diluted earnings per share from
continuing operations $.91 $.24 $ 1.15

Average diluted shares outstanding
(in thousands) 392,150 392,150 392,150

Return on equity from continuing
operations 12.6% 3.2% 15.8%

Reported results reflect State Street's Consolidated Statement of
Income prepared in accordance with accounting principles generally
accepted in the United States.
(1) Represents taxable-equivalent adjustment, which is not included in
reported results.
(2) Represents merger and integration costs recorded in connection
with the acquisition of Investors Financial, which are direct and
incremental costs associated with the acquisition and do not include
ongoing expenses of the combined organization.
*T

-0-
*T
STATE STREET CORPORATION
Press Release Addendum

CONSOLIDATED STATEMENT OF CONDITION

------------------------------------------ ---------------------------
December September December
31, 30, 31,
(Dollars in millions, except per share
amounts) 2007 2007 2006
------------------------------------------ ---------------------------

Assets
Cash and due from banks $ 4,733 $ 4,610 $ 2,368
Interest-bearing deposits with banks 5,579 6,559 5,236
Securities purchased under resale
agreements 19,133 16,151 14,678
Federal funds sold 4,540 2,575 0
Trading account assets 589 1,305 785
Investment securities available for sale 70,326 72,789 60,445
Investment securities held to maturity 4,233 4,294 4,547
Loans and leases (net of allowance of $18) 15,784 11,292 8,928
Premises and equipment 1,894 1,824 1,560
Accrued income receivable 2,096 1,883 1,617
Goodwill 4,567 4,601 1,384
Other intangible assets 1,990 1,994 434
Other assets 7,079 10,011 5,371
-------- --------- --------
Total assets $142,543 $139,888 $107,353
======== ========= ========

Liabilities
Deposits:
Noninterest-bearing $ 15,039 $ 13,779 $ 10,194
Interest-bearing -- U.S. 14,790 15,838 1,272
Interest-bearing -- Non-U.S. 65,960 63,384 54,180
-------- --------- --------
Total deposits 95,789 93,001 65,646

Securities sold under repurchase
agreements 14,646 14,008 19,147
Federal funds purchased 425 320 2,147
Other short-term borrowings 5,557 4,802 2,835
Accrued taxes and other expenses 4,392 3,953 3,143
Other liabilities 6,799 8,938 4,567
Long-term debt 3,636 3,616 2,616
-------- --------- --------
Total liabilities 131,244 128,638 100,101

Shareholders' Equity
Preferred stock, no par: authorized
3,500,000; issued none
Common stock, $1 par: authorized
750,000,000 shares;
issued 398,366,000, 398,370,000 and
337,126,000 shares 398 398 337
Surplus 4,630 4,616 399
Retained earnings 7,745 7,610 7,030
Accumulated other comprehensive loss (575) (369) (224)
Treasury stock (at cost 12,082,000,
13,576,000 and 4,688,000 shares) (899) (1,005) (290)
-------- --------- --------
Total shareholders' equity 11,299 11,250 7,252
-------- --------- --------
Total liabilities and shareholders' equity $142,543 $139,888 $107,353
======== ========= ========
*T

State Street Corporation
Edward J. Resch, +1 617-664-1110
or
Investors:
Kelley MacDonald, +1 617-664-3477
or
Media:
Hannah Grove, +1 617-664-3377

Copyright Business Wire 2008