State Street Announces Common Stock Offering

Plans Non-FDIC-Guaranteed Senior Notes Offering

Positions Company to Repay TARP CPP Investment

Company Elects to Take Action Resulting in Consolidation of Its Asset-Backed
Commercial Paper Conduits
BOSTON--(Business Wire)--
State Street Corporation (NYSE: STT) announced today that it has commenced a
public offering of its common stock. State Street also announced today that it
plans to commence a separate public offering of non-guaranteed senior notes in
the near term. The notes will not be guaranteed under the Federal Deposit
Insurance Corporation`s Temporary Liquidity Guarantee Program. Both offerings
will be conducted as public offerings pursuant to an effective registration
statement under the Securities Act of 1933. Neither offering is conditioned upon
completion of the other.

Goldman, Sachs & Co. and Morgan Stanley are acting as joint book-running
managers for the offerings.

Subject to consultation with its banking regulators, State Street plans to
notify the US Treasury of its intention to repurchase the US Treasury`s
preferred stock and common stock purchase warrant investment in State Street
under the TARP Capital Purchase Program. If permitted to do so, the company
expects to repurchase the preferred stock and warrant with proceeds of these
offerings. State Street intends to use offering proceeds not used for this
repurchase for general corporate purposes.

State Street also announced today that it elected to take action, effective on
May 15, 2009, that resulted in consolidation onto its balance sheet of the
asset-backed commercial paper conduits it administers. The analysis conducted
under the Federal Reserve`s Supervisory Capital Assessment Program (SCAP), in
evaluating State Street`s capital position, assumed consolidation of these
conduits onto State Street`s balance sheet during 2009. The Federal Reserve
concluded that, after consolidation of the conduits and under the assumptions
and methodology required by SCAP, State Street had a sufficient capital buffer
to withstand even the stress test`s "more adverse" scenario.

In connection with the consolidation of the conduits, State Street recorded for
accounting purposes an after-tax loss of approximately $3.7 billion relating to
the recognition of the unrealized mark-to-market losses on the conduit assets.
From the conduits, assets with an aggregate book value of approximately $22.7
billion as of May 15, 2009 were consolidated onto the company`s balance sheet at
a fair value of approximately $16.6 billion as of that date. Based on its credit
assessment of these assets, State Street expects that a vast majority of the
after-tax loss recorded upon consolidation will accrete as interest revenue over
the lives of the assets into the consolidated income statement. Based upon
management`s current prepayment assumptions, State Street expects approximately
$475 million pre-tax to accrete as interest revenue in 2009.

The following table1 sets forth State Street`s specified capital ratios as of
March 31, 2009 on (1) an actual (unaudited) basis, (2) adjusted to reflect the
effect of conduit consolidation onto State Street`s balance sheet as if the
consolidation had occurred on March 31, 2009 and (3) adjusted to reflect that
conduit consolidation and the assumed completion as of March 31, 2009 of the
common stock offering announced today.

March 31, 2009 Tier 1 Capital Tier 1 Leverage Tier 1 Common TCE
Actual (unaudited) 19.1 % 10.4 % 14.8 % 5.9 %
Ratios as adjusted for conduit consolidation 13.2 % 7.4 % 9.0 % 2.2 %
Ratios as adjusted for conduit consolidation and completion of stock offering 15.1 % 8.4 % 10.8 % 3.4 %

(1) See "Description of Table and Ratios" below for assumptions used in
calculating the above ratios, a description of the above ratios and certain
reconciliation and other information concerning the above table.

After giving effect to the consolidation of the conduits and assuming the
issuance of common stock and senior notes in the offerings, State Street
estimates that operating earnings per share for 2009 will be in a range from
$4.25 to $4.50. Operating revenues for 2009 are expected to decline by
approximately 12% relative to 2008. After consolidation, return on equity for
2009 is expected to be approximately 17%. Estimated operating-basis results for
2009 exclude the extraordinary loss recognized upon the consolidation of the
asset-backed commercial paper conduits, but include an estimated $0.75 per share
of accretion as interest revenue from the conduit assets as they mature or pay
down, offset by the expected impact of the offerings and a contemplated
re-establishment of a reserve for discretionary incentive compensation in the
second half of 2009, subject to company performance.

DESCRIPTION OF TABLE AND RATIOS

The ratios set forth in the table above give effect, as noted, to the
consolidation of the conduits onto our consolidated balance sheet and the
receipt as of the date of the table of an assumed $1.45 billion of net proceeds
from the common stock offering described above, but do not include any proceeds
from the proposed senior notes offering described above. The ratios set forth in
the table above are not adjusted for the planned repurchase of the preferred
stock and related common stock purchase warrant issued to the US Treasury under
the TARP Capital Purchase Program discussed above.

Effective May 15, 2009, we elected to take action that resulted in the
consolidation onto our consolidated balance sheet of all of the assets and
liabilities of the conduits in accordance with Financial Accounting Standards
Board Interpretation No. 46(R). For purposes of this table, we have assumed that
all of the conduits, with total assets of approximately $22.5 billion as of
March 31, 2009, were consolidated on March 31, 2009 and that the assets of the
conduits were recorded at their fair value as of that date, that we incurred a
charge in connection with such consolidation and that our marginal tax rate was
40%. Depending upon, among other things, the measurement date of the security,
the subsequent sale price of the security may be different from its recorded
fair value. These differences may be significant especially if the security is
sold during a period of illiquidity or market disruption or as part of a large
block of securities under a forced transaction.

Below is a description of, and other information with respect to, the ratios in
the table above.

* Tier 1 risk-based capital, or tier 1 capital, and tier 1 leverage ratios, as
applicable, are each calculated in accordance with applicable bank regulatory
requirements and, as permitted, exclude the impact of commercial paper purchased
under the Federal Reserve Bank of Boston`s Asset-Backed Commercial Paper Money
Market Mutual Fund Liquidity Facility, or AMLF.
* Tier 1 risk-based common, or tier 1 common, ratio is calculated by dividing
(a) tier 1 capital less non-common elements including qualifying perpetual
preferred stock, qualifying minority interest in subsidiaries and qualifying
trust preferred securities, by (b) risk-weighted assets, which assets are
calculated in accordance with applicable bank regulatory requirements. The tier
1 common ratio is not required by U.S. generally accepted accounting principles,
or GAAP, or on a recurring basis by applicable bank regulatory requirements.
However, this ratio was used by the Federal Reserve in connection with its
stress test administered to the 19 largest U.S. bank holding companies under the
SCAP, the results of which were announced on May 7, 2009. Although we understand
that the Federal Reserve does not intend to prospectively require calculation of
the tier 1 common ratio, due to the recent timing of the SCAP, management is
currently monitoring this ratio, along with the other ratios set forth in the
table above, in evaluating State Street`s capital levels and believes that, at
this time, the ratio may be of interest to investors. As used in the table
above, actual unaudited tier 1 capital as of March 31, 2009 was $14.6 billion,
which capital was calculated in accordance with applicable bank regulatory
requirements. To calculate tier 1 common capital, tier 1 capital was reduced by
non-common elements of capital, composed of preferred stock of $1.9 billion as
of March 31, 2009 and trust preferred securities of $1.5 billion as of March 31,
2009. These aggregate non-common capital elements of $3.4 billion at March 31,
2009 were deducted from tier 1 capital of $14.6 billion at March 31, 2009,
resulting in actual unaudited tier 1 common capital of $11.2 billion at March
31, 2009.
* The ratio of tangible common equity to adjusted tangible assets, or TCE ratio,
is calculated by dividing total common shareholders` equity by consolidated
total assets, after reducing both amounts by goodwill and other intangible
assets net of related deferred taxes. Total assets reflected in the TCE ratio
also exclude commercial paper purchased under the AMLF and cash balances on
deposit at the Federal Reserve Bank and other central banks in excess of
required reserves. The TCE ratio is not required by GAAP or by applicable bank
regulatory requirements, but is a metric used by management to evaluate the
adequacy of State Street`s capital levels. Since there is no authoritative
requirement to calculate the TCE ratio, our TCE ratio is not necessarily
comparable to similar capital measures disclosed or used by other companies in
the financial services industry. Tangible common equity and adjusted tangible
assets are non-GAAP financial measures and should be considered in addition to,
not as a substitute for or superior to, financial measures determined in
accordance with GAAP. With respect to the calculation of the actual unaudited
TCE ratio as of March 31, 2009, a reconciliation of tangible common equity to
GAAP total common shareholders` equity is set forth below in millions:

Total Common Shareholders` Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,969

Less:

Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,493

Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,809

Adjusted equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,667

Plus deferred tax liability 540

Total tangible common equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,207

With respect to the calculation of the unaudited TCE ratio as of March 31, 2009,
a reconciliation of adjusted tangible assets to GAAP total assets is set forth
below in millions:

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 142,144

Less:

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,493

Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,809

AMLF investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 740

Excess reserves held at central banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,963

Adjusted assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,139

Plus:

Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540

Total adjusted tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 105,679

ADDITIONAL INFORMATION

This press release includes financial information presented on a GAAP basis as
well as on an operating basis, in addition to other measures not presented in
accordance with GAAP and used in the calculation of identified capital ratios.
Management measures and compares certain financial information on an operating
basis, as it believes that this presentation supports meaningful comparisons
from period to period and the analysis of comparable financial trends with
respect to State Street`s normal ongoing business operations. Management
believes that operating-basis financial information, which reports revenue from
non-taxable sources on a fully taxable-equivalent basis and excludes the impact
of revenue and expenses outside of the normal course of business, facilitates an
investor`s understanding and analysis of State Street`s underlying financial
performance and trends in addition to financial information prepared in
accordance with GAAP. Management also believes that the use of other non-GAAP
financial measures in the calculation of identified capital ratios is useful to
understanding State Street`s capital position and of interest to investors.
Non-GAAP financial measures should be considered in addition to, not as a
substitute for or superior to, financial measures determined in accordance with
GAAP.

State Street has filed a registration statement (including a prospectus) with
the SEC for the offerings to which this communication relates. Before you
invest, you should read the prospectus in that registration statement and other
documents State Street has filed with the SEC for more complete information
about State Street and the offerings. You may obtain these documents for free by
visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, copies of the
prospectus may be obtained from Goldman, Sachs & Co. toll free at (866)
471-2526, or Morgan Stanley & Co. Incorporated, toll free at (866) 718-1649.

This announcement does not constitute an offer to sell or the solicitation of an
offer to buy securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful.

State Street Corporation (NYSE: STT) is the world's leading provider of
financial services to institutional investors including investment servicing,
investment management and investment research and trading. With $11.337 trillion
in assets under custody and $1.395 trillion in assets under management at March
31, 2009, State Street operates in 27 countries and more than 100 geographic
markets and employs 27,500 worldwide.

FORWARD-LOOKING STATEMENTS

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

Important factors that may affect future results and outcomes include, but are
not limited to:

* global financial market disruptions and the current worldwide economic
recession, and monetary and other governmental actions designed to address such
disruptions and recession in the U.S. and internationally;
* the impact of our consolidation for financial reporting purposes, effective as
of May 15, 2009, of the asset-backed commercial paper conduits that we
administer, including the possible increase in the volatility of our net
interest revenue, changes in the composition of the assets on our consolidated
balance sheet and the possibility that we may be required to change the manner
in which we fund those assets;
* the financial strength and continuing viability of the counterparties with
which we or our clients do business and with which we have investment or
financial exposure;
* the liquidity of the U.S. and international securities markets, particularly
the markets for fixed income securities, 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;
* the maintenance of credit agency ratings for our debt obligations as well as
the level of credibility of credit agency ratings;
* the possibility of our customers incurring substantial losses in investment
pools where we act as agent, and the possibility of further general reductions
in the valuation of assets;
* our ability to attract deposits and other low-cost, short-term funding;
* potential changes to the competitive environment, including changes due to the
effects of consolidation, extensive and changing government regulation and
perceptions of State Street as a suitable service provider or counterparty;
* the level and volatility of interest rates and the performance and volatility
of securities, credit, currency and other markets in the U.S. and
internationally;
* our ability to measure the fair value of the investment securities on our
consolidated balance sheet;
* the results of litigation, government investigations and similar disputes and,
in particular, the effect of current or potential proceedings concerning State
Street Global Advisors`, or SSgA`s, active fixed-income strategies and other
investment products, and the enactment of legislation and changes in regulation
and enforcement that impact us and our customers;
* adverse publicity or other reputational harm;
* our ability to pursue acquisitions, strategic alliances and divestures,
finance future business acquisitions and obtain regulatory approvals and
consents for acquisitions;
* the performance and demand for the products and services we offer, including
the level and timing of withdrawals from our collective investment products;
* our ability to continue to grow revenue, attract highly skilled people,
control expenses and attract the capital necessary to achieve our business goals
and comply with regulatory requirements;
* our ability to control operating risks, information technology systems risks
and outsourcing risks, the possibility of errors in the quantitative models we
use to manage our business and the possibility that our controls will fail or be
circumvented;
* the potential for new products and services to impose additional costs on us
and expose us to increased operational risk, and our ability to protect our
intellectual property rights;
* changes in government regulation or new legislation, which may increase our
costs, expose us to risk related to compliance or impact our customers;
* restrictions and limitations associated with our participation in the U.S.
Treasury`s Troubled Asset Relief Program, or TARP, capital purchase program and
our ability to repurchase the preferred stock and warrants issued by us under
that program;
* changes in accounting standards and practices; 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 our 2008
Annual Report on Form 10-K and our subsequent SEC filings, including our Current
Report on Form 8-K filed on May 18, 2009. We encourage investors to read these
filings, particularly the sections on Risk Factors, for additional information
with respect to any forward-looking statements and prior to making any
investment decision. The forward-looking statements contained in this press
release speak only as of the date hereof, May 18, 2009, and we do not undertake
efforts to revise those forward-looking statements to reflect events after this
date.

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 2009