State Street (STT) 8-K Regulation FD Disclosure

Exhibit 99.1

2

Reminder

This

presentation

contains

forward-looking

statements

as

defined

by

United

States

securities

laws,

including

statements

about

State

Street's

goals

and

expectations

regarding

its

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

State

Street’s

expectations

or

beliefs

as

of

any

date

subsequent

to

the

date

of

this

presentation.

Important

factors

that

may

affect

future

results

and

outcomes

include:

the

financial

strength

of

the

counterparties

with

which

State

Street

or

its

clients

does

business

and

with

whom

State

Street

has

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

State

Street's

customers;

potential

changes

to

the

competitive

environment

due

to

the

effects

of

consolidation,

regulation

and

perceptions

of

State

Street

as

a

suitable

service

provider

or

counterparty;

the

level

and

volatility

of

interest

rates,

particularly

in

the

U.S.,

Europe

and

the

Asia/Pacific

region;

the

performance

and

volatility

of

securities,

credit,

currency

and

other

markets

in

the

U.S.

and

internationally;

economic

conditions

and

monetary

and

other

governmental

actions

designed

to

address

the

level

and

volatility

of

interest

rates

and

the

volatility

of

securities,

currency

and

other

markets

in

the

U.S.

and

internationally;

State

Street's

ability

to

measure

the

fair

value

of

securities

in

its

investment

securities

portfolio

and

in

the

asset-backed

commercial

paper

conduits

it

sponsors,

particularly

given

current

market

conditions

for

many

of

those

securities;

the

credit

quality

and

credit

agency

ratings

of

the

securities

in

State

Street's

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

the

credit

agency

ratings

for

State

Street's

own

debt

obligations

as

well

as

the

level

of

credibility

of

credit

agency

ratings;

State

Street's

ability

to

attract

non-interest

bearing

deposits

and

other

low-cost

funds;

the

possibility

that

changes

to

accounting

rules

or

in

market

conditions

or

asset

performance

may

require

any

off-balance

sheet

activities,

including

State

Street's

asset-backed

commercial

paper

conduits,

to

be

consolidated

into

State

Street's

financial

statements,

requiring

recognition

of

associated

losses,

if

any;

the

results

of

litigation

and

similar

disputes

and,

in

particular,

the

effect

that

current

or

potential

litigation

may

have

on

its

reputation

and

that

of

State

Street

Global

Advisors

("SSgA")

and

State

Street's

ability

to

attract

and

retain

customers;

the

possibility

that

the

ultimate

costs

of

the

legal

exposure

associated

with

certain

of

SSgA's

actively

managed

fixed-income

strategies

may

exceed

or

be

below

the

level

of

the

related

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

that

previously

gave

rise

to

the

legal

exposure

associated

with

certain

of

SSgA's

actively

managed

fixed-income

and

other

investment

strategies;

State

Street's

ability

to

integrate

acquisitions

into

its

business,

including

the

acquisition

of

Investors

Financial;

the

performance

and

demand

for

the

products

and

services

State

Street

offers,

including

the

level

and

timing

of

withdrawals

from

our

collective

investment

products;

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

navigate

systemic

risks

and

control

operating

risks;

State

Street's

ability

to

obtain

quality

and

timely

services

from

third

parties

with

which

it

contracts;

trends

in

the

globalization

of

investment

activity

and

the

growth

on

a

worldwide

basis

in

financial

assets

and

the

resulting

sovereign

and

monetary

policy

risks;

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

Annual

Report

on

Form

10-K

and

its

subsequent

SEC

filings,

including,

in

particular,

its

Current

Report

on

Form

8-K

dated

October

15,

2008.

State

Street

encourages

investors

to

read

these

filings,

particularly

the

sections

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

presentation

speak

only

as

of

the

date

hereof,

November

11,

2008,

and

State

Street

does

not

undertake

efforts

to

revise

those

forward-looking

statements

to

reflect

events

after

this

date.

3

Agenda

Navigating the New Financial Landscape

Core Business is Strong

Managing through the Turmoil

Building on the Core Business

4

5

Navigating the New Financial Landscape

Core Business is Strong*

$2,417

$1.30

Consensus

**

650 BPS

$2,700

$1.40

Actual

Q2 08

$2,605

$1.36

Consensus

**

290 BPS

$2,536

$1.24

Actual

Q3 08

$2,514

$2,600

Operating Revenue

Q1 08

810 BPS

Operating Leverage

$1.19

$1.39

Operating Earnings per Share

Consensus

**

Actual

$ in millions                           

except per share data

*Results

presented

on

an

operating

basis,

including

fully

taxable-equivalent

revenue;

see

reconciling

tables

in

Appendix

**Consensus

reports’

average

of

First

Call

estimates

Indy Mac

Fannie Mae &

Freddie Mac

Significant bank

write-downs

Bear Stearns

Insurance

downgrades

Bond insurers

under scrutiny

Lehman

AMLF

CPFF

MMIFF

TARP

State Street has performed well during turbulent times

Feb

Mar

Apr

May

Jun

Jan 08

Jul

Aug

Sep

Oct

Nov

AIG

6

Core

Business

is

Strong*

—

2008

Performance

Year-to-Date

Navigating

the

New

Financial

Landscape

*Results

presented

on

an

operating

basis,

including

fully

taxable-equivalent

revenue;

see

reconciling

tables

in

Appendix

+24.7%

+21.4%

+25.4%

% Change ex IFIN

17.3%

17.8%

Operating ROE

$ in millions,

except per share data

9/30/08

9/30/07

% Change

Operating revenue

$7,836

$5,898

+32.9%

Operating expenses

$5,252

$4,119

+27.5%

Operating EPS

$4.03

$3.15

+27.9%

PERFORMANCE FOR NINE MONTHS ENDED

Operating revenue, operating EPS and operating ROE continue to be strong

Operating leverage

540 bps

400 bps

7

Navigating

the

New

Financial

Landscape

Approaching the high end of the range

Approaching the high end of the range

Exceeding the high end of the range

Expectations for 2008

14%–17%

Operating ROE

10%–15%

Growth in Operating EPS

14%–17%

Growth in Operating Revenue

Range

(Includes Investors Financial)

Goal

*Presented

on

an

operating

basis

Consistent

performance

approaching

or

above

high

end

of

ranges

Core

Business

is

Strong

—

Expectations

for

2008*

8

Navigating

the

New

Financial

Landscape

Continued

momentum

in

core

business

Core

Business

is

Strong

—

New

Business

Wins

Business

2009

Q4 08

$2 billion

$23 billion

$102 billion

$127 billion

Asset Management

$852 billion

Installed thru Q3

$130 billion

To be installed

$298 billion

$1,280 billion

Asset Servicing

YTD New Wins¹

1

Assets

as

of

9/30/08

9

-15.9

-18.6

3.1

-20

-15

-10

-5

0

5

Navigating

the

New

Financial

Landscape

-8.7

-14.3

-1.1

-15

-10

-5

0

5

Servicing

fees

are

based

on

more

factors

than

AUC

valuations

Core

Business

is

Strong

—

Servicing

Fee

Revenue

vs.

Daily

Average

Values

%

S&P

500

average

daily

valuations

EAFE

average

daily

valuations

State

Street

servicing

fee

revenue

%

Q3 2008 vs. Q3 2007

Q3 2008  vs. Q2 2008

10

Navigating the New Financial Landscape

Core Business is Strong —

Management

Fee

Revenue

vs.

Average

of

Three

Months’

End

Q3 2008  vs. Q2 2008

-8.6

-15.6

-6.8

-20

-15

-10

-5

0

5

%

%

-16.6

-21.4

-12.7

-25

-20

-15

-10

-5

0

5

S&P 500 average of 3 months’

end

EAFE average 3 months’

end

State Street management fee revenue

New business and diverse products contribute to management fee revenue

Q3 2008 vs. Q3 2007

11

12

Market conditions improving, aided by the Federal Reserve and U.S. Treasury programs

Navigating the New Financial Landscape

>

Program created to address customer requests; Assets sourced from the market

>

Committed to reducing size of program

–

$29.2 billion of assets at 9/30/07

–

$25.5 billion of assets at 9/30/08

>

As of 9/30/08, 80% of the conduit assets were rated A or higher with no sub-prime

or SIV assets

>

Excluding impact of AMLF, amount held on balance sheet was $6.2 billion as of

9/30/08

>

$22

billion

(89%)

of

commercial

paper

of

$25.5

billion

in

total

assets

within

conduits

(as

of

9/30/08)

is

eligible

to

be

sold

to

the

Federal

Reserve

Bank’s

Commercial

Paper

Funding

Facility

(CPFF),

although

we

are

not

participating

at

this time

>

Unrealized mark-to-market after-tax loss was $2.1 billion as of 9/30/08

Managing through the Turmoil

ABCP Conduits

13

Navigating the New Financial Landscape

1

The

estimated

pro

forma

impact

to

State

Street

Corporation’s

capital

ratios

assumes:

-

All

four

State

Street-sponsored

conduits,

with

combined

assets

of

approximately

$25.5

billion

at

September

30,

2008

are

consolidated

onto

the

balance

sheet

of

State

Street

Bank

and

Trust

on

September

30,

2008;

Assets

of

the

conduits

are

recorded

at

fair

value

2

Requirement

for

Tier

1

leverage

applies

to

Bank

only

3

Common

equity

plus

TARP

less

goodwill

and

intangibles

/

adjusted

tangible

assets

4

Moody’s

definition

of

TCE

gives

some

equity

credit

for

hybrid

securities

and

for

TARP

preferred

of

which

25%

is

credited

to

equity

4.26%

6.14%

4.80%

Total Tangible Equity³

15.76%

18.62%

15.95%

6%

Tier 1 Risk-Based Capital

5%

Well Capitalized

Minimum²

8.31%

8.25%

Pro-forma

ex Central Banks w/ $2B TARP

& conduit consolidation

11.16%

10.35%

Moody’s TCE/RWA

4

9.76%

8.36%

Tier 1 Leverage

Pro forma

ex Central Banks       

w/ $2B TARP

Actual

Ex Central Bank

deposits

STT’s

Ratios

9/30/2008

Had State Street consolidated its conduits on 9/30/08, it would have remained               

well-capitalized with ample sources of liquidity¹

Managing through the Turmoil

ABCP CONDUITS —

IMPACT¹

TO FINANCIAL RATIOS

14

Navigating

the

New

Financial

Landscape

>

Conservatively structured and well seasoned

>

At 9/30/08, 84% of portfolio assets were rated AAA and 97% were rated

A or better

>

Portfolio performing within expectations at 9/30/08

>

Portfolio

constructed

to

perform

well

even

with

stresses

in

market

environment²

>

As of 9/30/08, downgrades have been minimal and no assets were in

default²

>

All assets are current for principal and interest

>

Unrealized mark-to-market after-tax loss was $3.3 billion as of 9/30/08

Investment Portfolio remains of high quality and well diversified

Managing through the Turmoil

Investment

Portfolio¹

1

All

information

as

of

9/30/08

unless

otherwise

noted

2

See

Appendix

15

Navigating the New Financial Landscape

Stable Value

Wrap Accounts

>

$10BN

(as

of

9/30/08)

in

SSgA-managed

stable

value

accounts

that

have

contractual

arrangements

with

wrap

providers

>

A

Stable

Value

investment

option

is

an

important

choice

to

tens

of

thousands

of

retirement

plan

participants

>

Continued

disruption

in

markets

has

led

to

wider

spreads

between

market

and

book

value;

as

of

9/30/08

market

value

of

non-cash

assets

was

91%

of

book value

>

Added

$450

million

cash

to

these

accounts

to

bring

market

value

of

non-

cash

assets

to

95%

of

book

value

as

of

October

30,

2008

>

Purchased

$2.5

billion

in

assets

from

program

onto

State

Street’s

balance

sheet

(AFS)

to

enhance

position

of

customers

and

wrap

providers

>

State

Street’s

actions

support

plan

participants,

our

customers,

and

the

industry

Contribution

helps

to

protect

the

retirement

interests

of

plan

participants

Managing through the Turmoil

16

Navigating

the

New

Financial

Landscape

>

State

Street

acts

as

agent,

not

principal,

in

managing

program

>

Collateral

pools

performing

as

expected

and

are

conservatively

invested

–

23

day

duration

book

as

of

9/30/08

–

Customer

participation/redemption

in

collateral

pools

managed

with

available liquidity

>

Customers

have

not

experienced

losses

due

to

default

and

collateral

pools

have

not

required

our

support

in

current

market

turmoil

>

As

of

September

30,

2008,

excluding

market

declines,

program

assets

have

declined

10%

from

June

30.

2008

–

About

44

of

450

customers

have

suspended

participation

in

the

program

–

No

restrictions

on

customers’

normal

program

activities;

certain

restrictions

on

customers

whose

withdrawal

requests

are

a

change

from

normal activity

–

Gained

several

new

customers

during

period

of

turmoil

>

Spreads

and

scarcity

value

of

assets

on

loan

are

expected

to

partially

offset

the

impact

of

lower

volumes

Program

remains

liquid

in

challenging

market

Managing through the Turmoil

Securities

Lending¹

1

All

information

as

of

9/30/08

unless

otherwise

noted

17

Navigating

the

New

Financial

Landscape

State

Street

is

an

integral

part

of

the

financial

services

infrastructure

Managing

through

the

Turmoil

—

Government

Actions

TARP

CPFF

AMLF

MBS

Fed / Treasury Programs

>

One

of

nine

financial

institutions

selected

to

lead

participation

in

Capital

Purchase

Program

>

Asset-purchase

component

of

TARP

still

evolving

>

Appointed

as

custodian

and

administrator

for

Commercial

Paper

Funding

Facility

>

One

of

the

first

banks

to

be

fully

operational

with

Asset-Backed

Commercial

Paper

Money

Market

Liquidity

Facility

(AMLF)

program

>

No

credit

or

capital

assessment

to

State

Street

>

$152

billion

of

eligible

ABCP

purchased

from

2a7

funds

in

total

program;

State

Street

purchased

$77

billion

as

of

9/30/08

>

Appointed

to

manage

a

portion

of

Mortgage-Backed

Securities Program

State Street Eligible

Custody / Manage

18

19

Navigating the New Financial Landscape

Building on the Core Business —

Rating Agency View of Capital

“…State

Street’s

current

capital

levels

provide

a

substantial

cushion

against

the

primary

direct

risks

to

its

capital

adequacy…

if

conduit

assets

were

consolidated

and

the

security

portfolio

unrealized

losses

at

9/30/08

were

deducted

from

capital

[low

likelihood

on

a

HTM

basis]

then

Moody’s

estimates

that

State

Street’s

Tier1/RWA

would

fall

to

a

still

solid

approximately

11.5%

from

a

very

high

19%...”

—

Moody’s

press

release

affirming

State

Street

Credit

rating

at

Aa3,

10/15/08

“We

have

tended

to

look

at

tangible

common

equity

relative

to

risk

weighted

assets

rather

than

to

total

assets.

Because

we

still

feel

risk

weighted

gives

you

a

clearer

—

a

better

picture

of

the

risks

than

total

assets

would...So

generally

we

actually

look

at

both

tier

one

ratio

and

our

own

tangible

common

equity

to

risk

weighted

assets

ratio,

and

we

generally

give

those

two

equal

weights

in

our

analysis.

”

—

David

Fanger,

Senior

Analyst

at

Moody’s,

10/20/08

Describing

Moody’s

approach

to

capital

adequacy

when

determining

credit

ratings

as

reported

on

a

Deutsche-Bank

sponsored

conference

call

Moody’s

20

Navigating

the

New

Financial

Landscape

>

Raised

$2.8

billion

in

equity

capital

in

June

2008

>

TARP

added

$2

billion

in

preferred

shares

in

October

2008

>

Generated

approximately

$1.8

billion

of

organic

capital

in

9

months

of

2008

>

TOTAL:

Added

$6.6

billion

in

additional

capital

in

the

first

9

months

of

2008

Building

on

the

Core

Business

—

Regulatory

Ratios

Well-capitalized

with

ample

sources

of

liquidity;

Goal

is

to

maintain

flexibility

in

the

challenging

market

environment

8.3%

15.8%

STT

pro forma

with TARP

and conduit

consolidation²

8.7%

12.1%

NTRS

pro forma

with TARP³

8.2%

11.8%

BK

pro forma

with TARP³

9.8%

18.6%

STT

pro forma

with TARP²

6.6%

6.5%

8.4%

5%

Leverage

Ratio

NTRS²

BK²

STT²

Well Capitalized

Minimum¹

9.2%

9.3%

16.0%

6%

Tier 1

Risk-based

Capital

As of September 30, 2008

1

Requirement

for

Tier

1

leverage

applies

to

Bank

only

2

Based

on

reported

results

3

Based

on

State

Street’s

calculation

adding

reported

TARP

issuance

to

information

disclosed

in

reports

from

BK

and

NTRS

21

Navigating

the

New

Financial

Landscape

Building

on

the

Core

Business

—

Opportunities

>

$225

billion

*

of

AUM

at

SSgA

and

$270

billion

in

AUC

from

Sovereign

Wealth

Funds

>

Leverage

strong

existing

relationships

to

further

penetrate

this

growing

segment

>

Integrated

firm-wide

approach

presents

new

cross-sell

opportunities

Sovereign

Wealth Funds

>

State

Street

ETFs

of

$180

billion

(9/30/08)

—

up

$30

billion

from

6/30/08

>

Leverage

strong

brand

awareness

and

multi-channel

distribution

strategy

>

Opportunities

exist

for

continued

product

innovation

Exchange

Traded Funds

>

Cost

pressures

tend

to

increase

willingness

of

investment

managers

to

outsource

back

and

middle

office

functions

>

Expect

increased

business

opportunities

in

2H

2009

and

2010

Outsourcing

>

Recent

government

actions

have

created

political

environment

for

regulatory reform

>

More

regulation

generally

increases

customer

demand

for

administration

and reporting

Regulatory Reform

*As of September 30, 2008

22

Navigating

the

New

Financial

Landscape

Building

on

the

Core

Business

—

Expense

Management

Since

2004,

inculcating

expense

management

into

corporate

DNA

Key Levers

>

State

Street

remains

committed

to

achieving

positive

operating

leverage

on

an

annual

basis

>

Given

the

uncertainty

in

the

current

economic

environment,

we

must

remain

vigilant

>

Aggressive

policies

in

place

to

manage

headcount

and

related

expense

–

IT

expenses

(20%–25%

of

operating

expenses)

can

be

modulated

–

Use

of

contractors

provides

flexibility

in

expense

>

Redoubling

strategic

sourcing

efforts

23

Navigating

the

New

Financial

Landscape

Summary

>

Core

business

remains

strong,

building

momentum

>

Flight

to

quality

continues

>

During

turmoil,

significantly

strengthened

capital

levels

and

ratios

>

Environment

continues

to

be

challenging

>

Focus

on

expenses

>

Concentrate

on

key

revenue

streams,

such

as

additional

outsourcing

>

Developing

new

products

to

meet

emerging

regulatory

requirements

>

Objectives

continue

to

be

preservation

of

capital

,

operating

EPS

growth,

and

positive

operating

leverage

on

an

annual

basis

>

Intend

to

retain

long-term

financial

goals;

Working

toward

delivering

operating

EPS

in

2009

approaching

low

end

of

long-term

goal

Focused

on

delivering

consistent

results

24