Quarterly Report (10-q)

false--12-31Q120200000093751268090000000.000250.010.000250.0100108000000350000001000000300000010000000400000040000000.031080.035970.037090.025390.03436700000044590000000.470.521.001.007500000007500000005038796425038796423573894163519438580.3370.0947400000097000000042157000000422010000001000000010000009000000440000006000000300000030000001000000040000004000000000.0590.05250.05350.0562525.00100000005000000009000000350000035000005000750075007500500050005000750075007500500050005000750075007500500050005000750075007500500050002000000000.0300000000500000000146490226151935784 0000093751 2020-01-01 2020-03-31 0000093751 stt:SeriesGPreferredStockDepositoryShareMember 2020-01-01 2020-03-31 0000093751 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0000093751 stt:SeriesDPreferredStockDepositoryShareMember 2020-01-01 2020-03-31 0000093751 2020-04-24 0000093751 2019-01-01 2019-03-31 0000093751 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesHPreferredStockMember 2019-12-31 0000093751 2020-03-31 0000093751 us-gaap:SeriesDPreferredStockMember 2020-03-31 0000093751 2019-12-31 0000093751 us-gaap:SeriesDPreferredStockMember 2019-12-31 0000093751 us-gaap:SeriesGPreferredStockMember 2019-12-31 0000093751 us-gaap:SeriesCPreferredStockMember 2019-12-31 0000093751 us-gaap:SeriesFPreferredStockMember 2020-03-31 0000093751 us-gaap:SeriesHPreferredStockMember 2020-03-31 0000093751 us-gaap:SeriesGPreferredStockMember 2020-03-31 0000093751 us-gaap:SeriesFPreferredStockMember 2019-12-31 0000093751 us-gaap:SeriesCPreferredStockMember 2020-03-31 0000093751 us-gaap:SeriesEPreferredStockMember 2020-03-31 0000093751 us-gaap:SeriesEPreferredStockMember 2019-12-31 0000093751 us-gaap:RetainedEarningsMember 2019-03-31 0000093751 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000093751 us-gaap:CommonStockMember 2018-12-31 0000093751 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000093751 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000093751 us-gaap:PreferredStockMember 2019-12-31 0000093751 us-gaap:TreasuryStockMember 2019-12-31 0000093751 us-gaap:TreasuryStockMember 2020-01-01 2020-03-31 0000093751 us-gaap:TreasuryStockMember 2019-01-01 2019-03-31 0000093751 us-gaap:RetainedEarningsMember 2019-12-31 0000093751 2018-12-31 0000093751 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000093751 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0000093751 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0000093751 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000093751 us-gaap:CommonStockMember 2019-12-31 0000093751 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000093751 us-gaap:TreasuryStockMember 2020-03-31 0000093751 us-gaap:CommonStockMember 2019-03-31 0000093751 us-gaap:PreferredStockMember 2018-12-31 0000093751 us-gaap:PreferredStockMember 2020-01-01 2020-03-31 0000093751 us-gaap:PreferredStockMember 2019-03-31 0000093751 us-gaap:TreasuryStockMember 2019-03-31 0000093751 us-gaap:CommonStockMember 2020-03-31 0000093751 us-gaap:TreasuryStockMember 2018-12-31 0000093751 2019-03-31 0000093751 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000093751 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000093751 us-gaap:PreferredStockMember 2020-03-31 0000093751 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000093751 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0000093751 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0000093751 us-gaap:RetainedEarningsMember 2020-03-31 0000093751 us-gaap:RetainedEarningsMember 2018-12-31 0000093751 stt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2020-01-01 0000093751 us-gaap:AccountingStandardsUpdate201613Member stt:LoansandOtherFinancialAssetsHeldatAmortizedCostMember 2020-01-01 0000093751 us-gaap:AccountingStandardsUpdate201613Member stt:OffBalanceSheetCommitmentsMember 2020-01-01 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember 2018-12-31 0000093751 stt:NonUSDebtSecuritiesMember 2018-12-31 0000093751 stt:NonUsDebtSecuritiesOtherMember 2019-01-01 2019-03-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember 2019-01-01 2019-03-31 0000093751 us-gaap:DerivativeFinancialInstrumentsAssetsMember 2019-01-01 2019-03-31 0000093751 us-gaap:AvailableforsaleSecuritiesMember 2019-01-01 2019-03-31 0000093751 us-gaap:AssetBackedSecuritiesMember 2019-01-01 2019-03-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember 2019-03-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember 2019-01-01 2019-03-31 0000093751 us-gaap:DerivativeFinancialInstrumentsAssetsMember 2019-03-31 0000093751 stt:NonUSDebtSecuritiesMember 2019-01-01 2019-03-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember 2019-01-01 2019-03-31 0000093751 us-gaap:AssetBackedSecuritiesMember 2019-03-31 0000093751 us-gaap:ForeignExchangeContractMember 2019-01-01 2019-03-31 0000093751 stt:NonUSDebtSecuritiesMember 2019-03-31 0000093751 stt:NonUsDebtSecuritiesOtherMember 2018-12-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember 2018-12-31 0000093751 us-gaap:ForeignExchangeContractMember 2018-12-31 0000093751 us-gaap:AvailableforsaleSecuritiesMember 2018-12-31 0000093751 us-gaap:ForeignExchangeContractMember 2019-03-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember 2018-12-31 0000093751 stt:NonUsDebtSecuritiesOtherMember 2019-03-31 0000093751 us-gaap:DerivativeFinancialInstrumentsAssetsMember 2018-12-31 0000093751 us-gaap:AvailableforsaleSecuritiesMember 2019-03-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember 2019-03-31 0000093751 us-gaap:AssetBackedSecuritiesMember 2018-12-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember 2019-03-31 0000093751 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember stt:ShortTermBorrowingsUnderMMLFMember 2020-03-31 0000093751 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-03-31 0000093751 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember stt:HeldtoMaturityUnderMMLFMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember stt:HeldtoMaturityUnderMMLFMember 2020-03-31 0000093751 us-gaap:CarryingReportedAmountFairValueDisclosureMember stt:ShortTermBorrowingsUnderMMLFMember 2020-03-31 0000093751 us-gaap:EstimateOfFairValueFairValueDisclosureMember stt:ShortTermBorrowingsUnderMMLFMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember stt:ShortTermBorrowingsUnderMMLFMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember stt:ShortTermBorrowingsUnderMMLFMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember stt:HeldtoMaturityUnderMMLFMember 2020-03-31 0000093751 us-gaap:EstimateOfFairValueFairValueDisclosureMember stt:HeldtoMaturityUnderMMLFMember 2020-03-31 0000093751 us-gaap:CarryingReportedAmountFairValueDisclosureMember stt:HeldtoMaturityUnderMMLFMember 2020-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel2Member us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesOtherMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:AssetBackedSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:OtherCreditDerivativesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetBackedSecuritiesStudentLoansMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:ForeignGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetBackedSecuritiesStudentLoansMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:AssetBackedSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetBackedSecuritiesStudentLoansMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetBackedSecuritiesStudentLoansMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUSDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USTreasuryAndGovernmentMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:OtherCreditDerivativesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesGovernmentSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesGovernmentSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetBackedSecuritiesCreditCardsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USTreasuryAndGovernmentMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:UsTreasuryAndFederalAgenciesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:OtherCreditDerivativesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel1Member us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:UsTreasuryAndFederalAgenciesDirectObligationsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesOtherMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesOtherMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:AssetBackedSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:ForeignGovernmentDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USTreasuryAndGovernmentMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUSDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:ForeignGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USGovernmentDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesOtherMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:FairValueInputsLevel3Member us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUSDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetBackedSecuritiesCreditCardsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:ForeignGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:UsTreasuryAndFederalAgenciesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesMortgageBackedSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:UsTreasuryAndFederalAgenciesDirectObligationsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:OtherCreditDerivativesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesGovernmentSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetBackedSecuritiesCreditCardsMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesGovernmentSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetBackedSecuritiesCreditCardsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:UsTreasuryAndFederalAgenciesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:USTreasuryAndGovernmentMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUSDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:UsTreasuryAndFederalAgenciesDirectObligationsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:UsTreasuryAndFederalAgenciesMortgageBackedSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 us-gaap:AssetBackedSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:UsTreasuryAndFederalAgenciesDirectObligationsMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0000093751 stt:NonUSDebtSecuritiesCoveredBondsMember 2020-03-31 0000093751 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsNonrecurringMember 2020-03-31 0000093751 stt:NonUSDebtSecuritiesSupranationalAndNonUSAgencyBondsMember 2019-12-31 0000093751 stt:NonUSDebtSecuritiesCorporateBondsMember 2020-03-31 0000093751 stt:NonUSDebtSecuritiesCoveredBondsMember 2019-12-31 0000093751 stt:NonUSDebtSecuritiesSupranationalAndNonUSAgencyBondsMember 2020-03-31 0000093751 stt:NonUSDebtSecuritiesCorporateBondsMember 2019-12-31 0000093751 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0000093751 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0000093751 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-12-31 0000093751 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0000093751 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0000093751 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0000093751 srt:WeightedAverageMember us-gaap:DerivativeFinancialInstrumentsAssetsMember us-gaap:FairValueInputsLevel3Member us-gaap:MeasurementInputOptionVolatilityMember us-gaap:ValuationTechniqueOptionPricingModelMember 2019-12-31 0000093751 stt:SignificantUnobservableInputsReadilyAvailableMember us-gaap:FairValueInputsLevel3Member 2020-03-31 0000093751 stt:SignificantUnobservableInputsReadilyAvailableMember us-gaap:DerivativeFinancialInstrumentsAssetsMember us-gaap:FairValueInputsLevel3Member 2019-12-31 0000093751 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember us-gaap:MeasurementInputOptionVolatilityMember us-gaap:ValuationTechniqueOptionPricingModelMember 2020-03-31 0000093751 stt:SignificantUnobservableInputsReadilyAvailableMember us-gaap:FairValueInputsLevel3Member us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember 2019-12-31 0000093751 stt:SignificantUnobservableInputsReadilyAvailableMember us-gaap:FairValueInputsLevel3Member 2019-12-31 0000093751 stt:SignificantUnobservableInputsReadilyAvailableMember us-gaap:DerivativeFinancialInstrumentsAssetsMember us-gaap:FairValueInputsLevel3Member 2020-03-31 0000093751 srt:WeightedAverageMember us-gaap:DerivativeFinancialInstrumentsAssetsMember us-gaap:FairValueInputsLevel3Member us-gaap:MeasurementInputOptionVolatilityMember us-gaap:ValuationTechniqueOptionPricingModelMember 2020-03-31 0000093751 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember us-gaap:MeasurementInputOptionVolatilityMember us-gaap:ValuationTechniqueOptionPricingModelMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:FairValueInputsLevel3Member us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:UsTreasuryAndFederalAgenciesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USTreasuryAndGovernmentMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesGovernmentSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesOtherMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:UsTreasuryAndFederalAgenciesDirectObligationsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesOtherMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USGovernmentDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:AssetBackedSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesOtherMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:UsTreasuryAndFederalAgenciesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:OtherCreditDerivativesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetBackedSecuritiesStudentLoansMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:OtherCreditDerivativesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:InterestRateContractMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:FairValueInputsLevel1Member us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:AssetBackedSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesGovernmentSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:UsTreasuryAndFederalAgenciesMortgageBackedSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesOtherMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:ForeignGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:OtherCreditDerivativesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:ForeignGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetBackedSecuritiesStudentLoansMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:FairValueInputsLevel2Member us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetBackedSecuritiesCreditCardsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUSDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USTreasuryAndGovernmentMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:AssetBackedSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUSDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesMortgageBackedSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:OtherCreditDerivativesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesGovernmentSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:UsTreasuryAndFederalAgenciesDirectObligationsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USTreasuryAndGovernmentMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:ForeignGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:ForeignGovernmentDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USTreasuryAndGovernmentMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUSDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:UsTreasuryAndFederalAgenciesMortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetBackedSecuritiesStudentLoansMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUSDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:UsTreasuryAndFederalAgenciesDirectObligationsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesGovernmentSecuritiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetBackedSecuritiesStudentLoansMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetBackedSecuritiesCreditCardsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:USGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetBackedSecuritiesCreditCardsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:UsTreasuryAndFederalAgenciesDirectObligationsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetBackedSecuritiesCreditCardsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 us-gaap:AssetBackedSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember 2020-01-01 2020-03-31 0000093751 stt:NonUSDebtSecuritiesMember 2020-01-01 2020-03-31 0000093751 us-gaap:DerivativeFinancialInstrumentsAssetsMember 2020-01-01 2020-03-31 0000093751 us-gaap:AvailableforsaleSecuritiesMember 2020-01-01 2020-03-31 0000093751 stt:NonUSDebtSecuritiesMember 2020-03-31 0000093751 us-gaap:AssetBackedSecuritiesMember 2020-01-01 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember 2020-01-01 2020-03-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesOtherMember 2020-01-01 2020-03-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember 2020-01-01 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember 2020-03-31 0000093751 us-gaap:AvailableforsaleSecuritiesMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember 2019-12-31 0000093751 us-gaap:DerivativeFinancialInstrumentsAssetsMember 2020-03-31 0000093751 us-gaap:DerivativeFinancialInstrumentsAssetsMember 2019-12-31 0000093751 us-gaap:AssetBackedSecuritiesMember 2019-12-31 0000093751 us-gaap:AvailableforsaleSecuritiesMember 2020-03-31 0000093751 us-gaap:AssetBackedSecuritiesMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesOtherMember 2020-03-31 0000093751 stt:NonUSDebtSecuritiesMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesOtherMember 2019-12-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember 2020-03-31 0000093751 srt:MinimumMember us-gaap:DerivativeFinancialInstrumentsAssetsMember us-gaap:FairValueInputsLevel3Member us-gaap:MeasurementInputOptionVolatilityMember us-gaap:ValuationTechniqueOptionPricingModelMember 2020-03-31 0000093751 srt:MaximumMember us-gaap:DerivativeFinancialInstrumentsAssetsMember us-gaap:FairValueInputsLevel3Member us-gaap:MeasurementInputOptionVolatilityMember us-gaap:ValuationTechniqueOptionPricingModelMember 2020-03-31 0000093751 stt:UsTreasuryAndFederalAgenciesDirectObligationsMember 2020-03-31 0000093751 us-gaap:USTreasuryAndGovernmentMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesMortgageBackedSecuritiesMember 2020-03-31 0000093751 stt:NonUSDebtSecuritiesMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesOtherMember 2020-03-31 0000093751 us-gaap:AssetBackedSecuritiesMember 2020-03-31 0000093751 stt:AssetBackedSecuritiesStudentLoansMember 2020-03-31 0000093751 us-gaap:USStatesAndPoliticalSubdivisionsMember 2020-03-31 0000093751 stt:AssetBackedSecuritiesCreditCardsMember 2020-03-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember 2020-03-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesGovernmentSecuritiesMember 2020-03-31 0000093751 stt:UsTreasuryAndFederalAgenciesMortgageBackedSecuritiesMember 2020-03-31 0000093751 stt:MoneyMarketLiquidityFacilityMember 2020-03-31 0000093751 us-gaap:OtherDebtSecuritiesMember 2020-03-31 0000093751 stt:TotalHTMandCollateralizedObligationsMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember 2020-03-31 0000093751 stt:TotalBeforeMMLFMember 2020-03-31 0000093751 stt:IncludingMMLFMember 2020-03-31 0000093751 stt:NonUsDebtSecuritiesOtherMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesMortgageBackedSecuritiesMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesGovernmentSecuritiesMember 2019-12-31 0000093751 stt:IncludingMMLFMember 2019-12-31 0000093751 us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-12-31 0000093751 stt:AssetBackedSecuritiesStudentLoansMember 2019-12-31 0000093751 stt:UsTreasuryAndFederalAgenciesMortgageBackedSecuritiesMember 2019-12-31 0000093751 stt:NonUSDebtSecuritiesMember 2019-12-31 0000093751 us-gaap:OtherDebtSecuritiesMember 2019-12-31 0000093751 stt:AssetBackedSecuritiesCreditCardsMember 2019-12-31 0000093751 us-gaap:AssetBackedSecuritiesMember 2019-12-31 0000093751 stt:NonUsDebtSecuritiesAssetBackedSecuritiesMember 2019-12-31 0000093751 stt:UsTreasuryAndFederalAgenciesDirectObligationsMember 2019-12-31 0000093751 us-gaap:CollateralizedMortgageObligationsMember 2019-12-31 0000093751 us-gaap:USTreasuryAndGovernmentMember 2019-12-31 0000093751 stt:MoneyMarketLiquidityFacilityMember 2019-12-31 0000093751 stt:TotalBeforeMMLFMember 2019-12-31 0000093751 stt:AssetbackedSecuritiesCollateralizedLoanObligationsMember 2019-12-31 0000093751 stt:FederalFamilyEducationLoanProgramMember 2020-01-01 2020-03-31 0000093751 stt:USStatesandPoliticalSubdivisionsDebtSecuritiesTrustsMember 2019-12-31 0000093751 stt:USStatesandPoliticalSubdivisionsDebtSecuritiesTrustsMember 2020-03-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:GeographicDistributionDomesticMember 2020-03-31 0000093751 stt:CommercialAndFinancialSeniorSecuredBankLoansMember us-gaap:GeographicDistributionForeignMember 2020-03-31 0000093751 stt:CommercialAndFinancialOtherMember us-gaap:GeographicDistributionDomesticMember 2020-03-31 0000093751 stt:CommercialAndFinancialMunicipalitiesMember us-gaap:GeographicDistributionDomesticMember 2020-03-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:GeographicDistributionDomesticMember 2019-12-31 0000093751 stt:LoansExcludingUnfundedCommitmentsMember 2020-03-31 0000093751 us-gaap:GeographicDistributionDomesticMember 2019-12-31 0000093751 stt:CommercialAndFinancialOtherMember us-gaap:GeographicDistributionForeignMember 2020-03-31 0000093751 us-gaap:GeographicDistributionDomesticMember 2020-03-31 0000093751 stt:CommercialAndFinancialOtherMember us-gaap:GeographicDistributionForeignMember 2019-12-31 0000093751 us-gaap:GeographicDistributionForeignMember 2020-03-31 0000093751 stt:CommercialAndFinancialInvestmentFundsMember us-gaap:GeographicDistributionDomesticMember 2020-03-31 0000093751 stt:CommercialAndFinancialMunicipalitiesMember us-gaap:GeographicDistributionDomesticMember 2019-12-31 0000093751 stt:CommercialAndFinancialInvestmentFundsMember us-gaap:GeographicDistributionForeignMember 2020-03-31 0000093751 stt:CommercialAndFinancialOtherMember us-gaap:GeographicDistributionDomesticMember 2019-12-31 0000093751 us-gaap:GeographicDistributionForeignMember 2019-12-31 0000093751 stt:CommercialAndFinancialInvestmentFundsMember us-gaap:GeographicDistributionForeignMember 2019-12-31 0000093751 stt:LoansExcludingUnfundedCommitmentsMember 2019-12-31 0000093751 stt:CommercialAndFinancialSeniorSecuredBankLoansMember us-gaap:GeographicDistributionDomesticMember 2020-03-31 0000093751 stt:CommercialAndFinancialSeniorSecuredBankLoansMember us-gaap:GeographicDistributionForeignMember 2019-12-31 0000093751 stt:CommercialAndFinancialInvestmentFundsMember us-gaap:GeographicDistributionDomesticMember 2019-12-31 0000093751 stt:CommercialAndFinancialSeniorSecuredBankLoansMember us-gaap:GeographicDistributionDomesticMember 2019-12-31 0000093751 stt:CommercialAndFinancialMember stt:IndividuallyEvaluatedforImpairmentMember 2019-12-31 0000093751 stt:CommercialAndFinancialMember stt:IndividuallyEvaluatedforImpairmentMember 2020-01-01 2020-03-31 0000093751 stt:CommercialAndFinancialMember stt:IndividuallyEvaluatedforImpairmentMember 2019-01-01 2019-03-31 0000093751 stt:CommercialAndFinancialMember stt:IndividuallyEvaluatedforImpairmentMember 2020-03-31 0000093751 us-gaap:InternalInvestmentGradeMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember stt:SpeculativeMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:SubstandardMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:SpecialMentionMember 2020-03-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember 2020-03-31 0000093751 us-gaap:SpecialMentionMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember 2020-03-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:InternalInvestmentGradeMember 2020-03-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SpecialMentionMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:InternalInvestmentGradeMember 2020-03-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember stt:SpeculativeMember 2020-03-31 0000093751 us-gaap:SubstandardMember 2020-03-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SubstandardMember 2020-03-31 0000093751 stt:SpeculativeMember 2020-03-31 0000093751 stt:ImpairedLoansMember us-gaap:SpecialMentionMember 2020-03-31 0000093751 2019-09-30 0000093751 stt:ImpairedLoansMember us-gaap:SubstandardMember 2020-03-31 0000093751 us-gaap:StandbyLettersOfCreditMember stt:OffBalanceSheetCommitmentandGuaranteesMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:GeographicDistributionForeignMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:GeographicDistributionForeignMember us-gaap:InternalInvestmentGradeMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:GeographicDistributionDomesticMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:GeographicDistributionDomesticMember us-gaap:SubstandardMember 2020-03-31 0000093751 stt:IndemnifiedSecuritiesFinancingMember stt:OffBalanceSheetCommitmentandGuaranteesMember 2020-03-31 0000093751 stt:OffBalanceSheetCommitmentandGuaranteesMember 2020-03-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:GeographicDistributionDomesticMember us-gaap:InternalInvestmentGradeMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:GeographicDistributionForeignMember us-gaap:SubstandardMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:GeographicDistributionDomesticMember us-gaap:InternalInvestmentGradeMember 2020-03-31 0000093751 stt:FinancingReceivablesandOffBalanceSheetCommitmentsMember 2020-03-31 0000093751 us-gaap:UnfundedLoanCommitmentMember stt:OffBalanceSheetCommitmentandGuaranteesMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:GeographicDistributionDomesticMember us-gaap:SpecialMentionMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:GeographicDistributionDomesticMember stt:SpeculativeMember 2020-03-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:GeographicDistributionForeignMember stt:SpeculativeMember 2020-03-31 0000093751 stt:IncludesAllowancesonUnfundedCommitmentsMember 2019-12-31 0000093751 stt:OffBalanceSheetCommitmentsMember 2019-12-31 0000093751 stt:InstitutionalOtherLoansMember 2019-12-31 0000093751 stt:InstitutionalOtherLoansMember 2020-03-31 0000093751 stt:InstitutionalOtherLoansMember 2020-01-01 2020-03-31 0000093751 us-gaap:CommercialBorrowerMember 2020-01-01 2020-03-31 0000093751 us-gaap:FinancialInstitutionsBorrowerMember 2020-01-01 2020-03-31 0000093751 stt:OffBalanceSheetCommitmentsMember 2020-01-01 2020-03-31 0000093751 us-gaap:HeldtomaturitySecuritiesMember 2020-01-01 2020-03-31 0000093751 stt:IncludesAllowancesonUnfundedCommitmentsMember 2020-03-31 0000093751 stt:OffBalanceSheetCommitmentsMember 2020-03-31 0000093751 us-gaap:FinancialInstitutionsBorrowerMember 2020-03-31 0000093751 stt:IncludesAllowancesonUnfundedCommitmentsMember 2020-01-01 2020-03-31 0000093751 stt:AllOtherMember 2019-12-31 0000093751 us-gaap:HeldtomaturitySecuritiesMember 2019-12-31 0000093751 us-gaap:CommercialBorrowerMember 2019-12-31 0000093751 stt:AllOtherMember 2020-01-01 2020-03-31 0000093751 us-gaap:HeldtomaturitySecuritiesMember 2020-03-31 0000093751 us-gaap:CommercialBorrowerMember 2020-03-31 0000093751 stt:AllOtherMember 2020-03-31 0000093751 us-gaap:FinancialInstitutionsBorrowerMember 2019-12-31 0000093751 us-gaap:SubstandardMember 2019-12-31 0000093751 stt:SpeculativeMember 2019-12-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:SubstandardMember 2019-12-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SpecialMentionMember 2019-12-31 0000093751 us-gaap:SpecialMentionMember 2019-12-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember 2019-12-31 0000093751 us-gaap:InternalInvestmentGradeMember 2019-12-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:InternalInvestmentGradeMember 2019-12-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember us-gaap:SpecialMentionMember 2019-12-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:InternalInvestmentGradeMember 2019-12-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember 2019-12-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SubstandardMember 2019-12-31 0000093751 stt:CommercialandFinancialPortfolioSegmentMember stt:SpeculativeMember 2019-12-31 0000093751 us-gaap:CommercialRealEstatePortfolioSegmentMember stt:SpeculativeMember 2019-12-31 0000093751 us-gaap:OtherIntangibleAssetsMember 2020-03-31 0000093751 us-gaap:OtherIntangibleAssetsMember 2019-12-31 0000093751 us-gaap:CustomerRelationshipsMember 2020-03-31 0000093751 us-gaap:CoreDepositsMember 2020-03-31 0000093751 us-gaap:TechnologyBasedIntangibleAssetsMember 2019-12-31 0000093751 us-gaap:CustomerRelationshipsMember 2019-12-31 0000093751 us-gaap:TechnologyBasedIntangibleAssetsMember 2020-03-31 0000093751 us-gaap:CoreDepositsMember 2019-12-31 0000093751 stt:InvestmentServicingMember 2019-01-01 2019-12-31 0000093751 stt:InvestmentServicingMember 2020-03-31 0000093751 2019-01-01 2019-12-31 0000093751 stt:InvestmentServicingMember 2019-12-31 0000093751 stt:InvestmentManagementMember 2019-12-31 0000093751 stt:InvestmentManagementMember 2020-03-31 0000093751 stt:InvestmentServicingMember 2018-12-31 0000093751 stt:InvestmentManagementMember 2019-01-01 2019-12-31 0000093751 stt:InvestmentManagementMember 2018-12-31 0000093751 stt:InvestmentServicingMember 2020-01-01 2020-03-31 0000093751 stt:InvestmentManagementMember 2020-01-01 2020-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:InterestIncomeMember 2019-01-01 2019-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:InterestIncomeMember 2019-01-01 2019-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:InterestIncomeMember 2020-01-01 2020-03-31 0000093751 us-gaap:InterestRateContractMember 2020-01-01 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember stt:GainsLossesRelatedtoInvestmentSecuritiesNetMember 2020-01-01 2020-03-31 0000093751 us-gaap:InterestRateContractMember 2019-01-01 2019-03-31 0000093751 us-gaap:ForeignExchangeContractMember stt:GainsLossesRelatedtoInvestmentSecuritiesNetMember 2019-01-01 2019-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:InterestIncomeMember 2020-01-01 2020-03-31 0000093751 stt:LIBORIndexedFloatingRateLoansMember 2020-01-01 2020-03-31 0000093751 us-gaap:CreditDefaultSwapMember 2020-03-31 0000093751 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember 2019-12-31 0000093751 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember 2020-03-31 0000093751 us-gaap:AvailableforsaleSecuritiesMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:LongTermDebtMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:LongTermDebtMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:AvailableforsaleSecuritiesMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:AvailableforsaleSecuritiesMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:AvailableforsaleSecuritiesMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:LongTermDebtMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:LongTermDebtMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:LongTermDebtMember stt:InterestIncomeNetMember 2020-01-01 2020-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:LongTermDebtMember stt:InterestIncomeNetMember 2019-01-01 2019-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:AvailableforsaleSecuritiesMember stt:InterestIncomeNetMember 2019-01-01 2019-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:AvailableforsaleSecuritiesMember stt:InterestIncomeNetMember 2020-01-01 2020-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:FutureMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:ForeignExchangeContractMember stt:OptionsPurchasedMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:ForeignExchangeContractMember stt:OptionsWrittenMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:OtherContractMember stt:DeferredValueAwardsMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:SwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:ForeignExchangeContractMember stt:ForwardSwapAndSpotMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember stt:ForwardsMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:ForeignExchangeContractMember stt:ForwardsMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:OtherContractMember stt:DeferredValueAwardsMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:FutureMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:OtherContractMember stt:StableValueContractsMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember stt:ForwardSwapAndSpotMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:InterestRateContractMember us-gaap:FutureMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember stt:OptionsPurchasedMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:FutureMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:InterestRateContractMember us-gaap:SwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:OtherContractMember stt:StableValueContractsMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:ForeignExchangeContractMember stt:OptionsWrittenMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:OtherAssetsMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:OtherAssetsMember us-gaap:OtherContractMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:OtherAssetsMember us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:OtherAssetsMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:OtherAssetsMember us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:OtherAssetsMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000093751 us-gaap:OtherAssetsMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:OtherContractMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000093751 us-gaap:OtherLiabilitiesMember us-gaap:OtherContractMember us-gaap:NondesignatedMember 2019-12-31 0000093751 us-gaap:OtherAssetsMember us-gaap:OtherContractMember us-gaap:NondesignatedMember 2020-03-31 0000093751 us-gaap:OtherContractMember us-gaap:NondesignatedMember stt:CompensationandEmployeeBenefitsMember 2020-01-01 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember us-gaap:InterestExpenseMember 2020-01-01 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember us-gaap:InterestExpenseMember 2019-01-01 2019-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:NondesignatedMember stt:ForeignExchangeTradingServicesMember 2019-01-01 2019-03-31 0000093751 us-gaap:NondesignatedMember 2019-01-01 2019-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember stt:ForeignExchangeTradingServicesMember 2019-01-01 2019-03-31 0000093751 us-gaap:OtherContractMember us-gaap:NondesignatedMember stt:CompensationandEmployeeBenefitsMember 2019-01-01 2019-03-31 0000093751 us-gaap:NondesignatedMember 2020-01-01 2020-03-31 0000093751 us-gaap:InterestRateContractMember us-gaap:NondesignatedMember stt:ForeignExchangeTradingServicesMember 2020-01-01 2020-03-31 0000093751 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember stt:ForeignExchangeTradingServicesMember 2020-01-01 2020-03-31 0000093751 us-gaap:EquitySecuritiesMember 2019-12-31 0000093751 us-gaap:MaturityOvernightAndOnDemandMember us-gaap:EquitySecuritiesMember 2020-03-31 0000093751 us-gaap:MaturityOver90DaysMember us-gaap:USTreasuryAndGovernmentMember 2020-03-31 0000093751 us-gaap:MaturityOver90DaysMember 2019-12-31 0000093751 us-gaap:MaturityUpTo30DaysMember 2019-12-31 0000093751 us-gaap:MaturityUpTo30DaysMember us-gaap:EquitySecuritiesMember 2019-12-31 0000093751 us-gaap:MaturityOvernightAndOnDemandMember 2020-03-31 0000093751 us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0000093751 us-gaap:MaturityOver90DaysMember us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0000093751 us-gaap:MaturityUpTo30DaysMember 2020-03-31 0000093751 us-gaap:MaturityOver90DaysMember 2020-03-31 0000093751 us-gaap:MaturityUpTo30DaysMember us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0000093751 us-gaap:MaturityOver90DaysMember us-gaap:EquitySecuritiesMember 2020-03-31 0000093751 us-gaap:MaturityOver90DaysMember us-gaap:SovereignDebtMember 2019-12-31 0000093751 us-gaap:MaturityUpTo30DaysMember us-gaap:SovereignDebtMember 2019-12-31 0000093751 us-gaap:MaturityOvernightAndOnDemandMember us-gaap:USTreasuryAndGovernmentMember 2020-03-31 0000093751 us-gaap:MaturityUpTo30DaysMember us-gaap:USTreasuryAndGovernmentMember 2019-12-31 0000093751 us-gaap:MaturityOvernightAndOnDemandMember us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0000093751 us-gaap:MaturityOvernightAndOnDemandMember 2019-12-31 0000093751 us-gaap:MaturityOvernightAndOnDemandMember us-gaap:USTreasuryAndGovernmentMember 2019-12-31 0000093751 us-gaap:MaturityOver90DaysMember us-gaap:SovereignDebtMember 2020-03-31 0000093751 us-gaap:MaturityOver90DaysMember us-gaap:CorporateDebtSecuritiesMember 2020-03-31 0000093751 us-gaap:MaturityOvernightAndOnDemandMember us-gaap:SovereignDebtMember 2020-03-31 0000093751 us-gaap:MaturityUpTo30DaysMember us-gaap:SovereignDebtMember 2020-03-31 0000093751 us-gaap:MaturityOvernightAndOnDemandMember us-gaap:SovereignDebtMember 2019-12-31 0000093751 us-gaap:MaturityUpTo30DaysMember us-gaap:USTreasuryAndGovernmentMember 2020-03-31 0000093751 us-gaap:MaturityUpTo30DaysMember us-gaap:EquitySecuritiesMember 2020-03-31 0000093751 us-gaap:MaturityOvernightAndOnDemandMember us-gaap:CorporateDebtSecuritiesMember 2020-03-31 0000093751 us-gaap:MaturityOver90DaysMember us-gaap:EquitySecuritiesMember 2019-12-31 0000093751 us-gaap:EquitySecuritiesMember 2020-03-31 0000093751 us-gaap:MaturityOvernightAndOnDemandMember us-gaap:EquitySecuritiesMember 2019-12-31 0000093751 us-gaap:MaturityOver90DaysMember us-gaap:USTreasuryAndGovernmentMember 2019-12-31 0000093751 us-gaap:MaturityUpTo30DaysMember us-gaap:CorporateDebtSecuritiesMember 2020-03-31 0000093751 us-gaap:CorporateDebtSecuritiesMember 2020-03-31 0000093751 us-gaap:SovereignDebtMember 2020-03-31 0000093751 us-gaap:SovereignDebtMember 2019-12-31 0000093751 stt:AccruedExpensesAndOtherLiabilitiesMember 2020-03-31 0000093751 stt:AccruedExpensesAndOtherLiabilitiesMember 2019-12-31 0000093751 us-gaap:InterestRateContractMember 2019-12-31 0000093751 stt:OtherDerivativeContractsMember 2020-03-31 0000093751 us-gaap:InterestRateContractMember 2020-03-31 0000093751 stt:OtherDerivativeContractsMember 2019-12-31 0000093751 stt:InvoicingMatterMember us-gaap:LegalReserveMember 2020-03-31 0000093751 2019-06-01 2019-06-30 0000093751 stt:InvoicingMatterMember 2017-01-01 2017-01-31 0000093751 stt:InvoicingMatterMember 2019-06-01 2019-06-30 0000093751 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-12-31 0000093751 us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2020-03-31 0000093751 us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-12-31 0000093751 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2020-03-31 0000093751 stt:TwoThousandandNineteenShareRepurchaseProgramMember 2020-01-01 2020-03-31 0000093751 stt:SeriesEPreferredStockDepositoryShareMember 2020-03-15 0000093751 us-gaap:SeriesEPreferredStockMember 2020-03-15 0000093751 stt:TwoThousandandEighteenShareRepurchaseProgramMember 2018-06-30 0000093751 stt:TwoThousandandEighteenShareRepurchaseProgramMember 2019-01-01 2019-03-31 0000093751 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2020-01-01 2020-03-31 0000093751 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0000093751 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedOtherThanTemporaryImpairmentMember 2019-01-01 2019-03-31 0000093751 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-03-31 0000093751 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-01-01 2020-03-31 0000093751 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedOtherThanTemporaryImpairmentMember 2020-01-01 2020-03-31 0000093751 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000093751 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-01-01 2019-03-31 0000093751 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-01-01 2019-03-31 0000093751 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-01-01 2020-03-31 0000093751 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-31 0000093751 us-gaap:AccumulatedTranslationAdjustmentMember 2019-03-31 0000093751 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-03-31 0000093751 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0000093751 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-03-31 0000093751 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-01-01 2019-03-31 0000093751 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-03-31 0000093751 stt:AccumulatedNetUnrealizedGainLossOnNetInvestmentHedgingMember 2019-01-01 2019-03-31 0000093751 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-01-01 2019-03-31 0000093751 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-03-31 0000093751 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-31 0000093751 us-gaap:AccumulatedOtherThanTemporaryImpairmentMember 2019-01-01 2019-03-31 0000093751 us-gaap:AccumulatedOtherThanTemporaryImpairmentMember 2018-12-31 0000093751 stt:AccumulatedNetUnrealizedGainLossOnNetInvestmentHedgingMember 2018-12-31 0000093751 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-12-31 0000093751 stt:AccumulatedNetUnrealizedGainLossOnNetInvestmentHedgingMember 2019-03-31 0000093751 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0000093751 us-gaap:AccumulatedOtherThanTemporaryImpairmentMember 2019-03-31 0000093751 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-03-31 0000093751 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2020-01-01 2020-03-31 0000093751 us-gaap:AccumulatedTranslationAdjustmentMember 2020-01-01 2020-03-31 0000093751 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-12-31 0000093751 stt:AccumulatedNetUnrealizedGainLossOnNetInvestmentHedgingMember 2020-03-31 0000093751 stt:AccumulatedNetUnrealizedGainLossOnNetInvestmentHedgingMember 2019-12-31 0000093751 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2020-03-31 0000093751 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-03-31 0000093751 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-01-01 2020-03-31 0000093751 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-01-01 2020-03-31 0000093751 us-gaap:AccumulatedOtherThanTemporaryImpairmentMember 2020-03-31 0000093751 stt:AccumulatedNetUnrealizedGainLossOnNetInvestmentHedgingMember 2020-01-01 2020-03-31 0000093751 us-gaap:AccumulatedOtherThanTemporaryImpairmentMember 2020-01-01 2020-03-31 0000093751 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-12-31 0000093751 us-gaap:AccumulatedTranslationAdjustmentMember 2020-03-31 0000093751 us-gaap:AccumulatedTranslationAdjustmentMember 2019-12-31 0000093751 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-12-31 0000093751 us-gaap:AccumulatedOtherThanTemporaryImpairmentMember 2019-12-31 0000093751 stt:SeriesGPreferredStockDepositoryShareMember 2016-04-30 0000093751 us-gaap:SeriesDPreferredStockMember 2014-02-28 0000093751 stt:SeriesDPreferredStockDepositoryShareMember 2014-02-28 0000093751 stt:SeriesHPreferredStockDepositoryShareMember 2018-09-01 2018-09-30 0000093751 us-gaap:SeriesGPreferredStockMember 2016-04-30 0000093751 us-gaap:SeriesFPreferredStockMember 2015-05-31 0000093751 stt:SeriesFPreferredStockDepositoryShareMember 2015-05-31 0000093751 stt:SeriesHPreferredStockDepositoryShareMember 2018-09-30 0000093751 stt:SeriesDPreferredStockDepositoryShareMember 2014-02-01 2014-02-28 0000093751 stt:SeriesGPreferredStockDepositoryShareMember 2016-04-01 2016-04-30 0000093751 stt:SeriesFPreferredStockDepositoryShareMember 2015-05-01 2015-05-31 0000093751 us-gaap:SeriesHPreferredStockMember 2018-09-30 0000093751 stt:SeriesFPreferredStockDepositoryShareMember 2019-01-01 2019-03-31 0000093751 stt:SeriesHPreferredStockDepositoryShareMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesEPreferredStockMember 2019-01-01 2019-03-31 0000093751 us-gaap:SeriesFPreferredStockMember 2019-01-01 2019-03-31 0000093751 us-gaap:SeriesGPreferredStockMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesHPreferredStockMember 2020-01-01 2020-03-31 0000093751 stt:SeriesEPreferredStockDepositoryShareMember 2019-01-01 2019-03-31 0000093751 stt:SeriesDPreferredStockDepositoryShareMember 2019-01-01 2019-03-31 0000093751 us-gaap:SeriesCPreferredStockMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesEPreferredStockMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesDPreferredStockMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesCPreferredStockMember 2019-01-01 2019-03-31 0000093751 stt:SeriesCPreferredStockDepositoryShareMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesGPreferredStockMember 2019-01-01 2019-03-31 0000093751 stt:SeriesFPreferredStockDepositoryShareMember 2020-01-01 2020-03-31 0000093751 stt:SeriesCPreferredStockDepositoryShareMember 2019-01-01 2019-03-31 0000093751 us-gaap:SeriesHPreferredStockMember 2019-01-01 2019-03-31 0000093751 us-gaap:SeriesDPreferredStockMember 2019-01-01 2019-03-31 0000093751 stt:SeriesHPreferredStockDepositoryShareMember 2019-01-01 2019-03-31 0000093751 us-gaap:SeriesFPreferredStockMember 2020-01-01 2020-03-31 0000093751 stt:SeriesEPreferredStockDepositoryShareMember 2020-01-01 2020-03-31 0000093751 stt:SeriesGPreferredStockDepositoryShareMember 2019-01-01 2019-03-31 0000093751 stt:TwoThousandandNineteenShareRepurchaseProgramMember 2019-10-01 2019-12-31 0000093751 stt:TwoThousandandEighteenShareRepurchaseProgramMember 2019-04-01 2019-06-30 0000093751 us-gaap:SeriesCPreferredStockMember 2020-03-15 0000093751 stt:SeriesCPreferredStockDepositoryShareMember 2020-03-15 0000093751 us-gaap:SeriesCPreferredStockMember 2020-03-15 2020-03-15 0000093751 stt:TwoThousandandNineteenShareRepurchaseProgramMember 2019-06-30 0000093751 us-gaap:SeriesGPreferredStockMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesFPreferredStockMember 2015-05-01 2015-05-31 0000093751 us-gaap:SeriesGPreferredStockMember 2016-04-01 2016-04-30 0000093751 us-gaap:SeriesHPreferredStockMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesDPreferredStockMember 2014-02-01 2014-02-28 0000093751 us-gaap:SeriesDPreferredStockMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesFPreferredStockMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-03-31 0000093751 us-gaap:SeriesHPreferredStockMember 2018-09-01 2018-09-30 0000093751 stt:BaselIIIAdvancedApproachMember 2019-12-31 0000093751 srt:SubsidiariesMember stt:BaselIIIAdvancedApproachMember 2020-03-31 0000093751 stt:BaselIIIstandardizedApproachMember 2020-03-31 0000093751 srt:SubsidiariesMember stt:BaselIIIstandardizedApproachMember 2019-12-31 0000093751 srt:SubsidiariesMember stt:BaselIIIAdvancedApproachMember 2019-12-31 0000093751 stt:BaselIIIAdvancedApproachMember 2020-03-31 0000093751 srt:SubsidiariesMember stt:BaselIIIstandardizedApproachMember 2020-03-31 0000093751 stt:BaselIIIstandardizedApproachMember 2019-12-31 0000093751 us-gaap:EmployeeSeveranceMember 2018-12-31 0000093751 stt:AssetsAndOtherWriteOffsMember 2019-01-01 2019-03-31 0000093751 us-gaap:EmployeeSeveranceMember 2019-01-01 2019-03-31 0000093751 stt:AssetsAndOtherWriteOffsMember 2018-12-31 0000093751 us-gaap:FacilityClosingMember 2020-03-31 0000093751 stt:AssetsAndOtherWriteOffsMember 2020-01-01 2020-03-31 0000093751 us-gaap:EmployeeSeveranceMember 2019-12-31 0000093751 us-gaap:EmployeeSeveranceMember 2019-03-31 0000093751 us-gaap:FacilityClosingMember 2019-01-01 2019-03-31 0000093751 stt:AssetsAndOtherWriteOffsMember 2019-03-31 0000093751 stt:AssetsAndOtherWriteOffsMember 2020-03-31 0000093751 us-gaap:EmployeeSeveranceMember 2020-03-31 0000093751 us-gaap:FacilityClosingMember 2019-12-31 0000093751 us-gaap:FacilityClosingMember 2020-01-01 2020-03-31 0000093751 us-gaap:EmployeeSeveranceMember 2020-01-01 2020-03-31 0000093751 us-gaap:FacilityClosingMember 2018-12-31 0000093751 us-gaap:FacilityClosingMember 2019-03-31 0000093751 stt:AssetsAndOtherWriteOffsMember 2019-12-31 0000093751 stt:CharlesRiverDevelopmentMember 2019-01-01 2019-03-31 0000093751 stt:CharlesRiverDevelopmentMember 2020-01-01 2020-03-31 0000093751 srt:ScenarioForecastMember stt:CharlesRiverDevelopmentMember 2018-10-01 2021-12-31 0000093751 us-gaap:OperatingSegmentsMember stt:InvestmentServicingMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:InvestmentManagementMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:InvestmentServicingMember 2020-01-01 2020-03-31 0000093751 us-gaap:MaterialReconcilingItemsMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:InvestmentManagementMember 2020-01-01 2020-03-31 0000093751 us-gaap:MaterialReconcilingItemsMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ProcessingServicesandOtherMember stt:InvestmentManagementMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:RevenueFromFeesMember stt:InvestmentServicingMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ProcessingServicesandOtherMember stt:InvestmentServicingMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:InterestIncomeNetMember stt:InvestmentServicingMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:TotalOtherIncomeMember stt:InvestmentManagementMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:AccountServicingMember stt:InvestmentServicingMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:InterestIncomeNetMember stt:InvestmentManagementMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:TotalOtherIncomeMember stt:InvestmentServicingMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:SecuritiesFinancingServicesMember stt:InvestmentManagementMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ForeignExchangeTradingServicesMember stt:InvestmentManagementMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ManagementServicesMember stt:InvestmentManagementMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ManagementServicesMember stt:InvestmentServicingMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:RevenueFromFeesMember stt:InvestmentManagementMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ForeignExchangeTradingServicesMember stt:InvestmentServicingMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:SecuritiesFinancingServicesMember stt:InvestmentServicingMember 2019-01-01 2019-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:AccountServicingMember stt:InvestmentManagementMember 2019-01-01 2019-03-31 0000093751 stt:AccruedInterestandFeesReceivableMember 2020-03-31 0000093751 stt:AccruedInterestandFeesReceivableMember 2019-12-31 0000093751 us-gaap:OperatingSegmentsMember stt:TotalOtherIncomeMember stt:InvestmentManagementMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:AccountServicingMember stt:InvestmentServicingMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ForeignExchangeTradingServicesMember stt:InvestmentManagementMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ProcessingServicesandOtherMember stt:InvestmentManagementMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:InterestIncomeNetMember stt:InvestmentServicingMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:RevenueFromFeesMember stt:InvestmentServicingMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ForeignExchangeTradingServicesMember stt:InvestmentServicingMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:SecuritiesFinancingServicesMember stt:InvestmentServicingMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:InterestIncomeNetMember stt:InvestmentManagementMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ProcessingServicesandOtherMember stt:InvestmentServicingMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:AccountServicingMember stt:InvestmentManagementMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:RevenueFromFeesMember stt:InvestmentManagementMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ManagementServicesMember stt:InvestmentServicingMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:ManagementServicesMember stt:InvestmentManagementMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:SecuritiesFinancingServicesMember stt:InvestmentManagementMember 2020-01-01 2020-03-31 0000093751 us-gaap:OperatingSegmentsMember stt:TotalOtherIncomeMember stt:InvestmentServicingMember 2020-01-01 2020-03-31 0000093751 us-gaap:NonUsMember 2020-03-31 0000093751 us-gaap:NonUsMember 2019-03-31 0000093751 country:US 2019-01-01 2019-03-31 0000093751 us-gaap:NonUsMember 2020-01-01 2020-03-31 0000093751 us-gaap:NonUsMember 2019-01-01 2019-03-31 0000093751 country:US 2020-01-01 2020-03-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure stt:portfolio stt:security stt:loan_segment stt:loan stt:segment


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
 
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)
 
 
Massachusetts
 
04-2456637
(State or other jurisdiction of incorporation)
(I.R.S. Employer Identification No.)
 
One Lincoln Street
 
 
Boston,
Massachusetts
02111
 
 
(617)
786-3000
(Address of principal executive offices, and Zip Code)
(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.PRD
 
New York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, without par value per share
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No  

The number of shares of the registrant’s common stock outstanding as of April 24, 2020 was 351,956,390.

 




STATE STREET CORPORATION
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED
March 31, 2020

TABLE OF CONTENTS
 
Page
PART I. FINANCIAL INFORMATION
 
Management's Discussion and Analysis of Financial Condition and Results of Operations
4
General
4
Overview of Financial Results
8
Consolidated Results of Operations
11
Total Revenue
11
Net Interest Income
14
Provision for Credit Losses
17
Expenses
17
Acquisition Costs
17
Restructuring and Repositioning Charges
17
  Income Tax Expense
18
Line of Business Information
18
Investment Servicing
18
Investment Management
21
Financial Condition
23
Investment Securities
24
Loans
26
Cross-Border Outstandings
27
Risk Management
27
Credit Risk Management
28
Liquidity Risk Management
28
Operational Risk Management
32
Information Technology Risk Management
33
Market Risk Management
33
Model Risk Management
37
Strategic Risk Management
37
Capital
37
Off-Balance Sheet Arrangements
45
Significant Accounting Estimates
46
Recent Accounting Developments
46
Quantitative and Qualitative Disclosures About Market Risk
47
Controls and Procedures
47
Consolidated Financial Statements
48
Consolidated Statement of Income (unaudited)
48
Consolidated Statement of Comprehensive Income (unaudited)
49
Consolidated Statement of Condition
50
Consolidated Statement of Changes in Shareholders' Equity (unaudited)
51
Consolidated Statement of Cash Flows (unaudited)
52
Note 1. Summary of Significant Accounting Policies
53
Note 2. Fair Value
54

State Street Corporation | 2



Note 3. Investment Securities
60
Note 4. Loans
65
Note 5. Allowance for Credit Losses
66
Note 6. Goodwill and Other Intangible Assets
70
Note 7. Other Assets
70
Note 8. Derivative Financial Instruments
70
Note 9. Offsetting Arrangements
74
Note 10. Commitments and Guarantees
76
Note 11. Contingencies
76
Note 12. Variable Interest Entities
79
Note 13. Shareholders' Equity
79
Note 14. Regulatory Capital
82
Note 15. Net Interest Income
83
Note 16. Expenses
83
Note 17. Earnings Per Common Share
83
Note 18. Line of Business Information
84
Note 19. Revenue From Contracts with customers
84
Note 20. Non-U.S. Activities
85
Review Report of Independent Registered Public Accounting Firm
86
 
 
PART II. OTHER INFORMATION
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
89
Item 6. Exhibits
90
Signatures
91
 
 
















We use acronyms and other defined terms for certain business terms and abbreviations, as defined in the acronyms list and glossary following the consolidated financial statements in this Form 10-Q.


State Street Corporation | 3


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS



GENERAL
State Street Corporation, referred to as the Parent Company, is a financial holding company organized in 1969 under the laws of the Commonwealth of Massachusetts. Our executive offices are located at One Lincoln Street, Boston, Massachusetts 02111 (telephone (617) 786-3000). For purposes of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (Form 10-Q), 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. The Parent Company is a source of financial and managerial strength to our subsidiaries. Through our subsidiaries, including our principal banking subsidiary, State Street Bank and Trust Company, referred to as State Street Bank, we provide a broad range of financial products and services to institutional investors worldwide, with $31.86 trillion of AUC/A and $2.69 trillion of AUM as of March 31, 2020.
As of March 31, 2020, we had consolidated total assets of $362.53 billion, consolidated total deposits of $257.10 billion, consolidated total shareholders' equity of $23.86 billion and 39,318 employees. We operate in more than 100 geographic markets worldwide, including in the U.S., Canada, Europe, the Middle East and Asia.
Our operations are organized into two lines of business, Investment Servicing and Investment Management, which are defined based on products and services provided.
Additional information about our lines of business is provided in Line of Business Information in this Management's Discussion and Analysis and Note 18 to the consolidated financial statements in this Form 10-Q.
This Management's Discussion and Analysis is part of the Form 10-Q and updates the Management's Discussion and Analysis in our 2019 Annual Report on Form 10-K for the year ended December 31, 2019 previously filed with the SEC (2019 Form 10-K). You should read the financial information contained in this Management's Discussion and Analysis and elsewhere in this Form 10-Q in conjunction with the financial and other information contained in our 2019 Form 10-K. Certain previously reported amounts presented in this Form 10-Q have been reclassified to conform to current-period presentation.
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.
 
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 include:
accounting for fair value measurements;
impairment of goodwill and other intangible assets;
contingencies; and
allowance for credit losses.
These significant accounting policies require the most subjective or complex judgments, and underlying estimates and assumptions could be subject to revision as new information becomes available. For additional information about these significant accounting policies refer to pages 115 to 117, “Significant Accounting Estimates” included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2019 Form 10-K and Significant Accounting Estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q. Upon evaluating our accounting policies in light of our adoption of CECL on January 1, 2020, we included allowance for credit losses as one of our significant accounting policies. Other than including that additional significant policy, we did not change these significant accounting policies in the first three months of 2020.
Certain financial information provided in this Form 10-Q, including in this Management's Discussion and Analysis, is prepared on both a U.S. GAAP, or reported basis, and a non-GAAP basis. 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 superior to, financial information prepared in conformity with U.S. GAAP. Any non-GAAP financial information presented in this Form 10-Q, including this Management’s Discussion and Analysis, is reconciled to its most directly comparable U.S. GAAP-basis measure.
We further believe that our presentation of FTE NII, a non-GAAP measure, which reports non-taxable revenue, such as interest income associated with tax-exempt investment securities, on a FTE basis, facilitates an investor's understanding and analysis of our underlying financial performance and trends.
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) and the LCR, summary results of semi-annual State Street-run stress

State Street Corporation | 4


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

tests which we conduct under the Dodd-Frank Act, and resolution plan disclosures required under the Dodd-Frank Act. These additional disclosures are accessible on the “Investor Relations” section of our corporate website at www.statestreet.com.
We have included our website address in this report as an inactive textual reference only. Information on our website is not incorporated by reference into this Form 10-Q.
We use acronyms and other defined terms for certain business terms and abbreviations, as defined in the acronyms list and glossary following the consolidated financial statements in this Form 10-Q.
Forward-Looking Statements
This Form 10-Q, 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, outcomes of legal proceedings, market growth, acquisitions, joint ventures and divestitures, client growth and new technologies, services and opportunities, 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 “plan,” “expect,” “intend,” “objective,” “forecast,” “outlook,” “believe,” “priority,” “anticipate,” “estimate,” “seek,” “may,” “will,” “trend,” “target,” “strategy” and “goal,” 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, but are not limited to:
the financial strength of the counterparties with which we or our clients do business and to which we have investment, credit or financial exposures or to which our clients have such exposures as a result of our acting as agent, including as an asset manager or securities lending agent;
the significant risks and uncertainties for our business, results of operations and financial condition, as well as our regulatory capital and liquidity ratios and other regulatory requirements in the United States and internationally, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its influence on the economy and financial markets, the effectiveness of our work from home arrangements and staffing levels in operational facilities, the impact of market participants on which we rely and actions taken by governmental authorities and other third parties in response to the pandemic and the impact of lower equity market valuations on our service and management fee revenue;
increases in the volatility of, or declines in the level of, our NII; changes in the composition or valuation of the assets recorded in our consolidated statement of condition (and our ability to measure the fair value of investment securities); and changes in the manner in which we fund those assets;
the volatility of servicing fee, management fee, trading fee and securities finance revenues due to, among other factors, the value of equity and fixed-income markets, market interest and FX rates, the volume of client transaction activity, competitive pressures in the investment servicing and asset management industries, and the timing of revenue recognition with respect to software and processing fees revenues;
the liquidity of the U.S. and international securities markets, particularly the markets for fixed-income securities and inter-bank credits; the liquidity of the assets on our balance sheet and changes or volatility in the sources of such funding, particularly the deposits of our clients; and demands upon our liquidity, including the liquidity demands and requirements of our clients;
the level, volatility and uncertainty of interest rates; the expected discontinuation of Interbank Offered Rates including London Interbank Offered Rate (LIBOR); the valuation of the U.S. dollar relative to other currencies in which we record revenue or accrue expenses; the performance and volatility of securities, credit, currency and other markets in

State Street Corporation | 5


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

the U.S. and internationally; and the impact of monetary and fiscal policy in the U.S. and internationally on prevailing rates of interest and currency exchange rates in the markets in which we provide services to our clients;
the credit quality, credit-agency ratings and fair values of the securities in our investment securities portfolio, a deterioration or downgrade of which could lead to impairment of such securities and the recognition of a provision for credit losses in our consolidated statement of income;
our ability to attract and retain deposits and other low-cost, short-term funding; our ability to manage the level and pricing of such deposits and the relative portion of our deposits that are determined to be operational under regulatory guidelines; our ability to deploy deposits in a profitable manner consistent with our liquidity needs, regulatory requirements and risk profile; and the risks associated with the potential liquidity mismatch between short-term deposit funding and longer term investments;
the manner and timing with which the Federal Reserve and other U.S. and non-U.S. regulators implement or reevaluate the regulatory framework applicable to our operations (as well as changes to that framework), including implementation or modification of the Dodd-Frank Act and related stress testing and resolution planning requirements and implementation of international standards applicable to financial institutions, such as those proposed by the Basel Committee and European legislation (such as Undertakings for Collective Investments in Transferable Securities (UCITS) V, the Money Market Fund Regulation and the Markets in Financial Instruments Directive II/Markets in Financial Instruments Regulation); among other consequences, these regulatory changes impact the levels of regulatory capital, long-term debt and liquidity we must maintain, acceptable levels of credit exposure to third parties, margin requirements applicable to derivatives, restrictions on banking and financial activities and the manner in which we structure and implement our global operations and servicing relationships. In addition, our regulatory posture and related expenses have been and will continue to be affected by heightened standards and changes in regulatory expectations for global systemically important financial institutions applicable to, among other things, risk management, liquidity and capital planning, cyber-security, resiliency, resolution planning and compliance programs, as well as changes in governmental enforcement approaches to perceived failures to comply with regulatory or legal obligations;
 
adverse changes in the regulatory ratios that we are, or will be, required to meet, whether arising under the Dodd-Frank Act or implementation of international standards applicable to financial institutions, such as those proposed by the Basel Committee, or due to changes in regulatory positions, practices or regulations in jurisdictions in which we engage in banking activities, including changes in internal or external data, formulae, models, assumptions or other advanced systems used in the calculation of our capital or liquidity ratios that cause changes in those ratios as they are measured from period to period;
requirements to obtain the prior approval or non-objection of the Federal Reserve or other U.S. and non-U.S. regulators for the use, allocation or distribution of our capital or other specific capital actions or corporate activities, including, without limitation, acquisitions, investments in subsidiaries, dividends and stock repurchases, without which our growth plans, distributions to shareholders, share repurchase programs or other capital or corporate initiatives may be restricted;
changes in law or regulation, or the enforcement of law or regulation, that may adversely affect our business activities or those of our clients or our counterparties, and the products or services that we sell, including, without limitation, additional or increased taxes or assessments thereon, capital adequacy requirements, margin requirements and changes that expose us to risks related to our operating model and the adequacy and resiliency of our controls or compliance programs;
a cyber-security incident, or a failure to protect our systems and our, our clients' and others' information against cyber-attacks, could result in the theft, loss, unauthorized access to, disclosure, use or alteration of information, system failures, or loss of access to information; any such incident or failure could adversely impact our ability to conduct our businesses, damage our reputation and cause losses, potentially materially;
our ability to expand our use of technology to enhance the efficiency, accuracy and reliability of our operations and our dependencies on information technology; to replace and consolidate systems, particularly those relying upon older technology, and to adequately incorporate cyber-security, resiliency and business continuity into our operations, information technology infrastructure and systems management; to implement robust management processes into our technology development and maintenance programs; and to control risks related to use of technology, including cyber-crime and inadvertent data disclosures;
our ability to identify and address threats to our

State Street Corporation | 6


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

information technology infrastructure and systems (including those of our third-party service providers); the effectiveness of our and our third party service providers' efforts to manage the resiliency of the systems on which we rely; controls regarding the access to, and integrity of, our and our clients' data; and complexities and costs of protecting the security of such systems and data;
our ability to control operational and resiliency risks, data security breach risks and outsourcing risks; our ability to protect our intellectual property rights; the possibility of errors in the quantitative models we use to manage our business; and the possibility that our controls will prove insufficient, fail or be circumvented;
economic or financial market disruptions in the U.S. or internationally, including those which may result from recessions or political instability; for example, the United Kingdom's (U.K.) exit from the European Union or actual or potential changes in trade policy, such as tariffs or bilateral and multilateral trade agreements;
our ability to create cost efficiencies through changes in our operational processes and to further digitize our processes and interfaces with our clients, any failure of which, in whole or in part, may among other things, reduce our competitive position, diminish the cost-effectiveness of our systems and processes or provide an insufficient return on our associated investment;
our ability to promote a strong culture of risk management, operating controls, compliance oversight, ethical behavior and governance that meets our expectations and those of our clients and our regulators, and the financial, regulatory, reputational and other consequences of our failure to meet such expectations;
the impact on our compliance and controls enhancement programs associated with the appointment of a monitor under the deferred prosecution agreement with the DOJ and compliance consultant appointed under a settlement with the SEC, including the potential for such monitor and compliance consultant to require changes to our programs or to identify other issues that require substantial expenditures, changes in our operations, payments to clients or reporting to U.S. authorities;
the results of our review of our billing practices, including additional findings or amounts we may be required to reimburse clients, as well as potential consequences of such review, including damage to our client relationships or our reputation, adverse actions or penalties imposed by governmental authorities and costs associated with remediation of identified deficiencies;
the results of, and costs associated with,
 
governmental or regulatory inquiries and investigations, litigation and similar claims, disputes, or civil or criminal proceedings;
changes or potential changes in the amount of compensation we receive from clients for our services, and the mix of services provided by us that clients choose;
the large institutional clients on which we focus are often able to exert considerable market influence and have diverse investment activities, and this, combined with strong competitive market forces, subjects us to significant pressure to reduce the fees we charge, to potentially significant changes in our AUC/A or our AUM in the event of the acquisition or loss of a client, in whole or in part, and to potentially significant changes in our revenue in the event a client re-balances or changes its investment approach, re-directs assets to lower- or higher-fee asset classes or changes the mix of products or services that it receives from us;
the potential for losses arising from our investments in sponsored investment funds;
the possibility that our clients will incur substantial losses in investment pools for which we act as agent; the possibility of significant reductions in the liquidity or valuation of assets underlying those pools and the potential that clients will seek to hold us liable for such losses; and the possibility that our clients or regulators will assert claims that our fees, with respect to such investment products, are not appropriate;
our ability to anticipate and manage the level and timing of redemptions and withdrawals from our collateral pools and other collective investment products;
the credit agency ratings of our debt and depositary obligations and investor and client perceptions of our financial strength;
adverse publicity, whether specific to us or regarding other industry participants or industry-wide factors, or other reputational harm;
changes or potential changes to the competitive environment, due to, among other things, regulatory and technological changes, the effects of industry consolidation and perceptions of us, as a suitable service provider or counterparty;
our ability to complete acquisitions, joint ventures and divestitures, including, without limitation, our ability to obtain regulatory approvals, the ability to arrange financing as required and the ability to satisfy closing conditions;
the risks that our acquired businesses, including, without limitation, our acquisition of CRD, and joint ventures will not achieve their anticipated financial, operational and product innovation benefits or will

State Street Corporation | 7


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

not be integrated successfully, or that the integration will take longer than anticipated; that expected synergies will not be achieved or unexpected negative synergies or liabilities will be experienced; that client and deposit retention goals will not be met; that other regulatory or operational challenges will be experienced; and that disruptions from the transaction will harm our relationships with our clients, our employees or regulators;
our ability to integrate CRD's front office software solutions with our middle and back office capabilities to develop our front-to-middle-to-back office State Street Alpha that is competitive, generates revenues in line with our expectations and meets our clients' requirements; the dependency of State Street Alpha on enhancements to our data management and the risks to our servicing model associated with increased exposure to client data;
our ability to recognize evolving needs of our clients and to develop products that are responsive to such trends and profitable to us; the performance of and demand for the products and services we offer; and the potential for new products and services to impose additional costs on us and expose us to increased operational risk;
our ability to grow revenue, manage expenses, attract and retain highly skilled people and raise the capital necessary to achieve our business goals and comply with regulatory requirements and expectations;
changes in accounting standards and practices; and
the impact of the U.S. tax legislation enacted in 2017, and changes in tax legislation and in the interpretation of existing tax laws by U.S. and non-U.S. tax authorities that affect the amount of taxes due.
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-Q or disclosed in our other SEC filings. Forward-looking statements in this Form 10-Q should not be relied on as representing our expectations or assumptions as of any time subsequent to the time this Form 10-Q 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 Investor Relations section of our corporate website at www.statestreet.com.
OVERVIEW OF FINANCIAL RESULTS
TABLE 1: OVERVIEW OF FINANCIAL RESULTS
 
Three Months Ended March 31,
 
 
 
(Dollars in millions, except per share amounts)
2020
 
2019
 
% Change
Total fee revenue
$
2,399

 
$
2,260

 
6%
Net interest income
664

 
673

 
(1)
Total other income
2


(1
)

nm
Total revenue
3,065

 
2,932

 
5
Provision for credit losses(1)
36

 
4

 
nm
Total expenses
2,255

 
2,293

 
(2)
Income before income tax expense
774

 
635

 
22
Income tax expense
140

 
127

 
10
Net income
$
634

 
$
508

 
25
Adjustments to net income:
 
 
 
 

Dividends on preferred stock(2)
$
(53
)
 
$
(55
)
 
(4)
Earnings allocated to participating securities(3)
(1
)
 
(1
)
 
Net income available to common shareholders
$
580

 
$
452

 
28
Earnings per common share:
 
 
 
 

Basic
$
1.64

 
$
1.20

 
37
Diluted
1.62

 
1.18

 
37
Average common shares outstanding (in thousands):
 
 
 
 

Basic
353,746

 
377,915

 
(6)
Diluted
357,993

 
381,703

 
(6)
Cash dividends declared per common share
$
.52

 
$
.47

 
11
Return on average common equity
10.9
%
 
8.7
%
 
220
bps
Pre-tax margin
25.3

 
21.7

 
360
 
 
 
(1) We adopted ASU 2016-13, Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments, on January 1, 2020. Please refer to Note 1 to the consolidated financial statements in this Form 10-Q for additional information.
(2) Additional information about our preferred stock dividends is provided in Note 13 to the consolidated financial statements in this Form 10-Q.
(3) 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.
nm Not meaningful
The following “Financial Results and Highlights” section provides information related to significant events, as well as highlights of our consolidated financial results for the first quarter of 2020 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 first quarter of 2020 compared to the same period in

State Street Corporation | 8


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

2019, is provided under “Consolidated Results of Operations”, "Line of Business Information" and "Capital" which follows these sections, as well as in our consolidated financial statements in this Form 10-Q. In this Management’s Discussion and Analysis, where we describe the effects of changes in FX rates, those effects are determined by applying applicable weighted average FX rates from the relevant 2019 period to the relevant 2020 period results.
Financial Results and Highlights
EPS of $1.62 in the first quarter of 2020 increased 37% compared to $1.18 in the same period in 2019.
The COVID-19 pandemic, and the actions we took to support our clients, the financial markets and the broader economy, is reflected in our results for the first quarter of 2020. This includes accommodating higher than usual U.S. client deposits in March 2020 and a 64% increase in FX trading services revenue in the first quarter of 2020 as compared to the same period in 2019 reflecting higher FX volume amidst significant market volatility towards quarter-end. Operationally, we maintained business continuity, resiliency and operational effectiveness with approximately 90% of our global employees working from home by the end of the quarter.
The impact of notable items in the first quarter of 2020 includes:
acquisition costs of approximately $11 million primarily related to CRD; and
costs of $9 million due to the redemption of all outstanding Series C non-cumulative perpetual preferred stock representing the difference between the redemption value and the net carrying value of the preferred stock.
The impact of notable items in the first quarter of 2019 includes:
acquisition and restructuring costs of $9 million, consisting of acquisition costs related to CRD of $13 million, partially offset by a $4 million accrual release for restructuring; and
legal and related expenses of approximately $14 million.
CRD contributed approximately $95 million and $58 million in total revenue and total expenses, respectively, in the first quarter of 2020, compared to $96 million and $41 million, respectively, in the same period in 2019. In addition, CRD-related expenses include $17 million and $15 million in amortization of other
 
intangible assets in the first quarters of 2020 and 2019, respectively. CRD revenue with affiliated entities, which is eliminated in our consolidated financial statements, was $5 million and $3 million for the first quarters of 2020 and 2019, respectively.
In the first quarter of 2020, return on equity of 10.9% increased from 8.7% in the same period in 2019, primarily due to an increase in net income available to common shareholders. Pre-tax margin of 25.3% in the first quarter of 2020 increased from 21.7% in the same period in 2019, primarily due to higher total revenue and lower expenses.
Operating leverage was 6.2% in the first quarter of 2020. 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.
We repurchased $500 million of our common stock in the first quarter of 2020 under our common stock purchase program announced in June 2019. On March 16, 2020, we announced that we temporarily suspended our common stock repurchase program, together with the other U.S. based GSIFIs, in light of the COVID-19 pandemic.
As our clients participated in the Federal Reserve's Money Market Mutual Fund Liquidity Facility (MMLF) program in the first quarter of 2020, we purchased $27 billion of investment securities under that program providing liquidity to our clients by facilitating more than 50% of the MMLF program usage. In April 2020, we were selected to serve as custodian and accounting administrator for the Federal Reserve's Commercial Paper Funding Facility and to its Primary and Secondary Market Corporate Credit Fund Facilities.
Revenue
Total revenue and fee revenue increased 5% and 6%, respectively, in the first quarter of 2020 compared to the same period in 2019, primarily driven by increases in servicing fees, management fees and foreign exchange trading services, partially offset by lower securities finance revenues and software and processing fees and, in the case of total revenue, by NII.
Servicing fee revenue increased 3% in the first quarter of 2020 compared to the same period in 2019, primarily due to higher client activity and flows, average market levels, and net new business, partially offset by pricing headwinds.

State Street Corporation | 9


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Management fee revenue increased 7% in the first quarter of 2020 compared to the same period in 2019, primarily due to higher average equity market levels and the run rate revenue impact of inflows from ETFs and cash throughout 2019, partially offset by mix changes away from higher fee institutional products.
Foreign exchange trading services increased 64% in the first quarter of 2020 compared to the same period in 2019, primarily due to a significant increase in FX volatility and trading volumes amidst significant market disruptions towards quarter-end.
Securities finance revenue decreased 22% in the first quarter of 2020 compared to the same period in 2019, primarily due to decreases in enhanced custody balances due to client deleveraging and a decline in equity markets and lower agency lending revenues due to lower spreads and balances with the market volatility in the first quarter of 2020.
Software and processing fees revenue decreased 41% in the first quarter of 2020 compared to the same period in 2019, primarily due to market-related adjustments and lower income on tax advantaged investments.
NII decreased 1% in the first quarter of 2020 compared to the same period in 2019, primarily due to the impact of lower market rates, partially offset by stronger deposit balances reflecting period-end inflows, and episodic market-related benefits.
Provision for Credit Losses
In the first quarter of 2020, we recorded a provision for credit losses related to loans and financial assets held at amortized cost, including investment securities held-to-maturity and off-balance sheet commitments of $36 million based on the CECL methodology, reflecting the impact of COVID-19 driven changes in our economic outlook as of quarter-end on estimated lifetime losses under the CECL methodology. While we took steps in late March to incorporate the impact of the COVID-19 pandemic on the economic forecast utilized to determine our allowance for credit losses, which drives our provision, if the economic forecast worsens relative to the assumptions we utilized in March our allowance for credit losses will increase accordingly in future periods. This compares to a $4 million provision for credit losses in the same period in 2019 (which was under the previous incurred loss model).
 
Expenses
Total expenses decreased 2% in the first quarter of 2020 compared to the same period in 2019, primarily reflecting savings from resource discipline, process re-engineering and automation initiatives.
AUC/A and AUM
AUC/A decreased 2% as of March 31, 2020 compared to March 31, 2019, primarily due to lower end of period equity market levels and a previously announced client transition, partially offset by higher fixed income market levels. In the first quarter of 2020, newly announced asset servicing mandates totaled approximately $171 billion. Servicing assets remaining to be installed in future periods totaled approximately $1.06 trillion as of March 31, 2020.
AUM decreased 4% as of March 31, 2020 compared to March 31, 2019, primarily due to lower end of period equity market levels, partially offset by net inflows from cash and ETFs.
Capital and Capital Redemptions
In the first quarter of 2020, we returned a total of approximately $683 million to our shareholders in the form of common stock dividends and share purchases.
We declared aggregate common stock dividends of $0.52 per share, totaling $183 million in the first quarter of 2020, compared to $0.47 per share, totaling $177 million in the same period in 2019, representing an increase of approximately 11% on a per share basis.
In the first quarter of 2020, we acquired 6.5 million shares of common stock at an average per share cost of $77.35 and an aggregate cost of approximately $500 million. In the first quarter of 2019, we acquired 4.2 million shares of common stock at an average per share cost of $70.93 and an aggregate cost of approximately$300 million. These purchases were all conducted under share purchase programs approved by our Board of Directors.
Our CET1 capital ratio was 10.7% as of March 31, 2020 compared to 11.7% as of December 31, 2019, and Tier 1 leverage ratio decreased to 6.1% as of March 31, 2020, compared to 6.9% as of December 31, 2019, due primarily to increased leverage assets and the redemption of our $500 million Series C

State Street Corporation | 10


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

preferred stock in the first quarter of 2020. As of March 31, 2020, standardized approaches capital ratios were binding for the period.
Capital Redemptions
We redeemed all outstanding Series C non-cumulative perpetual preferred stock as of March 15, 2020 at a redemption price of $500 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends. The difference of $9 million between the redemption value and the net carrying value resulted in an EPS impact of approximately ($0.03) per share in the first quarter of 2020.
Debt Issuances
On January 24, 2020, we issued $750 million aggregate principal amount of 2.400% Senior Notes due 2030.
On March 26, 2020, we issued $750 million aggregate principal amount of 2.825% Fixed-to-Floating Rate Senior Notes due 2023, $500 million aggregate principal amount of 2.901% Fixed-to-Floating Rate Senior Notes due 2026 and $500 million aggregate principal amount of 3.152% of Fixed-to-Floating Rate Senior Notes due 2031.
CONSOLIDATED RESULTS OF OPERATIONS
This section discusses our consolidated results of operations for the first quarter of 2020 compared to the same period in 2019, and should be read in conjunction with the consolidated financial statements and accompanying condensed notes to the consolidated financial statements in this Form 10-Q.
Total Revenue
TABLE 2: TOTAL REVENUE
 
Three Months Ended March 31,
 
% Change
(Dollars in millions)
2020
 
2019
 
Fee revenue:
 
 
 
 
 
Servicing fees
$
1,287

 
$
1,251

 
3
 %
Management fees
449

 
420

 
7

Foreign exchange trading services
459

 
280

 
64

Securities finance
92

 
118

 
(22
)
Software and processing fees
112

 
191

 
(41
)
Total fee revenue
2,399

 
2,260

 
6

Net interest income:
 
 
 
 

Interest income
868

 
1,027

 
(15
)
Interest expense
204

 
354

 
(42
)
Net interest income
664

 
673

 
(1
)
Other income:
 
 
 
 
 
Gains (losses) from sales of available-for-sale securities, net
2

 

 
nm

Other income

 
(1
)
 
nm

Total other income
2


(1
)

nm

Total revenue
$
3,065

 
$
2,932

 
5

 
 
nm Not meaningful
 
Fee Revenue
Table 2: Total Revenue, provides the breakout of fee revenue for the first quarters of 2020 and 2019. Servicing and management fees collectively made up approximately 72% and 74% of the total fee revenue in the first quarters of 2020 and 2019, respectively.
Servicing Fee Revenue
Generally, our servicing fee revenues are affected by several factors including changes in market valuations, client activity and asset flows, net new business and the manner in which we price our services. We provide a range of services to our clients, including core custody services, accounting, reporting and administration and middle office services, and the nature and mix of services provided affects our servicing fees. The basis for fees will differ across regions and clients. On average and over time, approximately 55% of our servicing fee revenues have been variable due to changes in asset valuations including changes in daily average valuations of AUC/A; another 15% of our servicing fees are impacted by the volume of activity in the funds we serve; and the remaining 30% of our servicing fees tend not to be variable in nature nor impacted by market fluctuations or values.
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. If the lower equity market levels that we experienced towards the end of the first quarter of 2020 persist into future periods our servicing fee revenue would be adversely impacted.
Over the five years ended December 31, 2019, we estimate that worldwide market valuations impacted our servicing fee revenues by approximately (2)% to 5% annually. See Table 3: Daily Averages, Month-End Averages and Quarter-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.
We estimate, using relevant information as of March 31, 2020 and assuming that all other factors remain constant, that:

State Street Corporation | 11


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

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 time, of approximately 3%; and
A 10% increase or decrease in worldwide fixed income 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 time, of approximately 1%.
TABLE 3: DAILY AVERAGES, MONTH-END AVERAGES AND QUARTER-END EQUITY INDICES(1)
 
Daily Averages of Indices
 
Month-End Averages of Indices
 
Quarter-End Indices
 
Three Months Ended March 31,
 
Three Months Ended March 31,
 
As of March 31,
 
2020
 
2019
 
% Change
 
2020
 
2019
 
% Change
 
2020
 
2019
 
% Change
S&P 500®
3,056

 
2,721

 
12
 %
 
2,921

 
2,774

 
5
 %
 
2,585

 
2,834

 
(9
)%
MSCI EAFE®
1,868

 
1,833

 
2

 
1,788

 
1,860

 
(4
)
 
1,560

 
1,875

 
(17
)
MSCI® Emerging Markets
1,030

 
1,033

 

 
972

 
1,053

 
(8
)
 
849

 
1,058

 
(20
)
 
 
(1) The index names listed in the table are service marks of their respective owners.
TABLE 4: QUARTER-END DEBT INDICES(1)
 
As of March 31,
 
 
 
2020
 
2019
 
% Change
Barclays Capital U.S. Aggregate Bond Index®
2,295

 
2,107

 
9
%
Barclays Capital Global Aggregate Bond Index®
510

 
489

 
4

 
 
(1) The index names listed in the table are service marks of their respective owners.
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, 2019, we estimate that client activity and asset flows, together, impacted our servicing fee revenues by approximately (1)% to 2% annually. 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
 
Three Months Ended March 31,
(In billions)
2020
 
2019
North America - ICI Market Data(1)(2)(3)
 
 
 
Long-Term Funds(4)
$
(347.1
)
 
$
41.8

Money Market
765.4

 
54.0

Exchange-Traded Fund
58.3

 
45.7

Total ICI Flows
$
476.6

 
$
141.5

 
 
 
 
Europe - Broadridge Market Data(1)(5)(6)
 
 
 
Long-Term Funds(4)
$
130.7

 
$
5.7

Money Market
30.8

 
(9.0
)
Total Broadridge Flows
$
161.5

 
$
(3.3
)
 
 
 
(1) Industry data is provided for illustrative purposes only. It is not intended to reflect our activity or its clients' activity and is indicative of only segments of the entire industry.
(2) Source: Investment Company Institute. ICI data includes long-term funds, ETFs and money market funds, as well as funds not registered under the Investment Company Act of 1940. Mutual fund data represents estimates of net new cash flow, which is new sales minus redemptions combined with net exchanges, while ETF data represents net issuance, which is gross issuance less gross redemptions. Data for mutual funds that invest primarily in other mutual funds and ETFs that invest primarily in other ETFs were excluded from the series. ICI classifies mutual funds and ETFs based on language in the fund prospectus.
(3) The first quarter of 2020 data includes ICI actuals for January and February 2020 and ICI estimates for March 2020.
(4) The long-term fund flows reported by ICI are composed of North America Market flows mainly in Equities, Hybrids and Fixed-Income Asset Classes. The long-term fund flows reported by Broadridge are composed of the European, Middle-Eastern, and African market flows mainly in Equities, Fixed-Income and Multi Asset Classes.
(5) Source: © Copyright 2020, Broadridge Financial Solutions, Inc. Funds of funds have been excluded from Broadridge data (to avoid double counting). Therefore, a market total is the sum of all the investment categories excluding the three funds of funds categories (in-house, ex-house and hedge). Broadridge data includes funds for long-term funds and money market funds. ETFs are included in Broadridge’s database on mutual funds, but this excludes exchange-traded commodity products that are not mutual funds.
(6) The first quarter of 2020 data is on a rolling three month basis for December 2019 through February 2020 for Europe, Middle East and Africa (Copyright 2020 Broadridge Financial Solutions, Inc.).

State Street Corporation | 12


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

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 wins, as the amount of revenue associated with AUC/A can vary materially. On average, over the five years ended December 31, 2019, we estimate that pricing pressure with respect to existing clients has impacted our servicing fees by approximately (2)% annually, with the impact ranging from (1)% to (4)% in any given year. Pricing concessions can be a part of a contract renegotiation with a client including terms that may benefit us, such as extending the terms 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. The timing of the impact of additional revenue generated by anticipated additional services, and the amount of revenue generated, may differ from the impact of pricing concessions on existing services due to the necessary time required to onboard those new services, the nature of those services and client investment practices. These same market pressures also impact the fees we negotiate when we win business from new clients.
Net New Business
Over the five years ended December 31, 2019, net new business, which includes business both won and lost, has affected our servicing fee revenues by approximately 2% on average with a range of 0% to 3% annually.
New business impacting servicing fees can include: custody; product and participant level accounting; daily valuation and administration; record-keeping; cash management; and other services. Revenues 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.
Management Fee Revenue
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 UCITS, 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. If the lower equity market levels that we experienced towards the end of the first quarter of 2020 persist into future periods our management fee revenue would be adversely impacted. 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. In addition, in a prolonged low-interest-rate environment we may waive certain fees for our clients for money market products.
Asset-based management fees for passively managed products, to which our AUM is currently primarily weighted, are generally charged at a lower fee of 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.
In light of the above, we estimate, using relevant information as of March 31, 2020 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 time, of approximately 5%; and
A 10% increase or decrease in worldwide fixed-income 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 time, of approximately 4%.
Daily averages, month-end averages and quarter-end indices demonstrate worldwide changes in equity and debt markets that affect our management fee revenue. Quarter-end indices affect the values of AUM as of those dates. See Table 3: Daily Averages, Month-End Averages and Quarter-End Equity Indices for selected indices.
Additional information about fee revenue is provided under "Line of Business Information" included in this Management's Discussion and Analysis.

State Street Corporation | 13


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Net Interest Income
See Table 2: Total Revenue, for the breakout of interest income and interest expense for the first quarters of 2020 and 2019.
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, resale agreements, loans 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 a FTE basis using the U.S. federal and state statutory income tax rates.
NII on a FTE basis decreased in the first quarter of 2020 compared to the same period in 2019, primarily due to lower long-end U.S. market rates, partially offset by higher U.S. average client deposit balances, investment portfolio and loan growth, and episodic market-related benefits of approximately $20 million. The higher average deposits were primarily attributable to increased deposits towards quarter-end amidst the COVID-19 pandemic. When the economic and market environment becomes more stable, deposit levels may normalize, impacting net interest income.
Investment securities net premium amortization, which is included in interest income, was $108 million in the first quarter of 2020 compared to $89 million in the same period in 2019, primarily related to higher MBS premium amortization.
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 rate of return considers any non-refundable fees or costs, as well as purchase premiums or discounts, resulting in amortization or accretion, accordingly. The amortization of premiums and accretion of discounts are adjusted for prepayments when they occur, such that the level rate of return remains constant throughout the contractual life of the security.
 
The following table presents the investment securities amortizable purchase premium net of discount accretion for the periods indicated:
TABLE 6: INVESTMENT SECURITIES NET PREMIUM AMORTIZATION
 
Three Months Ended March 31,
(Dollars in millions)
2020
 
2019
Unamortized premiums, net of discounts at period end
$
1,653

 
$
1,629

Net premium amortization
108

 
89

Investment securities duration (years)(1)
2.2

 
2.8

 
 
(1) Excluding investment securities purchased under the MMLF program, the investment securities portfolio duration is 2.7 years.
Money Market Mutual Fund Liquidity Facility
In March 2020, in response to the economic impact of COVID-19, the Federal Reserve established the MMLF program in order to enhance the liquidity and functioning of crucial money markets. Through the establishment of the MMLF program, the Federal Reserve Bank of Boston makes loans available to eligible financial institutions secured by high-quality assets purchased by the financial institution from money market mutual funds. The MMLF program is authorized through September 30, 2020 and is to cease operations thereafter unless an extension is made. We participated in this program in support of our clients and purchased $27 billion of these assets (including negotiable CDs, municipals and asset-backed commercial paper) in the first quarter of 2020, following the program’s adoption on March 18, 2020 (for an average balance sheet impact of $2.1 billion in the first quarter of 2020), and earned $2 million of NII associated with this facility. The purchases are match funded through Federal Reserve borrowings and the assets are posted as collateral. The borrowing is non-recourse, meaning that the Federal Reserve has taken on the credit risk of the assets purchased. The purchased securities are classified as held-to-maturity and have a maturity of less than 12 months. MMLF related assets do not impact our risk-based and leverage capital ratios. We recorded a $4 million allowance for credit losses on HTM securities purchased under the MMLF program.

State Street Corporation | 14


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

See Table 7: Average Balances and Interest Rates - Fully Taxable-Equivalent Basis, for the breakout of NII on a FTE basis for the first quarters of 2020 and 2019.
TABLE 7: AVERAGE BALANCES AND INTEREST RATES - FULLY TAXABLE-EQUIVALENT BASIS(1)
 
Three Months Ended March 31,
 
2020
 
2019
(Dollars in millions; fully taxable-equivalent basis)
Average
Balance
 
Interest
Revenue/Expense
 
Average Rate
 
Average
Balance
 
Interest
Revenue/Expense
 
Average Rate
Interest-bearing deposits with banks
$
67,120

 
$
81

 
.49
 %
 
$
48,856

 
$
119

 
.99
%
Securities purchased under resale agreements(2)
1,805

 
65

 
14.38

 
2,775

 
98

 
14.33

Trading account assets
915

 

 

 
866

 

 

Investment securities
95,449

 
487

 
2.04

 
88,273

 
507

 
2.30

Investment securities held to maturity purchased under money market liquidity facility
2,111

 
8

 
1.52

 

 

 

Loans
28,468

 
185

 
2.62

 
23,056

 
199

 
3.49

Other interest-earning assets
10,764

 
46

 
1.70

 
15,286

 
109

 
2.89

Average total interest-earning assets
$
206,632

 
$
872

 
1.70

 
$
179,112

 
$
1,032

 
2.34

Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
U.S.
$
80,247

 
$
100

 
.50
 %
 
$
64,531

 
$
132

 
.83
%
Non-U.S.(3)
64,340

 
(32
)
 
(.20
)
 
59,775

 
39

 
.26

Total interest-bearing deposits(3)(4)
144,587

 
68

 
.19

 
124,306

 
171

 
.56

Securities sold under repurchase agreements
1,773

 
2

 
.55

 
1,773

 
12

 
2.66

Short-term borrowings under money market liquidity facility
2,187

 
6

 
1.11

 

 

 

Other short-term borrowings
2,960

 
10

 
1.32

 
1,157

 
4

 
1.34

Long-term debt
13,288

 
88

 
2.64

 
10,955

 
106

 
3.89

Other interest-bearing liabilities
3,434

 
30

 
3.55

 
4,642

 
61

 
5.31

Average total interest-bearing liabilities
$
168,229

 
$
204

 
.49

 
$
142,833

 
$
354

 
1.00

Interest rate spread
 
 
 
 
1.21
 %
 
 
 
 
 
1.34
%
Net interest income, fully taxable-equivalent basis
 
 
$
668

 
 
 
 
 
$
678

 
 
Net interest margin, fully taxable-equivalent basis
 
 
 
 
1.30
 %
 
 
 
 
 
1.54
%
Tax-equivalent adjustment
 
 
(4
)
 
 
 
 
 
(5
)
 
 
Net interest income, GAAP basis
 
 
$
664

 
 
 
 
 
$
673

 
 
 
 
(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 $123.96 billion in the first quarter of 2020 compared to $59.20 billion in the same period in 2019. Excluding the impact of netting, the average interest rates would be approximately 0.21% in the first quarter of 2020 compared to 0.64% in the same period in 2019.
(3) Average rate includes the impact of FX swap costs of approximately $(2) million in the first quarter of 2020 compared to $39 million in the same period in 2019. Average rates for total interest-bearing deposits excluding the impact of FX swap costs were 0.19% in the first quarter of 2020 compared to approximately 0.43% in the same period in 2019.
(4) Total deposits averaged $180.16 billion in the first quarter of 2020 compared to $155.34 billion in the same period in 2019.
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 15 to the consolidated financial statements in this Form 10-Q.
Average total interest-earning assets were $206.63 billion in the first quarter of 2020 compared to $179.11 billion in the same period in 2019. The increase is primarily driven by higher average total deposits.
Interest-bearing deposits with banks averaged $67.12 billion in the first quarter of 2020 compared to $48.86 billion in the same period in 2019. 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 with central banks reflect higher levels of client deposits, including a significant increase in client deposits towards quarter-end.

State Street Corporation | 15


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Securities purchased under resale agreements averaged $1.81 billion in the first quarter of 2020 compared to $2.78 billion in the same period in 2019. The impact of balance sheet netting increased to $123.96 billion on average in the first quarter of 2020, respectively, compared to $59.20 billion in the same period in 2019. We maintain an agreement with Fixed Income Clearing Corporation (FICC), a clearing organization that enables us to net all securities sold under repurchase agreements against those purchased under resale agreements with counterparties that are also members of the clearing organization. The increase in average balance sheet netting, in the first quarter of 2020 compared to the same period in 2019, is primarily due to the expansion of our FICC program and new client activity.
We have been a netting and sponsoring member within FICC since 2005. FICC expanded the service in 2017, and since then, we have increased our participation. 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 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.
Average investment securities, excluding MMLF HTM securities, increased to $95.45 billion in the first quarter of 2020 from $88.27 billion in the same period in 2019 primarily driven by higher MBS balances.
Loans averaged $28.47 billion in the first quarter of 2020 compared to $23.06 billion in the same period in 2019. Average core loans, which exclude overdrafts, averaged $22.18 billion in first quarter of 2020 compared to $19.95 billion in the same period in 2019.
Average other interest-earning assets, largely associated with our enhanced custody business, decreased to $10.76 billion in the first quarter of 2020 from $15.29 billion in the same period in 2019, primarily driven by a reduction in the level of cash collateral posted related to client deleveraging. Enhanced custody is our securities financing business where we act as principal with respect to our custody clients and generate securities finance revenue. The NII earned on these transactions is generally lower than the interest earned on other alternative investments.
Aggregate average total interest-bearing deposits increased to $144.59 billion in the first quarter of 2020 from $124.31 billion in the same period in 2019. Interest bearing deposits totaled $187.70 billion as of March 31, 2020 compared to $147.84 billion as of December
 
31, 2019. We expect deposits to remain elevated and above the averages in the fourth quarter of 2019 and what we experienced in January and February 2020. However, we do not expect the levels seen in the last half of March 2020 to persist unless the degree of market disruption experienced at the end of the first quarter of 2020 returns. Average U.S. interest-bearing deposits increased as a result of the overall macroeconomic environment, the level of global interest rates and new deposit initiatives. Future deposit levels will be influenced by the underlying asset servicing business, client deposit behavior and market conditions, including the general levels of U.S. and non-U.S. interest rates.
Average other short-term borrowings, typically associated with our tax-exempt investment program, increased to $2.96 billion in the first quarter of 2020 from $1.16 billion in the same period in 2019.
Average long-term debt was $13.29 billion in the first quarter of 2020 compared to $10.96 billion in the same period in 2019. These amounts reflect issuances, redemptions and maturities of senior debt during the respective periods, including the issuance of $750 million of senior debt in January 2020 and $1.75 billion in March 2020.
Average other interest-bearing liabilities were $3.43 billion in the first quarter of 2020 compared to $4.64 billion in the same period in 2019. Other interest-bearing liabilities primarily reflect our level of cash collateral received from clients in connection with our enhanced custody business, which is presented on a net basis where we have enforceable netting agreements.
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.

State Street Corporation | 16


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Provision for Credit Losses
In January 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as CECL methodology. The impact of transitioning to ASC 326 on the consolidated financial statements was an increase in the allowance for credit losses and a decrease in retained earnings of $3 million as of January 1, 2020. In the first quarter of 2020, we recorded a provision for credit losses related to loans and financial assets held at amortized cost, including investment securities held-to-maturity and off-balance sheet commitments of $36 million based on the CECL methodology, reflecting the impact of COVID-19 driven changes in our economic outlook as of quarter-end on estimated lifetime losses under the CECL methodology. This compares to a $4 million provision for credit losses in the same period in 2019 (which was under the previous incurred loss model). Additional information is provided under “Loans” in "Financial Condition" in this Management's Discussion and Analysis and in Note 5 to the consolidated financial statements in this Form 10-Q.
Expenses
Table 8: Expenses, provides the breakout of expenses for the first quarters of 2020 and 2019.
TABLE 8: EXPENSES
 
Three Months Ended March 31,
 
% Change
(Dollars in millions)
2020
 
2019
 
Compensation and employee benefits
$
1,208

 
$
1,229

 
(2
)%
Information systems and communications
385

 
362

 
6

Transaction processing services
254

 
242

 
5

Occupancy
109

 
116

 
(6
)
Acquisition costs
11

 
13

 
(15
)
Restructuring charges, net

 
(4
)
 
(100
)
Amortization of other intangible assets
58

 
60

 
(3
)
Other:
 
 
 
 
 
Professional services
81

 
80

 
1

Other
149

 
195

 
(24
)
Total other
230

 
275

 
(16
)
Total expenses
$
2,255

 
$
2,293

 
(2
)
Number of employees at quarter-end
39,318

 
39,969

 
(2
)
Compensation and employee benefits expenses decreased 2% in the first quarter of 2020 compared to the same period in 2019, primarily due to lower headcount in high cost locations, partially offset by higher seasonal deferred incentive compensation expenses for retirement eligible employees and related payroll taxes. These seasonal expenses were $151 million in the first quarter of 2020 compared to $137 million in the same period in 2019.
 
Total headcount decreased by approximately 2% as of March 31, 2020 compared to March 31, 2019, primarily driven by productivity savings, including a reduction in headcount in higher cost locations.
Information systems and communications expenses increased 6% in the first quarter of 2020 compared to the same period in 2019. The increase was primarily related to technology infrastructure enhancements.
Transaction processing services expenses increased 5% in the first quarter of 2020 compared to the same period in 2019, primarily reflecting higher transaction volume and broker fees due to higher FX volumes in March 2020.
Occupancy expenses decreased 6% in the first quarter of 2020 compared to the same period in 2019, primarily due to the advancement of our global footprint strategy.
Amortization of other intangible assets decreased 3% in the first quarter of 2020 compared to the same period in 2019.
Other expenses decreased 16% in the first quarter of 2020 compared to the same period in 2019, primarily driven by lower marketing spend and travel.
In April 2020, we announced that we were deferring most planned headcount reductions through the end of 2020, in light of the COVID-19 pandemic. We expect our planned actions will take place following that period.
Acquisition Costs
We recorded approximately $11 million of acquisition costs in the first quarter of 2020 compared to $13 million in the same period in 2019, related to our acquisition of CRD. As we integrate CRD into our business, we expect to incur a total of approximately $200 million of acquisition costs, including merger and integration costs, through 2021, out of which $121 million has been incurred as of March 31, 2020, since the acquisition.
Restructuring and Repositioning Charges
The following table presents aggregate activity for repositioning charges and activity related to previous Beacon restructuring charges for the periods indicated:
TABLE 9: RESTRUCTURING AND REPOSITIONING CHARGES
(In millions)
Employee
Related Costs
 
Real Estate
Actions
 
Asset and Other Write-offs
 
Total
Accrual Balance at December 31, 2018
$
303


$
37

 
$
1

 
$
341

Accruals for Beacon
(4
)


 

 
(4
)
Payments and Other Adjustments
(53
)

(25
)


 
(78
)
Accrual balance at March 31, 2019
$
246

 
$
12

 
$
1

 
$
259

Accrual balance at December 31, 2019
$
190

 
$
7

 
$
1

 
$
198

Payments and other adjustments
(33
)
 
(1
)
 

 
(34
)
Accrual balance at March 31, 2020
$
157

 
$
6

 
$
1

 
$
164


State Street Corporation | 17


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Income Tax Expense
Income tax expense was $140 million in the first quarter of 2020 compared to $127 million in the same period in 2019. Our effective tax rate was 18.1% in the first quarter of 2020, compared to 20.1% in the same period in 2019.
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.
Investment Servicing, through State Street Global Services, State Street Global Markets, State Street Global Exchange and CRD, provides services for 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. Products include: custody; product and participant level accounting; daily pricing and administration; master trust and master custody; depotbank services (a fund oversight role created by non-U.S. regulation); record-keeping; cash management; foreign exchange, brokerage and other trading services; securities finance and enhanced custody products; deposit and short-term investment facilities; loans and lease financing; investment manager and alternative investment manager operations outsourcing; performance, risk and compliance analytics; and financial data management to support institutional investors. Our CRD business also falls within our Investment Servicing line of business and includes products and services, such as: portfolio modeling and construction; trade order management; investment risk and compliance; and wealth management solutions.
Investment Management, through State Street Global Advisors, provides a broad range of investment management strategies and products for our clients. Our investment management strategies and products span the risk/reward spectrum, including core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities and alternative investment strategies. Our AUM is currently primarily weighted to indexed strategies. In addition, we provide a breadth of services and solutions, including environmental, social and governance investing, defined benefit and defined contribution and Global Fiduciary Solutions (formerly Outsourced Chief Investment Officer). State Street Global Advisors is also a provider of ETFs, including the SPDR® ETF brand. While management fees are primarily determined by the values of AUM and the investment strategies
 
employed, management fees reflect other factors as well, including the benchmarks specified in the respective management agreements related to performance fees.
For information about our two lines of business, as well as the revenues, expenses and capital allocation methodologies associated with them, refer to Note 18 to the consolidated financial statements in this Form 10-Q.
Investment Servicing
TABLE 10: INVESTMENT SERVICING LINE OF BUSINESS RESULTS
(Dollars in millions, except where otherwise noted)
Three Months Ended March 31,
 
% Change
2020
 
2019
 
Servicing fees
$
1,287

 
$
1,251

 
3
 %
Foreign exchange trading services
434

 
246

 
76

Securities finance
89

 
117

 
(24
)
Software and processing fees
137

 
180

 
(24
)
Total fee revenue
1,947

 
1,794

 
9

Net interest income
663

 
679

 
(2
)
Total other income
2

 
(1
)
 
nm

Total revenue
2,612

 
2,472

 
6

Provision for credit losses
36

 
4

 
nm

Total expenses
1,859

 
1,864

 

Income before income tax expense
$
717

 
$
604

 
19

Pre-tax margin
27
%
 
24
%
 
 
Average assets (in billions)
$
220.3

 
$
220.2

 
 
 
 
 
nm Not meaningful
Servicing Fees
Servicing fees, as presented in Table 10: Investment Servicing Line of Business Results, increased 3% in the first quarter of 2020 compared to the same period in 2019 primarily due to higher client activity and flows, average market levels, and net new business, partially offset by pricing headwinds. FX rates negatively impacted servicing fees by 0.5% and 2% in the first quarters of 2020 and 2019, respectively.
Servicing fees generated outside the U.S. were approximately 45% of total servicing fees in the first quarter of 2020 compared to approximately 46% in the same period in 2019.
TABLE 11: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY PRODUCT
(In billions)
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Collective funds
$
8,662

 
$
9,796

 
$
9,436

Mutual funds
8,056

 
9,221

 
8,586

Insurance and other products
8,416

 
8,417

 
8,108

Pension products
6,730

 
6,924

 
6,513

Total
$
31,864

 
$
34,358

 
$
32,643


State Street Corporation | 18


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

TABLE 12: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY ASSET CLASS
(In billions)
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Equities
$
16,267

 
$
19,301

 
$
18,924

Fixed-income
11,096

 
10,766

 
9,831

Short-term and other investments
4,501

 
4,291

 
3,888

Total
$
31,864

 
$
34,358

 
$
32,643

TABLE 13: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY GEOGRAPHY(1)
(In billions)
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Americas
$
22,787

 
$
25,018

 
$
23,979

Europe/Middle East/Africa
7,112

 
7,325

 
6,875

Asia/Pacific
1,965

 
2,015

 
1,789

Total
$
31,864

 
$
34,358

 
$
32,643

 
 
(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.
Asset servicing mandates newly announced in the first quarter of 2020 totaled approximately $171 billion. Servicing assets remaining to be installed in future periods totaled approximately $1.06 trillion as of March 31, 2020, 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 over several quarters as the assets are installed and additional services are added over that period.
New asset servicing mandates may be subject to completion of definitive agreements, approval of applicable boards and shareholders and customary regulatory approvals. New asset servicing mandates and servicing assets remaining to be installed in future periods exclude certain new business which has been contracted, but for which the client has not yet provided permission to publicly disclose and the expected installation date extends beyond one quarter. These excluded assets, which from time to time may be significant, will be included in new asset servicing mandates and reflected in servicing assets remaining to be installed in the period in which the client provides its permission. Servicing mandates and servicing assets remaining to be installed in future periods are presented on a gross basis and therefore also do not include the impact of clients who have notified us during the period of their intent to terminate or reduce their relationship with us, which may from time to time be significant.
With respect to these new servicing mandates, once installed we may provide various services, including accounting, bank loan servicing, compliance reporting and monitoring, custody, depository banking services, FX, fund administration, hedge fund servicing, middle office outsourcing, performance and analytics, private equity administration, real estate administration,
 
securities finance, transfer agency and wealth management services. Revenues associated with new servicing mandates may vary based on the breadth of services provided and the timing of installation, and the types of assets.
For additional information about 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.
Foreign Exchange Trading Services
Foreign exchange trading services revenue, as presented in Table 10: Investment Servicing Line of Business Results, increased 76% in the first quarter of 2020 compared to the same period in 2019, primarily due to a significant increase in FX volatility and trading volumes amidst significant market disruptions towards quarter-end. Foreign exchange trading services is composed of revenue generated by FX trading and revenue generated by brokerage and other trading services, which made up 73% and 27%, respectively, of foreign exchange trading services revenue in the first quarter of 2020.
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. 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.
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.
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.

State Street Corporation | 19


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

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, or to one of our electronic trading platforms. 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. 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.
Securities Finance
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 enhanced custody 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 enhanced custody 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.
Securities finance revenue, as presented in Table 10: Investment Servicing Line of Business Results, decreased 24% in the first quarter of 2020 compared to the same period in 2019, primarily due to decreases in enhanced custody balances related to client deleveraging and a decline in equity markets and lower agency lending revenues due to lower spreads. 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 enhanced custody businesses, the volume of our securities lending activity and related revenue and profitability in future periods.
Software and Processing Fees
Software and processing fees revenue includes diverse types of fees and revenue, including fees from software licensing and maintenance, fees from our structured products business and other revenue including equity income from our joint venture investments, gains and losses on sales of other assets, market-related adjustments and income associated with certain tax-advantaged investments.
Software and processing fees revenue, presented in Table 10: Investment Servicing Line of Business Results, decreased 24% in the first quarter of 2020 compared to the same period in 2019, primarily due to market-related adjustments and lower income on tax-advantaged investments.
CRD was acquired on October 1, 2018. Revenue related to the front office solutions provided by CRD is primarily driven by the sale of term software licenses and software as service 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 Software as a Service (SaaS) related arrangement is recognized over time as services are provided.

State Street Corporation | 20


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

CRD contributed approximately $95 million and $58 million in total revenue and total expenses, respectively, in the first quarter of 2020, compared to $96 million and $41 million, respectively, in the same period in 2019. In addition, CRD-related expenses include $17 million and $15 million in amortization of other intangible assets in the first quarters of 2020 and 2019, respectively. CRD revenue with affiliated entities, which is eliminated in our consolidated financial statements, was $5 million and $3 million for the first quarter of 2020 and 2019, respectively.
Expenses
Total expenses for Investment Servicing were flat in the first quarter of 2020 compared to the same period in 2019, primarily due to savings from resource discipline initiatives and process re-engineering benefits, offset by technology infrastructure and operational investments. Seasonal deferred incentive compensation expense and payroll taxes were $128 million in the first quarter of 2020 compared to $116 million in the same period in 2019. Additional information about expenses is provided under "Expenses" in "Consolidated Results of Operations" included in this Management's Discussion and Analysis.
Investment Management
TABLE 14: INVESTMENT MANAGEMENT LINE OF BUSINESS RESULTS
(Dollars in millions, except where otherwise noted)
Three Months Ended March 31,
 
% Change
2020
 
2019
 
Management fees
$
449

 
$
420

 
7
 %
Foreign exchange trading services(1)
25

 
34

 
(26
)
Securities finance
3

 
1

 
nm

Software and processing fees(2)
(25
)
 
11

 
nm

Total fee revenue
452

 
466

 
(3
)
Net interest income
1

 
(6
)
 
nm

Total revenue
453

 
460

 
(2
)
Total expenses
385

 
406

 
(5
)
Income before income tax expense
$
68

 
$
54

 
26

Pre-tax margin
15
%
 
12
%
 
 
Average assets (in billions)
$
3.0

 
$
3.2

 
 
 
 
(1) Includes revenues related to certain ETFs associated with State Street Global Advisors for which we act as the distribution and marketing agent.
(2) Includes other revenue items that are primarily driven by equity market movements.
nm Not meaningful
Management Fees
Management fees increased 7% in the first quarter of 2020 compared to the same period in 2019, primarily due to higher average equity market levels and the run rate revenue impact of inflows from ETFs and cash throughout 2019, partially offset by mix changes away from higher fee institutional products.
Management fees generated outside the U.S. were approximately 29% of total management fees in
 
the first quarter of 2020 compared to approximately 27% in the same period in 2019.
TABLE 15: ASSETS UNDER MANAGEMENT BY ASSET CLASS AND INVESTMENT APPROACH
(In billions)
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Equity:
 
 
 
 
 
  Active
$
68

 
$
88

 
$
85

  Passive
1,493

 
1,903

 
1,694

Total equity
1,561

 
1,991

 
1,779

Fixed-income:
 
 
 
 
 
  Active
89

 
89

 
88

  Passive
369

 
379

 
341

Total fixed-income
458

 
468

 
429

Cash(1)
364

 
324

 
314

Multi-asset-class solutions:
 
 
 
 
 
  Active
21

 
24

 
22

  Passive
120

 
133

 
125

Total multi-asset-class solutions
141

 
157

 
147

Alternative investments(2):
 
 
 
 
 
  Active
20

 
21

 
21

  Passive
145

 
155

 
115

Total alternative investments
165

 
176

 
136

Total
$
2,689

 
$
3,116

 
$
2,805

 
 
(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® MiniSharesSM Trust, but act as the marketing agent.
TABLE 16: EXCHANGE-TRADED FUNDS BY ASSET CLASS(1)
(In billions)
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Alternative Investments(2)
$
59

 
$
56

 
$
45

Cash
18

 
9

 
8

Equity
474

 
618

 
535

Fixed-Income
78

 
85

 
73

Total Exchange-Traded Funds
$
629

 
$
768

 
$
661

 
 
(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® MiniSharesSM Trust, but act as the marketing agent.
TABLE 17: GEOGRAPHIC MIX OF ASSETS UNDER MANAGEMENT(1)
(In billions)
March 31, 2020
 
December 31, 2019
 
March 31, 2019
North America
$
1,847

 
$
2,115

 
$
1,899

Europe/Middle East/Africa
416

 
493

 
447

Asia/Pacific
426

 
508

 
459

Total
$
2,689

 
$
3,116

 
$
2,805

 
 
(1) Geographic mix is based on client location or fund management location.

State Street Corporation | 21


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

TABLE 18: ACTIVITY IN ASSETS UNDER MANAGEMENT BY PRODUCT CATEGORY
(In billions)
Equity
 
Fixed-Income
 
Cash(1)
 
Multi-Asset-Class Solutions
 
Alternative Investments(2)
 
Total
Balance as of December 31, 2018
$
1,544

 
$
422

 
$
287

 
$
132

 
$
126

 
$
2,511

Long-term institutional flows, net(3)
26

 
(7
)
 

 
3

 
16

 
38

Exchange-traded fund flows, net
13

 
15

 

 

 
6

 
34

Cash fund flows, net

 

 
31

 

 

 
31

Total flows, net
39

 
8

 
31

 
3

 
22

 
103

Market appreciation (depreciation)
404

 
38

 
6

 
22

 
28

 
498

Foreign exchange impact
4

 

 

 

 

 
4

Total market/foreign exchange impact
408

 
38

 
6

 
22

 
28

 
502

Balance as of December 31, 2019
$
1,991

 
$
468

 
$
324

 
$
157

 
$
176

 
$
3,116

Long-term institutional flows, net(3)
19

 
(10
)
 
(1
)
 
1

 
1

 
10

Exchange-traded fund flows, net
(13
)
 
(3
)
 
9

 

 
4

 
(3
)
Cash fund flows, net

 

 
32

 

 

 
32

Total flows, net
6

 
(13
)

40


1


5

 
39

Market appreciation (depreciation)
(419
)
 
6

 
2

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

 

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

 
$
458

 
$
364

 
$
141

 
$
165

 
$
2,689

 
 
(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® MiniSharesSM Trust, but act as the marketing agent.
(3) Amounts represent long-term portfolios, excluding ETFs.
TABLE 19: ACTIVITY IN ASSETS UNDER MANAGEMENT BY PRODUCT CATEGORY
 
Three Months Ended March 31,
(In billions)
2020
 
2019
Beginning balance
$
3,116

 
$
2,511

Net asset flows:
 
 
 
Long-term institutional
10

 
52

ETF
(3
)
 
(3
)
Cash fund
32

 
24

Total flows, net
39

 
73

Market appreciation (depreciation)
(436
)
 
223

Foreign exchange impact
(30
)
 
(2
)
Total market/foreign exchange impact
(466
)
 
221

Ending balance
$
2,689

 
$
2,805

Expenses
Total expenses for Investment Management decreased 5% in the first quarter of 2020 compared to the same period in 2019, primarily due to savings from resource discipline initiatives and process re-engineering benefits. Seasonal deferred incentive compensation expense and payroll taxes were $23 million in the first quarter of 2020 compared to $21 million in the same period in 2019.
Additional information about expenses is provided under "Expenses" in "Consolidated Results of Operations" included in this Management's Discussion and Analysis.

State Street Corporation | 22


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

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 balance sheet volume, mix and currency denomination. 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 influenced by the characteristics of the client liabilities and our desire to maintain a well-diversified portfolio of high-quality assets.
 

TABLE 20: AVERAGE STATEMENT OF CONDITION(1)

 
Three Months Ended March 31,
(In millions)
2020
 
2019
Assets:
 
 
 
Interest-bearing deposits with banks
$
67,120

 
$
48,856

Securities purchased under resale agreements
1,805

 
2,775

Trading account assets
915

 
866

U.S. Treasury and federal agencies:
 
 
 
Direct obligations
14,102

 
15,427

Mortgage-and asset-backed securities
43,947

 
39,216

State and political subdivisions
1,782

 
1,914

Other investments:
 
 
 
Asset-backed securities
10,645

 
9,078

Collateralized mortgage-backed securities and obligations
741

 
980

Other debt investments and equity securities
24,232

 
21,658

Investment securities held to maturity purchased under money market liquidity facility
2,111

 

Total investment securities
97,560

 
88,273

Loans
28,468

 
23,056

Other interest-earning assets
10,764

 
15,286

Average total interest-earning assets
206,632

 
179,112

Cash and due from banks
3,856

 
3,078

Other non-interest-earning assets
40,693

 
37,370

Average total assets
$
251,181

 
$
219,560

Liabilities and shareholders’ equity:
 
 
 
Interest-bearing deposits:
 
 
 
U.S.
$
80,247

 
$
64,531

Non-U.S.
64,340

 
59,775

Total interest-bearing deposits(2)
144,587

 
124,306

Securities sold under repurchase agreements
1,773

 
1,773

Short-term borrowings under money market liquidity facility
2,187

 

Other short-term borrowings
2,960

 
1,157

Long-term debt
13,288

 
10,955

Other interest-bearing liabilities
3,434

 
4,642

Average total interest-bearing liabilities
168,229

 
142,833

Non-interest-bearing deposits(2)
35,573

 
31,037

Other non-interest-bearing liabilities
23,052

 
20,921

Preferred shareholders’ equity
2,861

 
3,690

Common shareholders’ equity
21,466

 
21,079

Average total liabilities and shareholders’ equity
$
251,181

 
$
219,560

 
 
(1) Additional information about our average statement of condition, primarily our interest-earning assets and interest-bearing liabilities, is provided in "Net Interest Income" included in this Management's Discussion and Analysis.
(2) Total deposits averaged $180.16 billion in the first quarter of 2020 compared to $155.34 billion in the same period in 2019.

State Street Corporation | 23


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Investment Securities
TABLE 21: CARRYING VALUES OF INVESTMENT SECURITIES
(In millions)
March 31, 2020
 
December 31, 2019
Available-for-sale:
 
 
 
U.S. Treasury and federal agencies:
 
 
 
Direct obligations
$
5,150

 
$
3,487

Mortgage-backed securities
18,364

 
17,838

Total U.S. Treasury and federal agencies
23,514

 
21,325

Asset-backed securities:
 
 
 
Student loans(1) 
454

 
531

Credit cards
85

 
89

Collateralized loan obligations
1,841

 
1,820

Total asset-backed securities
2,380

 
2,440

Non-U.S. debt securities:
 
 
 
Mortgage-backed securities
1,692

 
1,980

Asset-backed securities
1,855

 
2,179

Government securities
13,055

 
12,373

Other
8,774

 
8,658

Total non-U.S. debt securities
25,376

 
25,190

State and political subdivisions
1,765

 
1,783

Collateralized mortgage obligations
96

 
104

Other U.S. debt securities
2,712

 
2,973

Total available-for-sale
$
55,843

 
$
53,815

 
 
 
 
Held-to-maturity(2):
 
 
 
U.S. Treasury and federal agencies:
 
 
 
Direct obligations
$
9,268

 
$
10,311

Mortgage-backed securities
26,613

 
26,297

Total U.S. Treasury and federal agencies
35,881

 
36,608

Asset-backed securities:
 
 
 
Student loans(1) 
4,055

 
3,783

Total asset-backed securities
4,055

 
3,783

Non-U.S. debt securities:
 
 
 
Mortgage-backed securities
335

 
366

Government securities
279

 
328

Total non-U.S. debt securities
614

 
694

Collateralized mortgage obligations
600

 
697

Total
41,150

 
41,782

Held-to-maturity under money market mutual fund liquidity facility(3)
26,812

 

Total held-to-maturity
$
67,962

 
$
41,782

 
 
 
(1) 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.
(2) Includes securities at amortized cost or fair value on the date of transfer from AFS.
(3) Consists of $25,365 million U.S. securities and $1,447 million non-U.S. securities.
Additional information about our investment securities portfolio is provided in Note 3 to the consolidated financial statements in this Form 10-Q.
We manage our investment securities portfolio to align with the interest rate and duration characteristics of our client liabilities and in the context of the overall structure of our consolidated statement of condition, 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 was 2.2 years and 2.7 years as of March 31, 2020 and December 31, 2019, respectively. The decrease in securities duration is primarily driven by a significant increase in the HTM investment portfolio from securities purchased under the MMLF program. Excluding HTM securities purchased under the MMLF program, the average duration of our investment securities portfolio was 2.7 years as of March 31, 2020, unchanged from December 31, 2019, as the decrease in interest rates was offset by purchases in longer term securities.
As presented in the table below, approximately 90% of the carrying value of the portfolio was rated “AAA” or “AA” as of both March 31, 2020 and December 31, 2019, excluding the securities purchased under the MMLF program. The Federal Reserve has taken on the credit risk of the assets purchased under the MMLF program, including municipal securities. The securities purchased under the MMLF program were primarily short-duration securities.
TABLE 22: INVESTMENT PORTFOLIO BY EXTERNAL CREDIT RATING (EXCLUDING SECURITIES PURCHASED UNDER THE MMLF PROGRAM)
 
March 31, 2020
 
December 31, 2019
AAA(1)
77
%
 
77
%
AA
13

 
13

A
5

 
5

BBB
5

 
5

Below BBB

 

 
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.
As of March 31, 2020 and December 31, 2019, the investment portfolio was diversified with respect to asset class composition. The following table presents the composition of these asset classes.
TABLE 23: INVESTMENT PORTFOLIO BY ASSET CLASS
 
March 31, 2020
 
December 31, 2019
U.S. Agency
Mortgage-backed securities
32
%
 
41
%
Foreign sovereign
15

 
19

U.S. Treasuries
12

 
14

Asset-backed securities
8

 
11

Other credit(1)
33

 
15

 
100
%
 
100
%
 
 
(1) Includes the securities purchased under the MMLF program.

State Street Corporation | 24


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Non-U.S. Debt Securities
Approximately 21% and 27% of the aggregate carrying value of our investment securities portfolio was non-U.S. debt securities as of March 31, 2020 and December 31, 2019, respectively.
TABLE 24: NON-U.S. DEBT SECURITIES(1)
(In millions)
March 31, 2020
 
December 31, 2019
Available-for-sale:
 
 
 
Canada
$
3,156

 
$
2,611

France
2,318

 
2,223

European(1)
2,315

 
2,101

Australia
2,129

 
2,409

Germany
1,848

 
1,944

Spain
1,526

 
1,531

Japan
1,372

 
1,363

Austria
1,363

 
1,398

Netherlands
1,347

 
1,524

Belgium
1,235

 
977

Ireland
1,198

 
1,235

United Kingdom
1,132

 
1,608

Italy
1,041

 
1,113

Finland
971

 
846

Hong Kong
644

 
617

Asian(2)
567

 
581

Sweden
148

 
156

Luxembourg
72

 
124

Brazil
71

 
93

Norway
49

 
51

Other(3)
874

 
685

Total
$
25,376

 
$
25,190

Held-to-maturity:
 
 
 
Singapore
$
170

 
$
214

United Kingdom
123

 
126

Germany
110

 
112

Australia
87

 
109

Spain
81

 
85

Other
43

 
48

Total
$
614

 
$
694

 
 
(1) Geography is determined primarily based on the domicile of collateral or issuer.
(2) Consists entirely of supranational bonds.
(2) Included approximately $808 million and $618 million as of March 31, 2020 and December 31, 2019, respectively, related to supranational and non-U.S. agency bonds.
Approximately 75% and 74% of the aggregate carrying value of these non-U.S. debt securities was rated “AAA” or “AA” as of March 31, 2020 and December 31, 2019, respectively. As of March 31, 2020 and December 31, 2019, approximately 22% and 27%, respectively, of the aggregate carrying value of these non-U.S. debt securities was floating-rate.
As of March 31, 2020, our non-U.S. debt securities had an average market-to-book ratio of 100.3%, and an aggregate pre-tax net unrealized gain of $89 million, composed of gross unrealized gains of $237 million and gross unrealized losses of $148 million. These unrealized amounts included:
a pre-tax net unrealized gain of $46 million, composed of gross unrealized gains of $180 million and gross unrealized losses of $134 million, associated with non-U.S. AFS debt securities; and
 
a pre-tax net unrealized gain of $43 million, composed of gross unrealized gains of $57 million and gross unrealized losses of $14 million, associated with non-U.S. HTM debt securities.
As of March 31, 2020, the securities listed under “Canada” were composed of Canadian government securities, corporate debt 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. Additionally, the underlying collateral for non-U.S. MBS and ABS primarily included U.K., Australian, Italian and Dutch mortgages.
Municipal Obligations
We carried approximately $1.8 billion of municipal securities classified as state and political subdivisions in our investment securities portfolio as of March 31, 2020, as shown in Table 21: Carrying Values of Investment Securities, all of which were classified as AFS. As of March 31, 2020, we also provided approximately $9.5 billion of credit and liquidity facilities to municipal issuers.
TABLE 25: STATE AND MUNICIPAL OBLIGORS(1)
(Dollars in millions)
Total Municipal
Securities
 
Credit and
Liquidity 
Facilities(2)
 
Total
 
% of Total Municipal
Exposure
March 31, 2020
 
 
 
 
 
 
State of Issuer:
 
 
 
 
 
 
 
Texas
$
328

 
$
2,345

 
$
2,673

 
22
%
California
201

 
2,072

 
2,273

 
19

New York
729

 
1,531

 
2,260

 
19

Massachusetts
437

 
809

 
1,246

 
10

Total
$
1,695

 
$
6,757

 
$
8,452

 
 
 
 
 
 
 
 
 
 
December 31, 2019
 
 
 
 
 
 
State of Issuer:
 
 
 
 
 
 
 
Texas
$
275

 
$
2,345

 
$
2,620

 
23
%
California
111

 
2,114

 
2,225

 
20

New York
283

 
1,531

 
1,814

 
16

Massachusetts
442

 
809

 
1,251

 
11

Total
$
1,111

 
$
6,799

 
$
7,910

 
 
 
 
 
 
(1) Represented 5% or more of our aggregate municipal credit exposure of approximately $11.97 billion and $11.32 billion across our businesses as of March 31, 2020 and December 31, 2019, respectively.
(2) Includes municipal loans which are also presented within Table 26: U.S. and Non-U.S. Loans.
Our aggregate municipal securities exposure presented in Table 25: State and Municipal Obligors, was concentrated primarily with highly-rated counterparties, with approximately 88% of the obligors rated “AAA” or “AA”, or equivalent, as of March 31, 2020. Additionally, as of March 31, 2020, approximately 26%, 67% and 7% of our aggregate municipal securities exposure was associated with general obligation bonds, revenue bonds and certification participations, respectively. The portfolios are also diversified geographically, with the states that represent our largest exposures widely dispersed across the U.S.

State Street Corporation | 25


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Additional information with respect to our assessment of impairment of our municipal securities is provided in Note 3 to the consolidated financial statements in this Form 10-Q.
Allowance for Credit Losses
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. Please refer to Note 3 and Note 5 to the consolidated financial statements in this Form 10-Q for additional information. 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. Additional information with respect to the allowance for credit losses, net impairment losses and gross unrealized losses is provided in Notes 3 and 5 to the consolidated financial statements in this Form 10-Q.
Loans
TABLE 26: U.S. AND NON- U.S. LOANS
(In millions)
As of March 31, 2020
 
As of December 31, 2019
Domestic(1):
 
 
 
Commercial and financial
$
21,145

 
$
18,762

Commercial real estate
1,815

 
1,766

Total domestic
22,960

 
20,528

Foreign(1):
 
 
 
Commercial and financial
9,419

 
5,781

Total foreign
9,419

 
5,781

Total loans(2)(3)
$
32,379

 
$
26,309

Average loans(4)
$
28,468

 
$
24,073

 
 
 
 
(1) Domestic and foreign categorization is based on the borrower’s country of domicile.
(2) Includes $8,685 million and $3,256 million of overdrafts as of March 31, 2020 and December 31, 2019, respectively.
(3) As of March 31, 2020, floating rate loans totaled $21,642 million and fixed rate loans totaled $2,047 million.
(4) Average loans are presented on a gross basis. Average loans net of allowance for loan loss amount to $28,398 million and $24,003 million as of March 31, 2020 and December 31, 2019, respectively.
The increase in loans in the commercial and financial segment as of March 31, 2020 compared to December 31, 2019 was primarily driven by higher levels of client overdrafts as we helped clients facilitate the higher settlement of trades and FX activities during March 2020 and an increase in loans to investment funds.
As of March 31, 2020 and December 31, 2019, our investment in senior secured loans, otherwise known as leveraged loans, totaled approximately $4.41 billion and $4.46 billion, respectively. In addition, we had binding unfunded commitments as of March 31, 2020
 
and December 31, 2019 of $233 million and $176 million, respectively, to participate in such syndications. Additional information about these unfunded commitments is provided in Note 10 to the consolidated financial statements in this Form 10-Q.
These senior secured loans, which are primarily rated “speculative” under our internal risk-rating framework (refer to Note 5 to the consolidated financial statements in this Form 10-Q), are externally rated “BBB,” “BB” or “B,” with approximately 84% and 86% of the loans rated “BB” or “B” as of March 31, 2020 and December 31, 2019, 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.
Additional information about all of our loan segments, as well as underlying classes, is provided in Note 4 and Note 5 to the consolidated financial statements in this Form 10-Q.
No loans were modified in troubled debt restructurings as of both March 31, 2020 and December 31, 2019.
TABLE 27: ALLOWANCE FOR CREDIT LOSSES
 
Three Months Ended March 31,
(In millions)
2020
 
2019(1)
Allowance for credit losses:
 
 
 
Beginning balance(2)
$
93

 
$
83

Provision for credit losses (funded commitments)(3)
29

 
4

Provision for credit losses (unfunded commitments)(4)
3

 
(4
)
Provision for credit losses (held-to-maturity securities)
4

 

Charge-offs(5)
(5
)
 

Ending balance
$
124


$
83

 
 
 
(1) Prior to the adoption of ASU 2016-13, the provision for unfunded commitments was recorded within other expenses in the consolidated statement of income. Upon adoption of ASU 2016-13 in the first quarter of 2020, the provision for all assets within scope is recorded within the provision for credit losses in the consolidated statement of income.
(2)Beginning 2020, balance activity will not tie to the December 31, 2019 ending balance due to the adoption of ASU 2016-13. Please refer to Note 1 to the consolidated financial statements in this Form 10-Q for additional information.  
(3) The provision for credit losses is primarily related to commercial and financial loans.  
(5) The charge-offs are related to commercial and financial loans.
(6) Consists primarily of FX translation.
As discussed above, we adopted ASU 2016-13 in January 2020. For additional information on this new standard, refer to Note 1 to the consolidated financial statements in this Form 10-Q.

State Street Corporation | 26


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

We recorded a provision for credit losses related to loans and financial assets held at amortized cost, including investment securities classified as HTM and off-balance sheet commitments of $36 million based on the CECL methodology compared to $4 million in the same period in 2019 (which was under the previous incurred loss model). Additional information is provided in Note 5 to the consolidated financial statements in this Form 10-Q. For additional information on the previous loss model, please refer to Note 4 of the 2019 Form 10-K.
As of March 31, 2020, approximately $83 million of our allowance for credit losses was related to senior secured loans included in the commercial and financial segment compared to $62 million as of March 31, 2019. As this portfolio grows and matures and our view on current and future economic scenarios change, our allowance for credit losses related to these loans may increase through additional provisions for credit losses. The remaining $41 million and $8 million as of March 31, 2020 and 2019, respectively, was related to off-balance sheet commitments and other financial assets held at amortized cost, including investment securities held to maturity.
Cross-Border Outstandings
Cross-border outstandings are amounts payable to us by non-U.S. counterparties which are denominated in U.S. dollars or other non-local currency, as well as non-U.S. local currency claims not funded by local currency liabilities. Our cross-border outstandings consist primarily of deposits with banks; loans and lease financing, including short-duration advances; investment securities; amounts related to FX and interest rate contracts; and securities finance.  In addition to credit risk, cross-border outstandings have the risk that, as a result of political or economic conditions in a country, borrowers may be unable to meet their contractual repayment obligations of principal and/or interest when due because of the unavailability of, or restrictions on, FX needed by borrowers to repay their obligations.
As market and economic conditions change, the major independent credit rating agencies may downgrade U.S. and non-U.S. financial institutions and sovereign issuers which have been, and may in the future be, significant counterparties to us, or whose financial instruments serve as collateral on which we rely for credit risk mitigation purposes, and may do so again in the future. As a result, we may be exposed to increased counterparty risk, leading to negative ratings volatility.
The cross-border outstandings presented in Table 28: Cross-border outstandings, represented approximately 28% of our consolidated total assets as of both March 31, 2020 and December 31, 2019.
 
TABLE 28: CROSS-BORDER OUTSTANDINGS(1)
(In millions)
Investment Securities and Other Assets 
 
Derivatives and Securities on Loan
 
Total Cross-Border Outstandings
March 31, 2020
 

 
 
 
 
Japan
$
22,508

 
$
684

 
$
23,192

United Kingdom
15,352

 
6,807

 
22,159

Germany
17,562

 
831

 
18,393

Australia
5,090

 
3,406

 
8,496

Canada
4,121

 
3,594

 
7,715

Luxembourg
5,108

 
1,655

 
6,763

Ireland
2,390

 
2,482

 
4,872

France
2,948

 
1,883

 
4,831

Switzerland
829

 
2,805

 
3,634

December 31, 2019
 
 
 
 
 

Germany
$
20,968

 
$
217

 
$
21,185

United Kingdom
13,764

 
1,468

 
15,232

Japan
11,121

 
555

 
11,676

Luxembourg
3,399

 
668

 
4,067

Canada
2,955

 
783

 
3,738

Australia
3,100

 
597

 
3,697

France
2,813

 
240

 
3,053

Ireland
1,988

 
641

 
2,629

Switzerland
1,724

 
589

 
2,313

 
 
 
(1) Cross-border outstandings included countries in which we do business, and which amounted to at least 1% of our consolidated total assets as of the dates indicated.
As of March 31, 2020, aggregate cross-border outstandings in Belgium amounted to between 0.75% and 1% of our consolidated assets, at approximately $3.49 billion. As of December 31, 2019, aggregate cross-border outstandings in the Netherlands amounted to between 0.75% and 1% of our consolidated assets, at approximately $1.89 billion.
Risk Management
In the normal course of our global business activities, we are exposed to a variety of risks, some inherent in the financial services industry, others more specific to our business activities. Our risk management framework focuses on material risks, which include the following:
credit and counterparty risk;
liquidity risk, funding and management;
operational risk;
information technology risk;
market risk associated with our trading activities;
market risk associated with our non-trading activities, which we refer to as asset-and-liability management, and which consists primarily of interest rate risk;
model risk;
strategic risk; and
reputational, fiduciary and business conduct risk.

State Street Corporation | 27


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Many of these risks, as well as certain of the factors underlying each of these risks that could affect our businesses and our consolidated financial statements, are discussed in detail on pages 18 to 47 included under Item 1A, Risk Factors, in our 2019 Form 10-K.
For additional information about our risk management, including our risk appetite framework and risk governance committee structure, refer to pages 80 to 84 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Risk Management Framework", in our 2019 Form 10-K.
Credit Risk Management
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 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.
Allowance for Credit Losses
We maintain an allowance for credit losses to support our on-balance sheet credit exposures, including financial assets held at amortized cost and investment securities held-to-maturity. We also maintain an allowance for unfunded commitments and letters of credit to support our off-balance credit exposure. The two components together represent the allowance for credit losses. 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 reasonable and supportable forecasts and their effect on our counterparties in our expectation of credit losses. We utilize multiple economic scenarios, consisting of a baseline, upside and downside scenario, to develop management’s forecast of future expected losses.
The economic forecast utilized in the first quarter of 2020 reflects a significant shift in economic outlook, with the expectation of an economic contraction over several quarters due to the impact of COVID-19. We took steps in late March to incorporate the impact of the COVID-19 pandemic on the economic forecast utilized to determine our allowance for credit losses. Such outlook continues to evolve as new information
 
becomes available and if the economic forecast worsens relative to the information utilized to determine our allowance for credit losses as of March 31, 2020, our allowance for credit losses will increase accordingly in future periods. The market and economic uncertainty has also increased the risks inherent in our activities as a credit provider to investment pools and other institutional investors. Additional information about the allowance for credit losses is provided in Note 5 to the consolidated financial statements in this Form 10-Q.
For additional information about our credit risk management framework, including our core policies and principles, structure and organization, credit ratings, risk parameter estimates, credit risk mitigation, credit limits, reporting, monitoring and controls, refer to pages 84 to 89 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Risk Management Framework", in our 2019 Form 10-K.
Liquidity Risk Management
Our liquidity framework contemplates areas of potential risk 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. We also manage liquidity on a stand-alone basis at the Parent Company, as well as at certain branches and 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 the "Uses of Liquidity" section of this Management's Discussion and Analysis, enough cash to meet its current debt maturities and cash needs, as well as those projected over the next one-year period. Reference our SPOE Strategy as discussed in the "Uses of Liquidity" section of this Management's Discussion and Analysis. Absent financial distress at the Parent Company, the liquid assets available at SSIF continue to be available to the Parent Company. As of March 31, 2020, the Parent Company and State Street Bank had approximately $2.45 billion of senior notes or

State Street Corporation | 28


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

subordinated debentures outstanding that will mature in the next twelve months.
As a systemically important financial institution, 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.
For additional information on our liquidity risk management, as well as liquidity risk metrics, refer to pages 89 to 93 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operation, in our 2019 Form 10-K. For additional information on our liquidity ratios, including LCR and the net stable funding ratio, refer to page 9 included under Item 1, Business, in our 2019 Form 10-K.
Asset Liquidity
Central to the management of our liquidity is asset liquidity, which consists primarily of unencumbered highly liquid securities, cash and cash equivalents reported in our consolidated statement of condition. We restrict the eligibility of securities to be characterized as asset liquidity to U.S. Government and federal agency securities (including MBS), securities of selected non-U.S. Governments and supranational organizations as well as certain other high-quality securities which generally are more liquid than other types of assets even in times of stress. As a banking organization, we are subject to a minimum LCR of 100% under the LCR rule approved by U.S. banking regulators. 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.
 
We report LCR to the Federal Reserve daily. For the quarters ended March 31, 2020 and December 31, 2019, daily average LCR for the Parent Company was 109% and 110%, respectively. The average HQLA for the Parent Company under the LCR final rule was $112.67 billion and $100.23 billion, post-prescribed haircuts, for the quarters ended March 31, 2020 and December 31, 2019, respectively.
We maintained average cash balances in excess of regulatory requirements governing deposits with the Federal Reserve of approximately $57.53 billion at the Federal Reserve, the ECB and other non-U.S. central banks for the quarter ended March 31, 2020, compared to $41.56 billion for the quarter ended December 31, 2019. 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. We had approximately $4 billion of outstanding borrowings from the FHLB as of March 31, 2020. As of December 31, 2019, we had no outstanding borrowings from the FHLB.
Access to primary, intra-day and contingent liquidity provided by these utilities is an important source of contingent liquidity with utilization subject to underlying conditions. As of March 31, 2020 and December 31, 2019, we had no outstanding primary credit borrowings from the FRBB discount window.
In addition to the securities included in our asset liquidity, we have significant amounts of other unencumbered investment securities. These securities are available sources of liquidity, although not as rapidly deployed as those included in our asset liquidity.
The average fair value of total unencumbered securities was $75.16 billion for the quarter ended March 31, 2020 compared to $76.94 billion for the quarter ended December 31, 2019.
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; or other permitted purposes. Such circumstances would generally arise under stress conditions including deterioration in credit ratings. A recurring significant 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 enhanced custody program.

State Street Corporation | 29


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

We had unfunded commitments to extend credit with gross contractual amounts totaling $30.97 billion and $29.70 billion and standby letters of credit totaling $3.27 billion and $3.32 billion as of March 31, 2020 and December 31, 2019, respectively. These amounts do not reflect the value of any collateral. As of March 31, 2020, approximately 75% of our unfunded commitments to extend credit and 10% of our standby letters of credit expire within one year. Since many of our commitments are expected to expire or renew without being fully drawn upon, the gross contractual amounts do not necessarily represent our future cash requirements.
Resolution Planning
State Street, like other bank holding companies with total consolidated assets of $50 billion or more, periodically submits 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 our 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. We have and will continue to focus management attention and resources to meet regulatory expectations with respect to resolution planning.
We submitted our updated 2019 165(d) resolution plan describing our preferred resolution strategy to the Federal Reserve and FDIC (the Agencies) before July 1, 2019, and our resolution strategy is materially consistent with our prior resolution strategy. In reviewing the 2019 plan, the Agencies noted meaningful improvements over prior plan submissions. The Agencies did not identify any deficiencies in the 2019 plan, but did identify one shortcoming related to the implementation of governance mechanisms. We submitted to the Agencies our plan to remediate this shortcoming in line with the expected timeframe. In addition to the above letter, the Federal Reserve and FDIC jointly issued a final rule that was published in the Federal Register on November 1, 2019.  This final rule revised the implementation requirements under the Dodd Frank Act's resolution planning provisions by means of establishing a biennial filing cycle for the U.S. G-SIBs, including State Street. This cycle alternates between a targeted resolution plan, followed two years later by a full resolution plan.  As a result of this rule, our next resolution plan will be a targeted plan and is due July 1, 2021.
In the event of material financial distress or failure, our preferred resolution strategy is the SPOE Strategy. For additional information about the SPOE Strategy, refer to pages 12 to 14 included under Item 1, Business, in our 2019 Form 10-K. The SPOE Strategy provides
 
that prior to the bankruptcy of the Parent Company and pursuant to a support agreement among the Parent Company, SSIF, our Beneficiary Entities (as defined below) and certain other of our entities, SSIF is obligated, up to its available resources, to recapitalize and/or provide liquidity to State Street Bank and our other entities benefiting from such capital and/or liquidity (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 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, debt investments, investments in marketable securities and other cash and non-cash equivalent investments) to SSIF contemporaneous with entering into the support agreement and will continue to contribute such assets, to the extent available, on an on-going 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 certain amounts of cash needed to meet its upcoming obligations and to fund 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 us to continue to meet our obligations throughout the period prior to the occurrence of a "Recapitalization Event" (as defined below). The support agreement does not contemplate that SSIF is obligated 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.

State Street Corporation | 30


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

In accordance with its policies, we are required to monitor, on an ongoing basis, the capital and liquidity needs of State Street Bank and the 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. In the event that we experience material financial distress, the support agreement requires us to model and calculate certain capital and liquidity triggers on a regular basis to determine whether or not the Parent Company should commence preparations for a bankruptcy filing and whether or not a Recapitalization Event has occurred.
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; (3) SSIF would be required to provide capital and liquidity support to the Beneficiary Entities to support such entities’ continued operation; 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, 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, on any of our affiliates being or remaining a Beneficiary Entity or receiving capital or liquidity support pursuant to the support agreement.
A “Recapitalization Event” is defined under the support agreement as the earlier occurrence of one or more capital and liquidity thresholds being breached or the authorization by the Parent Company's Board of Directors for the Parent Company to commence bankruptcy proceedings. These 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. The SPOE Strategy and the obligations under the support agreement may result in the recapitalization of State Street Bank 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. An expected effect of the SPOE Strategy and applicable TLAC regulatory requirements is that losses will be imposed on the 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 its losses are imposed on the holders of the debt securities of the Parent Company's operating subsidiaries or any of their depositors or creditors, or before U.S. taxpayers are put at risk.
 
There can be no assurance that credit rating agencies, in response to our 2019 resolution plan or the support agreement, will not downgrade, place on negative watch or change their outlook on our debt credit ratings, generally or on specific debt securities. Any such downgrade, placement on negative watch or change in outlook could adversely affect our cost of borrowing, limit our access to the capital markets or result in restrictive covenants in future debt agreements and could also adversely impact the trading prices, or the liquidity, of our outstanding debt securities.
State Street Bank is also required to submit, periodically in accordance with applicable regulations and FDIC guidance, a plan for resolution in the event of its failure, referred to as an Insured Depository Institution (IDI) plan. On April 22, 2019, the Federal Register published the FDIC’s advance notice of proposed rulemaking in which it invited comment on potential revisions to its IDI plan requirements. In addition to this advance notice of proposed rulemaking, on April 16, 2019, the FDIC Board voted to delay the next round of submissions under the IDI Rule until the rulemaking process has been completed. At this time, the filing deadline for our next IDI plan has not been identified by the FDIC.
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 March 31, 2020 and December 31, 2019, approximately 60% of our average total deposit balances were denominated in U.S. dollars, approximately 20% in EUR, 10% in GBP and 10% 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. 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.
Short-term secured funding also comes in the form of securities lent or sold under agreements to

State Street Corporation | 31


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

repurchase. These transactions are short-term in nature, generally overnight and are collateralized by high-quality investment securities. These balances were $5.37 billion and $1.10 billion as of March 31, 2020 and December 31, 2019, respectively.
State Street Bank currently maintains a line of credit with a financial institution of CAD $1.40 billion, or approximately $0.99 billion, as of March 31, 2020, to support its Canadian securities processing operations. The line of credit has no stated termination date and is cancelable by either party with prior notice. As of both March 31, 2020 and December 31, 2019, 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, including accommodating the transaction and cash management needs of our clients. In addition, State Street Bank also has current authorization from the Board to issue up to $5 billion in unsecured senior debt and an additional $500 million of subordinated debt.
On January 24, 2020, we issued $750 million aggregate principal amount of 2.400% Senior Notes due 2030.
On March 26, 2020, we issued $750 million aggregate principal amount of 2.825% Fixed-to-Floating Rate Senior Notes due 2023, $500 million aggregate principal amount of 2.901% Fixed-to-Floating Rate Senior Notes due 2026 and $500 million aggregate principal amount of 3.152% of Fixed-to-Floating Rate Senior Notes due 2031.
Agency Credit Ratings
Our ability to maintain consistent access to liquidity is fostered by the maintenance of high investment grade ratings as measured by the major independent credit rating agencies. 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 assurance for unsecured funding and depositors;
 
increasing the potential market for our debt and improving our ability to offer products;
serving markets; and
engaging in transactions in which clients value high credit ratings.
A downgrade or reduction of 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 draw-downs 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 all 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 8 to the consolidated financial statements in this Form 10-Q. Other funding sources, such as secured financing transactions and other margin requirements, for which there are no explicit triggers, could also be adversely affected.
Operational Risk Management
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. 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 as well as prudent ethical standards in business practices in addition to exposure to litigation from all aspects of our activities.
In light of the COVID-19 pandemic, we have instituted business continuity arrangements across our operating locations and we and a significant percentage of our key service providers are operating significantly or entirely in a work from home environment. Due to the related market disruption, we have also been processing a historically high volume of transactions on behalf of our clients. Both the operating environment and market dynamics increase operational risk and information technology risk, including cyber-threats.  See also “Information Technology Risk Management” below.

State Street Corporation | 32


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

For additional information about our operational risk framework, refer to pages 93 to 97 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Risk Management Framework", in our 2019 Form 10-K.
Information Technology Risk Management
We define information technology risk as the risk associated with the use, ownership, operation, involvement, influence and adoption of information technology. Information technology risk includes risks triggered by technology non-compliance with regulatory obligations, information security and privacy incidents, business disruption, technology internal control and process gaps, technology operational events and adoption of new business technologies.
For additional information about our information technology risk framework, refer to pages 97 to 98 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Risk Management", in our 2019 Form 10-K.
Market Risk Management
Market risk is defined by U.S. banking regulators as the risk of loss that could result from broad market movements, such as changes in the general level of interest rates, credit spreads, FX 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.
For additional information about the market risk associated with our trading activities, refer to pages 98 to 99 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2019 Form 10-K.
As part of our trading activities, we assume positions in the FX and interest-rate markets by buying and selling cash instruments and entering into derivative instruments, including FX forward contracts, FX and interest-rate options and interest rate swaps, interest rate forward contracts, and interest rate futures. As of March 31, 2020, the notional amount of these derivative contracts was $2.76 trillion, of which $2.74 trillion was composed of FX forward, swap and spot
 
contracts. We seek to match positions closely with the objective of tightly controlling related currency and interest rate risk. All FX contracts are valued daily at current market rates.
Value-at-Risk and Stressed Value-at-Risk
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 currently applicable bank regulatory market risk requirements. Our regulatory VaR-based measure is calculated based on historical 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 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 identifies 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 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 automatically incorporated.
For additional information about our VaR measurement tools and methodologies, refer to pages 100 to 103 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2019 Form 10-K.

State Street Corporation | 33


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Stress Testing
We have a corporate-wide stress testing program in place that incorporates an array of 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 Enterprise Risk Management (ERM) and reported to the Trading and Markets Risk Committee (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 review by management and the implementation of a remediation plan.
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 profit-and-loss (P&L) outcomes, observed from daily market movements. We back-test our VaR model using “clean” P&L, which excludes non-trading revenue such as fees, commissions and NII, as well as estimated revenue from intra-day 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 intra-day activity.
We had four back-testing exceptions in the quarter ended March 31, 2020, all of which occurred during the heightened market volatility witnessed in March 2020. There were no back-testing exceptions in the quarter ended March 31, 2019, and one back-testing exception in the quarter ended December 31, 2019.
The following tables present VaR and stressed VaR associated with our trading activities for covered positions held during the quarters ended March 31, 2020, December 31, 2019 and March 31, 2019. A covered position is generally defined by U.S. banking regulators 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.
Diversification effect in the table below represents the difference between total VaR and the sum of the VaRs for each trading activity. This effect arises because the trading activities are not perfectly correlated.
TABLE 29: TEN-DAY VALUE-AT-RISK ASSOCIATED WITH TRADING ACTIVITIES FOR COVERED POSITIONS
 
 
 
Three Months Ended
 
As of March 31, 2020
 
As of December 31, 2019
 
As of March 31, 2019
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
 
 
 
(In thousands)
Avg.
 
Max.
 
Min.
 
Avg.
 
Max.
 
Min.
 
Avg.
 
Max.
 
Min.
 
VaR
 
VaR
 
VaR
Global Markets
$
9,533


$
14,575


$
5,220

 
$
10,235

 
$
26,419

 
$
5,880

 
$
10,030


$
18,397


$
4,201

 
$
6,496

 
$
9,954

 
$
16,571

Global Treasury
803


4,018


112

 
733

 
2,326

 
123

 
614


2,615


207

 
3,335

 
987

 
865

Diversification
(808
)

(4,048
)

(121
)
 
(864
)
 
(4,812
)
 
(67
)
 
(772
)

(2,738
)

(157
)
 
(3,341
)
 
(1,082
)
 
(939
)
Total VaR
$
9,528


$
14,545


$
5,211

 
$
10,104

 
$
23,933

 
$
5,936

 
$
9,872


$
18,274


$
4,251

 
$
6,490

 
$
9,859

 
$
16,497

TABLE 30: TEN-DAY STRESSED VALUE-AT-RISK ASSOCIATED WITH TRADING ACTIVITIES FOR COVERED POSITIONS
 
 
 
Three Months Ended
 
As of March 31, 2020
 
As of December 31, 2019
 
As of March 31, 2019
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
 
 
 
(In thousands)
Avg.
 
Max.
 
Min.
 
Avg.
 
Max.
 
Min.
 
Avg.
 
Max.
 
Min.
 
Stressed VaR
 
Stressed VaR
 
Stressed VaR
Global Markets
$
39,994


$
61,261


$
23,402

 
$
34,574

 
$
55,751

 
$
17,492

 
$
26,810


$
49,359


$
15,052

 
$
38,401

 
$
48,089

 
$
39,238

Global Treasury
3,825


14,586


587

 
3,454

 
8,376

 
842

 
4,999


9,530


1,953

 
10,905

 
5,898

 
6,761

Diversification
(4,307
)

(15,622
)

(615
)
 
(3,459
)
 
(5,962
)
 
(1,734
)
 
(5,426
)

(10,857
)

(1,710
)
 
(12,045
)
 
(8,289
)
 
(8,592
)
Total VaR
$
39,512


$
60,225


$
23,374

 
$
34,569

 
$
58,165

 
$
16,600

 
$
26,383


$
48,032


$
15,295

 
$
37,261

 
$
45,698

 
$
37,407


State Street Corporation | 34


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The three month average of our stressed VaR-based measure was approximately $40 million for the quarter ended March 31, 2020 compared to an average of approximately $35 million for the quarter ended December 31, 2019 and $26 million for the quarter ended March 31, 2019. The increase in the average stressed VaR compared to the quarters ended December 31, 2019 and March 31, 2019, is primarily attributed to higher foreign exchange and interest rate risk positions.
The VaR-based measures 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. Overall levels of volatility have been low, both on an absolute basis and relative to the historical information observed at the beginning of the period used for the calculations.
We 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 these 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 FX risk, interest rate risk and volatility risk as of March 31, 2020, December 31, 2019 and March 31, 2019. Diversification effect in the table below represents the difference between total VaR and the sum of the VaRs for each risk category. This effect arises because the risk categories are not perfectly correlated.
TABLE 31: TEN-DAY VALUE-AT-RISK ASSOCIATED WITH TRADING ACTIVITIES BY RISK FACTOR FOR COVERED POSITIONS(1)
 
As of March 31, 2020
 
As of December 31, 2019
 
As of March 31, 2019
(In thousands)
Foreign Exchange Risk
 
Interest Rate Risk
 
Volatility Risk
 
Foreign Exchange Risk
 
Interest Rate Risk
 
Volatility Risk
 
Foreign Exchange Risk
 
Interest Rate
 
Volatility Risk
By component:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Markets
$
5,599


$
7,017


$
162

 
$
5,447

 
$
6,266

 
$
126

 
$
3,837


$
14,401


$
327

Global Treasury
22


3,609



 
24

 
966

 

 
47


836



Diversification
(28
)

(3,583
)


 
(23
)
 
(995
)
 

 
(62
)

(746
)


Total VaR
$
5,593


$
7,043


$
162

 
$
5,448

 
$
6,237

 
$
126

 
$
3,822


$
14,491


$
327

TABLE 32: TEN-DAY STRESSED VALUE-AT-RISK ASSOCIATED WITH TRADING ACTIVITIES BY RISK FACTOR FOR COVERED POSITIONS(1)
 
As of March 31, 2020
 
As of December 31, 2019
 
As of March 31, 2019
(In thousands)
Foreign Exchange Risk
 
Interest Rate Risk
 
Volatility Risk
 
Foreign Exchange Risk
 
Interest Rate Risk
 
Volatility Risk
 
Foreign Exchange Risk
 
Interest Rate
 
Volatility Risk
By component:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Markets
$
11,695


$
51,732


$
172

 
$
8,427

 
$
61,792

 
$
266

 
$
12,870


$
45,137


$
421

Global Treasury
40


10,242



 
59

 
6,258

 

 
126


7,121



Diversification
(61
)

(11,848
)


 
(61
)
 
(8,681
)
 

 
(162
)

(10,467
)


Total VaR
$
11,674


$
50,126


$
172

 
$
8,425

 
$
59,369

 
$
266

 
$
12,834


$
41,791


$
421

 
 
 
(1) For purposes of risk attribution by component, FX 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 FX 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 characteristics of our balance sheet liabilities, including the currency composition of our significant non-U.S. dollar denominated client liabilities.
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. Table 33, Key Interest Rates for Baseline Forecasts, presents the spot and 12-month forward rates used in our baseline forecasts at March 31, 2020 and March 31, 2019. Our March 31, 2020 baseline forecast assumes no changes by the Federal Reserve over the next 12 months.

State Street Corporation | 35


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

TABLE 33: KEY INTEREST RATES FOR BASELINE FORECASTS
 
March 31, 2020
 
March 31, 2019
 
Fed Funds Target
 
10-Year Treasury
 
Fed Funds Target
 
10-Year Treasury
Spot rates
0.25
%
 
0.67
%
 
2.50
%
 
2.41
%
12-month forward rates
0.25

 
0.85

 
2.50

 
2.72

In Table 34: Net Interest Income Sensitivity, we report the expected change in NII over the next twelve months from instantaneous shocks to various tenors on the yield curve, 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 interest rate changes on our financial performance. While investment securities balances can fluctuate with the level of rates as prepayment assumptions change, our modeling approach in the past has been to keep our balance sheet consistent with our baseline outlook in both higher and lower rate scenarios. However, for the March 31, 2020 reporting period, we reevaluated this approach for our +100 bps shock scenario in light of the current rate environment. Under this scenario, which assumes that the Federal Reserve increases its target range by 1.00% to 1.25% along with increases by other central banks, client deposits are modeled to return to average balance levels experienced in the fourth quarter of 2019 with a corresponding reduction in cash and cash equivalents held with central banks.For the -100 bps shock scenario at March 31, 2020, we held the balance sheet consistent with our baseline outlook, including client deposits, given the amount of fiscal stimulus and monetary policy easing already implied in the baseline scenario. Another factor was that the current -100 bps scenario is impacted by assumed floors as interest rates reach zero for certain currencies including U.S. dollar.
TABLE 34: NET INTEREST INCOME SENSITIVITY
 
March 31, 2020
 
March 31, 2019
(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
$
314

 
$
136

 
$
450

 
$
103

 
$
238

 
$
341

–100 bps shock
(93
)
 
140

 
47

 
(165
)
 
23

 
(142
)
Steeper yield curve:


 
 
 


 
 
 


 


+100 bps shift in long-end rates
174

 
8

 
182

 
92

 
17

 
109

-100 bps shift in short-end rates
(17
)
 
147

 
130

 
(35
)
 
37

 
2

Flatter yield curve:


 
 
 


 
 
 


 


+100 bps shift in short-end rates
155

 
128

 
283

 
16

 
223

 
239

-100 bps shift in long-end rates
(84
)
 
(7
)
 
(91
)
 
(121
)
 
(16
)
 
(137
)
As of March 31, 2020, NII sensitivity is expected to benefit from both parallel increases and decreases in interest rates. Compared to March 31, 2019, our NII is more sensitive to parallel rate increases primarily driven by lower deposit beta assumptions given the current interest rate environment. Our positioning to parallel rate decreases has shifted to benefit NII driven by changes to the composition of our deposit base as well as impacts by assumed floors as interest rates in several currencies approach zero, which prevents the full extent of the rate shock to be realized.
U.S. dollar NII sensitivity as of March 31, 2020 remains poised to benefit from a parallel rise in interest rates and our sensitivity to a parallel decrease in interest rates has shifted to a neutral NII position. Compared to March 31, 2019, our U.S. dollar NII benefit to higher rates has increased due to lower deposit betas and lower prepayments in the investment portfolio. Compared to March 31, 2019, our U.S. dollar NII sensitivity to lower rates has improved driven by changes to the composition of U.S. deposits and cash flow hedging activity which impacts our short-end sensitivities. Our U.S. declining rate scenarios are also impacted by assumed floors as U.S. interest rates approach zero.
NII sensitivity is still positioned to benefit from changes in non-U.S. interest rates with the majority of our sensitivity derived from the short-end of the curve given deposit pricing expectations. Compared to March 31, 2019, our non-U.S. benefit to higher rates has decreased while the benefit to lower rates has increased. The decreased benefit to higher rates is driven by EMEA deposit pricing actions in addition to the treatment of excess reserves by the European Central Bank and Swiss National Bank. The increased benefit to lower rates is impacted by the aforementioned deposit pricing and excess reserve changes.

State Street Corporation | 36


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

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. Management compares the change in EVE sensitivity against our aggregate tier 1 and tier 2 risk-based capital, calculated in conformity with current applicable regulatory requirements. 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 35: ECONOMIC VALUE OF EQUITY SENSITIVITY
 
As of March 31,
(In millions)
2020
 
2019
Rate change:
Benefit (Exposure)
+200 bps shock
$
(1,161
)
 
$
(1,615
)
–200 bps shock
1,179

 
605

As of March 31, 2020, EVE sensitivity remains exposed to upward shifts in interest rates. Compared to March 31, 2019, the change in the up 200 bps instantaneous shock scenario was primarily driven by the benefit from increased liability duration from deposit modeling updates and long-term debt issuances. The down 200 bps instantaneous shock results are impacted by assumed floors as interest rates in several currencies approach zero, which prevents the full extent of the rate shock to be realized.
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 pages 103 to 105 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Risk Management", in our 2019 Form 10-K.
Model Risk Management
The use of models is widespread throughout the financial services industry, with large and complex organizations relying on sophisticated models to support numerous aspects of their financial decision making. The models contemporaneously represent both a significant advancement in financial management and a source of risk. In large banking organizations like us, model results influence business decisions, and model failure could have a harmful effect on our financial performance. As a result, the Model Risk Management Framework seeks to mitigate our model risk.
For additional information about our model risk management framework, including our governance and model validation, refer to pages 105 to 106 included under Item 7, Management's Discussion and Analysis
 
of Financial Condition and Results of Operations, "Risk Management Framework", in our 2019 Form 10-K.
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. Active management of strategic risk is an integral component of all aspects of our business.
For additional information about our strategic risk management framework, refer to page 106 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Risk Management Framework", in our 2019 Form 10-K.
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.
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. Further, like all other U.S. G-SIBs, we are also currently subject to a 2.0% leverage buffer under the Basel III rule. If we fail to exceed any regulatory buffer or surcharge, we will be subject to increased restrictions (depending upon the extent of the shortfall) regarding capital distributions and discretionary executive bonus payments.
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 capital, liquidity and other regulatory requirements.
For additional information about our capital, refer to pages 106 to 113 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2019 Form 10-K.

State Street Corporation | 37


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Regulatory Capital
We and State Street Bank, as advanced approaches banking organizations, are subject to the U.S. Basel III framework. Provisions of the Basel III rule became effective with full implementation on January 1, 2019. We are also subject to the final market risk capital rule issued by U.S. banking regulators effective as of January 2013.
The minimum capital ratios as of January 1, 2020, including a capital conservation buffer of 2.5% 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. Based on a calculation date of December 31, 2018, our G-SIB surcharge for 2020 was reduced to 1.0%. This reduction was driven by strategic balance sheet repositioning and risk reduction actions in 2018. To maintain the status of the Parent Company as a financial holding company, we and our insured depository institution subsidiaries are required, among other requirements, to be "well capitalized" as defined by Regulation Y and the Prompt Corrective Action Framework.
The Basel III rule provides for 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 certain on- and off-balance sheet exposures. The advanced approaches consist of the Advanced Internal Ratings-Based Approach used for the calculation of RWA related to credit risk, and the Advanced Measurement Approach used for the calculation of RWA related to operational risk.
The specific calculation of our and State Street Bank's risk-based capital ratios changed as the provisions of the Basel III rule related to the numerator (capital) and denominator (RWA) were phased in, and as our RWA calculated using the advanced approaches changed due to changes in methodology. These methodological changes result in differences in our reported capital ratios from one reporting period to the next that are independent of applicable changes to our capital base, our asset composition, our off-balance sheet exposures or our risk profile.
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, calculated under the advanced approaches and standardized approach provisions of the Basel III final rule 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.

State Street Corporation | 38


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

TABLE 36: REGULATORY CAPITAL STRUCTURE AND RELATED REGULATORY CAPITAL RATIOS
 
State Street Corporation

State Street Bank
(Dollars in millions)
Basel III Advanced Approaches March 31, 2020
 
Basel III Standardized Approach March 31, 2020
 
Basel III Advanced Approaches December 31, 2019
 
Basel III Standardized Approach December 31, 2019
 
Basel III Advanced Approaches March 31, 2020
 
Basel III Standardized Approach March 31, 2020
 
Basel III Advanced Approaches December 31, 2019

Basel III Standardized Approach December 31, 2019
 Common shareholders' equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock and related surplus
$
10,659


$
10,659

 
$
10,636

 
$
10,636

 
$
12,893

 
$
12,893

 
$
12,893

 
$
12,893

Retained earnings
22,315


22,315

 
21,918

 
21,918

 
13,936

 
13,936

 
13,218

 
13,218

Accumulated other comprehensive income (loss)
(920
)

(920
)

(870
)

(870
)

(650
)

(650
)

(654
)

(654
)
Treasury stock, at cost
(10,664
)

(10,664
)
 
(10,209
)
 
(10,209
)
 

 

 

 

Total
21,390

 
21,390

 
21,475

 
21,475

 
26,179

 
26,179

 
25,457

 
25,457

Regulatory capital adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill and other intangible assets, net of associated deferred tax liabilities
(8,994
)

(8,994
)
 
(9,112
)
 
(9,112
)
 
(8,726
)
 
(8,726
)
 
(8,839
)
 
(8,839
)
Other adjustments(1)
(281
)

(281
)
 
(150
)
 
(150
)
 
(111
)
 
(111
)
 
(1
)
 
(1
)
 Common equity tier 1 capital
12,115

 
12,115

 
12,213

 
12,213

 
17,342

 
17,342

 
16,617

 
16,617

Preferred stock
2,471

 
2,471

 
2,962

 
2,962

 

 

 

 

 Tier 1 capital
14,586

 
14,586

 
15,175

 
15,175

 
17,342

 
17,342

 
16,617

 
16,617

Qualifying subordinated long-term debt
1,168

 
1,168

 
1,095

 
1,095

 
1,172

 
1,172

 
1,099

 
1,099

Allowance for credit losses
17

 
123

 
5

 
90

 
18

 
123

 
3

 
90

 Total capital
$
15,771

 
$
15,877

 
$
16,275

 
$
16,360

 
$
18,532

 
$
18,637

 
$
17,719

 
$
17,806

 Risk-weighted assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit risk(2)
$
60,468

 
$
110,913

 
$
54,763

 
$
102,367

 
$
57,169

 
$
107,380

 
$
51,610

 
$
98,979

Operational risk(3)
46,738

 
N/A

 
47,963

 
 N/A

 
43,925

 
N/A

 
44,138

 
NA

Market risk
1,850

 
1,850

 
1,638

 
1,638

 
1,850

 
1,850

 
1,638

 
1,638

Total risk-weighted assets
$
109,056

 
$
112,763

 
$
104,364

 
$
104,005

 
$
102,944

 
$
109,230

 
$
97,386

 
$
100,617

Adjusted quarterly average assets
$
239,861

 
$
239,861

 
$
219,624

 
$
219,624

 
$
236,431

 
$
236,431

 
$
216,397

 
$
216,397

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Ratios:
2020 Minimum Requirements Including Capital Conservation Buffer and G-SIB Surcharge
2019 Minimum Requirements Including Capital Conservation Buffer and G-SIB Surcharge
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
8.0
%
8.5
%
11.1
%
 
10.7
%
 
11.7
%
 
11.7
%
 
16.8
%
 
15.9
%
 
17.1
%
 
16.5
%
Tier 1 capital
9.5

10.0

13.4

 
12.9

 
14.5

 
14.6

 
16.8

 
15.9

 
17.1

 
16.5

Total capital
11.5

12.0

14.5

 
14.1

 
15.6

 
15.7

 
18.0

 
17.1

 
18.2

 
17.7

 
 
 
 
(1) Other adjustments within CET1 capital primarily include the overfunded portion of our defined benefit pension plan obligation net of associated deferred tax liabilities, disallowed deferred tax assets, and other required credit risk based deductions.
(2) Includes a CVA which reflects the risk of potential fair value adjustments for credit risk reflected in our valuation of over-the-counter (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.
NA Not applicable

State Street Corporation | 39


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Our CET1 capital decreased $0.10 billion as of March 31, 2020 compared to December 31, 2019, primarily driven by common stock repurchases and capital distributions from common and preferred stock dividends in the first quarter of 2020, partially offset by net income and accumulated other comprehensive income.
Our tier 1 capital decreased $0.59 billion as of March 31, 2020 compared to December 31, 2019 under both the advanced approaches and standardized approach due to the aforementioned changes in our CET1 capital and the redemption of the Series C preferred stock. Total capital decreased under the advanced approaches and standardized approach by $0.50 billion and $0.48 billion, respectively, due to the changes in our tier 1 and tier 2 capital.
The table below presents a roll-forward of CET1 capital, tier 1 capital and total capital for the first quarter of 2020 and for the year ended December 31, 2019.
TABLE 37: CAPITAL ROLL-FORWARD
(In millions)
Basel III Advanced Approaches March 31, 2020
 
Basel III Standardized Approach March 31, 2020
 
Basel III
Advanced Approaches
December 31, 2019
 
Basel III Standardized Approach
December 31, 2019
Common equity tier 1 capital:
 
 
 
 
 
 
 
Common equity tier 1 capital balance, beginning of period
$
12,213

 
$
12,213

 
$
11,580

 
$
11,580

Net income
634

 
634

 
2,242

 
2,242

Changes in treasury stock, at cost
(455
)
 
(455
)
 
(1,494
)
 
(1,494
)
Dividends declared
(227
)
 
(227
)
 
(939
)
 
(939
)
Goodwill and other intangible assets, net of associated deferred tax liabilities
118

 
118

 
238

 
238

Effect of certain items in accumulated other comprehensive income (loss)
(50
)
 
(50
)
 
462

 
462

Other adjustments
(118
)
 
(118
)
 
124

 
124

Changes in common equity tier 1 capital
(98
)
 
(98
)
 
633

 
633

Common equity tier 1 capital balance, end of period
12,115

 
12,115

 
12,213

 
12,213

Additional tier 1 capital:
 
 
 
 
 
 
 
Tier 1 capital balance, beginning of period
15,175

 
15,175

 
15,270

 
15,270

Change in common equity tier 1 capital
(98
)
 
(98
)
 
633

 
633

Net issuance of preferred stock
(491
)
 
(491
)
 
(728
)
 
(728
)
Other adjustments

 

 

 

Changes in tier 1 capital
(589
)
 
(589
)
 
(95
)
 
(95
)
Tier 1 capital balance, end of period
14,586

 
14,586

 
15,175

 
15,175

Tier 2 capital:
 
 
 
 
 
 
 
Tier 2 capital balance, beginning of period
1,100

 
1,185

 
792

 
861

Net issuance and changes in long-term debt qualifying as tier 2
73

 
73

 
317

 
317

Changes in Allowance for credit losses(1)
12

 
33

 
(9
)
 
7

Change in other adjustments

 

 

 

Changes in tier 2 capital
85

 
106

 
308

 
324

Tier 2 capital balance, end of period
1,185

 
1,291

 
1,100

 
1,185

Total capital:
 
 
 
 
 
 
 
Total capital balance, beginning of period
16,275

 
16,360

 
16,062

 
16,131

Changes in tier 1 capital
(589
)
 
(589
)
 
(95
)
 
(95
)
Changes in tier 2 capital
85

 
106

 
308

 
324

Total capital balance, end of period
$
15,771

 
$
15,877

 
$
16,275

 
$
16,360


 
 
(1) We adopted ASU 2016-13, Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments, on January 1, 2020. Please refer to Note 1 to the consolidated financial statements in this Form 10-Q for additional information.

State Street Corporation | 40


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following table presents a roll-forward of the Basel III advanced and standardized approaches RWA for the first quarter of 2020 and for the year ended December 31, 2019.
TABLE 38: ADVANCED & STANDARDIZED APPROACHES RISK-WEIGHTED ASSETS ROLL-FORWARD
(In millions)
Basel III Advanced Approaches March 31, 2020
 
Basel III
Advanced Approaches December 31, 2019
 
Basel III Standardized Approach March 31, 2020
 
Basel III Standardized Approach December 31, 2019
Total risk-weighted assets, beginning of period(1)
$
104,364

 
$
95,315

 
$
104,005

 
$
98,820

Changes in credit risk-weighted assets:
 
 
 
 
 
 
 
Net increase (decrease) in investment securities-wholesale
(272
)
 
3,470

 
(97
)
 
3,882

Net increase (decrease) in loans
2,361

 
2,586

 
6,458

 
809

Net increase (decrease) in securitization exposures
(179
)
 
(140
)
 
(179
)
 
(140
)
Net increase (decrease) in repo-style transaction exposures
1,605

 
(45
)
 
(4,473
)
 
365

Net increase (decrease) in Over-the-counter derivatives exposures
307

 
26

 
3,301

 
(1,124
)
Net increase (decrease) in all other(2)(3)
1,883

 
1,128

 
3,536

 
1,272

Net increase (decrease) in credit risk-weighted assets
5,705

 
7,025

 
8,546

 
5,064

Net increase (decrease) in market risk-weighted assets
212

 
121

 
212

 
121

Net increase (decrease) in operational risk-weighted assets
(1,225
)
 
1,903

 
N/A

 
N/A

Total risk-weighted assets, end of period
$
109,056

 
$
104,364

 
$
112,763

 
$
104,005


 
 
(1) Standardized approach RWA as of the periods noted above were calculated using our estimates, based on our then current interpretation of the Basel III rule.
(2) Includes assets not in a definable category, cleared transactions, non-material portfolio, other wholesale, cash and due from, and interest-bearing deposits with banks, equity exposures and 6% credit risk supervisory charge.
(3) Includes assets not in a definable category, cleared transactions, other wholesale, cash and due from, and interest-bearing deposits with banks and equity exposures.
As of March 31, 2020, total advanced approaches RWA increased $4.69 billion compared to December 31, 2019, mainly due to an increase in credit risk, partially offset by operational risk RWA. The increase in credit risk RWA was primarily due to loans, all other, and repo-style transactions RWA. The decrease in operational risk RWA was driven by decreased frequency in the largest unit of measure.
As of March 31, 2020, total standardized approach RWA increased $8.76 billion compared to December 31, 2019, mainly due to increases in both credit and market risk RWA. The increase in credit risk RWA was primarily due to loans, all other, and OTC derivatives RWA, partially offset by repo-style transactions RWA. The increase in market risk RWA was primarily due to equity market volatility in the first quarter of 2020.
The regulatory capital ratios as of March 31, 2020, presented in Table 36: Regulatory Capital Structure and Related Regulatory Capital Ratios, are calculated under the standardized approach and advanced approaches in conformity with the Basel III rule. The advanced approaches-based ratios reflect calculations and determinations with respect to our capital and related matters as of March 31, 2020, based on our 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 unit of measure (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 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 rule on us and State Street Bank are therefore subject to further evaluation and also to further regulatory guidance, action or rule-making.

State Street Corporation | 41


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Tier 1 and Supplementary Leverage Ratios
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%.
TABLE 39: TIER 1 AND SUPPLEMENTARY LEVERAGE RATIOS
(Dollars in millions)
March 31, 2020
 
December 31, 2019
State Street Corporation:
 
 
 
Tier 1 capital
$
14,586

 
$
15,175

Average assets
251,181

 
228,886

Less: adjustments for deductions from tier 1 capital
(11,320
)
 
(9,262
)
Adjusted average assets
239,861

 
219,624

Off-balance sheet exposures
30,401

 
28,238

Total assets for SLR
$
270,262

 
$
247,862

Tier 1 leverage ratio(1)
6.1
%
 
6.9
%
Supplementary leverage ratio
5.4

 
6.1

 
 
 
 
State Street Bank:
 
 
 
Tier 1 capital
$
17,342

 
$
16,617

Average assets
247,313

 
225,234

Less: adjustments for deductions from tier 1 capital
(10,882
)
 
(8,837
)
Adjusted average assets
236,431

 
216,397

Off-balance sheet exposures
30,432

 
28,266

Total assets for SLR
$
266,863

 
$
244,663

Tier 1 leverage ratio (1)
7.3
%
 
7.7
%
Supplementary leverage ratio
6.5

 
6.8

 
 
 
(1) Tier 1 leverage ratios were calculated in conformity with the Basel III rule.
Total Loss-Absorbing Capacity
In 2016, the Federal Reserve released its final rule on TLAC, LTD and clean holding company requirements for U.S. domiciled G-SIBs, such as us, that is intended to improve the resiliency and resolvability of certain U.S. banking organizations through enhanced prudential standards. Among other things, the TLAC final rule requires us to comply with minimum requirements for external TLAC and external LTD effective January 1, 2019. Specifically, 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%) and 9.5% of total leverage exposure (7.5% minimum plus the SLR buffer of 2.0%), as defined by the SLR final 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 final rule.
The following table presents external LTD and external TLAC as of March 31, 2020. On January 24, 2020 we issued $750 million aggregate principal amount of 2.400% Senior Notes due in 2030. On March 26, 2020, we issued $750 million aggregate principal amount of 2.825% Fixed-to-Floating Rate Senior Notes due 2023, $500 million aggregate principal amount of 2.901% Fixed-to-Floating Rate Senior Notes due 2026 and $500 million aggregate principal amount of 3.152% of Fixed-to-Floating Rate Senior Notes due 2031.
TABLE 40: TOTAL LOSS-ABSORBING CAPACITY
 
As of March 31, 2020
(Dollars in millions)
Actual
 
Requirement(1)
Total loss-absorbing capacity (eligible Tier 1 regulatory capacity and long term debt):
 
 
 
 
 
 
 
Risk-weighted assets
$
27,545

 
24.4
%
 
$
24,244

 
21.5
%
Supplementary leverage exposure
27,545

 
10.2

 
25,675

 
9.5

Long term debt:
 
 
 
 
 
 
 
Risk-weighted assets
12,583

 
11.2

 
7,893

 
7.0

Supplementary leverage exposure
12,583

 
4.7

 
12,162

 
4.5

 
 
 
 
(1) We have received a one year extension for compliance with LTD SLR to April 1, 2020; all other requirements of the TLAC final rule became effective January 1, 2019.
We requested and received from the Federal Reserve, an extension from January 1, 2019 to January 1, 2020, for compliance with the LTD SLR requirements of the TLAC final rule. In granting the extension request, the Federal Reserve noted that the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA) was signed into law in May 2018. Under this legislation, the Federal Reserve and the other U.S. federal banking agencies must promulgate rules to exclude certain central bank placements from the calculation of SLR for custodial banks such as us. The Federal Reserve and the other U.S. federal banking agencies adopted that final rule in November 2019; the rule becomes effective on April 1, 2020. Accordingly, we requested and received an additional three-month extension from January 1, 2020 to April 1, 2020, for compliance with the LTD SLR requirements of the rule. This regulatory change is expected to reduce the LTD we are required to hold as calculated under the requirements generally in effect through March 31, 2020.

State Street Corporation | 42


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Regulatory Developments
In April 2018, the Federal Reserve issued a proposed rule which would replace the current 2.0% supplementary leverage ratio buffer for G-SIBs, with a buffer equal to 50% of their G-SIB surcharge, which is currently 1.0% for us. This proposal would also make conforming modifications to our TLAC and eligible LTD requirements applicable to G-SIBs.
In November 2019, the Federal Reserve and the other U.S. federal banking agencies adopted a final rule that establishes a deduction for central bank deposits from a custodial banking organization’s total leverage exposure equal to the lesser of (i) the total amount of funds the custodial banking organization and its consolidated subsidiaries have on deposit at qualifying central banks and (ii) the total amount of client funds on deposit at the custodial banking organization that are linked to fiduciary or custodial and safekeeping accounts. The rule became effective on April 1, 2020. For the quarter ended March 31, 2020, we estimated that $65.03 billion of average balances held on deposit at central banks would have been excluded from the SLR denominator, which would have impacted the SLR by approximately 171 bps. Accordingly, the estimated proforma SLR would have been 7.1% as of March 31, 2020.The TLAC and LTD that we are required to hold as calculated under the current requirements will also be reduced as a consequence of the rule.
Also in November 2019, the Federal Reserve and other U.S. federal banking agencies issued a final rule to implement the Standardized Approach for Counterparty Credit Risk as a replacement of the Current Exposure Method for calculating exposure-at-default of derivatives exposures. We have not estimated the impact of the final rule as its mandatory compliance date is January 1, 2022, and it is expected to be accompanied by other revisions to the Basel III regime.
On March 4, 2020, the Agencies issued the SCB final rule that will replace, under the Standardized Approach, the current Capital Conservation Buffer (2.5%) with a SCB calculated as the difference between the institution’s starting and lowest projected CET1 ratio under the CCAR severely adverse scenario plus the Bank’s planned dividend payments (as a percentage of RWA) from the fourth through seventh quarter of the CCAR planning horizon. The SCB requirement will become effective in the fourth quarter of 2020 (it must be updated on October 1 each year) and will be floored at 2.5%. Based on the results of the 2019 CCAR cycle, State Street estimated that it would be subject to an SCB of 2.5%.
The Federal Reserve also recently took action to support the flow of credit to the economy and liquidity in markets impacted by the COVID-19 pandemic: following the launch of the MMLF program, the Federal
 
Reserve issued a rule on March 19, 2020, allowing bank holding companies to exclude assets purchased with the MMLF program from their risk-weighted assets and total leverage exposure. Additionally, the SLR interim final rule released on April 1, 2020 will allow bank holding companies to deduct their deposits with the Federal Reserve and their investments in U.S. Treasuries from their total leverage exposure from the second quarter of 2020 through the first quarter of 2021. The U.S. Treasuries deduction will be applied in addition to the central bank deposits relief referred to above that is coming into effect in the second quarter of 2020. For the quarter ended March 31, 2020, we estimated that combined, the two rules would have improved our SLR by 223 bps.
On March 27, 2020, the Basel Committee on Banking Supervision announced the deferral of the implementation of the revisions to the Basel III framework to January 1, 2023. No conforming communication has been made by the Agencies as of yet.
For additional information about our capital, refer to pages 106 to 113 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2019 Form 10-K.

State Street Corporation | 43


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Capital Actions
Preferred Stock
The following table summarizes selected terms of each of the series of the preferred stock issued and outstanding as of March 31, 2020:
TABLE 41: PREFERRED STOCK ISSUED AND OUTSTANDING
Preferred Stock(2):
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 March 31, 2020
(In millions)
 
Redemption Date(1)
Series D
February 2014
 
30,000,000

$
750

 
1/4,000th

$
100,000


$
25


5.90% to but excluding March 15, 2024, then a floating rate equal to the three-month LIBOR plus 3.108%
 
Quarterly: March, June, September and December
 
$
742


March 15, 2024
Series F
May 2015
 
750,000

750

 
1/100th

100,000


1,000


5.25% to but excluding September 15, 2020, then a floating rate equal to the three-month LIBOR plus 3.597%
 
Semi-annually: March and September
 
742


September 15, 2020
Series G
April 2016
 
20,000,000

500

 
1/4,000th

100,000


25


5.35% to but excluding March 15, 2026, then a floating rate equal to the three-month LIBOR plus 3.709%
 
Quarterly: March, June, September and December
 
493


March 15, 2026
Series H
September 2018
 
500,000
 
500

 
1/100th
 
100,000

 
1,000

 
5.625% to but excluding December 15, 2023, then a floating rate equal to the three-month LIBOR plus 2.539%
 
Semi-annually: June and December
 
494

 
December 15, 2023
 
 
 
 
(1) 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.
(2) 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.
We redeemed all outstanding Series C non-cumulative perpetual preferred stock as of March 15, 2020 at a redemption price of $500 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends. The difference of $9 million between the redemption value and the net carrying value resulted in an EPS impact of approximately ($0.03) per share in the first quarter of 2020.
The following tables present the dividends declared for each of the series of preferred stock issued and outstanding for the periods indicated:
TABLE 42: PREFERRED STOCK DIVIDENDS
 
Three Months Ended March 31,
 
2020
 
2019
(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 C
$
1,313

 
$
0.33

 
$
6

 
$
1,313

 
$
0.33

 
$
6

Series D
1,475

 
0.37

 
11

 
1,475

 
0.37

 
11

Series E(1)

 

 

 
1,500

 
0.38

 
11

Series F
2,625

 
26.25

 
20

 
2,625

 
26.25

 
20

Series G
1,338

 
0.33

 
7

 
1,338

 
0.33

 
7

Series H

 

 

 

 

 

Total
 
 
 
 
$
44

 
 
 
 
 
$
55

 
 
 
 
(1) We redeemed all outstanding Series E non-cumulative perpetual preferred stock as of December 15, 2019 at a redemption price of $750 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends.  

State Street Corporation | 44


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Common Stock
In June 2019, the Federal Reserve issued a non-objection to our capital plan submitted as part of the 2019 CCAR submission; and in connection with that capital plan, our Board approved a common stock purchase program authorizing the purchase of up to $2.0 billion of our common stock from July 1, 2019 through June 30, 2020 (the 2019 Program). We repurchased $500 million of our common stock in the first quarter of 2020. On March 16, 2020, we announced that we temporarily suspended our common stock repurchase program, in light of the COVID-19 pandemic.
In June 2018, the Federal Reserve issued a conditional non-objection to our 2018 capital plan; and in connection with that capital plan, our Board approved a common stock purchase program authorizing the purchase of up to $1.2 billion of our common stock through June 30, 2019 (the 2018 Program), under which we repurchased $300 million of our common stock in the first quarter of 2019.
The table below presents the activity under our common stock purchase program during the periods indicated:
TABLE 43: SHARES REPURCHASED
 
Three Months Ended March 31, 2020
 
Shares Acquired
(In millions)
 
Average Cost per Share
 
Total Acquired
(In millions)
2019 Program
6.5

 
$
77.35

 
$
500

 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
Shares Acquired
(In millions)
 
Average Cost per Share
 
Total Acquired
(In millions)
2018 Program
4.2

 
$
70.93

 
$
300

The table below presents the dividends declared on common stock for the periods indicated:
TABLE 44: COMMON STOCK DIVIDENDS
 
Three Months Ended March 31,
 
2020
 
2019
 
Dividends Declared per Share
 
Total
(In millions)
 
Dividends Declared per Share
 
Total
(In millions)
Common Stock
$
0.52


$
183


$
0.47


$
177

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 pages 52 and 53 included under Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, in our 2019 Form 10-K, and to Note 15 on pages 159 to 161 to the consolidated financial statements included under Item 8, Financial Statements
 
and Supplementary Data, in our 2019 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 may be made using various types of mechanisms, including open market purchases, accelerated share repurchases or transactions off market and may be made under Rule 10b5-1 trading programs. The timing of stock purchases, types of transactions and number of shares purchased will depend on several factors, including, market conditions and our capital positions, financial performance and investment opportunities. The common stock purchase 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 $376.98 billion and $367.90 billion as of March 31, 2020 and December 31, 2019, 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 $397.80 billion and $385.43 billion as collateral for indemnified securities on loan as of March 31, 2020 and December 31, 2019, 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 $397.80 billion and $385.43 billion, referenced above, $46.03 billion and $45.66 billion was invested in indemnified repurchase agreements as of March 31, 2020 and December 31, 2019, respectively. We or our

State Street Corporation | 45


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

agents held $49.26 billion and $48.89 billion as collateral for indemnified investments in repurchase agreements as of March 31, 2020 and December 31, 2019, respectively.
Additional information about our securities finance activities and other off-balance sheet arrangements is provided in Notes 8, 10, and 12 to the consolidated financial statements in this Form 10-Q.
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, require management to make judgments, involving significant estimates and assumptions, 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 more significant accounting policies applied by us have been identified by management as those associated with recurring fair value measurements, impairment of goodwill and other intangible assets, contingencies and allowance for credit losses. These accounting policies require the most subjective or complex judgments, and underlying estimates and assumptions could be most subject to revision as new information becomes available. An understanding of the judgments, estimates and assumptions underlying these accounting policies is essential in order to understand our reported consolidated results of operations and financial condition.
Allowance for Credit Losses
In January 2020, we adopted ASC 326, which replaces the incurred loss methodology with an expected loss methodology. We maintain an allowance for credit losses to support our on-balance sheet credit exposures, including financial assets held at amortized cost and investment securities held to-maturity. We also maintain an allowance for unfunded commitments and letters of credit to support our off-balance credit exposure. The two components together represent the allowance for credit losses.
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.
Additional information about our allowance for credit losses is provided in Note 5 to the consolidated financial statements in this Form 10-Q.
For additional information about these significant accounting policies refer to pages 115 to 117, “Significant Accounting Estimates” included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2019 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-Q.

State Street Corporation | 46





QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information provided under Financial Condition - Market Risk Management in Management’s Discussion and Analysis, included in this Form 10-Q, is incorporated by reference herein. For more information on our market risk refer to pages 98 to 105 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2019 Form 10-K.
CONTROLS AND PROCEDURES
We have established and maintain disclosure controls and procedures that are designed to ensure that information related to us and our subsidiaries on a consolidated basis required to be disclosed in our 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 our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. For the quarter ended March 31, 2020, our 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 our disclosure controls and procedures. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2020.
We have established and maintain 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, we routinely enhance our internal controls and procedures for financial reporting by either upgrading our current systems or implementing new systems. Changes have been made and may be made to our internal controls and procedures for financial reporting as a result of these efforts. During the quarter ended March 31, 2020, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.




 












































State Street Corporation | 47



STATE STREET CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)

 
Three Months Ended March 31,
(Dollars in millions, except per share amounts)
2020
 
2019
Fee revenue:
 
 
 
Servicing fees
$
1,287

 
$
1,251

Management fees
449

 
420

Foreign exchange trading services
459

 
280

Securities finance
92

 
118

Software and processing fees
112

 
191

Total fee revenue
2,399

 
2,260

Net interest income:
 
 
 
Interest income
868

 
1,027

Interest expense
204

 
354

Net interest income
664

 
673

Other income:
 
 
 
Gains from sales of available-for-sale securities, net
2

 

Other income (loss)

 
(1
)
Total other income
2

 
(1
)
Total revenue
3,065

 
2,932

Provision for credit losses
36

 
4

Expenses:
 
 
 
Compensation and employee benefits
1,208

 
1,229

Information systems and communications
385

 
362

Transaction processing services
254

 
242

Occupancy
109

 
116

Acquisition and restructuring costs
11

 
9

Amortization of other intangible assets
58

 
60

Other
230

 
275

Total expenses
2,255

 
2,293

Income before income tax expense
774

 
635

Income tax expense
140

 
127

Net income
$
634

 
$
508

Net income available to common shareholders
$
580

 
$
452

Earnings per common share:
 
 
 
Basic
1.64

 
$
1.20

Diluted
1.62

 
1.18

Average common shares outstanding (in thousands):
 
 
 
Basic
353,746

 
377,915

Diluted
357,993

 
381,703

Cash dividends declared per common share
$
.52

 
$
.47









The accompanying condensed notes are an integral part of these consolidated financial statements.

State Street Corporation | 48




STATE STREET CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

 
Three Months Ended March 31,
(In millions)
2020
 
2019
Net income
$
634

 
$
508

Other comprehensive income (loss), net of related taxes:
 
 
 
Foreign currency translation, net of related taxes of ($10) and ($3), respectively
(300
)
 
(26
)
Net unrealized gains (losses) on available-for-sale securities, net of reclassification adjustment and net of related taxes of $35 and $108, respectively
134

 
272

Net unrealized gains (losses) on available-for-sale securities designated in fair value hedges, net of related taxes of ($3) and ($1), respectively
(7
)
 
(2
)
Net unrealized gains (losses) on cash flow hedges, net of related taxes of $44 and $9, respectively
117

 
24

Net unrealized gains (losses) on retirement plans, net of related taxes of $4 and ($4), respectively
12

 
(8
)
Other comprehensive income (loss)
(44
)
 
260

Total comprehensive income
$
590

 
$
768
































The accompanying condensed notes are an integral part of these consolidated financial statements.

State Street Corporation | 49



STATE STREET CORPORATION
CONSOLIDATED STATEMENT OF CONDITION

 
March 31, 2020
 
December 31, 2019
(Dollars in millions, except per share amounts)
(UNAUDITED)
 
 
Assets:
 
 
 
Cash and due from banks
$
4,932

 
$
3,302

Interest-bearing deposits with banks
147,735

 
68,965

Securities purchased under resale agreements
1,037

 
1,487

Trading account assets
872

 
914

Investment securities available-for-sale
55,843

 
53,815

Investment securities to held-to-maturity purchased under money market liquidity facility (less allowance for credit losses of $4) (fair value of $26,808)
26,808

 

Investment securities held-to-maturity (fair value of $42,201 and $42,157)
41,150

 
41,782

Loans (less allowance for credit losses on loans of $97 and $74)
32,282

 
26,235

Premises and equipment (net of accumulated depreciation of $4,459 and $4,367)
2,225

 
2,282

Accrued interest and fees receivable
3,274

 
3,231

Goodwill
7,506

 
7,556

Other intangible assets
1,963

 
2,030

Other assets
36,900

 
34,011

Total assets
$
362,527

 
$
245,610

Liabilities:
 
 
 
Deposits:
 
 
 
Non-interest-bearing
$
69,404

 
$
34,031

Interest-bearing - U.S.
110,106

 
77,504

Interest-bearing - non-U.S.
77,594

 
70,337

Total deposits
257,104

 
181,872

Securities sold under repurchase agreements
5,373

 
1,102

Short-term borrowings under money market liquidity facility
25,665



Other short-term borrowings
4,835

 
839

Accrued expenses and other liabilities
30,151

 
24,857

Long-term debt
15,538

 
12,509

Total liabilities
338,666

 
221,179

Commitments, guarantees and contingencies (Notes 10 and 11)

 

Shareholders’ equity:
 
 
 
Preferred stock, no par, 3,500,000 shares authorized:
 
 
 
Series C, 5,000 shares issued and outstanding

 
491

Series D, 7,500 shares issued and outstanding
742

 
742

Series F, 7,500 shares issued and outstanding
742

 
742

Series G, 5,000 shares issued and outstanding
493

 
493

Series H, 5,000 shares issued and outstanding
494

 
494

Common stock, $1 par, 750,000,000 shares authorized:
 
 
 
503,879,642 and 503,879,642 shares issued, and 351,943,858 and 357,389,416 shares outstanding
504

 
504

Surplus
10,155

 
10,132

Retained earnings
22,315

 
21,918

Accumulated other comprehensive income (loss)
(920
)
 
(876
)
Treasury stock, at cost (151,935,784 and 146,490,226 shares)
(10,664
)
 
(10,209
)
Total shareholders’ equity
23,861

 
24,431

Total liabilities and shareholders' equity
$
362,527

 
$
245,610


The accompanying condensed notes are an integral part of these consolidated financial statements.

State Street Corporation | 50



STATE STREET CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)

(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, 2018
$
3,690

 
503,880

 
$
504

 
$
10,061

 
$
20,553

 
$
(1,356
)
 
123,933

 
$
(8,715
)
 
$
24,737

Reclassification of certain tax effects(1)
 
 
 
 
 
 
 
 
84

 
(84
)
 
 
 
 
 

Net income
 
 
 
 
 
 
 
 
508

 
 
 
 
 
 
 
508

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
260

 
 
 
 
 
260

Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Common stock - $0.47 per share
 
 
 
 
 
 
 
 
(177
)
 
 
 
 
 
 
 
(177
)
  Preferred stock
 
 
 
 
 
 
 
 
(55
)
 
 
 
 
 
 
 
(55
)
Common stock acquired
 
 
 
 
 
 
 
 
 
 
 
 
4,230

 
(300
)
 
(300
)
Common stock awards exercised
 
 
 
 
 
 
26

 
 
 
 
 
(1,002
)
 
45

 
71

Other
 
 
 
 
 
 
(5
)
 
(2
)
 
 
 
(2
)
 
1

 
(6
)
Balance at March 31, 2019
$
3,690

 
503,880

 
$
504

 
$
10,082

 
$
20,911

 
$
(1,180
)
 
127,159

 
$
(8,969
)
 
25,038

Balance at December 31, 2019
$
2,962

 
503,880

 
$
504

 
$
10,132

 
$
21,918

 
$
(876
)
 
146,490

 
$
(10,209
)
 
$
24,431

Net income
 
 
 
 
 
 
 
 
634

 
 
 
 
 
 
 
634

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
(44
)
 
 
 
 
 
(44
)
Preferred stock redeemed
(491
)
 
 
 
 
 
 
 
(9
)
 
 
 
 
 
 
 
(500
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Common stock - $0.52 per share
 
 
 
 
 
 
 
 
(183
)
 
 
 
 
 
 
 
(183
)
  Preferred stock
 
 
 
 
 
 
 
 
(44
)
 
 
 
 
 
 
 
(44
)
Common stock acquired
 
 
 
 
 
 
 
 
 
 
 
 
6,464

 
(500
)
 
(500
)
Common stock awards exercised
 
 
 
 
 
 
23

 
 
 
 
 
(1,017
)
 
45

 
68

Other(2)
 
 
 
 
 
 
 
 
(1
)
 
 
 
(1
)
 
 
 
(1
)
Balance at March 31, 2020
$
2,471

 
503,880

 
$
504

 
$
10,155

 
$
22,315

 
$
(920
)
 
151,936

 
$
(10,664
)
 
$
23,861

 
 
 
 
 
(1) Represents the reclassification from accumulated other comprehensive income into retained earnings as a result of our adoption of ASU 2018-02 - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income in the first quarter of 2019.
(2) Includes the impact of transitioning to ASC 326 consisting of a decrease in retained earnings of $3 million in the first quarter of 2020.





















The accompanying condensed notes are an integral part of these consolidated financial statements.

State Street Corporation | 51



STATE STREET CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
 
Three Months Ended March 31,
(In millions)
2020
 
2019
Operating Activities:
 
 
 
Net income
$
634

 
$
508

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Deferred income tax expense (benefit)
8

 
(35
)
Amortization of other intangible assets
58

 
60

Other non-cash adjustments for depreciation, amortization and accretion, net
274

 
244

Losses (gains) related to investment securities, net
(2
)
 
1

Change in trading account assets, net
42

 
4

Change in accrued interest and fees receivable, net
(43
)
 
(74
)
Change in collateral deposits, net
2,685

 
(1,527
)
Change in unrealized losses (gains) on foreign exchange derivatives, net
(3,090
)
 
(63
)
Change in other assets, net
(891
)
 
(816
)
Change in accrued expenses and other liabilities, net
4,179

 
976

Other, net
185

 
143

Net cash provided by operating activities
4,039

 
(579
)
Investing Activities:
 
 
 
Net decrease (increase) in interest-bearing deposits with banks
(78,770
)
 
19,176

Net decrease (increase) in securities purchased under resale agreements
450

 
3,157

Proceeds from sales of available-for-sale securities
1,657

 
152

Proceeds from maturities of available-for-sale securities
4,219

 
3,959

Purchases of available-for-sale securities
(8,935
)
 
(7,408
)
Purchases of held-to-maturity securities under the MMLF program
(26,061
)
 

Proceeds from maturities of held-to-maturity securities under the MMLF program

451

 

Proceeds from maturities of held-to-maturity securities
2,695

 
2,606

Purchases of held-to-maturity securities
(2,141
)
 
(2,348
)
Net (increase) in loans
(6,071
)
 
2,409

Business acquisitions, net of cash acquired

 
(54
)
Purchases of equity investments and other long-term assets
(794
)
 
(71
)
Purchases of premises and equipment, net
(114
)
 
(171
)
Other, net
641

 
264

Net cash (used in) provided by investing activities
(112,773
)
 
21,671

Financing Activities:
 
 
 
Net (decrease) increase in time deposits
18,635

 
(5,876
)
Net increase (decrease) in all other deposits
56,596

 
(12,013
)
Net increase in short-term borrowings under money market liquidity facility
25,665

 

Net (decrease) increase in other short-term borrowings
8,267

 
(1,807
)
Proceeds from issuance of long-term debt, net of issuance costs
2,497

 

Payments for long-term debt and obligations under finance leases
(8
)
 
(31
)
Payments for redemption of preferred stock
(500
)
 

Repurchases of common stock
(515
)
 
(300
)
Repurchases of common stock for employee tax withholding
(43
)
 
(43
)
Payments for cash dividends
(230
)
 
(234
)
Net cash (used in) financing activities
110,364

 
(20,304
)
Net increase
1,630

 
788

Cash and due from banks at beginning of period
3,302

 
3,212

Cash and due from banks at end of period
$
4,932

 
$
4,000

 








The accompanying condensed notes are an integral part of these consolidated financial statements.

State Street Corporation | 52


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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. Our principal banking subsidiary is State Street Bank.
The accompanying consolidated financial statements should be read in conjunction with the financial and risk factor information included in our 2019 Form 10-K, which we previously filed with the SEC.
The consolidated financial statements accompanying these condensed notes are unaudited. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the consolidated results of operations in these financial statements, have been made. Certain previously reported amounts presented in this Form 10-Q have been reclassified to conform to current-period presentation. Events occurring subsequent to the date of our consolidated statement of condition were evaluated for potential recognition or disclosure in our consolidated financial statements through the date we filed this Form 10-Q with the SEC.
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. These accounting estimates reflect the best judgment of management, but actual results could differ.
Our consolidated statement of condition as of December 31, 2019 included in the accompanying consolidated financial statements was derived from the audited financial statements as of that date, but does not include all notes required by U.S. GAAP for a complete set of consolidated financial statements.
Recent Accounting Developments
Relevant standards that were adopted in the first quarter of 2020:
In January 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (ASC 326):
 
Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as CECL methodology. This standard requires immediate recognition of expected credit losses for certain financial assets and off-balance sheet commitments, including trade and other receivables, loans and commitments, held-to-maturity debt securities, and other financial assets held at amortized cost at the reporting date, to be measured based on historical experience, current conditions, and reasonable and supportable forecasts. Credit losses on available-for-sale securities are recorded as an allowance against the amortized cost basis of the security, limited to the amount by which the security’s amortized cost basis exceeds the fair value, and reversal of impairment losses are allowed when the credit of the issuer improves.
ASC 326 was adopted using a modified retrospective method of transition for all financial assets measured at amortized cost and off balance sheet commitments, which requires the impact of applying the standard on prior periods to be reflected in opening retained earnings upon adoption. Results for reporting periods beginning after January 1, 2020 are presented under the CECL methodology in ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP. Additional information about the reporting for prior periods can be found in our 2019 Form 10-K filed with the SEC on February 20, 2020. The impact of transitioning to ASC 326 on the consolidated financial statements was an increase in the allowance for credit losses and a decrease in retained earnings of $3 million primarily arising from:
An increase of $1 million in the allowance for credit losses related to loans and other financial assets held at amortized cost.
An increase of $2 million in the allowance for credit losses related to off-balance sheet commitments
In January 2020, we adopted the remaining provisions of ASU 2018-13 - Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value, specifically the provisions of the standard that add disclosures. We previously adopted the provisions of the standard that eliminated or amended disclosures as of December 31, 2018. There are no material impacts to the disclosures as a result of the adoption.
In January 2020, we adopted ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. There are no material impacts to our financial statements as a result of the adoption.

State Street Corporation | 53


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

In January 2020, we adopted ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement. There are no material impacts to our financial statements as a result of the adoption.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting is effective as of March 12, 2020. The guidance provides temporary optional expedients and exceptions to the existing guidance in U.S. GAAP on contract modifications and hedge accounting in relation to the transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance also allows a one-time election to sell and/or reclassify to AFS or trading HTM debt securities that reference an interest rate affected by reference rate reform. There were no material impacts to our financial statements as a result of the adoption; we are evaluating the one-time election to sell/transfer HTM securities impacted by reference rate reform.
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. For information about our valuation techniques for financial assets and financial liabilities measured at fair value and the fair value hierarchy, refer to pages 128 to 134 in Note 2 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
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:

State Street Corporation | 54


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 
Fair Value Measurements on a Recurring Basis
 
As of March 31, 2020
(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
$
35

 
$

 
$

 
 
 
$
35

Non-U.S. government securities
95

 
229

 

 
 
 
324

Other
16

 
497

 

 
 
 
513

Total trading account assets
146

 
726

 

 
 
 
872

Available-for-sale investment securities:
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agencies:
 
 
 
 
 
 
 
 
 
Direct obligations
5,150

 

 

 
 
 
5,150

Mortgage-backed securities

 
18,364

 

 
 
 
18,364

Total U.S. Treasury and federal agencies
5,150

 
18,364

 

 
 
 
23,514

Asset-backed securities:
 
 
 
 
 
 
 
 
 
Student loans

 
454

 

 
 
 
454

Credit cards

 
85

 

 
 
 
85

Collateralized loan obligations

 

 
1,841

 
 
 
1,841

Total asset-backed securities

 
539

 
1,841

 

 
2,380

Non-U.S. debt securities:
 
 
 
 
 
 
 
 
 
Mortgage-backed securities

 
1,692

 

 
 
 
1,692

Asset-backed securities

 
1,035

 
820

 
 
 
1,855

Government securities

 
13,055

 

 
 
 
13,055

Other(2)

 
8,730

 
44

 
 
 
8,774

Total non-U.S. debt securities

 
24,512

 
864

 
 
 
25,376

State and political subdivisions

 
1,765

 

 
 
 
1,765

Collateralized mortgage obligations

 
96

 

 
 
 
96

Other U.S. debt securities

 
2,712

 

 
 
 
2,712

Total available-for-sale investment securities
5,150

 
47,988

 
2,705

 

 
55,843

Other assets:
 
 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
 
 
Foreign exchange contracts

 
30,370

 
17

 
$
(20,711
)
 
9,676

Interest rate contracts

 
54

 

 
(17
)
 
37

Total derivative instruments

 
30,424

 
17

 
(20,728
)
 
9,713

Other

 
313

 

 

 
313

Total assets carried at fair value
$
5,296

 
$
79,451

 
$
2,722

 
$
(20,728
)
 
$
66,741

Liabilities:
 
 
 
 
 
 
 
 
 
Accrued expenses and other liabilities:
 
 
 
 
 
 
 
 
 
Trading account liabilities:
 
 
 
 
 
 
 
 
 
Other
$
3

 
$

 
$

 
$

 
$
3

Derivative instruments:
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
3

 
$
31,532

 
$
16

 
$
(24,001
)
 
$
7,550

Interest rate contracts
10

 
55

 

 
(17
)
 
48

Other derivative contracts

 
188

 

 

 
188

Total derivative instruments
13

 
31,775

 
16

 
(24,018
)
 
7,786

Total liabilities carried at fair value
$
16

 
$
31,775

 
$
16

 
$
(24,018
)
 
$
7,789

 
 
 
 
(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 $2.50 billion and $5.79 billion, respectively, for cash collateral received from and provided to derivative counterparties.
(2) As of March 31, 2020, the fair value of other non-U.S. debt securities included $6.00 billion of supranational and non-U.S. agency bonds, $1.71 billion of corporate bonds and $0.47 billion of covered bonds.

State Street Corporation | 55


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 
Fair Value Measurements on a Recurring Basis
 
As of December 31, 2019
(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
146

 
173

 

 
 
 
319

Other
21

 
540

 

 
 
 
561

Total trading account assets
201

 
713

 

 
 
 
914

Available-for-sale investment securities:




 
 
 


U.S. Treasury and federal agencies:




 
 
 


Direct obligations
3,487





 
 

3,487

Mortgage-backed securities


17,838



 
 

17,838

Total U.S. Treasury and federal agencies
3,487


17,838



 
 

21,325

Asset-backed securities:




 
 
 


Student loans


531



 
 

531

Credit cards


89



 
 

89

Collateralized loan obligations




1,820

 
 

1,820

Total asset-backed securities


620


1,820

 
 

2,440

Non-U.S. debt securities:






 
 
 



Mortgage-backed securities


1,980



 
 

1,980

Asset-backed securities


1,292


887

 
 

2,179

Government securities


12,373



 
 

12,373

Other(2)


8,613


45

 
 

8,658

Total non-U.S. debt securities


24,258


932

 
 

25,190

State and political subdivisions


1,783



 
 

1,783

Collateralized mortgage obligations


104



 
 

104

Other U.S. debt securities


2,973



 
 

2,973

Total available-for-sale investment securities
3,487


47,576


2,752

 
 

53,815

Other assets:




 
 
 
 
 
Derivative instruments:




 
 
 
 
 
Foreign exchange contracts


15,136


4

 
$
(10,391
)
 
4,749

Interest rate contracts


8



 
(4
)
 
4

Total derivative instruments


15,144


4

 
(10,395
)
 
4,753

Other


504



 

 
504

Total assets carried at fair value
$
3,688


$
63,937


$
2,756

 
$
(10,395
)
 
$
59,986

Liabilities:





 
 
 
 
Accrued expenses and other liabilities:





 
 
 
 
Trading account liabilities:





 
 
 
 
Other
$
5


$


$

 
$

 
$
5

Derivative instruments:





 
 
 
 
Foreign exchange contracts
$
3


$
15,144


$
3

 
$
(8,918
)
 
$
6,232

Interest rate contracts
6


43



 
(4
)
 
45

Other derivative contracts


182



 

 
182

Total derivative instruments
9


15,369


3

 
(8,922
)
 
6,459

Total liabilities carried at fair value
$
14


$
15,369


$
3

 
$
(8,922
)
 
$
6,464

 
 
 
 
 
(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 $2.31 billion and $0.84 billion, respectively, for cash collateral received from and provided to derivative counterparties.
(2) As of December 31, 2019, the fair value of other non-U.S. debt securities included $5.50 billion of supranational and non-U.S. agency bonds, $1.78 billion of corporate bonds and $0.68 billion of covered bonds.


State Street Corporation | 56


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following tables present activity related to our level 3 financial assets during the first quarters of 2020 and 2019, respectively. Transfers into and out of level 3 are reported as of the beginning of the period presented. During the first quarters of 2020 and 2019, there were no transfers into level 3. During the first quarter of 2020, there were no transfers out of level 3. During the first quarter of 2019, transfers out of level 3 were mainly related to certain non-U.S. debt securities, for which fair value was measured using prices for which observable market information, other than quoted prices included in Level 1, became available.
 
Fair Value Measurements Using Significant Unobservable Inputs
 
Three Months Ended March 31, 2020
 
Fair Value as of
December 31,
2019
 
Total Realized and
Unrealized Gains (Losses)
 
Purchases
 
Sales
 
Settlements
 
Transfers into
Level 3
 
Transfers
out of Level 3
 
Fair Value 
as of March 31, 2020(1)
 
Change in Unrealized Gains (Losses) Related to Financial Instruments
Held as of
March 31, 2020
(In millions)
 
Recorded in Revenue(1)
 
Recorded in Other Comprehensive Income(1)
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Collateralized loan obligations
$
1,820

 
$

 
$
(83
)
 
$
178

 
$
(42
)
 
$
(32
)
 
$

 
$

 
$
1,841

 
 
Total asset-backed securities
1,820




(83
)

178


(42
)

(32
)





1,841

 
 
Non-U.S. debt securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset-backed securities
887

 

 
(65
)
 

 

 
(2
)
 

 

 
820

 
 
Other
45

 

 
(1
)
 

 

 

 

 

 
44

 
 
Total non-U.S. debt securities
932




(66
)





(2
)




 
864

 
 
Total available-for-sale investment securities
2,752




(149
)

178


(42
)

(34
)




 
2,705

 
 
Other assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
4

 
11

 

 
3

 

 
(1
)
 

 

 
17

 
$
12

Total derivative instruments
4


11




3




(1
)




 
17

 
12

Total assets carried at fair value
$
2,756


$
11


$
(149
)

$
181


$
(42
)

$
(35
)

$


$

 
$
2,722

 
$
12

 
 
 
 
(1) Total realized and unrealized gains (losses) on AFS investment securities are included within gains (losses) related to investment securities, net. Total realized and unrealized gains (losses) on derivative instruments are included within foreign exchange trading services.

State Street Corporation | 57


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 
Fair Value Measurements Using Significant Unobservable Inputs
 
Three Months Ended March 31, 2019
 
Fair Value
as of
December 31,
2018
 
Total Realized and
Unrealized Gains (Losses)
 
Purchases
 
Sales
 
Settlements
 
Transfers
into
Level 3
 
Transfers
out of
Level 3
 
Fair Value 
as of March 31, 2019(1)
 
Change in Unrealized Gains (Losses) Related to Financial Instruments
Held as of
March 31, 2019
(In millions)
 
Recorded
in
Revenue
(1)
 
Recorded
in Other
Comprehensive
Income
(1)
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Collateralized loan obligations
$
593

 
$
1

 
$
(2
)
 
$
132

 
$

 
$
(56
)
 
$

 
$

 
$
668

 
 
Total asset-backed securities
593

 
1

 
(2
)
 
132

 

 
(56
)
 

 

 
668

 
 
Non-U.S. debt securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset-backed securities
631

 

 
(2
)
 
9

 

 
(11
)
 

 

 
627

 
 
Other
58

 

 

 

 

 
(1
)
 

 
(12
)
 
45

 
 
Total non-U.S. debt securities
689

 

 
(2
)
 
9

 

 
(12
)
 

 
(12
)
 
672

 
 
Collateralized mortgage obligations

2

 

 

 

 

 
(2
)
 

 

 

 
 
Total Available-for-sale investment securities
1,284

 
1

 
(4
)
 
141

 

 
(70
)
 

 
(12
)
 
1,340

 
 
Other assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
4

 
(3
)
 

 
3

 

 

 

 

 
4

 
$
(1
)
Total derivative instruments
4

 
(3
)
 

 
3

 

 

 

 

 
4

 
(1
)
Total assets carried at fair value
$
1,288

 
$
(2
)
 
$
(4
)
 
$
144

 
$

 
$
(70
)
 
$

 
$
(12
)
 
$
1,344

 
$
(1
)
 
 
 
 
 
(1) Total realized and unrealized gains (losses) on AFS investment securities are included within gains (losses) related to investment securities, net. Total realized and unrealized gains (losses) on derivative instruments are included within foreign exchange trading services.
The following table presents quantitative information, as of the dates indicated, about the valuation techniques and significant unobservable inputs used in the valuation of our level 3 financial assets and liabilities measured at fair value on a recurring basis for which we use pricing models. The significant unobservable inputs for our level 3 financial assets and liabilities whose fair value is measured using pricing information from non-binding broker/dealer quotes are not included in the table, as the specific inputs applied are not provided by the broker/dealer.
 
Quantitative Information about Level 3 Fair Value Measurements
 
Fair Value
 
 
 
 
 
Range
 
Weighted-Average
(Dollars in millions)
As of March 31, 2020
 
As of December 31, 2019
 
Valuation Technique
 
Significant Unobservable Input(1)
 
As of March 31, 2020
 
As of March 31, 2020
 
As of December 31, 2019
Significant unobservable inputs readily available to State Street:
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Instruments, foreign exchange contracts
$
17

 
$
4

 
Option model
 
Volatility
 
9.4% - 33.7%
 
19.3
%
 
8.2
%
Total
$
17

 
$
4

 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative instruments, foreign exchange contracts
$
16

 
$
3

 
Option model
 
Volatility
 
9.4% - 33.7%
 
19.2
%
 
7.0
%
Total
$
16

 
$
3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Significant changes in these unobservable inputs may result in significant changes in fair value measurement of the derivative instrument.

State Street Corporation | 58


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Fair Value Estimates
Estimates of fair value for financial instruments not carried at fair value on a recurring basis 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.
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)
March 31, 2020
 
 
 
 
 
 
 
 
 
Financial Assets:
 

 
 
 
 
 
 
 
 
Cash and due from banks
$
4,932

 
$
4,932

 
$
4,932

 
$

 
$

Interest-bearing deposits with banks
147,735

 
147,735

 

 
147,735

 

Securities purchased under resale agreements
1,037

 
1,037

 

 
1,037

 

HTM securities purchased under the MMLF program
26,808

 
26,808

 

 
26,808

 

Investment securities held-to-maturity
41,150

 
42,201

 
9,408

 
32,562

 
231

Net loans(1)
32,282

 
31,962

 

 
30,013

 
1,949

Other(2)
4,500

 
4,500

 

 
4,500

 

Financial Liabilities:
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
   Non-interest-bearing
$
69,404

 
$
69,404

 
$

 
$
69,404

 
$

   Interest-bearing - U.S.
110,106

 
110,106

 

 
110,106

 

   Interest-bearing - non-U.S.
77,594

 
77,594

 

 
77,594

 

Securities sold under repurchase agreements
5,373

 
5,373

 

 
5,373

 

Short-term borrowings under the MMLF program
25,665

 
25,665

 

 
25,665

 

Other short-term borrowings
4,835

 
4,835

 

 
4,835

 

Long-term debt
15,538

 
14,946

 

 
14,805

 
141

Other(2)
4,500

 
4,500

 

 
4,500

 

 
 
 
 
(1) Includes $2 million of loans classified as held-for-sale that were measured at fair value on a non-recurring basis as of March 31, 2020.
(2) Represents a portion of underlying client assets related to our enhanced custody 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, 2019
 
 
 
 
 
 
 
 
 
Financial Assets:
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
3,302

 
$
3,302

 
$
3,302

 
$

 
$

Interest-bearing deposits with banks
68,965

 
68,965

 

 
68,965

 

Securities purchased under resale agreements
1,487

 
1,487

 

 
1,487

 

Investment securities held-to-maturity
41,782

 
42,157

 
10,299

 
31,682

 
176

Net loans(1)
26,235

 
26,292

 

 
24,432

 
1,860

Other(2)
7,500

 
7,500

 

 
7,500

 

Financial Liabilities:
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
   Non-interest-bearing
$
34,031

 
$
34,031

 
$

 
$
34,031

 
$

   Interest-bearing - U.S.
77,504

 
77,504

 

 
77,504

 

   Interest-bearing - non-U.S.
70,337

 
70,337

 

 
70,337

 

Securities sold under repurchase agreements
1,102

 
1,102

 

 
1,102

 

Other short-term borrowings
839

 
839

 

 
839

 

Long-term debt
12,509

 
12,770

 

 
12,621

 
149

Other(2)
7,500

 
7,500

 

 
7,500

 

 
 
 
 
(1) Includes $9 million of loans classified as held-for-sale that were measured at fair value on a non-recurring basis as of December 31, 2019.
(2) Represents a portion of underlying client assets related to our enhanced custody business, which clients have allowed us to transfer and re-pledge.

State Street Corporation | 59


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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. For additional information on our accounting for investment securities, refer to page 135 in Note 3 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
Trading account assets are carried at fair value. Both realized and unrealized gains and losses on trading account assets are recorded in foreign exchange trading services 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 non-credit related gains and losses recorded in AOCI. Gains or losses related on sales of AFS investment securities are computed using the specific identification method and are recorded in gains (losses) related to investment securities, net in our consolidated statement of income.
We participated in the Federal Reserve's MMLF program in the first quarter of 2020 and purchased $27 billion of investment securities under that program.
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. As of March 31, 2020, we recognized an allowance for credit losses on HTM investment securities of $4 million all related to MMLF program assets.

State Street Corporation | 60


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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:
 
March 31, 2020
 
December 31, 2019
 
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
$
4,983


$
167


$


$
5,150

 
$
3,506

 
$
9

 
$
28

 
$
3,487

Mortgage-backed securities
17,842


547


25


18,364

 
17,599

 
264

 
25

 
17,838

Total U.S. Treasury and federal agencies
22,825


714


25


23,514

 
21,105

 
273

 
53

 
21,325

Asset-backed securities:







 
 
 
 
 
 
 
 
Student loans(1)
466




12


454

 
532

 
1

 
2

 
531

Credit cards
90




5


85

 
90

 

 
1

 
89

Collateralized loan obligations
1,931




90


1,841

 
1,822

 
1

 
3

 
1,820

Total asset-backed securities
2,487




107


2,380

 
2,444

 
2

 
6

 
2,440

Non-U.S. debt securities:







 
 
 
 
 
 
 
 
Mortgage-backed securities
1,710




18


1,692

 
1,978

 
3

 
1

 
1,980

Asset-backed securities
1,907




52


1,855

 
2,179

 
2

 
2

 
2,179

Government securities
12,952


121


18


13,055

 
12,243

 
131

 
1

 
12,373

Other(2)
8,761


59


46


8,774

 
8,595

 
73

 
10

 
8,658

Total non-U.S. debt securities
25,330


180


134


25,376

 
24,995

 
209

 
14

 
25,190

State and political subdivisions(3)
1,724


48


7


1,765

 
1,725

 
59

 
1

 
1,783

Collateralized mortgage obligations
96






96

 
104

 

 

 
104

Other U.S. debt securities
2,737


9


34


2,712

 
2,941

 
32

 

 
2,973

Total
$
55,199


$
951


$
307


$
55,843

 
$
53,314

 
$
575

 
$
74

 
$
53,815

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity:







 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agencies:







 
 
 
 
 
 
 
 
Direct obligations
$
9,268


$
171


$


$
9,439

 
$
10,311

 
$
24

 
$
3

 
$
10,332

Mortgage-backed securities
26,613


970


7


27,576

 
26,297

 
316

 
44

 
26,569

Total U.S. Treasury and federal agencies
35,881


1,141


7


37,015

 
36,608

 
340

 
47

 
36,901

Asset-backed securities:











 
 
 
 
 
 
 
 
Student loans(1)
4,055


1


148


3,908

 
3,783

 
10

 
41

 
3,752

Total asset-backed securities
4,055


1


148


3,908

 
3,783

 
10

 
41

 
3,752

Non-U.S. debt securities:







 
 
 
 
 
 
 
 
Mortgage-backed securities
335


56


14


377

 
366

 
82

 
6

 
442

Government securities
279


1




280

 
328

 

 

 
328

Total non-U.S. debt securities
614


57


14


657

 
694

 
82

 
6

 
770

Collateralized mortgage obligations
600


28


7


621

 
697

 
38

 
1

 
734

Total(4)
41,150


1,227


176


42,201

 
41,782

 
470

 
95

 
42,157

HTM securities purchased under the MMLF program(5)
26,812

 
9

 
13

 
26,808

 

 

 

 

Total held-to-maturity securities
$
67,962

 
$
1,236

 
$
189

 
$
69,009

 
$
41,782

 
$
470

 
$
95

 
$
42,157

 
 
 
 
(1) 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.
(2) As of March 31, 2020 and December 31, 2019, the fair value of other non-U.S. debt securities included $6.00 billion and $5.50 billion, respectively, primarily of supranational and non-U.S. agency bonds, $1.71 billion and $1.78 billion, respectively, of corporate bonds and $0.47 billion and $0.68 billion, respectively, of covered bonds.
(3) As of March 31, 2020 and December 31, 2019, the fair value of state and political subdivisions includes securities in trusts of $0.93 billion and $0.94 billion respectively. Additional information about these trusts is provided in Note 12.
(4) An immaterial amount of accrued interest related to HTM and AFS investment securities was excluded from the amortized cost basis for the period ended March 31, 2020.
(5) As of March 31, 2020, we recognized an allowance for credit losses of $4 million on HTM investment securities under the MMLF program.



State Street Corporation | 61


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Aggregate investment securities with carrying values of approximately $55.89 billion and $49.48 billion as of March 31, 2020 and December 31, 2019, respectively, were designated as pledged for public and trust deposits, short-term borrowings and for other purposes as provided by law.
The following tables present the aggregate fair values of AFS and HTM 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 March 31, 2020
 
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:
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
$
2,135

 
$
23

 
$
200

 
$
2

 
$
2,335

 
$
25

Total U.S. Treasury and federal agencies
2,135


23


200


2


2,335


25

Asset-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Student loans
344

 
11

 
99

 
1

 
443

 
12

Credit cards
85

 
5

 

 

 
85

 
5

Collateralized loan obligations
1,466

 
76

 
292

 
14

 
1,758

 
90

Total asset-backed securities
1,895


92


391


15


2,286


107

Non-U.S. debt securities:
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
1,431

 
15

 
203

 
3

 
1,634

 
18

Asset-backed securities
1,741

 
46

 
98

 
6

 
1,839

 
52

Government securities
1,044

 
18

 

 

 
1,044

 
18

Other
3,367

 
45

 
293

 
1

 
3,660

 
46

Total non-U.S. debt securities
7,583


124


594


10


8,177


134

State and political subdivisions
579

 
6

 
22

 
1

 
601

 
7

Collateralized mortgage obligations

 

 
2

 

 
2

 

Other U.S. debt securities
2,012

 
34

 

 

 
2,012

 
34

Total
$
14,204

 
$
279

 
$
1,209

 
$
28

 
$
15,413

 
$
307

 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agencies:
 
 
 
 
 
 
 
 
 
 
 
Direct obligations
$

 
$

 
$
31

 
$

 
$
31

 
$

Mortgage-backed securities
955

 
6

 
25

 
1

 
980

 
7

Total U.S. Treasury and federal agencies
955

 
6

 
56

 
1

 
1,011

 
7

Asset-backed securities:
 
 
 
 
 
 
 
 


 


Student loans
2,739

 
96

 
1,043

 
52

 
3,782

 
148

Total asset-backed securities
2,739

 
96

 
1,043

 
52


3,782


148

Non-U.S. debt securities:
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
35

 

 
122

 
14

 
157

 
14

Total non-U.S. debt securities
35




122


14


157


14

Collateralized mortgage obligations
39

 
4

 
20

 
3

 
59

 
7

Total
3,768


106


1,241


70


5,009


176

HTM securities purchased under the MMLF program

11,080

 
13

 

 

 
11,080

 
13

Total held-to-maturity securities
$
14,848

 
$
119

 
$
1,241

 
$
70

 
$
16,089

 
$
189


State Street Corporation | 62


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 
As of December 31, 2019
 
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
$
1,430

 
$
28

 
$

 
$

 
$
1,430

 
$
28

Mortgage-backed securities
2,499

 
7

 
1,665

 
18

 
4,164

 
25

Total U.S. Treasury and federal agencies
3,929

 
35

 
1,665

 
18

 
5,594

 
53

Asset-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Student loans
271

 
1

 
127

 
1

 
398

 
2

Credit cards
89

 
1

 

 

 
89

 
1

Collateralized loan obligations
862

 
2

 
278

 
1

 
1,140

 
3

Total asset-backed securities
1,222

 
4

 
405

 
2

 
1,627

 
6

Non-U.S. debt securities:
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
228

 

 
220

 
1

 
448

 
1

Asset-backed securities
672

 
1

 
109

 
1

 
781

 
2

Government securities
3,246

 
1

 

 

 
3,246

 
1

Other
2,736

 
9

 
187

 
1

 
2,923

 
10

Total non-U.S. debt securities
6,882

 
11

 
516

 
3

 
7,398

 
14

State and political subdivisions
163

 

 
22

 
1

 
185

 
1

Collateralized mortgage obligations
13

 

 
4

 

 
17

 

Other U.S. debt securities
219

 

 
14

 

 
233

 

Total
$
12,428

 
$
50

 
$
2,626

 
$
24

 
$
15,054

 
$
74

Held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agencies:
 
 
 
 
 
 
 
 
 
 
 
Direct obligations
$
604

 
$

 
$
2,262

 
$
3

 
$
2,866

 
$
3

   Mortgage-backed securities
6,056

 
31

 
1,606

 
13

 
7,662

 
44

Total U.S. Treasury and federal agencies
6,660

 
31

 
3,868

 
16

 
10,528

 
47

Asset-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Student loans
2,003

 
22

 
778

 
19

 
2,781

 
41

Total asset-backed securities
2,003

 
22

 
778

 
19

 
2,781

 
41

Non-U.S. debt securities:
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities

 

 
138

 
6

 
138

 
6

Total non-U.S. debt securities

 

 
138

 
6

 
138

 
6

Collateralized mortgage obligations
13

 

 
110

 
1

 
123

 
1

Total
$
8,676

 
$
53

 
$
4,894

 
$
42

 
$
13,570

 
$
95



State Street Corporation | 63


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table presents the amortized cost and the fair value of contractual maturities of debt investment securities as of March 31, 2020. 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 March 31, 2020
(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
$
1,060

 
$
1,075

 
$
1,873

 
$
1,907

 
$
2,050

 
$
2,168

 
$

 
$

 
$
4,983

 
$
5,150

Mortgage-backed securities
111

 
116

 
882

 
900

 
2,825

 
2,831

 
14,024

 
14,517

 
17,842

 
18,364

Total U.S. Treasury and federal agencies
1,171

 
1,191

 
2,755

 
2,807

 
4,875

 
4,999

 
14,024

 
14,517

 
22,825

 
23,514

Asset-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Student loans
57

 
57

 
217

 
216

 
17

 
16

 
175

 
165

 
466

 
454

Credit cards

 

 

 

 
90

 
85

 

 

 
90

 
85

Collateralized loan obligations

 

 
923

 
888

 
891

 
843

 
117

 
110

 
1,931

 
1,841

Total asset-backed securities
57

 
57

 
1,140

 
1,104

 
998

 
944

 
292

 
275

 
2,487

 
2,380

Non-U.S. debt securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Mortgage-backed securities
303

 
301

 
548

 
541

 
143

 
141

 
716

 
709

 
1,710

 
1,692

Asset-backed securities
292

 
280

 
913

 
897

 
362

 
349

 
340

 
329

 
1,907

 
1,855

Government securities
4,920

 
4,927

 
7,270

 
7,375

 
402

 
406

 
360

 
347

 
12,952

 
13,055

Other
699

 
699

 
6,692

 
6,712

 
1,297

 
1,290

 
73

 
73

 
8,761

 
8,774

Total non-U.S. debt securities
6,214

 
6,207

 
15,423

 
15,525

 
2,204

 
2,186

 
1,489

 
1,458

 
25,330

 
25,376

State and political subdivisions
232

 
232

 
648

 
648

 
531

 
559

 
313

 
326

 
1,724

 
1,765

Collateralized mortgage obligations

 

 

 

 

 

 
96

 
96

 
96

 
96

Other U.S. debt securities
793

 
790

 
1,847

 
1,826

 
97

 
96

 

 

 
2,737

 
2,712

Total
$
8,467

 
$
8,477

 
$
21,813

 
$
21,910

 
$
8,705

 
$
8,784

 
$
16,214

 
$
16,672

 
$
55,199

 
$
55,843

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agencies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct obligations
3,609

 
3,633

 
5,628

 
5,775

 
5

 
5

 
26

 
26

 
$
9,268

 
$
9,439

Mortgage-backed securities
6

 
6

 
438

 
451

 
3,098

 
3,238

 
23,071

 
23,881

 
26,613

 
27,576

Total U.S. Treasury and federal agencies
3,615


3,639


6,066


6,226


3,103


3,243


23,097


23,907


35,881


37,015

Asset-backed securities:


 
 


 
 



 
 



 
 
 


 
 
Student loans
105

 
96

 
201

 
196

 
516

 
494

 
3,233

 
3,122

 
4,055

 
3,908

Total asset-backed securities
105


96


201


196


516


494


3,233


3,122


4,055


3,908

Non-U.S. debt securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Mortgage-backed securities
11

 
11

 
26

 
26

 
4

 
3

 
294

 
337

 
335

 
377

Government securities
279

 
280

 

 

 

 

 

 

 
279

 
280

Total non-U.S. debt securities
290


291


26


26


4


3


294


337


614


657

Collateralized mortgage obligations
2

 
2

 
279

 
283

 
13

 
12

 
306

 
324

 
600

 
621

Total
4,012


4,028


6,572


6,731


3,636


3,752


26,930


27,690


41,150


42,201

Held-to-maturity under money market mutual fund liquidity facility
26,812

 
26,808

 

 

 

 

 

 

 
26,812

 
26,808

Total held-to-maturity securities
$
30,824

 
$
30,836

 
$
6,572

 
$
6,731

 
$
3,636

 
$
3,752

 
$
26,930

 
$
27,690

 
$
67,962

 
$
69,009

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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 | 64


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Allowance for Credit Losses
We conduct periodic reviews of individual securities to assess whether an allowance for credit losses is required. 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. Refer to note 5 for additional information. 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.
For additional information about the review of securities under previous other-than-temporary impairment guidance, refer to pages 140 to 141 in Note 3 to the consolidated financial statements included under Item 8. Financial Statements and Supplementary Data, in our 2019 Form 10-K.
We recorded an allowance for credit losses of approximately $4 million on our HTM securities under the new CECL guidance as of March 31, 2020. We recorded approximately $1 million of other-than-temporary-impairment (OTTI) in the first quarter of 2019, which resulted from adverse changes in the timing of expected future cash flows from non-U.S. mortgage- and asset backed securities.
Our review of impaired AFS investment securities 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.
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.
Debt securities that are not deemed to be credit-impaired are subject to additional management analysis to assess whether management intends to sell, or, more likely than not, would be required to sell, the security before the expected recovery of its amortized cost basis.
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 G7 sovereigns), the bank considers 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, even if the U.S. government were to technically default. Therefore, for those securities, the bank does not record expected credit losses.
Please refer to Note 5 for additional discussion of the credit quality indicators and the factors utilized when assessing the HTM and AFS investment securities for impairment.
After a review of the investment portfolio, taking into consideration 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 considers the aggregate decline in fair value of the investment securities portfolio and the resulting gross pre-tax unrealized losses of $496 million related to 1,024 securities as of March 31, 2020 to not be the result of any material changes in the credit characteristics of the securities.
Note 4.    Loans
We segregate our loans into two segments: commercial and financial loans and commercial real estate loans. We further classify commercial and financial loans as loans to investment funds, senior secured bank loans (otherwise known as leveraged loans), loans to municipalities and other. These classifications reflect their risk characteristics, their initial measurement attributes and the methods we use to monitor and assess credit risk. For additional information on our loans, including our internal risk-rating system used to assess our risk of credit loss for each loan, refer to Note 5 to the consolidated financial statements in this Form 10-Q and for prior periods refer

State Street Corporation | 65


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

to pages 141 to 143 in Note 4 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
The following table presents our recorded investment in loans, by segment, as of the dates indicated:
(In millions)
March 31, 2020
 
December 31, 2019
Domestic(1):
 
 
 
Commercial and financial:
 
 
 
Loans to investment funds
$
17,077

 
$
14,546

Senior secured bank loans
3,194

 
3,342

Loans to municipalities
850

 
848

Other
24

 
26

Commercial real estate
1,815

 
1,766

Total domestic
22,960

 
20,528

Foreign(1):
 
 
 
Commercial and financial:
 
 
 
Loans to investment funds
8,181

 
4,662

Senior secured bank loans
1,211

 
1,119

Other
27

 

Total foreign
9,419

 
5,781

Total loans(2)
32,379

 
26,309

Allowance for loan losses
(97
)
 
(74
)
Loans, net of allowance
$
32,282

 
$
26,235

 
 
 
 
(1) Domestic and foreign categorization is based on the borrower’s country of domicile.
(2) Loans to investment funds Include $8,685 million and $3,256 million of overdrafts as of March 31, 2020 and December 31, 2019, respectively.
The commercial and financial segment is composed primarily of floating-rate loans to mutual fund and private equity fund clients, purchased senior secured bank loans and loans to municipalities. Investment fund lending is composed of revolving credit lines providing liquidity and leverage to mutual fund and private equity fund clients.
Certain loans are pledged as collateral for access to the Federal Reserve's discount window. As of March 31, 2020 and December 31, 2019, the loans pledged as collateral totaled $8.07 billion and $6.75 billion, respectively.
As of March 31, 2020 and December 31, 2019, we had no loans on non-accrual status. As of March 31, 2020, we had one loan with interest past due 30 days or more. As of December 31, 2019, we had no loans 30 days or more contractually past due.
In certain circumstances, we restructure troubled loans by granting concessions to borrowers experiencing financial difficulty. Once restructured, the loans are generally considered impaired until their maturity, regardless of whether the borrowers perform under the modified terms of the loans. There were no loans modified in troubled debt restructurings as of both March 31, 2020 and December 31, 2019.
We review loans for indicators of impairment. Loans where indicators exist are evaluated individually
 
for impairment at least quarterly. For those loans where no such indicators are identified, the loans are collectively evaluated for impairment. As of March 31, 2020, we had two loans for $35 million in the commercial and financial segment that were individually evaluated for impairment and deemed to be impaired. We recorded specific reserves of $2 million on these loans. As of December 31, 2019, we had one loan for $25 million in the commercial and financial segment that was individually evaluated for impairment and deemed to be impaired. We recorded a specific reserve of $1 million on that loan.
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 estimated expected losses in the loan portfolio.
Note 5.    Allowance for Credit Losses
We recognize an allowance for credit losses in accordance with ASC 326 for financial assets held at amortized cost, AFS securities and off-balance sheet commitments. Further discussion of our adoption of ASC 326 on January 1, 2020, including the impact on our consolidated financial statements, is provided in Note 1.
When the allowance is recorded, a provision for credit losses expense is recognized in net income. The allowance for credit losses for financial assets 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.
We have elected to not record an allowance on accrued interest for HTM and AFS 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.
The allowance for credit losses may be determined using various methods, including discounted cash flow methods, loss-rate methods, probability-of-default methods, or other 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. We estimate our expected credit losses using the probability-of-default method for the majority of our financial assets and the discounted cash flow method for our structured products portfolio which are

State Street Corporation | 66


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

included in investment securities held-to-maturity on the statement of condition.
We measure expected credit losses of financial assets on a collective (pool) basis when similar risk characteristic 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 based on net realizable value, that is, the difference between the discounted value of the expected future cash flows, utilizing the effective interest rate, and the amortized cost basis of the asset. When the asset is collateral dependent, that is, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are measured as the difference between the amortized cost basis of the asset and 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.
Loans
We segregate our portfolio of loans held for investment into two portfolio segments, the commercial and financing and commercial real estate loan portfolio segment. These two segments are further disaggregated into loan classes, the level at which we monitor and assess credit risk based on risk characteristics.
We further classify commercial and financing loans as loans to investment funds, senior secured bank loans also referred to as leveraged loans, loans to municipalities, and other. These classifications reflect their risk characteristics, their initial measurement attributes and the methods we use to monitor and assess credit risk. Please refer to Note 4 for additional discussion of the loan portfolio.
 
Securities
HTM and AFS investment securities are assessed for credit loss based on the security type discussed in Note 3. We monitor the credit quality of the HTM and AFS investment securities through the use of credit ratings on a quarterly basis. As of March 31, 2020, 99% of our HTM and AFS investment portfolio is considered investment grade.
Other Assets
The remainder of our financial assets held at amortized cost are disaggregated based on product type. We assess credit risk based on the entire balance within fees receivable.
Securities purchased under a resale agreement and securities-financing within our principal business utilized the collateral maintenance provisions included within ASU 2016-13, Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments. An allowance for credit losses is recognized for any remaining exposure based on counterparty type.
Off-Balance Sheet Credit Exposure
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.
Credit Quality
Credit quality for financial assets held at amortized cost are continuously monitored by management and is reflected within the allowance for credit losses. The allowance for credit losses as reported in our consolidated statement of condition is adjusted by provision for credit losses, which is reported in earnings, and reduced by the charge-off of principal amounts, net of recoveries.
We use an internal risk-rating system to assess our risk of credit loss for each financial asset. The 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.

State Street Corporation | 67


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

When computing allowance levels, credit loss assumptions are estimated using a model that categorizes 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 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 at least annually, by evaluating various attributes in order to enable the earliest possible 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 financial asset held at amortized cost, 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 regularly reviews financial assets in the portfolio to assess credit quality indicators and to determine appropriate loans classification and grading in accordance with applicable bank regulations. Our internal risk rating methodology assigns risk ratings ranging from Investment Grade, Speculative, Special Mention, Substandard, Doubtful and Loss.
Investment Grade. Assets consisting of counterparties with strong credit quality and low expected credit risk and probability of default. Ratings apply to counterparties with a strong capacity to support the timely repayment of any financial commitment. Approximately 83% of our loans were rated as investment grade as of March 31, 2020 with external credit ratings, or equivalent, of "BBB-" or better.
Speculative. Assets consisting 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. Assets rated as
 
speculative, which is approximately 17% of our loans as of March 31, 2020, primarily comprises our senior secured loans. Approximately 84% of those senior secured loans have an external credit rating, or equivalent, of "BB" or "B" as of March 31, 2020.
Special Mention. Assets consisting of counterparties with potential weaknesses that, if uncorrected, may result in deterioration of repayment prospects.
Substandard. Assets consisting of counterparties with well-defined weakness that jeopardizes repayment with the possibility we will sustain some loss.
Doubtful. Assets consisting of counterparties with well-defined weakness which make collection or liquidation in full highly questionable and improbable.
Loss. Assets which are uncollectible or have little value.
The following tables present our recorded investment in each class of loans by credit quality indicator as of the dates indicated:
March 31, 2020
Commercial and Financial
 
Commercial Real Estate
 
Total Loans
(In millions)
Investment grade
$
25,075

 
$
1,815

 
$
26,890

Speculative
5,413

 

 
5,413

Special mention(1)
64

 

 
64

Substandard(2)
12

 

 
12

Total(3)
$
30,564

 
$
1,815

 
$
32,379

December 31, 2019
Commercial and Financial
 
Commercial Real Estate
 
Total Loans 
(In millions)
Investment grade
$
19,501

 
$
1,766

 
$
21,267

Speculative
5,008

 

 
5,008

Special mention
25

 

 
25

Substandard
9

 

 
9

Total(3)
$
24,543

 
$
1,766

 
$
26,309

 
 
 
 
(1) Includes approximately $25 million of impaired loans. Please refer to Note 4 for additional discussion of our impaired loans.
(2) Includes approximately $10 million of impaired loans. Please refer to Note 4 for additional discussion of our impaired loans.
(3) Loans to investment funds Include $8,685 million and $3,256 million of overdrafts as of March 31, 2020 and December 31, 2019, respectively.
The following table presents the amortized cost basis, by year of origination and credit quality indicator as of March 31, 2020. 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.

State Street Corporation | 68


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(In millions)
2020

2019

2018

2017

2016

2015

Prior

Revolving Loans

Total(1)(2)
Domestic loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and financial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk Rating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade
$
4,511

 
$
438

 
$
5

 
$
120

 
$
200

 
$

 
$

 
$
12,273

 
$
17,547

Speculative
340

 
1,024

 
976

 
802

 
137

 

 

 
245

 
3,524

Special mention

 
10

 
29

 
25

 

 

 

 

 
64

Substandard

 
10

 

 

 

 

 

 

 
10

Total commercial and financing
$
4,851

 
$
1,482

 
$
1,010

 
$
947

 
$
337

 
$

 
$

 
$
12,518

 
$
21,145

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk Rating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade
$
49

 
$
549

 
$
711

 
$
280

 
$
197

 
$
29

 
$

 
$

 
$
1,815

Total commercial real estate
$
49

 
$
549

 
$
711

 
$
280

 
$
197

 
$
29

 
$

 
$

 
$
1,815

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S. loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and financial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk Rating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade
$
3,642

 
$

 
$

 
$

 
$

 
$

 
$

 
$
3,886

 
$
7,528

Speculative
596

 
372

 
408

 
184

 
24

 

 
70

 
235

 
1,889

Substandard

 

 
2

 

 

 

 

 

 
2

Total commercial and financing
$
4,238

 
$
372

 
$
410

 
$
184

 
$
24

 
$

 
$
70

 
$
4,121

 
$
9,419

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
$
9,138

 
$
2,403

 
$
2,131

 
$
1,411

 
$
558

 
$
29

 
$
70

 
$
16,639

 
$
32,379

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Off-balance sheet commitments and guarantees:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unfunded credit facilities
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$
30,971

 
$
30,971

Indemnified securities financing
376,975

 

 

 

 

 

 

 

 
376,975

Standby letters of credit

 

 

 

 

 

 

 
3,273

 
3,273

Total off-balance sheet commitments and guarantees
$
376,975

 
$

 
$

 
$

 
$

 
$

 
$

 
$
34,244

 
$
411,219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total financing receivables and off-balance sheet commitments and guarantees
$
386,113

 
$
2,403

 
$
2,131

 
$
1,411

 
$
558

 
$
29

 
$
70

 
$
50,883

 
$
443,598

 
 
(1) Any reserve associated with accrued interest is not material.
(2) As of March 31, 2020, accrued interest receivable of $76 million included in the amortized cost basis of loans has been excluded from the amortized cost basis within this table.
The following table presents the activity in the allowance for credit losses by portfolio and class for the periods indicated:
 
Three Months Ended March 31, 2020
 
Commercial and Financial
 
 
 
 
 
 
 
 
 
(In millions)
Senior Secured Bank Loans
 
Other Loans
 
Commercial Real Estate
 
Held-to-Maturity Securities
 
Off-Balance Sheet Commitments
 
All Other
 
Total Credit Reserve
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
61

 
$
10

 
$
2

 
$

 
$
19

 
$
1

 
$
93

Charge-offs
(5
)
 

 

 

 

 

 
(5
)
Provision
27

 

 
2

 
4

 
3

 

 
36

Ending balance
$
83

 
$
10

 
$
4

 
$
4

 
$
22

 
$
1

 
$
124


State Street Corporation | 69


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Allowance for Loan Losses under Incurred Loss Methodology for the period ended March 31, 2019
The following table presents activity in the allowance for loan losses as of March 31, 2019 under the incurred loss methodology:
(In millions)
 
Three months ended March 31, 2019
Allowance for loan losses:
 
 
Beginning balance
 
$
67

Provision for credit losses(1)
 
4

Other(2)
 
(1
)
Ending balance
 
$
70

 
 
 
 
(1) The provisions for credit losses were primarily attributable to exposure to purchased senior secured loans to non-investment grade loans
(2) Consists primarily of FX translation
Loans are reviewed on a regular basis, and any provisions for loan 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 estimated incurred losses in the loan and lease portfolio.
Note 6.    Goodwill and Other Intangible Assets
The following table presents changes in the carrying amount of goodwill during the periods indicated:
(In millions)
Investment
Servicing(1)
 
Investment
Management
 
Total
Goodwill:
 
 
 
 
 
Ending balance December 31, 2018
$
7,180

 
$
266

 
$
7,446

Acquisitions
122

 

 
122

Foreign currency translation
(13
)
 
1

 
(12
)
Ending balance December 31, 2019
$
7,289

 
$
267

 
$
7,556

Foreign currency translation
(47
)
 
(3
)
 
(50
)
Ending balance March 31, 2020
$
7,242

 
$
264

 
$
7,506

 
 
(1) Investment Servicing includes our acquisition of CRD.
The following table presents changes in the net carrying amount of other intangible assets during the periods indicated:
(In millions)
Investment
Servicing(1)
 
Investment
Management
 
Total
Other intangible assets:
 
 
 
 
 
Ending balance December 31, 2018
$
2,218

 
$
151

 
$
2,369

Acquisitions
(93
)
 

 
(93
)
Amortization
(207
)
 
(29
)
 
(236
)
Foreign currency translation
(10
)
 

 
(10
)
Ending balance December 31, 2019
$
1,908

 
$
122

 
$
2,030

Amortization
(51
)
 
(7
)
 
(58
)
Foreign currency translation
(9
)
 

 
(9
)
Ending balance March 31, 2020
$
1,848

 
$
115

 
$
1,963

 
 
(1) Investment Servicing includes our acquisition of CRD.
 
The following table presents the gross carrying amount, accumulated amortization and net carrying amount of other intangible assets by type as of the dates indicated:
March 31, 2020
Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount
(In millions)


Other intangible assets:
 
 
 
 
 
Client relationships
$
2,636

 
$
(1,294
)
 
$
1,342

Technology
403

 
(96
)
 
307

Core deposits
669

 
(388
)
 
281

Other
98

 
(65
)
 
33

Total
$
3,806

 
$
(1,843
)
 
$
1,963

 
 
 
 
 
 
December 31, 2019
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
(In millions)
 
 
Other intangible assets:
 
 
 
 
 
Client relationships
$
3,104

 
$
(1,718
)
 
$
1,386

Technology
403

 
(87
)
 
316

Core deposits
673

 
(381
)
 
292

Other
100

 
(64
)
 
36

Total
$
4,280

 
$
(2,250
)
 
$
2,030


Note 7.    Other Assets
The following table presents the components of other assets as of the dates indicated:
(In millions)
March 31, 2020
 
December 31, 2019
Securities borrowed(1)
$
12,585

 
$
18,524

Derivative instruments, net
9,713

 
4,753

Bank-owned life insurance
3,418

 
3,395

Investments in joint ventures and other unconsolidated entities
2,837

 
2,899

Collateral, net
2,729

 
874

Receivable for securities settlement
1,951

 
336

Right-of-use assets
815

 
858

Accounts receivable
706

 
432

Prepaid expenses
452

 
395

Deferred tax assets, net of valuation allowance(2)
206

 
216

Income taxes receivable
136

 
309

Deposits with clearing organizations
58

 
58

Other(3)
1,294

 
962

Total
$
36,900

 
$
34,011

 
 
(1) Refer to Note 9, for further information on the impact of collateral on our financial statement presentation of securities borrowing and securities lending transactions.
(2) Deferred tax assets and liabilities recorded in our consolidated statement of condition are netted within the same tax jurisdiction.
(3) Consists primarily of advances for $1.07 billion and $0.67 billion as of March 31, 2020 and December 31, 2019, respectively.
Note 8.    Derivative Financial Instruments
We use derivative financial instruments to support our clients' needs and to manage our interest rate and currency 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;

State Street Corporation | 70


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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. For additional information on our derivative financial instruments, including derivatives not designated as hedging instruments, refer to pages 147 to 148 in Note 10 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
Derivatives Designated as Hedging Instruments
For additional information on our derivatives designated as hedging instruments, including our risk management objectives and hedging documentation methodologies, refer to page 148 in Note 10 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
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, AFS securities, and foreign currency investment securities. We use interest rate or FX contracts in this manner to manage our exposure to changes in the fair value of hedged items caused by changes in interest rates or FX rates.
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, all remaining adjustments to the carrying amount of the hedged item shall be 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 or 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 LIBOR indexed floating-rate loans. The interest rate swaps synthetically convert the loan interest receipts from a variable-rate to a fixed-rate, thereby mitigating the risk attributable to changes in the LIBOR benchmark rate.
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. As of March 31, 2020, the maximum maturity date of the underlying loans is approximately 4 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 other comprehensive income (OCI).
The following table presents the aggregate contractual, or notional, amounts of derivative financial instruments entered into in connection with our trading and asset-and-liability management activities as of the dates indicated:
(In millions)
March 31, 2020
 
December 31, 2019
Derivatives not designated as hedging instruments:
 
 
 
Interest-rate contracts:
 
 
 
Futures
$
890

 
$
4,368

Foreign exchange contracts:
 
 
 
Forward, swap and spot
2,733,650

 
2,378,808

Options purchased
1,718

 
1,581

Options written
1,464

 
1,110

Futures
1,192

 
1,040

Other:
 
 
 
Stable value contracts(1)
28,259

 
26,895

Deferred value awards(2)
473

 
389

Derivatives designated as hedging instruments:
 
 
 
Interest-rate contracts:
 
 
 
Swap agreements
15,932

 
15,196

Foreign exchange contracts:
 
 
 
Forward and swap
5,476

 
3,176




(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 pages 147 to 148 in Note 10 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.

State Street Corporation | 71


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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.
The following tables present 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. The impact of master netting agreements is provided in Note 9.
 
Fair Value
 
Derivative Assets(1)
 
Derivative Liabilities(2)
(In millions)
March 31, 2020
 
December 31, 2019
 
March 31, 2020
 
December 31, 2019
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts
$
30,291

 
$
15,140

 
$
31,471

 
$
15,054

Other derivative contracts

 

 
188

 
182

Total
$
30,291

 
$
15,140

 
$
31,659

 
$
15,236

 
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts
$
96

 
$

 
$
80

 
$
96

Interest-rate contracts
54

 
8

 
65

 
49

Total
$
150

 
$
8

 
$
145

 
$
145

 
 
(1) Derivative assets are included within other assets in our consolidated statement of condition.
(2) Derivative liabilities are included within accrued expenses and other liabilities in our consolidated statement of condition.
The following tables present the impact of our use of derivative financial instruments on our consolidated statement of income for the periods indicated:
 
Location of Gain (Loss) on
Derivative in Consolidated
Statement of Income
Amount of Gain (Loss) on Derivative Recognized
in Consolidated Statement of Income
 
 
Three Months Ended March 31,
(In millions)
 
2020
 
2019
Derivatives not designated as hedging instruments:
 
 
 
 
Foreign exchange contracts
Foreign exchange trading services revenue
$
333

 
$
160

Foreign exchange contracts
Interest expense
2

 
(39
)
Interest rate contracts
Foreign exchange trading services revenue
3

 
(1
)
Other derivative contracts
Compensation and employee benefits
(67
)
 
(74
)
Total
 
$
271

 
$
46


The following table shows 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:
 
March 31, 2020
 
Hedged Items Currently Designated
 
Hedged Items No Longer Designated(1)
(In millions)
Carrying Amount of Assets and Liabilities
 
Cumulative Hedge Accounting Basis Adjustments
 
Carrying Amount of Assets and Liabilities
 
Cumulative Hedge Accounting Basis Adjustments
Long-term debt
$
10,513

 
$
711

 
$
1,199

 
$
(5
)
Available-for-sale securities
926

 
59

 

 

Total
$
11,439

 
$
770

 
$
1,199

 
$
(5
)
 
 
 
 
 
 
 
 
 
December 31, 2019
 
Hedged Items Currently Designated
 
Hedged Items No Longer Designated(1)
(In millions)
Carrying Amount of Assets and Liabilities
 
Cumulative Hedge Accounting Basis Adjustments
 
Carrying Amount of Assets and Liabilities
 
Cumulative Hedge Accounting Basis Adjustments
Long-term debt
$
9,769

 
$
164

 
$
1,199

 
$
(8
)
Available-for-sale securities
940

 
49

 

 

Total
$
10,709

 
$
213

 
$
1,199

 
$
(8
)
 
 
 
 
 
(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.
As of March 31, 2020 and December 31, 2019, the total notional amount of the interest rate swaps of fair value hedges was $10.93 billion and $10.20 billion, respectively.

State Street Corporation | 72


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following tables present the impact of our use of derivative financial instruments on our consolidated statement of income for the periods indicated:
 
 
 
Three Months Ended March 31,
 
 
 
 
 
Three Months Ended March 31,
 
 
 
2020
 
2019
 
 
 
 
 
2020
 
2019
(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
 
$
(11
)
 
$
106

 
Available-for-sale securities(1)
 
Net interest income
 
$
10

 
$
(102
)
Interest rate contracts
Net interest income
 
547

 
(3
)
 
Long-term debt
 
Net interest income
 
(535
)
 
4

Total
 
 
$
536

 
$
103

 
 
 
 
 
$
(525
)
 
$
(98
)
 
 
 
 
 
(1) In the first quarter of 2020, $7 million of net unrealized losses on AFS investment securities designated in fair value hedges was recognized in OCI compared to $2 million of net unrealized losses in the same period in 2019.
 
Three Months Ended March 31,
 
 
 
Three Months Ended March 31,
 
2020
 
2019
 
 
 
2020
 
2019
(In millions)
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative
 
Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
 
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives designated as cash flow hedges:
 
 
 
 
 
 
 
 
 
Interest rate contracts
$
158

 
$
10

 
Net interest income
 
$

 
$
(2
)
Foreign exchange contracts
10

 
27

 
Net interest income
 
7

 
7

Total derivatives designated as cash flow hedges
$
168

 
$
37

 
 
 
$
7

 
$
5

 
 
 
 
 
 
 
 
 
 
Derivatives designated as net investment hedges:
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
108

 
$
20

 
Gains (Losses) related to investment securities, net
 
$

 
$

Total derivatives designated as net investment hedges
108

 
20

 
 
 

 

Total
$
276

 
$
57

 
 
 
$
7

 
$
5


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 9.
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 derivatives instruments in net liability positions. The aggregate fair value of all derivatives with credit contingent features and in a liability position as of March 31, 2020 totaled approximately $5.34 billion, against which we provided $3.80 billion of collateral in the normal course of business. If our credit related contingent features underlying these agreements were triggered as of March 31, 2020, the maximum additional collateral we would be required to post to our counterparties is approximately $1.54 billion.

State Street Corporation | 73


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 9. Offsetting Arrangements
For additional information on our offsetting arrangements, refer to page 152 in Note 11 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
As of March 31, 2020 and December 31, 2019, the value of securities received as collateral from third parties where we are permitted to transfer or re-pledge the securities totaled $4.50 billion and $10.09 billion, respectively, and the fair value of the portion that had been transferred or re-pledged as of the same dates was $2.49 billion and $5.72 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:
March 31, 2020
 
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
$
30,387

 
$
(18,215
)
 
$
12,172

 
$

 
$
12,172

Interest rate contracts(6)
54

 
(17
)
 
37

 

 
37

Cash collateral and securities netting
NA

 
(2,496
)
 
(2,496
)
 
(1,416
)
 
(3,912
)
Total derivatives
30,441

 
(20,728
)
 
9,713

 
(1,416
)
 
8,297

Other financial instruments:
 
 
 
 
 
 
 
 
 
Resale agreements and securities borrowing(7)(8)
181,315

 
(167,693
)
 
13,622

 
(13,285
)
 
337

Total derivatives and other financial instruments
$
211,756

 
$
(188,421
)
 
$
23,335

 
$
(14,701
)
 
$
8,634


Assets:
December 31, 2019
 
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
$
15,140

 
$
(8,081
)
 
$
7,059

 
$

 
$
7,059

Interest rate contracts(6)
8

 
(4
)
 
4

 

 
4

Cash collateral and securities netting
NA

 
(2,310
)
 
(2,310
)
 
(685
)
 
(2,995
)
Total derivatives
15,148

 
(10,395
)
 
4,753

 
(685
)
 
4,068

Other financial instruments:
 
 
 
 
 
 
 
 
 
Resale agreements and securities borrowing(7)(8)
179,989

 
(159,978
)
 
20,011

 
(19,572
)
 
439

Total derivatives and other financial instruments
$
195,137

 
$
(170,373
)
 
$
24,764

 
$
(20,257
)
 
$
4,507

 
 
 
 
 
(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 $13.62 billion as of March 31, 2020 were $1.04 billion of resale agreements and $12.58 billion of collateral provided related to securities borrowing. Included in the $20.01 billion as of December 31, 2019 were $1.49 billion of resale agreements and $18.52 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 10 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:
March 31, 2020
 
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
$
31,551

 
$
(18,215
)
 
$
13,336

 
$

 
$
13,336

Interest rate contracts(6)
65

 
(17
)
 
48

 

 
48

Other derivative contracts
188

 

 
188

 

 
188

Cash collateral and securities netting
NA

 
(5,786
)
 
(5,786
)
 
(1,101
)
 
(6,887
)
Total derivatives
31,804

 
(24,018
)
 
7,786

 
(1,101
)
 
6,685

Other financial instruments:
 
 
 
 
 
 
 
 
 
Repurchase agreements and securities lending(7)(8)
181,125

 
(167,693
)
 
13,432

 
(11,560
)
 
1,872

Total derivatives and other financial instruments
$
212,929

 
$
(191,711
)
 
$
21,218

 
$
(12,661
)
 
$
8,557



State Street Corporation | 74


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Liabilities:
December 31, 2019
 
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
$
15,150

 
$
(8,081
)
 
$
7,069

 
$

 
$
7,069

Interest rate contracts(6)
49

 
(4
)
 
45

 

 
45

Other derivative contracts
182

 

 
182

 

 
182

Cash collateral and securities netting
NA

 
(837
)
 
(837
)
 
(557
)
 
(1,394
)
Total derivatives
15,381

 
(8,922
)
 
6,459

 
(557
)
 
5,902

Other financial instruments:
 
 
 
 
 
 
 
 
 
Repurchase agreements and securities lending(7)(8)
171,853

 
(159,977
)
 
11,876

 
(10,793
)
 
1,083

Total derivatives and other financial instruments
$
187,234

 
$
(168,899
)
 
$
18,335

 
$
(11,350
)
 
$
6,985

 
 
 
 
 
(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 $13.43 billion as of March 31, 2020 were $5.37 billion of repurchase agreements and $8.06 billion of collateral received related to securities lending transactions. Included in the $11.88 billion as of December 31, 2019 were $1.10 billion of repurchase agreements and $10.77 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 10 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 March 31, 2020
 
As of December 31, 2019
(In millions)
Overnight and Continuous
 
Up to 30 Days
 
Greater than 90 Days
 
Total
 
Overnight and Continuous
 
Up to 30 Days
 
Greater than 90 Days
 
Total
Repurchase agreements:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency securities
$
170,595

 
$

 
$

 
$
170,595

 
$
156,465

 
$

 
$

 
$
156,465

Total
170,595

 

 

 
170,595

 
156,465

 

 

 
156,465

Securities lending transactions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
US Treasury and agency securities
418

 

 

 
418

 
15

 

 

 
15

Corporate debt securities
167

 

 

 
167

 
354

 

 

 
354

Equity securities
5,292

 

 
153

 
5,445

 
7,389

 

 
130

 
7,519

Other(1)
4,500

 

 

 
4,500

 
7,500

 

 

 
7,500

Total
10,377

 

 
153

 
10,530

 
15,258

 

 
130

 
15,388

Gross amount of recognized liabilities for repurchase agreements and securities lending
$
180,972

 
$

 
$
153

 
$
181,125

 
$
171,723

 
$

 
$
130

 
$
171,853

 
 
 
 
 
(1) Represents a security interest in underlying client assets related to our enhanced custody business, which assets clients have allowed us to transfer and re-pledge.

State Street Corporation | 75


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 10.    Commitments and Guarantees
For additional information on our commitments and guarantees, refer to page 155 in Note 12 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
The following table presents the aggregate gross contractual amounts of our off-balance sheet commitments and off-balance sheet guarantees as of the dates indicated:
(In millions)
March 31, 2020
 
December 31, 2019
Commitments:
 
 
 
Unfunded credit facilities(1)
$
30,971

 
$
29,697

Guarantees(2):
 
 
 
Indemnified securities financing
$
376,975

 
$
367,901

Standby letters of credit
3,273

 
3,324

 
 
(1) As of March 31, 2020, approximately 75% of our unfunded commitments to extend credit expire within one year.
(2) 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.
Indemnified Securities Financing
For additional information on our indemnified securities financing, refer to page 155 in Note 12 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
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)
March 31, 2020
 
December 31, 2019
Fair value of indemnified securities financing
$
376,975

 
$
367,901

Fair value of cash and securities held by us, as agent, as collateral for indemnified securities financing
397,797

 
385,428

Fair value of collateral for indemnified securities financing invested in indemnified repurchase agreements
46,030

 
45,658

Fair value of cash and securities held by us or our agents as collateral for investments in indemnified repurchase agreements
49,255

 
48,887


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 March 31, 2020 and December 31, 2019, we had approximately $12.58 billion and $18.52 billion, respectively, of collateral provided and approximately $8.06 billion and $10.77 billion, respectively, of collateral received from
 
clients in connection with our participation in principal securities finance transactions.
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 subject securities received under and held on their behalf by State Street. For additional information on our repurchase and reverse repurchase agreements, please refer to Note 9.
Note 11.    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

State Street Corporation | 76


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

timing of discovery and other assessments of facts and the procedural posture of the matter (collectively, "factors influencing reasonable estimates").
As of March 31, 2020, our aggregate accruals for loss contingencies for legal, regulatory and related matters totaled approximately $146 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 March 31, 2020, for those matters for which we have accrued probable loss contingencies (including the Invoicing Matter described below) 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 $50 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 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.
Invoicing Matter
In 2015, we determined that we had incorrectly invoiced clients for certain expenses. We have reimbursed most of our affected customers for those expenses, and we have implemented enhancements to our billing processes. In connection with our enhancements to our billing processes, we continue to review historical billing practices and may from time to time identify additional remediation. In 2017, we identified an additional area of incorrect expense billing associated with mailing services in our retirement services business. We currently expect the cumulative total of our payments to customers for these invoicing errors, including the error in the retirement services business, to be at least $380 million, all of which has been paid or is accrued. However, we may identify additional remediation costs.
In March 2017, a purported class action was commenced against us alleging that our invoicing practices violated duties owed to retirement plan customers under the Employee Retirement Income Security Act. In addition, we have received a purported class action demand letter alleging that our invoicing practices were unfair and deceptive under Massachusetts law. A class of customers, or particular customers, may assert that we have not paid to them all amounts incorrectly invoiced, and may seek double or treble damages under Massachusetts law.
We are also cooperating with investigations by governmental and regulatory authorities on these matters, including the civil and criminal divisions of the DOJ and the DOL, which reviews could result in significant fines or other sanctions, civil and criminal, against us. In June 2019, we reached an agreement with the SEC to settle its claims that we violated the recordkeeping provisions of Section 34(b) of the Investment Company Act of 1940 and caused violations of Section 31(a) of the Investment Company Act and Rules 31a-1(a) and 31a-1(b) thereunder in connection with our overcharges of customers which are registered investment companies. In reaching this settlement, we neither admitted nor denied the claims contained in the SEC’s order, and agreed to pay a civil monetary penalty of $40 million. Also in June 2019, we reached an agreement with the Massachusetts Attorney General’s office to resolve its claims related to this matter. In reaching this settlement, we neither admitted nor denied the claims in the order, and agreed to pay a civil monetary penalty of $5.5 million. The costs associated with these settlements were within our related previously established accruals for loss contingencies.

State Street Corporation | 77


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The SEC and Massachusetts Attorney General’s office settlements both recognize that the payment of $48.8 million in disgorgement and interest is satisfied by our direct reimbursements of our customers.
In January 2020, the DOJ outlined a framework for a possible resolution of their review. We are discussing the terms of a potential settlement of this matter with the DOJ. Separately, we have inquired of the DOL as to the status of their review but have not entered into settlement discussions with the DOL. There can be no assurance that any settlement with the DOJ or DOL will be reached on financial or other terms acceptable to us or at all. The aggregate amount of penalties that may potentially be imposed upon us in connection with the resolution of all outstanding investigations into our historical billing practices is not currently known. We have established a legal accrual with respect to the pending governmental investigations and civil litigation with respect to this matter; however, our ultimate liability with respect to this matter might be significantly in excess of our current accrual. Government authorities have significant discretion in criminal and civil matters as to the fines and other penalties they may seek to impose. Any resolution of the DOJ and DOL claims may involve penalties that could be a significant percentage, or a multiple of, all or a portion of the overcharge. The severity of such fines or penalties could take into account factors such as the amount or duration of our incorrect invoicing and the government’s or regulators’ assessment of the conduct of our employees, as well as prior conduct such as that which resulted in our January 2017 deferred prosecution agreement and settlement of civil claims regarding our indirect FX business.
The outcome of any of these proceedings and, in particular, any criminal sanction could materially adversely affect our results of operations and could have significant additional consequences for our business and reputation.
Federal Reserve/Massachusetts Division of Banks Written Agreement
On June 1, 2015, we entered into a written agreement with the Federal Reserve and the Massachusetts Division of Banks relating to deficiencies identified in our compliance programs with the requirements of the Bank Secrecy Act, Anti-Money Laundering regulations and U.S. economic sanctions regulations promulgated by the Office of Foreign Assets Control. As part of this enforcement action, we have been required to, among other things, implement improvements to our compliance programs. If we fail to comply with the terms of the written agreement, we may become subject to fines and other regulatory sanctions, which may have a material adverse effect on us.
 
Shareholder Litigation
A shareholder of ours has filed a derivative complaint against the Company’s past and present officers and directors to recover alleged losses incurred by the Company relating to the invoicing matter and to the Ohio public retirement plans matter.
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 of approximately $146 million as of March 31, 2020 decreased from $149 million as of December 31, 2019.
We are presently under audit by a number of tax authorities, and the Internal Revenue Service is currently reviewing our U.S. income tax returns for the tax years 2017 and 2018. The earliest tax year open to examination in jurisdictions where we have material operations is 2012. Management believes that we have sufficiently accrued liabilities as of March 31, 2020 for potential tax exposures.

State Street Corporation | 78


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 12.    Variable Interest Entities
For additional information on our variable interest entities (VIEs), refer to pages 158 to 159 in Note 14 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, "Variable Interest Entities", in our 2019 Form 10-K.
Tax Exempt Investment Program
In the normal course of our business, we structure and sell certificated interests in pools of tax exempt investment grade assets, principally to our mutual fund clients. We structure these pools as partnership trusts, and the assets and liabilities of the trusts are recorded in our consolidated statement of condition as AFS investment securities and other short-term borrowings. As of March 31, 2020 and December 31, 2019, we carried AFS investment securities, composed of securities related to state and political subdivisions, with a fair value of $0.93 billion and $0.94 billion, respectively, and other short-term borrowings of $0.82 billion, in both periods, in our consolidated statement of condition in connection with these trusts. The interest income and interest expense generated by the investments and certificated interests, respectively, are recorded as components of NII when earned or incurred.
The trusts had a weighted average life of approximately 2.7 years and 3.0 years as of March 31, 2020 and December 31, 2019, respectively.
Interests in Investment Funds
As of March 31, 2020, the aggregate assets and liabilities of our consolidated sponsored investment funds totaled $16 million and $3 million, respectively. As of December 31, 2019, the aggregate assets and liabilities of our consolidated sponsored investment funds totaled $21 million and $5 million, respectively.
As of March 31, 2020 and December 31, 2019, our maximum total exposure associated with the consolidated sponsored investment funds totaled $13 million and $16 million, respectively, and represented the value of our economic ownership interest in the funds.
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 $20 million as of March 31, 2020 and $21 million as of December 31, 2019, 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.
Note 13.    Shareholders' Equity
Preferred Stock
The following table summarizes selected terms of each of the series of the preferred stock issued and outstanding as of March 31, 2020:
Preferred Stock(2):
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 March 31, 2020
(In millions)
 
Redemption Date(1)
Series D
February 2014
 
30,000,000
 
1/4,000th
 
$
100,000

 
$
25

 
5.90% to but excluding March 15, 2024, then a floating rate equal to the three-month LIBOR plus 3.108%
 
Quarterly
 
$
742

 
March 15, 2024
Series F
May 2015
 
750,000
 
1/100th
 
100,000

 
1,000

 
5.25% to but excluding September 15, 2020, then a floating rate equal to the three-month LIBOR plus 3.597%
 
Semi-annually
 
742

 
September 15, 2020
Series G
April 2016
 
20,000,000
 
1/4,000th
 
100,000

 
25

 
5.35% to but excluding March 15, 2026, then a floating rate equal to the three-month LIBOR plus 3.709%
 
Quarterly
 
493

 
March 15, 2026
Series H
September 2018
 
500,000
 
1/100th
 
100,000

 
1,000

 
5.625% to but excluding December 15, 2023, then a floating rate equal to the three-month LIBOR plus 2.539%
 
Semi-annually
 
494

 
December 15, 2023
 
 
 
 
(1) 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.
(2) 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.

State Street Corporation | 79


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

We redeemed all outstanding Series C non-cumulative perpetual preferred stock as of March 15, 2020 at a redemption price of $500 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends. The difference of $9 million between the redemption value and the net carrying value resulted in an EPS impact of approximately ($0.03) per share in the first quarter of 2020.
The following table presents the dividends declared for each of the series of preferred stock issued and outstanding for the periods indicated:
 
Three Months Ended March 31,
 
2020
 
2019
(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 C
$
1,313

 
$
0.33

 
$
6

 
$
1,313

 
$
0.33

 
$
6

Series D
1,475

 
0.37

 
11

 
1,475

 
0.37

 
11

Series E(1)

 

 

 
1,500

 
0.38

 
11

Series F
2,625

 
26.25

 
20

 
2,625

 
26.25

 
20

Series G
1,338

 
0.33

 
7

 
1,338

 
0.33

 
7

Series H

 

 

 

 

 

Total
 
 
 
 
$
44

 
 
 
 
 
$
55


 
 
 
 
(1) We redeemed all outstanding Series E non-cumulative perpetual preferred stock as of December 15, 2019 at a redemption price of $750 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends.
Common Stock
In June 2019, our Board approved a common stock purchase program authorizing the purchase of up to $2.0 billion of our common stock from July 1, 2019 through June 30, 2020 (the 2019 Program). We repurchased $500 million of our common stock in the first quarter of 2020 under the 2019 Program. On March 16, 2020, we announced that we temporarily suspended our common stock repurchase program, together with the other U.S. based GSIFIs, in light of the COVID-19 pandemic.
In June 2018, our Board approved a common stock purchase program authorizing the purchase of up to $1.2 billion of our common stock through June 30, 2019 (the 2018 Program). We repurchased $300 million of our common stock in the first quarter of 2019 under the 2018 Program.
    The table below presents the activity under our common stock purchase program during the periods indicated:
 
Three Months Ended March 31, 2020
 
Shares Acquired
(In millions)
 
Average Cost per Share
 
Total Acquired
(In millions)
2019 Program
6.5

 
$
77.35

 
$
500

 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
Shares Acquired
(In millions)
 
Average Cost per Share
 
Total Acquired
(In millions)
2018 Program
4.2

 
$
70.93

 
$
300


The table below presents the dividends declared on common stock for the periods indicated:
 
Three Months Ended March 31,
 
2020
 
2019
 
Dividends Declared per Share
 
Total
(In millions)
 
Dividends Declared per Share
 
Total
(In millions)
Common Stock
$
0.52


$
183


$
0.47

 
$
177




State Street Corporation | 80


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Accumulated Other Comprehensive Income (Loss)
The following table presents the after-tax components of AOCI as of the dates indicated:
 
Three Months Ended March 31,
(In millions)
2020
 
2019
Net unrealized (losses) on cash flow hedges
$
47

 
$
(71
)
Net unrealized gains on available-for-sale securities portfolio
556

 
114

Net unrealized gains related to reclassified available-for-sale securities
23

 
58

Net unrealized gains on available-for-sale securities
579

 
172

Net unrealized (losses) on available-for-sale securities designated in fair value hedges
(43
)
 
(56
)
Net unrealized gains on hedges of net investments in non-U.S. subsidiaries
154

 
36

Non-credit impairment on held-to-maturity securities previously identified under ASC 320
(2
)
 
(3
)
Net unrealized (losses) on retirement plans
(175
)
 
(179
)
Foreign currency translation
(1,480
)
 
(1,079
)
Total
$
(920
)
 
$
(1,180
)

The following table presents changes in AOCI by component, net of related taxes, for the periods indicated:
(In millions)
Net Unrealized Gains (Losses) on Cash Flow Hedges
 
Net Unrealized Gains (Losses) on Available-for-Sale Securities
 
Net Unrealized Gains (Losses) on Hedges of Net Investments in Non-U.S. Subsidiaries
 
Non-credit Impairment on Held-to-Maturity Securities
 
Net Unrealized Losses on Retirement Plans
 
Foreign Currency Translation
 
Total
Balance as of December 31, 2019
$
(70
)
 
$
409

 
$
46

 
$
(2
)
 
$
(187
)
 
$
(1,072
)
 
$
(876
)
Other comprehensive income (loss) before reclassifications
125

 
126

 
108

 

 

 
(408
)
 
(49
)
Amounts reclassified into (out of) earnings
(8
)
 
1

 

 

 
12

 

 
5

Other comprehensive income (loss)
117

 
127

 
108

 

 
12

 
(408
)
 
(44
)
Balance as of March 31, 2020
$
47

 
$
536

 
$
154

 
$
(2
)
 
$
(175
)
 
$
(1,480
)
 
$
(920
)

(In millions)
Net Unrealized Gains (Losses) on Cash Flow Hedges
 
Net Unrealized Gains (Losses) on Available-for-Sale Securities
 
Net Unrealized Gains (Losses) on Hedges of Net Investments in Non-U.S. Subsidiaries
 
Other-Than-Temporary Impairment on Held-to-Maturity Securities
 
Net Unrealized Losses on Retirement Plans
 
Foreign Currency Translation
 
Total
Balance as of December 31, 2018
$
(89
)
 
$
(175
)
 
$
16

 
$
(2
)
 
$
(143
)
 
$
(963
)
 
$
(1,356
)
Other comprehensive income (loss) before reclassifications
39

 
270

 
23

 
1

 

 
(49
)
 
284

Reclassification of certain tax effects(1)
(6
)
 
21

 
(3
)
 
(1
)
 
(28
)
 
(67
)
 
(84
)
Amounts reclassified into (out of) earnings
(15
)
 

 

 
(1
)
 
(8
)
 

 
(24
)
Other comprehensive income (loss)
18

 
291

 
20

 
(1
)
 
(36
)
 
(116
)
 
176

Balance as of March 31, 2019
$
(71
)
 
$
116

 
$
36

 
$
(3
)
 
$
(179
)
 
$
(1,079
)
 
$
(1,180
)
 
 
 
 
 

(1) Represents the reclassification from accumulated other comprehensive income into retained earnings as a result of our adoption of ASU 2018-02 - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income in the first quarter of 2019.
The following table presents after-tax reclassifications into earnings for the periods indicated:
 
Three Months Ended March 31,
 
 
 
2020
 
2019
 
 
(In millions)
Amounts Reclassified into
(out of) Earnings
 
Affected Line Item in Consolidated Statement of Income
Available-for-sale securities:
 
 
 
 
 
Net realized gains (losses) from sales of available-for-sale securities, net of related taxes of $1 and zero, respectively
$
1

 
$

 
Net gains (losses) from sales of available-for-sale securities
Held-to-maturity securities:
 
 
 
 
 
Non-credit impairment on held-to-maturity securities previously identified under ASC 320, net of related taxes of zero and zero, respectively

 
(1
)
 
Losses reclassified (from) to other comprehensive income
Cash flow hedges:
 
 
 
 
 
Gain reclassified from accumulated other comprehensive income into Income, net of related taxes of ($3) and ($6)
(8
)
 
(15
)
 
Net interest income reclassified from other comprehensive income
Retirement plans:
 
 
 
 
 
Amortization of actuarial losses, net of related taxes of $4 and ($4), respectively
12

 
(8
)
 
Compensation and employee benefits expenses
Total reclassifications (into) out of Accumulated other comprehensive loss
$
5

 
$
(24
)
 
 


State Street Corporation | 81


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 14.    Regulatory Capital
For additional information on our regulatory capital, including the regulatory capital requirements administered by federal banking agencies, and to which we are subject, refer to page 162 in Note 16 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
As of March 31, 2020, we and State Street Bank exceeded all regulatory capital adequacy requirements to which we were subject. As of March 31, 2020, 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 March 31, 2020 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, calculated under the advanced approaches and standardized approach provisions of the Basel III final rule as of the dates indicated:
 
State Street Corporation
 
State Street Bank
(Dollars in millions)
Basel III Advanced Approaches March 31, 2020
 
Basel III Standardized Approach March 31, 2020
 
Basel III Advanced Approaches December 31, 2019
 
Basel III Standardized Approach December 31, 2019
 
Basel III Advanced Approaches March 31, 2020
 
Basel III Standardized Approach March 31, 2020
 
Basel III Advanced Approaches December 31, 2019
 
Basel III Standardized Approach December 31, 2019
 Common shareholders' equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock and related surplus
$
10,659

 
$
10,659

 
$
10,636

 
$
10,636

 
$
12,893

 
$
12,893

 
$
12,893

 
$
12,893

Retained earnings
22,315

 
22,315

 
21,918

 
21,918

 
13,936

 
13,936

 
13,218

 
13,218

Accumulated other comprehensive income (loss)
(920
)
 
(920
)
 
(870
)
 
(870
)
 
(650
)
 
(650
)
 
(654
)
 
(654
)
Treasury stock, at cost
(10,664
)
 
(10,664
)
 
(10,209
)
 
(10,209
)
 

 

 

 

Total
21,390

 
21,390

 
21,475

 
21,475

 
26,179

 
26,179

 
25,457

 
25,457

Regulatory capital adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill and other intangible assets, net of associated deferred tax liabilities
(8,994
)
 
(8,994
)
 
(9,112
)
 
(9,112
)
 
(8,726
)
 
(8,726
)
 
(8,839
)
 
(8,839
)
Other adjustments(1)
(281
)
 
(281
)
 
(150
)
 
(150
)
 
(111
)
 
(111
)
 
(1
)
 
(1
)
 Common equity tier 1 capital
12,115

 
12,115

 
12,213

 
12,213

 
17,342

 
17,342

 
16,617

 
16,617

Preferred stock
2,471

 
2,471

 
2,962

 
2,962

 

 

 

 

 Tier 1 capital
14,586

 
14,586

 
15,175

 
15,175

 
17,342

 
17,342

 
16,617

 
16,617

Qualifying subordinated long-term debt
1,168

 
1,168

 
1,095

 
1,095

 
1,172

 
1,172

 
1,099

 
1,099

Allowance for credit losses
17

 
123

 
5

 
90

 
18

 
123

 
3

 
90

 Total capital
$
15,771

 
$
15,877

 
$
16,275

 
$
16,360

 
$
18,532

 
$
18,637

 
$
17,719

 
$
17,806

 Risk-weighted assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit risk(2)
$
60,468

 
$
110,913

 
$
54,763

 
$
102,367

 
$
57,169

 
$
107,380

 
$
51,610

 
$
98,979

Operational risk(3)
46,738

 
N/A

 
47,963

 
 N/A

 
43,925

 
N/A

 
44,138

 
NA

Market risk
1,850

 
1,850

 
1,638

 
1,638

 
1,850

 
1,850

 
1,638

 
1,638

Total risk-weighted assets
$
109,056

 
$
112,763

 
$
104,364

 
$
104,005

 
$
102,944

 
$
109,230

 
$
97,386

 
$
100,617

Adjusted quarterly average assets
$
239,861

 
$
239,861

 
$
219,624

 
$
219,624

 
$
236,431

 
$
236,431

 
$
216,397

 
$
216,397

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Ratios:
2020 Minimum Requirements Including Capital Conservation Buffer and G-SIB Surcharge
2019 Minimum Requirements Including Capital Conservation Buffer and G-SIB Surcharge
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
8.0
%
8.5
%
11.1
%
 
10.7
%
 
11.7
%
 
11.7
%
 
16.8
%
 
15.9
%
 
17.1
%
 
16.5
%
Tier 1 capital
9.5

10.0

13.4

 
12.9

 
14.5

 
14.6

 
16.8

 
15.9

 
17.1

 
16.5

Total capital
11.5

12.0

14.5

 
14.1

 
15.6

 
15.7

 
18.0

 
17.1

 
18.2

 
17.7

 
 
(1) Other adjustments within CET1 primarily include the overfunded portion of the firm’s defined benefit pension plan obligation net of associated deferred tax liabilities, disallowed deferred tax assets, and other required credit risk based deductions.
(2) 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.
NA Not applicable

State Street Corporation | 82


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 15.    Net Interest Income
The following table presents the components of interest income and interest expense, and related NII, for the periods indicated:
 
Three Months Ended March 31,
(In millions)
2020
 
2019
Interest income:
 
 
 
Interest-bearing deposits with banks
$
81

 
$
119

Investment securities:
 
 
 
U.S. Treasury and federal agencies
356

 
369

State and political subdivisions
11

 
12

Other investments
117

 
122

Investment securities purchased under money market liquidity facility
8

 

Securities purchased under resale agreements
65

 
98

Loans
184

 
198

Other interest-earning assets
46

 
109

Total interest income
868

 
1,027

Interest expense:
 
 
 
Interest-bearing deposits
68

 
171

Investment securities purchased under money market liquidity facility
6

 

Securities sold under repurchase agreements
2

 
12

Other short-term borrowings
10

 
4

Long-term debt
88

 
106

Other interest-bearing liabilities
30

 
61

Total interest expense
204

 
354

Net interest income
$
664

 
$
673


Note 16.    Expenses
The following table presents the components of other expenses for the periods indicated:
 
Three Months Ended March 31,
(In millions)
2020
 
2019
Professional services
$
81

 
$
80

Sales advertising public relations
18


27

Securities processing
15

 
9

Regulatory fees and assessments
12

 
20

Bank operations
9

 
11

Insurance
5

 
5

Other
90

 
123

Total other expenses
$
230

 
$
275


Acquisition Costs
We recorded approximately $11 million of acquisition costs in the first quarter of 2020 compared to $13 million in the same period in 2019, related to our acquisition of CRD. As we integrate CRD into our business, we expect to incur approximately $200 million of acquisition costs, including merger and integration costs, through 2021.
 
Restructuring and Repositioning Charges
The following table presents aggregate activity for repositioning charges and activity related to previous Beacon restructuring charges for the periods indicated:
(In millions)
Employee
Related Costs
 
Real Estate
Actions
 
Asset and Other Write-offs
 
Total
Accrual Balance at December 31, 2018
$
303

 
$
37

 
$
1

 
$
341

Accruals for Beacon
(4
)
 

 

 
(4
)
Accruals for Repositioning Charges

 

 

 

Payments and Other Adjustments
(53
)
 
(25
)
 

 
(78
)
Accrual balance at March 31, 2019
$
246

 
$
12

 
$
1

 
$
259

Accrual balance at December 31, 2019
$
190

 
$
7

 
$
1

 
$
198

Payments and Other Adjustments
(33
)
 
(1
)
 

 
(34
)
Accrual Balance at March 31, 2020
$
157

 
$
6

 
$
1

 
$
164


Note 17. Earnings Per Common Share
For additional information on our earnings per share calculation methodologies, refer to pages 169 to 170 in Note 23 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
The following table presents the computation of basic and diluted earnings per common share for the periods indicated:
 
Three Months Ended March 31,
(Dollars in millions, except per share amounts)
2020
 
2019
Net income
$
634

 
$
508

Less:
 
 
 
Preferred stock dividends
(53
)
 
(55
)
Dividends and undistributed earnings allocated to participating securities(1)
(1
)
 
(1
)
Net income available to common shareholders
$
580

 
$
452

Average common shares outstanding (In thousands):
 
 
 
Basic average common shares
353,746

 
377,915

Effect of dilutive securities: equity-based awards
4,247

 
3,788

Diluted average common shares
357,993

 
381,703

Anti-dilutive securities(2)
918

 
1,951

Earnings per common share:
 
 
 
Basic
$
1.64

 
$
1.20

Diluted(3)
1.62

 
1.18

 
 

(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 on pages 164 and 165 in Note 18 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
(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.

State Street Corporation | 83


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 18.    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 information about our two lines of business, as well as revenues, expenses and capital allocation methodologies associated with them, refer to pages 170 to 171 in Note 24 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
The following is a summary of our line of business results for the periods indicated. The "Other" columns represent costs incurred that are not allocated to a specific line of business, including certain severance and restructuring costs, acquisition costs and certain provisions for legal contingencies.
 
Three Months Ended March 31,
 
Investment
Servicing
 
Investment
Management
 
Other
 
Total
(Dollars in millions)
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Servicing fees
$
1,287

 
$
1,251

 
$

 
$

 
$

 
$

 
$
1,287

 
$
1,251

Management fees

 

 
449

 
420

 

 

 
449

 
420

Foreign exchange trading services
434

 
246

 
25

 
34

 

 

 
459

 
280

Securities finance
89

 
117

 
3

 
1

 

 

 
92

 
118

Software and processing fees
137

 
180

 
(25
)
 
11

 

 

 
112

 
191

Total fee revenue
1,947

 
1,794

 
452

 
466

 

 

 
2,399

 
2,260

Net interest income
663

 
679

 
1

 
(6
)
 

 

 
664

 
673

Total other income
2

 
(1
)
 

 

 

 

 
2

 
(1
)
Total revenue
2,612

 
2,472

 
453

 
460

 

 

 
3,065

 
2,932

Provision for credit losses
36

 
4

 

 

 

 

 
36

 
4

Total expenses
1,859

 
1,864

 
385

 
406

 
11

 
23

 
2,255

 
2,293

Income before income tax expense
$
717

 
$
604

 
$
68

 
$
54

 
$
(11
)
 
$
(23
)
 
$
774

 
$
635

Pre-tax margin
27
%
 
24
%
 
15
%
 
12
%
 
 
 
 
 
25
%
 
22
%

Note 19.  Revenue from Contracts with Customers
For additional information on our revenue from contracts with customers, including revenues associated with both our Investment Servicing and Investment Management lines of business, refer to pages 172 to 173 in Note 25 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.
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.
 
Three Months Ended March 31, 2020
 
Investment Servicing
 
Investment Management
 
Total
(Dollars in millions)
Topic 606 revenue
 
All other revenue
 
Total
 
Topic 606 revenue
 
All other revenue
 
Total
 
2020
Servicing fees
$
1,287

 
$

 
$
1,287

 
$

 
$

 
$

 
$
1,287

Management fees

 

 

 
449

 

 
449

 
449

Foreign exchange trading services
100

 
334

 
434

 
25

 

 
25

 
459

Securities finance
57

 
32

 
89

 

 
3

 
3

 
92

Software and processing fees
107

 
30

 
137

 

 
(25
)
 
(25
)
 
112

Total fee revenue
1,551

 
396

 
1,947

 
474

 
(22
)
 
452

 
2,399

Net interest income

 
663

 
663

 

 
1

 
1

 
664

Total other income

 
2

 
2

 

 

 

 
2

Total revenue
$
1,551

 
$
1,061

 
$
2,612

 
$
474

 
$
(21
)
 
$
453

 
$
3,065



State Street Corporation | 84


STATE STREET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 
Three Months Ended March 31, 2019
 
Investment Servicing
 
Investment Management
 
Total
(Dollars in millions)
Topic 606 revenue
 
All other revenue
 
Total
 
Topic 606 revenue
 
All other revenue
 
Total
 
2019
Servicing fees
$
1,251

 
$

 
$
1,251

 
$

 
$

 
$

 
$
1,251

Management fees

 

 

 
420

 

 
420

 
420

Foreign exchange trading services
86

 
160

 
246

 
34

 

 
34

 
280

Securities finance
70

 
47

 
117

 

 
1

 
1

 
118

Software and processing fees
116

 
64

 
180

 

 
11

 
11

 
191

Total fee revenue
1,523

 
271

 
1,794

 
454

 
12

 
466

 
2,260

Net interest income

 
679

 
679

 

 
(6
)
 
(6
)
 
673

Total other income

 
(1
)
 
(1
)
 

 

 

 
(1
)
Total revenue
$
1,523

 
$
949

 
$
2,472

 
$
454

 
$
6

 
$
460

 
$
2,932

Contract balances and contract costs
As of March 31, 2020 and December 31, 2019, net receivables of $2.79 billion and $2.77 billion, respectively, are included in accrued interest and fees receivable, 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; therefore, we do not have significant contract assets or liabilities.
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 20.    Non-U.S. Activities
We define our non-U.S. activities as those revenue-producing business activities that arise from clients which 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:
 
Three Months Ended March 31,
 
2020
 
2019
(In millions)
Non-U.S.(1)
 
U.S.
 
Total
 
Non-U.S.(1)
 
U.S.
 
Total
Total revenue
$
1,364

 
$
1,701

 
$
3,065

 
$
1,335

 
$
1,597

 
$
2,932

Income before income tax expense
285

 
489

 
774

 
300

 
335

 
635

 
 
 
(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 $104.44 billion and $77.73 billion as of March 31, 2020 and 2019, respectively.

State Street Corporation | 85




Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

The Shareholders and Board of Directors of State Street Corporation
Results of Review of Interim Financial Statements
We have reviewed the accompanying consolidated statement of condition of State Street Corporation (the “Corporation”) as of March 31, 2020, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for the three-month periods ended March 31, 2020 and 2019, and the related condensed notes (collectively referred to as the “condensed consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated statement of condition of the Corporation as of December 31, 2019, the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for the year then ended, and the related notes (not presented herein); and in our report dated February 20, 2020, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of condition as of December 31, 2019, is fairly stated, in all material respects, in relation to the consolidated statement of condition from which it has been derived.
Basis for Review Results

These financial statements are the responsibility of the Corporation’s management. 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 SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.



/s/ Ernst & Young LLP

Boston, Massachusetts
April 28, 2020


State Street Corporation | 86





ACRONYMS
 
 
 
 
ABS
Asset-backed securities
G-SIB
Global systemically important bank
AFS
Available-for-sale
HQLA(1)
High-quality liquid assets
AOCI
Accumulated other comprehensive income (loss)
HTM
Held-to-maturity
ASU
Accounting Standards Update
ICI
Investment Company Institute
AUC/A
Assets under custody and/or administration
LCR(1)
Liquidity coverage ratio
AUM
Assets under management
LIBOR
London Interbank Offered Rate
bps
Basis points
LTD
Long-term debt
CCAR
Comprehensive Capital Analysis and Review
MBS
Mortgage-backed securities
CRD
Charles River Development
MMLF
Money Market Mutual Fund Liquidity Facility
CECL
Current Expected Credit Loss
NII
Net interest income
CET1(1)
Common equity tier 1
NIM
Net interest margin
CVA
Credit valuation adjustment
PCAOB
Public Company Accounting Oversight Board
DOJ
Department of Justice
RWA(1)
Risk-weighted asset
DOL
Department of Labor
SCB
Stress Capital Buffer
EPS
Earnings per share
SEC
Securities and Exchange Commission
ETF
Exchange-Traded Fund
SLR(1)
Supplementary leverage ratio
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
FTE
Fully taxable-equivalent
VaR
Value-at-Risk
FX
Foreign exchange
VIE
Variable interest entity
GAAP
Generally accepted accounting principles
 
 
 
 
 
(1) As defined by the applicable U.S. regulations.

State Street Corporation | 87





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.

Beacon: A multi-year program, announced in October 2015, to create cost efficiencies through changes in our operational processes and to further digitize our processes and interfaces with our clients.

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 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 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.

Depot bank: A German term, specified by the country's law on investment companies, which essentially corresponds to 'custodian'.

Doubtful:
 Doubtful loans and leases meet the same definition of substandard loans and leases (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. 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.

Other-than-temporary-impairment: Impairment charge taken on a security whose fair value has fallen below its carrying value on balance sheet and its value is not expected to recover through the holding period of the security.

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.

Special mention: Loans and leases that consist of counterparties with potential weaknesses that, if uncorrected, may result in deterioration of repayment prospects.

Speculative: Loans and leases 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 and leases 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 | 88




PART II. OTHER INFORMATION
ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In June 2019, our Board approved a common stock purchase program authorizing the purchase of up to $2.0 billion of our common stock from July 1, 2019 through June 30, 2020 (the 2019 Program). On March 16, 2020, we announced that we temporarily suspended our common stock repurchase program, together with the other U.S. based GSIFIs, in light of the COVID-19 pandemic.
Stock purchases may be made using various types of mechanisms, including open market purchases, accelerated share repurchases or transactions off market, and may be made under Rule 10b5-1 trading programs. The timing of stock purchases, types of transactions and number of shares purchased will depend on several factors, including market conditions and State Street’s capital positions, financial performance and investment opportunities. Our common stock purchase programs do 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. We repurchased $500 million of shares in the first quarter of 2020 under the 2019 Program.
The following table presents purchases of our common stock under the 2019 Program and related information for each of the months in the quarter ended March 31, 2020.
 
Total Number of Shares Purchased (In thousands)
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Program (In thousands)
 
Approximate Dollar Value of Shares That May Yet be Purchased Under Publicly Announced Program (In millions)
Period:
 
 
 
 
 
 
 
January 1 - January 31, 2020
3,053

 
$
79.61

 
3,053

 
$
757

February 1 - February 29, 2020
3,411

 
75.34

 
3,411

 
500

March 1 - March 31, 2020

 

 

 
500

Total
6,464

 
$
77.35

 
6,464

 
$
500


State Street Corporation | 89




ITEM 6.    EXHIBITS
Exhibit No.
 
Exhibit Description
 
 
 
 
 
 
 
 
 
4.1
 
(Note: none of the instruments defining the rights of the 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 agrees to furnish to the SEC upon request, a copy of any such instrument with respect to long-term debt of State Street and its subsidiaries.)

 
 

 
 

 
 
 
 
 
 

 
15
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32
 
 
 
 
 
 
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

 
 
 
*
 
Submitted electronically herewith
Attached as Exhibit 101 to this report are the following formatted in Inline XBRL (Extensible Business Reporting Language): (i) consolidated statement of income for the three months ended March 31, 2020 and 2019, (ii) consolidated statement of comprehensive income for the three months ended March 31, 2020 and 2019, (iii) consolidated statement of condition as of March 31, 2020 and December 31, 2019, (iv) consolidated statement of changes in shareholders' equity for the three months ended March 31, 2020 and 2019, (v) consolidated statement of cash flows for the three months ended March 31, 2020 and 2019, and (vi) notes to consolidated financial statements.

State Street Corporation | 90




SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 
 
 
 
 
 
STATE STREET CORPORATION
 
 
 
 
 
(Registrant)
 
 
 
 
 
 
 
 
 
 
 
 
Date:
April 28, 2020
 
By:
 
/s/ ERIC W. ABOAF
 
 
 
 
 
Eric W. Aboaf,
 
 
 
 
 
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
 
 
 
 
 
 
 
 
 
 
 
 
Date:
April 28, 2020
 
By:
 
/s/ IAN W. APPLEYARD
 
 
 
 
 
Ian W. Appleyard,
 
 
 
 
 
Executive Vice President, Global Controller and Chief Accounting Officer
(Principal Accounting Officer)
 
 
 
 
 
 


State Street Corporation | 91