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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 September 30, 2021

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 001-07511

STATE STREET CORPORATION

(Exact name of registrant as specified in its charter)

MA

04-2456637

(State or other jurisdiction of incorporation)

(I.R.S. Employer Identification No.)

One Lincoln Street

Boston,

MA

02111

(Address of principal executive offices)

(Zip Code)

(617)

786-3000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1 par value per share

STT

New York Stock Exchange

Depositary Shares, each representing a 1/4,000th ownership interest in a share of

STT.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 October 20, 2021 was 365,629,173.

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STATE STREET CORPORATION

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED

September 30, 2021

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			7
			Consolidated Results of Operations			10
			Total Revenue			10
			Net Interest Income			14
			Provision for Credit Losses			17
			Expenses			17
			Acquisition Costs			18
			Restructuring and Repositioning Charges			18
			Income Tax Expense			19
			Line of Business Information			19
			Investment Servicing			20
			Investment Management			24
			Financial Condition			27
			Investment Securities			28
			Loans			30
			Cross-Border Outstandings			31
			Risk Management			31
			Credit Risk Management			32
			Liquidity Risk Management			32
			Operational Risk Management			37
			Information Technology Risk Management			37
			Market Risk Management			37
			Model Risk Management			41
			Strategic Risk Management			41
			Capital			42
			Off-Balance Sheet Arrangements			52
			Recent Accounting Developments			52
			Quantitative and Qualitative Disclosures About Market Risk			53
			Controls and Procedures			53
			Consolidated Financial Statements			54
			Consolidated Statement of Income (unaudited)			54
			Consolidated Statement of Comprehensive Income (loss) (unaudited)			55
			Consolidated Statement of Condition			56
			Consolidated Statement of Changes in Shareholders' Equity (unaudited)			57
			Consolidated Statement of Cash Flows (unaudited)			58
			Note 1. Summary of Significant Accounting Policies			59
			Note 2. Fair Value			59
			Note 3. Investment Securities			65
			Note 4. Loans and Allowance for Credit Losses			69
			Note 5. Goodwill and Other Intangible Assets			74

State Street Corporation | 2

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			Note 6. Other Assets			75
			Note 7. Derivative Financial Instruments			76
			Note 8. Offsetting Arrangements			80
			Note 9. Commitments and Guarantees			83
			Note 10. Contingencies			83
			Note 11. Variable Interest Entities			86
			Note 12. Shareholders' Equity			86
			Note 13. Regulatory Capital			90
			Note 14. Net Interest Income			91
			Note 15. Expenses			91
			Note 16. Earnings Per Common Share			92
			Note 17. Line of Business Information			93
			Note 18. Revenue From Contracts with Customers			94
			Note 19. Non-U.S. Activities			95
			Review Report of Independent Registered Public Accounting Firm			96
PART II			OTHER INFORMATION
Item 1A			Risk Factors			99
Item 2			Unregistered Sales of Equity Securities and Use of Proceeds			100
Item 6			Exhibits			101
Signatures						102

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

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

PART I. FINANCIAL INFORMATION

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 September 30, 2021 (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 $43.34 trillion of AUC/A and $3.86 trillion of AUM as of September 30, 2021.

As of September 30, 2021, we had consolidated total assets of $323.14 billion, consolidated total deposits of $259.37 billion, consolidated total shareholders' equity of $27.31 billion and 38,932 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 17 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 2020 Annual Report on Form 10-K for the year ended December 31, 2020 previously filed with the SEC (2020 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 2020 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 123 to 125, “Significant Accounting Estimates” included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2020 Form 10-K. We did not change these significant accounting policies in the first nine months of 2021.

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-

State Street Corporation | 4

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

run stress 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:

Strategic Risks

•The possibility that some or all of the anticipated business, financial, capital, staffing, operational or other benefits or synergies of the acquisition of the BBH Investor Services business will not be realized when expected or at all, including as a result of the impact of, additional costs or unanticipated negative synergies associated with, or problems arising from, the integration of the BBH Investor Services business (including challenges in transitioning clients, systems, technology or personnel), as a result of regulatory or operational challenges we may experience, as a result of disruptions from the transaction harming relationships (including those resulting from the announcement of the transaction) with our clients, employees or regulators, or as a result of the strength of the economy and competitive factors in the areas where we and the BBH Investor Services business do business;

•The failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect us or the expected benefits of the transaction, perhaps materially), to satisfy any of the other conditions to the acquisition or at all, in each case, on a timely basis or at all; and, if delayed, the resulting effects, including in magnitude and timing of the expected financial benefits of the acquisition of the BBH Investor Services business, of a delayed closing of the acquisition (which expected financial benefits are presented and determined assuming a closing date of December 31, 2021);

•The occurrence of any event, change or other circumstances that could give rise to the termination of the definitive purchase agreement in respect of the acquisition of the BBH Investor Services business;

•Potential adverse changes in demand for the products and services of State Street and of the BBH Investor Services business;

•We are subject to intense competition, which could negatively affect our profitability;

State Street Corporation | 5

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

•We are subject to significant pricing pressure and variability in our financial results and our AUC/A and AUM;

•Our development and completion of new products and services, including State Street Alpha and State Street Digital, and our enhancement of the capabilities of our existing products and services in light of changed client needs and competitive pressures, may involve costs and dependencies and expose us to increased risk;

•Our business may be negatively affected by our failure to update and maintain our technology infrastructure;

•Acquisitions, strategic alliances, joint ventures and divestitures, and the integration, retention and development of the benefits of our acquisitions, pose risks for our business;

•The COVID-19 pandemic continues to exacerbate certain risks and uncertainties for our business; and

•Competition for qualified members of our workforce is intense, and we may not be able to attract and retain the highly skilled people we need to support our business.

Financial Market Risks

•We could be adversely affected by geopolitical, economic and market conditions;

•We have significant International operations, and disruptions in European and Asian economies could have an adverse effect on our consolidated results of operations or financial condition;

•Our investment securities portfolio, consolidated financial condition and consolidated results of operations could be adversely affected by changes in the financial markets;

•Our business activities expose us to interest rate risk;

•We assume significant credit risk to counterparties, who may also have substantial financial dependencies with other financial institutions, and these credit exposures and concentrations could expose us to financial loss;

•Our fee revenue represents a significant portion of our consolidated revenue and is subject to decline based on, among other factors, the investment activities of our clients;

•If we are unable to effectively manage our capital and liquidity, our consolidated financial condition, capital ratios, results of operations and business prospects could be adversely affected;

•We may need to raise additional capital or debt in the future, which may not be available to us or may only be available on unfavorable terms; and

•If we experience a downgrade in our credit ratings, or an actual or perceived reduction in our financial strength, our borrowing and capital costs, liquidity and reputation could be adversely affected.

Compliance and Regulatory Risks

•Our business and capital-related activities, including common share repurchases, may be adversely affected by capital and liquidity standards required as a result of capital stress testing;

•We face extensive and changing government regulation in the jurisdictions in which we operate, which may increase our costs and compliance risks;

•We are subject to enhanced external oversight as a result of the resolution of prior regulatory or governmental matters;

•Our businesses may be adversely affected by government enforcement and litigation;

•Any misappropriation of the confidential information we possess could have an adverse impact on our business and could subject us to regulatory actions, litigation and other adverse effects;

•Our calculations of risk exposures, total RWA and capital ratios depend on data inputs, formulae, models, correlations and assumptions that are subject to change, which could materially impact our risk exposures, our total RWA and our capital ratios from period to period;

•Changes in accounting standards may adversely affect our consolidated financial statements;

•Changes in tax laws, rules or regulations, challenges to our tax positions and changes in the composition of our pre-tax earnings may increase our effective tax rate; and

•The transition away from LIBOR may result in additional costs and increased risk exposure.

Operational Risks

•Our control environment may be inadequate, fail or be circumvented, and, if so, operational risks could adversely affect our consolidated results of operations;

•Cost shifting to non-U.S. jurisdictions and outsourcing may expose us to increased operational risk and reputational harm and may not result in expected cost savings;

•Attacks or unauthorized access to our information technology systems or facilities, or those of the third parties with which we do

State Street Corporation | 6

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

business, or disruptions to our or their continuous operations, could result in significant costs, reputational damage and impacts on our business activities;

•Long-term contracts expose us to pricing and performance risk;

•Our businesses may be negatively affected by adverse publicity or other reputational harm;

•We may not be able to protect our intellectual property;

•The quantitative models we use to manage our business may contain errors that could result in material harm;

•Our reputation and business prospects may be damaged if our clients incur substantial losses or are restricted in redeeming their interests in investment pools that we sponsor or manage;

•The impacts of climate change could adversely affect our business operations; and

•We may incur losses as a result of unforeseen events, including terrorist attacks, natural disasters, the emergence of a new pandemic or acts of embezzlement.

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, and our 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 September 30,												% Change
(Dollars in millions, except per share amounts)			2021						2020
Total fee revenue			$	2,504					$	2,306					9		%
Net interest income			487						478						2
Total other income			(1)						—						nm
Total revenue			2,990						2,784						7
Provision for credit losses			(2)						—						nm
Total expenses			2,116						2,103						1
Income before income tax expense			876						681						29
Income tax expense			162						126						29
Net income			$	714					$	555					29
Adjustments to net income:
Dividends on preferred stock(1)			$	(21)					$	(38)					(45)
Earnings allocated to participating securities(2)			—						—						nm
Net income available to common shareholders			$	693					$	517					34
Earnings per common share:
Basic			$	1.99					$	1.47					35
Diluted			1.96						1.45						35
Average common shares outstanding (in thousands):
Basic			347,718						352,586						(1)
Diluted			353,494						357,168						(1)
Cash dividends declared per common share			$	.57					$	.52					10
Return on average common equity			11.6		%				8.9		%				270 bps
Pre-tax margin			29.3						24.5						480
			Nine Months Ended September 30,												% Change
(Dollars in millions, except per share amounts)			2021						2020
Total fee revenue			$	7,501					$	7,083					6		%
Net interest income			1,421						1,701						(16)
Total other income			52			—			2						nm
Total revenue			8,974						8,786						2
Provision for credit losses			(26)						88						nm
Total expenses			6,559						6,440						2
Income before income tax expense			2,441						2,258						8
Income tax expense			445						375						19
Net income			$	1,996					$	1,883					6
Adjustments to net income:
Dividends on preferred stock(1)			$	(85)					$	(123)					(31)
Earnings allocated to participating securities(2)			(1)						(1)						—
Net income available to common shareholders			$	1,910					$	1,759					9
Earnings per common share:
Basic			$	5.49					$	4.99					10
Diluted			5.40						4.93						10
Average common shares outstanding (in thousands):
Basic			348,106						352,829						(1)
Diluted			353,376						356,971						(1)
Cash dividends declared per common share			$	1.61					$	1.56					3
Return on average common equity			10.8		%				10.6		%				20 bps
Pre-tax margin			27.2						25.7						150

(1) Additional information about our preferred stock dividends is provided in Note 12 to the consolidated financial statements in this Form 10-Q.

(2) Represents the portion of net income available to common equity allocated to participating securities, composed of unvested and fully vested SERP (Supplemental executive retirement plans) shares and fully vested deferred director stock awards, which are equity-based awards that contain non-forfeitable rights to dividends, and are considered to participate with the common stock in undistributed earnings.

nm Not meaningful

State Street Corporation | 7

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following “Financial Results and Highlights” section provides information related to significant events, as well as highlights of our consolidated financial results for the third quarter of 2021 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 three and nine months ended September 30, 2021, compared to the same periods in 2020, 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 foreign currency translation, those effects are determined by applying applicable weighted average FX rates from the relevant 2020 period to the relevant 2021 period results.

Financial Results and Highlights

•Third quarter of 2021 financial performance:

◦EPS of $1.96 in the third quarter of 2021, up 35%, from $1.45 in the same period in 2020.

◦Total fee revenue was up 9% in the third quarter of 2021, compared to the same period in 2020, including less than 1% due to currency translation.

◦Servicing fee revenues were up 7% in the third quarter of 2021, compared to the same period in 2020. Management fee revenues were up 10% in the third quarter of 2021, compared to the same period in 2020.

◦In the third quarter of 2021, return on equity of 11.6% increased from 8.9% in the same period in 2020, primarily due to an increase in net income available to common shareholders. Pre-tax margin of 29.3% in the third quarter of 2021 increased from 24.5% in the same period in 2020, primarily due to an increase in total revenue.

◦Operating leverage was 6.8% points in the third quarter of 2021. 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.

•In September 2021, we announced that we had entered into a definitive agreement to acquire the BBH Investor Services business for $3.5 billion in cash. This proposed acquisition is subject to regulatory approvals and the satisfaction or waiver of other closing conditions.

◦We expect to finance the proposed acquisition of the BBH Investor Services business primarily with the proceeds of $1.9 billion from a common stock offering completed in September 2021, a temporary suspension of repurchases of our common stock and with cash on hand.

•During the third quarter of 2021, our business and financial results continued to reflect effects of the COVID-19 pandemic:

◦Approximately 77% of our employees globally continue to work remotely as of September 30, 2021.

◦We continued to experience high levels of client deposits in the third quarter of 2021 amidst the Federal Reserve's expansionary monetary policy.

Revenue

•Total revenue increased 7% in the third quarter of 2021, compared to the same period in 2020. Total fee revenue increased 9% in the third quarter of 2021, compared to the same period in 2020, driven by increases across all categories of fee revenue.

•Servicing fee revenue increased 7% in the third quarter of 2021, compared to the same period in 2020, primarily due to higher average equity market levels, client activity and flows, and net new business, partially offset by normal pricing headwinds.

•Management fee revenue increased 10% in the third quarter of 2021, compared to the same period in 2020, primarily due to higher average equity market levels and net inflows from ETFs, partially offset by idiosyncratic actions by an institutional client, as previously reported, and higher money market fee waivers.

•Foreign exchange trading services increased 3% in the third quarter of 2021, compared to the same period in 2020, primarily due to higher direct sales and trading revenue and indirect volumes, partially offset by lower FX volatility.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

•Securities finance revenue increased 26% in the third quarter of 2021, compared to the same period in 2020, reflecting higher client securities loan balances and spreads, as well as new business wins in enhanced custody.

•Software and processing fees revenue increased 15% in the third quarter of 2021, compared to the same period in 2020, primarily due to higher CRD revenues.

•NII increased 2% in the third quarter of 2021, compared to the same period in 2020, primarily due to higher loan balances and growth in the investment portfolio and deposits, as well as the absence of a $20 million non-recurring true-up in the third quarter of 2020, partially offset by lower investment portfolio yields.

Provision for Credit Losses

•The provision for credit losses was a $2 million reserve release in the third quarter of 2021, compared to no provision for credit losses in the same period in 2020, which is primarily driven by improvements in credit quality and stable economic outlook.

Expenses

•Total expenses increased 1% in the third quarter of 2021, compared to the same period in 2020, primarily reflecting the impact of notable items and currency translation. Currency translation increased expenses by less than 1% in the third quarter of 2021, relative to the same period in 2020.

•The impact of notable items in the third quarter of 2021 includes acquisition and restructuring costs of approximately $18 million, of which $11 million related to CRD and $7 million related to our proposed acquisition of the BBH Investor Services business.

•The impact of notable items in the third quarter of 2020 includes acquisition and restructuring costs of approximately $15 million, primarily related to CRD, and a $9 million accrual release.

AUC/A and AUM

•AUC/A of $43.34 trillion increased 18% as of September 30, 2021, compared to September 30, 2020, primarily due to higher market levels, client flows and net new business growth. In the third quarter of 2021, newly announced asset servicing mandates totaled approximately $1.66 trillion, with State Street AlphaSM representing a large proportion of the wins. Servicing assets

remaining to be installed in future periods totaled approximately $2.73 trillion as of September 30, 2021.

•AUM of $3.86 trillion increased 23% as of September 30, 2021, compared to September 30, 2020, primarily due to higher market levels and net inflows from ETFs and cash, partially offset by institutional net outflows.

Capital

•In the third quarter of 2021, we returned a total of approximately $179 million to our shareholders in the form of common stock dividends paid.

•We declared common stock dividends of $0.57 per share, totaling $209 million in the third quarter of 2021 to be paid in the fourth quarter of 2021, compared to $0.52 per share, totaling $184 million in the third quarter of 2020, representing a 10% increase on a per share basis from the third quarter of 2020.

•In July 2021, our Board authorized a common share repurchase plan of up to $3.0 billion of our common stock through the end of 2022, however, in connection with our proposed acquisition of the BBH Investor Services business, we did not repurchase any common stock during the third quarter of 2021. We do not intend to repurchase any common stock during the fourth quarter of 2021 and the first quarter of 2022. We intend to resume our common share repurchases during the second quarter of 2022.

•In September 2021, we completed a public offering of approximately 21.7 million shares of our common stock. The offering price was $87.60 per share and net proceeds totaled approximately $1.9 billion. We expect to use these net proceeds to finance our proposed acquisition of the BBH Investor Services business.

•Our CET1 capital ratio increased to 13.5% as of September 30, 2021, compared to 12.3% as of December 31, 2020, primarily due to higher retained earnings and the issuance of common stock in September 2021, partially offset by higher risk-weighted assets. Our Tier 1 leverage ratio decreased to 6.3% as of September 30, 2021 compared to 6.4% as of December 31, 2020. Following the planned closing of our acquisition of the BBH Investor Services business, we expect both capital ratios to be at the lower end of our target ranges of 10-11% for CET1 ratio and

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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5.25%-5.75% for Tier 1 Leverage ratio . As of both September 30, 2021 and December 31, 2020, standardized capital ratios were binding.

CONSOLIDATED RESULTS OF OPERATIONS

This section discusses our consolidated results of operations for the three and nine months ended September 30, 2021, compared to the same periods in 2020, and should be read in conjunction with the consolidated financial statements and accompanying notes to the consolidated financial statements in this Form 10-Q.

Total Revenue

TABLE 2: TOTAL REVENUE
			Three Months Ended September 30,												% Change
(Dollars in millions)			2021						2020
Fee revenue:
Servicing fees			$	1,395					$	1,301											7		%
Management fees(1)			526						479												10
Foreign exchange trading services(1)			279						270												3
Securities finance			106						84												26
Software and processing fees			198						172												15
Total fee revenue			2,504						2,306												9
Net interest income:
Interest income			487						520												(6)
Interest expense			—						42												nm
Net interest income			487						478												2
Other income:
Gains (losses) related to investment securities, net			(1)						—												nm
Other income			—						—												nm
Total other income			(1)						—												nm
Total revenue(1)			$	2,990					$	2,784											7
			Nine Months Ended September 30,																		% Change
(Dollars in millions)			2021						2020
Fee revenue:
Servicing fees			$	4,165					$	3,860											8		%
Management fees(1)			1,523						1,387												10
Foreign exchange trading services(1)			911						1,039												(12)
Securities finance			314						268												17
Software and processing fees			588						529												11
Total fee revenue			7,501						7,083												6
Net interest income:
Interest income			1,425						2,062												(31)
Interest expense			4						361												(99)
Net interest income			1,421						1,701												(16)
Other income:
Gains (losses) related to investment securities, net			(1)						2												nm
Other income			53						—												nm
Total other income			52						2												nm
Total revenue			$	8,974					$	8,786											2

(1) Certain fees associated with our GLD ETFs have been reclassified from foreign exchange trading services to management fees to better reflect the nature of those fees. Prior periods have been reclassified to conform to current-period presentation. These fees were approximately $24 million and $58 million in the three and nine months ended September 30, 2020, respectively.

nm Not meaningful

Fee Revenue

Table 2: Total Revenue, provides the breakout of fee revenue for the three and nine months ended September 30, 2021 and 2020. Servicing and management fees collectively made up approximately 77% and 76% of the total fee revenue in the three and nine months ended September 30, 2021, respectively, compared to 77% and 74% in the same periods in 2020, 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.

Changes in Market Valuations

Our servicing fee revenue is impacted by both our levels and the geographic and product mix of our AUC/A. Increases or decreases in market valuations have a corresponding impact on the level of our AUC/A and servicing fee revenues, though the degree of impact will vary depending on asset types and classes and geography of assets held within our clients’ portfolios. For certain asset classes where the valuation process is more complex, including alternative investments, or where our valuation is dependent on third party information, AUC/A is reported on a lag, typically one-month. For those asset classes, the impact of market levels on our reported AUC/A does not reflect current period-end market levels.

Over the five years ended December 31, 2020, we estimate that worldwide market valuations impacted our servicing fee revenues by approximately (1)% 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.

State Street Corporation | 10

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Assuming that all other factors remain constant, including client activity and asset flows and pricing, we estimate, using relevant information as of September 30, 2021 that a 10% increase or decrease in worldwide equity valuations, on a weighted average basis, over the relevant periods for which our servicing fees are calculated, would result in a corresponding change in our total servicing fee revenues, on average and over multiple quarters, of approximately 3%. We estimate, similarly assuming all other factors constant and using relevant information as of September 30, 2021, that changes in worldwide fixed income markets, which on a weighted average basis and over time are typically less volatile than worldwide equity markets, have a smaller impact on our servicing fee revenues on average and over time.

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 September 30,																		Three Months Ended September 30,																		As of September 30,
			2021						2020						% Change						2021						2020						% Change						2021						2020						% Change
S&P 500®			4,422						3,320						33		%				4,408						3,378						30		%				4,308						3,363						28		%
MSCI EAFE®			2,338						1,871						25						2,320						1,862						25						2,281						1,855						23
MSCI® Emerging Markets			1,295						1,084						19						1,280						1,087						18						1,253						1,082						16
			Daily Averages of Indices																														Month-End Averages of Indices
			Nine Months Ended September 30,																														Nine Months Ended September 30,
									2021						2020						% Change																		2021						2020						% Change
S&P 500®									4,162						3,104						34		%																4,156						3,106						34		%
MSCI EAFE®									2,283						1,807						26																		2,263						1,790						26
MSCI® Emerging Markets									1,336						1,015						32																		1,325						1,003						32

(1) The index names listed in the table are service marks of their respective owners.

TABLE 4: QUARTER-END DEBT INDICES(1)
			As of September 30,
			2021						2020						% Change
Barclays Capital U.S. Aggregate Bond Index®			2,355						2,376						(1)		%
Barclays Capital Global Aggregate Bond Index®			536						541						(1)

(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, 2020, 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.

State Street Corporation | 11

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

TABLE 5: INDUSTRY ASSET FLOWS
			Three Months Ended September 30,
(In billions)			2021						2020
North America - (US Domiciled) - Morningstar Direct Market Data(1)(2)(3)
Long-Term Funds(4)			$	130.0					$	21.4
Money Market			20.8						(165.8)
Exchange-Traded Fund			103.2						60.1
Total Flows			$	254.0					$	(84.3)
Europe - Morningstar Direct Market Data(1)(2)(5)
Long-Term Funds(4)			$	213.4					$	134.4
Money Market			47.9						60.0
Exchange-Traded Fund			36.7						32.4
Total Flows			$	298.0					$	226.8

(1) Industry data is provided for illustrative purposes only. It is not intended to reflect our activity or our clients' activity and is indicative of only segments of the entire industry.

(2) Source: Morningstar. The data includes long-term mutual funds, ETFs and money market funds. Mutual fund data represents estimates of net new cash flow, which is new sales minus redemptions combined with net exchanges, while ETF data represents net issuance, which is gross issuance less gross redemptions. Data for Fund of Funds, Feeder funds and Obsolete funds were excluded from the series to prevent double counting. Data is from the Morningstar Direct Asset Flows database.

(3) The third quarter of 2021 data for North America (US domiciled) includes Morningstar direct actuals for July and August 2021 and Morningstar direct estimates for September 2021.

(4) The long-term fund flows reported by Morningstar direct in North America are composed of US domiciled market flows mainly in Equities, Allocation and Fixed-Income asset classes. The long-term fund flows reported by Morningstar direct in EMEA are composed of the European market flows mainly in Equities, Allocation and Fixed-Income asset classes.

(5) The third quarter of 2021 data for Europe is on a rolling three month basis for June 2021 through August 2021, sourced by Morningstar.

Net New Business

Over the five years ended December 31, 2020, 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. Gross investment servicing mandates were $1.66 trillion in the third quarter of 2021 and $1.3 trillion per year on average over the past five years. Over the five years ended December 31, 2020, gross annual investment servicing mandates ranged from $750 billion to nearly $2.0 trillion.

New business impacting servicing fees can include: custody; product 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.

Revenues associated with new mandates are not reflected in our servicing fee revenue until the assets have been installed. Our installation timeline, in general, can range from 6 to 36 months, with the average installation timeline being approximately 9 to 12 months over the 2 years ended December 31, 2020. Our more complex installations, including new State Street Alpha mandates, will generally be on the longer end of that range. With respect to the current asset mandates of approximately $2.73 trillion that are yet to be installed as of September 30, 2021, we expect the conversion will occur over the coming 12 to 24 months, with approximately half of the annualized revenue expected to be recognized through 2022, and the remainder primarily in 2023.

State Street Corporation | 12

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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, 2020, 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.

In order to offset the typical client attrition and normal pricing headwinds, we estimate that we need at least $1.5 trillion of new AUC/A per year; although, notwithstanding increases in AUC/A, servicing fees remain subject to several factors, including changes in market valuations, client activity and asset flows, the manner in which we price our services, the nature of the assets being serviced and the type of services and the other factors described in Item 1A, "Risk Factors", in our 2020 Form 10-K.

Historically, and based on an indicative sample of revenue, we estimate that approximately 55%, on average, of our servicing fee revenues have been variable due to changes in asset valuations including changes in daily average valuations of AUC/A; another 15%, on average, of our servicing fees are impacted by the volume of activity in the funds we serve; and the remaining approximately 30% of our servicing fees tend not to be variable in nature nor impacted by market fluctuations or values.

Based on the impact of the above, client activity and asset flows, net new business and pricing, noted drivers of our servicing fee revenue will vary depending on the mix of products and services we provide to our clients. The full impact of changes in market valuations and the volume of activity in the funds may not be fully reflected in our servicing fee revenues in the periods in which the changes occur, particularly in periods of higher volatility.

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. 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, such as we are currently experiencing, we have waived and may in the future waive certain fees for our clients for money market products.

The impact of State Street Global Advisors gross money market fund fee waivers on total management fee revenue was approximately $20 million in the third quarter of 2021. As of September 30, 2021, and assuming short-term spot interest rates and the amount of money market fund assets remain constant, we estimate that the impact of gross money market fee waivers on our management fees would be approximately $20 million in the fourth quarter of 2021. We believe that a further decline in short-term interest rates, primarily one- and three-month interest rates, would not materially impact this estimate. Alternatively, if short-term interest rates were to rise by approximately 10bps, the impact of gross money market fee waivers on our management fees would be largely mitigated in the subsequent quarterly periods.

Asset-based management fees for passively managed products, to which our AUM is currently primarily weighted, are generally charged at a lower fee on AUM than for actively managed products. Actively managed products may also include performance fee arrangements which are recorded when the fee is earned, based on predetermined benchmarks associated with the applicable account's performance.

State Street Corporation | 13

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

In light of the above, we estimate, using relevant information as of September 30, 2021 and assuming that all other factors remain constant, including the impact of business won and lost and client flows, that:

•A 10% increase or decrease in worldwide equity valuations, on a weighted average basis, over the relevant periods for which our management fees are calculated, would result in a corresponding change in our total management fee revenues, on average and over multiple quarters, of approximately 5%; and

•We estimate, similarly assuming all other factors constant and using relevant information as of September 30, 2021, that changes in worldwide fixed income markets, which on a weighted average basis and over time are typically less volatile than worldwide equity markets, will have a smaller impact on our management fee revenues on average and over time.

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.

Net Interest Income

See Table 2: Total Revenue, for the breakout of interest income and interest expense for the three and nine months ended September 30, 2021, compared to the same periods in 2020.

NII is defined as interest income earned on interest-earning assets less interest expense incurred on interest-bearing liabilities. Interest-earning assets, which principally consist of investment securities, interest-bearing deposits with banks, loans, resale agreements and other liquid assets, are financed primarily by client deposits, short-term borrowings and long-term debt.

NIM represents the relationship between annualized FTE NII and average total interest-earning assets for the period. It is calculated by dividing FTE NII by average interest-earning assets. Revenue that is exempt from income taxes, mainly earned from certain investment securities (state and political subdivisions), is adjusted to a FTE basis using the U.S. federal and state statutory income tax rates.

NII on an FTE basis increased in the three months ended September 30, 2021, compared to the same period in 2020, primarily due to higher loan

balances and growth in the investment portfolio and deposits, as well as the absence of a non-recurring true-up in the third quarter of 2020, partially offset by lower investment portfolio yields.

NII on an FTE basis decreased in the nine months ended September 30, 2021, compared to the same period in 2020, primarily due to lower investment portfolio yields, partially offset by deposit, investment portfolio and loan growth, and the absence of a non-recurring true-up in the third quarter of 2020.

Investment securities net premium amortization, which is included in interest income, was $128 million and $454 million in the three and nine months ended September 30, 2021, respectively, compared to $179 million and $396 million in the same periods in 2020, respectively. The decrease in MBS premium amortization in the three months ended September 30, 2021, compared to the same period in 2020, is primarily driven by lower prepayments and the absence of a non-recurring true-up of $20 million, which impacted the third quarter of 2020. The increase in the nine months ended September 30, 2021, compared to the same period in 2020, is primarily driven by low level of interest rates and the absence of the MMLF discount accretion.

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, which primarily impact mortgage-backed securities.

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 September 30,
			2021																		2020
(Dollars in millions)			MBS						Non -MBS						Total(1)						MBS						Non- MBS						Total
Unamortized premiums, net of discounts at period end			$	768					$	497					$	1,265					$	1,281					$	735					$	2,016
Net premium amortization(2)			78						50						128						128						51						179

(1) The investment securities portfolio duration is 3.1 years as of September 30, 2021.

(2) Net of discount accretion on MMLF HTM securities.

State Street Corporation | 14

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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 three and nine months ended September 30, 2021, compared to the same periods in 2020.

TABLE 7: AVERAGE BALANCES AND INTEREST RATES - FULLY TAXABLE-EQUIVALENT BASIS(1)
			Three Months Ended September 30,
			2021																		2020
(Dollars in millions; fully taxable-equivalent basis)			Average Balance						Interest Revenue/Expense						Rate						Average Balance						Interest Revenue/Expense						Rate
Interest-bearing deposits with banks (2)			$	79,375					$	—					—		%				$	72,717					$	(6)					(.03)		%
Securities purchased under resale agreements(3)			4,061						6						.65						4,181						20						1.91
Trading account assets			733						—						.02						900						—						—
Investment securities:
Investment securities available-for-sale			69,621						150						.86						59,593						169						1.13
Investment securities held-to-maturity			44,014						161						1.47						43,367						174						1.61
Investment securities held-to-maturity purchased under money market liquidity facility			—						—						—						7,488						25						1.32
Total investment securities			113,635						311						1.10						110,448						368						1.33
Loans			32,035						168						2.08						25,974						139						2.13
Other interest-earning assets			24,662						5						.08						11,586						3						.10
Average total interest-earning assets			$	254,501					$	490					.76						$	225,806					$	524					.92
Interest-bearing deposits:
U.S.			$	104,575					$	6					.02		%				$	85,432					$	4					.02		%
Non-U.S.(2)(4)			82,230						(68)						(.33)						69,514						(65)						(.37)
Total interest-bearing deposits(4)(5)			186,805						(62)						(.13)						154,946						(61)						(.16)
Securities sold under repurchase agreements			332						—						—						2,891						—						.08
Short-term borrowings under money market liquidity facility			—						—						—						7,449						23						1.24
Other short-term borrowings			837						—						.17						1,724						2						.44
Long-term debt			13,021						51						1.59						14,794						69						1.86
Other interest-bearing liabilities			5,461						11						.78						2,764						9						1.28
Average total interest-bearing liabilities			$	206,456					$	—					—						$	184,568					$	42					.09
Interest rate spread															.76		%																.83		%
Net interest income, fully taxable-equivalent basis									$	490																	$	482
Net interest margin, fully taxable-equivalent basis															.76		%																.85		%
Tax-equivalent adjustment									(3)																		(4)
Net interest income, GAAP-basis									$	487																	$	478
			Nine Months Ended September 30,
			2021																		2020
(Dollars in millions; fully taxable-equivalent basis)			Average Balance						Interest Revenue/Expense						Rate						Average Balance						Interest Revenue/Expense						Rate
Interest-bearing deposits with banks(2)			$	91,291					$	(13)					(.02)		%				$	75,517					$	79					.14		%
Securities purchased under resale agreements(3)			4,194						19						.61						3,114						109						4.68
Trading account assets			754						—						.01						897						—						—
Investment securities:
Investment securities available-for-sale			65,051						435						.89						57,109						609						1.42
Investment securities held-to-maturity			45,526						510						1.49						41,595						641						2.06
Investment securities held-to-maturity purchased under money market liquidity facility			420						4						1.35						9,516						103						1.45
Total investment securities			110,997						949						1.14						108,220						1,353						1.67
Loans			29,858						467						2.09						27,266						482						2.36
Other interest-earning assets			21,322						13						.08						10,729						52						.64
Average total interest-earning assets			$	258,416					$	1,435					.74						$	225,743					$	2,075					1.23
Interest-bearing deposits:
U.S.			$	105,286					$	10					.01		%				$	85,592					$	111					.17		%
Non-U.S.(2)(4)			81,318						(206)						(.34)						66,953						(158)						(.31)
Total interest-bearing deposits(4)(5)			186,604						(196)						(.14)						152,545						(47)						(.04)
Securities sold under repurchase agreements			606						—						.02						2,687						3						.16
Short-term borrowings under money market liquidity facility			421						4						1.21						9,550						87						1.22
Other short-term borrowings			832						1						.20						2,582						17						.86
Long-term debt			13,431						165						1.64						14,553						252						2.31
Other interest-bearing liabilities			5,332						30						.77						3,217						49						2.01
Average total interest-bearing liabilities			$	207,226					$	4					—						$	185,134					$	361					.26
Interest rate spread															.74		%																.97		%
Net interest income, fully taxable-equivalent basis									$	1,431																	$	1,714
Net interest margin, fully taxable-equivalent basis															.74		%																1.01		%
Tax-equivalent adjustment									(10)																		(13)
Net interest income, GAAP-basis									$	1,421																	$	1,701

(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) Negative values reflect the interest rate environment outside of the U.S. where central bank rates are below zero for several major currencies.

(3) Reflects the impact of balance sheet netting under enforceable netting agreements of approximately $52.17 billion and $66.92 billion in the three and nine months ended September 30, 2021, respectively, compared to $83.48 billion and $103.46 billion in the same periods in 2020, respectively. Excluding the impact of netting, the average interest rates would be approximately 0.05% and 0.04% in the three and nine months ended September 30, 2021, respectively, compared to 0.09% and 0.14% in the same periods in 2020, respectively.

(4) Average rate includes the impact of FX swap costs of approximately ($16) million and ($53) million in the three and nine months ended September 30, 2021, respectively, compared to ($19) million and ($39) million for the same periods in 2020, respectively. Average rates for total interest-bearing deposits excluding the impact of FX swap costs were (0.10)% in both the three and nine months ended September 30, 2021, compared to (0.11)% and (0.01)% in the same periods in 2020, respectively.

(5) Total deposits averaged $233.27 billion and $233.96 billion in the three and nine months ended September 30, 2021, respectively, compared to $189.23 billion and $188.82 billion in the same periods in 2020, respectively.

State Street Corporation | 15

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

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 14 to the consolidated financial statements within this Form 10-Q.

Average total interest-earning assets were $254.50 billion and $258.42 billion in the three and nine months ended September 30, 2021, respectively, compared to $225.81 billion and $225.74 billion in the same periods in 2020, respectively. The increase is primarily due to higher interest-bearing deposits with banks, investment securities, loans and other interest- earning assets, partially offset by a decrease in investment securities purchased under the MMLF facility.

Interest-bearing deposits with banks averaged $79.38 billion and $91.29 billion in the three and nine months ended September 30, 2021, respectively, compared to $72.72 billion and $75.52 billion in the same periods in 2020, respectively. 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.

Securities repurchased under resale agreements averaged $4.06 billion and $4.19 billion in the three and nine months ended September 30, 2021, respectively, compared to $4.18 billion and $3.11 billion in the same periods in 2020, respectively. The impact of balance sheet netting decreased to $52.17 billion and $66.92 billion in the three and nine months ended September 30, 2021, respectively, compared to $83.48 billion and $103.46 billion in the same periods in 2020, respectively. We maintain an agreement with Fixed Income Clearing Corporation (FICC), a clearing organization that enables us to net securities sold under repurchase agreements against those repurchased under resale agreements with counterparties that are also members of the clearing organization, when specific netting criteria are met. The decrease in average balance sheet netting in the three and nine months ended September 30, 2021, compared to the same periods in 2020, is primarily due to lower FICC repo volumes from an increased cash supply and lower short-term interest rates driven by extensive Federal Reserve stimulus.

We have been a sponsoring member within FICC since 2005 and continue to expand our client base as program eligibility parameters broaden. We enter into repurchase and resale transactions in eligible securities with sponsored clients and with other FICC members and, pursuant to FICC Government Securities Division rules, submit, novate

and net the transactions. We may sponsor clients to clear their eligible repurchase transactions with FICC, backed by our guarantee to FICC of the prompt and full payment and performance of our sponsored member clients’ respective obligations. We generally obtain a security interest from our sponsored clients in the high quality securities collateral that they receive, which is designed to mitigate our potential exposure to FICC.

Average investment securities were $113.64 billion and $111.00 billion, in the three and nine months ended September 30, 2021, respectively, including $420 million MMLF securities in the nine months ended September 30, 2021, compared to $110.45 billion and $108.22 billion, including $7.49 billion and $9.52 billion MMLF securities, in the same periods in 2020, respectively. We did not have any MMLF securities in the three months ended September 30, 2021. Average investment securities, excluding MMLF HTM securities, increased to $113.64 billion and $110.58 billion in the three and nine months ended September 30, 2021, respectively, compared to $102.96 billion and $98.70 billion in the same periods in 2020, respectively, primarily driven by U.S. Treasuries, CMBS balances and foreign government bonds. The growth reflects our deployment of higher structural deposit levels that resulted from the COVID-19 pandemic.

Loans averaged $32.04 billion and $29.86 billion in the three and nine months ended September 30, 2021, respectively, compared to $25.97 billion and $27.27 billion in the same periods in 2020, respectively. Average core loans, which exclude overdrafts and highlight our efforts to grow our lending portfolio, averaged $28.41 billion and $25.92 billion in the three and nine months ended September 30, 2021, respectively, compared to $22.54 billion and $22.42 billion in the same periods in 2020, respectively. The increases in both periods are primarily due to growth in CLOs in loan form and fund finance loans. Additional information about these loans is provided in Note 4 to the consolidated financial statements in this Form 10-Q.

Average other interest-earning assets, largely associated with our enhanced custody business, increased to $24.66 billion and $21.32 billion in the three and nine months ended September 30, 2021, respectively, from $11.59 billion and $10.73 billion in the same periods in 2020, respectively, primarily driven by an increase in the level of cash collateral posted. 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.

State Street Corporation | 16

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Aggregate average total interest-bearing deposits increased to $186.81 billion and $186.60 billion in the three and nine months ended September 30, 2021, respectively, from $154.95 billion and $152.55 billion in the same periods in 2020, respectively. Average U.S. interest-bearing deposits increased as a result of the market uncertainty due to the COVID-19 pandemic, U.S. monetary policy and the level of global interest rates. We expect deposits to remain elevated within the current environment of low interest rates and continued expansion of the money supply by the Federal Reserve, but modestly reduced from third quarter of 2021 levels. 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 decreased to $0.84 billion and $0.83 billion in the three and nine months ended September 30, 2021, respectively, from $1.72 billion and $2.58 billion in the same periods in 2020, respectively. The decrease is primarily due to lower borrowings from the FHLB in the three and nine months ended September 30, 2021, compared to the same periods in 2020.

Average long-term debt was $13.02 billion and $13.43 billion in the three and nine months ended September 30, 2021, respectively, compared to $14.79 billion and $14.55 billion in the same periods in 2020, respectively. These amounts reflect issuances, redemptions and maturities of senior debt during the respective periods.

Average other interest-bearing liabilities were $5.46 billion and $5.33 billion in the three and nine months ended September 30, 2021, respectively, compared to $2.76 billion and $3.22 billion in the same periods in 2020, respectively. 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.

Provision for Credit Losses

There was a $2 million reserve release for the provision for credit losses in the third quarter of 2021, which is primarily driven by improvements in credit quality and stable economic outlook. We recorded no provision for credit losses in the third quarter of 2020.

Additional information is provided under “Loans” in "Financial Condition" in this Management's Discussion and Analysis and in Note 4 to the consolidated financial statements in this Form 10-Q.

Expenses

Table 8: Expenses, provides the breakout of expenses for the three and nine months ended September 30, 2021 compared to the same periods in 2020.

TABLE 8: EXPENSES
			Three Months Ended September 30,																		% Change
(Dollars in millions)			2021						2020
Compensation and employee benefits			$	1,054					$	1,062											(1)		%
Information systems and communications			406						395												3
Transaction processing services			253						234												8
Occupancy			102						109												(6)
Amortization of other intangible assets			62						59												5
Acquisition costs			18						15												20
Other:
Professional services			91						89												2
Other			130						140												(7)
Total other			221						229												(3)
Total expenses			$	2,116					$	2,103											1
Number of employees at quarter-end			38,932						38,979												—
			Nine Months Ended September 30,																		% Change
(Dollars in millions)			2021						2020
Compensation and employee benefits			$	3,373					$	3,321											2		%
Information systems and communications			1,225						1,156												6
Transaction processing services			786						721												9
Occupancy			311						327												(5)
Amortization of other intangible assets			183						175												5
Acquisition costs			40						38												5
Restructuring charges, net			(1)						—												nm
Other:
Professional services			246						261												(6)
Other			396						441												(10)
Total other			642						702												(9)
Total expenses			$	6,559					$	6,440											2

State Street Corporation | 17

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Compensation and employee benefits expenses decreased 1% in the third quarter of 2021, compared to the same period in 2020, primarily due to higher salary deferrals and lower headcount, partially offset by higher medical benefits costs. Compensation and employee benefits expenses increased 2% in the nine months ended September 30, 2021, compared to the same period in 2020, primarily due to currency translation and higher seasonal expenses, partially offset by lower headcount in high cost locations and incentive compensation. Currency translation increased compensation and employee benefits by 2% in the nine months ended September 30, 2021, compared to the same period in 2020.

Total headcount was flat as of September 30, 2021 compared to September 30, 2020, primarily driven by hiring in global hubs, offset by a reduction in high cost locations.

Information systems and communications expenses increased 3% in the third quarter of 2021, compared to the same period in 2020, primarily due to higher technology and infrastructure investments. Information systems and communications expenses increased 6% in the nine months ended September 30, 2021, compared to the same period in 2020, primarily related to higher software costs, technology infrastructure investments and notable items, partially offset by transformation initiatives. Currency translation increased information systems and communications expenses by 1% in the nine months ended September 30, 2021, compared to the same period in 2020.

Transaction processing services expenses increased 8% and 9% in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020, primarily due to higher sub-custody costs and market data fees. Currency translation increased transaction processing services and communications expenses by 2% in the nine months ended September 30, 2021, compared to the same period in 2020.

Occupancy expenses decreased 6% and 5% in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020, primarily due to footprint optimization. Currency translation increased occupancy expenses by 2% in the nine months ended September 30, 2021, compared to the same period in 2020.

Amortization of other intangible assets increased 5% in both the three and nine months ended September 30, 2021 compared to the same periods in 2020, primarily due to the lift-out in the first quarter of 2021 of the depository bank and fund administrator activities of Fideuram Bank Luxembourg, a subsidiary of Intesa Sanpaolo.

Other expenses decreased 3% in the third quarter of 2021, compared to the same period in 2020, primarily driven by lower sub-advisor costs and marketing costs, partially offset by the absence of notable items from the third quarter of 2020. Other expenses decreased 9% in the nine months ended September 30, 2021, compared to the same period in 2020, primarily due to lower securities processing losses, professional services and travel costs.

Acquisition Costs

We recorded approximately $11 million and $33 million of acquisition costs in the three and nine months ended September 30, 2021, respectively, compared to $15 million and $38 million in the same periods in 2020, respectively, related to our acquisition of CRD. As we integrate CRD into our business, we expect to incur up to approximately $225 million in total of acquisition costs for the period beginning the last quarter of 2018 through 2021, after which we will no longer distinguish certain CRD costs as acquisition costs. As of September 30, 2021, we have incurred a total of $197 million of acquisition costs related to CRD.

In addition, we recorded approximately $7 million of acquisition costs in the third quarter of 2021 related to our proposed acquisition of the BBH Investor Services business. We expect to incur up to approximately $590 million of total acquisition and integration costs related to the acquisition through the third year following its closing.

Restructuring and Repositioning Charges

The following table presents aggregate activity for repositioning 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, 2019			$	190					$	7																	$	1					$	198
Payments and Other Adjustments			(33)						(1)																		—						(34)
Accrual Balance at March 31, 2020			157						6																		1						164
Payments and Other Adjustments			(25)						(1)																		—						(26)
Accrual Balance at June 30, 2020			$	132					$	5																	$	1					$	138
Payments and Other Adjustments			(10)						1																		(1)						(10)
Accrual Balance at September 30, 2020			$	122					$	6																	$	—					$	128
Accrual Balance at December 31, 2020			$	190					$	6																	$	—					$	196
Accruals for Beacon			(1)						—																		—						(1)
Accruals for Repositioning Charges			—						2																		—						2
Payments and Other Adjustments			(9)						(2)																		—						(11)
Accrual Balance at March 31, 2021			$	180					$	6																	$	—					$	186
Payments and Other Adjustments			(34)						—																		—						(34)
Accrual Balance at June 30, 2021			$	146					$	6																	$	—					$	152
Payments and other adjustments			(23)						—																		—						(23)
Accrual Balance at September 30, 2021			$	123					$	6																	$	—					$	129

State Street Corporation | 18

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Income Tax Expense

Income tax expense was $162 million and $445 million in the three and nine months ended September 30, 2021, respectively, compared to $126 million and $375 million in the same periods in 2020, respectively. Our effective tax rate was 18.5% and 18.2% in the three and nine months ended September 30, 2021, respectively, compared to 18.5% and 16.6% in the same periods in 2020, respectively. The increase in the nine months ended September 30, 2021 compared to the same period in 2020, is primarily due to lower benefits from tax credit investments.

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 Institutional 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 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.

Included within our Investment Servicing line of business is CRD, which we acquired in October 2018. The Charles River Investment Management solution

is a technology offering which is designed to automate and simplify the institutional investment process across asset classes, from portfolio management and risk analytics through trading and post-trade settlement, with integrated compliance and managed data throughout. With the acquisition of CRD, we took the first step in building our front-to-back platform, State Street Alpha. Today our State Street Alpha platform combines portfolio management, trading and execution, advanced data aggregation, analytics and compliance tools, and integration with other industry platforms and providers.

Following completion of our proposed acquisition of the BBH Investor Services business, the acquired business will be included within our Investment Servicing line of business.

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 for equity, fixed income and cash assets, 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 17 to the consolidated financial statements in this Form 10-Q.

State Street Corporation | 19

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Investment Servicing

TABLE 10: INVESTMENT SERVICING LINE OF BUSINESS RESULTS
(Dollars in millions, except where otherwise noted)															Three Months Ended September 30,																		% Change
																					2021						2020
Servicing fees																					$	1,395					$	1,301											7		%
Foreign exchange trading services																					266						252												6
Securities finance																					103						81												27
Software and processing fees																					204						162												26
Total fee revenue																					1,968						1,796												10
Net interest income																					491						482												2
Total other income																					(1)						—												nm
Total revenue																					2,458						2,278												8
Provision for credit losses																					(2)						—												nm
Total expenses																					1,755						1,739												1
Income before income tax expense																					$	705					$	539											31
Pre-tax margin																					29		%				24		%
(Dollars in millions, except where otherwise noted)															Nine Months Ended September 30,																		% Change
																					2021						2020
Servicing fees																					$	4,165					$	3,860											8		%
Foreign exchange trading services																					869						998												(13)
Securities finance																					304						258												18
Software and processing fees																					585						528												11
Total fee revenue																					5,923						5,644												5
Net interest income																					1,432						1,716												(17)
Total other income																					(1)						2												nm
Total revenue																					7,354						7,362												—
Provision for credit losses																					(26)						88												nm
Total expenses																					5,389						5,315												1
Income before income tax expense																					$	1,991					$	1,959											2
Pre-tax margin																					27		%				27		%

nm Not meaningful

Servicing Fees

Servicing fees, as presented in Table 10: Investment Servicing Line of Business Results, increased 7% and 8% in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020, respectively, primarily due to higher average equity market levels, client activity and flows, and net new business, partially offset by normal pricing headwinds. Currency translation increased servicing fees by 2% in the nine months ended September 30, 2021, compared to the same period in 2020.

Servicing fees generated outside the U.S. were approximately 48% of total servicing fees in both the three and nine months ended September 30, 2021, compared to approximately 47% and 46% in the same periods in 2020, respectively.

TABLE 11: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY PRODUCT(1)(2)
(In billions)			September 30, 2021						December 31, 2020						September 30, 2020
Collective funds			$	15,159					$	13,387					$	12,204
Mutual funds			11,505						9,810						9,183
Insurance and other products			8,176						8,000						7,939
Pension products			8,497						7,594						7,317
Total			$	43,337					$	38,791					$	36,643

TABLE 12: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY ASSET CLASS(2)
(In billions)			September 30, 2021						December 31, 2020						September 30, 2020
Equities			$	25,350					$	21,626					$	20,094
Fixed-income			12,808						12,834						12,403
Short-term and other investments			5,179						4,331						4,146
Total			$	43,337					$	38,791					$	36,643

TABLE 13: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY GEOGRAPHY(2)(3)
(In billions)			September 30, 2021						December 31, 2020						September 30, 2020
Americas			$	31,934					$	28,245					$	26,666
Europe/Middle East/Africa			8,748						8,101						7,675
Asia/Pacific			2,655						2,445						2,302
Total			$	43,337					$	38,791					$	36,643

(1) Certain previously reported amounts presented have been reclassified to conform to current-period presentation.

(2) Consistent with past practice, AUC/A values for certain asset classes are based on a lag, typically one-month.

(3) Geographic mix is generally based on the domicile of the entity servicing the funds and is not necessarily representative of the underlying asset mix.

State Street Corporation | 20

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Asset servicing mandates newly announced in the third quarter of 2021 totaled approximately $1.66 trillion, with State Street Alpha representing a large proportion of the wins. Servicing assets remaining to be installed in future periods totaled approximately $2.73 trillion as of September 30, 2021, 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. With respect to the current asset mandates of approximately $2.73 trillion that are yet to be installed as of September 30, 2021, we expect the conversion will occur over the coming 12 to 24 months, with approximately half of the annualized revenue expected to be recognized through 2022, and the remainder primarily in 2023.

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.

As a result of a decision to diversify providers, one of our large asset servicing clients has advised us it expects to move a significant portion of its ETF assets currently with State Street to one or more other providers, pending necessary approvals. We expect to continue as a significant service provider for this client after this transition and for the client to

continue to be meaningful to our business. The transition is expected to begin in 2022 but will principally occur in 2023. For the year ended December 31, 2020, the fee revenue associated with the transitioning assets represented approximately 1.5% of our total fee revenue. The total revenue and income impact of this transition will depend upon a range of factors, including potential growth in our continuing business with the client and expense reductions associated with the transition.

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 6% in the three months ended September 30, 2021, compared to the same period in 2020, primarily due to higher direct sales and trading revenue and indirect volumes, partially offset by lower FX volatility. Foreign exchange trading services revenue, as presented in Table 10: Investment Servicing Line of Business Results, decreased 13% in the nine months ended September 30, 2021, compared to the same period in 2020, primarily due to lower FX volatility, as compared to the high levels of volatility experienced in the first nine months of 2020 due to the COVID-19 pandemic. Foreign exchange trading services is composed of revenue generated by FX trading and revenue generated by brokerage and other trading services, which made up 66% and 34%, respectively, of foreign exchange trading services revenue in the third quarter of 2021, compared to 61% and 39%, respectively, in the same period in 2020. The impact of gross money market fund fee waivers on foreign exchange trading services was $15 million and $38 million in the three and nine months ended September 30, 2021, respectively, compared to $2 million and $4 million in the same periods in 2020, respectively.

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.

State Street Corporation | 21

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

•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.

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, increased 27% in the three months ended September 30, 2021, compared to the same period in 2020, primarily driven by higher client securities loan balances and spreads, as well as new business wins in enhanced custody. Securities finance revenue, as presented in Table 10: Investment Servicing Line of Business Results, increased 18% in the nine months ended September 30, 2021, compared to the same period in 2020, primarily driven by higher agency lending and enhanced custody balances, partially offset by lower spreads.

State Street Corporation | 22

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

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, increased 26% and 11% in the three and nine months ended September 30, 2021, compared to the same periods in 2020, respectively, and reflects approximately $104 million and $327 million from CRD in the three and nine months ended September 30, 2021, respectively, compared to approximately $86 million and $303 million from CRD in the same periods in 2020, respectively. 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. Approximately 50%-70% of revenue associated with a sale of software to be installed on-premises is recognized at a point in time when the customer benefits from obtaining access to and use of the software license, with the percentage varying based on the length of the contract and other contractual terms. The remainder of revenue for on-premise installations is recognized over the length of the contract as maintenance and other services are provided. Upon renewal of an on-premises software contract, the same pattern of revenue recognition is followed with 50%-70% recognized upon renewal and the balance recognized over the term of the contract. Revenue for a Software as a Service (SaaS) related arrangement, where the customer does not take possession of the software, is recognized over the term of the contract as services are provided. Upon

renewal of a SaaS arrangement, revenue continues to be recognized as services are provided under the new contract. As a result of these differences in how portions of CRD revenue are accounted for, CRD revenue may vary more than other business units quarter to quarter. CRD contributed approximately $106 million and $336 million in total revenue in the three and nine months ended September 30, 2021, respectively, compared to approximately $89 million and $314 million in the same periods in 2020, respectively, which included in the three and nine months ended September 30, 2021 approximately $104 million and $327 million in software and processing fees, respectively, and $3 million and $9 million in brokerage and other trading services, respectively, within foreign exchange trading services.

Amortization of tax advantage investments negatively impacted software and processing fees by approximately $23 million and $79 million in the three and nine months ended September 30, 2021, respectively, compared to $24 million and $67 million in the same periods in 2020, respectively.

In addition, FX and market-related adjustments, which also includes certain fair value adjustments, impacted software and processing fees by approximately $14 million and $16 million in the three and nine months ended September 30, 2021, respectively, compared to ($2) million and $3 million in the same periods in 2020, respectively.

Expenses

Total expenses for Investment Servicing increased 1% in both the three and nine months ended September 30, 2021, compared to the same periods in 2020, primarily reflecting the impact of notable items and unfavorable currency translation. Currency translation increased expenses for Investment Servicing by 1% in both the three and nine months ended September 30, 2021 relative to the same periods in 2020. Seasonal deferred incentive compensation expense and payroll taxes were $141 million in the nine months ended September 30, 2021 compared to $125 million in the same period in 2020. Total expenses contributed by CRD were approximately $74 million and $211 million in the three and nine months ended September 30, 2021, respectively, compared to $62 million and $181 million in the same periods in 2020, respectively. Additional information about expenses is provided under "Expenses" in "Consolidated Results of Operations" included in this Management's Discussion and Analysis.

State Street Corporation | 23

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Investment Management

TABLE 14: INVESTMENT MANAGEMENT LINE OF BUSINESS RESULTS
(Dollars in millions, except where otherwise noted)															Three Months Ended September 30,																		% Change
																					2021						2020
Management fees(1)(2)																					$	526					$	479											10		%
Foreign exchange trading services(1)(3)																					13						18												(28)
Securities finance																					3						3												—
Software and processing fees(4)																					(6)						10												nm
Total fee revenue																					536						510												5
Net interest income																					(4)						(4)												—
Total revenue																					532						506												5
Provision for credit losses																					—						—												nm
Total expenses																					339						358												(5)
Income before income tax expense																					$	193					$	148											30
Pre-tax margin																					36		%				29		%
(Dollars in millions, except where otherwise noted)															Nine Months Ended September 30,																		% Change
																					2021						2020
Management fees(1)(2)																					$	1,523					$	1,387											10		%
Foreign exchange trading services(1)(3)																					42						41												2
Securities finance																					10						10												—
Software and processing fees(4)																					3						1												nm
Total fee revenue																					1,578						1,439												10
Net interest income																					(11)						(15)												(27)
Total revenue																					1,567						1,424												10
Provision for credit losses																					—						—												nm
Total expenses																					1,082						1,096												(1)
Income before income tax expense																					$	485					$	328											48
Pre-tax margin																					31		%				23		%

(1) Certain fees associated with our GLD ETFs have been reclassified from Foreign exchange trading services to management fees to better reflect the nature of those fees. Prior periods have been reclassified to conform to current-period presentation. These fees were approximately $24 million and $58 million in the three and nine months ended September 30, 2020, respectively.

(2) Includes revenues from SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust AUM where we are not the investment manager but act as the marketing agent.

(3) Includes revenue for reimbursements received for certain ETFs associated with State Street Global Advisors where we act as the distribution and marketing agent.

(4) Includes other revenue items that are primarily driven by equity market movements.

nm Not meaningful

Investment Management total revenue increased 5% and 10% in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020.

Management Fees

Management fees increased 10% in both the three and nine months ended September 30, 2021, compared to the same periods in 2020, primarily due to higher average equity market levels and net inflows from ETFs, partially offset by idiosyncratic actions by an institutional client, as previously reported, and higher money market fee waivers. As of September 30, 2021, and assuming short-term spot interest rates and the amount of money market fund assets remain constant, we estimate that the impact of gross money market fee waivers on our management fees would be approximately $20 million in the fourth quarter of 2021. Currency translation increased management fees by 2% in the nine months ended September 30, 2021, relative to the same period in 2020.

State Street Corporation | 24

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Management fees generated outside the U.S. were approximately 26% of total management fees in both the three and nine months ended September 30, 2021, compared to approximately 25% and 26% in the same periods in 2020, respectively.

TABLE 15: ASSETS UNDER MANAGEMENT BY ASSET CLASS AND INVESTMENT APPROACH
(In billions)			September 30, 2021						December 31, 2020						September 30, 2020
Equity:
Active			$	79					$	85					$	82
Passive			2,361						2,086						1,876
Total equity (1)			2,440						2,171						1,958
Fixed-income:
Active			101						90						85
Passive			509						459						424
Total fixed-income(1)			610						549						509
Cash(1)(2)			367						349						321
Multi-asset-class solutions:
Active			35						40						40
Passive			174						146						124
Total multi-asset-class solutions(1)			209						186						164
Alternative investments(3):
Active			58						39						28
Passive			178						173						168
Total alternative investments(1)			236						212						196
Total			$	3,862					$	3,467					$	3,148

(1) The implementation of an improved internal data management system for product level data in the first quarter of 2021 resulted in some AUM reclassifications between the categories presented for prior periods to align with the current presentation. There was no impact to the total level of reported AUM.

(2) Includes both floating- and constant-net-asset-value portfolios held in commingled structures or separate accounts.

(3) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager for the SPDR® Gold Shares and SPDR®Gold MiniSharesSM Trust, but act as the marketing agent.

TABLE 16: EXCHANGE-TRADED FUNDS BY ASSET CLASS(1)
(In billions)			September 30, 2021						December 31, 2020						September 30, 2020
Alternative Investments(2)(3)			$	69					$	83					$	88
Equity(3)			849						708						605
Multi Asset			1						—						—
Fixed-Income(3)			131						115						108
Total Exchange-Traded Funds			$	1,050					$	906					$	801

(1) ETFs are a component of AUM presented in the preceding table.

(2) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager for the SPDR® Gold Shares and SPDR®Gold MiniSharesSM Trust, but act as the marketing agent.

(3) The implementation of an improved internal data management system for product level data in the first quarter of 2021 resulted in some AUM reclassifications between the categories presented for prior periods to align with the current presentation. There was no impact to the total level of reported AUM.

TABLE 17: GEOGRAPHIC MIX OF ASSETS UNDER MANAGEMENT(1)
(In billions)			September 30, 2021						December 31, 2020						September 30, 2020
North America			$	2,732					$	2,411					$	2,163
Europe/Middle East/Africa			558						512						483
Asia/Pacific			572						544						502
Total			$	3,862					$	3,467					$	3,148

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

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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TABLE 18: ACTIVITY IN ASSETS UNDER MANAGEMENT BY PRODUCT CATEGORY
(In billions)			Equity(1)						Fixed-Income(1)						Cash(1)(2)						Multi-Asset-Class Solutions(1)						Alternative Investments(1)(3)						Total
Balance as of December 31, 2019			$	1,990					$	479					$	317					$	157					$	173					$	3,116
Long-term institutional flows, net(4)			21						(10)						(1)						—						—						10
Exchange-traded fund flows, net			(14)						7						—						—						4						(3)
Cash fund flows, net			—						—						32						—						—						32
Total flows, net			7						(3)						31						—						4						39
Market appreciation (depreciation)			(419)						5						2						(16)						(8)						(436)
Foreign exchange impact			(17)						(3)						(2)						(1)						(7)						(30)
Total market/foreign exchange impact			(436)						2						—						(17)						(15)						(466)
Balance as of March 31, 2020			1,561						478						348						140						162						2,689
Long-term institutional flows, net(4)			(17)						(10)						—						1						(5)						(31)
Exchange-traded fund flows, net			8						6						—						—						12						26
Cash fund flows, net			—						—						28						—						—						28
Total flows, net			(9)						(4)						28						1						7						23
Market appreciation (depreciation)			283						17						(1)						15						10						324
Foreign exchange impact			10						2						1						1						4						18
Total market/foreign exchange impact			293						19						—						16						14						342
Balance as of June 30, 2020			1,845						493						376						157						183						3,054
Long-term institutional flows, net(4)			(22)						17						—						2						(5)						(8)
Exchange-traded fund flows, net			(4)						—						—						—						5						1
Cash fund flows, net			—						—						(58)						—						—						(58)
Total flows, net			(26)						17						(58)						2						—						(65)
Market appreciation (depreciation)			124						(5)						2						4						11						136
Foreign exchange impact			15						4						1						1						2						23
Total market/foreign exchange impact			139						(1)						3						5						13						159
Balance as of September 30, 2020			$	1,958					$	509					$	321					$	164					$	196					$	3,148
Balance as of December 31, 2020			$	2,171					$	549					$	349					$	186					$	212					$	3,467
Long-term institutional flows, net(4)			(35)						26						(1)						1						1						(8)
Exchange-traded fund flows, net			21						9						—						—						(7)						23
Cash fund flows, net			—						—						24						—						—						24
Total flows, net			(14)						35						23						1						(6)						39
Market appreciation (depreciation)			148						(24)						—						3						(11)						116
Foreign exchange impact			(23)						(6)						—						(1)						(1)						(31)
Total market/foreign exchange impact			125						(30)						—						2						(12)						85
Balance as of March 31, 2021			2,282						554						372						189						194						3,591
Long-term institutional flows, net(4)			13						37						—						7						(2)						55
Exchange-traded fund flows, net			15						5						—						—						1						21
Cash fund flows, net			—						—						7						—						—						7
Total flows, net			28						42						7						7						(1)						83
Market appreciation (depreciation)			152						14						2						11						45						224
Foreign exchange impact			(1)						—						—						—						—						(1)
Total market/foreign exchange impact			151						14						2						11						45						223
Balance as of June 30, 2021			2,461						610						381						207						238						3,897
Long-term institutional flows, net(4)			(10)						—						—						4						—						(6)
Exchange-traded fund flows, net			12						4						—						—						(3)						13
Cash fund flows, net			—						—						(12)						—						—						(12)
Total flows, net			2						4						(12)						4						(3)						(5)
Market appreciation (depreciation)			(13)						(1)						(1)						(1)						4						(12)
Foreign exchange impact			(10)						(3)						(1)						(1)						(3)						(18)
Total market/foreign exchange impact			(23)						(4)						(2)						(2)						1						(30)
Balance as of September 30, 2021			$	2,440					$	610					$	367					$	209					$	236					$	3,862

(1) The implementation of an improved internal data management system for product level data in the first quarter of 2021 resulted in some AUM reclassifications between the categories presented for prior periods to align with the current presentation. There was no impact to the total level of reported AUM.

(2) Includes both floating- and constant-net-asset-value portfolios held in commingled structures or separate accounts.

(3) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager for the SPDR® Gold Shares and SPDR®Gold MiniSharesSM Trust, but act as the marketing agent.

(4) Amounts represent long-term portfolios, excluding ETFs.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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Expenses

Total expenses for Investment Management decreased 5% in the three months ended September 30, 2021, compared to the same period in 2020, primarily due to expense savings initiatives, partially offset by higher investments and unfavorable currency translation. Total expenses for Investment Management decreased 1% in the nine months ended September 30, 2021, compared to the same period in 2020, primarily due to expense savings initiatives, partially offset by higher seasonal expenses and currency translation. Seasonal deferred incentive compensation expense and payroll taxes were $35 million in the nine months ended September 30, 2021, compared to $26 million in the same period in 2020. Currency translation increased expenses for Investment Management by 1% in both the three and nine months ended September 30, 2021, relative to the same periods in 2020.

Additional information about expenses is provided under "Expenses" in "Consolidated Results of Operations" included in this Management's Discussion and Analysis.

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 determined by the characteristics of the client liabilities and our desire to maintain a well-diversified portfolio of high-quality assets.

The following information on our financial condition is based on our average balance sheet, which we believe is the better measure of our balance sheet trends as period-end balances can be impacted by the timing of client activities including deposits and withdrawals.

TABLE 19: AVERAGE STATEMENT OF CONDITION(1)
			Nine Months Ended September 30,
(In millions)			2021						2020
Assets:
Interest-bearing deposits with banks			$	91,291					$	75,517
Securities purchased under resale agreements			4,194						3,114
Trading account assets			754						897
Investment securities:
Investment securities available-for-sale			65,051						57,109
Investment securities held-to-maturity			45,526						41,595
Investment securities held-to-maturity purchased under money market liquidity facility			420						9,516
Total investment securities			110,997						108,220
Loans			29,858						27,266
Other interest-earning assets			21,322						10,729
Average total interest-earning assets			258,416						225,743
Cash and due from banks			5,077						3,663
Other non-interest-earning assets			35,150						37,336
Average total assets			$	298,643					$	266,742
Liabilities and shareholders’ equity:
Interest-bearing deposits:
U.S.			$	105,286					$	85,592
Non-U.S.			81,318						66,953
Total interest-bearing deposits(2)			186,604						152,545
Securities sold under repurchase agreements			606						2,687
Short-term borrowings under money market liquidity facility			421						9,550
Other short-term borrowings			832						2,582
Long-term debt			13,431						14,553
Other interest-bearing liabilities			5,332						3,217
Average total interest-bearing liabilities			207,226						185,134
Non-interest-bearing deposits(2)			47,358						36,276
Other non-interest-bearing liabilities			18,407						20,591
Preferred shareholders’ equity			2,110						2,601
Common shareholders’ equity			23,542						22,140
Average total liabilities and shareholders’ equity			$	298,643					$	266,742

(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 $233.96 billion in the nine months ended September 30, 2021 compared to $188.82 billion in the same period in 2020.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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Investment Securities

TABLE 20: CARRYING VALUES OF INVESTMENT SECURITIES
(In millions)			September 30, 2021						December 31, 2020
Available-for-sale:
U.S. Treasury and federal agencies:
Direct obligations			$	14,339					$	6,575
Mortgage-backed securities			16,223						14,305
Total U.S. Treasury and federal agencies			30,562						20,880
Non-U.S. debt securities:
Mortgage-backed securities			2,141						1,996
Asset-backed securities			2,365						2,291
Non-U.S. sovereign, supranational and non-U.S. agency			22,854						22,087
Other(1)			3,306						3,355
Total non-U.S. debt securities			30,666						29,729
Asset-backed securities:
Student loans(2)			231						314
Collateralized loan obligations(3)			4,296						2,966
Non-agency CMBS and RMBS(4)			59						78
Other			92						90
Total asset-backed securities			4,678						3,448
State and political subdivisions			1,396						1,548
Other U.S. debt securities(5)			2,977						3,443
Total available-for-sale securities(6)			$	70,279					$	59,048
Held-to-maturity:
U.S. Treasury and federal agencies:
Direct obligations			$	2,709					$	6,057
Mortgage-backed securities			33,525						36,901
Total U.S. Treasury and federal agencies			36,234						42,958
Non-U.S. debt securities:
Mortgage-backed securities			209						303
Non-U.S. sovereign, supranational and non-U.S. agency			1,508						342
Total non-U.S. debt securities			1,717						645
Asset-backed securities:
Student loans(2)			5,017						4,774
Non-agency CMBS and RMBS(7)			380						554
Total asset-backed securities			5,397						5,328
Total(6)(8)			43,348						48,931
Held-to-maturity under money market mutual fund liquidity facility			—						3,300
Total held-to-maturity securities(6)			$	43,348					$	52,231

(1) As of September 30, 2021 and December 31, 2020, the fair value includes non-U.S. corporate bonds of $1.76 billion and $1.88 billion, respectively.

(2) 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.

(3) Excludes collateralized loan obligations in loan form. Refer to Note 4 for additional information.

(4) Consists entirely of non-agency CMBS as of both September 30, 2021 and December 31, 2020.

(5) As of September 30, 2021 and December 31, 2020, the fair value of U.S. corporate bonds was $2.98 billion and $3.44 billion, respectively.

(6) An immaterial amount of accrued interest related to HTM and AFS investment securities was excluded from the amortized cost basis for the period ended September 30, 2021.

(7) As of September 30, 2021 and December 31, 2020, the total amortized cost included $315 million and $464 million, respectively, of non-agency CMBS and $65 million and $90 million of non-agency RMBS, respectively.

(8) As of September 30, 2021, we recognized an allowance for credit losses of $2 million on HTM investment securities.

Additional information about our investment securities portfolio is provided in Note 3 to the consolidated financial statements in this Form 10-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 3.1 years and 3.0 years as of September 30, 2021 and December 31, 2020, respectively. The increase in securities duration is driven by higher interest rates leading to slower MBS paydowns and the run-off of MMLF securities, partially offset by portfolio activity, including purchases, run-off and sales.

Approximately 92% of the carrying value of the portfolio was rated “AAA” or “AA” as of both September 30, 2021 and December 31, 2020.

TABLE 21: INVESTMENT PORTFOLIO BY EXTERNAL CREDIT RATING (EXCLUDING SECURITIES PURCHASED UNDER THE MMLF PROGRAM)
			September 30, 2021						December 31, 2020
AAA(1)			79		%				78		%
AA			13						14
A			4						4
BBB			4						4
			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 September 30, 2021 and December 31, 2020, the investment portfolio was diversified with respect to asset class composition. The following table presents the composition of these asset classes.

TABLE 22: INVESTMENT PORTFOLIO BY ASSET CLASS
			September 30, 2021						December 31, 2020
U.S. Agency Mortgage-backed securities			34		%				39		%
Foreign sovereign			21						20
U.S. Treasuries			15						11
Asset-backed securities			13						11
Other credit(1)			17						19
			100		%				100		%

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

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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Non-U.S. Debt Securities

Approximately 28% and 27% of the aggregate carrying value of our investment securities portfolio was non-U.S. debt securities as of September 30, 2021 and December 31, 2020, respectively.

TABLE 23: NON-U.S. DEBT SECURITIES(1)
(In millions)			September 30, 2021						December 31, 2020
Available-for-sale:
Canada			$	6,444					$	3,163
Germany			2,297						2,155
France			2,272						2,829
Australia			2,080						2,809
Austria			1,394						1,544
Japan			1,382						560
Spain			1,264						1,642
Netherlands			1,195						1,528
United Kingdom			1,177						1,209
Belgium			1,077						1,618
Italy			867						1,014
Finland			866						1,222
Ireland			768						1,226
Other(2)			7,583						7,210
Total			$	30,666					$	29,729
Held-to-maturity:
Singapore			$	149					$	342
Australia			65						90
Spain			70						84
Other(2)			1,433						129
Total			$	1,717					$	645

(1) Geography is determined primarily based on the domicile of collateral or issuer.

(2) As of September 30, 2021, other non-U.S. investments include $6.8 billion supranational bonds in AFS securities and $1.4 billion supranational bonds in HTM securities.

Approximately 80% of the aggregate carrying value of these non-U.S. debt securities was rated “AAA” or “AA” as of both September 30, 2021 and December 31, 2020. The majority of these securities comprised senior positions within the security structures; these positions have a level of protection provided through subordination and other forms of credit protection. As of both September 30, 2021 and December 31, 2020, approximately 26% of the aggregate carrying value of these non-U.S. debt securities was floating-rate.

As of September 30, 2021, our non-U.S. debt securities had an average market-to-book ratio of 100.6%, and an aggregate pre-tax net unrealized gain of $190 million, composed of gross unrealized gains of $258 million and gross unrealized losses of $68 million. These unrealized amounts included:

•a pre-tax net unrealized gain of $130 million, composed of gross unrealized gains of $193 million and gross unrealized losses of $63 million, associated with non-U.S. AFS debt securities; and

•a pre-tax net unrealized gain of $60 million, composed of gross unrealized gains of $65

million and gross unrealized losses of $5 million, associated with non-U.S. HTM debt securities.

As of September 30, 2021, the underlying collateral for non-U.S. MBS and ABS primarily included Australian, U.K., Netherlands, Spanish and Italian mortgages. The securities listed under “Canada” were composed of Canadian government securities and provincial bonds, 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. The securities listed under “Japan” were substantially composed of Japanese government securities.

Municipal Obligations

We carried approximately $1.4 billion of municipal securities classified as state and political subdivisions in our investment securities portfolio as of September 30, 2021, as shown in Table 20: Carrying Values of Investment Securities, all of which were classified as AFS. As of September 30, 2021, we also provided approximately $9.3 billion of credit and liquidity facilities to municipal issuers.

TABLE 24: STATE AND MUNICIPAL OBLIGORS(1)
(Dollars in millions)			Total Municipal Securities						Credit and Liquidity  Facilities(2)						Total						% of Total Municipal Exposure
September 30, 2021
State of Issuer:
Texas			$	239					$	2,388					$	2,627					24		%
California			109						2,072						2,181						20
New York			274						1,257						1,531						14
Massachusetts			322						698						1,020						10
Tennessee			—						491						491						5
Total			$	944					$	6,906					$	7,850
December 31, 2020
State of Issuer:
Texas			$	268					$	2,282					$	2,550					23		%
California			113						2,174						2,287						21
New York			297						1,363						1,660						15
Massachusetts			382						927						1,309						12
Total			$	1,060					$	6,746					$	7,806

(1) Represented 5% or more of our aggregate municipal credit exposure of approximately $10.73 billion and $11.06 billion across our businesses as of September 30, 2021 and December 31, 2020, respectively.

(2) Includes municipal loans which are also presented within Table 25: U.S. and Non-U.S. Loans.

Our aggregate municipal securities exposure presented in Table 24: State and Municipal Obligors, was concentrated primarily with highly-rated counterparties, with approximately 88% of the obligors rated “AAA” or “AA” as of September 30, 2021. As of that date, approximately 24% and 75% of our aggregate municipal securities exposure was associated with general obligation and revenue bonds, respectively. The portfolios are also diversified geographically, with the states that represent our largest exposures widely dispersed across the U.S.

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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.

Loans

TABLE 25: U.S. AND NON- U.S. LOANS
(In millions)			September 30, 2021						December 31, 2020
Domestic(1):
Commercial and financial:
Fund Finance(2)			$	12,367					$	11,531
Leveraged loans			3,407						2,923
Overdrafts			2,352						1,894
Other(3)			2,140						2,688
Commercial real estate			2,384						2,096
Total domestic			22,650						21,132
Foreign(1):
Commercial and financial:
Fund Finance(2)			7,368						4,432
Leveraged loans			1,317						1,242
Overdrafts			1,462						1,088
Other(3)			—						31
Total foreign			10,147						6,793
Total loans(2)(4)			32,797						27,925
Allowance for loan losses			(95)						(122)
Loans, net of allowance			$	32,702					$	27,803

(1) Domestic and foreign categorization is based on the borrower’s country of domicile.

(2) Fund finance loans include primarily $6,282 million loans to real money funds, $9,752 million private equity capital call finance loans, $993 million loans to business development companies and $2,412 million collateralized loan obligations in loan form, as of September 30, 2021, compared to $6,391 million loans to real money funds, $8,380 million private equity capital call finance loans and $821 million loans to business development companies as of December 31, 2020.

(3) Includes $1,532 million securities finance loans, $589 million loans to municipalities and $19 million other loans as of September 30, 2021 and $1,911 million securities finance loans, $754 million loans to municipalities and $54 million other loans as of December 31, 2020.

(4) As of September 30, 2021, excluding overdrafts, floating rate loans totaled $26,529 million and fixed rate loans totaled $2,453 million.

In the second quarter of 2021, in addition to our CLOs in the investment portfolio, we began purchasing CLOs in loan form. The increase in foreign loans as of September 30, 2021 compared to December 31, 2020 was primarily driven by the purchase of $2,412 million collateralized loan obligations in loan form in 2021.

As of September 30, 2021 and December 31, 2020, our leveraged loans totaled approximately $4.72 billion and $4.17 billion, respectively. We sold $84 million of leveraged loans in the third quarter of 2021, of which $46 million remained unsettled and was held for sale as of September 30, 2021.

In addition, we had binding unfunded commitments as of September 30, 2021 and December 31, 2020 of $279 million and $149 million, respectively, to participate in syndications of leveraged loans. Additional information about these

unfunded commitments is provided in Note 9 to the consolidated financial statements in this Form 10-Q.

These leveraged loans, which are primarily rated “speculative” under our internal risk-rating framework (refer to Note 4 to the consolidated financial statements in this Form 10-Q), are externally rated “BBB,” “BB” or “B,” with approximately 88% and 85% of the loans rated “BB” or “B” as of September 30, 2021 and December 31, 2020, 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 to the consolidated financial statements in this Form 10-Q.

No loans were modified in troubled debt restructurings as of both September 30, 2021 and December 31, 2020.

Allowance for credit losses

TABLE 26: ALLOWANCE FOR CREDIT LOSSES
			Nine Months Ended September 30,
(In millions)			2021						2020
Allowance for credit losses:
Beginning balance			$	148					$	93
Provision for credit losses (funded commitments)(1)			(22)						89
Provisions for credit losses (unfunded commitments)			(2)						(4)
Provisions for credit losses (held-to-maturity securities and all other)			(2)						3
Charge-offs(2)			(2)						(33)
Other(3)			(3)						5
Ending balance			$	117					$	153

(1) The provision for credit losses is primarily related to commercial and financial loans.

(2) The charge-offs are related to commercial and financial loans.

(3) Consists primarily of foreign currency translation.

The provision for credit losses related to loans and other financial assets held at amortized cost, including investment securities classified as HTM and off-balance sheet commitments, was a $2 million and $26 million reserve release in the three and nine months ended September 30, 2021, compared to nil and $88 million reserve build in the same periods in 2020, respectively.

As of September 30, 2021, approximately $68 million of our allowance for credit losses was related to leveraged loans included in the commercial and financial segment compared to $106 million as of September 30, 2020. The reduction in the allowance in the third quarter of 2021 was primarily driven by improvements in credit quality and stable economic

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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conditions. As our view on current and future economic scenarios change, our allowance for credit losses related to these loans may be impacted through a change to the provisions for credit losses, reflecting credit migration within our loan portfolio, as well as changes in management's economic outlook as of year-end. The remaining $49 million and $47 million as of September 30, 2021 and 2020, respectively, was related to other loans, commercial real estate loans, off-balance sheet commitments and other financial assets held at amortized cost, including investment securities held-to-maturity.

An allowance for credit losses is recognized on HTM securities upon acquisition of the security, and on AFS securities when the fair value and expected future cash flows of the investment securities are less than their amortized cost basis. Our assessment of impairment involves an evaluation of economic and security-specific factors. Such factors are based on estimates, derived by management, which contemplate current market conditions and security-specific performance. To the extent that market conditions are worse than management's expectations or due to idiosyncratic bond performance, the credit-related component of impairment, in particular, could increase and would be recorded in the provision for credit losses. Additional information with respect to the allowance for credit losses, net impairment losses and gross unrealized losses related to investment securities, is provided in Note 3 to the consolidated financial statements in this Form 10-Q.

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 27: Cross-border outstandings, represented approximately 24% and 30% of our consolidated total assets as of September 30, 2021 and December 31, 2020, respectively.

TABLE 27: CROSS-BORDER OUTSTANDINGS(1)
(In millions)			Investment Securities and Other Assets						Derivatives and Securities on Loan						Total Cross-Border Outstandings
September 30, 2021
Germany			$	25,773					$	344					$	26,117
United Kingdom			12,227						1,330						13,557
Canada			11,564						528						12,092
Australia			7,238						903						8,141
Luxembourg			5,734						1,833						7,567
Ireland			3,095						2,345						5,440
Japan			4,413						535						4,948
December 31, 2020
United Kingdom			$	18,880					$	1,797					$	20,677
Japan			19,537						560						20,097
Germany			18,734						2,163						20,897
Canada			5,997						3,113						9,110
Australia			5,790						2,908						8,698
Luxembourg			5,036						2,148						7,184
France			3,586						3,010						6,596

(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 September 30, 2021, aggregate cross-border outstandings in France amounted to between 0.75% and 1% of our consolidated assets, at approximately $2.73 billion. As of December 31, 2020, aggregate cross-border outstandings in each of Switzerland and Ireland amounted to between 0.75% and 1% of our consolidated assets, at approximately $3.13 billion and $2.93 billion, respectively.

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-

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liability management, and which consists primarily of interest rate risk;

•model risk;

•strategic risk; and

•reputational, fiduciary and business conduct risk.

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 24 to 52 included under Item 1A, Risk Factors, in our 2020 Form 10-K.

For additional information about our risk management, including our risk appetite framework and risk governance committee structure, refer to pages 85 to 89 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, Risk Management, in our 2020 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 overdrafts, loans and contingent commitments, in our investment securities portfolio, where recourse to a counterparty exists, and in our direct and indirect trading activities, such as securities purchased under a resale agreement, principal securities lending and FX and indemnified agency securities lending. We also assume credit risk in our day-to-day treasury and securities and other settlement operations, in the form of deposit placements and other cash balances, with central banks or private sector institutions and fees receivables.

Allowance for Credit Losses

We maintain an allowance for credit losses to support our financial assets held at amortized cost. We also maintain an allowance for unfunded commitments and letters of credit to support our off-balance sheet 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 the estimated effects of our forecasts on our counterparties. We utilize multiple economic scenarios, consisting of a baseline, upside and downside scenarios, to develop management's forecast of future expected losses.

The economic forecast utilized in the third quarter of 2021 reflects improvements in credit quality and stable economic outlook. Allowance estimates remain subject to continued model and economic uncertainty and management may use qualitative adjustments. If future data and forecasts deviate relative to the forecasts utilized to determine our allowance for credit losses as of September 30, 2021, or if credit risk migration is higher or lower than forecasted for reasons independent of the economic forecast, our allowance for credit losses will also change.

Additional information about the allowance for credit losses is provided in Notes 3 and 4 to the consolidated financial statements in this Form 10-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 89 to 94 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, Credit Risk Management, in our 2020 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 our 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

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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 September 30, 2021, our Parent Company and State Street Bank had no senior notes or 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 metrics, refer to pages 94 to 99 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity Risk Management, in our 2020 Form 10-K. For additional information on our liquidity ratios, including LCR and the net stable funding ratio, refer to page 14 included under Item 1, Business, in our 2020 Form 10-K.

Asset Liquidity

Central to the management of our liquidity is asset liquidity, which consists primarily of HQLA. HQLA is the amount of liquid assets that qualify for inclusion in the LCR. As a banking organization, we are subject to a minimum LCR under the LCR rule approved by 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. The LCR was fully

implemented beginning on January 1, 2017. We report LCR to the Federal Reserve daily. For the quarters ended September 30, 2021 and December 31, 2020, daily average LCR for the Parent Company was 105% and 108%, respectively, with the lower daily average LCR for the quarter ended September 30, 2021 driven primarily by higher deposits. The impact of higher deposits on the Parent Company's LCR is offset by a cap on the HQLA from State Street Bank and Trust that can be recognized at the Parent Company as defined in the U.S. LCR Final Rule as it prohibits the upstreaming of liquidity under stress. The average HQLA for the Parent Company under the LCR final rule definition was $151.48 billion and $143.61 billion, post-prescribed haircuts, for the quarters ended September 30, 2021 and December 31, 2020, respectively. The increase in average HQLA for the quarter ended September 30, 2021, compared to the quarter ended December 31, 2020, was primarily due to a higher level of client deposits. For the quarter ended September 30, 2021, LCR for State Street Bank and Trust was approximately 127%. State Street Bank and Trust's LCR is higher than the Parent Company's LCR, primarily due to application of the transferability restriction in the LCR Final Rule to the calculation of the Parent Company's LCR. This restriction limits the HQLA used in the calculation of the Parent Company's LCR to the amount of net cash outflows of its principal banking subsidiary (State Street Bank and Trust). This transferability restriction does not apply in the calculation of State Street Bank and Trust's LCR, and therefore State Street Bank and Trust's LCR reflects the benefit of all of its HQLA holdings.

We maintained average cash balances in excess of regulatory requirements governing deposits with the Federal Reserve of approximately $76.83 billion at the Federal Reserve, the ECB and other non-U.S. central banks for the quarter ended September 30, 2021, and $75.68 billion for the quarter ended December 31, 2020. 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. As of both September 30, 2021 and December 31, 2020, 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

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underlying conditions. As of both September 30, 2021 and December 31, 2020, we had no outstanding primary credit borrowings from the FRBB discount window or any other central bank facility.

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 $100.03 billion for the quarter ended September 30, 2021, compared to $89.12 billion for the quarter ended December 31, 2020.

Uses of Liquidity

Significant uses of our liquidity could result from the following: withdrawals of client deposits; draw-downs by our custody clients of lines of credit; advances to clients to settle securities transactions; increases in our investment and loan portfolios; or other permitted purposes. Such circumstances would generally arise under stress conditions including deterioration in credit ratings. A recurring use of our liquidity involves our deployment of HQLA from our investment portfolio to post collateral to financial institutions serving as sources of securities under our enhanced custody program.

We had unfunded commitments to extend credit with gross contractual amounts totaling $34.47 billion and $34.21 billion and standby letters of credit totaling $3.33 billion and $3.33 billion as of September 30, 2021 and December 31, 2020, respectively. These amounts do not reflect the value of any collateral. As of September 30, 2021, approximately 73% of our unfunded commitments to extend credit and 28% of our standby letters of credit expire within one year. Since many of our commitments are expected to expire or renew without being drawn upon, the gross contractual amounts do not necessarily represent our future cash requirements.

Resolution Planning

State Street, like other bank holding companies considered systemically important, 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.

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. The Agencies published on June 29, 2020 the scope for the 2021 targeted resolution plan, to include the core elements of resolution planning and some specific firm level information, as well as the impact of the COVID-19 pandemic. We submitted our 2021 targeted resolution plan to the Agencies by 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 18 to 20 included under Item 1, Business, in our 2020 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

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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.

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 2021 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. On June 25, 2021, the FDIC issued a policy statement adjusting the timing of IDI plan submissions to a triennial filing for State Street and the other U.S. G-SIBs.

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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 September 30, 2021, approximately 64% of our average total deposit balances were denominated in U.S. dollars, 16% in EUR, 10% in the British pound Sterling (GBP) and 10% in all other currencies, whereas as of December 31, 2020, approximately 65% of our average total deposit balances were denominated in U.S. dollars, approximately 15% in EUR, 10% in the British pound Sterling (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 repurchase. These transactions are short-term in nature, generally overnight and are collateralized by high-quality investment securities. These balances were $0.64 billion and $3.41 billion as of September 30, 2021 and December 31, 2020, respectively.

State Street Bank currently maintains a line of credit with a financial institution of CAD $1.40 billion, or approximately $1.10 billion, as of September 30, 2021, 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 September 30, 2021 and December 31, 2020, 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. The total amount remaining for

issuance under the registration statement is $4.25 billion as of September 30, 2021. In addition, State Street Bank also has current authorization from the Board to issue up to $5 billion in unsecured senior debt.

On March 3, 2021, we issued $850 million aggregate principal amount of 2.200% Senior Subordinated Notes due 2031.

In September 2021, we completed a public offering of approximately 21.7 million shares of our common stock to provide partial funding for our $3.5 billion proposed purchase of the BBH Investor Services business. The offering price was $87.60 per share and net proceeds totaled approximately $1.9 billion.

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

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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 7 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.

In light of the COVID-19 pandemic, we continue to have business continuity arrangements in place 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. The current operating environment increases operational risk and information technology risk, including cyber-threats. See also “Information Technology Risk Management” below.

For additional information about our operational risk framework, refer to pages 100 to 103 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Operational Risk Management", in our 2020 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 and associated risks, refer to pages 103 to 104 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Information Technology Risk Management" in our 2020 Form 10-K, and pages 48 to 49 included under Item 1A, Risk Factors, in our 2020 Form 10-K - "Any failures of or damage to, attack on or unauthorized access to our information technology systems or facilities or disruptions to our continuous operations, including

the systems, facilities or operations of third parties with which we do business, such as resulting from cyber-attacks, could result in significant costs, reputational damage and limits on our ability to conduct our business activities".

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, foreign exchange rates or commodity prices. We are exposed to market risk in both our trading and certain of our non-trading, or asset-and-liability management, activities.

Information about the market risk associated with our trading activities is provided below under “Trading Activities.” Information about the market risk associated with our non-trading activities, which consists primarily of interest rate risk, is provided below under “Asset-and-Liability Management Activities.”

Trading Activities

In the conduct of our trading activities, we assume market risk, the level of which is a function of our overall risk appetite, business objectives and liquidity needs, our clients' requirements and market volatility and our execution against those factors.

For additional information about the market risk associated with our trading activities, refer to pages 104 to 106 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Market Risk Management" in our 2020 Form 10-K.

As part of our trading activities, we assume positions in the foreign exchange and interest rate markets by buying and selling cash instruments and entering into derivative instruments, including foreign exchange forward contracts, foreign exchange and interest rate options and interest rate swaps, interest rate forward contracts and interest rate futures. As of September 30, 2021, the notional amount of these derivative contracts was $2.40 trillion, of which $2.38 trillion was composed of foreign exchange forward, swap and spot contracts. We seek to match positions closely with the objective of mitigating related currency and interest rate risk. All foreign exchange contracts are valued daily at current market rates.

Value-at-Risk and Stressed VaR

We use a variety of risk measurement tools and methodologies, including VaR, which is an estimate of potential loss for a given period within a stated statistical confidence interval. We use a risk measurement methodology to measure trading-related VaR daily. We have adopted standards for measuring trading-related VaR, and we maintain regulatory capital for market risk associated with our

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trading activities in conformity 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 is designed to identify the second-worst outcome occurring in the worst continuous one-year rolling period since July 2007. This stressed VaR meets the regulatory requirement as the rolling ten-day period with an outcome that is worse than 99% of other outcomes during that twelve-month period of financial stress. For each portfolio, the stress period is determined algorithmically by seeking the one-year time horizon that produces the largest ten-business-day VaR from within the available historical data. This historical data set includes the financial crisis of 2008, the highly volatile period surrounding the Eurozone sovereign debt crisis and the Standard & Poor's downgrade of U.S. Treasury debt in August 2011. As the historical data set used to determine the stress period expands over time, future market stress events will be incorporated.

For additional information about our VaR measurement tools and methodologies, refer to pages 107 to 110 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Value-at-Risk and Stressed VaR" in our 2020 Form 10-K.

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 ERM and reported to the Credit and Market Risk Committee (CMRC). Limit breaches are addressed by ERM risk managers in conjunction with the business units, escalated as appropriate, and reviewed by the CMRC 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 experienced no back-testing exceptions in the quarters ended September 30, 2021, June 30, 2021 and September 30, 2020. At a 99% confidence interval, the statistical expectation for a VaR model is to witness one exception every hundred trading days (or two to three exceptions per year).

The following tables present VaR and stressed VaR associated with our trading activities for covered positions held during the quarters ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively, as measured by our VaR methodology. Diversification effect in the tables below represents the difference between total VaR and the sum of the VaRs for each trading activity. This effect arises because the risks present in our trading activities are not perfectly correlated.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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TABLE 28: TEN-DAY VALUE-AT-RISK ASSOCIATED WITH TRADING ACTIVITIES FOR COVERED POSITIONS
			Three Months Ended																																																						As of September 30, 2021						As of June 30, 2021						As of September 30, 2020
			September 30, 2021																								June 30, 2021																								September 30, 2020
(In thousands)			Avg.						Max.						Min.												Avg.						Max.						Min.												Avg.						Max.						Min.						VaR						VaR						VaR
Global Markets			$	17,071					$	30,485					$	11,417											$	15,283					$	25,020					$	6,974											$	14,270					$	31,389					$	6,589					$	15,314					$	20,989					$	13,964
Global Treasury			1,357						5,468						220												4,342						9,451						460												3,206						7,933						350						1,131						3,667						1,969
Diversification			(925)						(5,444)						(185)												(2,671)						(7,136)						474												(2,758)						(7,914)						(342)						(1,285)						(812)						(1,618)
Total VaR			$	17,503					$	30,509					$	11,452											$	16,954					$	27,335					$	7,908											$	14,718					$	31,408					$	6,597					$	15,160					$	23,844					$	14,315
TABLE 29: TEN-DAY STRESSED VALUE-AT-RISK ASSOCIATED WITH TRADING ACTIVITIES FOR COVERED POSITIONS
			Three Months Ended																																																						As of September 30, 2021						As of June 30, 2021						As of September 30, 2020
			September 30, 2021																								June 30, 2021																								September 30, 2020
(In thousands)			Avg.						Max.						Min.												Avg.						Max.						Min.												Avg.						Max.						Min.						VaR						VaR						VaR
Global Markets			$	53,508					$	101,535					$	26,874											$	36,478					$	74,475					$	13,037											$	32,974					$	84,755					$	17,472					$	45,720					$	56,998					$	39,714
Global Treasury			4,053						15,424						1,229												12,644						29,651						2,042												9,075						23,153						1,725						6,230						6,462						5,594
Diversification			(2,798)						(5,791)						(1,662)												(6,471)						(8,193)						1,690												(7,773)						(23,190)						(1,591)						(7,930)						8,473						(4,861)
Total Stressed VaR			$	54,763					$	111,168					$	26,441											$	42,651					$	95,933					$	16,769											$	34,276					$	84,718					$	17,606					$	44,020					$	71,933					$	40,447

The three month average of our stressed VaR-based measure was approximately $55 million for the quarter ended September 30, 2021, compared to an average of approximately $43 million for the quarter ended June 30, 2021 and $34 million for the quarter ended September 30, 2020. The increase in the average stressed VaR for the quarter ended September 30, 2021, compared to the quarter ended June 30, 2021 and the quarter ended September 30, 2020, is primarily attributed to higher 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. Both the ten-day VaR-based measures and the stressed VaR-based measures are based on historical changes observed during rolling ten-day periods for the portfolios as of the close of business each day over the past one-year period.

We have in the past and may in the future modify and adjust our models and methodologies used to calculate VaR and stressed VaR, subject to regulatory review and approval, and any future modifications and adjustments may result in changes in our VaR-based and stressed VaR-based measures.

The following tables present the VaR and stressed-VaR associated with our trading activities attributable to foreign exchange risk, interest rate risk and volatility risk as of September 30, 2021, June 30, 2021 and September 30, 2020, respectively. Diversification effect in the tables below represents the difference between total VaR and the sum of the VaRs for each trading activity. This effect arises because the risks present in our trading activities are not perfectly correlated.

TABLE 30: TEN-DAY VaR ASSOCIATED WITH TRADING ACTIVITIES BY RISK FACTOR(1)
			As of September 30, 2021																		As of June 30, 2021																		As of September 30, 2020
(In thousands)			Foreign Exchange Risk						Interest Rate Risk						Volatility Risk												Foreign Exchange Risk						Interest Rate Risk						Volatility Risk												Foreign Exchange Risk						Interest Rate Risk						Volatility Risk
By component:
Global Markets			$	7,411					$	16,637					$	549											$	6,859					$	16,327					$	701											$	3,260					$	13,634					$	771
Global Treasury			246						1,304						—												97						3,950						—												16						2,078						—
Diversification			(53)						(1,335)						—												(234)						687						—												(15)						(1,804)						—
Total VaR			$	7,604					$	16,606					$	549											$	6,722					$	20,964					$	701											$	3,261					$	13,908					$	771

TABLE 31: TEN-DAY STRESSED VaR ASSOCIATED WITH TRADING ACTIVITIES BY RISK FACTOR(1)
			As of September 30, 2021																		As of June 30, 2021																		As of September 30, 2020
(In thousands)			Foreign Exchange Risk						Interest Rate Risk						Volatility Risk												Foreign Exchange Risk						Interest Rate Risk						Volatility Risk												Foreign Exchange Risk						Interest Rate Risk						Volatility Risk
By component:
Global Markets			$	7,925					$	73,540					$	575											$	10,456					$	59,710					$	747											$	8,098					$	44,418					$	868
Global Treasury			299						6,509						—												117						6,350						—												34						5,679						—
Diversification			(177)						(7,058)						—												(191)						8,450						—												(34)						(6,468)						—
Total Stressed VaR			$	8,047					$	72,991					$	575											$	10,382					$	74,510					$	747											$	8,098					$	43,629					$	868

(1) For purposes of risk attribution by component, foreign exchange refers only to the risk from market movements in period-end rates.  Forwards, futures, options and swaps with maturities greater than period-end have embedded interest rate risk that is captured by the measures used for interest rate risk.  Accordingly, the interest rate risk embedded in these foreign exchange instruments is included in the interest rate risk component.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

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. The baseline view of NII is updated on a regular basis. Relative to the year ago period, the September 30, 2021 baseline forecast is based on an increased balance sheet size. Compared to June 30, 2021, the baseline forecast assumes a modest reduction in balance sheet size over the subsequent twelve-month horizon. Table 32, Key Interest Rates for Baseline Forecasts, presents the spot and 12-month forward rates used in our baseline forecasts at September 30, 2021 and September 30, 2020. Our September 30, 2021 baseline forecast assumes no changes by the Federal Reserve over the next 12 months.

TABLE 32: KEY INTEREST RATES FOR BASELINE FORECASTS
			September 30, 2021												September 30, 2020
			Fed Funds Target						10-Year Treasury						Fed Funds Target						10-Year Treasury
Spot rates			0.25		%				1.49		%				0.25		%				0.69		%
12-month forward rates			0.25						1.70						0.25						0.77

In Table 33: 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 and composition can fluctuate with the level of rates as prepayment assumptions change, our deposit balances are assumed to remain consistent with the baseline.

Beginning with the December 31, 2020 reporting period, we enhanced our NII sensitivity methodology so that the full impact of rate shocks are realized for all currencies even if the result is negative interest rates. Prior to the December 31, 2020 reporting period, our results in lower rate scenarios were impacted by an assumed floor at zero for certain currencies including U.S. dollar. For consistency in this disclosure, the September 30, 2020 reporting period is restated in the table below using enhanced modeling for negative rates.

TABLE 33: NET INTEREST INCOME SENSITIVITY
			September 30, 2021																		September 30, 2020(1)
(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			$	507					$	323					$	830					$	426					$	134					$	560
–100 bps shock			921						96						1,017						534						193						727
Steeper yield curve:
'+100 bps shift in long-end rates(2)			136						16						152						170						5						175
'-100 bps shift in short-end rates(2)			1,070						111						1,181						728						198						926
Flatter yield curve:
'+100 bps shift in short-end rates(2)			371						307						678						248						145						393
'-100 bps shift in long-end rates(2)			(143)						(16)						(159)						(183)						(5)						(188)

(1) Represents September 30, 2020 results using the enhanced modeling approach including negative interest rates for all currencies that was implemented starting with the December 31, 2020 reporting period.

(2) The short-end is 0-3 months. The long-end is 5 years and above. Interim term points are interpolated.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

As of September 30, 2021, NII and U.S. dollar NII is expected to benefit from both parallel increases and decreases in interest rates. Compared to September 30, 2020, our NII and U.S. dollar NII is more sensitive to parallel rate increases, primarily due to higher levels of client deposits. Our projection of an NII benefit to an upward rate shock of +100bps assumes deposit betas remain low, consistent with the last rising rate cycle. Our projection also assumes that deposit levels remain relatively consistent with third quarter 2021 averages. We expect that our NII benefit in the +100bps scenarios would be lower if deposits levels decline in a rising rate environment.

Compared to September 30, 2020, our NII and U.S. dollar NII benefit to lower rates has increased primarily due to growth in fixed and contractually floored securities and loans. Our projection of an NII benefit from a downward rate shock of -100 bps assumes negative interest rates are charged on client deposits and contractual floors are reached on our securities and loans. NII is also exposed to smaller shocks to short-end U.S. interest rates. If short-end U.S. market interest rates increase or (decrease) by 5 bps, we estimate the annualized impact to be approximately $20 million in higher (or lower) NII primarily due to the impact on our sponsored repo activity.

NII 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 September 30, 2020, our non-U.S. benefit from higher rates increased due to higher non-U.S. deposit balances. Our benefit from lower rates decreased due to lower levels of non-U.S. securities.

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 34: ECONOMIC VALUE OF EQUITY SENSITIVITY
			As of September 30,
(In millions)			2021						2020
Rate change:			Benefit (Exposure)
+200 bps shock			$	(1,587)					$	(1,725)
–200 bps shock			4,816						5,145

As of September 30, 2021, EVE sensitivity remains exposed to upward shifts in interest rates. Compared to September 30, 2020, our sensitivity in both the up and down 200 shock scenarios

decreased due to higher client deposits, partially offset by growth in our securities portfolio and interest rate hedging activity.

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 "Risk Management" in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

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 112 to 113 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Model Risk Management", in our 2020 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.

On March 5, 2021, the Intercontinental Exchange Benchmark Administration announced, in conjunction with the United Kingdom Financial Conduct Authority (FCA), that it would cease the publication of GBP, EUR, Swiss Franc and the Japanese Yen LIBOR settings for all tenors, as well as one week and two months U.S. dollar LIBOR settings on December 31, 2021 and would cease the publication of overnight and twelve months U.S. dollar LIBOR settings on June 30, 2023.

On April 6, 2021, the state of New York adopted Alternative Reference Rate Committee sponsored

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

legislation that would, among other things, provide for the replacement of LIBOR references in hard to modify legacy financial contracts governed by New York law with a benchmark rate based on SOFR. Other states may adopt similar legislation.

U.S. bank regulators have issued guidance strongly encouraging banking organizations to cease using U.S. dollar LIBOR as a reference rate in new contracts as soon as practicable and in any event by December 31, 2021. We are continuing our efforts to work to facilitate an orderly transition from LIBOR, and other interbank offered rates, to alternative reference rates for us and our clients in a manner consistent with supervisory expectations.

For additional information about our strategic risk management framework and associated risks, refer to page 113 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Strategic Risk Management", in our 2020 Form 10-K, and page 46 included under Item 1A, Risk Factors, in our 2020 Form 10-K - "The market transition away from broad use of the London Interbank Offered Rate (LIBOR) as an interest rate benchmark may impose additional costs on us and may expose us to increased operational, model and financial risk."

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 final rule. Further, like all other U.S. G-SIBs, we are also currently subject to a 2.0% SLR buffer in addition to the required minimum of 3% under the Basel III final 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 113 to 121 included under Item 7,

Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2020 Form 10-K.

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 final rule became effective on January 1, 2014 with full implementation required 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 Basel III final 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.

As required by the Dodd-Frank Act enacted in 2010 and the Stress Capital Buffer (SCB) rule enacted in 2020, we and State Street Bank, as advanced approaches banking organizations, are subject to a "capital floor," also referred to as the Collins Amendment, in the assessment of our regulatory capital adequacy, including the capital conservation buffer (CCB) and the SCB, for the advanced approaches and standardized approach, respectively, and a countercyclical capital buffer. In addition, we are subject to a G-SIB surcharge. Our risk-based capital ratios for regulatory assessment purposes are the lower of each ratio calculated under the advanced approaches and standardized approach.

The SCB replaced, under the standardized approach, the capital conservation buffer with a buffer calculated as the difference between the institution’s starting and lowest projected CET1 ratio under the CCAR severely adverse scenario plus planned common stock dividend payments (as a percentage of RWA) from the fourth through seventh quarter of the CCAR planning horizon. The SCB requirement, which became effective October 1, 2020, can be no less than 2.5% of RWA. Breaching the SCB or other regulatory buffer or surcharge will limit a banking organization’s ability to make capital distributions and discretionary bonus payments to executive officers. The countercyclical capital buffer is currently set at zero by U.S. banking regulators.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Our minimum risk-based capital ratios as of January 1, 2021, include a CCB of 2.5% and a SCB of 2.5% for the advanced approaches and standardized approach, respectively, a G-SIB surcharge of 1.0%, and a countercyclical buffer of 0.0%. This results in minimum risk-based ratios of 8.0% for the Common Equity Tier 1 (CET1) capital ratio, 9.5% for the tier 1 capital ratio, and 11.5% for the total capital ratio.

Based on a calculation date of December 31, 2019, our current G-SIB surcharge, through December 31, 2022, is 1.0%. Based on a calculation date of December 31, 2020, our G-SIB surcharge beginning January 1, 2023 could have been 1.5%. However, in May 2021, the Federal Reserve granted our request for relief relating to the effects of the MMLF program on the calculation of our G-SIB surcharge. As a result of this relief, our G-SIB surcharge for 2023 will be 1.0%.

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 Regulation H.

The market risk capital rule requires us to use internal models to calculate daily measures of VaR, which reflect general market risk for certain of our trading positions defined by the rule as “covered positions,” as well as stressed-VaR measures to supplement the VaR measures. The rule also requires a public disclosure composed of qualitative and quantitative information about the market risk associated with our trading activities and our related VaR and stressed-VaR measures. The qualitative and quantitative information required by the rule is provided under "Market Risk Management" included in this Management's Discussion and Analysis.

The following table presents the regulatory capital structure and related regulatory capital ratios for us and State Street Bank as of the dates indicated. We are subject to the more stringent of the risk-based capital ratios calculated under the standardized approach and those calculated under the advanced approaches in the assessment of our capital adequacy under applicable bank regulatory standards.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

TABLE 35: REGULATORY CAPITAL STRUCTURE AND RELATED REGULATORY CAPITAL RATIOS
									State Street Corporation																								State Street Bank
(Dollars in millions)									Basel III Advanced Approaches September 30, 2021						Basel III Standardized Approach September 30, 2021						Basel III Advanced Approaches December 31, 2020						Basel III Standardized Approach December 31, 2020						Basel III Advanced Approaches September 30, 2021						Basel III Standardized Approach September 30, 2021						Basel III Advanced Approaches December 31, 2020						Basel III Standardized Approach December 31, 2020
Common shareholders' equity:
Common stock and related surplus									$	11,267					$	11,267					$	10,709					$	10,709					$	12,887					$	12,887					$	12,893					$	12,893
Retained earnings									24,785						24,785						23,442						23,442						14,919						14,919						12,939						12,939
Accumulated other comprehensive income (loss)									(682)						(682)						187						187						(465)						(465)						371						371
Treasury stock, at cost									(10,032)						(10,032)						(10,609)						(10,609)						—						—						—						—
Total									25,338						25,338						23,729						23,729						27,341						27,341						26,203						26,203
Regulatory capital adjustments:
Goodwill and other intangible assets, net of associated deferred tax liabilities									(9,040)						(9,040)						(9,019)						(9,019)						(8,770)						(8,770)						(8,745)						(8,745)
Other adjustments(1)									(467)						(467)						(333)						(333)						(281)						(281)						(152)						(152)
Common equity tier 1 capital									15,831						15,831						14,377						14,377						18,290						18,290						17,306						17,306
Preferred stock									1,976						1,976						2,471						2,471						—						—						—						—
Tier 1 capital									17,807						17,807						16,848						16,848						18,290						18,290						17,306						17,306
Qualifying subordinated long-term debt									1,590						1,590						961						961						754						754						966						966
Allowance for credit losses									—						117						1						148						—						117						10						148
Total capital									$	19,397					$	19,514					$	17,810					$	17,957					$	19,044					$	19,161					$	18,282					$	18,420
Risk-weighted assets:
Credit risk(2)									$	66,503					$	114,604					$	63,367					$	114,892					$	59,635					$	111,464					$	58,960					$	110,797
Operational risk(3)									45,750						NA						44,150						NA						43,113						NA						43,663						NA
Market risk									2,625						2,625						2,188						2,188						2,625						2,625						2,188						2,188
Total risk-weighted assets									$	114,878					$	117,229					$	109,705					$	117,080					$	105,373					$	114,089					$	104,811					$	112,985
Adjusted quarterly average assets									$	281,952					$	281,952					$	263,490					$	263,490					$	278,705					$	278,705					$	260,489					$	260,489
Capital Ratios:			2021 Minimum Requirements Including Capital Conservation Buffer and G-SIB Surcharge(4)			2020 Minimum Requirements Including Capital Conservation Buffer and G-SIB Surcharge(4)
Common equity tier 1 capital			8.0		%	8.0		%	13.8		%				13.5		%				13.1		%				12.3		%				17.4		%				16.0		%				16.5		%				15.3		%
Tier 1 capital			9.5			9.5			15.5						15.2						15.4						14.4						17.4						16.0						16.5						15.3
Total capital			11.5			11.5			16.9						16.6						16.2						15.3						18.1						16.8						17.4						16.3

(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 OTC derivative contracts. We used a simple CVA approach in conformity with the Basel III advanced approaches.

(3) Under the current advanced approaches rules and regulatory guidance concerning operational risk models, RWA attributable to operational risk can vary substantially from period-to-period, without direct correlation to the effects of a particular loss event on our results of operations and financial condition and impacting dates and periods that may differ from the dates and periods as of and during which the loss event is reflected in our financial statements, with the timing and categorization dependent on the processes for model updates and, if applicable, model revalidation and regulatory review and related supervisory processes. An individual loss event can have a significant effect on the output of our operational RWA under the advanced approaches depending on the severity of the loss event and its categorization among the seven Basel-defined UOMs.

(4) Minimum requirements include a CCB of 2.5% and a SCB of 2.5% for the advanced approaches and the standardized approach, respectively, a G-SIB surcharge of 1.0% and a countercyclical buffer of 0%.

NA Not applicable

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Our CET1 capital increased $1.45 billion as of September 30, 2021, compared to December 31, 2020, primarily driven by higher retained earnings and the issuance of common stock.

Our Tier 1 capital increased $0.96 billion as of September 30, 2021, compared to December 31, 2020, primarily due to higher CET1 capital, partially offset by the partial redemption of the Series F preferred stock. Total capital increased under both the advanced approaches and standardized approach by $1.59 billion and $1.56 billion, respectively, due to the changes in our CET1 capital, Tier 1 capital, and the issuance of Tier 2 qualifying debt.

The table below presents a roll-forward of CET1 capital, Tier 1 capital and total capital for the nine months ended September 30, 2021 and for the year ended December 31, 2020.

TABLE 36: CAPITAL ROLL-FORWARD
(In millions)			Basel III Advanced Approaches September 30, 2021						Basel III Standardized Approach September 30, 2021						Basel III Advanced Approaches December 31, 2020						Basel III Standardized Approach December 31, 2020
Common equity tier 1 capital:
Common equity tier 1 capital balance, beginning of period			$	14,377					$	14,377					$	12,213					$	12,213
Net income			1,996						1,996						2,420						2,420
Changes in treasury stock, at cost			577						577						(400)						(400)
Dividends declared			(472)						(472)						(886)						(886)
Goodwill and other intangible assets, net of associated deferred tax liabilities			(21)						(21)						93						93
Effect of certain items in accumulated other comprehensive income (loss)			(869)						(869)						1,057						1,057
Other adjustments			243						243						(120)						(120)
Changes in common equity tier 1 capital			1,454						1,454						2,164						2,164
Common equity tier 1 capital balance, end of period			15,831						15,831						14,377						14,377
Additional tier 1 capital:
Tier 1 capital balance, beginning of period			16,848						16,848						15,175						15,175
Changes in common equity tier 1 capital			1,454						1,454						2,164						2,164
Net issuance (redemption) of preferred stock			(495)						(495)						(491)						(491)
Changes in tier 1 capital			959						959						1,673						1,673
Tier 1 capital balance, end of period			17,807						17,807						16,848						16,848
Tier 2 capital:
Tier 2 capital balance, beginning of period			962						1,109						1,100						1,185
Net issuance and changes in long-term debt qualifying as tier 2			629						629						(134)						(134)
Changes in allowance for credit losses			(1)						(31)						(4)						58
Changes in tier 2 capital			628						598						(138)						(76)
Tier 2 capital balance, end of period			1,590						1,707						962						1,109
Total capital:
Total capital balance, beginning of period			17,810						17,957						16,275						16,360
Changes in tier 1 capital			959						959						1,673						1,673
Changes in tier 2 capital			628						598						(138)						(76)
Total capital balance, end of period			$	19,397					$	19,514					$	17,810					$	17,957

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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The following table presents a roll-forward of the Basel III advanced and standardized approaches RWA for the nine months ended September 30, 2021 and for the year ended December 31, 2020.

TABLE 37: ADVANCED & STANDARDIZED APPROACHES RISK-WEIGHTED ASSETS ROLL-FORWARD
(In millions)			Basel III Advanced Approaches September 30, 2021						Basel III Advanced Approaches December 31, 2020						Basel III Standardized Approach September 30, 2021						Basel III Standardized Approach December 31, 2020
Total risk-weighted assets, beginning of period			$	109,705					$	104,364					$	117,080					$	104,005
Changes in credit risk-weighted assets:
Net increase (decrease) in investment securities-wholesale			(1,072)						3,008						(776)						1,762
Net increase (decrease) in loans			2,131						2,973						2,822						3,638
Net increase (decrease) in securitization exposures			682						578						644						351
Net increase (decrease) in repo-style transaction exposures			(45)						1,763						(4,826)						3,895
Net increase (decrease) in over-the-counter derivatives exposures(1)			(1,240)						780						3,016						457
Net increase (decrease) in all other(2)			2,680						(498)						(1,168)						2,422
Net increase (decrease) in credit risk-weighted assets			3,136						8,604						(288)						12,525
Net increase (decrease) in market risk-weighted assets			437						550						437						550
Net increase (decrease) in operational risk-weighted assets			1,600						(3,813)						N/A						N/A
Total risk-weighted assets, end of period			$	114,878					$	109,705					$	117,229					$	117,080

(1) Under the advanced approaches, includes CVA RWA.

(2) Includes assets not in a definable category, non-material portfolio, cleared transactions, other wholesale, cash and due from banks, interest-bearing deposits with banks, and equity exposures.

NA Not applicable

As of September 30, 2021, total advanced approaches RWA increased $5.17 billion compared to December 31, 2020, mainly due to an increase in credit risk and operational risk RWA. The increase in credit risk RWA was primarily driven by a net increase in all other and loans RWA.

As of September 30, 2021, total standardized approach RWA increased $0.15 billion compared to December 31, 2020, mainly due to higher market risk RWA, partially offset by lower credit risk RWA. The decrease in credit risk RWA was primarily driven by a decrease in repo-style transactions RWA, partially offset by an increase in FX trading and loans RWA.

The regulatory capital ratios as of September 30, 2021, presented in Table 35: Regulatory Capital Structure and Related Regulatory Capital Ratios, are calculated under the advanced approaches and standardized approach in conformity with the Basel III final rule. The advanced approaches-based ratios reflect calculations and determinations with respect to our capital and related matters as of September 30, 2021, 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 UOM, and the stability of the distributional approach for a particular UOM, and without direct correlation to the effects of the loss event, or the timing of such effects, on our results of operations.

Due to the influence of changes in these advanced systems, whether resulting from changes in data inputs, regulation or regulatory supervision or interpretation, specific to us or market activities or experiences or other updates or factors, we expect that our advanced systems and our capital ratios calculated in conformity with the Basel III final rule will change and may be volatile over time, and that those latter changes or volatility could be material as calculated and measured from period to period. The full effects of the Basel III final rule on us and State Street Bank are therefore subject to further evaluation and also to further regulatory guidance, action or rule-making.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Tier 1 and Supplementary Leverage Ratios

We are subject to a minimum Tier 1 leverage ratio and a supplementary leverage ratio. The Tier 1 leverage ratio is based on Tier 1 capital and adjusted quarterly average on-balance sheet assets. The Tier 1 leverage ratio differs from the SLR primarily in that the denominator of the Tier 1 leverage ratio is a quarterly average of on-balance sheet assets, while the SLR additionally includes off-balance sheet exposures. We must maintain a minimum Tier 1 leverage ratio of 4%.

We are also subject to a minimum SLR of 3%, and as a U.S. G-SIB, we must maintain a 2% SLR buffer in order to avoid any limitations on distributions to shareholders and discretionary bonus payments to certain executives. If we do not maintain this buffer, limitations on these distributions and discretionary bonus payments would be increasingly stringent based upon the extent of the shortfall.

TABLE 38: TIER 1 AND SUPPLEMENTARY LEVERAGE RATIOS
(Dollars in millions)			September 30, 2021						December 31, 2020
State Street:
Tier 1 capital			$	17,807					$	16,848
Average assets			291,459						277,055
Less: adjustments for deductions from tier 1 capital and other			(9,507)						(13,565)
Adjusted average assets for tier 1 leverage ratio			281,952						263,490
Off-balance sheet exposures			32,375						34,379
Adjustments for deductions of qualifying central bank deposits			(77,225)						(90,322)
Total assets for SLR			$	237,102					$	207,547
Tier 1 leverage ratio(1)			6.3		%				6.4		%
Supplementary leverage ratio			7.5						8.1
State Street Bank(2):
Tier 1 capital			$	18,290					$	17,306
Average assets			287,756						273,599
Less: adjustments for deductions from tier 1 capital and other			(9,051)						(13,110)
Adjusted average assets for tier 1 leverage ratio			278,705						260,489
Off-balance sheet exposures			32,376						38,591
Adjustments for deductions of qualifying central bank deposits			(77,225)						(80,935)
Total assets for SLR			$	233,856					$	218,145
Tier 1 leverage ratio(1)			6.6		%				6.6		%
Supplementary leverage ratio			7.8						7.9

(1) Tier 1 leverage ratios were calculated in conformity with the Basel III final rule.

(2) The SLR rule requires that, as of January 1, 2018, (i) State Street Bank maintains an SLR of at least 6.0% to be well capitalized under the U.S. banking regulators’ Prompt Corrective Action Framework and (ii) we maintain an SLR of at least 5.0% to avoid limitations on capital distributions and discretionary bonus payments. In addition to the SLR, State Street Bank is subject to a well-capitalized Tier 1 leverage ratio requirement of 5.0%.

Total Loss-Absorbing Capacity (TLAC)

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:

			Amount equal to:
Combined eligible tier 1 regulatory capital and LTD			Greater of: •21.5% of total RWA (18.0% minimum plus 2.5% plus a G-SIB surcharge calculated for these purposes under Method 1 of 1.0% plus any applicable counter- cyclical buffer, which is currently 0%); and   •9.5% of total leverage exposure (7.5% minimum plus the SLR buffer of 2.0%), as defined by the SLR final rule.
Qualifying external LTD			Greater of: •7.0% of RWA (6.0% minimum plus a G-SIB surcharge calculated for these purposes under method 2 of 1.0%); and •4.5% of total leverage exposure, as defined by the SLR final rule.

As of April 1, 2020, the TLAC and LTD requirements calibrated to the SLR denominator reflect the deduction of certain central bank balances as prescribed by the regulatory relief implemented under the EGRRCPA.

The following table presents external LTD and external TLAC as of September 30, 2021.

TABLE 39: TOTAL LOSS-ABSORBING CAPACITY
						As of September 30, 2021
(Dollars in millions)						Actual												Requirement
Total loss-absorbing capacity (eligible Tier 1 regulatory capacity and long-term debt):
Risk-weighted assets						$	30,708					26.2		%				$	25,204					21.5		%
Supplemental leverage ratio						30,708						13.0						22,525						9.5
Long-term debt:
Risk-weighted assets						11,635						9.9						8,206						7.0
Supplemental leverage ratio						11,635						4.9						10,670						4.5

Regulatory Developments

In April 2018, the Federal Reserve issued a proposed rule which would replace the current 2.0% SLR buffer for G-SIBs, with a buffer equal to 50% of their G-SIB surcharge. This proposal would also make conforming modifications to our TLAC and eligible LTD requirements applicable to G-SIBs. At

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

this point in time, it is unclear whether this proposal will be implemented as proposed.

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 (SA-CCR) as a replacement of the Current Exposure Method for calculating exposure-at-default of derivatives exposures. Mandatory compliance with the final rule is required by January 1, 2022. Due to the nature of our trading activities, the impact of the final rule may have a greater proportional impact on our RWA than on some of our G-SIB peers.

On March 4, 2020, the U.S. federal banking agencies issued the SCB final rule that replaces, under the standardized approach, the capital conservation buffer (2.5%) with a SCB calculated as the difference between an institution’s starting and lowest projected CET1 ratio under the CCAR severely adverse scenario plus planned common stock dividend payments (as a percentage of RWA) from the fourth through seventh quarter of the CCAR planning horizon. The SCB requirement, which became effective October 1, 2020, can be no less than 2.5% of RWA.

The Federal Reserve and other U.S. federal banking agencies issued an interim final rule effective in March 2020 and later finalized on a permanent basis on August 26, 2020, which revised the definition of eligible retained income for all U.S. banking organizations. The revised definition of eligible retained income makes any automatic limitations on capital distributions, where a banking organization's regulatory ratios were to decline below the respective minimum requirements, take effect on a more gradual basis.

Following the launch of the MMLF program, which we participated in, the Federal Reserve issued an interim final rule on March 19, 2020 (followed by a final rule on September 29, 2020), allowing Bank Holding Companies (BHCs) to exclude assets purchased with the MMLF program from their RWA, total leverage exposure and average total consolidated assets. No new credit extensions were made after March 31, 2021, as the program had expired.

On March 27, 2020, the BCBS announced the deferral of the implementation of the revisions to the Basel III framework to January 1, 2023. As of now, the U.S. federal banking agencies have not formally proposed the implementation of the BCBS revisions.

Effective April 1, 2020, the Federal Reserve and other U.S. federal banking agencies adopted a final rule as part of EGRRCPA that establishes a

deduction for qualifying 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. For the quarter ended September 30, 2021, we deducted $77.2 billion of average balances held on deposit at central banks from the denominator used in the calculation of our SLR, based on this custodial banking deduction.

On October 20, 2020, the Federal Reserve and other U.S. federal banking agencies issued a final rule that will require us and State Street Bank to make certain deductions from regulatory capital for investments in certain unsecured debt instruments, including eligible LTD under the TLAC rule, issued by the Parent Company and other U.S. and foreign G-SIBs. The final rule became effective on April 1, 2021.

In light of considerable economic uncertainty created by the COVID-19 pandemic, all participating CCAR banking organizations were required to resubmit their capital plans by November 2, 2020, based on updated scenarios provided by the Federal Reserve on September 17, 2020.

In light of the decision to administer a new stress test, the Federal Reserve limited the ability of all CCAR banking organizations to make capital distributions in the third and fourth quarters of 2020, although banking organizations were permitted to pay common stock dividends at previous levels provided such distributions did not exceed an amount determined by a formula based on the banking organization's recent income. As a result, CCAR banking organizations, including us, were not permitted to return capital to shareholders in the form of common share repurchases during the third quarter and fourth quarter of 2020.

On December 18, 2020, following the release of a second round of stress test results for 2020, the Federal Reserve modified the restrictions on capital distributions for the first quarter of 2021. Common stock dividends and share repurchases in the first quarter of 2021 were limited to the average of our net income for the four preceding quarters plus a number of shares equal to the share issuances in the quarter related to expensed employee compensation, provided that we did not increase the amount of our common stock dividends to be larger than the level paid in the second quarter of 2020. On March 25, 2021, the Federal Reserve extended these restrictions through the second quarter of 2021.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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On June 24, 2021, we were notified by the Federal Reserve of the results from the 2021 supervisory stress test. Our SCB calculated under this year's supervisory stress test was well below the 2.5% minimum, resulting in an SCB at that floor, which will go into effect starting October 1, 2021 and run through September 30, 2022. The Federal Reserve also lifted the restrictions on capital distributions implemented in response to the COVID-19 pandemic and we are currently governed in our capital distributions by minimum capital requirements inclusive of SCB.

For additional information about our capital, refer to pages 113 to 121 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2020 Form 10-K.

Capital Actions

Preferred Stock

The following table summarizes selected terms of each of the series of the preferred stock issued and outstanding as of September 30, 2021:

TABLE 40: PREFERRED STOCK ISSUED AND OUTSTANDING
Preferred Stock(1):						Issuance Date						Depositary Shares Issued						Amount outstanding (in millions)						Ownership Interest Per Depositary Share						Liquidation Preference Per Share						Liquidation Preference Per Depositary Share						Per Annum Dividend Rate						Dividend Payment Frequency						Carrying Value as of September 30, 2021 (In millions)						Redemption Date(2)
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(3)						May 2015						250,000						250						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%, or 3.7130% effective September 15, 2021						Quarterly: March, June, September and December						247						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) The preferred stock and corresponding depositary shares may be redeemed at our option in whole, but not in part, prior to the redemption date upon the occurrence of a regulatory capital treatment event, as defined in the certificate of designation, at a redemption price equal to the liquidation price per share and liquidation price per depositary share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

(2) On the redemption date, or any dividend payment date thereafter, the preferred stock and corresponding depositary shares may be redeemed by us, in whole or in part, at the liquidation price per share and liquidation price per depositary share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

(3) Series F preferred stock is redeemable on September 15, 2020 and on each succeeding dividend payment date. We did not elect redemption on September 15, 2020, December 15, 2020, June 15, 2021 or September 15, 2021.

On March 15, 2021, we redeemed an aggregate of $500 million, or 5,000 of the 7,500 outstanding shares of our non-cumulative perpetual preferred stock, Series F, for cash at a redemption price of $100,000 per share (equivalent to $1,000 per depositary share) plus all declared and unpaid dividends.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following tables present the dividends declared for each of the series of preferred stock issued and outstanding for the periods indicated:

TABLE 41: PREFERRED STOCK DIVIDENDS

			Three Months Ended September 30,
			2021																		2020
(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			$	—					$	—					$	—					$	—					$	—					$	—
Series D			1,475						0.37						11						1,475						0.37						11
Series F			950						9.50						2						2,625						26.25						20
Series G			1,338						0.33						7						1,338						0.33						7
Series H			—						—						—						—						—						—
Total															$	20																	$	38
			Nine Months Ended September 30,
			2021																		2020
(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
Series D			4,425						1.11						33						4,425						1.11						33
Series F			2,869						28.69						11						5,250						52.50						40
Series G			4,014						0.99						21						4,014						0.99						21
Series H			2,813						28.13						14						2,813						28.13						14
Total															$	79																	$	114

Common Stock

In September 2021, we completed a public offering of approximately 21.7 million shares of our common stock. The offering price was $87.60 per share and net proceeds totaled approximately $1.9 billion. We expect to use these net proceeds to finance our proposed acquisition of the BBH Investor Services business.

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 share repurchase program authorizing the repurchase 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, along with the other U.S. G-SIBs, suspended common share repurchases and maintained this suspension through the fourth quarter of 2020 in response to the COVID-19 pandemic. This suspension was consistent with limitations imposed by the Federal Reserve beginning in the second quarter of 2020. As a result, we had no repurchases of our common stock in the second, third or fourth quarters of 2020. In December 2020, the Federal Reserve issued results of 2020 resubmission stress tests and authorized us to continue to pay common stock dividends at current levels and to resume repurchasing common shares in the first quarter of 2021. In January 2021, our Board authorized a common share repurchase program for the repurchase of up to $475 million of our common stock through March 31, 2021. We repurchased $475 million of our common stock in the first quarter of 2021. In April 2021, our Board authorized a common share repurchase program for the repurchase of up to $425 million of our common stock through June 30, 2021, in compliance with the limit set by the Federal Reserve. We repurchased $425 million of our common stock in the second quarter of 2021. In July 2021, our Board authorized a share repurchase program for the repurchase of up to $3.0 billion of our common stock through the end of 2022.

In connection with our proposed acquisition of the BBH Investor Services business, we did not repurchase any common stock during the third quarter of 2021 under the common share repurchase plan approved by our Board in July 2021, and we do not intend to repurchase any common stock during the fourth quarter of 2021 and the first quarter of 2022. We intend to resume our common share repurchases during the second quarter of 2022.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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The table below presents the activity under our common share repurchase program for the periods indicated:

																		TABLE 42: SHARES REPURCHASED
						Three Months Ended September 30, 2021																		Nine Months Ended September 30, 2021
																		Shares Acquired (In millions)						Average Cost per Share						Total Acquired (In millions)						Shares Acquired (In millions)						Average Cost per Share						Total Acquired (In millions)
																		—						$	—					$	—					11.2						$	80.00					$	900

			Three Months Ended September 30, 2020																		Nine Months Ended September 30, 2020
			Shares Acquired (In millions)						Average Cost per Share						Total Acquired (In millions)						Shares Acquired (In millions)						Average Cost per Share						Total Acquired (In millions)
2019 Program			—						$	—					$	—					6.5						$	77.35					$	500

The table below presents the dividends declared on common stock for the periods indicated:

TABLE 43: COMMON STOCK DIVIDENDS
			Three Months Ended September 30,
			2021												2020
			Dividends Declared per Share						Total (In millions)						Dividends Declared per Share						Total (In millions)
Common Stock			$	0.57					$	209					$	0.52					$	184
			Nine Months Ended September 30,
			2021												2020
			Dividends Declared per Share						Total (In millions)						Dividends Declared per Share						Total (In millions)
Common Stock			$	1.61					$	570					$	1.56					$	550

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 55 and 57 in "Related Stockholder Matters" included under Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, in our 2020 Form 10-K, and to pages 171 to 173 in Note 15 to the consolidated financial statements included under Item 8. 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 transactions, including open-market purchases, accelerated share repurchases or other transactions off the market, and may be made under Rule 10b5-1 trading programs. The timing and amount of any stock purchases and the type of transaction will depend on several factors, including investment opportunities, our capital position, our financial performance, market conditions and the amount of common stock issued as part of employee compensation programs. The common share repurchase program does not have specific price targets and may be suspended at any time.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

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 $402.37 billion and $440.88 billion as of September 30, 2021 and December 31, 2020, 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 $422.88 billion and $463.27 billion as collateral for indemnified securities on loan as of September 30, 2021 and December 31, 2020, 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 $422.88 billion and $463.27 billion, referenced above, $67.83 billion and $54.43 billion was invested in indemnified repurchase agreements as of September 30, 2021 and December 31, 2020, respectively. We or our agents held $73.18 billion and $58.09 billion as collateral for indemnified investments in repurchase agreements as of September 30, 2021 and December 31, 2020, respectively.

Additional information about our securities finance activities and other off-balance sheet arrangements is provided in Notes 7, 9 and 11 to the consolidated financial statements in this Form 10-Q.

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.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information provided under “Market Risk Management” in "Financial Condition" in our Management's Discussion and Analysis in this Form 10-Q, is incorporated by reference herein.

For more information on our market risk refer to pages 104 to 112 included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2020 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 September 30, 2021, 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 September 30, 2021.

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 September 30, 2021, 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.

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STATE STREET CORPORATION

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

			Three Months Ended September 30,												Nine Months Ended September 30,
(Dollars in millions, except per share amounts)			2021						2020						2021						2020
Fee revenue:
Servicing fees			$	1,395					$	1,301					$	4,165					$	3,860
Management fees			526						479						1,523						1,387
Foreign exchange trading services			279						270						911						1,039
Securities finance			106						84						314						268
Software and processing fees			198						172						588						529
Total fee revenue			2,504						2,306						7,501						7,083
Net interest income:
Interest income			487						520						1,425						2,062
Interest expense			—						42						4						361
Net interest income			487						478						1,421						1,701
Other income:
Gains (losses) related to investment securities, net			(1)						—						(1)						2
Other income			—						—						53						—
Total other income (loss)			(1)						—						52						2
Total revenue			2,990						2,784						8,974						8,786
Provision for credit losses			(2)						—						(26)						88
Expenses:
Compensation and employee benefits			1,054						1,062						3,373						3,321
Information systems and communications			406						395						1,225						1,156
Transaction processing services			253						234						786						721
Occupancy			102						109						311						327
Acquisition and restructuring costs			18						15						39						38
Amortization of other intangible assets			62						59						183						175
Other			221						229						642						702
Total expenses			2,116						2,103						6,559						6,440
Income before income tax expense			876						681						2,441						2,258
Income tax expense			162						126						445						375
Net income			$	714					$	555					$	1,996					$	1,883
Net income available to common shareholders			$	693					$	517					$	1,910					$	1,759
Earnings per common share:
Basic			$	1.99					$	1.47					$	5.49					$	4.99
Diluted			1.96						1.45						5.40						4.93
Average common shares outstanding (in thousands):
Basic			347,718						352,586						348,106						352,829
Diluted			353,494						357,168						353,376						356,971
Cash dividends declared per common share			$	.57					$	.52					$	1.61					$	1.56

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

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STATE STREET CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(LOSS)

(UNAUDITED)

			Three Months Ended September 30,
(In millions)			2021						2020
Net income			$	714					$	555
Other comprehensive income (loss), net of related taxes:
Foreign currency translation, net of related taxes of $18 and ($14), respectively			(156)						283
Net unrealized gains (losses) on available-for-sale securities, net of reclassification adjustment and net of related taxes of ($39) and $4, respectively			(107)						2
Net unrealized gains (losses) on available-for-sale securities designated in fair value hedges, net of related taxes of $4 and $2, respectively			13						4
Net unrealized gains (losses) on cash flow hedges, net of related taxes of ($4) and $8, respectively			(12)						29
Net unrealized gains (losses) on retirement plans, net of related taxes of $1 and zero, respectively			2						1
Other comprehensive income (loss)			(260)						319
Total comprehensive income			$	454					$	874
			Nine Months Ended September 30,
(In millions)			2021						2020
Net income			$	1,996					$	1,883
Other comprehensive income (loss), net of related taxes:
Foreign currency translation, net of related taxes of $63 and ($20), respectively			(307)						135
Net unrealized gains (losses) on available-for-sale securities, net of reclassification adjustment and net of related taxes of ($214) and $171, respectively			(567)						463
Net unrealized gains (losses) on available-for-sale securities designated in fair value hedges, net of related taxes of $3 and zero, respectively			9						—
Net unrealized gains (losses) on cash flow hedges, net of related taxes of ($8) and $55, respectively			(16)						152
Net unrealized gains (losses) on retirement plans, net of related taxes of $5 and $5, respectively			12						15
Other comprehensive income (loss)			(869)						765
Total comprehensive income			$	1,127					$	2,648

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

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STATE STREET CORPORATION

CONSOLIDATED STATEMENT OF CONDITION

			September 30, 2021						December 31, 2020
(Dollars in millions, except per share amounts)			(UNAUDITED)
Assets:
Cash and due from banks			$	4,606					$	3,467
Interest-bearing deposits with banks			107,553						116,960
Securities purchased under resale agreements			2,847						3,106
Trading account assets			720						815
Investment securities available-for-sale			70,279						59,048
Investment securities held-to-maturity purchased under money market liquidity facility (less allowance for credit losses of $0 and $1) (fair value of $0 and $3,304)			—						3,299
Investment securities held-to-maturity (less allowance for credit losses of $2 and $2) (fair value of $43,728 and $50,003)			43,346						48,929
Loans (less allowance for credit losses on loans of $95 and $122)			32,702						27,803
Premises and equipment (net of accumulated depreciation of $5,235 and $4,825)			2,191						2,154
Accrued interest and fees receivable			3,407						3,105
Goodwill			7,650						7,683
Other intangible assets			1,887						1,827
Other assets			45,951						36,510
Total assets			$	323,139					$	314,706
Liabilities:
Deposits:
Non-interest-bearing			$	64,885					$	49,439
Interest-bearing - U.S.			108,909						102,331
Interest-bearing - non-U.S.			85,579						88,028
Total deposits			259,373						239,798
Securities sold under repurchase agreements			637						3,413
Short-term borrowings under money market liquidity facility			—						3,302
Other short-term borrowings			549						685
Accrued expenses and other liabilities			22,288						27,503
Long-term debt			12,978						13,805
Total liabilities			295,825						288,506
Commitments, guarantees and contingencies (Notes 9 and 10)
Shareholders’ equity:
Preferred stock, no par, 3,500,000 shares authorized:
Series D, 7,500 shares issued and outstanding			742						742
Series F, 2,500 shares issued and outstanding			247						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 365,629,173 and 353,156,279 shares outstanding			504						504
Surplus			10,763						10,205
Retained earnings			24,785						23,442
Accumulated other comprehensive income (loss)			(682)						187
Treasury stock, at cost (138,250,469 and 150,723,363 shares)			(10,032)						(10,609)
Total shareholders’ equity			27,314						26,200
Total liabilities and shareholders' equity			$	323,139					$	314,706

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

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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, 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 (1)																					—						(1)												(1)						—						(1)
Balance at March 31, 2020			$	2,471					503,880						$	504					$	10,155					$	22,315					$	(920)					151,936						$	(10,664)					$	23,861
Net income																											694																								694
Other comprehensive income (loss)																																	490																		490
Cash dividends declared:
Common stock - $0.52 per share																											(183)																								(183)
Preferred stock																											(32)																								(32)
Common stock acquired																																																			—
Common stock awards exercised																					24																		(443)						20						44
Other																																							3						(1)						(1)
Balance at June 30, 2020			$	2,471					503,880						$	504					$	10,179					$	22,794					$	(430)					151,496						$	(10,645)					$	24,873
Net income																											555																								555
Other comprehensive income (loss)																																	319																		319
Cash dividends declared:
Common stock - $0.52 per share																											(184)																								(184)
Preferred stock																											(38)																								(38)
Common stock awards exercised																					13																		(417)						19						32
Other																											1												3						—						1
Balance at September 30, 2020			$	2,471					503,880						$	504					$	10,192					$	23,128					$	(111)					151,082						$	(10,626)					$	25,558
Balance at December 31, 2020			$	2,471					503,880						$	504					$	10,205					$	23,442					$	187					150,723						$	(10,609)					$	26,200
Net income																											519																								519
Other comprehensive income (loss)																																	(605)																		(605)
Preferred stock redeemed			(495)																								(5)																								(500)
Cash dividends declared:
Common stock - $0.52 per share																											(182)																								(182)
Preferred stock																											(25)																								(25)
Common stock acquired																																							6,233						(475)						(475)
Common stock awards exercised																					22																		(1,111)						49						71
Other																											2												2												2
Balance at March 31, 2021			$	1,976					503,880						$	504					$	10,227					$	23,751					$	(418)					155,847						$	(11,035)					$	25,005
Net income																											763																								763
Other comprehensive income (loss)																																	(4)																		(4)
Cash dividends declared:
Common stock - $0.52 per share																											(179)																								(179)
Preferred stock																											(34)																								(34)
Common stock acquired																																							5,017						(425)						(425)
Common stock awards exercised																					19																		(487)						23						42
Other																											(1)																								(1)
Balance at June 30, 2021			$	1,976					503,880						$	504					$	10,246					$	24,300					$	(422)					160,377						$	(11,437)					$	25,167
Net income																											714																								714
Other comprehensive income (loss)																																	(260)																		(260)
Common stock issued																					516																		(21,724)						1,384						1,900
Cash dividends declared:
Common stock - $0.57 per share																											(209)																								(209)
Preferred stock																											(20)																								(20)
Common stock awards exercised																					8																		(399)						20						28
Other																					(7)																		(4)						1						(6)
Balance at September 30, 2021			$	1,976					503,880						$	504					$	10,763					$	24,785					$	(682)					138,250						$	(10,032)					$	27,314

(1) Includes the impact of transitioning to ASC 326: Measurement of Credit Losses on Financial Instruments, 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.

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STATE STREET CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

			Nine Months Ended September 30,
(In millions)			2021						2020
Operating Activities:
Net income			$	1,996					$	1,883
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax (benefit)			(52)						(35)
Amortization of other intangible assets			183						175
Other non-cash adjustments for depreciation, amortization and accretion, net			1,015						(793)
Losses (gains) related to investment securities, net			1						(2)
Provision for credit losses			(26)						88
Change in trading account assets, net			94						74
Change in accrued interest and fees receivable, net			(302)						(60)
Change in collateral deposits, net			(7,723)						1,369
Change in unrealized losses (gains) on foreign exchange derivatives, net			(8,131)						(2,934)
Change in other assets, net			279						(430)
Change in accrued expenses and other liabilities, net			1,468						526
Other, net			261						295
Net cash (used in) provided by operating activities			(10,937)						156
Investing Activities:
Net (increase) decrease in interest-bearing deposits with banks			9,407						(7,002)
Net (increase) decrease in securities purchased under resale agreements			259						(3,012)
Proceeds from sales of available-for-sale securities			9,252						2,245
Proceeds from maturities of available-for-sale securities			16,281						16,257
Purchases of available-for-sale securities			(39,972)						(30,344)
Purchases of held-to-maturity securities under the MMLF program			—						(29,242)
Proceeds from maturities of held-to-maturity securities under the MMLF program			3,299						24,457
Proceeds from maturities of held-to-maturity securities			12,564						10,863
Purchases of held-to-maturity securities			(5,984)						(8,994)
Sale of loans			64						242
Net (increase) in loans			(4,873)						(967)
Business acquisitions, net of cash acquired			(346)						—
Divestitures			13						—
Purchases of equity investments and other long-term assets			(122)						(1,237)
Purchases of premises and equipment, net			(556)						(424)
Other, net			236						1,036
Net cash provided by (used in) investing activities			(478)						(26,122)
Financing Activities:
Net (decrease) increase in time deposits			(1,643)						(35,146)
Net increase (decrease) in all other deposits			21,227						50,786
Net (decrease) increase in securities sold under repurchase agreements			(2,776)						1,328
Net (decrease) increase in short-term borrowings under money market liquidity facility			(3,302)						4,819
Net (decrease) increase in other short-term borrowings			(137)						4,999
Proceeds from issuance of long-term debt, net of issuance costs			844						2,497
Payments for long-term debt and obligations under finance leases			(1,530)						(24)
Payments for redemption of preferred stock			(500)						(500)
Proceeds from issuance of common stock, net of issuance costs			1,900						—
Repurchases of common stock			(900)						(515)
Repurchases of common stock for employee tax withholding			(6)						(66)
Payments for cash dividends			(623)						(666)
Net cash (used in) provided by financing activities			12,554						27,512
Net increase			1,139						1,546
Cash and due from banks at beginning of period			3,467						3,302
Cash and due from banks at end of period			$	4,606					$	4,848

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

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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, including our principal banking subsidiary, State Street Bank.

The accompanying consolidated financial statements should be read in conjunction with the financial and risk factor information included in our 2020 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, 2020 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.

In September 2021, we announced that we had entered into a definitive agreement to acquire the BBH Investor Services business for $3.5 billion in cash.

Recent Accounting Developments

We did not adopt any new accounting standards in the third quarter of 2021 that had a material impact to our financial statements. Additionally, we continue to evaluate accounting standards that were recently issued but not yet adopted as of September 30, 2021; none are expected to have a material impact to our financial statements.

Note 2.    Fair Value

Fair Value Measurements

We carry trading account assets and liabilities, AFS debt securities, certain equity securities and various types of derivative financial instruments, at fair value in our consolidated statement of condition on a recurring basis. Changes in the fair values of these financial assets and liabilities are recorded either as components of our consolidated statement of income or as components of AOCI within shareholders' equity in our consolidated statement of condition.

We measure fair value for the above-described financial assets and liabilities in conformity with U.S. GAAP that governs the measurement of the fair value of financial instruments. Management believes that its valuation techniques and underlying assumptions used to measure fair value conform to the provisions of U.S. GAAP. We categorize the financial assets and liabilities that we carry at fair value based on a prescribed three-level valuation hierarchy. For information about our valuation techniques for financial assets and financial liabilities measured at fair value and the fair value hierarchy, refer to pages 135 to 142 in Note 2 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables present information with respect to our financial assets and liabilities carried at fair value in our consolidated statement of condition on a recurring basis as of the dates indicated:

			Fair Value Measurements on a Recurring Basis
			As of September 30, 2021
(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			$	40					$	—					$	—											$	40
Non-U.S. government securities			—						135						—												135
Other			—						545						—												545
Total trading account assets			40						680						—												720
Available-for-sale investment securities:
U.S. Treasury and federal agencies:
Direct obligations			14,339						—						—												14,339
Mortgage-backed securities			—						16,223						—												16,223
Total U.S. Treasury and federal agencies			14,339						16,223						—												30,562
Non-U.S. debt securities:
Mortgage-backed securities			—						2,141						—												2,141
Asset-backed securities			—						2,365						—												2,365
Non-U.S. sovereign, supranational and non-U.S. agency			—						22,854						—												22,854
Other			—						3,306						—												3,306
Total non-U.S. debt securities			—						30,666						—												30,666
Asset-backed securities:
Student loans			—						231						—												231
Collateralized loan obligations			—						4,296						—												4,296
Non-agency CMBS and RMBS(2)			—						59						—												59
Other			—						92						—												92
Total asset-backed securities			—						4,678						—												4,678
State and political subdivisions			—						1,396						—												1,396
Other U.S. debt securities			—						2,977						—												2,977
Total available-for-sale investment securities			14,339						55,940						—												70,279
Other assets:
Derivative instruments:
Foreign exchange contracts			—						16,451						2						$	(8,892)					7,561
Interest rate contracts			4						—						—						—						4
Total derivative instruments			4						16,451						2						(8,892)						7,565
Other			—						652						—						—						652
Total assets carried at fair value			$	14,383					$	73,723					$	2					$	(8,892)					$	79,216
Liabilities:
Accrued expenses and other liabilities:
Derivative instruments:
Foreign exchange contracts			$	2					$	15,733					$	—					$	(11,619)					$	4,116
Interest rate contracts			—						27						—						(4)						23
Other derivative contracts			—						176						—						—						176
Total derivative instruments			2						15,936						—						(11,623)						4,315
Total liabilities carried at fair value			$	2					$	15,936					$	—					$	(11,623)					$	4,315

(1) Represents counterparty netting against level 2 financial assets and liabilities where a legally enforceable master netting agreement exists between us and the counterparty. Netting also reflects asset and liability reductions of $1.23 billion and $3.96 billion, respectively, for cash collateral received from and provided to derivative counterparties.

(2) Consists entirely of non-agency CMBS.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

			Fair Value Measurements on a Recurring Basis
			As of December 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			$	40					$	—					$	—											$	40
Non-U.S. government securities			—						239						—												239
Other			17						519						—												536
Total trading account assets			57						758						—												815
Available-for-sale investment securities:
U.S. Treasury and federal agencies:
Direct obligations			6,575						—						—												6,575
Mortgage-backed securities			—						14,305						—												14,305
Total U.S. Treasury and federal agencies			6,575						14,305						—												20,880
Non-U.S. debt securities:
Mortgage-backed securities			—						1,996						—												1,996
Asset-backed securities			—						2,291						—												2,291
Non-U.S. sovereign, supranational and non-U.S. agency			—						22,087						—												22,087
Other			—						3,355						—												3,355
Total non-U.S. debt securities			—						29,729						—												29,729
Asset-backed securities:
Student loans			—						314						—												314
Collateralized loan obligations			—						2,952						14												2,966
Non-agency CMBS and RMBS(2)			—						78						—												78
Other			—						90						—												90
Total asset-backed securities			—						3,434						14												3,448
State and political subdivisions			—						1,548						—												1,548
Other U.S. debt securities			—						3,443						—												3,443
Total available-for-sale investment securities			6,575						52,459						14												59,048
Other assets:
Derivative instruments:
Foreign exchange contracts			—						25,941						2						$	(20,140)					5,803
Interest rate contracts			1						—						—						—						1
Total derivative instruments			1						25,941						2						(20,140)						5,804
Other			—						525						—						—						525
Total assets carried at fair value			$	6,633					$	79,683					$	16					$	(20,140)					$	66,192
Liabilities:
Accrued expenses and other liabilities:
Trading account liabilities:
Other			$	4					$	—					$	—					$	—					$	4
Derivative instruments:
Foreign exchange contracts			1						25,925						1						(15,558)						10,369
Interest rate contracts			—						42						—						—						42
Other derivative contracts			—						157						—						—						157
Total derivative instruments			1						26,124						1						(15,558)						10,568
Total liabilities carried at fair value			$	5					$	26,124					$	1					$	(15,558)					$	10,572

(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 $5.87 billion and $1.29 billion, respectively, for cash collateral received from and provided to derivative counterparties.

(2) Consists entirely of non-agency CMBS.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables present activity related to our level 3 financial assets during the three and nine months ended September 30, 2021 and 2020, respectively. Transfers into and out of level 3 are reported as of the beginning of the period presented. During the three months ended September 30, 2021, there were no transfers into and out of level 3. During the nine months ended September 30, 2021, transfers into level 3 were primarily related to a U.S. corporate bond, for which fair value was measured using information obtained from third party sources, including non-binding broker/dealer quotes. During the nine months ended September 30, 2021, transfers out of level 3 were primarily related to collateralized loan obligations and a U.S. corporate bond, for which fair value was measured using prices for which observable market information became available. During the three and nine months ended September 30, 2020, transfers into level 3 were primarily related to collateralized loan obligations. During the three and nine months ended September 30, 2020, there were no transfers out of level 3.

			Fair Value Measurements Using Significant Unobservable Inputs
			Three Months Ended September 30, 2021
			Fair Value as of June 30, 2021						Total Realized and Unrealized Gains (Losses)(1)												Purchases												Sales						Settlements						Transfers into Level 3						Transfers out of Level 3						Fair Value  as of September 30, 2021(1)						Change in Unrealized Gains (Losses) Related to Financial Instruments Held as of September 30, 2021
(In millions)									Recorded in Revenue(1)						Recorded in Other Comprehensive Income(1)
Assets:
Other assets:
Derivative instruments:
Foreign exchange contracts			$	2					$	—					$	—					$	1											$	—					$	(1)					$	—					$	—					$	2					$	—
Total derivative instruments			2						—						—						1												—						(1)						—						—						2						—
Total assets carried at fair value			$	2					$	—					$	—					$	1											$	—					$	(1)					$	—					$	—					$	2					$	—

(1) Total realized and unrealized gains (losses) on derivative instruments are included within foreign exchange trading services.

			Fair Value Measurements Using Significant Unobservable Inputs
			Nine Months Ended September 30, 2021
			Fair Value as of December 31, 2020						Total Realized and Unrealized Gains (Losses)(1)												Purchases												Sales						Settlements						Transfers into Level 3						Transfers out of Level 3						Fair Value  as of September 30, 2021(1)						Change in Unrealized Gains (Losses) Related to Financial Instruments Held as of September 30, 2021
(In millions)									Recorded in Revenue(1)						Recorded in Other Comprehensive Income(1)
Assets:
Available-for-sale Investment securities:
Asset-backed securities:
Collateralized loan obligations			$	14					$	—					$	—					$	106											$	—					$	—					$	—					$	(120)					$	—
Total asset-backed securities			14						—						—						106												—						—						—						(120)						—
Other U.S. debt securities			—						—						—						—												—						—						15						(15)						—
Total available-for-sale investment securities			14						—						—						106												—						—						15						(135)						—
Other assets:
Derivative instruments:
Foreign exchange contracts			2						(3)						—						4												—						(1)						—						—						2						$	(1)
Total derivative instruments			2						(3)						—						4												—						(1)						—						—						2						(1)
Total assets carried at fair value			$	16					$	(3)					$	—					$	110											$	—					$	(1)					$	15					$	(135)					$	2					$	(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.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

			Fair Value Measurements Using Significant Unobservable Inputs
			Three Months Ended September 30, 2020
			Fair Value as of June 30, 2020						Total Realized and Unrealized Gains (Losses)(1)												Purchases												Sales						Settlements						Transfers into Level 3						Transfers out of Level 3						Fair Value  as of September 30, 2020(1)						Change in Unrealized Gains (Losses) Related to Financial Instruments Held as of September 30, 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			$	1,869					$	—					$	14					$	663											$	(34)					$	(24)					$	50					$	—					$	2,538
Total asset-backed securities			1,869						—						14						663												(34)						(24)						50						—						2,538
Non-U.S. debt securities:
Asset-backed securities			876						—						45						—												—						(3)						—						—						918
Other			45						—						2						—												—						—						—						—						47
Total non-U.S. debt securities			921						—						47						—												—						(3)						—						—						965
Total available-for-sale investment securities			2,790						—						61						663												(34)						(27)						50						—						3,503
Other assets:
Derivative instruments:
Foreign exchange contracts			2						(2)						—						9												—						(3)						—						—						6						$	(4)
Total derivative instruments			2						(2)						—						9												—						(3)						—						—						6						(4)
Total assets carried at fair value			$	2,792					$	(2)					$	61					$	672											$	(34)					$	(30)					$	50					$	—					$	3,509					$	(4)

(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.

			Fair Value Measurements Using Significant Unobservable Inputs
			Nine Months Ended September 30, 2020
			Fair Value as of December 31, 2019						Total Realized and Unrealized Gains (Losses)(1)												Purchases												Sales						Settlements						Transfers into Level 3						Transfers out of Level 3						Fair Value  as of September 30, 2020(1)						Change in Unrealized Gains (Losses) Related to Financial Instruments Held as of September 30, 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					$	—					$	(10)					$	850											$	(95)					$	(77)					$	50					$	—					$	2,538
Total asset-backed securities			1,820						—						(10)						850												(95)						(77)						50						—						2,538
Non-U.S. debt securities:
Asset-backed securities			887						—						35						1												—						(5)						—						—						918
Other			45						—						2						—												—						—						—						—						47
Total non-U.S. debt securities			932						—						37						1												—						(5)						—						—						965
Total available-for-sale investment securities			2,752						—						27						851												(95)						(82)						50						—						3,503
Other assets:
Derivative instruments:
Foreign exchange contracts			4						(7)						—						10												—						(1)						—						—						6						$	(4)
Total derivative instruments			4						(7)						—						10												—						(1)						—						—						6						(4)
Total assets carried at fair value			$	2,756					$	(7)					$	27					$	861											$	(95)					$	(83)					$	50					$	—					$	3,509					$	(4)

(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.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 internally-developed 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 September 30, 2021						As of December 31, 2020						Valuation Technique						Significant Unobservable Input(1)						As of September 30, 2021												As of September 30, 2021						As of December 31, 2020
Significant unobservable inputs readily available to State Street:
Assets:
Derivative Instruments, foreign exchange contracts			$	2					$	2					Option model						Volatility						5.0%			-			12.6%						7.6		%				7.9		%
Total			$	2					$	2
Liabilities:
Derivative instruments, foreign exchange contracts			$	—					$	1					Option model						Volatility						6.9%			-			8.0%						7.4		%				7.7		%
Total			$	—					$	1

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

Fair Value Estimates

Estimates of fair value for financial instruments not carried at fair value in our consolidated statement of condition are generally subjective in nature, and are determined as of a specific point in time based on the characteristics of the financial instruments and relevant market information.

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)
September 30, 2021
Financial Assets:
Cash and due from banks			$	4,606					4,606						$	4,606					$	—					$	—
Interest-bearing deposits with banks			107,553						107,553						—						107,553						—
Securities purchased under resale agreements			2,847						2,847						—						2,847						—
Investment securities held-to-maturity			43,346						43,728						2,708						41,020						—
Net loans(1)			32,702						32,806						—						30,292						2,514
Financial Liabilities:
Deposits:
Non-interest-bearing			$	64,885					$	64,885					$	—					$	64,885					$	—
Interest-bearing - U.S.			108,909						108,909						—						108,909						—
Interest-bearing - non-U.S.			85,579						85,579						—						85,579						—
Securities sold under repurchase agreements			637						637						—						637						—
Other short-term borrowings			549						549						—						549						—
Long-term debt			12,978						13,151						—						13,069						82

(1) Includes $61 million of loans classified as held-for-sale that were measured at fair value in level 2 as of September 30, 2021.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

															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, 2020
Financial Assets:
Cash and due from banks			$	3,467					$	3,467					$	3,467					$	—					$	—
Interest-bearing deposits with banks			116,960						116,960						—						116,960						—
Securities purchased under resale agreements			3,106						3,106						—						3,106						—
HTM securities purchased under the MMLF program			3,299						3,304						—						3,304						—
Investment securities held-to-maturity			48,929						50,003						6,115						43,888						—
Net loans			27,803						27,884						—						25,668						2,216
Other(1)			4,753						4,753						—						4,753						—
Financial Liabilities:
Deposits:
Non-interest-bearing			$	49,439					$	49,439					$	—					$	49,439					$	—
Interest-bearing - U.S.			102,331						102,331						—						102,331						—
Interest-bearing - non-U.S.			88,028						88,028						—						88,028						—
Securities sold under repurchase agreements			3,413						3,413						—						3,413						—
Short-term borrowings under the MMLF program			3,302						3,302						—						3,302						—
Other short-term borrowings			685						685						—						685						—
Long-term debt			13,805						14,162						—						14,049						113
Other(1)			4,753						4,753						—						4,753						—

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

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 143 in Note 3 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

Trading assets are carried at fair value. Both realized and unrealized gains and losses on trading 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 gains and losses are recorded in AOCI. Gains or losses realized on sales of AFS investment securities are computed using the specific identification method and are recorded in gains (losses) related to investment securities, net, in our consolidated statement of income.

HTM investment securities are carried at cost, adjusted for amortization of premiums and accretion of discounts, with any allowance for credit losses recorded through the consolidated statement of income. As of September 30, 2021, we recognized an allowance for credit losses on HTM investment securities of $2 million.

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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:

			September 30, 2021																								December 31, 2020
			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			$	14,372					$	30					$	63					$	14,339					$	6,453					$	123					$	1					$	6,575
Mortgage-backed securities			16,051						215						43						16,223						13,891						421						7						14,305
Total U.S. Treasury and federal agencies			30,423						245						106						30,562						20,344						544						8						20,880
Non-U.S. debt securities:
Mortgage-backed securities			2,130						12						1						2,141						1,994						4						2						1,996
Asset-backed securities			2,365						2						2						2,365						2,294						1						4						2,291
Non-U.S. sovereign, supranational and non-U.S. agency			22,747						150						43						22,854						21,769						321						3						22,087
Other(1)			3,294						29						17						3,306						3,297						58						—						3,355
Total non-U.S. debt securities			30,536						193						63						30,666						29,354						384						9						29,729
Asset-backed securities:
Student loans(2)			228						3						—						231						313						2						1						314
Collateralized loan obligations(3)			4,293						4						1						4,296						2,969						3						6						2,966
Non-agency CMBS and RMBS(4)			58						1						—						59						76						2						—						78
Other			90						2						—						92						90						—						—						90
Total asset-backed securities			4,669						10						1						4,678						3,448						7						7						3,448
State and political subdivisions(5)			1,336						63						3						1,396						1,470						80						2						1,548
Other U.S. debt securities(6)			2,943						39						5						2,977						3,371						72						—						3,443
Total available-for-sale securities(7)			$	69,907					$	550					$	178					$	70,279					$	57,987					$	1,087					$	26					$	59,048
Held-to-maturity:
U.S. Treasury and federal agencies:
Direct obligations			$	2,709					$	22					$	—					$	2,731					$	6,057					$	83					$	—					$	6,140
Mortgage-backed securities			33,525						525						309						33,741						36,901						955						67						37,789
Total U.S. Treasury and federal agencies			36,234						547						309						36,472						42,958						1,038						67						43,929
Non-U.S. debt securities:
Mortgage-backed securities			209						65						2						272						303						68						4						367
Non-U.S. sovereign, supranational and non-U.S. agency			1,508						—						3						1,505						342						—						—						342
Total non-U.S. debt securities			1,717						65						5						1,777						645						68						4						709
Asset-backed securities:
Student loans(2)			5,017						64						13						5,068						4,774						33						25						4,782
Non-agency CMBS and RMBS(8)			380						31						—						411						554						30						1						583
Total asset-backed securities			5,397						95						13						5,479						5,328						63						26						5,365
Total(7)(9)			43,348						707						327						43,728						48,931						1,169						97						50,003
Held-to-maturity under money market mutual fund liquidity facility			—						—						—						—						3,300						4						—						3,304
Total held-to-maturity securities(7)			$	43,348					$	707					$	327					$	43,728					$	52,231					$	1,173					$	97					$	53,307

(1) As of September 30, 2021 and December 31, 2020, the fair value includes non-U.S. corporate bonds of $1.76 billion and $1.88 billion, respectively, and non-U.S. collateralized loan obligations of $0.88 billion and $0.96 billion, respectively.

(2) 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.

(3) Excludes collateralized loan obligations in loan form. Refer to Note 4 for additional information.

(4) Consists entirely of non-agency CMBS as of both September 30, 2021 and December 31, 2020.

(5) As of September 30, 2021 and December 31, 2020, the fair value of state and political subdivisions includes securities in trusts of $0.61 billion and $0.70 billion, respectively. Additional information about these trusts is provided in Note 11.

(6) As of September 30, 2021 and December 31, 2020, the fair value of U.S. corporate bonds was $2.98 billion and $3.44 billion, respectively.

(7) An immaterial amount of accrued interest related to HTM and AFS investment securities was excluded from the amortized cost basis for the period ended September 30, 2021.

(8) As of September 30, 2021 and December 31, 2020, the total amortized cost included $315 million and $464 million, respectively, of non-agency CMBS and $65 million and $90 million of non-agency RMBS, respectively.

(9) As of September 30, 2021, we recognized an allowance for credit losses of $2 million on HTM investment securities.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Aggregate investment securities with carrying values of approximately $77.85 billion and $70.57 billion as of September 30, 2021 and December 31, 2020, 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 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 September 30, 2021
			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			$	11,538					$	63					$	—					$	—					$	11,538					$	63
Mortgage-backed securities			3,847						41						162						2						4,009						43
Total U.S. Treasury and federal agencies			15,385						104						162						2						15,547						106
Non-U.S. debt securities:
Mortgage-backed securities			394						1						33						—						427						1
Asset-backed securities			646						1						464						1						1,110						2
Non-U.S. sovereign, supranational and non-U.S. agency			5,631						42						39						1						5,670						43
Other			1,291						17						67						—						1,358						17
Total non-U.S. debt securities			7,962						61						603						2						8,565						63
Asset-backed securities:
Collateralized loan obligations			2,516						1						62						—						2,578						1
Total asset-backed securities			2,516						1						62						—						2,578						1
State and political subdivisions			83						—						45						3						128						3
Other U.S. debt securities			573						5						—						—						573						5
Total			$	26,519					$	171					$	872					$	7					$	27,391					$	178

			As of December 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:
Direct obligations			$	1,636					$	1					$	—					$	—					$	1,636					$	1
Mortgage-backed securities			1,394						7						63						—						1,457						7
Total U.S. Treasury and federal agencies			3,030						8						63						—						3,093						8
Asset-backed securities:
Student loans			31						—						197						1						228						1
Collateralized loan obligations			1,498						4						369						2						1,867						6
Total asset-backed securities			1,529						4						566						3						2,095						7
Non-U.S. debt securities:
Mortgage-backed securities			600						1						120						1						720						2
Asset-backed securities			1,015						3						446						1						1,461						4
Non-U.S. sovereign, supranational and non-U.S. agency			489						—						—						—						489						—
Other			715						3						80						—						795						3
Total non-U.S. debt securities			2,819						7						646						2						3,465						9
State and political subdivisions			95						—						76						2						171						2
Other U.S. debt securities			17						—						—						—						17						—
Total			$	7,490					$	19					$	1,351					$	7					$	8,841					$	26

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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 September 30, 2021. 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 September 30, 2021
(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			$	2,112					$	2,114					$	11,214					$	11,169					$	1,046					$	1,056					$	—					$	—					$	14,372					$	14,339
Mortgage-backed securities			83						87						845						855						6,227						6,248						8,896						9,033						16,051						16,223
Total U.S. Treasury and federal agencies			2,195						2,201						12,059						12,024						7,273						7,304						8,896						9,033						30,423						30,562
Non-U.S. debt securities:
Mortgage-backed securities			212						213						540						543						40						40						1,338						1,345						2,130						2,141
Asset-backed securities			271						271						1,286						1,287						415						415						393						392						2,365						2,365
Non-U.S. sovereign, supranational and non-U.S. agency			5,828						5,835						13,987						14,081						2,917						2,923						15						15						22,747						22,854
Other			786						790						2,077						2,089						375						371						56						56						3,294						3,306
Total non-U.S. debt securities			7,097						7,109						17,890						18,000						3,747						3,749						1,802						1,808						30,536						30,666
Asset-backed securities:
Student loans			129						131						—						—						—						—						99						100						228						231
Collateralized loan obligations			29						30						760						761						1,656						1,656						1,848						1,849						4,293						4,296
Non-agency CMBS and RMBS			—						—						—						—						—						—						58						59						58						59
Other			—						—						—						—						90						92						—						—						90						92
Total asset-backed securities			158						161						760						761						1,746						1,748						2,005						2,008						4,669						4,678
State and political subdivisions			159						160						544						563						528						567						105						106						1,336						1,396
Other U.S. debt securities			718						723						2,183						2,209						42						45						—						—						2,943						2,977
Total			$	10,327					$	10,354					$	33,436					$	33,557					$	13,336					$	13,413					$	12,808					$	12,955					$	69,907					$	70,279
Held-to-maturity:
U.S. Treasury and federal agencies:
Direct obligations			$	2,387					$	2,403					$	304					$	309					$	—					$	—					$	18					$	19					$	2,709					$	2,731
Mortgage-backed securities			171						177						285						290						4,528						4,509						28,541						28,765						33,525						33,741
Total U.S. Treasury and federal agencies			2,558						2,580						589						599						4,528						4,509						28,559						28,784						36,234						36,472
Non-U.S. debt securities:
Mortgage-backed securities			38						37						18						18						—						—						153						217						209						272
Non-U.S. sovereign, supranational and non-U.S. agency			275						275						1,232						1,229						1						1						—						—						1,508						1,505
Total non-U.S. debt securities			313						312						1,250						1,247						1						1						153						217						1,717						1,777
Asset-backed securities:
Student loans			349						343						110						109						1,071						1,088						3,487						3,528						5,017						5,068
Non-agency CMBS and RMBS			127						140						158						160						2						2						93						109						380						411
Total asset-backed securities			476						483						268						269						1,073						1,090						3,580						3,637						5,397						5,479
Total			$	3,347					$	3,375					$	2,107					$	2,115					$	5,602					$	5,600					$	32,292					$	32,638					$	43,348					$	43,728

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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.

Allowance for Credit Losses on Debt Securities and Impairment of AFS Securities

We conduct quarterly reviews of HTM and AFS securities on a collective (pool) basis when similar risk characteristics exist to determine whether an allowance for credit losses should be recognized. We review individual AFS securities periodically to assess if additional impairment is required. For additional information about the Current Expected Credit Loss methodology and the review of investment securities for expected credit losses or impairment, refer to pages 148 to 149 in Note 3 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

We monitor the credit quality of the HTM and AFS investment securities using a variety of methods, including both external and internal credit ratings. As of September 30, 2021, 99% of our HTM and AFS investment portfolio is publicly rated investment grade.

Our allowance for credit losses on our HTM securities is approximately $2 million as of September 30, 2021. In the third quarter of 2021, we recorded no provision for credit losses and no charge-offs on HTM securities. 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.

After a review of the investment portfolio, taking into consideration then-current economic conditions, adverse situations that might affect our ability to fully collect principal and interest, the timing of future payments, the credit quality and performance of the collateral underlying MBS and ABS and other relevant factors, management considers the aggregate decline in fair value of the investment securities portfolio and the resulting gross pre-tax unrealized losses of $505 million related to 722 securities as of September 30, 2021 to not be the result of any material changes in the credit characteristics of the securities.

Note 4.    Loans and Allowance for Credit Losses

We segregate our loans into two segments: commercial and financial loans and commercial real estate loans. We further classify commercial and financial loans as fund finance loans, leveraged loans, overdrafts 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 pages 149 to 154 in Note 4 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

The following table presents our recorded investment in loans, by segment, as of the dates indicated:

(In millions)			September 30, 2021						December 31, 2020
Domestic(1):
Commercial and financial:
Fund Finance(2)			$	12,367					$	11,531
Leveraged loans			3,407						2,923
Overdrafts			2,352						1,894
Other(3)			2,140						2,688
Commercial real estate			2,384						2,096
Total domestic			22,650						21,132
Foreign(1):
Commercial and financial:
Fund Finance(2)			7,368						4,432
Leveraged loans			1,317						1,242
Overdrafts			1,462						1,088
Other(3)			—						31
Total foreign			10,147						6,793
Total loans(2)			32,797						27,925
Allowance for credit losses			(95)						(122)
Loans, net of allowance			$	32,702					$	27,803

(1) Domestic and foreign categorization is based on the borrower’s country of domicile.

(2) Fund finance loans include primarily $6,282 million loans to real money funds, $9,752 million private equity capital call finance loans, $993 million loans to business development companies and $2,412 million collateralized loan obligations in loan form as of September 30, 2021, compared to $6,391 million loans to real money funds, $8,380 million private equity capital call finance loans and $821 million loans to business development companies as of December 31, 2020.

(3) Includes $1,532 million securities finance loans, $589 million loans to municipalities and $19 million other loans as of September 30, 2021 and $1,911 million securities finance loans, $754 million loans to municipalities and $54 million other loans as of December 31, 2020.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The commercial and financial segment is composed of primarily fund finance loans, purchased leveraged loans, overdrafts and other loans. Fund finance loans are composed of revolving credit lines providing liquidity and leverage to mutual fund and private equity fund clients, as well as collateralized loan obligations in loan form.

Certain loans are pledged as collateral for access to the Federal Reserve's discount window. As of September 30, 2021 and December 31, 2020, the loans pledged as collateral totaled $9.00 billion and $8.07 billion, respectively.

As of September 30, 2021 and December 31, 2020, we had no loans on non-accrual status.

We purchased $832 million collateralized loan obligations in loan form, which were all rated AAA, in the third quarter of 2021.

We sold $84 million of leveraged loans in the third quarter of 2021, of which $46 million remained unsettled and was held for sale as of September 30, 2021. Additionally, we have one loan for $15 million which has been classified as doubtful and is pending settlement.

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 during the third quarter of 2021.

Allowance for Credit Losses

We recognize an allowance for credit losses in accordance with ASC 326 for financial assets held at amortized cost and off-balance sheet commitments. The allowance for credit losses is reviewed on a regular basis, and any provision for credit losses is recorded to reflect the amount necessary to maintain the allowance for expected credit losses at a level which represents what management does not expect to recover due to expected credit losses. For additional discussion on the allowance for credit losses for investment securities, please refer to Note 3, to the consolidated financial statements in this Form 10-Q.

When the allowance is recorded, a provision for credit loss expense is recognized in net income. The allowance for credit losses for financial assets (excluding investment securities, as discussed in Note 3) represents the portion of the amortized cost basis, including accrued interest for financial assets held at amortized cost, which management does not expect to recover due to expected credit losses and is presented on the statement of condition as an offset to the amortized cost basis. The accrued interest balance is presented separately on the statement of

condition within accrued interest and fees receivable. The allowance for off-balance sheet commitments is presented within other liabilities.

The allowance for credit losses may be determined using various methods, including discounted cash flow methods, loss-rate methods, probability-of-default methods, and other quantitative or qualitative methods as determined by us. The method used to estimate expected credit losses may vary depending on the type of financial asset, our ability to predict the timing of cash flows, and the information available to us.

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 separately using one or more of the methods noted above. As of September 30, 2021, we had nine loans for $232 million in the commercial and financial segment that no longer met the similar risk characteristics of their collective pool. We recorded an allowance for credit losses of $13 million as of September 30, 2021 on these loans.

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, factors and forecasts then prevailing may result in significant changes in the allowance for credit losses in those future periods.

We estimate credit losses over the contractual life of the financial asset, while factoring in prepayment activity, where supported by data, over a three year reasonable and supportable forecast period. We utilize a baseline, upside and downside scenario which are applied based on a probability weighting, in order to better reflect management’s expectation of expected credit losses given existing market conditions and the changes in the economic environment. The multiple scenarios are based on a three year horizon (or less depending on contractual maturity) and then revert linearly over a two year period to a ten-year historical average thereafter. The contractual term excludes expected extensions, renewals and modifications, but includes prepayment assumptions where applicable.

As part of our allowance methodology, we establish qualitative reserves to address any risks inherent in our portfolio that are not addressed through our quantitative reserve assessment. These factors may relate to, among other things, legislation changes or new regulation, credit concentration, loan markets, scenario weighting and overall model

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

limitations. The qualitative adjustments are applied to our portfolio of financial instruments under the existing governance structure and are inherently judgmental.

For additional information on the allowance for credit losses, refer to pages 150 to 151 in Note 4 to the consolidated financial statements included under item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

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.

We use an internal risk-rating system to assess our risk of credit loss for each loan. This risk-rating process incorporates the use of risk-rating tools in conjunction with management judgment. Qualitative and quantitative inputs are captured in a systematic manner, and following a formal review and approval process, an internal credit rating based on our credit scale is assigned.

When computing allowance levels, credit loss assumptions are estimated using 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 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 individual loan, among the factors considered are the borrower's debt capacity, collateral coverage, payment history and delinquency experience,

financial flexibility and earnings strength, the expected amounts and source of repayment, the level and nature of contingencies, if any, and the industry and geography in which the borrower operates. These factors are based on an evaluation of historical and current information, and involve subjective assessment and interpretation. Credit counterparties are evaluated and risk-rated on an individual basis at least annually. Management considers the ratings to be current as of September 30, 2021.

Our internal risk rating methodology assigns risk ratings to counterparties ranging from Investment Grade, Speculative, Special Mention, Substandard, Doubtful and Loss.

•Investment Grade: Counterparties with strong credit quality and low expected credit risk and probability of default. Approximately 82% of our loans were rated as investment grade as of September 30, 2021 with external credit ratings, or equivalent, of "BBB-" or better.

•Speculative: Counterparties that have the ability to repay but face significant uncertainties, such as adverse business, financial circumstances that could affect credit risk or economic downturns. Loans to counterparties rated as speculative account for approximately 17% of our loans as of September 30, 2021, and are concentrated in leveraged loans. Approximately 88% of those leveraged loans have an external credit rating, or equivalent, of "BB" or "B" as of September 30, 2021.

•Special Mention: Counterparties with potential weaknesses that, if uncorrected, may result in deterioration of repayment prospects.

•Substandard: Counterparties with well-defined weakness that jeopardizes repayment with the possibility we will sustain some loss.

•Doubtful: Counterparties with well-defined weakness which make collection or liquidation in full highly questionable and improbable.

•Loss: Counterparties which are uncollectible or have little value.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables present our recorded loans to counterparties by risk rating, as noted above, as of the dates indicated:

September 30, 2021			Commercial and Financial						Commercial Real Estate						Total Loans
(In millions)
Investment grade			$	24,936					$	1,963					$	26,899
Speculative			5,180						383						5,563
Special mention			118						38						156
Substandard			164						—						164
Doubtful			15						—						15
Total(1)			$	30,413					$	2,384					$	32,797

December 31, 2020			Commercial and Financial						Commercial Real Estate						Total Loans
(In millions)
Investment grade			$	20,859					$	1,724					$	22,583
Speculative			4,852						372						5,224
Special mention			67						—						67
Substandard			34						—						34
Doubtful			17						—						17
Total(1)			$	25,829					$	2,096					$	27,925

(1) Loans Include $3,814 million and $2,982 million of overdrafts as of September 30, 2021 and December 31, 2020 respectively. Overdrafts are short-term in nature and do not present a significant credit risk to us.

For additional information about credit quality, refer to pages 151 to 154 in Note 4 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

The following table presents the amortized cost basis, by year of origination and credit quality indicator, as of September 30, 2021. For origination years before the fifth annual period, we present the aggregate amortized cost basis of loans. For purchased loans, the date of issuance is used to determine the year of origination, not the date of acquisition. For modified, extended or renewed lending arrangements, we evaluate whether a credit event has occurred which would consider the loan to be a new arrangement.

(In millions)			2021						2020						2019						2018						2017												Prior						Revolving Loans						Total(1)
Domestic loans:
Commercial and financial:
Risk Rating:
Investment grade			$	2,696					$	14					$	376					$	2					$	135											$	—					$	13,120					$	16,343
Speculative			974						473						719						519						455												67						457						3,664
Special mention			—						—						70						29						19												—						—						118
Substandard			—						5						71						56						9												—						—						141
Total commercial and financing			$	3,670					$	492					$	1,236					$	606					$	618											$	67					$	13,577					$	20,266
Commercial real estate:
Risk Rating:
Investment grade			$	321					$	129					$	383					657						$	276											$	197					$	—					$	1,963
Speculative			120						49						166						20						—												28						—						383
Special mention			—						—						—						38						—												—						—						38
Total commercial real estate			$	441					$	178					$	549					$	715					$	276											$	225					$	—					$	2,384
Non-U.S. loans:
Commercial and financial:
Risk Rating:
Investment grade			$	3,655					$	—					$	—					$	—					$	—											$	—					$	4,938					$	8,593
Speculative			433						197						294						254						146												31						161						1,516
Substandard			—						—						—						23						—												—						—						23
Doubtful			—						—						—						—						15												—						—						15
Total commercial and financing			$	4,088					$	197					$	294					$	277					$	161											$	31					$	5,099					$	10,147
Total loans			$	8,199					$	867					$	2,079					$	1,598					$	1,055											$	323					$	18,676					$	32,797

(1) Any reserve associated with accrued interest is not material. As of September 30, 2021, accrued interest receivable of $82 million included in the amortized cost basis of loans has been excluded from the amortized cost basis within this table.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents the amortized cost basis, by year of origination and credit quality indicator as of December 31, 2020:

(In millions)			2020						2019						2018						2017						2016												Prior						Revolving Loans						Total(1)
Domestic loans:
Commercial and financial:
Risk Rating:
Investment grade			$	1,894					$	388					$	4					$	167					$	200											$	—					$	12,836					$	15,489
Speculative			432						942						822						610						43												—						597						3,446
Special mention			—						28						—						39						—												—						—						67
Substandard			—						5						—						—						29												—						—						34
Total commercial and financing			$	2,326					$	1,363					$	826					$	816					$	272											$	—					$	13,433					$	19,036
Commercial real estate:
Risk Rating:
Investment grade			$	178					$	383					$	688					$	277					$	197											$	—					$	—					$	1,723
Speculative			120						166						58						—						—												29						—						373
Total commercial real estate			$	298					$	549					$	746					$	277					$	197											$	29					$	—					$	2,096
Non-U.S. loans:
Commercial and financial:
Risk Rating:
Investment grade			$	1,028					$	—					$	—					$	—					$	—											$	—					$	4,343					$	5,371
Speculative			283						401						346						162						26												66						121						1,405
Doubtful			—						—						—						17						—												—						—						17
Total commercial and financing			$	1,311					$	401					$	346					$	179					$	26											$	66					$	4,464					$	6,793
Total loans			$	3,935					$	2,313					$	1,918					$	1,272					$	495											$	95					$	17,897					$	27,925

(1) Any reserve associated with accrued interest is not material. As of December 31, 2020, accrued interest receivable of $72 million included in the amortized cost basis of loans has been excluded from the amortized cost basis within this table.

The following tables present the activity in the allowance for credit losses by portfolio and class for the periods indicated:

			Three Months Ended September 30, 2021
			Commercial and Financial
(In millions)			Leveraged Loans						Other Loans(1)						Commercial Real Estate						Held-to-Maturity Securities						Off-Balance Sheet Commitments						All Other						Total
Allowance for credit losses:
Beginning balance			$	74					$	12					$	14					$	2					$	19					$	—					$	121
Charge-offs			(1)						—						—						—						—						—						(1)
Provision			(4)						—						1						—						1						—						(2)
Other(2)			(1)						—						—						—						—						—						(1)
Ending balance			$	68					$	12					$	15					$	2					$	20					$	—					$	117

(1) Includes $11 million allowance for credit losses on Fund Finance loans and $1 million on other loans.

(2) The amount includes primarily foreign currency translation.

			Nine Months Ended September 30, 2021
			Commercial and Financial
(In millions)			Leveraged Loans						Other Loans(1)						Commercial Real Estate						Held-to-Maturity Securities						Off-Balance Sheet Commitments						All Other						Total
Allowance for credit losses:
Beginning balance			$	97					$	17					$	8					$	3					$	22					$	1					$	148
Charge-offs			(2)						—						—						—						—						—						(2)
Provision			(24)						(5)						7						(1)						(2)						(1)						(26)
Other(2)			(3)						—						—						—						—						—						(3)
Ending balance			$	68					$	12					$	15					$	2					$	20					$	—					$	117

(1) Includes $11 million allowance for credit losses on Fund Finance loans and $1 million on other loans.

(2) The amount includes primarily foreign currency translation.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

.

			Three Months Ended September 30, 2020
			Commercial and Financial
(In millions)			Leveraged Loans						Other Loans(1)						Commercial Real Estate						Held-to-Maturity Securities						Off-Balance Sheet Commitments						All Other						Total
Allowance for credit losses:
Beginning balance			$	113					$	20					$	8					$	3					$	18					$	1					$	163
Charge-offs(2)			(14)						—						—						—						—						—						(14)
Provision			3						—						—						—						(3)						—						—
Foreign currency translation			4						—						—						—						—						—						4
Ending balance			$	106					$	20					$	8					$	3					$	15					$	1					$	153
(1) Includes $15 million allowance for credit losses on Fund Finance loans and $5 million on other loans.
(2) Related to the sale of leveraged loans in the third quarter of 2020.

			Nine Months Ended September 30, 2020
			Commercial and Financial
(In millions)			Leveraged Loans						Other Loans						Commercial Real Estate						Held-to-Maturity Securities						Off-Balance Sheet Commitments						All Other						Total
Allowance for credit losses:
Beginning balance			$	61					$	10					$	2					$	—					$	19					$	1					$	93
Charge-offs(1)			(33)						—						—						—						—						—						(33)
Provision			73						10						6						3						(4)						—						88
Foreign currency translation			5						—						—						—						—						—						5
Ending balance			$	106					$	20					$	8					$	3					$	15					$	1					$	153
(1) Primarily related to the sale of leveraged loans in the third and third quarters of 2020.

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 credit losses in the loan portfolio. In the third quarter of 2021, we reduced the allowance for credit losses by $4 million, principally through a $2 million reserve release in the provision for credit losses, compared to a decrease in the allowance for credit losses of $10 million in the third quarter of 2020. The reduction in the allowance reflects improvements in credit quality and stable economic outlook. Allowance estimates remain subject to continued model and economic uncertainty and management may use qualitative adjustments in the allowance estimates. If future data and forecasts deviate relative to the forecasts utilized to determine our allowance for credit losses as of September 30, 2021, or if credit risk migration is higher or lower than forecasted for reasons independent of the economic forecast, our allowance for credit losses will also change.

Note 5.    Goodwill and Other Intangible Assets

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, 2019			$	7,289					$	267					$	7,556
Foreign currency translation			124						3						127
Ending balance December 31, 2020			7,413						270						7,683
Acquisitions(2)			66						—						66
Divestitures(3)			(17)						—						(17)
Foreign currency translation			(80)						(2)						(82)
Ending balance September 30, 2021			$	7,382					$	268					$	7,650

(1) Investment Servicing includes our acquisition of CRD.

(2) Investment Servicing includes our acquisitions of the depositary bank and fund administrator activities of Fideuram Bank Luxembourg, a subsidiary of Intesa Sanpaolo, in the first quarter of 2021, with a total purchase price of approximately EUR 220 million or approximately $258 million, and our acquisition of Mercatus, Inc.in the third quarter of 2021, with a total purchase price of approximately $88 million. We accounted for these acquisitions as business combinations and, in accordance with ASC Topic 805, Business Combinations, we have recorded assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The purchase price accounting reflected is provisional and is based upon estimates and assumptions that are subject to change within the measurement period (up to one year from the acquisition date pursuant to ASC 805). The measurement period remains open for both transactions pending the completion of valuation procedures related to the acquired assets and assumed liabilities, primarily identifiable intangible assets.

(3) In the second quarter of 2021, we sold a majority share of our WMS business.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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, 2019			$	1,908					$	122					$	2,030
Amortization			(206)						(28)						(234)
Foreign currency translation			31						—						31
Ending balance December 31, 2020			1,733						94						1,827
Acquisitions(2)			263						—						263
Amortization			(165)						(18)						(183)
Foreign currency translation			(20)						—						(20)
Ending balance September 30, 2021			$	1,811					$	76					$	1,887

(1) Investment Servicing includes our acquisition of CRD.

(2) Investment Servicing includes our acquisitions of the depositary bank and fund administrator activities of Fideuram Bank Luxembourg, a subsidiary of Intesa Sanpaolo, in the first quarter of 2021, with a total purchase price of approximately EUR 220 million or approximately $258 million, and our acquisition of Mercatus, Inc. in the third quarter of 2021, with a total purchase price of approximately $88 million. We accounted for these acquisitions as business combinations and, in accordance with ASC Topic 805, Business Combinations, we have recorded assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The purchase price accounting reflected is provisional and is based upon estimates and assumptions that are subject to change within the measurement period (up to one year from the acquisition date pursuant to ASC 805). The measurement period remains open for both transactions pending the completion of valuation procedures related to the acquired assets and assumed liabilities, primarily identifiable intangible assets.     

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:

September 30, 2021			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
(In millions)
Other intangible assets:
Client relationships			$	2,803					$	(1,464)					$	1,339
Technology			404						(133)						271
Core deposits			700						(444)						256
Other			103						(82)						21
Total			$	4,010					$	(2,123)					$	1,887
December 31, 2020			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
(In millions)
Other intangible assets:
Client relationships			$	2,704					$	(1,450)					$	1,254
Technology			393						(113)						280
Core deposits			690						(425)						265
Other			107						(79)						28
Total			$	3,894					$	(2,067)					$	1,827

Note 6.    Other Assets

The following table presents the components of other assets as of the dates indicated:

(In millions)			September 30, 2021						December 31, 2020
Securities borrowed(1)			$	26,643					$	18,330
Derivative instruments, net			7,565						5,804
Bank-owned life insurance			3,548						3,479
Investments in joint ventures and other unconsolidated entities			3,140						3,095
Collateral, net			1,348						2,616
Receivable for securities settlement			621						117
Right-of-use assets			612						720
Prepaid expenses			474						383
Accounts receivable			395						379
Income tax receivable			359						367
Deferred tax assets, net of valuation allowance(2)			196						233
Deposits with clearing organizations			62						58
Other(3)			988						929
Total			$	45,951					$	36,510

(1) Refer to Note 8, 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 of $532 million and $460 million as of September 30, 2021 and December 31, 2020, respectively.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 7. 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; 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 use and accounting policies on derivative financial instruments, including derivatives not designated as hedging instruments, refer to pages 158 to 159 in Note 10 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 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 159 in Note 10 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 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 and AFS securities. We use interest rate contracts in this manner to manage our exposure to changes in the fair value of hedged items caused by changes in interest 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, but the hedged item was not derecognized, all remaining adjustments to the carrying amount of the hedged item are amortized over a period that is consistent with the amortization of other discounts or premiums associated with the hedged item.

Cash Flow Hedges

Derivatives designated as cash flow hedges are utilized to offset the variability of cash flows of

recognized assets 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. The net gain associated with cash flow hedges expected to be reclassified from AOCI within 12 months of September 30, 2021, is approximately $70 million. The maximum length of time over which forecasted cash flows are hedged is 5 years.

Net Investment Hedges

Derivatives categorized as net investment hedges are entered into to protect the net investment in our foreign operations against adverse changes in exchange rates. We use FX forward contracts to convert the foreign currency risk to U.S. dollars to mitigate our exposure to fluctuations in FX rates. The changes in fair value of the FX forward contracts are recorded, net of taxes, in the foreign currency translation component of OCI.

The following table presents the aggregate contractual, or notional, amounts of derivative financial instruments, including those entered into for trading and asset-and-liability management activities as of the dates indicated:

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In millions)			September 30, 2021						December 31, 2020
Derivatives not designated as hedging instruments:
Interest rate contracts:
Futures			$	3,572					$	2,842
Foreign exchange contracts:
Forward, swap and spot			2,372,570						2,640,989
Options purchased			724						946
Options written			221						661
Futures			2,077						1,980
Other:
Stable value contracts(1)			32,704						32,359
Deferred value awards(2)			360						332
Derivatives designated as hedging instruments:
Interest rate contracts:
Swap agreements			13,714						7,449
Foreign exchange contracts:
Forward and swap			6,877						5,221

(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 158 to 159 in Note 10 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

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 table presents the fair value of derivative financial instruments, excluding the impact of master netting agreements, recorded in our consolidated statement of condition as of the dates indicated. The impact of master netting agreements is provided in Note 8.

			Derivative Assets(1)												Derivative Liabilities(2)
(In millions)			September 30, 2021						December 31, 2020						September 30, 2021						December 31, 2020
Derivatives not designated as hedging instruments:
Foreign exchange contracts			$	16,345					$	25,939					$	15,735					$	25,811
Other derivative contracts			—						—						176						157
Total			$	16,345					$	25,939					$	15,911					$	25,968
Derivatives designated as hedging instruments:
Foreign exchange contracts			$	108					$	4					$	—					$	116
Interest rate contracts			4						1						27						42
Total			$	112					$	5					$	27					$	158

(1) Derivative assets are included within other assets in our consolidated statement of condition.

(2) Derivative liabilities are included within other liabilities in our consolidated statement of condition.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents 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 September 30,												Nine Months Ended September 30,
(In millions)						2021						2020						2021						2020
Derivatives not designated as hedging instruments:
Foreign exchange contracts			Foreign exchange trading services revenue			$	186					$	164					$	617					$	712
Foreign exchange contracts			Interest expense			16						20						53						39
Interest rate contracts			Foreign exchange trading services revenue			—						—						1						3
Other derivative contracts			Compensation and employee benefits			(35)						(39)						(158)						(151)
Total						$	167					$	145					$	513					$	603

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:

			September 30, 2021
									Cumulative Fair Value Hedging Adjustment Increasing (Decreasing) the carrying amount
(In millions)			Carrying Amount of Hedged Assets/Liabilities						Active						De-designated(1)
Long-term debt			$	9,024					$	(14)					$	554
Available-for-sale securities			2,420						4						28
			December 31, 2020
									Cumulative Fair Value Hedging Adjustment Increasing (Decreasing) the carrying amount
(In millions)			Carrying Amount of Hedged Assets/Liabilities						Active						De-designated(1)
Long-term debt			$	10,519					$	3					$	688
Available-for-sale securities			2,330						2						43

(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 September 30, 2021 and December 31, 2020, the total notional amount of the interest rate swaps of fair value hedges was $6.81 billion and $2.60 billion, respectively.

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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 September 30,																								Three Months Ended September 30,
									2021						2020																								2021						2020
(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						$	15					$	5											Available-for-sale securities(1)						Net interest income						$	(17)					$	(6)
Interest rate contracts			Net interest income						(7)						(19)												Long-term debt						Net interest income						8						17
Total									$	8					$	(14)																							$	(9)					$	11
									Nine Months Ended September 30,																														Nine Months Ended September 30,
									2021						2020																								2021						2020
(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						$	9					$	(3)											Available-for-sale securities(2)						Net interest income						$	(12)					$	—
Interest rate contracts			Net interest income						(26)						564												Long-term debt						Net interest income						26						(557)
Total									$	(17)					$	561																							$	14					$	(557)

(1) In the three months ended September 30, 2021, approximately $13 million of net unrealized gains on AFS investment securities designated in fair value hedges was recognized in OCI compared to $4 million of net unrealized gains in the same period in 2020.

(2) In the nine months ended September 30, 2021, approximately $9 million of net unrealized gains on AFS investment securities designated in fair value hedges was recognized in OCI compared to no net unrealized gains or losses in the same period in 2020.

			Three Months Ended September 30,																		Three Months Ended September 30,
			2021						2020												Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income						2021						2020
(In millions)			Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative															Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives designated as cash flow hedges:
Interest rate contracts(1)			$	(3)					$	—											Net interest income						$	22					$	18
Foreign exchange contracts			12						(30)												Net interest income						2						6
Total derivatives designated as cash flow hedges			$	9					$	(30)																	$	24					$	24
Derivatives designated as net investment hedges:
Foreign exchange contracts			$	111					$	(122)											Gains (Losses) related to investment securities, net						$	—					$	—
Total derivatives designated as net investment hedges			111						(122)																		—						—
Total			$	120					$	(152)																	$	24					$	24
			Nine Months Ended September 30,																								Nine Months Ended September 30,
			2021						2020																		2021						2020
(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			$	(9)					179												Net interest income						$	62					$	32
Foreign exchange contracts			55						$	(11)											Net interest income						8						20
Total derivatives designated as cash flow hedges			$	46					$	168																	$	70					$	52
Derivatives designated as net investment hedges:
Foreign exchange contracts			$	222					$	(100)											Gains (losses) related to investment securities, net						$	—					$	—
Total derivatives designated as net investment hedges			222						(100)																		—						—
Total			$	268					$	68																	$	70					$	52

(1) As of September 30, 2021, the maximum maturity date of the underlying hedged items is approximately 5.0 years.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 8.

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 September 30, 2021 totaled approximately $4.76 billion, against which we provided $3.90 billion of collateral in the normal course of business. If our credit related contingent features underlying these agreements were triggered as of September 30, 2021, the maximum additional collateral we would be required to post to our counterparties is approximately $0.86 billion.

Note 8. Offsetting Arrangements

For additional information on our offsetting arrangements, refer to page 163 in Note 11 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

As of September 30, 2021 and December 31, 2020, the value of securities received as collateral from third parties where we are permitted to transfer or re-pledge the securities totaled $1.97 billion and $6.48 billion, respectively, and the fair value of the portion that had been transferred or re-pledged as of the same dates was zero and $3.88 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:			September 30, 2021
			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			$	16,453					$	(7,667)					$	8,786					$	—					$	8,786
Interest rate contracts(6)			4						—						4						—						4
Cash collateral and securities netting			NA						(1,225)						(1,225)						(1,086)						(2,311)
Total derivatives			16,457						(8,892)						7,565						(1,086)						6,479
Other financial instruments:
Resale agreements and securities borrowing(7)(8)			87,099						(57,609)						29,490						(29,242)						248
Total derivatives and other financial instruments			$	103,556					$	(66,501)					$	37,055					$	(30,328)					$	6,727

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Assets:			December 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			$	25,943					$	(14,271)					$	11,672					$	—					$	11,672
Interest rate contracts(6)			1						—						1						—						1
Cash collateral and securities netting			NA						(5,869)						(5,869)						(1,105)						(6,974)
Total derivatives			25,944						(20,140)						5,804						(1,105)						4,699
Other financial instruments:
Resale agreements and securities borrowing(7)(8)			174,461						(153,025)						21,436						(20,568)						868
Total derivatives and other financial instruments			$	200,405					$	(173,165)					$	27,240					$	(21,673)					$	5,567

(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 $29.49 billion as of September 30, 2021 were $2.85 billion of resale agreements and $26.64 billion of collateral provided related to securities borrowing. Included in the $21.44 billion as of December 31, 2020 were $3.11 billion of resale agreements and $18.33 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 9 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:			September 30, 2021
			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			$	15,735					$	(7,663)					$	8,072					$	—					$	8,072
Interest rate contracts(6)			27						(4)						23						—						23
Other derivative contracts			176						—						176						—						176
Cash collateral and securities netting			NA						(3,956)						(3,956)						(1,269)						(5,225)
Total derivatives			15,938						(11,623)						4,315						(1,269)						3,046
Other financial instruments:
Repurchase agreements and securities lending(7)(8)			66,016						(57,609)						8,407						(7,802)						605
Total derivatives and other financial instruments			$	81,954					$	(69,232)					$	12,722					$	(9,071)					$	3,651

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Liabilities:			December 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			$	25,927					$	(14,271)					$	11,656					$	—					$	11,656
Interest rate contracts(6)			42						—						42						—						42
Other derivative contracts			157						—						157						—						157
Cash collateral and securities netting			NA						(1,287)						(1,287)						(1,732)						(3,019)
Total derivatives			26,126						(15,558)						10,568						(1,732)						8,836
Other financial instruments:
Repurchase agreements and securities lending(7)(8)			165,793						(153,025)						12,768						(12,448)						320
Total derivatives and other financial instruments			$	191,919					$	(168,583)					$	23,336					$	(14,180)					$	9,156

(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 $8.41 billion as of September 30, 2021 were $0.64 billion of repurchase agreements and $7.77 billion of collateral received related to securities lending transactions. Included in the $12.77 billion as of December 31, 2020 were $3.41 billion of repurchase agreements and $9.36 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 9 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 September 30, 2021																														As of December 31, 2020
(In millions)			Overnight and Continuous						Up to 30 Days						30-90 days						Greater than 90 Days						Total						Overnight and Continuous						Up to 30 Days						30-90 days						Greater than 90 Days						Total
Repurchase agreements:
U.S. Treasury and agency securities			$	53,915					$	—					$	—					$	—					$	53,915					$	152,140					$	—					$	—					$	—					$	152,140
Total			53,915						—						—						—						53,915						152,140						—						—						—						152,140
Securities lending transactions:
US Treasury and agency securities			2						—						—						—						2						—						—						—						—						—
Corporate debt securities			149						—						—						—						149						110						—						—						—						110
Equity securities			9,876						54						3						2,016						11,949						7,578						56												1,156						8,790
Other(1)			1						—						—						—						1						4,753						—						—						—						4,753
Total			10,028						54						3						2,016						12,101						12,441						56						—						1,156						13,653
Gross amount of recognized liabilities for repurchase agreements and securities lending			$	63,943					$	54					$	3					$	2,016					$	66,016					$	164,581					$	56					$	—					$	1,156					$	165,793

(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.

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Note 9.    Commitments and Guarantees

For additional information on the nature of the obligations and related business activities for our commitments and guarantees, refer to page 166 in Note 12 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 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)			September 30, 2021						December 31, 2020
Commitments:
Unfunded credit facilities			$	34,471					$	34,213
Guarantees(1):
Indemnified securities financing			$	402,369					$	440,875
Standby letters of credit			3,333						3,330

(1) The potential losses associated with these guarantees equal the gross contractual amounts and do not consider the value of any collateral or reflect any participations to independent third parties.

Approximately 73% of our unfunded commitments to extend credit expire within one year as of both September 30, 2021 and December 31, 2020.

Indemnified Securities Financing

For additional information on our indemnified securities financing, refer to page 166 in Note 12 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 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)			September 30, 2021						December 31, 2020
Fair value of indemnified securities financing			$	402,369					$	440,875
Fair value of cash and securities held by us, as agent, as collateral for indemnified securities financing			422,882						463,273
Fair value of collateral for indemnified securities financing invested in indemnified repurchase agreements			67,833						54,432
Fair value of cash and securities held by us or our agents as collateral for investments in indemnified repurchase agreements			73,176						58,092

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 September 30, 2021 and December 31, 2020, we had approximately $26.64 billion and $18.33 billion, respectively, of collateral provided and approximately $7.77 billion and $9.36 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 8 to the consolidated financial statements in this Form 10-Q.

Note 10.    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

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proceedings and the amount of reasonably estimable loss (or range thereof) are inherently difficult to predict, especially in the early stages of proceedings. Even if a loss is probable, an amount (or range) of loss might not be reasonably estimated until the later stages of the proceeding due to many factors such as the presence of complex or novel legal theories, the discretion of governmental authorities in seeking sanctions or negotiating resolutions in civil and criminal matters, the pace and timing of discovery and other assessments of facts and the procedural posture of the matter (collectively, "factors influencing reasonable estimates").

As of September 30, 2021, our aggregate accruals for loss contingencies for legal, regulatory and related matters totaled approximately $19 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 September 30, 2021, 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 $45 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 $360 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. We have agreed, subject to court approval, to resolve this matter and pay a cost that is within our established accruals for loss contingencies. 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 have agreed with the office of the United States Attorney for the District of Massachusetts to resolve potential criminal claims arising from these matters by entering into a deferred prosecution agreement and paying a $115 million penalty in May 2021. In June 2019, we reached an agreement with the SEC to settle its claims that we violated the

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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 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. We paid fines to resolve claims of the Securities Divisions of the Secretaries of the State of Massachusetts and New Hampshire. The costs associated with the settlements discussed above were within our related previously established accruals for loss contingencies.

We have not resolved certain claims that may be made by the U.S. Department of Labor. We do not know whether any such claims will be brought, and there can be no assurance that any settlement of any such claims will be reached on financial 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 any such matters is not currently known.

Shareholder Litigation

A shareholder of ours filed a derivative complaint against certain of 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. The Suffolk Superior Court Department of the Trial Court of the Commonwealth of Massachusetts, without objection, approved a settlement of the claim in which we agreed to take, or to continue to take, specified steps to improve our ongoing governance and compliance policies, and to pay a fee to plaintiff's counsel.

Gomes, et al. v. State Street Corp.

Eight participants in our Salary Savings Program filed a purported class action complaint in May 2021 on behalf of participants and beneficiaries who participated in the Program and invested in our proprietary investment fund options between May 2015 and the present. The complaint names the Plan Sponsor as well as the committees overseeing the Plan and their respective members as defendants,

and alleges breach of fiduciary duty and violations of other duties owed to retirement plan participants under the Employee Retirement Income and Security Act. We and the other named defendants deny the alleged claims and are proceeding with a defense of the matter.

Edmar Financial Company, LLC et al v. Currenex, Inc. et al

In August 2021, two former Currenex clients filed a putative civil class action lawsuit in the Southern District of New York alleging antitrust violations, fraud and a civil Racketeer Influenced and Corrupt Organization Act violation against Currenex, State Street and others.

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 $295 million as of September 30, 2021 decreased from $308 million as of December 31, 2020.

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, including amended returns, for tax years 2014-2018. The earliest tax year open to examination in jurisdictions where we have material operations is 2013. Management believes that we have sufficiently accrued liabilities as of September 30, 2021 for potential tax exposures.

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Note 11.    Variable Interest Entities

For additional information on our accounting policy and our use of variable interest entities (VIEs), refer to pages 169 to 170 in Note 14 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, "Variable Interest Entities", in our 2020 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 September 30, 2021 and December 31, 2020, we carried AFS investment securities, composed of securities related to state and political subdivisions, with a fair value of $0.61 billion and $0.70 billion, respectively, and other short-term borrowings of $0.43 billion and $0.62 billion, respectively, 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 2.2 years as of September 30, 2021, compared to approximately 2.7 years as of December 31, 2020.

Interests in Investment Funds

As of September 30, 2021, we had no consolidated funds. As of December 31, 2020, the aggregate assets and liabilities of our consolidated sponsored investment funds totaled $17 million and $4 million, respectively. As of December 31, 2020, our maximum total exposure associated with the consolidated sponsored investment funds totaled $13 million, and represented the value of our economic ownership interest in the funds.

As of September 30, 2021 and December 31, 2020, 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 $11 million and $22 million as of September 30, 2021 and December 31, 2020, respectively, and represented the carrying value of our investments, which are recorded in other assets in our consolidated statement of condition. The amount of loss we may recognize during any period is limited to the carrying amount of our investments in the unconsolidated funds.

Note 12.    Shareholders' Equity

Preferred Stock

    The following table summarizes selected terms of each of the series of the preferred stock issued and outstanding as of September 30, 2021:

Preferred Stock(1):						Issuance Date						Depositary Shares Issued						Amount outstanding (in millions)						Ownership Interest Per Depositary Share						Liquidation Preference Per Share						Liquidation Preference Per Depositary Share						Per Annum Dividend Rate						Dividend Payment Frequency						Carrying Value as of September 30, 2021 (In millions)						Redemption Date(2)
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						$	742					March 15, 2024
Series F(3)						May 2015						250,000						250						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%, or 3.7130% effective September 15, 2021						Quarterly						247						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						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						494						December 15, 2023

(1) The preferred stock and corresponding depositary shares may be redeemed at our option in whole, but not in part, prior to the redemption date upon the occurrence of a regulatory capital treatment event, as defined in the certificate of designation, at a redemption price equal to the liquidation price per share and liquidation price per depositary share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

(2) On the redemption date, or any dividend payment date thereafter, the preferred stock and corresponding depositary shares may be redeemed by us, in whole or in part, at the liquidation price per share and liquidation price per depositary share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

(3) Series F preferred stock is redeemable on September 15, 2020 and on each succeeding dividend payment date. We did not elect redemption on September 15, 2020, December 15, 2020, June 15, 2021 or September 15, 2021.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On March 15, 2021, we redeemed an aggregate of $500 million, or 5,000 of the 7,500 outstanding shares of our non-cumulative perpetual preferred stock, Series F, for cash at a redemption price of $100,000 per share (equivalent to $1,000 per depositary share) plus all declared and unpaid dividends.

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 September 30,
			2021																		2020
(Dollars in millions, except per share amounts)			Dividends Declared per Share						Dividends Declared per Depositary Share						Total						Dividends Declared per Share						Dividends Declared per Depositary Share						Total
Preferred Stock:
Series D			$	1,475					$	0.37					$	11					$	1,475					$	0.37					$	11
Series F			950						9.50						2						2,625						26.25						20
Series G			1,338						0.33						7						1,338						0.33						7
Series H			—						—						—						—						—						—
Total															$	20																	$	38
			Nine Months Ended September 30,
			2021																		2020
(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
Series D			4,425						1.11						33						4,425						1.11						33
Series F			2,869						28.69						11						5,250						52.50						40
Series G			4,014						0.99						21						4,014						0.99						21
Series H			2,813						28.13						14						2,813						28.13						14
Total															$	79																	$	114

In October 2021, we declared dividends on our series D, F, G and H preferred stock of approximately $1,475, $939, $1,338 and $2,813, respectively, per share, or approximately $0.37, $9.39, $0.33 and $28.13, respectively, per depositary share. These dividends total approximately $11 million, $2 million, $7 million and $14 million on our series D, F, G and H preferred stock, respectively, which will be paid in December 2021.

Common Stock

In September 2021, we completed a public offering of approximately 21.7 million shares of our common stock. The offering price was $87.60 per share and net proceeds totaled approximately $1.9 billion. We expect to use these net proceeds to finance our proposed acquisition of the BBH Investor Services business.

In June 2019, our Board approved a common share repurchase program authorizing the repurchase 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 each of the third and fourth quarters of 2019 and the first quarter of 2020 under the 2019 Program.

On March 16, 2020, we, along with the other U.S. G-SIBs, suspended common share repurchases and maintained this suspension through the fourth quarter of 2020 in response to the COVID-19 pandemic. This suspension was consistent with limitations imposed by the Federal Reserve beginning in the second quarter of 2020. As a result, we had no repurchases of our common stock in the second, third or fourth quarters of 2020.

In December 2020, the Federal Reserve issued results of 2020 resubmission stress tests and authorized us to continue to pay common stock dividends at current levels and to resume repurchasing common shares in the first quarter of 2021. In January 2021, our Board authorized a share repurchase program for the repurchase of up to $475 million of our common stock through March 31, 2021. In April 2021, our Board authorized a share repurchase program for the repurchase of up to $425 million of our common stock through June 30, 2021, consistent with the limit set by the Federal Reserve. In July 2021, our Board authorized a share repurchase program for the repurchase of up to $3.0 billion of our common stock through the end of 2022.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In connection with our proposed acquisition of the BBH Investor Services business, we did not purchase any common stock during the third quarter of 2021 under the common share repurchase plan approved by our Board in July 2021, and we do not intend to repurchase any common stock during the fourth quarter of 2021 and the first quarter of 2022. We intend to resume our common share repurchases during the second quarter of 2022.

The tables below present the activity under our common share repurchase program for the periods indicated:

									Three Months Ended September 30, 2021																		Nine Months Ended September 30, 2021
																					Shares Acquired (In millions)						Average Cost per Share						Total Acquired (In millions)						Shares Acquired (In millions)						Average Cost per Share						Total Acquired (In millions)
																					—						$	—					$	—					11.2						$	80.00					$	900

									Three Months Ended September 30, 2020																		Nine Months Ended September 30, 2020
																					Shares Acquired (In millions)						Average Cost per Share						Total Acquired (In millions)						Shares Acquired (In millions)						Average Cost per Share						Total Acquired (In millions)
2019 Program																					—						$	—					$	—					6.5						$	77.35					$	500

The table below presents the dividends declared on common stock for the periods indicated:

			Three Months Ended September 30,
			2021												2020
			Dividends Declared per Share						Total (In millions)						Dividends Declared per Share						Total (In millions)
Common Stock			$	0.57					$	209					$	0.52					$	184
			Nine Months Ended September 30,
			2021												2020
			Dividends Declared per Share						Total (In millions)						Dividends Declared per Share						Total (In millions)
Common Stock			$	1.61					$	570					$	1.56					$	550

Accumulated Other Comprehensive Income (Loss)

The following table presents the after-tax components of AOCI for the periods indicated:

			Nine Months Ended September 30,
(In millions)			2021						2020
Net unrealized gains (losses) on cash flow hedges			$	41					$	82
Net unrealized gains (losses) on available-for-sale securities portfolio			353						976
Net unrealized gains (losses) related to reclassified available-for-sale securities			(39)						(68)
Net unrealized gains (losses) on available-for-sale securities			314						908
Net unrealized (losses) on available-for-sale securities designated in fair value hedges			(24)						(36)
Net unrealized gains (losses) on hedges of net investments in non-U.S. subsidiaries			18						(54)
Other-than-temporary impairment on held-to-maturity securities related to factors other than credit			(2)						(2)
Net unrealized (losses) on retirement plans			(166)						(172)
Foreign currency translation			(863)						(837)
Total			$	(682)					$	(111)

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						Other-Than-Temporary Impairment on Held-to-Maturity Securities						Net Unrealized Losses on Retirement Plans						Foreign Currency Translation						Total
Balance as of December 31, 2020			$	57					$	848					$	(204)					$	(2)					$	(178)					$	(334)					$	187
Other comprehensive income (loss) before reclassifications			35						(558)						222						—						—						(529)						(830)
Amounts reclassified into (out of) accumulated other comprehensive loss			(51)						—						—						—						12						—						(39)
Other comprehensive income (loss)			(16)						(558)						222						—						12						(529)						(869)
Balance as of September 30, 2021			$	41					$	290					$	18					$	(2)					$	(166)					$	(863)					$	(682)

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(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, 2019			$	(70)					$	409					$	46					$	(2)					$	(187)					$	(1,072)					$	(876)
Other comprehensive income (loss) before reclassifications			189						462						(100)						—						—						235						786
Amounts reclassified into (out of) accumulated other comprehensive loss			(37)						1						—						—						15						—						(21)
Other comprehensive income (loss)			152						463						(100)						—						15						235						765
Balance as of September 30, 2020			$	82					$	872					$	(54)					$	(2)					$	(172)					$	(837)					$	(111)

The following table presents after-tax reclassifications into earnings for the periods indicated:

			Three Months Ended September 30,
			2021						2020
(In millions)			Amounts Reclassified (into) out of Earnings												Affected Line Item in Consolidated Statement of Income
Cash flow hedges:
(Gain) reclassified from accumulated other comprehensive income into income, net of related taxes of $6 and $7, respectively			$	(18)					$	(17)					Net interest income reclassified from other comprehensive income
Retirement plans:
Amortization of actuarial losses, net of related taxes of $1 and $1, respectively			2						1						Compensation and employee benefits expenses
Total reclassifications into (out of) Accumulated other comprehensive loss			$	(16)					$	(16)
			Nine Months Ended September 30,
			2021						2020
(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 $0 and $1, respectively			$	—					$	1					Net gains (losses) from sales of available-for-sale securities
Cash flow hedges:
(Gain) reclassified from accumulated other comprehensive income into income, net of related taxes of $19 and $14, respectively			(51)						(37)						Net interest income reclassified from other comprehensive income
Retirement plans:
Amortization of actuarial losses, net of related taxes of $5 and $5, respectively			12						15						Compensation and employee benefits expenses
Total reclassifications into (out of) Accumulated other comprehensive loss			$	(39)					$	(21)

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 13.    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 174 in Note 16 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

As of September 30, 2021, we and State Street Bank exceeded all regulatory capital adequacy requirements to which we were subject to. As of September 30, 2021, 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 September 30, 2021 that have changed the capital categorization of State Street Bank.

The following table presents the regulatory capital structure, total RWA, related regulatory capital ratios and the minimum required regulatory capital ratios for us and State Street Bank as of the dates indicated.

									State Street Corporation																								State Street Bank
(Dollars in millions)									Basel III Advanced Approaches September 30, 2021						Basel III Standardized Approach September 30, 2021						Basel III Advanced Approaches December 31, 2020						Basel III Standardized Approach December 31, 2020						Basel III Advanced Approaches September 30, 2021						Basel III Standardized Approach September 30, 2021						Basel III Advanced Approaches December 31, 2020						Basel III Standardized Approach December 31, 2020
Common shareholders' equity:
Common stock and related surplus									$	11,267					$	11,267					$	10,709					$	10,709					$	12,887					$	12,887					$	12,893					$	12,893
Retained earnings									24,785						24,785						23,442						23,442						14,919						14,919						12,939						12,939
Accumulated other comprehensive income (loss)									(682)						(682)						187						187						(465)						(465)						371						371
Treasury stock, at cost									(10,032)						(10,032)						(10,609)						(10,609)						—						—						—						—
Total									25,338						25,338						23,729						23,729						27,341						27,341						26,203						26,203
Regulatory capital adjustments:
Goodwill and other intangible assets, net of associated deferred tax liabilities									(9,040)						(9,040)						(9,019)						(9,019)						(8,770)						(8,770)						(8,745)						(8,745)
Other adjustments(1)									(467)						(467)						(333)						(333)						(281)						(281)						(152)						(152)
Common equity tier 1 capital									15,831						15,831						14,377						14,377						18,290						18,290						17,306						17,306
Preferred stock									1,976						1,976						2,471						2,471						—						—						—						—
Tier 1 capital									17,807						17,807						16,848						16,848						18,290						18,290						17,306						17,306
Qualifying subordinated long-term debt									1,590						1,590						961						961						754						754						966						966
Allowance for credit losses									—						117						1						148						—						117						10						148
Total capital									$	19,397					$	19,514					$	17,810					$	17,957					$	19,044					$	19,161					$	18,282					$	18,420
Risk-weighted assets:
Credit risk(2)									$	66,503					$	114,604					$	63,367					$	114,892					$	59,635					$	111,464					$	58,960					$	110,797
Operational risk(3)									45,750						NA						44,150						NA						43,113						NA						43,663						NA
Market risk									2,625						2,625						2,188						2,188						2,625						2,625						2,188						2,188
Total risk-weighted assets									$	114,878					$	117,229					$	109,705					$	117,080					$	105,373					$	114,089					$	104,811					$	112,985
Adjusted quarterly average assets									$	281,952					$	281,952					$	263,490					$	263,490					$	278,705					$	278,705					$	260,489					$	260,489
Capital Ratios:			2021 Minimum Requirements(4)			2020 Minimum Requirements(4)
Common equity tier 1 capital			8.0		%	8.0		%	13.8		%				13.5		%				13.1		%				12.3		%				17.4		%				16.0		%				16.5		%				15.3		%
Tier 1 capital			9.5			9.5			15.5						15.2						15.4						14.4						17.4						16.0						16.5						15.3
Total capital			11.5			11.5			16.9						16.6						16.2						15.3						18.1						16.8						17.4						16.3
Tier 1 leverage(5)			4.0			4.0			6.3						6.3						6.4						6.4						6.6						6.6						6.6						6.6

(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 OTC derivative contracts. We used a simple CVA approach in conformity with the Basel III advanced approaches.

(3) Under the current advanced approaches rules and regulatory guidance concerning operational risk models, RWA attributable to operational risk can vary substantially from period-to-period, without direct correlation to the effects of a particular loss event on our results of operations and financial condition and impacting dates and periods that may differ from the dates and periods as of and during which the loss event is reflected in our financial statements, with the timing and categorization dependent on the processes for model updates and, if applicable, model revalidation and regulatory review and related supervisory processes. An individual loss event can have a significant effect on the output of our operational RWA under the advanced approaches depending on the severity of the loss event and its categorization among the seven Basel-defined UOMs.
(4) Minimum requirements include a CCB of 2.5% and a SCB of 2.5% for the advanced approaches and the standardized approach, respectively, a G-SIB surcharge of 1.0% and a countercyclical buffer of 0%.
(5) State Street Bank is required to maintain a minimum Tier 1 leverage ratio of 5.0% as it is the insured depository institution subsidiary of State Street Corporation, a U.S. G-SIB.
NA Not applicable

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 14.    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 September 30,												Nine Months Ended September 30,
(In millions)			2021						2020						2021						2020
Interest income:
Interest-bearing deposits with banks			$	—					$	(6)					$	(13)					$	79
Investment securities:
Investment securities available-for-sale			150						169						435						609
Investment securities held-to-maturity			158						171						501						631
Investment securities purchased under money market liquidity facility			—						25						4						103
Total investment securities			308						365						940						1,343
Securities purchased under resale agreements			6						20						19						109
Loans			168						138						466						479
Other interest-earning assets			5						3						13						52
Total interest income			487						520						1,425						2,062
Interest expense:
Interest-bearing deposits			(62)						(61)						(196)						(47)
Short-term borrowings under money market liquidity facility			—						23						4						87
Securities sold under repurchase agreements			—						—						—						3
Other short-term borrowings			—						2						1						17
Long-term debt			51						69						165						252
Other interest-bearing liabilities			11						9						30						49
Total interest expense			—						42						4						361
Net interest income			$	487					$	478					$	1,421					$	1,701

Note 15.    Expenses

The following table presents the components of other expenses for the periods indicated:

			Three Months Ended September 30,												Nine Months Ended September 30,
(In millions)			2021						2020						2021						2020
Professional services			$	91					$	89					$	246					$	261
Regulatory fees and assessments			16						16						53						45
Sales advertising public relations			13						20						46						50
Securities processing			8						10						22						40
Insurance			3						2						9						10
Bank operations			3						2						7						15
Other			87						90						259						281
Total other expenses			$	221					$	229					$	642					$	702

Acquisition Costs

We recorded approximately $11 million and $33 million of acquisition costs in the three and nine months ended September 30, 2021, respectively, compared to $15 million and $38 million in the same periods in 2020, respectively, related to our acquisition of CRD. In addition, we recorded approximately $7 million of acquisition costs in the third quarter of 2021 related to our proposed acquisition of the BBH Investor Services business.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Restructuring and Repositioning Charges

The following table presents aggregate activity for repositioning charges for the periods indicated:

(In millions)			Employee Related Costs						Real Estate Actions																		Asset and Other Write-offs						Total
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
Payments and Other Adjustments			(25)						(1)																		—						(26)
Accrual Balance at June 30, 2020			132						5																		1						138
Payments and Other Adjustments			(10)						1																		(1)						(10)
Accrual Balance at September 30, 2020			$	122					$	6																	$	—					$	128
Accrual Balance at December 31, 2020			$	190					$	6																	$	—					$	196
Accruals for Beacon			(1)						—																		—						(1)
Accruals for Repositioning Charges			—						2																		—						2
Payments and Other Adjustments			(9)						(2)																		—						(11)
Accrual Balance at March 31, 2021			180						6																		—						186
Payments and Other Adjustments			(34)						—																		—						(34)
Accrual Balance at June 30, 2021			146						6																		—						152
Payments and Other Adjustments			(23)						—																		—						(23)
Accrual Balance at September 30, 2021			$	123					$	6																	$	—					$	129

Note 16. Earnings Per Common Share

For additional information on our earnings per share calculation methodologies, refer to pages 181 to 182 in Note 23 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

The following table presents the computation of basic and diluted earnings per common share for the periods indicated:

			Three Months Ended September 30,												Nine Months Ended September 30,
(Dollars in millions, except per share amounts)			2021						2020						2021						2020
Net income			$	714					$	555					$	1,996					$	1,883
Less:
Preferred stock dividends			(21)						(38)						(85)						(123)
Dividends and undistributed earnings allocated to participating securities(1)			—						—						(1)						(1)
Net income available to common shareholders			$	693					$	517					$	1,910					$	1,759
Average common shares outstanding (In thousands):
Basic average common shares			347,718						352,586						348,106						352,829
Effect of dilutive securities: equity-based awards			5,776						4,582						5,270						4,142
Diluted average common shares			353,494						357,168						353,376						356,971
Anti-dilutive securities(2)			97						1,309						119						1,351
Earnings per common share:
Basic			$	1.99					$	1.47					$	5.49					$	4.99
Diluted(3)			1.96						1.45						5.40						4.93

(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 176 and 177 in Note 18 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 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.

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STATE STREET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 17. 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 182 to 183 in Note 24 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

The following table 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, certain employee costs, including certain severance and restructuring costs, acquisition costs and certain provisions for legal contingencies.

			Three Months Ended September 30,
			Investment Servicing																		Investment Management																		Other																		Total
(Dollars in millions)			2021						2020												2021						2020												2021						2020												2021						2020
Servicing fees			$	1,395					$	1,301											$	—					$	—											$	—					$	—											$	1,395					$	1,301
Management fees			—						—												526						479												—						—												526						479
Foreign exchange trading services			266						252												13						18												—						—												279						270
Securities finance			103						81												3						3												—						—												106						84
Software and processing fees (1)			204						162												(6)						10												—						—												198						172
Total fee revenue			1,968						1,796												536						510												—						—												2,504						2,306
Net interest income			491						482												(4)						(4)												—						—												487						478
Total other income			(1)						—												—						—												—						—												(1)						—
Total revenue			2,458						2,278												532						506												—						—												2,990						2,784
Provision for credit losses			(2)						—												—						—												—						—												(2)						—
Total expenses			1,755						1,739												339						358												22						6												2,116						2,103
Income before income tax expense			$	705					$	539											$	193					$	148											$	(22)					$	(6)											$	876					$	681
Pre-tax margin			29		%				24		%										36		%				29		%																												29		%				24		%
			Nine Months Ended September 30,
			Investment Servicing																		Investment Management																		Other																		Total
(Dollars in millions)			2021						2020												2021						2020												2021						2020												2021						2020
Servicing fees			$	4,165					$	3,860											$	—					$	—											$	—					$	—											$	4,165					$	3,860
Management fees			—						—												1,523						1,387												—						—												1,523						1,387
Foreign exchange trading services			869						998												42						41												—						—												911						1,039
Securities finance			304						258												10						10												—						—												314						268
Software and processing fees (1)			585						528												3						1												—						—												588						529
Total fee revenue			5,923						5,644												1,578						1,439												—						—												7,501						7,083
Net interest income			1,432						1,716												(11)						(15)												—						—												1,421						1,701
Total other income			(1)						2												—						—												53						—												52						2
Total revenue			7,354						7,362												1,567						1,424												53						—												8,974						8,786
Provision for credit losses			(26)						88												—						—												—						—												(26)						88
Total expenses			5,389						5,315												1,082						1,096												88						29												6,559						6,440
Income before income tax expense			$	1,991					$	1,959											$	485					$	328											$	(35)					$	(29)											2,441						$	2,258
Pre-tax margin			27		%				27		%										31		%				23		%																												27		%				26		%

(1) Investment Management includes other revenue items that are primarily driven by equity market movements.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 18.  Revenue from Contracts with Customers

For additional information on the nature of services and our revenue from contracts with customers, including revenues associated with both our Investment Servicing and Investment Management lines of business, refer to pages 184 to 186 in Note 25 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

Revenue by category

In the following tables, 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 September 30, 2021
			Investment Servicing																		Investment Management																		Other																		Total
(Dollars in millions)			Topic 606 revenue						All other revenue						Total						Topic 606 revenue						All other revenue						Total						Topic 606 revenue						All other revenue						Total						2021
Servicing fees			$	1,395					$	—					1,395						$	—					$	—					$	—					$	—					$	—					$	—					$	1,395
Management fees			—						—						—						526						—						526						—						—						—						526
Foreign exchange trading services			82						184						266						13						—						13						—						—						—						279
Securities finance			60						43						103						—						3						3						—						—						—						106
Software and processing fees			126						78						204						—						(6)						(6)						—						—						—						198
Total fee revenue			1,663						305						1,968						539						(3)						536						—						—						—						2,504
Net interest income			—						491						491						—						(4)						(4)						—						—						—						487
Total other income			—						(1)						(1)						—						—						—						—						—						—						(1)
Total revenue			$	1,663					$	795					$	2,458					$	539					$	(7)					$	532					$	—					$	—					$	—					$	2,990
			Nine Months Ended September 30, 2021
			Investment Servicing																		Investment Management																		Other																		Total
(Dollars in millions)			Topic 606 revenue						All other revenue						Total						Topic 606 revenue						All other revenue						Total						Topic 606 revenue						All other revenue						Total						2021
Servicing fees			$	4,165					$	—					$	4,165					$	—					$	—					$	—					$	—					$	—					$	—					$	4,165
Management fees			—						—						—						1,523						—						1,523						—						—						—						1,523
Foreign exchange trading services			260						609						869						42						—						42						—						—						—						911
Securities finance			181						123						304						—						10						10						—						—						—						314
Software and processing fees			390						195						585						—						3						3						—						—						—						588
Total fee revenue			4,996						927						5,923						1,565						13						1,578						—						—						—						7,501
Net interest income			—						1,432						1,432						—						(11)						(11)						—						—						—						1,421
Total other income			—						(1)						(1)						—						—						—						—						53						53						52
Total revenue			$	4,996					$	2,358					$	7,354					$	1,565					$	2					$	1,567					$	—					$	53					$	53					$	8,974

			Three Months Ended September 30, 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			$	1,301					$	—					$	1,301					$	—					$	—					$	—																							$	1,301
Management fees			—						—						—						479						—						479																								479
Foreign exchange trading services			90						162						252						18						—						18																								270
Securities finance			42						39						81						—						3						3																								84
Software and processing fees			108						54						162						—						10						10																								172
Total fee revenue			1,541						255						1,796						497						13						510																								2,306
Net interest income			—						482						482						—						(4)						(4)																								478
Total revenue			$	1,541					$	737					$	2,278					$	497					$	9					$	506																							$	2,784
			Nine Months Ended September 30, 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			$	3,860					$	—					$	3,860					$	—					$	—					$	—																							$	3,860
Management fees			—						—						—						1,387						—						1,387																								1,387
Foreign exchange trading services			285						713						998						41						—						41																								1,039
Securities finance			162						96						258						—						10						10																								268
Software and processing fees			366						162						528						—						1						1																								529
Total fee revenue			4,673						971						5,644						1,428						11						1,439																								7,083
Net interest income			—						1,716						1,716						—						(15)						(15)																								1,701
Total other income			—						2						2						—						—						—																								2
Total revenue			$	4,673					$	2,689					$	7,362					$	1,428					$	(4)					$	1,424																							$	8,786

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Contract balances and contract costs

As of September 30, 2021 and December 31, 2020, net receivables of $2.87 billion and $2.68 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 or quarterly; 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 19.    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 September 30,
			2021																		2020
(In millions)			Non-U.S.(1)						U.S.						Total						Non-U.S.(1)						U.S.						Total
Total revenue			$	1,331					$	1,659					$	2,990					$	1,268					$	1,516					$	2,784
Income before income tax expense			387						489						876						325						356						681
			Nine Months Ended September 30,
			2021																		2020
(In millions)			Non-U.S.(1)						U.S.						Total						Non-U.S.(1)						U.S.						Total
Total revenue			$	3,987					$	4,987					$	8,974					$	3,894					$	4,892					$	8,786
Income before income tax expense			1,095						1,346						2,441						1,002						1,256						2,258

(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 $96.28 billion and $92.33 billion as of September 30, 2021 and 2020, respectively.

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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 September 30, 2021, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity for the three- and nine-month periods ended September 30, 2021 and 2020, cash flows for the nine-month periods ended September 30, 2021 and 2020 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, 2020, 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 19, 2021, 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, 2020, 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

October 22, 2021

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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
AUC/A			Assets under custody and/or administration			IDI			Insured Depository Institution
AUM			Assets under management			EUR			Euro
BBH			Brown Brothers Harriman & Co			LCR(1)			Liquidity coverage ratio
BCC			Business Conduct Committee			LIHTC			Low income housing tax credits
bps			Basis points			LIBOR			London Interbank Offered Rate
CAP			Capital adequacy process			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
CET1(1)			Common equity tier 1			NII			Net interest income
CFTC			Commodity Futures Trading Commission			NIM			Net interest margin
CIS			Corporate Information Security			OTC			Over-the-counter
CLO			Collateralized Loan Obligation			PCAOB			Public Company Accounting Oversight Board
CVA			Credit valuation adjustment			P&L			Profit-and-loss
DOJ			Department of Justice			RWA(1)			Risk-weighted asset
DOL			Department of Labor			SCB			Stress Capital Buffer
ECB			European Central Bank			SEC			Securities and Exchange Commission
EGRRCPA			Economic Growth, Regulatory Relief, and Consumer Protection Act			SLB			Stress Leverage Buffer
EMEA			Europe, Middle East, and Africa			SLR(1)			Supplementary leverage ratio
EPS			Earnings per share			SPDR			Spider; Standard and Poor's depository receipt
ERM			Enterprise Risk Management			SPOE Strategy			Single Point of Entry Strategy
ETF			Exchange-Traded Fund			SSIF			State Street Intermediate Funding, LLC
EVE			Economic value of equity			TLAC(1)			Total loss-absorbing capacity
FDIC			Federal Deposit Insurance Corporation			TORC			Technology and Operational Risk Committee
FHLB			Federal Home Loan Bank of Boston			UCITS			Undertakings for Collective Investments in Transferable Securities
FICC			Fixed Income Clearing Corporation			UOM			Unit of measure
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.

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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 loan or security backed by a pool of debt, primarily senior secured leveraged loans. CLOs are similar to collateralized mortgage obligations, except for the different type of underlying loan. With a CLO, the investor receives scheduled loan or debt payments from the underlying loans, assuming most of the risk in the event borrowers default, but is offered greater diversity and the potential for higher-than-average returns. Commercial real estate: Property intended to generate profit from capital gains or rental income. CRE loans are term loans secured by commercial and multifamily properties. We seek CRE loans with strong competitive positions in major domestic markets, stable cash flows, modest leverage and experienced institutional ownership. Deposit beta: A measure of how much of an interest rate increase is expected to be passed on to client interest-bearing accounts, on average. 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 final rule. It can be defined as the expected amount of loss a bank may be exposed to upon default of an obligor. Global systemically important bank: A financial institution whose distress or disorderly failure, because of its size, complexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity, which will be subject to additional capital requirements. Held-to-maturity investment securities: We classify investments in debt securities as held-to-maturity only if we have the positive intent and ability to hold those securities to maturity. Investments in debt securities classified as held-to-maturity are measured subsequently at amortized cost in the statement of financial position.

High-quality liquid assets: Cash or assets that can be converted into cash at little or no loss of value in private markets and are considered unencumbered. Investment grade: A rating of loans and leases to counterparties with strong credit quality and low expected credit risk and probability of default. It applies to counterparties with a strong capacity to support the timely repayment of any financial commitment. Liquidity coverage ratio: The ratio of encumbered high-quality liquid assets divided by expected total net cash outflows over a 30-day stress period. A Basel III framework requirement for banks and bank holding companies to measure liquidity, it is designed to ensure that certain banking institutions, including us, maintain a minimum amount of unencumbered HQLA sufficient to withstand the net cash outflow under a hypothetical standardized acute liquidity stress scenario for a 30-day stress period. Net asset value: The amount of net assets attributable to each share/unit of the fund at a specific date or time. Net stable funding ratio: The ratio of the amount of available stable funding relative to the amount of required stable funding. This ratio should be equal to at least 100% on an ongoing basis. 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.

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ITEM 1A. RISK FACTORS

State Street is supplementing the risk factors previously disclosed in its 2020 Form 10-K with the following risk factors. These risk factors should be read in conjunction with the risk factors included in the 2020 Form 10-K.

Consummation of our planned acquisition of the BBH Investor Services business is subject to the satisfaction or closing conditions and regulatory approvals, the failure of which may prevent or delay the consummation of the acquisition.

On September 7, 2021, we announced that we had entered into a definitive agreement with BBH to acquire the BBH Investor Services business, including its custody, accounting, fund administration, global markets and technology services for $3.5 billion in cash, subject to customary adjustments. The transaction is targeted to be completed by the end of 2021, subject to the receipt of regulatory approvals and the satisfaction or waiver of other closing conditions. We cannot provide any assurance that all necessary regulatory approvals will be obtained nor the timing of such regulatory approvals, nor can we provide any assurance that all of the other closing conditions will be satisfied or waived. The failure to obtain necessary regulatory approvals or the failure to satisfy some or all of the other required conditions could delay the completion of the acquisition for a significant period of time or prevent it from occurring.

Even if we successfully consummate our planned acquisition of the BBH Investor Services business, we may fail to realize some or all of the anticipated benefits of the transaction or the benefits may take longer to realize than expected.

Our ability to realize the anticipated benefits of the planned acquisition will depend, to a large extent, on our ability to integrate the BBH Investor Services business into our business and realize anticipated growth opportunities and cost synergies. The integration of the BBH Investor Services business into our business will be a complex, costly and time-consuming process, and our management may face significant challenges in implementing that integration, including, without limitation, challenges related to:

•retaining the business and revenue from the BBH Investor Services business's current clients, many of which have the right to consent to transfer their business to State Street or to transition their business on short notice;

•integrating the BBH Investor Services business's software solutions, including its Infomediary communication platform, with our existing products and services and cross-selling our comprehensive suite of products and services, including State Street Alpha, to clients of the BBH Investor Services business;

•achieving the anticipated cost and revenue synergies from the combination of the BBH Investor Services business with State Street;

•managing systems, operational and business complexities and costs associated with combining two different global securities servicing platforms, including maintaining service consistency, information security, business continuity and compliance, and controlling operational risks associated with large-scale technology conversions; and

•transitioning the BBH Investor Services business's senior management team of investment service partners into roles within our larger company and retaining other key employees of the BBH Investor Services business.

Any delay or failure in achieving any of the foregoing could materially adversely impact the expected benefits of the acquisition.

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PART 2. OTHER INFORMATION

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In June 2019, our Board approved a common share repurchase program authorizing the repurchase 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, along with the other U.S. G-SIBs, suspended common share repurchases and maintained this suspension through the fourth quarter of 2020 in response to the COVID-19 pandemic. This suspension was consistent with limitations imposed by the Federal Reserve beginning in the second quarter of 2020. As a result, we had no repurchases of our common stock in the second, third or fourth quarters of 2020.

In December 2020, the Federal Reserve issued results of 2020 resubmission stress tests and authorized us to continue to pay common stock dividends at current levels and to resume repurchasing common shares in the first quarter of 2021. In January 2021, our Board authorized a share repurchase program for the purchase of up to $475 million of our common stock through March 31, 2021. In April 2021, our Board authorized a share repurchase program for the repurchase of up to $425 million of our common stock through June 30, 2021, consistent with the limit set by the Federal Reserve. In July 2021, our Board authorized a share repurchase program for the repurchase of up to $3.0 billion of our common stock through the end of 2022.

In connection with our proposed acquisition of the BBH Investor Services business, we did not repurchase any common stock during the third quarter of 2021 under the common share repurchase plan approved by our Board in July 2021, and we do not intend to repurchase any common stock during the fourth quarter of 2021 and the first quarter of 2022. We intend to resume our common share repurchases during the second quarter of 2022.

Stock repurchases may be made using various types of transactions, including open-market repurchases, accelerated share repurchases or other transactions off the market, and may be made under Rule 10b5-1 trading programs. The timing and amount of any stock repurchases and the type of transaction will depend on several factors, including investment opportunities, our capital position, our financial performance, market conditions and the amount of common stock issued as part of employee compensation programs. The common share repurchase program does not have specific price targets and may be suspended at any time.

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ITEM 6.    EXHIBITS

Exhibit No.									Exhibit Description
			15						Acknowledgment Letter of Ernst & Young LLP, Independent Registered Public Accounting Firm
			31.1						Rule 13a-14(a)/15d-14(a) Certification of Chairman, President and Chief Executive Officer
			31.2						Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
			32						Section 1350 Certifications
			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)

*						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 and nine months ended September 30, 2021 and 2020, (ii) consolidated statement of comprehensive income for the three and nine months ended September 30, 2021 and 2020, (iii) consolidated statement of condition as of September 30, 2021 and December 31, 2020, (iv) consolidated statement of changes in shareholders' equity for the three and nine months ended September 30, 2021 and 2020, (v) consolidated statement of cash flows for the nine months ended September 30, 2021 and 2020, and (vi) notes to consolidated financial statements.

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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:

October 22, 2021

By:

/s/ ERIC W. ABOAF

Eric W. Aboaf,

Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date:

October 22, 2021

By:

/s/ IAN W. APPLEYARD

Ian W. Appleyard,

Executive Vice President, Global Controller and Chief Accounting Officer (Principal Accounting Officer)

State Street Corporation | 102