Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

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

For	the	fiscal	year	ended	December	31,	2014

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

# STATE	STREET	CORPORATION

(Exact	name	of	registrant	as	specified	in	its	charter)

Massachusetts

(State	or	other	jurisdiction	of	incorporation)

One	Lincoln	Street Boston,	Massachusetts

(Address	of	principal	executive	office)

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

(Zip	Code)

(Registrant's	telephone	number,	including	area	code)

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

# (Title	of	Each	Class)

Common	Stock,	$1	par	value	per	share

Depositary	Shares,	each	representing	a	1/4,000th	ownership	interest	in	a	share	of Non-Cumulative	Perpetual	Preferred	Stock,	Series	C,	without	par	value	per	share

Depositary	Shares,	each	representing	a	1/4,000th	ownership	interest	in	a	share	of Fixed-to-Floating	Rate	Non-Cumulative	Perpetual	Preferred	Stock,	Series	D,	without

par	value	per	share

# (Name	of	each	exchange	on	which	registered)

New	York	Stock	Exchange

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

Non-Cumulative	Perpetual	Preferred	Stock,	Series	E,	without	par	value	per	share New	York	Stock	Exchange

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

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.		Yes		x			No			¨

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.		Yes		¨		No		x

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		x			No	¨

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	Web	site,	if	any,	every	Interactive	Data	File	required	to	be	submitted	and	posted	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	and	post	such	files).		Yes		x		No	¨

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	(§	229.405	of	this	chapter)	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of	registrant's	knowledge,	in definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.		x

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer	or	a	smaller	reporting	company.	See	the	definitions	of	"large	accelerated	filer,"	"accelerated	filer"	and "smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.	(Check	one):

				Large	accelerated	filer		x Accelerated	filer		¨ Non-accelerated	filer		¨ Smaller	reporting	company		¨

(Do	not	check	if	a	smaller	reporting	company)

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Act).		Yes		¨		No		x

The	aggregate	market	value	of	the	voting	and	non-voting	common	equity	held	by	non-affiliates	computed	by	reference	to	the	per	share	price	($67.26)	at	which	the	common	equity	was	last	sold	as	of	the	last	business	day of	the	registrant's	most	recently	completed	second	fiscal	quarter	(June	30,	2014)	was	approximately	$28.43	billion.

The	number	of	shares	of	the	registrant's	common	stock	outstanding	as	of January	31,	2015	was	412,280,622.

Portions	of	the	following	documents	are	incorporated	by	reference	into	Parts	of	this	Report	on	Form	10-K,	to	the	extent	noted	in	such	Parts,	as	indicated	below:

(1)	The	registrant's	definitive	Proxy	Statement	for	the	2015	Annual	Meeting	of	Shareholders	to	be	filed	pursuant	to	Regulation	14A	on	or	before	April	30,	2015	(Part	III).

# PART	I

| Item	1 | Business | 3 |
| :--- | :--- | :--- |
| Item\t1A | Risk\tFactors | 15 |
| Item\t1B | Unresolved\tStaff\tComments | 40 |
| Item\t2 | Properties | 40 |
| Item\t3 | Legal\tProceedings | 41 |
| Item\t4 | Mine\tSafety\tDisclosures | 41 |
|  | Executive\tOfficers\tof\tthe\tRegistrant | 41 |
| PART\tII |  |  |
| Item\t5 | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 43 |
| Item\t6 | Selected\tFinancial\tData | 47 |
| Item\t7 | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 48 |
| Item\t7A | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 121 |
| Item\t8 | Financial\tStatements\tand\tSupplementary\tData | 121 |
| Item\t9 | Changes\tin\tand\tDisagreements\twith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 195 |
| Item\t9A | Controls\tand\tProcedures | 195 |
| Item\t9B | Other\tInformation | 198 |
| PART\tIII |  |  |
| Item\t10 | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 198 |
| Item\t11 | Executive\tCompensation | 198 |
| Item\t12 | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 198 |
| Item\t13 | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 199 |
| Item\t14 | Principal\tAccounting\tFees\tand\tServices | 199 |
| PART\tIV |  |  |
| Item\t15 | Exhibits,\tFinancial\tStatement\tSchedules | 199 |
|  | SIGNATURES | 200 |
|  | EXHIBIT\tINDEX | 201 |

# ITEM	1. BUSINESS

# GENERAL

State	Street	Corporation,	the	parent	company,	is	a	financial	holding company	organized	in	1969	under	the	laws	of	the	Commonwealth	of Massachusetts.	For	purposes	of	this	Form	10-K,	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	provides	financial	and managerial	support	to	our	legal	and	operating	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.

As	of	December	31,	2014,	we	had	consolidated	total	assets	of $274.12	billion,	consolidated	total	deposits	of	 $209.04	billion, consolidated	total	shareholders'	equity	of	$21.47	billion	and	29,970 employees.	Our	executive	offices	are	located	at	One	Lincoln	Street, Boston,	Massachusetts	02111	(telephone	(617)	786-3000).	We	operate	in more	than	100	geographic	markets	worldwide,	including	the	U.S., Canada,	Europe,	the	Middle	East	and	Asia.

We	make	available	on	the	"Investor	Relations"	section	of	our corporate	website	at	www.statestreet.com\stockholder,	free	of	charge,	all reports	we	electronically	file	with,	or	furnish	to,	the	Securities	and Exchange	Commission,	or	SEC,	including	our	Annual	Reports	on	Form 10-K,	Quarterly	Reports	on	Form	10-Q	and	Current	Reports	on	Form	8-K, as	well	as	any	amendments	to	those	reports,	as	soon	as	reasonably practicable	after	those	documents	have	been	filed	with,	or	furnished	to, the	SEC.	These	documents	are	also	accessible	on	the	SEC's	website	at www.sec.gov.	We	have	included	the	website	addresses	of	State	Street and	the	SEC	in	this	report	as	inactive	textual	references	only.	Information on	those	websites	is	not	part	of	this	Form	10-K.

We	have	Corporate	Governance	Guidelines,	as	well	as	written charters	for	the	Examining	and	Audit	Committee,	the	Executive Committee,	the	Executive	Compensation	Committee,	the	Nominating	and Corporate	Governance	Committee,	the	Risk	Committee	and	the Technology	Committee	of	our	Board	of	Directors,	or	Board,	and	a	Code	of Ethics	for	senior	financial	officers,	a	Standard	of	Conduct	for	Directors and	a	Standard	of	Conduct	for	our	employees.	Each	of	these	documents is	posted	on	the	"Investor	Relations"	section	of	our	website	under "Corporate	Governance."

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	summary	results	of	semi- annual	State	Street-run	stress	tests	which	we	conduct	under	the	Dodd- Frank	Wall	Street	Reform	and	Consumer	Protection	Act,	or	Dodd-Frank Act,	on	the	"Investor	Relations"	section	of	our	website	under	"Filings	and Reports."

# BUSINESS	DESCRIPTION

# Overview

We	are	a	leader	in	providing	financial	services	and	products	to	meet the	needs	of	institutional	investors	worldwide,	with	$28.19	trillion	of	assets under	custody	and	administration	and	$2.45	trillion	of	assets	under management	as	of	December	31,	2014.	Our	clients	include	mutual	funds, collective	investment	funds	and	other	investment	pools,	corporate	and public	retirement	plans,	insurance	companies,	foundations,	endowments and	investment	managers.

We	conduct	our	business	primarily	through	State	Street	Bank,	which traces	its	beginnings	to	the	founding	of	the	Union	Bank	in	1792.	State Street	Bank's	current	charter	was	authorized	by	a	special	Act	of	the Massachusetts	Legislature	in	1891,	and	its	present	name	was	adopted	in 1960.	State	Street	Bank	operates	as	a	specialized	bank,	referred	to	as	a trust	and	custody	bank,	that	services	and	manages	assets	on	behalf	of	its institutional	clients.

# Additional	Information

Additional	information	about	our	business	activities	is	provided	in	the sections	that	follow.	For	information	about	our	management	of	credit	and counterparty	risk;	liquidity	risk;	operational	risk;	market	risk	associated with	our	trading	activities;	market	risk	associated	with	our	non-trading,	or asset-and-liability	management,	activities,	primarily	composed	of	interest- rate	risk;	and	capital,	as	well	as	other	risks	inherent	in	our	businesses, refer	to	"Risk	Factors"	included	under	Item	1A,	the	"Financial	Condition" section	of	Management's	Discussion	and	Analysis	of	Financial	Condition and	Results	of	Operations,	or	Management's	Discussion	and	Analysis, included	under	Item	7,	and	our	consolidated	financial	statements	and accompanying	notes	included	under	Item	8,	of	this	Form	10-K.

# LINES	OF	BUSINESS

We	have	two	lines	of	business:	Investment	Servicing	and	Investment Management.

# Investment	Servicing

Our	Investment	Servicing	line	of	business	performs	core	custody and	related	value-added

functions,	such	as	providing	institutional	investors	with	clearing,	payment and	settlement	services.	Our	financial	services	and	products	allow	our large	institutional	investor	clients	to	execute	financial	transactions	on	a daily	basis	in	markets	across	the	globe.	As	most	institutional	investors cannot	economically	or	efficiently	build	their	own	technology	and operational	processes	necessary	to	facilitate	their	global	securities settlement	needs,	our	role	as	a	global	trust	and	custody	bank	is	generally to	aid	our	clients	to	efficiently	perform	services	associated	with	the clearing,	settlement	and	execution	of	securities	transactions	and	related payments.

Our	investment	servicing	products	and	services	include:	custody; product-	and	participant-level	accounting;	daily	pricing	and	administration; master	trust	and	master	custody;	record-keeping;	cash	management; foreign	exchange,	brokerage	and	other	trading	services;	securities finance;	deposit	and	short-term	investment	facilities;	loans	and	lease financing;	investment	manager	and	alternative	investment	manager operations	outsourcing;	and	performance,	risk	and	compliance	analytics.

We	provide	mutual	fund	custody	and	accounting	services	in	the	U.S. We	offer	clients	a	broad	range	of	integrated	products	and	services, including	accounting,	daily	pricing	and	fund	administration.	We	service U.S.	tax-exempt	assets	for	corporate	and	public	pension	funds,	and	we provide	trust	and	valuation	services	for	daily-priced	portfolios.

We	are	a	service	provider	outside	of	the	U.S.	as	well.	In	Germany, Italy,	France	and	Luxembourg,	we	provide	depotbank	services	(a	fund oversight	role	created	by	regulation)	for	retail	and	institutional	fund assets,	as	well	as	custody	and	other	services	to	pension	plans	and	other institutional	clients.	In	the	U.K.,	we	provide	custody	services	for	pension fund	assets	and	administration	services	for	mutual	fund	assets.	As	of December	31,	2014,	we	serviced	approximately	$1.43	trillion	of	offshore assets	in	funds	located	primarily	in	Luxembourg,	Ireland	and	the	Cayman Islands.	As	of	December	31,	2014,	we	serviced	$1.34	trillion	of	assets under	administration	in	the	Asia/Pacific	region,	and	in	Japan,	we	serviced approximately	94%	of	the	trust	assets	serviced	by	non-domestic	trust banks.

We	are	an	alternative	asset	servicing	provider	worldwide,	servicing hedge,	private	equity	and	real	estate	funds.	As	of	December	31,	2014,	we had	approximately	$1.32	trillion	of	alternative	assets	under	administration.

# Investment	Management

We	provide	our	Investment	Management	services	through	State Street	Global	Advisors,	or	SSGA.	SSGA	provides	a	broad	array	of investment	management,	investment	research	and	investment	advisory services	to	corporations,	public	funds	and	other	sophisticated	investors. SSGA	offers	active	and	passive	asset	management	strategies	across equity,	fixed-income	and	cash	asset	classes.	Products	are	distributed directly	and	through	intermediaries	using	a	variety	of	investment	vehicles, including	exchange-traded	funds,	or	ETFs,	such	as	the	SPDR®	ETF brand.

Additional	information	about	our	lines	of	business	is	provided	under "Line	of	Business	Information"	in	Management's	Discussion	and	Analysis included	under	Item	7,	and	in	note	24	to	the	consolidated	financial statements	included	under	Item	8,	of	this	Form	10-K.

# COMPETITION

We	operate	in	a	highly	competitive	environment	and	face	global competition	in	all	areas	of	our	business.	Our	competitors	include	a	broad range	of	financial	institutions	and	servicing	companies,	including	other custodial	banks,	deposit-taking	institutions,	investment	management firms,	insurance	companies,	mutual	funds,	broker/dealers,	investment banks,	benefits	consultants,	business	service	and	software	companies and	information	services	firms.	As	our	businesses	grow	and	markets evolve,	we	may	encounter	increasing	and	new	forms	of	competition around	the	world.

We	believe	that	many	key	factors	drive	competition	in	the	markets for	our	business.	For	Investment	Servicing,	quality	of	service,	economies of	scale,	technological	expertise,	quality	and	scope	of	sales	and marketing,	required	levels	of	capital	and	price	drive	competition,	and	are critical	to	our	servicing	business.	For	Investment	Management,	key competitive	factors	include	expertise,	experience,	availability	of	related service	offerings,	quality	of	service	and	performance,	and	price.

Our	competitive	success	may	depend	on	our	ability	to	develop	and market	new	and	innovative	services,	to	adopt	or	develop	new technologies,	to	bring	new	services	to	market	in	a	timely	fashion	at competitive	prices,	to	continue	and	expand	our	relationships	with	existing clients,	and	to	attract	new	clients.

# SUPERVISION	AND	REGULATION

State	Street	is	registered	with	the	Board	of	Governors	of	the	Federal Reserve	System,	which	we	refer	to	as	the	Federal	Reserve,	as	a	bank holding	company	pursuant	to	the	Bank	Holding	Company	Act

of	1956.	The	Bank	Holding	Company	Act	limits	the	activities	in	which	we and	our	non-banking	subsidiaries	may	engage	to	those	that	the	Federal Reserve	considers	to	be	closely	related	to	banking,	or	to	managing	or controlling	banks.	These	limits	also	apply	to	non-banking	entities	that	we are	deemed	to	"control"	for	purposes	of	the	Bank	Holding	Company	Act, which	may	include	companies	of	which	we	own	or	control	more	than	5% of	a	class	of	voting	shares.	The	Federal	Reserve	may	order	a	bank holding	company	to	terminate	any	activity,	or	its	ownership	or	control	of	a non-banking	subsidiary,	if	the	Federal	Reserve	finds	that	the	activity, ownership	or	control	constitutes	a	serious	risk	to	the	financial	safety, soundness	or	stability	of	a	banking	subsidiary	or	is	inconsistent	with sound	banking	principles	or	statutory	purposes.	The	Bank	Holding Company	Act	also	requires	a	bank	holding	company	to	obtain	prior approval	of	the	Federal	Reserve	before	it	acquires	substantially	all	the assets	of	any	bank,	or	ownership	or	control	of	more	than	5%	of	the	voting shares	of	any	bank.

The	parent	company	is	qualified	as,	and	has	elected	to	become,	a financial	holding	company,	which	increases	to	some	extent	the	scope	of activities	in	which	it	may	engage.	A	financial	holding	company	and	the entities	under	its	control	are	permitted	to	engage	in	activities	considered "financial	in	nature"	as	defined	by	the	Bank	Holding	Company	Act	and	the Federal	Reserve's	implementing	rules	and	interpretations,	and	therefore State	Street	may	engage	in	a	broader	range	of	activities	than	permitted for	bank	holding	companies	and	their	subsidiaries	that	have	not	elected	to become	financial	holding	companies.	Financial	holding	companies	may engage	directly	or	indirectly	in	activities	that	are	defined	to	be	financial	in nature,	either	de	novo	or	by	acquisition,	provided	that	the	financial	holding company	gives	the	Federal	Reserve	after-the-fact	notice	of	the	new activities.	Activities	defined	to	be	financial	in	nature	include,	but	are	not limited	to,	the	following:	providing	financial	or	investment	advice; underwriting;	dealing	in	or	making	markets	in	securities;	making	merchant banking	investments,	subject	to	significant	limitations;	and	any	activities previously	found	by	the	Federal	Reserve	to	be	closely	related	to	banking. In	order	to	maintain	our	status	as	a	financial	holding	company,	we	and each	of	our	depository	institution	subsidiaries	must	be	well	capitalized	and well	managed,	as	defined	in	applicable	regulations	and	determined	in	part by	the	results	of	regulatory	examinations,	and	must	comply	with Community	Reinvestment	Act	obligations.	Failure	to	maintain	these standards	may	ultimately	permit	the	Federal	Reserve	to	take	enforcement actions	against	us	and	restrict	our	ability	to	engage	in	activities	defined	to be	financial	in	nature.	Currently,

under	the	Bank	Holding	Company	Act,	we	may	not	be	able	to	engage	in new	activities	or	acquire	shares	or	control	of	other	businesses.

The	Dodd-Frank	Act,	which	became	law	in	July	2010,	has	had,	and will	continue	to	have,	a	significant	effect	on	the	regulatory	structure	of	the financial	markets	and	supervision	of	bank	holding	companies,	banks	and other	financial	institutions.	The	Dodd-Frank	Act,	among	other	things: established	the	Financial	Stability	Oversight	Council,	or	FSOC,	to	monitor systemic	risk	posed	by	financial	institutions;	enacted	new	restrictions	on proprietary	trading	and	private-fund	investment	activities	by	banks	and their	affiliates,	commonly	known	as	the	"Volcker	rule"	(refer	to	our discussion	of	the	Volcker	rule	provided	below	under	"Regulatory	Capital Adequacy	and	Liquidity	Standards"	in	this	"Supervision	and	Regulation" section);	created	a	new	framework	for	the	regulation	of	derivatives	and the	entities	that	engage	in	derivatives	trading;	altered	the	regulatory capital	treatment	of	trust	preferred	and	other	hybrid	capital	securities; revised	the	assessment	base	that	is	used	by	the	Federal	Deposit Insurance	Corporation,	or	FDIC,	to	calculate	deposit	insurance	premiums; and	required	large	financial	institutions	to	develop	plans	for	their resolution	under	the	U.S.	Bankruptcy	Code	(or	other	specifically applicable	insolvency	regime)	in	the	event	of	material	financial	distress	or failure.

Another	aspect	of	the	Dodd-Frank	Act	is	its	adoption	of	capital planning	and	stress	test	requirements	for	large	bank	holding	companies, including	us.	We	are	required	by	the	Federal	Reserve	to	conduct	periodic stress	testing	of	our	business	operations	and	to	develop	an	annual	capital plan	as	part	of	the	Federal	Reserve's	Comprehensive	Capital	Analysis and	Review	process.	That	process	is	used	by	the	Federal	Reserve	to evaluate	our	management	of	capital,	the	adequacy	of	our	regulatory capital	and	the	potential	requirement	for	us	to	maintain	capital	levels above	regulatory	minimums.	Before	making	any	capital	distribution, including	stock	purchases	and	dividends,	we	must	receive	no	objection	to our	capital	plan	from	the	Federal	Reserve.	This	could	require	us	to	revise our	stress-testing	or	capital	management	approaches,	resubmit	our capital	plan	or	postpone,	cancel	or	alter	our	planned	capital	actions.	In addition,	changes	in	our	strategy,	merger	or	acquisition	activity	or unanticipated	uses	of	capital	could	result	in	a	change	in	our	capital	plan and	its	associated	capital	actions,	and	may	require	resubmission	of	the capital	plan	to	the	Federal	Reserve	for	its	non-objection.	For	additional information	regarding	capital	planning	and	stress	test	requirements	and restrictions	on	dividends,	refer	to	""Capital	Planning,	Stress	Tests	and Dividends"	in	this	"Supervision	and	Regulation"	section	and	"Item	5. Market	for	Registrant's	Common

Equity,	Related	Stockholder	Matters	and	Issuer	Purchase	of	Equity Securities"	in	Part	II	of	this	Form	10-K.

In	addition,	regulatory	change	is	being	implemented	internationally with	respect	to	financial	institutions,	including,	but	not	limited	to,	the implementation	of	the	Basel	III	final	rule	(refer	to	"Regulatory	Capital Adequacy	and	Liquidity	Standards"	below	in	this	"Supervision	and Regulation"	section	and	"Financial	Condition	-	Capital"	in	Management's Discussion	and	Analysis	included	under	Item	7	of	this	Form	10-K	for	a discussion	of	Basel	III)	and	the	Alternative	Investment	Fund	Managers Directive,	or	AIFMD,	the	European	Market	Infrastructure	Resolution,	or EMIR,	revisions	to	the	European	collective	investment	fund,	or	UCITS, directive,	revisions	to	the	Markets	in	Financial	Instruments	Directive,	or MIFID,	and	ongoing	review	of	European	Union	data	protection	regulation.

Many	aspects	of	our	business	are	subject	to	regulation	by	other	U.S. federal	and	state	governmental	and	regulatory	agencies	and	self- regulatory	organizations	(including	securities	exchanges),	and	by	non- U.S.	governmental	and	regulatory	agencies	and	self-regulatory organizations.	Some	aspects	of	our	public	disclosure,	corporate governance	principles	and	internal	control	systems	are	subject	to	the Sarbanes-Oxley	Act	of	2002,	the	Dodd-Frank	Act	and	regulations	and rules	of	the	SEC	and	the	New	York	Stock	Exchange.

# Regulatory	Capital	Adequacy	and	Liquidity	Standards

Like	other	U.S.	bank	holding	companies,	we	and	our	depository institution	subsidiaries	are	subject	to	the	current	U.S.	minimum	risk-based capital	and	leverage	ratio	guidelines,	referred	to	as	Basel	III.	As	noted above,	the	status	of	our	parent	company	as	a	financial	holding	company also	requires	that	we	and	our	depository	institution	subsidiaries	maintain specified	regulatory	capital	ratio	levels.	As	of	December	31,	2014,	our regulatory	capital	levels	on	a	consolidated	basis,	and	the	regulatory capital	levels	of	State	Street	Bank,	our	principal	banking	subsidiary, exceeded	the	currently	applicable	minimum	capital	requirements	under Basel	III	and	the	requirements	we	must	meet	for	the	parent	company	to qualify	as	a	financial	holding	company.

The	U.S.	Basel	III	final	rule	replaced	the	Basel	I-	and	Basel	II-based capital	regulations	in	the	United	States.	As	an	"advanced	approaches" banking	organization	(refer	to	the	"Financial	Condition	-	Capital"	section	of Management's	Discussion	and	Analysis	included	under	Item	7	of	this Form	10-K	for	a	discussion	of	advanced	approaches),	State	Street became	subject	to	the	U.S.	Basel	III	final	rule	beginning	on	January	1, 2014.	However,	certain

aspects	of	the	U.S.	Basel	III	final	rule,	including	the	new	minimum	risk- based	and	leverage	capital	ratios,	capital	buffers,	regulatory	adjustments and	deductions	and	revisions	to	the	calculation	of	risk-weighted	assets under	the	so-called	"standardized	approach,"	will	commence	at	a	later date	or	be	phased	in	over	several	years.

Among	other	things,	the	U.S.	Basel	III	final	rule	introduces	a minimum	common	equity	tier	1	risk-based	capital	ratio	of	4.5%,	raises	the minimum	tier	1	risk-based	capital	ratio	from	4%	to	6%,	and,	for	advanced approaches	banking	organizations	such	as	State	Street,	imposes	a minimum	supplementary	tier	1	leverage	ratio	of	3%,	the	numerator	of which	is	tier	1	capital	and	the	denominator	of	which	includes	both	on- balance	sheet	assets	and	certain	off-balance	sheet	exposures.	In	addition to	the	supplementary	leverage	ratio,	State	Street	is	subject	to	a	minimum tier	1	leverage	ratio	of	4%,	which	differs	from	the	supplementary	leverage ratio	primarily	in	that	the	denominator	of	the	tier	1	leverage	ratio	is quarterly	average	on-balance	sheet	assets.

The	U.S.	Basel	III	final	rule	also	introduces	a	capital	conservation buffer	and	a	countercyclical	capital	buffer	that	add	to	the	minimum	risk- based	capital	ratios.	Specifically,	the	final	rule	limits	a	banking organization's	ability	to	make	capital	distributions	and	discretionary	bonus payments	to	executive	officers	if	it	fails	to	maintain	a	common	equity	tier	1 capital	conservation	buffer	of	more	than	2.5%	of	total	risk-weighted	assets and,	if	deployed	during	periods	of	excessive	credit	growth,	a	common equity	tier	1	countercyclical	capital	buffer	of	up	to	2.5%	of	total	risk- weighted	assets,	above	each	of	the	minimum	common	equity	tier	1,	and tier	1	and	total	risk-based	capital	ratios.	Banking	regulators	have	initially set	the	countercyclical	capital	buffer	at	zero.

To	maintain	the	status	of	our	parent	company	as	a	financial	holding company,	we	and	our	insured	depository	institution	subsidiaries	are required	to	be	"well-capitalized"	by	maintaining	capital	ratios	above	the minimum	requirements.	Effective	on	January	1,	2015,	the	"well- capitalized"	standard	for	our	banking	subsidiaries	was	revised	to	reflect the	higher	capital	requirements	in	the	U.S.	Basel	III	final	rule.

In	addition	to	introducing	new	capital	ratios	and	buffers,	the	U.S. Basel	III	final	rule	revises	the	eligibility	criteria	for	regulatory	capital instruments	and	provides	for	the	phase-out	of	existing	capital	instruments that	do	not	satisfy	the	new	criteria.	For	example,	existing	trust	preferred capital	securities	are	being	phased	out	from	tier	1	capital	over	a	two-year period	beginning	on	January	1,	2014	and	ending	on	January	1,	2016,	and subsequently,	the	qualification	of	these	securities	as	tier	2	capital	will	be phased	out	over	a	multi-year	transition	period	beginning	on

January	1,	2016	and	ending	on	January	1,	2022.	We	had	trust	preferred capital	securities	of	$475	million	outstanding	as	of	December	31,	2014.

Under	the	U.S.	Basel	III	final	rule,	certain	new	items	are	deducted from	common	equity	tier	1	capital	and	certain	regulatory	capital deductions	were	modified	as	compared	to	the	previously	applicable capital	regulations.	Among	other	things,	the	final	rule	requires	significant investments	in	the	common	stock	of	unconsolidated	financial	institutions, as	defined,	and	certain	deferred	tax	assets	that	exceed	specified individual	and	aggregate	thresholds	to	be	deducted	from	common	equity tier	1	capital.	As	an	advanced	approaches	banking	organization,	after-tax unrealized	gains	and	losses	on	investment	securities	classified	as available	for	sale,	which	are	excluded	from	tier	1	capital	under	Basel	I	and Basel	II,	flow	through	to	and	affect	State	Street's	and	State	Street	Bank's common	equity	tier	1	capital,	subject	to	a	phase-in	schedule.

On	January	1,	2015,	the	U.S.	Basel	III	final	rule	replaced	the	existing Basel	I-based	approach	for	calculating	risk-weighted	assets	with	the	U.S. Basel	III	standardized	approach	that,	among	other	things,	modifies	certain existing	risk	weights	and	introduces	new	methods	for	calculating	risk- weighted	assets	for	certain	types	of	assets	and	exposures.	The	final	rule also	revised	the	Basel	II-based	advanced	approaches	capital	rules	to implement	Basel	III	and	certain	provisions	of	the	Dodd-Frank	Act.

On	February	21,	2014,	we	were	notified	by	the	Federal	Reserve	that we	had	completed	our	parallel	run	period.	Consequently,	since	the second	quarter	of	2014,	we	are	required	to	use	the	advanced	approaches framework	as	provided	in	the	Federal	Reserve's	July	2013	Basel	III	final rule	in	the	determination	of	our	risk-based	capital	requirements.	The Dodd-Frank	Act	applies	a	"capital	floor"	to	advanced	approaches	banking organizations,	such	as	State	Street	and	State	Street	Bank.	As	of	January 1,	2015,	the	Basel	III	standardized	approach	acts	as	that	capital	floor.	As a	result,	we	are	required	to	calculate	our	risk-based	capital	ratios	under both	the	Basel	III	advanced	approach	and	the	Basel	III	standardized approach,	and	we	are	subject	to	the	more	stringent	of	the	risk-based capital	ratios	calculated	under	the	standardized	approach	and	those calculated	under	the	advanced	approach	in	the	assessment	of	our	capital adequacy	under	the	prompt	corrective	action	framework.

In	addition	to	the	U.S.	Basel	III	final	rule,	the	Dodd-Frank	Act requires	the	Federal	Reserve	to	establish	more	stringent	capital requirements	for	large	bank	holding	companies,	including	State	Street. The	Federal	Reserve	has	addressed	this	requirement	by,	among	other things,	proposing	to	implement	the	Basel	Committee's	capital	surcharge for	"global

systemically	important	banks,"	or	G-SIBs.	Specifically,	on	December	9, 2014,	the	Federal	Reserve	issued	a	proposed	rulemaking	to	establish	a risk-based	capital	surcharge	for	U.S.	G-SIBs,	such	as	State	Street.	Under the	proposed	rule,	a	G-SIB's	capital	conservation	buffer	would	be increased	by	the	amount	of	the	capital	surcharge,	using	the	higher surcharge	as	determined	under	two	proposed	methods.	The	first proposed	method	would	consider	a	G-SIB's	size,	interconnectedness, cross-jurisdictional	activity,	substitutability,	and	complexity,	whereas	the second	proposed	method	would	replace	substitutability	with	use	of	short- term	wholesale	funding.	If	the	rulemaking	is	finalized	as	proposed, the	capital	surcharge	could	be	higher	for	U.S.	G-SIB's	than	the	capital surcharge	as	determined	under	the	framework	proposed	by	the	Basel Committee.	Under	the	proposed	rule,	the	capital	surcharge	would	be phased	in	beginning	in	2016	and	would	become	fully	effective	on	January 1,	2019.	State	Street	is	assessing	the	impact	of	the	capital	surcharge	that would	result	if	the	proposed	rule	were	implemented	and	the	effects	of maintaining	capital	levels	necessary	to	meet	the	surcharge	could	be material.

In	November	2014,	the	Financial	Stability	Board,	or	FSB,	published a	consultative	document	with	a	proposal	to	enhance	the	total	loss- absorbing	capacity,	or	TLAC,	of	G-SIBs	in	resolution.	The	proposal	calls for	G-SIBs	to	maintain	TLAC	in	excess	of	prescribed	minimum	thresholds. TLAC	would	include	regulatory	capital	and	liabilities	that	can	be	written down	or	converted	into	equity	during	resolution.	At	a	minimum,	each	G- SIB	would	need	to	hold	TLAC	in	an	amount	equivalent	to	between	16% and	20%	of	its	risk-weighted	assets	(plus	applicable	regulatory	buffers)	or at	least	twice	the	relevant	Basel	III	tier	1	leverage	ratio	requirement.	The proposal	states	that	G-SIBs	will	not	be	expected	to	meet	TLAC requirements	before	January	1,	2019.	The	FSB	is	expected	to	finalize	its proposal	in	late	2015.	U.S.	banking	regulators	have	not	yet	issued	a proposal	to	implement	TLAC	requirements.

# Supplementary	Leverage	Ratio	Framework

On	April	8,	2014,	U.S.	banking	regulators	issued	a	final	rule enhancing	the	supplementary	leverage	ratio,	or	SLR,	standards	for	U.S. G-SIB's,	such	as	State	Street,	and	their	insured	depository	institution subsidiaries,	such	as	State	Street	Bank.	We	refer	to	this	final	rule	as	the eSLR	final	rule.	Under	the	eSLR	final	rule,	upon	implementation	on January	1,	2018,	State	Street	Bank	must	maintain	an	SLR	of	at	least	6% to	be	well	capitalized	under	the	U.S.	banking	regulators'	prompt	corrective action	provisions.	The	eSLR	final	rule	also	provides	that	if	State	Street maintains	an	SLR	greater	than	5%,	it	is	not	subject	to	limitations	on distributions	and	discretionary	bonus

payments	under	the	eSLR	final	rule,	but	could	continue	to	be	under	other provisions	of	the	Basel	III	final	rule,	including	risk-based	capital	ratio requirements.

On	September	3,	2014,	U.S.	banking	regulators	issued	a	final	rule modifying	the	definition	of	the	denominator	of	the	SLR	in	a	manner consistent	with	recent	changes	agreed	to	by	the	Basel	Committee.	The revisions	to	the	SLR	apply	to	all	banking	organizations	subject	to	the advanced	approaches	provisions	of	the	Basel	III	final	rule,	such	as	State Street.	Specifically,	the	SLR	final	rule	modifies	the	methodology	for including	off-balance

sheet	assets,	including	credit	derivatives,	repo-style	transactions,	and commitments	and	guarantees,	in	the	denominator	of	the	SLR,	and requires	banking	organizations	to	calculate	their	total	leverage	exposure using	daily	averages	for	on-balance	sheet	assets	and	the	average	of	three month-end	calculations	for	off-balance	sheet	exposures.	Certain	public disclosures	required	by	the	SLR	final	rule	must	be	provided	beginning with	the	first	quarter	of	2015,	and	the	minimum	SLR	requirement	using the	SLR	final	rule's	denominator	calculations	is	effective	beginning	on January	1,	2018.

# Liquidity	Coverage	Ratio	and	Net	Stable	Funding	Ratio

In	addition	to	capital	standards,	the	Basel	III	final	rule	introduced	two quantitative	liquidity	standards:	the	liquidity	coverage	ratio,	or	LCR,	and the	net	stable	funding	ratio,	or	NSFR.

The	LCR	requires	banking	organizations	to	maintain	a	minimum amount	of	liquid	assets	to	withstand	a	short-term	liquidity	stress	period	of thirty	days.	It	is	intended	to	promote	the	short-term	resilience	of	the liquidity	risk	profile	of	internationally	active	banking	organizations,	improve the	banking	industry's	ability	to	absorb	shocks	arising	from	financial	and economic	stress,	and	improve	the	measurement	and	management	of liquidity	risk.	On	September	3,	2014,	U.S.	banking	regulators	issued	a final	rule	to	implement	the	Basel	Committee's	LCR	in	the	U.S.

The	LCR	measures	an	institution's	high-quality	liquid	assets,	or HQLA,	against	its	net	cash	outflows.	The	LCR	will	be	phased	in,	as originally	proposed,	beginning	on	January	1,	2015,	at	80%,	with	full implementation	beginning	on	January	1,	2017.

Beginning	with	January	2015,	State	Street	is	required	to	report	its LCR	to	the	Federal	Reserve	on	a	monthly	basis.	Daily	reporting	of	the LCR	to	the	Federal	Reserve	will	be	required	beginning	with	July	2015.

The	LCR	final	rule	is	largely	similar	to	the	proposed	rule	issued	by U.S.	banking	regulators	in

October	2013;	however,	the	final	rule	contains	several	changes	and clarifications,	including	revisions	to	the	definition	of	operational	deposits and	more	favorable	foreign	exchange	netting	treatment,	both	of	which	we expect	to	benefit	our	LCR	ratio,	and	the	exclusion	as	operational	deposits of	deposits	from	non-regulated	funds,	which	we	expect	to	negatively affect	our	LCR	ratio.

Compliance	with	the	LCR	has	required	that	we	maintain	an investment	portfolio	that	contains	an	adequate	amount	of	HQLA.	In general,	HQLA	investments	generate	a	lower	investment	return	than other	the	types	of	investments,	resulting	in	a	negative	impact	on	our	net interest	revenue	and	our	net	interest	margin.		In	addition,	the	level	of HQLA	we	are	required	to	maintain	under	the	LCR	is	dependent	upon	our client	relationships	and	the	nature	of	services	we	provide,	which	may change	over	time.		For	example,	if	the	percentage	of	our	operational deposits	relative	to	non-operational	deposits	increases,	we	would	expect to	require	less	HQLA	in	order	to	maintain	our	LCR.		Conversely,	if	the percentage	of	non-operational	deposits	increases	relative	to	our operational	deposits,	we	would	expect	to	require	additional	HQLA	in	order to	maintain	our	LCR.

In	October	2014,	the	Basel	Committee	issued	final	guidance	with respect	to	the	NSFR.	The	NSFR	will	require	banking	organizations	to maintain	a	stable	funding	profile	relative	to	the	composition	of	their	assets and	off-balance	sheet	activities.	The	NSFR	limits	over-reliance	on	short- term	wholesale	funding,	encourages	better	assessment	of	funding	risk across	all	on-	and	off-balance	sheet	exposures,	and	promotes	funding stability.	The	final	guidance	establishes	a	one-year	liquidity	standard representing	the	proportion	of	long-term	assets	funded	by	long-term	stable funding,	with	the	NSFR	scheduled	to	become	a	minimum	standard beginning	on	January	1,	2018.

We	are	reviewing	the	specifics	of	the	final	guidance	and	will	evaluate the	U.S.	implementation	of	this	standard	to	analyze	its	impact	and develop	strategies	for	compliance.	U.S.	banking	regulators	have	not	yet issued	a	proposal	to	implement	the	NSFR.

Failure	to	meet	current	and	future	regulatory	capital	requirements could	subject	us	to	a	variety	of	enforcement	actions,	including	the termination	of	State	Street	Bank's	deposit	insurance	by	the	FDIC,	and	to certain	restrictions	on	our	business,	including	those	that	are	described above	in	this	"Supervision	and	Regulation"	section.

For	additional	information	about	our	regulatory	capital	position	and our	regulatory	capital	adequacy,	as	well	as	current	and	future	regulatory capital

requirements,	refer	to	"Financial	Condition	-	Capital"	in	Management's Discussion	and	Analysis	included	under	Item	7,	and	note	15	to	the consolidated	financial	statements	included	under	Item	8,	of	this	Form	10-

# Capital	Planning,	Stress	Tests	and	Dividends

Pursuant	to	the	Dodd-Frank	Act,	the	Federal	Reserve	has	adopted capital	planning	and	stress	test	requirements	for	large	bank	holding companies,	including	us,	which	form	part	of	the	Federal	Reserve's	annual Comprehensive	Capital	Analysis	and	Review,	or	CCAR,	framework. Under	the	Federal	Reserve's	capital	plan	final	rule,	we	must	submit	an annual	capital	plan	to	the	Federal	Reserve,	taking	into	account	the	results of	separate	stress	tests	designed	by	us	and	by	the	Federal	Reserve.

The	capital	plan	must	include	a	description	of	all	of	our	planned capital	actions	over	a	nine-quarter	planning	horizon,	including	any issuance	of	debt	or	equity	capital	instruments,	any	capital	distribution, such	as	payments	of	dividends	on,	or	purchases	of,	our	stock,	and	any similar	action	that	the	Federal	Reserve	determines	could	affect	our consolidated	capital.	The	capital	plan	must	include	a	discussion	of	how we	will	maintain	capital	above	the	minimum	regulatory	capital	ratios, including	the	minimum	ratios	under	the	U.S.	Basel	III	final	rule	that	are phased	in	over	the	planning	horizon,	and	serve	as	a	source	of	strength	to our	U.S.	depository	institution	subsidiaries	under	supervisory	stress scenarios.	The	capital	plan	requirements	mandate	that	we	receive	no objection	to	our	plan	from	the	Federal	Reserve	before	making	a	capital distribution.	In	addition,	even	with	a	capital	plan	for	which	we	have received	no	objection	from	the	Federal	Reserve,	we	must	seek	the approval	of	the	Federal	Reserve	before	making	a	capital	distribution	if, among	other	reasons,	we	would	not	meet	our	regulatory	capital requirements	after	making	the	proposed	capital	distribution.

In	addition	to	its	capital	planning	requirements,	the	Federal	Reserve has	the	authority	to	prohibit	or	to	limit	the	payment	of	dividends	by	the banking	organizations	it	supervises,	including	us	and	State	Street	Bank,	if, in	the	Federal	Reserve's	opinion,	the	payment	of	a	dividend	would constitute	an	unsafe	or	unsound	practice	in	light	of	the	financial	condition of	the	banking	organization.	All	of	these	policies	and	other	requirements could	affect	our	ability	to	pay	dividends	and	purchase	our	stock,	or	require us	to	provide	capital	assistance	to	State	Street	Bank	and	any	other banking	subsidiary.

We	expect	that,	by	March	31,	2015,	the	Federal	Reserve	will	either provide	a	notice	of	non-objection	or	object	to	our	2015	capital	plan,	which we	submitted	to	the	Federal	Reserve	in	January	2015.

In	October	2012,	the	Federal	Reserve	issued	a	final	rule	to implement	its	capital	stress-testing	requirements	under	the	Dodd-Frank Act	that	require	us	to	conduct	semi-annual	State	Street-run	stress	tests. Under	this	rule,	we	are	required	to	publicly	disclose	the	summary	results of	our	State	Street-run	stress	tests	under	the	severely	adverse	economic scenario.	In	September	2014,	we	provided	summary	results	of	our	2014 semi-annual	State	Street-run	stress	tests	on	the	"Investor	Relations" section	of	our	corporate	website.	The	rule	also	subjects	us	to	an	annual supervisory	stress	test	conducted	by	the	Federal	Reserve.

The	Dodd-Frank	Act	also	requires	State	Street	Bank	to	conduct	an annual	stress	test.	State	Street	Bank	submitted	its	2015	annual	State Street	Bank-run	stress	test	to	the	Federal	Reserve	in	January	2015.

# The	Volcker	Rule

In	December	2013,	U.S.	regulators	issued	final	regulations	to implement	the	Volcker	rule.	The	Volcker	rule	will,	over	time,	prohibit banking	entities,	including	us	and	our	affiliates,	from	engaging	in	certain prohibited	proprietary	trading	activities,	as	defined	in	the	final	Volcker	rule regulations,	subject	to	exemptions	for	market	making-related	activities, risk-mitigating	hedging,	underwriting	and	certain	other	activities.	The Volcker	rule	will	also	require	banking	entities	to	either	restructure	or	divest certain	ownership	interests	in,	and	relationships	with,	covered	funds	(as such	terms	are	defined	in	the	final	Volcker	rule	regulations).

The	Volcker	rule	became	effective	on	July	21,	2012,	and	the	final implementing	regulations	became	effective	on	April	1,	2014.	In	the absence	of	an	applicable	extension	of	the	Volcker	rule's	general conformance	period,	a	banking	entity	must	bring	its	activities	and investments	into	conformance	with	the	Volcker	rule	and	its	final implementing	regulations	by	July	21,	2015.	In	December	2014,	the Federal	Reserve	issued	an	order,	the	2016	conformance	period extension,	extending	the	Volcker	rule's	general	conformance	period	until July	21,	2016	for	investments	in	and	relationships	with	covered	funds	and certain	foreign	funds	that	were	in	place	on	or	prior	to	December	31,	2013, referred	to	as	legacy	covered	funds.	Under	the	2016	conformance	period extension,	all	investments	in	and	relationships	related	to	investments	in	a covered	fund	made	or	entered	into	after	that	date	by	a	banking	entity	and its	affiliates,	and	all	proprietary	trading	activities	of	those	entities,	must	be in	conformance	with	the	Volcker	rule	and	its	final	implementing regulations	by	July	21,	2015.	The	Federal	Reserve	stated	in	the	2016 conformance	period	extension	that	it	intends	to	grant	a	final	one-year extension	of	the	general	conformance	period,	to	July	21,	2017,	for banking

entities	to	conform	ownership	interests	in	and	relationships	with	legacy covered	funds.

Whether	certain	types	of	investment	securities	or	structures,	such	as collateralized	loan	obligations,	or	CLOs,	constitute	covered	funds,	as defined	in	the	final	Volcker	rule	regulations,	and	do	not	benefit	from	the exemptions	provided	in	the	Volcker	rule,	and	whether	a	banking organization's	investments	therein	constitute	ownership	interests	remain subject	to	(1)	market,	and	ultimately	regulatory,	interpretation,	and	(2)	the specific	terms	and	other	characteristics	relevant	to	such	investment securities	and	structures.

As	of	December	31,	2014,	we	held	approximately	 $4.54	billion	of investments	in	CLOs.	As	of	the	same	date,	these	investments	had	an aggregate	pre-tax	net	unrealized	gain	of	approximately	$97	million, composed	of	gross	unrealized	gains	of	$105	million	and	gross	unrealized losses	of	$8	million.	In	the	event	that	we	or	our	banking	regulators conclude	that	such	investments	in	CLOs,	or	other	investments,	are covered	funds,	we	may	be	required	to	divest	of	such	investments.	If	other banking	entities	reach	similar	conclusions	with	respect	to	similar investments	held	by	them,	the	prices	of	such	investments	could	decline significantly,	and	we	may	be	required	to	divest	of	such	investments	at	a significant	discount	compared	to	the	investments'	book	value.	This	could result	in	a	material	adverse	effect	on	our	consolidated	results	of operations	in	the	period	in	which	such	a	divestment	occurs	or	on	our consolidated	financial	condition.

We	are	reviewing	our	activities	that	are	affected	by	the	final	Volcker rule	regulations	and	are	taking	steps	to	bring	those	activities	into conformity	with	the	Volcker	rule.	The	final	Volcker	rule	regulations	also require	banking	entities	to	establish	extensive	programs	designed	to ensure	compliance	with	the	restrictions	of	the	Volcker	rule.	We	are	in	the process	of	establishing	the	necessary	compliance	program	to	comply	with the	final	Volcker	rule	regulations.	Such	compliance	program	will	restrict our	ability	in	the	future	to	service	certain	types	of	funds,	in	particular covered	funds	for	which	SSGA	acts	as	an	advisor	and	certain	types	of trustee	relationships.	Consequently,	Volcker	rule	compliance	will	entail both	the	cost	of	a	compliance	program	and	loss	of	certain	revenue	and future	opportunities.

# Enhanced	Prudential	Standards

The	Dodd-Frank	Act	established	a	new	regulatory	framework	to regulate	banking	organizations	designated	as	"systemically	important financial	institutions,"	or	SIFIs,	and	has	subjected	them	to	heightened prudential	standards,	including	heightened	capital,	leverage,	liquidity	and risk	management	requirements,	single-counterparty	credit	limits	and	early remediation	requirements.	Bank

holding	companies	with	$50	billion	or	more	in	consolidated	assets,	which includes	us,	became	automatically	subject	to	the	systemic-risk	regime	in July	2010.

The	FSOC,	established	by	the	Dodd-Frank	Act	as	discussed	earlier, can	recommend	prudential	standards,	reporting	and	disclosure requirements	to	the	Federal	Reserve	for	SIFIs,	and	must	approve	any finding	by	the	Federal	Reserve	that	a	financial	institution	poses	a	grave threat	to	financial	stability	and	must	undertake	mitigating	actions.	The FSOC	is	also	empowered	to	designate	systemically	important	payment, clearing	and	settlement	activities	of	financial	institutions,	subjecting	them to	prudential	supervision	and	regulation,	and,	assisted	by	the	new	Office of	Financial	Research	within	the	U.S.	Department	of	the	Treasury,	also established	by	the	Dodd-Frank	Act,	can	gather	data	and	reports	from financial	institutions,	including	us.

In	February	2014,	the	Federal	Reserve	approved	a	final	rule implementing	certain	of	the	Dodd-Frank	Act's	enhanced	prudential standards	for	large	bank	holding	companies	such	as	State	Street.	Under the	final	rule,	we	will	have	to	comply	with	various	liquidity-related	risk management	standards	and	maintain	a	liquidity	buffer	of	unencumbered highly	liquid	assets	based	on	the	results	of	internal	liquidity	stress	testing. This	liquidity	buffer	is	in	addition	to	other	liquidity	requirements,	such	as the	LCR	and,	when	implemented,	the	NSFR.	The	final	rule	also establishes	requirements	and	responsibilities	for	our	risk	committee	and mandates	risk	management	standards.	We	became	subject	to	these	new standards	on	January	1,	2015.	Final	rules	on	single	counterparty	credit limits	and	an	early	termination	framework	have	not	yet	been	promulgated. Refer	to	the	risk	factor	titled	"We	assume	significant	credit	risk	to counterparties,	many	of	which	are	major	financial	institutions.	These financial	institutions	and	other	counterparties	may	also	have	substantial financial	dependencies	with	other	financial	institutions	and	sovereign entities.	This	credit	exposure	and	concentration	could	expose	us	to financial	loss"	included	under	"Risk	Factors"	under	Item	1A	of	this	Form 10-K.	In	addition,	the	proposed	rules	would	create	a	new	early- remediation	regime	to	address	financial	distress	or	material	management weaknesses	determined	with	reference	to	four	levels	of	early	remediation, including	heightened	supervisory	review,	initial	remediation,	recovery,	and resolution	assessment,	with	specific	limitations	and	requirements	tied	to each	level.

The	systemic-risk	regime	also	provides	that,	for	institutions	deemed to	pose	a	grave	threat	to	U.S.	financial	stability,	the	Federal	Reserve, upon	an	FSOC	vote,	must	limit	that	institution's	ability	to

merge,	restrict	its	ability	to	offer	financial	products,	require	it	to	terminate activities,	impose	conditions	on	activities	or,	as	a	last	resort,	require	it	to dispose	of	assets.	Upon	a	grave-threat	determination	by	the	FSOC,	the Federal	Reserve	must	issue	rules	that	require	financial	institutions	subject to	the	systemic-risk	regime	to	maintain	a	debt-to-equity	ratio	of	no	more than	15	to	1	if	the	FSOC	considers	it	necessary	to	mitigate	the	risk	of	the grave	threat.	The	Federal	Reserve	also	has	the	ability	to	establish	further standards,	including	those	regarding	contingent	capital,	enhanced	public disclosures,	and	limits	on	short-term	debt,	including	off-balance	sheet exposures.

# Resolution	Planning

As	required	by	the	Dodd-Frank	Act,	the	FDIC	and	the	Federal Reserve	jointly	issued	a	final	rule	pursuant	to	which	we	are	required	to submit	annually	to	the	Federal	Reserve	and	the	FDIC	a	plan	for	our	rapid and	orderly	resolution	under	the	Bankruptcy	Code	(or	other	specifically applicable	insolvency	regime)	in	the	event	of	material	financial	distress	or failure,	referred	to	as	a	resolution	plan.	The	FDIC	also	issued	a	final	rule pursuant	to	which	State	Street	Bank	is	required	to	submit	annually	to	the FDIC	a	plan	for	resolution	in	the	event	of	its	failure.	We	and	State	Street Bank	submitted	our	most	recent	annual	resolution	plans	to	the	Federal Reserve	and	the	FDIC	on	July	1,	2014.	In	August	2014,	the	Federal Reserve	and	the	FDIC	announced	the	completion	of	their	reviews	of resolution	plans	submitted	in	2013	by	11	large,	complex	banking organizations,	including	State	Street,	under	the	requirements	of	the	Dodd- Frank	Act,	and	informed	each	of	these	organizations	of	specific shortcomings	with	their	respective	2013	resolution	plans.	If	we	fail	to	meet regulatory	expectations	to	the	satisfaction	of	the	Federal	Reserve	and	the FDIC	in	the	submission	of	our	2015	resolution	plan,	we	could	be	subject to	more	stringent	capital,	leverage	or	liquidity	requirements,	restrictions	on our	growth,	activities	or	operations,	or	be	required	to	divest	certain	of	our assets	or	operations.

# Orderly	Liquidation	Authority

Under	the	Dodd-Frank	Act,	certain	financial	companies,	including bank	holding	companies	such	as	State	Street,	and	certain	covered subsidiaries,	can	be	subjected	to	a	new	orderly	liquidation	authority.	The U.S.	Treasury	Secretary,	in	consultation	with	the	President,	must	first make	certain	extraordinary	financial	distress	and	systemic	risk determinations,	and	action	must	be	recommended	by	two-thirds	of	the FDIC	Board	and	two-thirds	of	the	Federal	Reserve	Board.	Absent	such actions,	we,	as	a	bank	holding	company,	would	remain	subject	to	the	U.S. Bankruptcy	Code.

The	orderly	liquidation	authority	went	into	effect	in	July	2010,	and rulemaking	is	proceeding	in	stages,	with	some	regulations	now	finalized and	others	planned	but	not	yet	proposed.	If	we	were	subject	to	the	orderly liquidation	authority,	the	FDIC	would	be	appointed	as	our	receiver,	which would	give	the	FDIC	considerable	powers	to	resolve	us,	including:	(1)	the power	to	remove	officers	and	directors	responsible	for	our	failure	and	to appoint	new	directors	and	officers;	(2)	the	power	to	assign	assets	and liabilities	to	a	third	party	or	bridge	financial	company	without	the	need	for creditor	consent	or	prior	court	review;	(3)	the	ability	to	differentiate	among creditors,	including	by	treating	junior	creditors	better	than	senior	creditors, subject	to	a	minimum	recovery	right	to	receive	at	least	what	they	would have	received	in	bankruptcy	liquidation;	and	(4)	broad	powers	to administer	the	claims	process	to	determine	distributions	from	the	assets of	the	receivership	to	creditors	not	transferred	to	a	third	party	or	bridge financial	institution.

In	December	2013,	the	FDIC	released	its	proposed	single-point-of- entry	strategy	for	resolution	of	a	SIFI	under	the	orderly	liquidation authority.	The	FDIC's	release	outlines	how	it	would	use	its	powers	under the	orderly	liquidation	authority	to	resolve	a	SIFI	by	placing	its	top-tier	U.S. holding	company	in	receivership	and	keeping	its	operating	subsidiaries open	and	out	of	insolvency	proceedings	by	transferring	the	operating subsidiaries	to	a	new	bridge	holding	company,	recapitalizing	the	operating subsidiaries	and	imposing	losses	on	the	shareholders	and	creditors	of	the holding	company	in	receivership	according	to	their	statutory	order	of priority.

# Derivatives

Title	VII	of	the	Dodd-Frank	Act	imposes	a	new	regulatory	structure on	the	over-the-counter	derivatives	market,	including	requirements	for clearing,	exchange	trading,	capital,	margin,	reporting	and	record-keeping. In	addition,	certain	derivative	activities	are	required	to	be	pushed	out	of insured	depository	institutions	and	conducted	in	separately	capitalized non-bank	affiliates.	Title	VII	also	requires	certain	persons	to	register	as	a major	swap	participant,	a	swap	dealer	or	a	securities-based	swap	dealer. The	Commodity	Futures	Trading	Commission,	or	CFTC,	the	SEC	and other	U.S.	regulators	have	adopted	and	are	still	in	the	process	of	adopting regulations	to	implement	Title	VII.	Through	this	rulemaking	process,	these regulators	collectively	have	adopted	or	proposed,	among	other	things, regulations	relating	to	reporting	and	record-keeping	obligations,	margin and	capital	requirements,	the	scope	of	registration	and	the	central clearing	and	exchange	trading	requirements	for	certain	over-the-counter derivatives.	The	CFTC	has	also	issued	rules	to	enhance	the	oversight	of clearing	and	trading

entities.	The	CFTC,	along	with	other	regulators,	including	the	Federal Reserve,	are	also	in	the	process	of	proposing	and	finalizing	additional rules,	such	as	with	respect	to	margin	requirements	for	uncleared derivatives	transactions.

State	Street	Bank	has	registered	provisionally	with	the	CFTC	as	a swap	dealer.	As	a	provisionally	registered	swap	dealer,	State	Street	Bank is	subject	to	significant	regulatory	obligations	regarding	its	swap	activity and	the	supervision,	examination	and	enforcement	powers	of	the	CFTC and	other	regulators.	In	December	2013,	the	CFTC	granted	State	Street Bank	a	limited-purpose	swap	dealer	designation.	Under	this	limited- purpose	designation,	interest-rate	swap	activity	engaged	in	by	State Street	Bank's	Global	Treasury	group	is	not	subject	to	certain	of	the	swap regulatory	requirements	otherwise	applicable	to	swaps	entered	into	by	a registered	swap	dealer,	subject	to	a	number	of	conditions.	For	all	other swap	transactions,	our	swap	activities	remain	subject	to	all	applicable swap	dealer	regulations.

# Money	Market	Funds

In	July	2014,	the	SEC	adopted	amendments	to	the	regulations governing	money	market	funds	to	address	potential	systemic	risks	and improve	transparency	for	money	market	fund	investors.	Among	other things,	the	amendments	require	a	floating	net	asset	value	for	institutional prime	money	market	funds	(i.e.,	money	market	funds	that	are	either	not restricted	to	natural	person	investors	or	not	restricted	to	investing	primarily in	U.S.	government	securities)	and	permit	(and	in	some	cases	require)	all money	market	funds	to	impose	redemption	fees	and	gates	under	certain circumstances.	As	a	result	of	these	reforms,	money	market	funds	may	be required	to	take	certain	steps	that	will	affect	their	structure	and/or operations,	which	could	in	turn	affect	the	liquidity,	marketability	and	return potential	of	such	funds.	Full	conformance	with	these	amendments	is required	by	October	14,	2016.

Money	market	reforms	are	also	being	considered	in	Europe.	The timing	and	content	of	those	regulations	remains	uncertain.	The	SEC's	July 2014	amended	regulations,	and	the	potential	reforms	in	Europe,	could alter	the	business	models	of	money	market	fund	sponsors	and	asset managers,	including	many	of	our	servicing	clients	and	SSGA,	and	may result	in	reduced	levels	of	investment	in	money	market	funds.	As	a	result, these	requirements	may	have	an	adverse	impact	on	our	business,	our operations	or	our	consolidated	results	of	operations.

# Subsidiaries

The	Federal	Reserve	is	the	primary	federal	banking	agency responsible	for	regulating	us	and	our

subsidiaries,	including	State	Street	Bank,	with	respect	to	both	our	U.S. and	non-U.S.	operations.

Our	banking	subsidiaries	are	subject	to	supervision	and	examination by	various	regulatory	authorities.	State	Street	Bank	is	a	member	of	the Federal	Reserve	System,	its	deposits	are	insured	by	the	FDIC	and	it	is subject	to	applicable	federal	and	state	banking	laws	and	to	supervision and	examination	by	the	Federal	Reserve,	as	well	as	by	the Massachusetts	Commissioner	of	Banks,	the	FDIC,	and	the	regulatory authorities	of	those	states	and	countries	in	which	State	Street	Bank operates	a	branch.	Our	other	subsidiary	trust	companies	are	subject	to supervision	and	examination	by	the	Office	of	the	Comptroller	of	the Currency,	the	Federal	Reserve	or	by	the	appropriate	state	banking regulatory	authorities	of	the	states	in	which	they	are	organized	and operate.	Our	non-U.S.	banking	subsidiaries	are	subject	to	regulation	by the	regulatory	authorities	of	the	countries	in	which	they	operate.	As	of December	31,	2014,	the	capital	of	each	of	these	banking	subsidiaries exceeded	the	minimum	legal	capital	requirements	set	by	those	regulatory authorities.

We	and	our	subsidiaries	that	are	not	subsidiaries	of	State	Street Bank	are	affiliates	of	State	Street	Bank	under	federal	banking	laws,	which impose	restrictions	on	various	types	of	transactions,	including	loans, extensions	of	credit,	investments	or	asset	purchases	by	or	from	State Street	Bank,	on	the	one	hand,	to	us	and	those	of	our	subsidiaries,	on	the other.	Transactions	of	this	kind	between	State	Street	Bank	and	its affiliates	are	limited	with	respect	to	each	affiliate	to	10%	of	State	Street Bank's	capital	and	surplus,	as	defined	by	the	aforementioned	banking laws,	and	to	20%	in	the	aggregate	for	all	affiliates,	and	in	some	cases	are also	subject	to	strict	collateral	requirements.	Under	the	Dodd-Frank	Act, effective	in	July	2012,	derivatives,	securities	borrowing	and	securities lending	transactions	between	State	Street	Bank	and	its	affiliates	became subject	to	these	restrictions.	The	Dodd-Frank	Act	also	expanded	the scope	of	transactions	required	to	be	collateralized.	In	addition,	the Volcker	rule	generally	prohibits	similar	transactions	between	the	parent company	or	any	of	its	affiliates	and	covered	funds	for	which	we	or	any	of our	affiliates	serve	as	the	investment	manager,	investment	adviser, commodity	trading	advisor	or	sponsor	and	other	covered	funds	organized and	offered	pursuant	to	specific	exemptions	in	the	final	Volcker	rule regulations.

Federal	law	also	requires	that	certain	transactions	with	affiliates	be on	terms	and	under	circumstances,	including	credit	standards,	that	are substantially	the	same,	or	at	least	as	favorable	to	the	institution,	as	those prevailing	at	the	time	for	comparable	transactions	involving	other	non- affiliated	companies.	Alternatively,	in	the	absence	of	comparable transactions,	the	transactions	must	be	on	terms	and	under circumstances,	including	credit	standards,	that	in	good	faith	would	be offered	to,	or	would	apply	to,	non-affiliated	companies.	State	Street	Bank is	also	prohibited	from	engaging	in	certain	tie-in	arrangements	in connection	with	any	extension	of	credit	or	lease	or	sale	of	property	or furnishing	of	services.	Federal	law	provides	as	well	for	a	depositor preference	on	amounts	realized	from	the	liquidation	or	other	resolution	of any	depository	institution	insured	by	the	FDIC.

Our	subsidiaries,	SSGA	Funds	Management,	Inc.,	or	SSGA	FM, and	State	Street	Global	Advisors	Limited,	or	SSGA	Ltd.,	act	as	investment advisers	to	investment	companies	registered	under	the	Investment Company	Act	of	1940.	SSGA	FM,	incorporated	in	Massachusetts	in	2001 and	headquartered	in	Boston,	Massachusetts,	is	registered	with	the	SEC as	an	investment	adviser	under	the	Investment	Advisers	Act	of	1940	and is	registered	with	the	CFTC	as	a	commodity	trading	adviser	and	pool operator.	SSGA	Ltd.,	incorporated	in	1990	as	a	U.K.	limited	company	and domiciled	in	the	U.K.,	is	also	registered	with	the	SEC	as	an	investment adviser	under	the	Investment	Advisers	Act	of	1940.	SSGA	Ltd.	is	also authorized	and	regulated	by	the	U.K.	Financial	Conduct	Authority,	or FCA,	and	is	an	investment	firm	under	the	Markets	in	Financial Instruments	Directive.	SSGA	FM	and	SSGA	Ltd.	each	offer	a	variety	of investment	management	solutions,	including	active,	enhanced	and passive	equity,	active	and	passive	fixed-income,	cash	management, multi-asset	class	solutions	and	real	estate.	In	addition,	a	major	portion	of our	investment	management	activities	are	conducted	by	State	Street Bank,	which	is	subject	to	supervision	primarily	by	the	Federal	Reserve with	respect	to	these	activities.

Our	U.S.	broker/dealer	subsidiary	is	registered	as	a	broker/dealer with	the	SEC,	is	subject	to	regulation	by	the	SEC	(including	the	SEC's	net capital	rule)	and	is	a	member	of	the	Financial	Industry	Regulatory Authority,	a	self-regulatory	organization.	The	U.K.	broker/dealer	business operates	through	our	subsidiary,	State	Street	Global	Markets	International Limited,	which	is	registered	in	the	U.K.	as	a	regulated	securities	broker,	is authorized	and	regulated	by	the	FCA	and	is	an	investment	firm	under	the Market	in	Financial	Instruments	Directive.	It	is	also	a	member	of	the London	Stock	Exchange.	In	accordance	with	the	rules	of	the	FCA,	the U.K.

broker/dealer	publishes	information	on	its	risk	management	objectives and	on	policies	associated	with	its	regulatory	capital	requirements	and resources.	Many	aspects	of	our	investment	management	activities	are subject	to	federal	and	state	laws	and	regulations	primarily	intended	to benefit	the	investment	holder,	rather	than	our	shareholders.

Our	activities	as	a	futures	commission	merchant	are	subject	to regulation	by	the	CFTC	in	the	U.S.	and	various	regulatory	authorities internationally,	as	well	as	the	membership	requirements	of	the	applicable clearinghouses.	In	addition,	we	have	a	subsidiary	registered	with	the CFTC	as	a	swap	execution	facility,	and	our	U.S.	broker/dealer	subsidiary also	offers	a	U.S.	equities	alternative	trading	system	registered	with	the SEC.

These	laws	and	regulations	generally	grant	supervisory	agencies and	bodies	broad	administrative	powers,	including	the	power	to	limit	or restrict	us	from	conducting	our	investment	management	activities	in	the event	that	we	fail	to	comply	with	such	laws	and	regulations,	and examination	authority.	Our	business	related	to	investment	management and	trusteeship	of	collective	trust	funds	and	separate	accounts	offered	to employee	benefit	plans	is	subject	to	the	Employee	Retirement	Income Security	Act,	or	ERISA,	and	is	regulated	by	the	U.S.	Department	of	Labor.

Our	businesses,	including	our	investment	management	and securities	and	futures	businesses,	are	also	regulated	extensively	by	non- U.S.	governments,	securities	exchanges,	self-regulatory	organizations, central	banks	and	regulatory	bodies,	especially	in	those	jurisdictions	in which	we	maintain	an	office.	For	instance,	among	others,	the	FCA,	the Prudential	Regulatory	Authority	and	the	Bank	of	England	regulate	our activities	in	the	U.K.;	the	Central	Bank	of	Ireland	regulates	our	activities	in Ireland;	the	Commission	de	Surveillance	du	Secteur	Financier	regulates our	activities	in	Luxembourg;	the	Australian	Prudential	Regulation Authority	and	the	Australian	Securities	and	Investments	Commission regulate	our	activities	in	Australia;	and	the	Financial	Services	Agency	and the	Bank	of	Japan	regulate	our	activities	in	Japan.	We	have	established policies,	procedures,	and	systems	designed	to	comply	with	the requirements	of	these	organizations.	However,	as	a	global	financial services	institution,	we	face	complexity	and	costs	related	to	regulation.

The	majority	of	our	non-U.S.	asset	servicing	operations	are conducted	pursuant	to	the	Federal	Reserve's	Regulation	K	through	State Street	Bank's	Edge	Act	subsidiary	or	through	international	branches	of State	Street	Bank.	An	Edge	Act	corporation	is	a	corporation	organized under	federal	law	that	conducts	foreign	business	activities.	In	general, banks	may	not

make	investments	in	their	Edge	Act	corporations	(and	similar	state	law corporations)	that	exceed	20%	of	their	capital	and	surplus,	as	defined, and	the	investment	of	any	amount	in	excess	of	10%	of	capital	and	surplus requires	the	prior	approval	of	the	Federal	Reserve.

In	addition	to	our	non-U.S.	operations	conducted	pursuant	to Regulation	K,	we	also	make	new	investments	abroad	directly	(through	us or	through	our	non-banking	subsidiaries)	pursuant	to	the	Federal Reserve's	Regulation	Y,	or	through	international	bank	branch	expansion, which	are	not	subject	to	the	investment	limitations	applicable	to	Edge	Act subsidiaries.

Additionally,	Massachusetts	has	its	own	bank	holding	company statute,	under	which	State	Street,	among	other	things,	may	be	required	to obtain	prior	approval	by	the	Massachusetts	Board	of	Bank	Incorporation for	an	acquisition	of	more	than	5%	of	any	additional	bank's	voting	shares, or	for	other	forms	of	bank	acquisitions.

# Anti-Money	Laundering	and	Financial	Transparency

We	and	certain	of	our	subsidiaries	are	subject	to	the	Bank	Secrecy Act	of	1970,	as	amended	by	the	USA	PATRIOT	Act	of	2001,	which contains	anti-money	laundering,	or	AML,	and	financial	transparency provisions	and	requires	implementation	of	regulations	applicable	to financial	services	companies,	including	standards	for	verifying	client identification	and	monitoring	client	transactions	and	detecting	and reporting	suspicious	activities.	AML	laws	outside	the	U.S.	contain	similar requirements.	We	have	implemented	policies,	procedures	and	internal controls	that	are	designed	to	comply	with	all	applicable	AML	laws	and regulations.	Compliance	with	applicable	AML	and	related	requirements	is a	common	area	of	review	for	financial	regulators,	and	our	level	of compliance	with	these	requirements	could	result	in	fines,	penalties, lawsuits,	regulatory	sanctions	or	difficulties	in	obtaining	approvals, restrictions	on	our	business	activities	or	harm	to	our	reputation.

# Deposit	Insurance

FDIC-insured	depository	institutions	are	required	to	pay	deposit insurance	assessments	to	the	FDIC.	The	Dodd-Frank	Act	made permanent	the	general	$250,000	deposit	insurance	limit	for	insured deposits.

The	FDIC's	Deposit	Insurance	Fund,	or	DIF,	is	funded	by assessments	on	insured	depository	institutions.	The	FDIC	assesses	DIF premiums	based	on	an	insured	depository	institution's	average consolidated	total	assets,	less	the	average	tangible	equity	of	the	insured depository	institution	during	the

assessment	period.	For	larger	institutions,	such	as	State	Street	Bank, assessments	are	determined	based	on	regulatory	ratings	and	forward- looking	financial	measures	to	calculate	the	assessment	rate,	which	is subject	to	adjustments	by	the	FDIC,	and	the	assessment	base.

The	Dodd-Frank	Act	also	directed	the	FDIC	to	determine	whether and	to	what	extent	adjustments	to	the	assessment	base	are	appropriate for	"custody	banks."	The	FDIC	has	concluded	that	certain	liquid	assets could	be	excluded	from	the	deposit	insurance	assessment	base	of custody	banks	that	satisfy	specified	institutional	eligibility	criteria.	This	has the	effect	of	reducing	the	amount	of	DIF	insurance	premiums	due	from custody	banks.	State	Street	Bank	is	a	custody	bank	for	this	purpose.	The custody	bank	assessment	adjustment	may	not	exceed	total	transaction account	deposits	identified	by	the	institution	as	being	directly	linked	to	a fiduciary	or	custody	and	safekeeping	asset.

# Prompt	Corrective	Action

The	FDIC	Improvement	Act	of	1991	requires	the	appropriate	federal banking	regulator	to	take	"prompt	corrective	action"	with	respect	to	a depository	institution	if	that	institution	does	not	meet	certain	capital adequacy	standards.	While	these	regulations	apply	only	to	banks,	such	as State	Street	Bank,	the	Federal	Reserve	is	authorized	to	take	appropriate action	against	a	parent	bank	holding	company,	such	as	our	parent company,	based	on	the	under-capitalized	status	of	any	banking subsidiary.	In	certain	instances,	we	would	be	required	to	guarantee	the performance	of	the	capital	restoration	plan	for	our	under-capitalized banking	subsidiary.

# Support	of	Subsidiary	Banks

Under	Federal	Reserve	regulations,	a	bank	holding	company	such as	our	parent	company	is	required	to	act	as	a	source	of	financial	and managerial	strength	to	its	banking	subsidiaries.	This	requirement	was added	to	the	Federal	Deposit	Insurance	Act	by	the	Dodd-Frank	Act	and means	that	we	are	expected	to	commit	resources	to	State	Street	Bank and	any	other	banking	subsidiary	in	circumstances	in	which	we	otherwise might	not	do	so	absent	such	a	requirement.	In	the	event	of	bankruptcy, any	commitment	by	us	to	a	federal	bank	regulatory	agency	to	maintain	the capital	of	a	banking	subsidiary	will	be	assumed	by	the	bankruptcy	trustee and	will	be	entitled	to	a	priority	payment.

# Insolvency	of	an	Insured	U.S.	Subsidiary	Depository	Institution

If	the	FDIC	is	appointed	the	conservator	or	receiver	of	an	FDIC- insured	U.S.	subsidiary	depository	institution,	such	as	State	Street	Bank, upon	its	insolvency	or	certain	other	events,	the	FDIC

has	the	ability	to	transfer	any	of	the	depository	institution's	assets	and liabilities	to	a	new	obligor	without	the	approval	of	the	depository institution's	creditors,	enforce	the	terms	of	the	depository	institution's contracts	pursuant	to	their	terms	or	repudiate	or	disaffirm	contracts	or leases	to	which	the	depository	institution	is	a	party.	Additionally,	the claims	of	holders	of	deposit	liabilities	and	certain	claims	for	administrative expenses	against	an	insured	depository	institution	would	be	afforded priority	over	other	general	unsecured	claims	against	such	an	institution, including	claims	of	debt	holders	of	the	institution	and,	under	current interpretation,	depositors	in	non-U.S.	offices,	in	the	liquidation	or	other resolution	of	such	an	institution	by	any	receiver.	As	a	result,	such	persons would	be	treated	differently	from	and	could	receive,	if	anything, substantially	less	than	the	depositors	in	U.S.	offices	of	the	depository institution.

# ECONOMIC	CONDITIONS	AND	GOVERNMENT	POLICIES

Economic	policies	of	the	U.S.	government	and	its	agencies influence	our	operating	environment.	Monetary	policy	conducted	by	the Federal	Reserve	directly	affects	the	level	of	interest	rates,	which	may affect	overall	credit	conditions	of	the	economy.	Monetary	policy	is	applied by	the	Federal	Reserve	through	open	market	operations	in	U.S. government	securities,	changes	in	reserve	requirements	for	depository institutions,	and	changes	in	the	discount	rate	and	availability	of	borrowing from	the	Federal	Reserve.	Government	regulation	of	banks	and	bank holding	companies	is	intended	primarily	for	the	protection	of	depositors	of the	banks,	rather	than	for	the	shareholders	of	the	institutions	and therefore	may,	in	some	cases,	be	adverse	to	the	interests	of	those shareholders.	We	are	similarly	affected	by	the	economic	policies	of	non- U.S.	government	agencies,	such	as	the	European	Central	Bank,	or	ECB.

# STATISTICAL	DISCLOSURE	BY	BANK	HOLDING	COMPANIES

The	following	information,	included	under	Items	6,	7	and	8	of	this Form	10-K,	is	incorporated	by	reference	herein:

"Selected	Financial	Data"	table	(Item	6)	-	presents	return	on average	common	equity,	return	on	average	assets,	common	dividend payout	and	equity-to-assets	ratios.

"Distribution	of	Average	Assets,	Liabilities	and	Shareholders'	Equity; Interest	Rates	and	Interest	Differential"	table	(Item	8)	-	presents consolidated	average	balance	sheet	amounts,	related	fully	taxable- equivalent	interest	earned	and	paid,	related	average	yields	and	rates	paid and	changes	in	fully	taxable-equivalent	interest	revenue	and	interest expense	for

each	major	category	of	interest-earning	assets	and	interest-bearing liabilities.

"Investment	Securities"	section	included	in	Management's Discussion	and	Analysis	(Item	7)	and	note	3,	"Investment	Securities,"	to the	consolidated	financial	statements	(Item	8)	-	disclose	information regarding	book	values,	market	values,	maturities	and	weighted-average yields	of	securities	(by	category).

Note	4,	"Loans	and	Leases,"	to	the	consolidated	financial statements	(Item	8)	-	discloses	our	policy	for	placing	loans	and	leases	on non-accrual	status.

"Loans	and	Leases"	section	included	in	Management's	Discussion and	Analysis	(Item	7)	and	note	4,	"Loans	and	Leases,"	to	the	consolidated financial	statements	(Item	8)	-	discloses	distribution	of	loans,	loan maturities	and	sensitivities	of	loans	to	changes	in	interest	rates.

"Loans	and	Leases"	and	"Cross-Border	Outstandings"	sections	of Management's	Discussion	and	Analysis	(Item	7)	-	discloses	information regarding	cross-border	outstandings	and	other	loan	concentrations	of State	Street.

"Credit	Risk	Management"	section	included	in	Management's Discussion	and	Analysis	(Item	7)	and	note	4,	"Loans	and	Leases,"	to	the consolidated	financial	statements	(Item	8)	-	present	the	allocation	of	the allowance	for	loan	losses,	and	a	description	of	factors	which	influenced management's	judgment	in	determining	amounts	of	additions	or reductions	to	the	allowance,	if	any,	charged	or	credited	to	results	of operations.

"Distribution	of	Average	Assets,	Liabilities	and	Shareholders'	Equity; Interest	Rates	and	Interest	Differential"	table	(Item	8)	-	discloses	deposit information.

Note	8,	"Short-Term	Borrowings,"	to	the	consolidated	financial statements	(Item	8)	-	discloses	information	regarding	short-term borrowings	of	State	Street.

# ITEM	1A.	RISK	FACTORS

# Forward-Looking	Statements

This	Form	10-K,	as	well	as	other	reports	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,	contain	statements	(including statements	in	the	Management's	Discussion	and	Analysis	included	under Item	7	of	this	Form	10-K)	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,	financial	portfolio	performance,	dividend	and	stock	purchase programs,	expected	outcomes	of	legal	proceedings,	market	growth, acquisitions,	joint	ventures	and	divestitures	and	new	technologies, services	and	opportunities,	as	well	as	regarding	industry,	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,"	"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	national	and	global	economies,	regulatory	environment	and the	equity,	debt,	currency	and	other	financial	markets,	as	well	as	factors specific	to	State	Street	and	its	subsidiaries,	including	State	Street	Bank. Factors	that	could	cause	changes	in	the	expectations	or	assumptions	on which	forward-looking	statements	are	based	cannot	be	foreseen	with certainty	and	include,	but	are	not	limited	to:

•the	financial	strength	and	continuing	viability	of	the	counterparties with	which	we	or	our	clients	do	business	and	to	which	we	have investment,	credit	or	financial	exposure,	including,	for	example, the	direct	and	indirect	effects	on	counterparties	of	the	sovereign- debt	risks	in	the	U.S.,	Europe	and	other	regions;

•increases	in	the	volatility	of,	or	declines	in	the	level	of,	our	net interest	revenue,	changes	in	the	composition	or	valuation	of	the assets	recorded	in	our	consolidated	statement	of	condition	(and our	ability	to	measure	the	fair	value	of	investment	securities)	and the	possibility	that	we	may	change	the	manner	in	which	we	fund those	assets;

•the	liquidity	of	the	U.S.	and	international	securities	markets, particularly	the	markets	for	fixed-income	securities	and	inter-bank credits,	and	the	liquidity	requirements	of	our	clients;

•the	level	and	volatility	of	interest	rates,	the	valuation	of	the	U.S. dollar	relative	to	other	currencies	in	which	we	record	revenue	or accrue	expenses	and	the	performance	and	volatility	of	securities, credit,	currency	and	other	markets	in	the	U.S.	and	internationally;

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

•our	ability	to	attract	deposits	and	other	low-cost,	short-term funding,	the	relative	portion	of	our	deposits	that	are	determined	to be	operational	under	regulatory	guidelines	and	our	ability	to deploy	deposits	in	a	profitable	manner	consistent	with	our liquidity	requirements	and	risk	profile;

•the	manner	and	timing	with	which	the	Federal	Reserve	and	other U.S.	and	foreign	regulators	implement	changes	to	the	regulatory framework	applicable	to	our	operations,	including	implementation of	the	Dodd-Frank	Act,	the	Basel	III	final	rule	and	European legislation	(such	as	the	Alternative	Investment	Fund	Managers Directive	and	Undertakings	for	Collective	Investment	in Transferable	Securities	Directives);	among	other	consequences, these	regulatory	changes	impact	the	levels	of	regulatory	capital we	must	maintain,	acceptable	levels	of	credit	exposure	to	third parties,	margin	requirements	applicable	to	derivatives,	and restrictions	on	banking	and	financial	activities.	In	addition,	our regulatory	posture	and	related	expenses	have	been	and	will continue	to	be	affected	by	changes	in	regulatory	expectations	for global	systemically	important	financial	institutions	applicable	to, among	other	things,	risk	management,	capital	planning	and compliance	programs,	and	changes	in	governmental enforcement	approaches	to	perceived	failures	to	comply	with regulatory	or	legal	obligations;

•adverse	changes	in	the	regulatory	ratios	that	we	are	required	or will	be	required	to	meet,	whether	arising	under	the	Dodd-Frank Act	or	the	Basel	III	final	rule,	or	due	to	changes	in	regulatory positions,	practices	or	regulations	in	jurisdictions	in	which	we engage	in	banking	activities,	including	changes	in	internal	or external	data,	formulae,	models,	assumptions

or	other	advanced	systems	used	in	the	calculation	of	our	capital ratios	that	cause	changes	in	those	ratios	as	they	are	measured from	period	to	period;

•increasing	requirements	to	obtain	the	prior	approval	of	the Federal	Reserve	or	our	other	U.S.	and	non-U.S.	regulators	for	the use,	allocation	or	distribution	of	our	capital	or	other	specific	capital actions	or	programs,	including	acquisitions,	dividends	and	stock purchases,	without	which	our	growth	plans,	distributions	to shareholders,	share	repurchase	programs	or	other	capital initiatives	may	be	restricted;

•changes	in	law	or	regulation,	or	the	enforcement	of	law	or regulation,	that	may	adversely	affect	our	business	activities	or those	of	our	clients	or	our	counterparties,	and	the	products	or services	that	we	sell,	including	additional	or	increased	taxes	or assessments	thereon,	capital	adequacy	requirements,	margin requirements	and	changes	that	expose	us	to	risks	related	to	the adequacy	of	our	controls	or	compliance	programs;

•financial	market	disruptions	or	economic	recession,	whether	in the	U.S.,	Europe,	Asia	or	other	regions;

•our	ability	to	promote	a	strong	culture	of	risk	management, operating	controls,	compliance	oversight	and	governance	that meet	our	expectations	and	those	of	our	clients	and	our	regulators;

•the	results	of,	and	costs	associated	with,	governmental	or regulatory	inquiries	and	investigations,	litigation	and	similar claims,	disputes,	or	proceedings;

•the	potential	for	losses	arising	from	our	investments	in	sponsored investment	funds;

•the	possibility	that	our	clients	will	incur	substantial	losses	in investment	pools	for	which	we	act	as	agent,	and	the	possibility	of significant	reductions	in	the	liquidity	or	valuation	of	assets underlying	those	pools;

•our	ability	to	anticipate	and	manage	the	level	and	timing	of redemptions	and	withdrawals	from	our	collateral	pools	and	other collective	investment	products;

•the	credit	agency	ratings	of	our	debt	and	depository	obligations and	investor	and	client	perceptions	of	our	financial	strength;

•adverse	publicity,	whether	specific	to	State	Street	or	regarding other	industry	participants	or	industry-wide	factors,	or	other reputational	harm;

•our	ability	to	control	operational	risks,	data	security	breach	risks and	outsourcing	risks,	our	ability	to	protect	our	intellectual property	rights,	the	possibility	of	errors	in	the	quantitative	models we	use	to	manage	our	business	and	the	possibility	that	our controls	will	prove	insufficient,	fail	or	be	circumvented;

•our	ability	to	expand	our	use	of	technology	to	enhance	the efficiency,	accuracy	and	reliability	of	our	operations	and	our dependencies	on	information	technology	and	our	ability	to	control related	risks,	including	cyber-crime	and	other	threats	to	our information	technology	infrastructure	and	systems	and	their effective	operation	both	independently	and	with	external	systems, and	complexities	and	costs	of	protecting	the	security	of	our systems	and	data;

•our	ability	to	grow	revenue,	manage	expenses,	attract	and	retain highly	skilled	people	and	raise	the	capital	necessary	to	achieve our	business	goals	and	comply	with	regulatory	requirements	and expectations;

•changes	or	potential	changes	to	the	competitive	environment, including	changes	due	to	regulatory	and	technological	changes, the	effects	of	industry	consolidation	and	perceptions	of	State Street	as	a	suitable	service	provider	or	counterparty;

•changes	or	potential	changes	in	the	amount	of	compensation	we receive	from	clients	for	our	services,	and	the	mix	of	services provided	by	us	that	clients	choose;

•our	ability	to	complete	acquisitions,	joint	ventures	and divestitures,	including	the	ability	to	obtain	regulatory	approvals, the	ability	to	arrange	financing	as	required	and	the	ability	to satisfy	closing	conditions;

•the	risks	that	our	acquired	businesses	and	joint	ventures	will	not achieve	their	anticipated	financial	and	operational	benefits	or	will not	be	integrated	successfully,	or	that	the	integration	will	take longer	than	anticipated,	that	expected	synergies	will	not	be achieved	or	unexpected	negative	synergies	or	liabilities	will	be experienced,	that	client	and	deposit	retention	goals	will	not	be met,	that	other	regulatory	or	operational	challenges	will	be experienced,	and	that	disruptions	from	the	transaction	will	harm our	relationships	with	our	clients,	our	employees	or	regulators; •our	ability	to	recognize	emerging	needs	of	our	clients	and	to develop	products	that	are	responsive	to	such	trends	and profitable	to

us,	the	performance	of	and	demand	for	the	products	and	services we	offer,	and	the	potential	for	new	products	and	services	to impose	additional	costs	on	us	and	expose	us	to	increased operational	risk;

•changes	in	accounting	standards	and	practices;	and

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

Actual	outcomes	and	results	may	differ	materially	from	what	is expressed	in	our	forward-looking	statements	and	from	our	historical financial	results	due	to	the	factors	discussed	in	this	Item	1A	Risk	Factors and	elsewhere	in	this	Form	10-K	(including	in	the	Management's Discussion	and	Analysis	included	under	Item	7	of	this	Form	10-K)	or disclosed	in	our	SEC	filings.	Forward-looking	statements	should	not	be relied	on	as	representing	our	expectations	or	beliefs	as	of	any	date subsequent	to	the	time	this	Form	10-K	is	filed	with	the	SEC.	We undertake	no	obligation	to	revise	our	forward-looking	statements	after	the time	they	are	made.	The	factors	discussed	in	this	Item	1A	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	or	financial	condition.

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	reports	on	Forms	10-K, 10-Q	and	8-K,	or	registration	statements	filed	under	the	Securities	Act	of 1933,	all	of	which	are	accessible	on	the	SEC's	website	at	www.sec.gov	or on	the	"Investor	Relations"	section	of	our	corporate	website	at www.statestreet.com.

# Risk	Factors

In	the	normal	course	of	our	business	activities,	we	are	exposed	to	a variety	of	risks.	The	following	is	a	discussion	of	various	risk	factors applicable	to	State	Street.	Additional	information	about	our	risk management	framework	is	included	under	"Risk	Management"	in Management's	Discussion	and	Analysis	included	under	Item	7	of	this Form	10-K.	Additional	risks	beyond	those	described	in	Management's Discussion	and	Analysis	or	in	the	following	discussion	may	be	inherent	in our	activities	or	operations	as	currently	conducted,	or	as	we	may	conduct them	in	the	future,	or	in	the	markets	in	which	we	operate	or	may	in	the future	operate.

# Credit	and	Counterparty,	Liquidity	and	Market	Risks

# We	assume	significant	credit	risk	to	counterparties,	many	of	which are	major	financial	institutions.	These	financial	institutions	and	other counterparties	may	also	have	substantial	financial	dependencies with	other	financial	institutions	and	sovereign	entities.	This	credit exposure	and	concentration	could	expose	us	to	financial	loss.

The	financial	markets	are	characterized	by	extensive interdependencies	among	numerous	parties,	including	banks,	central banks,	broker/dealers,	insurance	companies	and	other	financial institutions.	These	financial	institutions	also	include	collective	investment funds,	such	as	mutual	funds,	UCITs	and	hedge	funds	that	share	these interdependencies.	Many	financial	institutions,	including	collective investment	funds	also	hold,	or	are	exposed	to,	loans,	sovereign	debt, fixed-income	securities,	derivatives,	counterparty	and	other	forms	of	credit risk	in	amounts	that	are	material	to	their	financial	condition.	As	a	result	of our	own	business	practices	and	these	interdependencies,	we	and	many	of our	clients	have	concentrated	counterparty	exposure	to	other	financial institutions	and	collective	investment	funds,	particularly	large	and	complex institutions,	sovereign	issuers,	mutual	funds	and	UCITs	and	hedge	funds. Although	we	have	procedures	for	monitoring	both	individual	and aggregate	counterparty	risk,	significant	individual	and	aggregate counterparty	exposure	is	inherent	in	our	business,	as	our	focus	is	on servicing	large	institutional	investors.

In	the	normal	course	of	our	business,	we	assume	concentrated	credit risk	at	the	individual	obligor,	counterparty	or	group	level.	Such concentrations	may	be	material	and	can	often	exceed	10%	of	our consolidated	total	shareholders'	equity.	Our	material	counterparty exposures	change	daily,	and	the	counterparties	or	groups	of	related counterparties	to	which	our	risk	exposure	exceeds

10%	of	our	consolidated	total	shareholders'	equity	are	also	variable	during any	reported	period;	however,	our	largest	exposures	tend	to	be	to	other financial	institutions.

Concentration	of	counterparty	exposure	presents	significant	risks	to us	and	to	our	clients	because	the	failure	or	perceived	weakness	of	our counterparties	(or	in	some	cases	of	our	clients'	counterparties)	has	the potential	to	expose	us	to	risk	of	financial	loss.	Changes	in	market perception	of	the	financial	strength	of	particular	financial	institutions	or sovereign	issuers	can	occur	rapidly,	are	often	based	on	a	variety	of factors	and	are	difficult	to	predict.

Since	mid-2007,	a	variety	of	economic,	market	and	other	factors have	contributed	to	many	financial	institutions	becoming	significantly	less creditworthy,	as	reflected	in	the	credit	downgrades	of	numerous	large	U.S. and	non-U.S.	financial	institutions	in	recent	years.	Also,	credit downgrades	to	several	sovereign	issuers	(including	the	U.S.,	Austria, France,	Greece,	Italy,	the	Netherlands,	Portugal	and	Spain)	and	other issuers	have	stressed	the	perceived	creditworthiness	of	financial institutions,	many	of	which	invest	in,	accept	collateral	in	the	form	of,	or value	other	transactions	based	on	the	debt	or	other	securities	issued	by sovereign	or	other	issuers.	Unemployment	levels	and	deflationary	and recessionary	pressures	in	key	global	economies,	while	other	economies including	the	U.S.	and	U.K.	appear	to	be	experiencing	improving economic	conditions,	have	resulted	in	substantial	easing	of	monetary policy	in	Europe	and	Japan	which	contributed	to	economic	and	market uncertainty,	low	interest	rates	and	pressures	on	currency	exchange	rates in	2014	and	will	likely	have	similar	impacts	in	2015.	Substantial	changes in	commodity	prices,	particularly	oil,	and	a	slowing	of	demand	in	China, are	also	contributing	to	economic	and	market	risks.	Further	economic, political	or	market	turmoil	or	developments	may	lead	to	stress	on sovereign	issuers,	and	increase	the	potential	for	sovereign	defaults	or restructurings,	additional	credit-rating	downgrades	or	the	departure	of sovereign	issuers	from	common	currencies	or	economic	unions.	These same	factors	may	contribute	to	increased	risk	of	default	or	downgrading for	financial	and	corporate	issuers	or	other	market	risk	associated	with excess	levels	of	liquidity.	As	a	result,	we	may	be	exposed	to	increased counterparty	risks,	either	resulting	from	our	role	as	principal	or	because	of commitments	we	make	in	our	capacity	as	agent	for	some	of	our	clients.

The	degree	of	client	demand	for	short-term	credit	tends	to	increase during	periods	of	market	turbulence,	which	may	expose	us	to	further counterparty-related	risks.	For	example,	investors	in	collective	investment vehicles	for	which	we	act	as	custodian	may	experience	significant redemption

activity	due	to	adverse	market	or	economic	news.	Our	relationship	with our	clients	and	the	nature	of	the	settlement	process	for	some	types	of payments	may	result	in	the	extension	of	short-term	credit	in	such circumstances.	For	some	types	of	clients,	we	provide	credit	to	allow	them to	leverage	their	portfolios,	which	may	expose	us	to	potential	loss	if	the client	experiences	investment	losses	or	other	credit	difficulties.

In	addition	to	our	exposure	to	financial	institutions,	we	are	from	time to	time	exposed	to	concentrated	credit	risk	at	an	industry	or	country	level, potentially	exposing	us	to	a	single	market	or	political	event	or	a	correlated set	of	events.	This	concentration	risk	also	applies	to	groups	of	unrelated counterparties	that	may	have	similar	investment	strategies	involving	one or	more	particular	industries,	regions,	or	other	characteristics.	These unrelated	counterparties	may	concurrently	experience	adverse	effects	to their	performance,	liquidity	or	reputation	due	to	events	or	other	factors affecting	such	investment	strategies.	Though	potentially	not	material individually	(relative	to	any	one	such	counterparty),	our	aggregated	credit exposures	to	such	a	group	of	counterparties	could	similarly	expose	us	to	a single	market	or	political	event	or	a	correlated	set	of	events.

We	are	also	generally	not	able	to	net	exposures	across counterparties	that	are	affiliated	entities	and	may	not	be	able	in	all circumstances	to	net	exposures	to	the	same	legal	entity	across	multiple products.	As	a	consequence,	we	may	incur	a	loss	in	relation	to	one	entity or	product	even	though	our	exposure	to	an	entity's	affiliates	or	across product	types	is	over-collateralized.

Our	use	of	unaffiliated	subcustodians	also	exposes	us	to	operational risk,	credit	risk	and	risks	of	the	legal	systems	of	the	jurisdictions	in	which the	subcustodians	operate,	each	of	which	may	be	material.	These	risks are	amplified	due	to	changing	regulatory	requirements	with	respect	to	our financial	exposures	in	the	event	those	subcustodians	are	unable	to	return a	client's	assets.	We	are	also	exposed	to	settlement	risks,	particularly	in our	payments	and	foreign	exchange	activities.	Those	activities	may	lead to	losses	in	the	event	of	a	counterparty	breach.	Due	to	our	membership	in several	industry	clearing	or	settlement	exchanges,	we	may	be	required	to guarantee	obligations	and	liabilities,	or	provide	financial	support,	in	the event	that	other	members	do	not	honor	their	obligations	or	default. Moreover,	not	all	of	our	counterparty	exposure	is	secured,	and	when	our exposure	is	secured,	the	realizable	value	of	the	collateral	may	have declined	by	the	time	we	exercise	our	rights	against	that	collateral.	This risk	may	be	particularly

acute	if	we	are	required	to	sell	the	collateral	into	an	illiquid	or	temporarily- impaired	market.

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. Borrowers	are	generally	required	to	provide	collateral	equal	to	a contractually-agreed	percentage	equal	to	or	in	excess	of	the	fair	value	of the	loaned	securities.	As	the	fair	value	of	the	loaned	securities	changes, additional	collateral	is	provided	by	the	borrower	or	collateral	is	returned	to the	borrower.	In	addition,	our	clients	often	purchase	securities	or	other financial	instruments	from	financial	counterparties,	including broker/dealers,	under	repurchase	arrangements,	frequently	as	a	method of	reinvesting	the	cash	collateral	they	receive	from	lending	their	securities. Under	these	arrangements,	the	counterparty	is	obligated	to	repurchase these	securities	or	financial	instruments	from	the	client	at	the	same	price (plus	an	agreed	rate	of	return)	at	some	point	in	the	future.	The	value	of the	collateral	is	intended	to	exceed	the	counterparty's	payment	obligation, and	collateral	is	adjusted	daily	to	account	for	shortfall	under,	or	excess over,	the	agreed-upon	collateralization	level.	As	with	the	securities lending	program,	we	agree	to	indemnify	our	clients	from	any	loss	that would	arise	on	a	default	by	the	counterparty	under	these	repurchase arrangements	if	the	proceeds	from	the	disposition	of	the	securities	or other	financial	assets	held	as	collateral	are	less	than	the	amount	of	the repayment	obligation	by	the	client's	counterparty.	In	such	instances	of counterparty	default,	for	both	securities	lending	and	repurchase agreements,	we,	rather	than	our	client,	are	exposed	to	the	risks associated	with	collateral	value.

We	also	engage	in	certain	off-balance	sheet	activities	that	involve risks.	For	example,	we	provide	benefit-responsive	contracts,	known	as wraps,	to	defined	contribution	plans	that	offer	a	stable	value	option	to	their participants.	During	the	financial	crisis,	the	book	value	of	obligations under	many	of	these	contracts	exceeded	the	market	value	of	the underlying	portfolio	holdings.	Concerns	regarding	the	portfolio	of investments	protected	by	such	contracts,	or	regarding	the	investment manager	overseeing	such	an	investment	option,	may	result	in	redemption demands	from	stable	value	products	covered	by	benefit-responsive contracts	at	a	time	when	the	portfolio's	market	value	is	less	than	its	book value,	potentially	exposing	us	to	risk	of	loss.	Similarly,	we	provide	credit facilities	in	connection	with	the	remarketing	of	U.S.	municipal	obligations, potentially	exposing	us	to	credit	exposure	to	the	municipalities	issuing such	bonds	and	to	their	increased	liquidity	demands.	In	the	current economic	environment,

where	municipalities	are	subject	to	increased	investor	concern,	the	risks associated	with	such	businesses	increase.	Further,	our	off-balance	sheet activities	also	include	our	agreement,	described	above,	to	indemnify	our clients	for	the	fair	market	value	of	those	securities	against	a	failure	of	the borrower	to	return	such	securities.

Under	evolving	regulatory	restrictions	on	credit	exposure,	which	are anticipated	to	include	broader	or	more	prescriptive	measures	of	credit exposure,	we	may	be	required	to	limit	our	exposures	to	specific	issuers	or groups,	including	financial	institutions	and	sovereign	issuers,	to	levels	that we	may	currently	exceed.	These	credit	exposure	restrictions	under	such evolving	regulations	may	adversely	affect	our	businesses,	may	require that	we	expand	our	credit	exposure	to	a	broader	range	of	issuers, including	issuers	that	represent	increased	credit	risk	and	may	require	that we	modify	our	operating	models	or	the	policies	and	practices	we	use	to manage	our	consolidated	statement	of	condition.	Although	our	overall business	is	subject	to	these	interdependencies,	several	of	our	business units	are	particularly	sensitive	to	them,	including	our	Global	Treasury group,	that,	among	other	responsibilities,	manages	our	investment portfolio,	our	currency	trading	business,	our	securities	finance	business, and	our	investment	management	business.	Given	the	limited	number	of strong	counterparties	in	the	current	market,	we	are	not	able	to	mitigate	all of	our	and	our	clients'	counterparty	credit	risk.

# Our	investment	securities	portfolio,	consolidated	financial	condition and	consolidated	results	of	operations	could	be	adversely	affected by	changes	in	interest	rate,	market	and	credit	risks.

Our	investment	securities	portfolio	represented	approximately	 41% of	our	consolidated	total	assets	as	of	December	31,	2014,	and	the	gross interest	revenue	associated	with	our	investment	portfolio	represented approximately	20%	of	our	consolidated	total	gross	revenue	for	the	year ended	December	31,	2014	and	has	represented	as	much	as	 30%	of	our consolidated	gross	revenue	in	the	fiscal	years	since	2007.	As	such,	our consolidated	financial	condition	and	results	of	operations	are	materially exposed	to	the	risks	associated	with	our	investment	portfolio,	including, without	limitation,	changes	in	interest	rates,	credit	spreads,	credit performance,	credit	ratings,	our	access	to	liquidity,	foreign	exchange markets,	mark-to-market	valuations,	and	our	ability	to	profitably	reinvest repayments	of	principal	with	respect	to	these	securities.	The	low	interest- rate	environment	that	has	persisted	since	the	financial	crisis	began	in mid-2007,	and	may	continue	in	2015	and	beyond,	limits	our	ability	to achieve	a	net	interest	margin	consistent	with	our	historical	averages.

Our	investment	securities	portfolio	represents	a	greater	proportion	of our	consolidated	statement	of	condition	and	our	loan	and	lease	portfolios represent	a	smaller	proportion	(approximately	7%	of	our	consolidated total	assets	as	of	December	31,	2014),	in	comparison	to	many	other major	financial	institutions.	In	some	respects,	the	accounting	and regulatory	treatment	of	our	investment	securities	portfolio	may	be	less favorable	to	us	than	a	more	traditional	held-for-investment	lending portfolio.	For	example,	under	the	U.S.	Basel	III	final	rule	issued	in	July 2013,	after-tax	changes	in	the	fair	value	of	investment	securities	classified as	available	for	sale	are	included	in	tier	1	capital.	Since	loans	held	for investment	are	not	subject	to	a	fair-value	accounting	framework,	changes in	the	fair	value	of	loans	(other	than	incurred	credit	losses)	are	not similarly	included	in	the	determination	of	tier	1	capital	under	the	U.S. Basel	III	final	rule.	Due	to	this	differing	treatment,	we	may	experience increased	variability	in	our	tier	1	capital	relative	to	other	major	financial institutions	whose	loan-and-lease	portfolios	represent	a	larger	proportion of	their	consolidated	total	assets	than	ours.

Our	investment	portfolio	continues	to	have	significant	concentrations in	certain	classes	of	securities,	including	agency	and	non-agency residential	mortgage-backed	securities,	commercial	mortgage-backed securities	and	other	asset-backed	securities,	and	securities	with concentrated	exposure	to	consumers.	These	classes	and	types	of securities	experienced	significant	liquidity,	valuation	and	credit	quality deterioration	during	the	financial	disruption	that	began	in	mid-2007.	We also	hold	non-U.S.	mortgage-backed	and	asset-backed	securities	with exposures	to	European	countries,	whose	sovereign-debt	markets	have experienced	increased	stress	since	2011	and	may	continue	to	experience stress	in	the	future.	For	further	information,	refer	to	the	risk	factor	titled "Our	businesses	have	significant	European	operations,	and	disruptions	in European	economies	could	have	a	material	adverse	effect	on	our consolidated	results	of	operations	or	financial	condition."

Further,	we	hold	a	portfolio	of	U.S.	state	and	municipal	bonds.	In view	of	the	budget	deficits	that	a	number	of	states	and	municipalities currently	face,	the	risks	associated	with	this	portfolio	are	significant.

If	market	conditions	similar	to	those	experienced	in	2007	and	2008 were	to	recur,	our	investment	portfolio	could	experience	a	decline	in liquidity	and	market	value,	regardless	of	our	credit	view	of	our	portfolio holdings.	For	example,	we	recorded	significant	losses	not	related	to	credit in	connection	with	the	consolidation	of	our	off-balance	sheet	asset-backed commercial	paper	conduits	in	2009	and	the	repositioning	of	our investment	portfolio	in	2010	with

respect	to	these	asset	classes.	In	addition,	in	general,	deterioration	in credit	quality,	or	changes	in	management's	expectations	regarding repayment	timing	or	in	management's	investment	intent	to	hold	securities to	maturity,	in	each	case	with	respect	to	our	portfolio	holdings,	could result	in	other-than-temporary	impairment.	Similarly,	if	a	material	portion of	our	investment	portfolio	were	to	experience	credit	deterioration	below investment	grade,	our	capital	ratios	as	calculated	pursuant	to	the	Basel	III final	rule	could	be	adversely	affected.	This	risk	is	greater	with	portfolios	of investment	securities	than	with	loans	or	holdings	of	U.S.	Treasury securities.

Our	investment	portfolio	is	further	subject	to	changes	in	both	U.S. and	non-U.S.	(primarily	in	Europe)	interest	rates,	and	could	be	negatively affected	by	changes	in	those	rates,	whether	or	not	expected,	particularly by	a	quicker-than-anticipated	increase	in	interest	rates	or	by	monetary policy	that	results	in	persistently	low	or	negative	rates	of	interest.	This	has been	the	case,	for	example,	with	respect	to	recent	ECB	monetary	policy, including	negative	interest	rates	in	some	jurisdictions,	with	associated negative	effects	on	our	net	interest	revenue	and	net	interest	margin.	The effect	on	our	net	interest	revenue	has	been	exacerbated	by	the	effects	of the	recent	strong	U.S.	dollar	relative	to	other	currencies,	particularly	the Euro.	If	ECB	monetary	policy	continues	to	pressure	European	interest rates	downward	and	the	U.S.	dollar	remains	strong	or	strengthens,	the negative	effects	on	our	net	interest	revenue	likely	will	continue	or increase.

# Our	business	activities	expose	us	to	interest-rate	risk.

In	our	business	activities,	we	assume	interest-rate	risk	by	investing short-term	deposits	received	from	our	clients	in	our	investment	portfolio	of longer-	and	intermediate-term	assets.	Our	net	interest	revenue	and	net interest	margin	are	affected	by	the	levels	of	interest	rates	in	global markets,	changes	in	the	relationship	between	short-	and	long-term interest	rates,	the	direction	and	speed	of	interest-rate	changes,	and	the asset	and	liability	spreads	relative	to	the	currency	and	geographic	mix	of our	interest-earning	assets	and	interest-bearing	liabilities.	These	factors are	influenced,	among	other	things,	by	a	variety	of	economic	and	market forces	and	expectations,	including	monetary	and	other	policies	and activities	of	central	banks,	such	as	the	Federal	Reserve,	that	we	do	not control.	Our	ability	to	anticipate	changes	in	these	factors	or	to	hedge	the related	on-	and	off-balance	sheet	exposures	can	significantly	influence the	success	of	our	asset-and-liability	management	activities	and	the resulting	level	of	our	net	interest	revenue	and	net	interest	margin.	The impact	of	changes	in	interest	rates	and	related	factors	will	depend	on	the relative	duration	and	fixed-

or	floating-rate	nature	of	our	assets	and	liabilities.	Sustained	lower	interest rates,	a	flat	or	inverted	yield	curve	and	narrow	interest-rate	spreads generally	have	a	constraining	effect	on	our	net	interest	revenue.	For additional	information	about	the	effects	on	interest	rates	on	our	business, refer	to	"Financial	Condition	-	Market	Risk	Management	-	Asset-and- Liability	Management	Activities"	in	Management's	Discussion	and Analysis	included	under	Item	7	of	this	Form	10-K.

# If	we	are	unable	to	continuously	attract	deposits	and	other	short- term	funding,	our	consolidated	financial	condition,	including	our regulatory	capital	ratios,	our	consolidated	results	of	operations	and our	business	prospects,	could	be	adversely	affected.

Liquidity	management,	including	on	an	intra-day	basis,	is	critical	to the	management	of	our	consolidated	statement	of	condition	and	to	our ability	to	service	our	client	base.	We	generally	use	our	liquidity	to: •meet	clients'	demands	for	return	of	their	deposits; •extend	credit	to	our	clients	in	connection	with	our	custody business;	and

•fund	the	pool	of	long-	and	intermediate-term	assets	that	are included	in	the	investment	securities	carried	in	our	consolidated statement	of	condition.

Because	the	demand	for	credit	by	our	clients	is	difficult	to	predict	and control,	and	may	be	at	its	peak	at	times	of	disruption	in	the	securities markets,	and	because	the	average	maturity	of	our	investment	securities portfolio	is	longer	than	the	contractual	maturity	of	our	client	deposit	base, we	need	to	continuously	attract,	and	are	dependent	on	access	to,	various sources	of	short-term	funding.	During	periods	of	market	disruption,	the level	of	client	deposits	held	by	us	has	in	recent	years	tended	to	increase; however,	since	such	deposits	are	considered	to	be	transitory,	we	have historically	deposited	so-called	excess	deposits	with	U.S.	and	non-U.S. central	banks	and	in	other	highly	liquid	but	low-yielding	instruments. These	levels	of	excess	client	deposits,	as	a	consequence,	have	increased our	net	interest	revenue	but	have	adversely	affected	our	net	interest margin.

In	managing	our	liquidity,	our	primary	source	of	short-term	funding	is client	deposits,	which	are	predominantly	transaction-based	deposits	by institutional	investors.	Our	ability	to	continue	to	attract	these	deposits,	and other	short-term	funding	sources	such	as	certificates	of	deposit	and commercial	paper,	is	subject	to	variability	based	on	a	number	of	factors, including	volume	and	volatility	in	global	financial	markets,	the	relative interest	rates

that	we	are	prepared	to	pay	for	these	deposits	and	the	perception	of safety	of	these	deposits	or	short-term	obligations	relative	to	alternative short-term	investments	available	to	our	clients,	including	the	capital markets.

In	addition,	we	may	be	exposed	to	liquidity	or	other	risks	in managing	asset	pools	for	third	parties	that	are	funded	on	a	short-term basis,	or	for	which	the	clients	participating	in	these	products	have	a	right to	the	return	of	cash	or	assets	on	limited	notice.	These	business	activities include,	among	others,	securities	finance	collateral	pools,	money	market and	other	short-term	investment	funds	and	liquidity	facilities	utilized	in connection	with	municipal	bond	programs.	If	clients	demand	a	return	of their	cash	or	assets,	particularly	on	limited	notice,	and	these	investment pools	do	not	have	the	liquidity	to	support	those	demands,	we	could	be forced	to	sell	investment	securities	at	unfavorable	prices,	damaging	our reputation	as	an	asset	manager	and	potentially	exposing	us	to	claims related	to	our	management	of	the	pools.

The	availability	and	cost	of	credit	in	short-term	markets	are	highly dependent	on	the	markets'	perception	of	our	liquidity	and creditworthiness.	Our	efforts	to	monitor	and	manage	our	liquidity	risk, including	on	an	intra-day	basis,	may	not	be	successful	or	sufficient	to	deal with	dramatic	or	unanticipated	changes	in	the	global	securities	markets	or other	event-driven	reductions	in	liquidity.	As	a	result	of	such	events, among	other	things,	our	cost	of	funds	may	increase,	thereby	reducing	our net	interest	revenue,	or	we	may	need	to	dispose	of	a	portion	of	our investment	securities	portfolio,	which,	depending	on	market	conditions, could	result	in	a	loss	from	such	sales	of	investment	securities	being recorded	in	our	consolidated	statement	of	income.

Our	business	and	capital-related	activities,	including	our	ability	to return	capital	to	shareholders	and	purchase	our	capital	stock,	may be	adversely	affected	by	our	implementation	of	the	revised regulatory	capital	and	liquidity	standards	that	we	must	meet	under the	Basel	III	final	rule,	the	Dodd-Frank	Act	and	other	regulatory initiatives,	or	in	the	event	our	capital	plan	or	post-stress	capital ratios	are	determined	to	be	insufficient	as	a	result	of	regulatory capital	stress	testing.

The	U.S.	Basel	III	final	rule	replaced	the	Basel	I-	and	Basel	II-based capital	regulations.	As	a	so-called	"advanced	approaches"	banking organization,	we	became	subject	to	the	U.S.	Basel	III	final	rule	on	January 1,	2014.

On	January	1,	2015,	the	U.S.	Basel	III	final	rule	replaced	the	existing Basel	I-based	approach	for	calculating	risk-weighted	assets	with	the	U.S. Basel

III	standardized	approach	that,	among	other	things,	modifies	certain existing	risk	weights	and	introduces	new	methods	for	calculating	risk- weighted	assets	for	certain	types	of	assets	and	exposures.	The	final	rule also	revised	the	Basel	II-based	advanced	approaches	capital	rules	to implement	Basel	III	and	certain	provisions	of	the	Dodd-Frank	Act.

In	implementing	certain	aspects	of	these	capital	regulations,	we	are making	interpretations	of	the	regulatory	intent.	The	Federal	Reserve	may determine	that	we	are	not	in	compliance	with	certain	aspects	of	the advanced	approaches	capital	rules	and	may	require	us	to	take	certain actions	to	come	into	compliance	that	could	adversely	affect	our	business operations,	our	regulatory	capital	structure,	our	capital	ratios	or	our financial	performance,	or	otherwise	restrict	our	growth	plans	or	strategies. In	addition,	banking	regulators	could	change	the	Basel	III	final	rule	or	their interpretations	as	they	apply	to	us,	including	changes	to	these	standards or	interpretations	made	in	regulations	implementing	provisions	of	the Dodd-Frank	Act,	which	could	adversely	affect	us	and	our	ability	to	comply with	the	Basel	III	final	rule.

The	U.S.	Basel	III	final	rule	also	contains	additional	new requirements,	such	as	the	SLR	and	LCR,	and	further	capital	and	liquidity requirements	are	under	consideration	by	U.S.	and	international	banking regulators,	such	as	an	NSFR,	each	of	which	has	the	potential	to	have significant	effects	on	our	capital	and	liquidity	planning	and	activities.

For	example,	the	specification	of	the	various	elements	of	the	U.S. LCR	in	the	final	rule,	such	as	the	eligibility	of	assets	as	high-quality	liquid assets,	the	calculation	of	net	outflows,	including	the	treatment	of operational	deposits,	and	the	timing	of	indeterminate

maturities,	could	have	a	material	effect	on	our	business	activities, including	the	management	and	composition	of	our	investment	securities portfolio	and	our	ability	to	extend	committed	contingent	credit	facilities	to our	clients.	The	full	effects	of	the	Basel	III	final	rule,	and	of	other regulatory	initiatives	related	to	capital	or	liquidity,	on	State	Street	and State	Street	Bank	are	therefore	subject	to	further	evaluation	and	also	to further	regulatory	guidance,	action	or	rule-making.

As	a	G-SIB,	we	generally	expect	to	be	held	to	the	most	stringent provisions	under	the	U.S.	Basel	III	final	rule.	For	example,	on	December 9,	2014,	the	Federal	Reserve	issued	a	proposed	rulemaking	to	establish a	risk-based	capital	surcharge	for	U.S.	G-SIBs,	such	as	State	Street. Under	the	proposed	rule,	a	G-SIB's	capital	conservation	buffer	would	be increased	by	the	amount	of	the	capital	surcharge,	using	the	higher surcharge	as	determined	under	two	proposed	methods.	The	first proposed	method	would	consider	a	G-SIB's	size,	interconnectedness, cross-jurisdictional	activity,	substitutability,	and	complexity,	whereas	the second	proposed	method	would	replace	substitutability	with	the	use	of short-term	wholesale	funding.	If	the	rulemaking	is	finalized	as	proposed, the	capital	surcharge	could	be	higher	than	the	capital	surcharge	as determined	under	the	framework	proposed	by	the	Basel	Committee. Under	the	proposed	rule,	the	capital	surcharge	would	be	phased	in beginning	in	2016	and	would	become	fully	effective	on	January	1,	2019. State	Street	is	assessing	the	impact	of	the	capital	surcharge	that	would result	if	the	proposed	rule	were	implemented,	and	the	effects	of maintaining	capital	levels	necessary	to	meet	the	surcharge	could	be material.

In	addition,	in	November	2014,	the	FSB	published	a	consultative document	with	a	proposal	to	enhance	the	TLAC	of	G-SIBs	in	resolution. The	proposal	calls	for	G-SIBs	to	maintain	TLAC	in	excess	of	prescribed minimum	thresholds.	TLAC	would	include	regulatory	capital	and	liabilities that	can	be	written	down	or	converted	into	equity	during	resolution.	At	a minimum,	each	G-SIB	would	need	to	hold	TLAC	in	an	amount	equivalent to	between	16%	and	20%	of	its	risk-weighted	assets	(plus	applicable regulatory	buffers)	or	at	least	twice	the	relevant	Basel	III	tier	1	leverage ratio	requirement.	The	proposal	states	that	G-SIBs	will	not	be	expected	to meet	TLAC	requirements	before	January	1,	2019.	The	FSB	is	expected	to finalize	its	proposal	in	late	2015.	U.S.	banking	regulators	have	not	yet issued	a	proposal	to	implement	TLAC	requirements.

We	are	also	required	by	the	Federal	Reserve	to	conduct	periodic stress	testing	of	our	business	operations	and	to	develop	an	annual	capital plan	as	part	of	the	Federal	Reserve's	Comprehensive	Capital

Analysis	and	Review	process.	That	process	is	used	by	the	Federal Reserve	to	evaluate	our	management	of	capital,	the	adequacy	of	our regulatory	capital	and	the	potential	requirement	for	us	to	maintain	capital levels	above	regulatory	minimums.	The	planned	capital	actions	in	our capital	plan,	including	stock	purchases	and	dividends,	may	be	objected	to by	the	Federal	Reserve,	potentially	requiring	us	to	revise	our	stress- testing	or	capital	management	approaches,	resubmit	our	capital	plan	or postpone,	cancel	or	alter	our	planned	capital	actions.	In	addition,	changes in	our	business	strategy,	merger	or	acquisition	activity	or	unanticipated uses	of	capital	could	result	in	a	change	in	our	capital	plan	and	its associated	capital	actions,	and	may	require	resubmission	of	the	capital plan	to	the	Federal	Reserve	for	its	non-objection.	We	are	also	subject	to asset	quality	reviews	and	stress	testing	by	the	ECB	and	may	in	the	future to	be	subject	to	similar	reviews	and	testing	by	other	regulators.

Our	implementation	of	the	new	capital	and	liquidity	requirements, including	our	capital	plan,	may	not	be	approved	or	may	be	objected	to	by the	Federal	Reserve,	and	the	Federal	Reserve	may	impose	capital requirements	in	excess	of	our	expectations	or	require	us	to	maintain levels	of	liquidity	that	are	higher	than	we	may	expect,	and	which	may adversely	affect	our	consolidated	revenues.	In	the	event	that	our implementation	of	new	capital	and	liquidity	requirements	under	the	Basel III	final	rule,	the	Dodd-Frank	Act	or	other	regulatory	initiatives	or	our current	capital	structure	are	determined	not	to	conform	with	current	and future	capital	requirements,	our	ability	to	deploy	capital	in	the	operation	of our	business	or	our	ability	to	distribute	capital	to	shareholders	or	to purchase	our	capital	stock	may	be	constrained,	and	our	business	may	be adversely	affected.	Likewise,	in	the	event	that	regulators	in	other jurisdictions	in	which	we	have	banking	subsidiaries	determine	that	our capital	or	liquidity	levels	do	not	conform	with	current	and	future	regulatory requirements,	our	ability	to	deploy	capital,	our	levels	of	liquidity	or	our business	operations	in	those	jurisdictions	may	be	adversely	affected.

For	additional	information	about	the	above	matters,	refer	to "Business	-	Supervision	and	Regulation	-	Regulatory	Capital	Adequacy and	Liquidity	Standards"	included	under	Item	1,	and	"Financial	Condition	- Capital"	in	Management's	Discussion	and	Analysis	included	under	Item	7, of	this	Form	10-K.

Fee	revenue	represents	a	significant	majority	of	our	consolidated revenue	and	is	subject	to	decline,	among	other	things,	in	the	event of	a	reduction	in,	or	changes	to,	the	level	or	type	of	investment activity	by	our	clients.

We	rely	primarily	on	fee-based	services	to	derive	our	revenue.	This contrasts	with	commercial	banks	that	may	rely	more	heavily	on	interest- based	sources	of	revenue,	such	as	loans.	During	2014,	total	fee	revenue represented	approximately	78%	of	our	total	consolidated	revenue.	Fee revenue	generated	by	our	investment	servicing	and	investment management	businesses	is	augmented	by	trading	services,	securities finance	and	processing	fees	and	other	revenue.

The	level	of	these	fees	is	influenced	by	several	factors,	including	the mix	and	volume	of	our	assets	under	custody	and	administration	and	our assets	under	management,	the	value	and	type	of	securities	positions	held (with	respect	to	assets	under	custody)	and	the	volume	of	portfolio transactions,	and	the	types	of	products	and	services	used	by	our	clients. For	example,	reductions	in	the	level	of	economic	and	capital	markets activity	tend	to	have	a	negative	effect	on	our	fee	revenue,	as	these	often result	in	reduced	asset	valuations	and	transaction	volumes.	They	may also	result	in	investor	preference	trends	towards	asset	classes	and markets	deemed	more	secure,	such	as	cash	or	non-emerging	markets, with	respect	to	which	our	fee	rates	are	often	lower.

In	addition,	our	clients	include	institutional	investors,	such	as	mutual funds,	collective	investment	funds,	hedge	funds	and	other	investment pools,	corporate	and	public	retirement	plans,	insurance	companies, foundations,	endowments	and	investment	managers.	Economic,	market or	other	factors	that	reduce	the	level	or	rates	of	savings	in	or	with	those institutions,	either	through	reductions	in	financial	asset	valuations	or through	changes	in	investor	preferences,	could	materially	reduce	our	fee revenue	and	have	a	material	adverse	effect	on	our	consolidated	results	of operations.

# Our	businesses	have	significant	European	operations,	and disruptions	in	European	economies	could	have	an	adverse	effect	on our	consolidated	results	of	operations	or	financial	condition.

Since	2011,	Greece,	Ireland,	Italy,	Portugal,	Spain	and	other European	economies	have	experienced,	and	in	the	future	may experience,	difficulties	in	financing	their	deficits	and	servicing	their outstanding	debt.	Eurozone	instability	and	sovereign	debt	concerns,	and the	downgraded	credit	ratings	of	associated	sovereign	debt	and	European financial	institutions,	have	contributed	to	the	volatility	in	the	financial markets.	This	reduced	confidence	has	led	to	support	for	Greece,	Ireland, Portugal,	and	Spain	by	Eurozone	countries	and	the	International Monetary	Fund.	The	ECB	has	purchased	European	sovereign	debt	to support	these	markets	and	to	weaken	the	Euro	relative	to	the	currencies of	significant	trading

partners	of	the	Eurozone	economy	and,	in	the	second	half	of	2014 , announced	operational	details	of	possible	asset-backed	securities	and covered	bond	purchase	programs.	Numerous	European	governments, have	adopted	austerity	and	other	measures	in	an	attempt	to	contain	the spread	of	sovereign-debt	concerns	and	overall	slow	economic	growth. Current	political	attitudes	towards	such	economic	support	and	the European	Union	in	these	and	other	European	countries	appear	to	be diverging,	creating	the	potential	for	an	increasingly	complex	political environment	in	which	actions	to	support	European	economies	need	to	be resolved.	In	mid-2014	geopolitical	pressure	also	rose	due	to	the	conflict between	the	Ukraine	and	Russia,	with	governments	globally	imposing trade	restrictions	which	affected	the	global	and	European	economy,	the Russian	currency	and	Russian	financial	markets	and	financial	institutions.

These	political	disagreements,	along	with	the	interdependencies among	European	economies	and	financial	institutions	and	the	substantial refinancing	requirements	of	European	sovereign	issuers	create	ongoing concern	regarding	deflationary	pressures	in	Europe,	persistent	high	levels of	unemployment	in	certain	countries	and	the	stability	of	the	Euro, European	financial	markets	generally	and	certain	institutions	in	particular. Given	the	scope	of	our	European	operations,	clients	and	counterparties, disruptions	in	the	European	financial	markets,	the	failure	to	resolve	fully and	contain	sovereign-debt	concerns,	continued	recession	in	significant European	economies,	the	possible	attempt	of	a	country	to	abandon	the Euro,	the	failure	of	a	significant	European	financial	institution,	even	if	not an	immediate	counterparty	to	us,	or	persistent	weakness	in	the	Euro	and the	consequences	of	prolonged	negative	interest	rates,	could	have	a material	adverse	impact	on	our	consolidated	results	of	operations	or financial	condition.

# Recent	conditions	in	the	global	economy	and	financial	markets	have adversely	affected	us,	and	they	have	increased	the	uncertainty	and unpredictability	we	face	in	managing	our	businesses.

Global	credit	and	other	financial	markets	have	recently	suffered	from substantial	volatility,	illiquidity	and	disruption.	The	resulting	economic pressure	and	lack	of	confidence	in	the	financial	stability	of	certain countries,	and	in	the	financial	markets	generally,	have	adversely	affected our	business,	as	well	as	the	businesses	of	our	clients	and	our	significant counterparties.	This	environment,	the	potential	for	continuing	or	additional disruptions,	and	the	regulatory	and	enforcement	environment	that	has subsequently	arisen	have	also	affected	overall

confidence	in	financial	institutions,	have	further	exacerbated	liquidity	and pricing	issues	within	the	securities	markets,	have	increased	the uncertainty	and	unpredictability	we	face	in	managing	our	businesses,	and have	had	an	adverse	effect	on	our	consolidated	results	of	operations	and financial	condition.

While	global	economies	and	financial	markets	showed	some	signs	of stabilizing	during	2013	and	2014,	numerous	global	financial	services	firms and	the	sovereign	debt	of	some	nations	experienced	credit	downgrades and	recessionary	issues.	The	occurrence	of	additional	disruptions	in global	markets,	continued	uncertainty	with	respect	to	federal	budget	and federal	debt-ceiling	concerns	in	the	U.S.,	continued	economic	or	political uncertainty	in	Europe,	or	the	worsening	of	economic	conditions,	could further	adversely	affect	our	businesses	and	the	financial	services	industry in	general,	and	also	increase	the	difficulty	and	unpredictability	of	aligning our	business	strategies,	our	infrastructure	and	our	operating	costs	in	light of	current	and	future	market	and	economic	conditions.

Market	disruptions	can	adversely	affect	our	consolidated	results	of operations	if	the	value	of	assets	under	custody,	administration	or management	decline,	while	the	costs	of	providing	the	related	services remain	constant	due	to	the	high	fixed	costs	associated	with	this	business. These	factors	can	reduce	the	profitability	of	our	asset-based	fee	revenue and	could	also	adversely	affect	our	transaction-based	revenue,	such	as revenues	from	securities	finance	and	foreign	exchange	activities,	and	the volume	of	transactions	that	we	execute	for	or	with	our	clients.	Further,	the degree	of	volatility	in	foreign	exchange	rates	can	affect	our	foreign exchange	trading	revenue.	In	general,	increased	currency	volatility	tends to	increase	our	market	risk	but	also	increases	our	foreign	exchange revenue.	Conversely,	periods	of	lower	currency	volatility	tend	to	decrease our	market	risk	but	also	decrease	our	foreign	exchange	revenue.

In	addition,	as	our	business	grows	globally	and	a	significant percentage	of	our	revenue	is	earned	(and	of	our	expenses	paid)	in currencies	other	than	U.S.	dollars,	our	exposure	to	foreign	currency volatility	could	affect	our	levels	of	consolidated	revenue,	our	consolidated expenses	and	our	consolidated	results	of	operations,	as	well	as	the	value of	our	investment	in	our	non-U.S.	operations	and	our	investment	portfolio holdings.	For	example,	during	the	second	half	of	2014,	the	effects	of	a stronger	U.S.	dollar,	particularly	relative	to	the	Euro,	reduced	our servicing	fee	and	management	fee	revenue	and	also	reduced	our expenses.	The	extent	to	which	changes	in	the	strength	of	the	U.S.	dollar relative	to	other	currencies

affects	our	consolidated	results	of	operations,	including	the	degree	of	any offset	between	increases	or	decreases	to	both	revenue	and	expenses, will	depend	upon	the	nature	and	scope	of	our	operations	and	activities	in the	relevant	jurisdictions	during	the	relevant	periods,	which	may	vary	from period	to	period.

As	our	product	offerings	expand,	in	part	as	we	seek	to	take advantage	of	perceived	opportunities	arising	under	various	regulatory reforms	and	resulting	market	changes,	the	degree	of	our	exposure	to various	market	and	credit	risks	will	evolve,	potentially	resulting	in	greater revenue	volatility.	We	also	will	need	to	make	additional	investments	to develop	the	operational	infrastructure	and	to	enhance	our	compliance	and risk	management	capabilities	to	support	these	businesses,	which	may increase	the	operating	expenses	of	such	businesses	or,	if	our	risk management	resources	fail	to	keep	pace	with	product	expansion,	result	in increased	risk	of	loss	from	such	businesses.

# We	may	need	to	raise	additional	capital	in	the	future,	which	may	not be	available	to	us	or	may	only	be	available	on	unfavorable	terms.

We	may	need	to	raise	additional	capital	in	order	to	maintain	our credit	ratings	in	response	to	regulatory	changes,	including	capital	rules,	or for	other	purposes,	including	financing	acquisitions	and	joint	ventures. However,	our	ability	to	access	the	capital	markets,	if	needed,	will	depend on	a	number	of	factors,	including	the	state	of	the	financial	markets.	In	the event	of	rising	interest	rates,	disruptions	in	financial	markets,	negative perceptions	of	our	business	or	our	financial	strength,	or	other	factors	that would	increase	our	cost	of	borrowing,	we	cannot	be	sure	of	our	ability	to raise	additional	capital,	if	needed,	on	terms	acceptable	to	us.	Any diminished	ability	to	raise	additional	capital,	if	needed,	could	adversely affect	our	business	and	our	ability	to	implement	our	business	plan,	capital plan	and	strategic	goals,	including	the	financing	of	acquisitions	and	joint ventures.

# Any	downgrades	in	our	credit	ratings,	or	an	actual	or	perceived reduction	in	our	financial	strength,	could	adversely	affect	our borrowing	costs,	capital	costs	and	liquidity	and	cause	reputational harm.

Major	independent	rating	agencies	publish	credit	ratings	for	our	debt obligations	based	on	their	evaluation	of	a	number	of	factors,	some	of which	relate	to	our	performance	and	other	corporate	developments, including	financings,	acquisitions	and	joint	ventures,	and	some	of	which relate	to	general	industry	conditions.	We	anticipate	that	the	rating agencies	will	review	our	ratings	regularly	based	on	our	consolidated results	of	operations	and

developments	in	our	businesses.	One	or	more	of	the	major	independent credit	rating	agencies	have	in	the	past	downgraded,	and	may	in	the	future downgrade,	our	credit	ratings,	or	have	negatively	revised	their	outlook	for our	credit	ratings.	In	November	2013,	Moody's	Investors	Service downgraded	the	long-term	senior	and	subordinated	debt	ratings	for	State Street	Bank.

The	current	market	environment	and	our	exposure	to	financial institutions	and	other	counterparties,	including	sovereign	entities,	increase the	risk	that	we	may	not	maintain	our	current	ratings,	and	we	cannot provide	assurance	that	we	will	continue	to	maintain	our	current	credit ratings.	Downgrades	in	our	credit	ratings	may	adversely	affect	our borrowing	costs,	our	capital	costs	and	our	ability	to	raise	capital	and,	in turn,	our	liquidity.	A	failure	to	maintain	an	acceptable	credit	rating	may also	preclude	us	from	being	competitive	in	various	products.

Additionally,	our	counterparties,	as	well	as	our	clients,	rely	on	our financial	strength	and	stability	and	evaluate	the	risks	of	doing	business with	us.	If	we	experience	diminished	financial	strength	or	stability,	actual or	perceived,	including	the	effects	of	market	or	regulatory	developments, our	announced	or	rumored	business	developments	or	consolidated results	of	operations,	a	decline	in	our	stock	price	or	a	reduced	credit rating,	our	counterparties	may	be	less	willing	to	enter	into	transactions, secured	or	unsecured,	with	us;	our	clients	may	reduce	or	place	limits	on the	level	of	services	we	provide	them	or	seek	other	service	providers;	or our	prospective	clients	may	select	other	service	providers,	all	of	which may	have	other	adverse	effects	on	our	reputation.

The	risk	that	we	may	be	perceived	as	less	creditworthy	relative	to other	market	participants	is	higher	in	the	current	market	environment,	in which	the	consolidation,	and	in	some	instances	failure,	of	financial institutions,	including	major	global	financial	institutions,	have	resulted	in	a smaller	number	of	much	larger	counterparties	and	competitors.	If	our counterparties	perceive	us	to	be	a	less	viable	counterparty,	our	ability	to enter	into	financial	transactions	on	terms	acceptable	to	us	or	our	clients, on	our	or	our	clients'	behalf,	will	be	materially	compromised.	If	our	clients reduce	their	deposits	with	us	or	select	other	service	providers	for	all	or	a portion	of	the	services	we	provide	to	them,	our	revenues	will	decrease accordingly.

# Operational,	Business	and	Reputational	Risks

# We	face	extensive	and	changing	government	regulation	in	the	U.S. and	in	foreign	jurisdictions	in	which	we	operate,	which	may	increase our	costs	and	expose	us	to	risks	related	to	compliance.

Most	of	our	businesses	are	subject	to	extensive	regulation	by multiple	regulatory	bodies,	and	many	of	the	clients	to	which	we	provide services	are	themselves	subject	to	a	broad	range	of	regulatory requirements.	These	regulations	may	affect	the	scope	of,	and	the	manner and	terms	of	delivery	of,	our	services.	As	a	financial	institution	with substantial	international	operations,	we	are	subject	to	extensive	regulation and	supervisory	oversight,	both	in	and	outside	of	the	U.S.	This	regulation and	supervisory	oversight	affects,	among	other	things,	the	scope	of	our activities	and	client	services,	our	capital	and	organizational	structure,	our ability	to	fund	the	operations	of	our	subsidiaries,	our	lending	practices,	our dividend	policy,	our	common	stock	purchase	actions,	the	manner	in	which we	market	our	services,	and	our	interactions	with	foreign	regulatory agencies	and	officials.

In	particular,	State	Street	is	registered	with	the	Federal	Reserve	as	a bank	holding	company	pursuant	to	the	Bank	Holding	Company	Act	of 1956.	The	Bank	Holding	Company	Act	limits	the	activities	in	which	we (and	non-banking	entities	that	we	are	deemed	to	control	under	that	Act) may	engage	in	activities	the	Federal	Reserve	considers	to	be	closely related	to	banking	or	to	managing	or	controlling	banks.	Financial	holding company	status	expands	the	activities	permissible	for	a	bank	holding company	to	those	that	are	deemed	to	be	"financial	in	nature"	by	the Federal	Reserve.	State	Street	elected	to	become	a	financial	holding company	under	the	Bank	Holding	Company	Act.	Financial	holding company	status	requires	State	Street	and	its	banking	subsidiaries	to remain	well	capitalized	and	well	managed	and	to	comply	with	Community Reinvestment	Act	obligations.	Currently,	under	the	Bank	Holding Company	Act,	we	may	not	be	able	to	engage	in	new	activities	or	acquire shares	or	control	of	other	businesses.

Several	other	aspects	of	the	regulatory	environment	in	which	we operate,	and	related	risks,	are	discussed	below.	Additional	information	is provided	in	"Business	-	Supervision	and	Regulation"	included	under	Item 1	of	this	Form	10-K.

The	Dodd-Frank	Act,	which	became	law	in	July	2010,	has	had,	and will	continue	to	have,	a	significant	impact	on	the	regulatory	structure	of	the global	financial	markets	and	has	imposed,	and	is	expected	to	continue	to impose,	significant	additional	costs	on	us.	While	U.S.	banking	regulators have	finalized	many	regulations	to	implement	various	provisions	of	the Dodd-Frank	Act,	they	plan	to	propose	or	finalize	additional	implementing regulations	in	the	future.	In	light	of	the	further	rule-making	required	to	fully implement	the	Dodd-Frank	Act,	as	well	as	the	discretion	afforded	to federal	regulators,	the	full

impact	of	this	legislation	on	us,	our	business	strategies	and	financial performance	is	not	known	at	this	time	and	may	not	be	known	for	a number	of	years.	Several	elements	of	the	Dodd-Frank	Act,	such	as	the Volcker	rule	and	enhanced	prudential	standards	for	financial	institutions designated	as	SIFIs,	impose	or	are	expected	to	impose	significant additional	operational,	compliance	and	risk	management	costs	both	in	the near-term,	as	we	develop	and	integrate	appropriate	systems	and procedures,	and	on	a	recurring	basis	thereafter,	as	we	monitor,	support and	refine	those	systems	and	procedures.

A	number	of	regulations	implementing	the	Dodd-Frank	Act	that	are not	yet	final	are	anticipated	to	be	finalized	in	2015	or	2016,	with compliance	dates	soon	thereafter,	and,	as	a	result	of	and	together	with regulatory	change	in	Europe,	the	costs	and	impact	on	our	operations	of the	post-financial	crisis	regulatory	reform	are	accelerating.	We	may	not anticipate	completely	all	areas	in	which	the	Dodd-Frank	Act	or	other regulatory	initiatives	could	affect	our	business	or	influence	our	future activities	or	the	full	effects	or	extent	of	related	operational,	compliance, risk	management	or	other	costs.

The	FDIC	and	the	Federal	Reserve	jointly	issued	a	final	rule	under the	Dodd-Frank	Act	pursuant	to	which	we	are	required	to	submit	annually to	the	Federal	Reserve	and	the	FDIC	a	plan,	known	as	a	resolution	plan, for	our	rapid	and	orderly	resolution	under	the	Bankruptcy	Code	(or	other specifically	applicable	insolvency	regime)	in	the	event	of	material	financial distress	or	failure.	The	FDIC	also	issued	a	final	rule	pursuant	to	which State	Street	Bank	is	required	to	submit	annually	to	the	FDIC	a	plan	for resolution	in	the	event	of	its	failure.	We	and	State	Street	Bank	submitted our	most	recent	annual	resolution	plan	to	the	Federal	Reserve	and	the FDIC	on	July	1,	2014.	Subsequently,	in	August	2014,	the	Federal Reserve	and	the	FDIC	announced	the	completion	of	their	reviews	of resolution	plans	submitted	in	2013	by	11	large,	complex	banking organizations,	including	State	Street,	under	the	requirements	of	the	Dodd- Frank	Act,	and	informed	each	of	these	organizations	of	specific shortcomings	with	their	respective	2013	resolution	plans.	If	the	FDIC	and the	Federal	Reserve	should	determine	that	one	or	more	of	our	2014,	2015 or	any	subsequent	resolution	plan	is	not	credible	or	would	not	facilitate	an orderly	resolution	under	the	Bankruptcy	Code,	or	we	otherwise	fail	to meet	regulatory	expectations	to	the	satisfaction	of	the	Federal	Reserve	or the	FDIC	with	respect	to	one	or	more	of	such	resolution	plans,	we	could be	subject	to	more	stringent	capital,	leverage	or	liquidity	requirements, restrictions	on	our	growth,	activities	or	operations,	or	be	required	to	divest certain	of	our	assets	or	operations.

Other	provisions	of	the	Dodd-Frank	Act	and	its	implementing regulations,	such	as	new	rules	for	swap	market	participants,	additional regulation	of	financial	system	utilities,	the	designation	of	non-bank institutions	as	SIFIs,	and	further	requirements	to	facilitate	orderly liquidation	of	large	institutions,	could	adversely	affect	our	business operations	and	our	competitive	position,	and	could	also	negatively	affect the	operational	and	competitive	positions	of	our	clients.	The	final	effects	of the	Dodd-Frank	Act	on	our	business	will	depend	largely	on	the	scope	and timing	of	the	implementation	of	the	Dodd-Frank	Act	by	regulatory	bodies, which	in	many	cases	have	been	delayed,	and	the	exercise	of	discretion by	these	regulatory	bodies.

The	breadth	of	our	business	activities,	together	with	the	scope	of	our global	operations	and	varying	business	practices	in	relevant	jurisdictions, increase	the	complexity	and	costs	of	meeting	our	regulatory	compliance obligations,	including	in	areas	that	are	receiving	significant	regulatory scrutiny.	We	are,	therefore,	subject	to	related	risks	of	non-compliance, including	fines,	penalties,	lawsuits,	regulatory	sanctions	or	difficulties	in obtaining	approvals,	limitations	on	our	business	activities,	or	reputational harm,	any	of	which	may	be	significant.	For	example,	the	global	nature	of our	client	base	requires	us	to	comply	with	complex	regulations	relating	to money	laundering	and	anti-terrorist	monitoring	of	our	clients.	The	same applies	with	respect	to	anti-corruption	laws	and	related	requirements. Regulatory	scrutiny	of	compliance	with	these	and	other	regulations	is increasing	and	our	operations	are	subject	to	regulations	from	multiple jurisdictions.	The	overall	evolving	regulatory	landscape	in	each	jurisdiction in	which	we	operate,	including	requirements	or	restrictions	on	our	service offerings	or	opportunities	for	new	service	offerings,	particularly	when applied	on	a	cross-border	basis,	is	not	necessarily	consistent	with	the requirements	or	regulatory	objectives	of	other	jurisdictions	in	which	we have	clients	or	operations.	This	evolving	regulatory	landscape	may interfere	with	our	ability	to	conduct	our	operations,	with	our	pursuit	of	a common	global	operating	model	or	with	our	ability	to	compete	effectively with	other	financial	institutions	operating	in	those	jurisdictions	or	which may	be	subject	to	different	regulatory	requirements	than	apply	to	us.	In particular,	non-U.S.	regulation	and	initiatives	may	be	inconsistent	or conflict	with	current	or	proposed	regulations	in	the	U.S.,	which	could create	increased	compliance	and	other	costs	that	would	adversely	affect business,	operations	or	profitability.

Our	designation	under	the	Dodd-Frank	Act	in	the	U.S.	as	a	SIFI,	and our	identification	by	the	FSB	as	a	G-SIB,	to	which	certain	regulatory capital	surcharges	may	apply,	will	subject	us	to	incrementally	higher

capital	and	prudential	requirements,	increased	scrutiny	of	our	activities and	potential	further	regulatory	requirements	or	increased	regulatory expectations	than	those	applicable	to	some	of	the	financial	institutions with	which	we	compete	as	a	custodian	or	asset	manager.	This	increased scrutiny	also	has	significantly	increased,	and	may	continue	to	increase, our	expenses	associated	with	regulatory	compliance,	including	personnel and	systems,	as	well	as	implementation	and	related	costs	to	enhance	our programs.

We	are	further	affected	by	other	regulatory	initiatives,	including,	but not	limited	to,	the	implementation	of	the	Basel	III	final	rule,	including	the proposed	NSFR	and	Basel	III	SLR,	the	implemented	Alternative Investment	Fund	Managers	Directive,	or	AIFMD,	the	European	Market Infrastructure	Resolution,	or	EMIR,	which	is	currently	in	an implementation	phase,	proposed	revisions	to	the	European	collective investment	fund,	or	UCITS,	proposed	revisions	to	the	Markets	in	Financial Instruments	Directive	and	anticipated	revisions	to	the	European	Union data	protection	regulation.	Recent,	proposed	or	potential	regulations	in the	U.S.	and	Europe	with	respect	to	money	market	funds,	short-term wholesale	funding,	such	as	repurchase	agreements	or	securities	lending, or	other	"shadow	banking"	activities,	could	also	adversely	affect	not	only our	own	operations	but	also	the	operations	of	the	clients	to	which	we provide	services.	In	Europe,	the	AIFMD	increases	the	responsibilities	and potential	liabilities	of	custodians	to	certain	of	their	clients	for	asset	losses, and	proposed	revisions	to	the	regulations	affecting	UCITS	are	anticipated to	incorporate	similar,	potentially	more	strict,	standards.

EMIR	requires	the	reporting	of	all	derivatives	to	a	trade	repository, the	mandatory	clearing	of	certain	derivatives	trades	via	a	central counterparty	and	risk	mitigation	techniques	for	derivatives	not	cleared	via a	central	counterparty.	EMIR	will	impact	our	business	activities,	and increase	costs,	in	various	ways,	some	of	which	may	be	adverse.	Further, the	European	Commission's	proposal	to	introduce	a	proposed	financial transaction	tax	or	similar	proposals	elsewhere,	if	adopted,	could	materially affect	the	location	and	volume	of	financial	transactions	or	otherwise	alter the	conduct	of	financial	activities,	any	of	which	could	have	a	material adverse	effect	on	our	business	and	on	our	consolidated	results	of operations	or	financial	condition.

The	Dodd-Frank	Act	and	these	other	international	regulatory changes	could	limit	our	ability	to	pursue	certain	business	opportunities, increase	our	regulatory	capital	requirements,	alter	the	risk	profile	of certain	of	our	core	activities	and	impose	additional	costs	on	us,	otherwise adversely	affect	our	business,

our	consolidated	results	of	operations	or	financial	condition	and	have other	negative	consequences,	including	a	reduction	of	our	credit	ratings. Different	countries	may	respond	to	the	market	and	economic	environment in	different	and	potentially	conflicting	manners,	which	could	increase	the cost	of	compliance	for	us.

The	evolving	regulatory	environment,	including	changes	to	existing regulations	and	the	introduction	of	new	regulations,	may	also	contribute	to decisions	we	may	make	to	suspend,	reduce	or	withdraw	from	existing businesses,	activities	or	initiatives.	In	addition	to	potential	lost	revenue associated	with	any	such	suspensions,	reductions	or	withdrawals,	any such	suspensions,	reductions	or	withdrawals	may	result	in	significant restructuring	or	related	costs	or	exposures.

If	we	do	not	comply	with	governmental	regulations,	we	may	be subject	to	fines,	penalties,	lawsuits,	delays,	or	difficulties	in	obtaining regulatory	approvals	or	restrictions	on	our	business	activities	or	harm	to our	reputation,	which	may	significantly	and	adversely	affect	our	business operations	and,	in	turn,	our	consolidated	results	of	operations.	The willingness	of	regulatory	authorities	to	impose	meaningful	sanctions,	and the	level	of	fines	and	penalties	imposed	in	connection	with	regulatory violations,	have	increased	substantially	since	the	financial	crisis. Regulatory	agencies	may,	at	times,	limit	our	ability	to	disclose	their findings,	related	actions	or	remedial	measures.	Similarly,	many	of	our clients	are	subject	to	significant	regulatory	requirements	and	retain	our services	in	order	for	us	to	assist	them	in	complying	with	those	legal requirements.	Changes	in	these	regulations	can	significantly	affect	the services	that	we	are	asked	to	provide,	as	well	as	our	costs.

In	addition,	adverse	publicity	and	damage	to	our	reputation	arising from	the	failure	or	perceived	failure	to	comply	with	legal,	regulatory	or contractual	requirements	could	affect	our	ability	to	attract	and	retain clients.	If	we	cause	clients	to	fail	to	comply	with	these	regulatory requirements,	we	may	be	liable	to	them	for	losses	and	expenses	that	they incur.	In	recent	years,	regulatory	oversight	and	enforcement	have increased	substantially,	imposing	additional	costs	and	increasing	the potential	risks	associated	with	our	operations.	If	this	regulatory	trend continues,	it	could	adversely	affect	our	operations	and,	in	turn,	our consolidated	results	of	operations	and	financial	condition.

Our	calculations	of	credit,	market	and	operational	risk	exposures, total	risk-weighted	assets	and	capital	ratios	for	regulatory	purposes depend	on	data	inputs,	formulae,	models,	correlations,	and assumptions	that	are	subject	to	changes	over

# time,	which	changes,	in	addition	to	our	consolidated	financial results,	could	materially	change	our	risk	exposures,	our	total	risk- weighted	assets	and	our	capital	ratios	from	period	to	period.

To	calculate	our	credit,	market	and	operational	risk	exposures,	our total	risk-weighted	assets	and	our	capital	ratios	for	regulatory	purposes, the	Basel	III	final	rule	involves	the	use	of	current	and	historical	data, including	our	own	loss	data	and	claims	experience	and	similar	information from	other	industry	participants,	market	volatility	measures,	interest	rates and	spreads,	asset	valuations,	credit	exposures,	and	the	creditworthiness of	our	counterparties.	These	calculations	also	involve	the	use	of quantitative	formulae,	statistical	models,	historical	correlations	and significant	assumptions.	We	refer	to	the	data,	formulae,	models, correlations,	and	assumptions,	as	well	as	our	related	internal	processes, as	our	"advanced	systems."	While	our	advanced	systems	are	generally quantitative	in	nature,	significant	components	involve	the	exercise	of judgment	based,	among	other	factors,	on	our	and	the	financial	services industry's	evolving	experience.	Any	of	these	judgments	or	other	elements of	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.

In	addition,	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	our advanced	systems	and	a	corresponding	material	change	in	our	risk exposures,	our	total	risk-weighted	assets	and	our	capital	ratios	compared to	prior	periods.	Due	to	the	influence	of	changes	in	our	advanced systems,	whether	resulting	from	changes	in	data	inputs,	regulation	or regulatory	supervision	or	interpretation,	State	Street-specific	or	more general	market,	or	individual	financial	institution-specific,	activities	or experiences,	or	other	updates	or	factors,	we	expect	that	our	advanced systems	and	our	credit,	market	and	operational	risk	exposures,	our	total risk-weighted	assets	and	our	capital	ratios	calculated	under	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.

# Our	businesses	may	be	adversely	affected	by	regulatory enforcement	and	litigation.

In	the	ordinary	course	of	our	business,	we	are	subject	to	various regulatory,	governmental	and	law	enforcement	inquiries,	investigations and	subpoenas.	These	may	be	directed	generally	to	participants	in	the businesses	or	markets	in	which	we	are	involved	or	may	be	specifically directed	at	us.	In	regulatory	enforcement	matters,	claims	for disgorgement,	the	imposition	of	penalties	and	the	imposition	of	other remedial	sanctions	are	possible.

From	time	to	time,	our	clients,	or	the	government	on	their	or	its	own behalf,	make	claims	and	take	legal	action	relating	to,	among	other	things, our	performance	of	our	fiduciary	or	contractual	responsibilities.	Often,	the announcement	or	other	publication	of	such	a	claim	or	action,	or	of	any related	settlement,	may	spur	the	initiation	of	similar	claims	by	other	clients or	governmental	parties.	In	any	such	claims	or	actions,	demands	for substantial	monetary	damages	may	be	asserted	against	us	and	may result	in	financial	liability,	changes	in	our	business	practices	or	an adverse	effect	on	our	reputation	or	on	client	demand	for	our	products	and services.	In	regulatory	settlements	since	the	financial	crisis,	the	fines imposed	by	regulators	have	increased	substantially	and	may	exceed	in some	cases	the	profit	earned	or	harm	caused	by	the	regulatory	or	other breach.

We	are	currently	subject	to	both	regulatory	inquiries	and	civil	litigation with	respect	to	the	provision	of	foreign	exchange	execution	services	to institutional	investors	that	are	also	custody	clients.	We	recorded	total accruals	of	$185	million	for	2014	with	respect	to	certain	of	these	matters, and	these	regulatory	matters	and	litigation	have	the	potential	to	have	a material	adverse	effect	on	our	consolidated	results	of	operations	for	any future	period	in	which	the	relevant	matter	is	resolved	or	any	additional accrual	is	determined	to	be	required,	on	our	consolidated	financial condition	or	on	our	reputation.	The	potential	exposure	from	such	matters is	difficult	to	estimate	because	the	basis	on	which	some	claims	may	be brought	remains	uncertain	or	the	legal	theories	being	applied	are	untested in	the	courts.	For	additional	information	concerning	these	matters,	refer	to the	risk	factor	titled	"We	face	litigation	and	governmental	and	client inquiries	in	connection	with	our	execution	of	indirect	foreign	exchange trades	with	custody	clients;	these	issues	have	adversely	affected	our revenue	from	such	trading	and	may	cause	our	revenue	from	such	trading to	decline	in	the	future."

In	many	cases,	we	are	required	to	self-report	inappropriate	or	non- compliant	conduct	to	the	authorities,	and	our	failure	to	do	so	may represent	an	independent	regulatory	violation.	Even	when	we	promptly bring	the	matter	to	the	attention	of	the

appropriate	authorities,	we	may	nonetheless	experience	regulatory	fines, liabilities	to	clients,	harm	to	our	reputation	or	other	adverse	effects	in connection	with	self-reported	matters.

Our	operations	are	subject	to	regular	and	ongoing	inspection	by	our bank	and	other	financial	market	regulators	in	the	U.S.	and	internationally. As	a	result	of	such	inspections,	regulators	may	identify	areas	in	which	we may	need	to	take	actions,	which	may	be	significant,	to	enhance	our regulatory	compliance	or	risk	management	practices.	Such	remedial actions	may	entail	significant	cost,	management	attention,	and	systems development	and	such	efforts	may	affect	our	ability	to	expand	our business	until	such	remedial	actions	are	completed.	Our	failure	to implement	enhanced	compliance	and	risk	management	procedures	in	a manner	and	in	a	timeframe	deemed	to	be	responsive	by	the	applicable regulatory	authority	could	adversely	impact	our	relationship	with	such regulatory	authority	and	could	lead	to	restrictions	on	our	activities	or	other sanctions.

Further,	we	may	become	subject	to	regulatory	scrutiny,	inquiries	or investigations	associated	with	broad,	industry-wide	concerns,	and potentially	client-related	inquiries	or	claims,	whether	or	not	we	engaged	in the	relevant	activities,	and	could	experience	associated	increased	costs or	harm	to	our	reputation.	For	example,	we	are	a	major	foreign	exchange dealer	and	also	publish	a	commonly	used	foreign	exchange	benchmark. Many	participants	in	the	foreign	exchange	industry	have	settled governmental	allegations	of	manipulation	in	foreign	exchange	markets, particularly	with	respect	to	published	benchmarks,	and	others	are expected	to	be	facing	similar	inquiries	or	related	civil	litigation.	We	are enhancing	our	monitoring	with	respect	to	foreign	exchange	transactions and	communications	by	foreign	exchange	traders.	We	are	also undertaking	an	internal	review	of	communications	and	have	been	advising certain	U.S.	and	non-U.S.	government	agencies	of	the	results	of	such review.	Our	business	may	become	subject	to	material	governmental review,	proceedings	or	actions	or	the	assertion	of	material	claims,	and	the industry	may	become	subject	to	increased	regulation,	any	of	which	could decrease	the	volume	and	profitability	of	our	foreign	exchange	trading activities.	Our	revenue	worldwide	from	direct	foreign	exchange	sales	and trading	totaled	$361	million	in	2014,	$304	million	in	2013	and	$263	million in	2012.

Separately,	we	are	responding	to	subpoenas	from	the	Department	of Justice	and	the	SEC	for	information	regarding	our	solicitation	of	asset servicing	business	of	public	retirement	plans.	We	have	retained	counsel to	conduct	a	review	of	these	matters,	including	our	use	of	consultants	and

lobbyists	in	our	solicitation	of	business	of	public	retirement	plans	and,	in at	least	one	instance,	political	contributions	by	one	of	our	consultants during	and	after	a	public	bidding	process.

In	view	of	the	inherent	difficulty	of	predicting	the	outcome	of	legal and	regulatory	matters,	we	cannot	provide	assurance	as	to	the	outcome of	any	pending	or	potential	matter	or,	if	determined	adversely	against	us, the	costs	associated	with	any	such	matter,	particularly	where	the	claimant seeks	very	large	or	indeterminate	damages	or	where	the	matter	presents novel	legal	theories,	involves	a	large	number	of	parties	or	is	at	a preliminary	stage.	We	may	be	unable	to	accurately	estimate	our	exposure to	litigation	risk	when	we	record	reserves	for	probable	and	estimable	loss contingencies.	As	a	result,	any	reserves	we	establish	to	cover	any settlements,	judgments	or	regulatory	fines	may	not	be	sufficient	to	cover our	actual	financial	exposure.	The	resolution	of	certain	pending	or potential	legal	or	regulatory	matters	could	have	a	material	adverse	effect on	our	consolidated	results	of	operations	for	the	period	in	which	the relevant	matter	is	resolved	or	an	accrual	is	determined	to	be	required,	on our	consolidated	financial	condition	or	on	our	reputation.

We	face	litigation	and	governmental	and	client	inquiries	in connection	with	our	execution	of	indirect	foreign	exchange	trades with	custody	clients;	these	issues	have	adversely	affected	our revenue	from	such	trading	and	may	cause	our	revenue	from	such trading	to	decline	in	the	future.

Our	custody	clients	are	not	required	to	execute	foreign	exchange transactions	with	us.	To	the	extent	they	execute	foreign	exchange	trades with	us,	they	generally	execute	a	greater	volume	using	our	direct	methods of	execution	at	negotiated	rates	or	spreads	than	they	execute	using	our "indirect"	methods	at	rates	we	establish.	Where	our	clients	or	their investment	managers	choose	to	use	our	indirect	foreign	exchange execution	methods,	generally	they	elect	that	service	for	trades	of	smaller size	or	for	currencies	where	regulatory	or	operational	requirements	cause trading	in	such	currencies	to	present	greater	operational	risk	and	costs	for them.	Given	the	nature	of	these	trades	and	other	features	of	the	indirect foreign	exchange	trading	in	which	we	engage,	we	generally	charge	higher rates	for	indirect	execution	than	we	charge	for	other	trades,	including trades	in	the	interbank	currency	market.

In	October	2009,	the	Attorney	General	of	the	State	of	California commenced	an	action	under	the	California	False	Claims	Act	and California	Business	and	Professional	Code	related	to	services	State Street	provides	to	certain	California	state	pension	plans.	The	California Attorney	General	asserts	that

the	pricing	of	certain	foreign	exchange	transactions	for	these	pension plans	was	governed	by	the	custody	contracts	for	these	plans	and	that	our pricing	was	not	consistent	with	the	terms	of	those	contracts	and	related disclosures	to	the	plans,	and	that,	as	a	result,	State	Street	made	false claims	and	engaged	in	unfair	competition.	The	Attorney	General	asserts actual	damages	of	approximately	$100	million	for	periods	from	2001	to 2009	and	seeks	additional	penalties,	including	treble	damages.	This action	is	in	the	discovery	phase.

We	provide	custody	services	to	and	engage	in	principal	foreign exchange	trading	with	government	pension	plans	in	other	jurisdictions. Since	the	commencement	of	the	litigation	in	California,	attorneys	general and	other	governmental	authorities	from	a	number	of	jurisdictions,	as	well as	U.S.	Attorney's	offices,	the	U.S.	Department	of	Labor	and	the	SEC, have	requested	information	or	issued	subpoenas	in	connection	with inquiries	into	the	pricing	of	our	indirect	foreign	exchange	trading.	We continue	to	respond	to	such	inquiries	and	subpoenas.	Given	that	many	of these	inquiries	are	ongoing,	we	can	provide	no	assurance	that	litigation	or regulatory	proceedings	or	actions	will	not	be	brought	against	us	or	as	to the	nature	of	the	claims	that	might	be	alleged.	Such	litigation,	proceedings or	actions	may	be	brought	on	theories	similar	to	those	advanced	in California	or	on	alternative	theories	of	liability.

We	engage	in	indirect	foreign	exchange	trading	with	a	broad	range of	custody	clients	in	the	U.S.	and	internationally.	We	have	responded	and are	responding	to	information	requests	from	a	number	of	clients concerning	our	indirect	foreign	exchange	rates.	In	February	2011,	a putative	class	action	was	filed	in	federal	court	in	Boston	seeking unspecified	damages,	including	treble	damages,	on	behalf	of	all	custodial clients	that	executed	certain	foreign	exchange	transactions	with	State Street	from	1998	to	2009.	The	putative	class	action	alleges,	among	other things,	that	the	rates	at	which	State	Street	executed	foreign	currency trades	constituted	an	unfair	and	deceptive	practice	under	Massachusetts law	and	a	breach	of	the	duty	of	loyalty.	Two	other	putative	class	actions are	currently	pending	in	federal	court	in	Boston	alleging	various	violations of	ERISA	on	behalf	of	all	ERISA	plans	custodied	with	us	that	executed indirect	foreign	exchange	trades	with	State	Street	from	1998	onward.	The complaints	allege	that	State	Street	caused	class	members	to	pay	unfair and	unreasonable	rates	for	indirect	foreign	exchange	trades	with	State Street.	The	complaints	seek	unspecified	damages,	disgorgement	of profits,	and	other	equitable	relief.	Other	claims	may	be	asserted	in	the future,	including	in	response	to	developments	in	the	actions	discussed above	or	governmental	proceedings.

We	cannot	provide	any	assurance	as	to	the	outcome	of	the	pending proceedings,	or	whether	other	proceedings	might	be	commenced	against us	by	clients	or	government	authorities.	For	example,	the	New	York Attorney	General	and	the	United	States	Attorney	for	the	Southern	District of	New	York,	each	of	which	has	brought	indirect	foreign	exchange-related legal	proceedings	against	one	of	our	competitors,	have	made	inquiries	to us	about	our	indirect	foreign	exchange	execution	methods.	We	expect that	plaintiffs	will	seek	to	recover	their	share	of	all	or	a	portion	of	the revenue	that	we	have	recorded	from	providing	indirect	foreign	exchange trades.

The	following	table	summarizes	our	estimated	total	revenue worldwide	from	indirect	foreign	exchange	trading	for	the	years	ended December	31:

We	believe	that	the	amount	of	our	revenue	from	such	trading	has been	of	a	similar	or	lesser	order	of	magnitude	for	many	years	prior	to 2008.	Our	revenue	calculations	related	to	indirect	foreign	exchange trading	reflect	a	judgment	concerning	the	relationship	between	the	rates we	charge	for	indirect	foreign	exchange	execution	and	indicative interbank	market	rates	near	in	time	to	execution.	Our	revenue	from foreign	exchange	trading	generally	depends	on	the	difference	between the	rates	we	set	for	those	indirect	trades	and	indicative	interbank	market rates	at	the	time	of	settlement	of	the	trade.

We	cannot	predict	the	outcome	of	any	pending	matters	or	whether	a court,	in	the	event	of	an	adverse	resolution,	would	consider	our	revenue to	be	the	appropriate	measure	of	damages.	In	each	of	the	third	and	fourth quarters	of	2014,	we	announced	charges	(due	to	legal	accruals	recorded in	those	quarters)	reflecting	our	intention	to	seek	to	resolve	some,	but	not all,	of	the	outstanding	and	potential	claims	arising	out	of	our	indirect foreign	exchange	client	activities.	With	respect	to	those	legal	accruals:	(1) we	are	engaged	in	discussions	with	some,	but	not	all,	of	the governmental	agencies	and	civil	litigants	that	we	have	described	in connection	with	these	matters	regarding	potential	settlements	of	their outstanding	or	potential	claims;	(2)	there	can	be	no	assurance	that	we	will

reach	a	settlement	in	any	of	these	matters,	that	the	cost	of	such settlements	would	not	materially	exceed	such	accruals,	or	that	other claims	will	not	be	asserted;	and	(3)	we	do	not	currently	intend	to	seek	to negotiate	settlements	with	respect	to	all	outstanding	and	potential	claims, and	our	current	efforts,	even	if	successful,	will	not	address	all	of	our potential	material	legal	exposure	arising	out	of	our	indirect	foreign exchange	client	activities.	The	resolution	of	pending	matters	or	the resolution	of	any	that	may	be	initiated,	filed	or	threatened	could	have	a material	adverse	effect	on	our	consolidated	results	of	operations,	our consolidated	financial	condition	and	our	reputation.

The	heightened	regulatory	and	media	scrutiny	on	indirect	foreign exchange	services	has	resulted	in	clients	reducing	the	volume	of	indirect foreign	exchange	trades,	which	has	had	and	is	anticipated	to	continue	to have	an	adverse	impact	on	our	revenue	from,	and	the	profitability	of,	our indirect	foreign	exchange	trading.	Some	custody	clients	or	their investment	managers	have	elected	to	change	the	manner	in	which	they execute	foreign	exchange	with	us	or	have	decided	not	to	use	our	foreign exchange	execution	methods.	We	do	not	expect	the	market,	regulatory and	other	pressures	on	our	indirect	foreign	exchange	services	to decrease	in	2015.	We	intend	to	continue	to	offer	our	custody	clients	a range	of	execution	options	for	their	foreign	exchange	needs;	however,	the range	of	services,	costs	and	profitability	vary	by	execution	option.	We cannot	provide	assurance	that	clients	or	investment	managers	who choose	to	use	less	or	none	of	our	indirect	foreign	exchange	trading,	or	to use	alternatives	to	our	existing	indirect	foreign	exchange	trading,	will choose	the	alternatives	offered	by	us.	Accordingly,	our	revenue	earned from	providing	these	foreign	exchange	trading	services	may	decline further.

# We	may	incur	losses	arising	from	our	investments	in	sponsored investment	funds,	which	could	be	material	to	our	consolidated results	of	operations	in	the	periods	incurred.

In	the	normal	course	of	business,	we	manage	various	types	of sponsored	investment	funds	through	SSGA.	The	services	we	provide	to these	sponsored	investment	funds	generate	management	fee	revenue,	as well	as	servicing	fees	from	our	other	businesses.	From	time	to	time,	we may	invest	cash	in	the	funds,	which	we	refer	to	as	seed	capital,	in	order for	the	funds	to	establish	a	performance	history	for	newly	launched strategies.	These	funds	may	meet	the	definition	of	variable	interest entities,	as	defined	by	GAAP,	and	if	we	are	deemed	to	be	the	primary beneficiary	of	these	funds,	we	may	be	required	to	consolidate	these	funds in	our	financial	statements	under	GAAP.	The	funds	follow	specialized

investment	company	accounting	rules	which	prescribe	fair	value	for	the underlying	investment	securities	held	by	the	funds.

In	the	aggregate,	we	expect	any	financial	losses	that	we	realize	over time	from	these	seed	investments	to	be	limited	to	the	actual	fair	value	of the	amount	invested	in	the	consolidated	fund,	which	is	based	on	the	fair value	of	the	underlying	investment	securities	held	by	the	funds.	However, in	the	event	of	a	fund	wind-down,	gross	gains	and	losses	of	the	fund	may be	recognized	for	financial	accounting	purposes	in	different	periods	during the	time	the	fund	is	consolidated	but	not	wholly	owned.	Although	we expect	the	actual	economic	loss	to	be	limited	to	the	amount	invested,	our losses	in	any	period	for	financial	accounting	purposes	could	exceed	the value	of	our	economic	interests	in	the	fund	and	could	exceed	the	value	of our	initial	seed	capital	investment.

The	net	assets	of	any	consolidated	fund	are	solely	available	to	settle the	liabilities	of	the	fund	and	to	settle	any	investors'	ownership	redemption requests,	including	any	seed	capital	invested	in	the	fund	by	State	Street. We	are	not	contractually	required	to	provide	financial	or	any	other	support to	any	of	our	sponsored	investment	funds	and	are	subject	to	regulations that	prohibit	or	limit	our	ability	to	do	so.	In	addition,	neither	creditors	nor equity	investors	in	the	sponsored	investment	funds	have	any	recourse	to State	Street's	general	credit.

In	instances	where	we	are	not	deemed	to	be	the	primary	beneficiary	of the	sponsored	investment	fund,	we	do	not	include	the	funds	in	our consolidated	financial	statements.	Our	risk	of	loss	associated	with	these unconsolidated	funds	primarily	represents	our	seed	capital	investment, which	could	become	realized	as	a	result	of	poor	investment	performance. However,	the	amount	of	loss	we	may	recognize	during	any	period	would be	limited	to	the	carrying	amount	of	our	investment.

# Our	reputation	and	business	prospects	may	be	damaged	if	our clients	incur	substantial	losses	in	investment	pools	in	which	we	act as	agent	or	are	restricted	in	redeeming	their	interests	in	these investment	pools.

We	manage	assets	on	behalf	of	clients	in	several	forms,	including	in collective	investment	pools,	money	market	funds,	securities	finance collateral	pools,	cash	collateral	and	other	cash	products	and	short-term investment	funds.	In	addition	to	the	impact	on	the	market	value	of	client portfolios,	at	various	times	since	2007,	the	illiquidity	and	volatility	of	both the	global	fixed-income	and	equity	markets	have	negatively	affected	the investment	performance	of	certain	of	our	products	and	our	ability	to manage	client	inflows	and	outflows	from	our	pooled	investment	vehicles.

Our	management	of	collective	investment	pools	on	behalf	of	clients exposes	us	to	reputational	risk	and	operational	losses.	If	our	clients	incur substantial	investment	losses	in	these	pools,	receive	redemptions	as	in- kind	distributions	rather	than	in	cash,	or	experience	significant	under- performance	relative	to	the	market	or	our	competitors'	products,	our reputation	could	be	significantly	harmed,	which	harm	could	significantly and	adversely	affect	the	prospects	of	our	associated	business	units. Because	we	often	implement	investment	and	operational	decisions	and actions	over	multiple	investment	pools	to	achieve	scale,	we	face	the	risk that	losses,	even	small	losses,	may	have	a	significant	effect	in	the aggregate.

Within	our	investment	management	business,	we	manage investment	pools,	such	as	mutual	funds	and	collective	investment	funds that	generally	offer	our	clients	the	ability	to	withdraw	their	investments	on short	notice,	generally	daily	or	monthly.	This	feature	requires	that	we manage	those	pools	in	a	manner	that	takes	into	account	both	maximizing the	long-term	return	on	the	investment	pool	and	retaining	sufficient liquidity	to	meet	reasonably	anticipated	liquidity	requirements	of	our clients.	The	importance	of	maintaining	liquidity	varies	by	product	type,	but it	is	a	particularly	important	feature	in	money	market	funds	and	other products	designed	to	maintain	a	constant	net	asset	value	of	$1.00.

During	the	market	disruption	that	accelerated	following	the bankruptcy	of	Lehman	Brothers,	the	liquidity	in	many	asset	classes, particularly	short-	and	long-term	fixed-income	securities,	declined dramatically,	and	providing	liquidity	to	meet	all	client	demands	in	these investment	pools	without	adversely	affecting	the	return	to	non- withdrawing	clients	became	more	difficult.	In	2008,	we	imposed restrictions	on	cash	redemptions	from	the	agency	lending	collateral	pools, as	the	per-unit	market	value	of	those	funds'	assets	had	declined	below the	constant	$1.00	the	funds	employ	to	effect	purchase	and	redemption transactions.	Both	the	decline	of	the	funds'	net	asset	value	below	$1.00 and	the	imposition	of	restrictions	on	redemptions	had	a	significant	client, reputational	and	regulatory	impact	on	us,	and	the	recurrence	of	such	or similar	circumstances	in	the	future	could	adversely	impact	our consolidated	results	of	operations	and	financial	condition.	During	this period,	we	also	continued	to	process	purchase	and	redemption	of	units	of the	collateral	pools	at	$1.00	although	the	fair	market	value	of	the collateral	pools'	assets	were	less	than	$1.00.	Our	willingness	in	the	future to	continue	to	process	purchases	and	redemptions	from	collateral	pools at	$1.00	when	the	fair	market	value	of	our	collateral	pools'	assets	is	less than	$1.00	could	expose	us	to	significant	liability.	Our	unwillingness	in	the future	to	continue	to	process

purchases	and	redemptions	from	collateral	pools	at	$1.00	when	the	fair market	value	of	the	collateral	pools'	assets	are	less	than	$1.00	could similarly	expose	us	to	significant	liability.

In	the	case	of	SSGA	funds	that	engage	in	securities	lending,	we implemented	limitations,	which	were	terminated	in	2010,	on	the	portion	of an	investor's	interest	in	such	fund	that	may	be	withdrawn	during	any month.

If	higher	than	normal	demands	for	liquidity	from	our	clients	were	to return	to	post-Lehman-Brothers-bankruptcy	levels	or	increase,	managing the	liquidity	requirements	of	our	collective	investment	pools	could	become more	difficult.	If	such	liquidity	problems	were	to	recur,	our	relationships with	our	clients	may	be	adversely	affected,	and,	we	could,	in	certain circumstances,	be	required	to	consolidate	the	investment	pools	into	our consolidated	statement	of	condition;	levels	of	redemption	activity	could increase;	and	our	consolidated	results	of	operations	and	business prospects	could	be	adversely	affected.	In	addition,	if	a	money	market	fund that	we	manage	were	to	have	unexpected	liquidity	demands	from investors	in	the	fund	that	exceeded	available	liquidity,	the	fund	could	be required	to	sell	assets	to	meet	those	redemption	requirements,	and	selling the	assets	held	by	the	fund	at	a	reasonable	price,	if	at	all,	may	then	be difficult.

While	it	is	currently	not	our	intention,	and	we	do	not	have	contractual or	other	obligations	to	do	so,	we	have	in	the	past	guaranteed,	and	may	in the	future	guarantee,	liquidity	to	investors	desiring	to	make	withdrawals from	a	fund	or	otherwise	take	actions	to	mitigate	the	impact	of	market conditions	on	our	clients	and	if	permitted	by	applicable	laws.	Making	a significant	amount	of	such	guarantees	could	adversely	affect	our	own consolidated	liquidity	and	financial	condition.	Because	of	the	size	of	the investment	pools	that	we	manage,	we	may	not	have	the	financial	ability	or regulatory	authority	to	support	the	liquidity	or	other	demands	of	our clients.	The	extreme	volatility	in	the	equity	markets	has	led	to	the potential	for	the	return	on	passive	and	quantitative	products	to	deviate from	their	target	returns.

Any	decision	by	us	to	provide	financial	support	to	an	investment	pool to	support	our	reputation	in	circumstances	where	we	are	not	statutorily	or contractually	obligated	to	do	so	could	result	in	the	recognition	of significant	losses,	could	adversely	affect	the	regulatory	view	of	our	capital levels	or	plans	and	could,	in	certain	situations,	require	us	to	consolidate the	investment	pools	into	our	consolidated	statement	of	condition.	Any failure	of	the	pools	to	meet	redemption	requests,	or	under-performance	of our	pools	relative	to	similar	products

offered	by	our	competitors,	could	harm	our	business	and	our	reputation.

The	potential	reputational	impact	from	any	decision	to	support	or	not to	support	a	fund,	and	from	restrictions	on	redemptions,	is	most	acute	in connection	with	money	market	funds	and	other	cash	products	that	employ a	constant	net	asset	value	of	$1.00	for	purposes	of	effecting	subscriptions and	redemptions.	To	some	degree	investors	in	such	cash	products	rely upon	an	implicit	assumption	that	the	sponsors	of	the	investment	vehicle will	support	the	$1.00	valuation	of	a	cash	fund.	While	there	can	be	no assurance	that	we	will	not	change	our	policy	in	the	future,	we	have disclosed	in	the	offering	documents	for	such	cash	products	that	we	do	not intend	to	support	the	$1.00	valuation	of	such	products.	If	such	cash	funds were	in	the	future	to	have	valuations	of	less	than	$1.00,	such	occurrence could	have	a	material	adverse	effect	on	our	reputation	and	our	clients	that invested	in	such	funds.

# Our	businesses	may	be	negatively	affected	by	adverse	publicity	or other	reputational	harm.

Our	relationship	with	many	of	our	clients	is	predicated	on	our reputation	as	a	fiduciary	and	a	service	provider	that	adheres	to	the highest	standards	of	ethics,	service	quality	and	regulatory	compliance. Adverse	publicity,	regulatory	actions	or	fines,	litigation,	operational failures	or	the	failure	to	meet	client	expectations	or	fiduciary	or	other obligations	could	materially	and	adversely	affect	our	reputation,	our	ability to	attract	and	retain	clients	or	our	sources	of	funding	for	the	same	or	other businesses.	For	example,	as	discussed	earlier	in	this	"Risk	Factors" section,	we	have	experienced	adverse	publicity	with	respect	to	our indirect	foreign	exchange	trading,	and	this	adverse	publicity	has contributed	to	a	shift	of	client	volume	to	other	foreign	exchange	execution methods.	Similarly,	regulatory	and	reputational	issues	in	our	transition management	business	in	the	U.K.	in	2010	and	2011	adversely	affected our	revenue	from	that	business	in	2012,	2013	and	2014.	Preserving	and enhancing	our	reputation	also	depends	on	maintaining	systems, procedures	and	controls	that	address	known	risks	and	regulatory requirements,	as	well	as	our	ability	to	timely	identify,	understand	and mitigate	additional	risks	that	arise	due	to	changes	in	our	businesses	and the	marketplaces	in	which	we	operate,	the	regulatory	environment	and client	expectations.

# Our	controls	and	procedures	may	fail	or	be	circumvented,	our	risk management	policies	and	procedures	may	be	inadequate,	and operational	risk	could	adversely	affect	our	consolidated	results	of operations.

We	may	fail	to	identify	and	manage	risks	related	to	a	variety	of aspects	of	our	business,	including,	but

not	limited	to,	operational	risk,	interest-rate	risk,	foreign	exchange	risk, trading	risk,	fiduciary	risk,	legal	and	compliance	risk,	liquidity	risk	and credit	risk.	We	have	adopted	various	controls,	procedures,	policies	and systems	to	monitor	and	manage	risk.	While	we	currently	believe	that	our risk	management	process	is	effective,	we	cannot	provide	assurance	that those	controls,	procedures,	policies	and	systems	will	always	be	adequate to	identify	and	manage	the	internal	and	external,	including	service provider,	risks	in	our	various	businesses.	Risks	that	individuals,	either employees	or	contractors,	consciously	circumvent	established	control mechanisms	to,	for	example,	exceed	trading	or	investment	management limitations,	or	commit	fraud,	are	particularly	challenging	to	manage through	a	control	framework.	The	financial	and	reputational	impact	of control	failures	can	be	significant.	Persistent	or	repeated	issues	with respect	to	controls	may	raise	concerns	among	regulators	regarding	our culture,	governance	and	control	environment.	While	we	seek	to contractually	limit	our	financial	exposure	to	operational	risk,	the	degree	of protection	that	we	are	able	to	achieve	varies,	and	our	potential	exposure may	be	greater	than	the	revenue	we	anticipate	that	we	will	earn	from	the client	relationship.

In	addition,	our	businesses	and	the	markets	in	which	we	operate	are continuously	evolving.	We	may	fail	to	identify	or	fully	understand	the implications	of	changes	in	our	businesses	or	the	financial	markets	and	fail to	adequately	or	timely	enhance	our	risk	framework	to	address	those changes.	If	our	risk	framework	is	ineffective,	either	because	it	fails	to	keep pace	with	changes	in	the	financial	markets,	regulatory	or	industry requirements,	our	businesses,	our	counterparties,	clients	or	service providers	or	for	other	reasons,	we	could	incur	losses,	suffer	reputational damage	or	find	ourselves	out	of	compliance	with	applicable	regulatory	or contractual	mandates	or	expectations.

Operational	risk	is	inherent	in	all	of	our	business	activities.	As	a leading	provider	of	services	to	institutional	investors,	we	provide	a	broad array	of	services,	including	research,	investment	management,	trading services	and	investment	servicing	that	expose	us	to	operational	risk.	In addition,	these	services	generate	a	broad	array	of	complex	and specialized	servicing,	confidentiality	and	fiduciary	requirements,	many	of which	involve	the	opportunity	for	human,	systems	or	process	errors.	We face	the	risk	that	the	control	policies,	procedures	and	systems	we	have established	to	comply	with	our	operational	requirements	will	fail,	will	be inadequate	or	will	become	outdated.	We	also	face	the	potential	for	loss resulting	from	inadequate	or	failed	internal	processes,	employee supervision	or	monitoring	mechanisms,	service-provider	processes	or other

systems	or	controls,	which	could	materially	affect	our	future	consolidated results	of	operations.	Given	the	volume	and	magnitude	of	transactions	we process	on	a	daily	basis,	operational	losses	represent	a	potentially significant	financial	risk	for	our	business.	Operational	errors	that	result	in us	remitting	funds	to	a	failing	or	bankrupt	entity	may	be	irreversible,	and may	subject	us	to	losses.

We	may	also	be	subject	to	disruptions	from	external	events	that	are wholly	or	partially	beyond	our	control,	which	could	cause	delays	or disruptions	to	operational	functions,	including	information	processing	and financial	market	settlement	functions.	In	addition,	our	clients,	vendors	and counterparties	could	suffer	from	such	events.	Should	these	events	affect us,	or	the	clients,	vendors	or	counterparties	with	which	we	conduct business,	our	consolidated	results	of	operations	could	be	negatively affected.	When	we	record	balance	sheet	accruals	for	probable	and estimable	loss	contingencies	related	to	operational	losses,	we	may	be unable	to	accurately	estimate	our	potential	exposure,	and	any	accruals we	establish	to	cover	operational	losses	may	not	be	sufficient	to	cover	our actual	financial	exposure,	which	could	have	a	material	adverse	effect	on our	consolidated	results	of	operations.

The	quantitative	models	we	use	to	manage	our	business	may contain	errors	that	result	in	inadequate	risk	assessments,	inaccurate valuations	or	poor	business	decisions,	and	lapses	in	disclosure controls	and	procedures	or	internal	control	over	financial	reporting could	occur,	any	of	which	could	result	in	material	harm.

We	use	quantitative	models	to	help	manage	many	different	aspects of	our	businesses.	As	an	input	to	our	overall	assessment	of	capital adequacy,	we	use	models	to	measure	the	amount	of	credit	risk,	market risk,	operational	risk,	interest-rate	risk	and	business	risk	we	face.	During the	preparation	of	our	consolidated	financial	statements,	we	sometimes use	models	to	measure	the	value	of	asset	and	liability	positions	for	which reliable	market	prices	are	not	available.	We	also	use	models	to	support many	different	types	of	business	decisions	including	trading	activities, hedging,	asset-and-liability	management	and	whether	to	change	business strategy.	In	all	of	these	uses,	the	underlying	model	or	model	assumptions, or	inadequate	model	assumptions,	could	result	in	unanticipated	and adverse	consequences,	including	material	loss	and	material	non- compliance	with	regulatory	requirements	or	expectations.	Because	of	our widespread	usage	of	models,	potential	limitations	in	models	pose	an ongoing	risk	to	us.

We	also	may	fail	to	accurately	quantify	the	magnitude	of	the	risks	we face.	Our	measurement

methodologies	rely	on	many	assumptions	and	historical	analyses	and correlations.	These	assumptions	may	be	incorrect,	and	the	historical correlations	on	which	we	rely	may	not	continue	to	be	relevant. Consequently,	the	measurements	that	we	make	for	regulatory	purposes may	not	adequately	capture	or	express	the	true	risk	profiles	of	our businesses.	Moreover,	as	businesses	and	markets	evolve,	our measurements	may	not	accurately	reflect	this	evolution.	While	our	risk measures	may	indicate	sufficient	capitalization,	they	may	underestimate the	level	of	capital	necessary	to	conduct	our	businesses.

Additionally,	our	disclosure	controls	and	procedures	may	not	be effective	in	every	circumstance,	and,	similarly,	it	is	possible	we	may identify	a	material	weakness	or	significant	deficiency	in	internal	control over	financial	reporting.	Any	such	lapses	or	deficiencies	may	materially and	adversely	affect	our	business	and	consolidated	results	of	operations or	consolidated	financial	condition,	restrict	our	ability	to	access	the	capital markets,	require	us	to	expend	significant	resources	to	correct	the	lapses or	deficiencies,	expose	us	to	regulatory	or	legal	proceedings,	subject	us	to fines,	penalties	or	judgments	or	harm	our	reputation.

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

We	actively	strive	to	achieve	cost	savings	by	shifting	certain business	processes	and	business	support	functions	to	lower-cost geographic	locations,	such	as	Poland,	India	and	China.	We	may accomplish	this	shift	by	establishing	operations	in	lower-cost	locations,	by outsourcing	to	vendors	in	various	jurisdictions	or	through	joint	ventures. This	effort	exposes	us	to	the	risk	that	we	may	not	maintain	service	quality, control	or	effective	management	within	these	operations.	In	addition,	we are	exposed	to	the	relevant	macroeconomic,	political	and	similar	risks generally	involved	in	doing	business	in	those	jurisdictions.	The	increased elements	of	risk	that	arise	from	conducting	certain	operating	processes	in some	jurisdictions	could	lead	to	an	increase	in	reputational	risk.	During periods	of	transition,	greater	operational	risk	and	client	concern	exist	with respect	to	maintaining	a	high	level	of	service	delivery.	The	extent	and pace	at	which	we	are	able	to	move	functions	to	lower-cost	locations	may also	be	affected	by	regulatory	and	client	acceptance	issues.	Such relocation	of	functions	also	entails	costs,	such	as	technology,	real	estate and	restructuring	expenses,	that	may	offset	or	exceed	the	expected financial	benefits	of	the	lower-cost	locations.	In	addition,	the	financial benefits	of	lower-cost	locations	may	diminish	over	time.

# Development	of	new	products	and	services	may	impose	additional costs	on	us	and	may	expose	us	to	increased	operational	risk.

Our	financial	performance	depends,	in	part,	on	our	ability	to	develop and	market	new	and	innovative	services	and	to	adopt	or	develop	new technologies	that	differentiate	our	products	or	provide	cost	efficiencies, while	avoiding	increased	related	expenses.	The	introduction	of	new products	and	services	can	entail	significant	time	and	resources,	including regulatory	approvals.	Substantial	risks	and	uncertainties	are	associated with	the	introduction	of	new	products	and	services,	including	technical	and control	requirements	that	may	need	to	be	developed	and	implemented, rapid	technological	change	in	the	industry,	our	ability	to	access	technical and	other	information	from	our	clients	and	the	significant	and	ongoing investments	required	to	bring	new	products	and	services	to	market	in	a timely	manner	at	competitive	prices.	Our	failure	to	manage	these	risks and	uncertainties	also	exposes	us	to	enhanced	risk	of	operational	lapses which	may	result	in	the	recognition	of	financial	statement	liabilities. Regulatory	and	internal	control	requirements,	capital	requirements, competitive	alternatives,	vendor	relationships	and	shifting	market preferences	may	also	determine	if	such	initiatives	can	be	brought	to market	in	a	manner	that	is	timely	and	attractive	to	our	clients.	Failure	to successfully	manage	these	risks	in	the	development	and	implementation of	new	products	or	services	could	have	a	material	adverse	effect	on	our business	and	reputation,	as	well	as	on	our	consolidated	results	of operations	and	financial	condition.

We	depend	on	information	technology,	and	any	failures	of	or damage	to,	attack	on	or	unauthorized	access	to	our	information technology	systems	or	facilities,	or	those	of	third	parties	with	which we	do	business,	including	as	a	result	of	cyber-attacks,	could	result in	significant	limits	on	our	ability	to	conduct	our	operations	and activities,	costs	and	reputational	damage.

Our	businesses	depend	on	information	technology	infrastructure, both	internal	and	external,	to,	among	other	things,	record	and	process	a large	volume	of	increasingly	complex	transactions	and	other	data,	in	many currencies,	on	a	daily	basis,	across	numerous	and	diverse	markets	and jurisdictions.	Since	2012,	several	financial	services	firms	have	suffered successful	cyber-attacks	launched	both	domestically	and	from	abroad, resulting	in	the	disruption	of	services	to	clients,	loss	or	misappropriation	of sensitive	or	private	data	and	reputational	harm.	We	also	have	been subjected	to	cyber-attack,	and	although	we	have	not	suffered	a	material breach	of	our	systems,	it	is	possible	that	we	could	suffer	such	a	breach	in the	future.	We	may	not

implement	effective	systems	and	other	measures	to	effectively	prevent	or mitigate	the	full	diversity	of	cyber-threats	or	improve	and	adapt	such systems	and	measures	as	such	threats	evolve	and	advance.

Our	computer,	communications,	data	processing,	networks,	backup, business	continuity	or	other	operating,	information	or	technology	systems and	facilities,	including	those	that	we	outsource	to	other	providers,	may fail	to	operate	properly	or	become	disabled,	overloaded	or	damaged	as	a result	of	a	number	of	factors,	including	events	that	are	wholly	or	partially beyond	our	control,	which	could	adversely	affect	our	ability	to	process transactions,	provide	services	or	maintain	systems	availability,	maintain compliance	and	internal	controls	or	otherwise	appropriately	conduct	our business	activities.	For	example,	there	could	be	sudden	increases	in transaction	or	data	volumes,	electrical	or	telecommunications	outages, cyber-attacks	or	employee	or	contractor	error	or	malfeasance.

The	third	parties	with	which	we	do	business,	which	facilitate	our business	activities	or	with	whom	we	otherwise	engage	or	interact, including	financial	intermediaries	and	technology	infrastructure	and service	providers,	are	also	susceptible	to	the	foregoing	risks	(including regarding	the	third	parties	with	which	they	are	similarly	interconnected	or on	which	they	otherwise	rely),	and	our	or	their	business	operations	and activities	may	therefore	be	adversely	affected,	perhaps	materially,	by failures,	terminations,	errors	or	malfeasance	by,	or	attacks	or	constraints on,	one	or	more	financial,	technology,	infrastructure	or	government institutions	or	intermediaries	with	whom	we	or	they	are	interconnected	or conduct	business.

In	particular,	we,	like	other	financial	services	firms,	will	continue	to face	increasing	cyber	threats,	including	computer	viruses,	malicious	code, distributed	denial	of	service	attacks,	phishing	attacks,	information	security breaches	or	employee	or	contractor	error	or	malfeasance	that	could	result in	the	unauthorized	release,	gathering,	monitoring,	misuse,	loss	or destruction	of	our,	our	clients'	or	other	parties'	confidential,	personal, proprietary	or	other	information	or	otherwise	disrupt,	compromise	or damage	our	or	our	clients'	or	other	parties'	business	assets,	operations and	activities.	Our	status	as	a	global	systemically	important	financial institution	may	enhance	the	risk	that	we	are	targeted	by	such	cyber- security	threats.	We	therefore	could	experience	significant	related	costs and	exposures,	including	lost	or	constrained	ability	to	provide	our	services or	maintain	systems	availability	to	clients,	regulatory	inquiries, enforcements,	actions	and	fines,	litigation,	damage	to	our	reputation	or property	and	enhanced	competition.

Due	to	our	dependence	on	technology	and	the	important	role	it	plays in	our	business	operations,	we	must	persist	in	improving	and	updating	our information	technology	infrastructure.	Updating	these	systems	and facilities	can	require	significant	resources	and	often	involves implementation,	integration	and	security	risks	that	could	cause	financial, reputational	and	operational	harm.	However,	failing	to	properly	respond	to and	invest	in	changes	and	advancements	in	technology	can	limit	our ability	to	attract	and	retain	clients,	prevent	us	from	offering	similar products	and	services	as	those	offered	by	our	competitors	and	inhibit	our ability	to	meet	regulatory	requirements.

# Any	theft,	loss	or	other	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	businesses	and	relationships	with	clients	are	dependent	on	our ability	to	maintain	the	confidentiality	of	our	and	our	clients'	trade	secrets and	confidential	information	(including	client	transactional	data	and personal	data	about	our	employees,	our	clients	and	our	clients'	clients). Unauthorized	access	to	such	information	may	occur,	resulting	in	its	theft, loss	or	other	misappropriation.	Any	theft,	loss	or	other	misappropriation	of confidential	information	could	have	a	material	adverse	impact	on	our competitive	position,	our	relationships	with	our	clients	and	our	reputation and	could	subject	us	to	regulatory	inquiries,	enforcement	and	fines,	civil litigation	and	possible	financial	liability	or	costs.

# We	may	not	be	able	to	protect	our	intellectual	property,	and	we	are subject	to	claims	of	third-party	intellectual	property	rights.

Our	potential	inability	to	protect	our	intellectual	property	and proprietary	technology	effectively	may	allow	competitors	to	duplicate	our technology	and	products	and	may	adversely	affect	our	ability	to	compete with	them.	To	the	extent	that	we	do	not	protect	our	intellectual	property effectively	through	patents	or	other	means,	other	parties,	including	former employees,	with	knowledge	of	our	intellectual	property	may	leave	and seek	to	exploit	our	intellectual	property	for	their	own	or	others'	advantage. In	addition,	we	may	infringe	on	claims	of	third-party	patents,	and	we	may face	intellectual	property	challenges	from	other	parties.	We	may	not	be successful	in	defending	against	any	such	challenges	or	in	obtaining licenses	to	avoid	or	resolve	any	intellectual	property	disputes.	Third-party intellectual	rights,	valid	or	not,	may	also	impede	our	deployment	of	the	full scope	of	our	products	and	service	capabilities	in	all	jurisdictions	in	which we	operate	or

market	our	products	and	services.	The	intellectual	property	of	an	acquired business	may	be	an	important	component	of	the	value	that	we	agree	to pay	for	such	a	business.	However,	such	acquisitions	are	subject	to	the risks	that	the	acquired	business	may	not	own	the	intellectual	property	that we	believe	we	are	acquiring,	that	the	intellectual	property	is	dependent	on licenses	from	third	parties,	that	the	acquired	business	infringes	on	the intellectual	property	rights	of	others,	or	that	the	technology	does	not	have the	acceptance	in	the	marketplace	that	we	anticipated.

# Competition	for	our	employees	is	intense,	and	we	may	not	be	able to	attract	and	retain	the	highly	skilled	people	we	need	to	support	our business.

Our	success	depends,	in	large	part,	on	our	ability	to	attract	and retain	key	people.	Competition	for	the	best	people	in	most	activities	in which	we	engage	can	be	intense,	and	we	may	not	be	able	to	hire	people or	retain	them,	particularly	in	light	of	challenges	associated	with	evolving compensation	restrictions	applicable,	or	which	may	become	applicable,	to banks	and	some	asset	managers	and	that	potentially	are	not	applicable	to other	financial	services	firms	in	all	jurisdictions.	The	unexpected	loss	of services	of	key	personnel,	both	in	business	units	and	control	functions, could	have	a	material	adverse	impact	on	our	business	because	of	their skills,	their	knowledge	of	our	markets,	operations	and	clients,	their	years of	industry	experience	and,	in	some	cases,	the	difficulty	of	promptly finding	qualified	replacement	personnel.	Similarly,	the	loss	of	key employees,	either	individually	or	as	a	group,	could	adversely	affect	our clients'	perception	of	our	ability	to	continue	to	manage	certain	types	of investment	management	mandates	or	to	provide	other	services	to	them.

# We	are	subject	to	intense	competition	in	all	aspects	of	our	business, which	could	negatively	affect	our	ability	to	maintain	or	increase	our profitability.

The	markets	in	which	we	operate	across	all	facets	of	our	business are	both	highly	competitive	and	global.	These	markets	are	changing	as	a result	of	new	and	evolving	laws	and	regulations	applicable	to	financial services	institutions.	Regulatory-driven	market	changes	cannot	always	be anticipated,	and	may	adversely	affect	the	demand	for,	and	profitability	of, the	products	and	services	that	we	offer.	In	addition,	new	market	entrants and	competitors	may	address	changes	in	the	markets	more	rapidly	than we	do,	or	may	provide	clients	with	a	more	attractive	offering	of	products and	services,	adversely	affecting	our	business.	We	have	also experienced,	and	anticipate	that	we	will	continue	to	experience,	pricing pressure	in	many	of	our	core	businesses,	particularly

our	custodial	and	investment	management	services.	Many	of	our businesses	compete	with	other	domestic	and	international	banks	and financial	services	companies,	such	as	custody	banks,	investment advisors,	broker/dealers,	outsourcing	companies	and	data	processing companies.	Further	consolidation	within	the	financial	services	industry could	also	pose	challenges	to	us	in	the	markets	we	serve,	including potentially	increased	downward	pricing	pressure	across	our	businesses.

Some	of	our	competitors,	including	our	competitors	in	core	services, have	substantially	greater	capital	resources	than	we	do	or	are	not	subject to	as	stringent	capital	or	other	regulatory	requirements	as	are	we.	In	some of	our	businesses,	we	are	service	providers	to	significant	competitors. These	competitors	are	in	some	instances	significant	clients,	and	the retention	of	these	clients	involves	additional	risks,	such	as	the	avoidance of	actual	or	perceived	conflicts	of	interest	and	the	maintenance	of	high levels	of	service	quality	and	intra-company	confidentiality.	The	ability	of	a competitor	to	offer	comparable	or	improved	products	or	services	at	a lower	price	would	likely	negatively	affect	our	ability	to	maintain	or	increase our	profitability.	Many	of	our	core	services	are	subject	to	contracts	that have	relatively	short	terms	or	may	be	terminated	by	our	client	after	a	short notice	period.	In	addition,	pricing	pressures	as	a	result	of	the	activities	of competitors,	client	pricing	reviews,	and	rebids,	as	well	as	the	introduction of	new	products,	may	result	in	a	reduction	in	the	prices	we	can	charge	for our	products	and	services.

# Acquisitions,	strategic	alliances,	joint	ventures	and	divestitures pose	risks	for	our	business.

As	part	of	our	business	strategy,	we	acquire	complementary businesses	and	technologies,	enter	into	strategic	alliances	and	joint ventures	and	divest	portions	of	our	business.	We	undertake	transactions of	varying	sizes	to,	among	other	reasons,	expand	our	geographic footprint,	access	new	clients,	technologies	or	services,	develop	closer	or more	collaborative	relationships	with	our	business	partners,	efficiently deploy	capital	or	leverage	cost	savings	or	other	business	or	financial opportunities.	We	may	not	achieve	the	expected	benefits	of	these transactions,	which	could	result	in	increased	costs,	lowered	revenues, ineffective	deployment	of	capital,	regulatory	concerns,	exit	costs	or diminished	competitive	position	or	reputation.

Transactions	of	this	nature	also	involve	a	number	of	risks	and financial,	accounting,	tax,	regulatory,	managerial,	operational,	cultural	and employment	challenges,	which	could	adversely	affect	our	consolidated results	of	operations	and	financial	condition.	For	example,	the	businesses that	we

acquire	or	our	strategic	alliances	or	joint	ventures	may	under-perform relative	to	the	price	paid	or	the	resources	committed	by	us;	we	may	not achieve	anticipated	cost	savings;	or	we	may	otherwise	be	adversely affected	by	acquisition-related	charges.	Further,	past	acquisitions	have resulted	in	the	recognition	of	goodwill	and	other	significant	intangible assets	in	our	consolidated	statement	of	condition.	These	assets	are	not eligible	for	inclusion	in	regulatory	capital	under	applicable	requirements. In	addition,	we	may	be	required	to	record	impairment	in	our	consolidated statement	of	income	in	future	periods	if	we	determine	that	the	value	of these	assets	has	declined.	In	the	fourth	quarter	of	2014,	we	recorded	a $9	million	impairment	for	that	reason.

Through	our	acquisitions	or	joint	ventures,	we	may	also	assume unknown	or	undisclosed	business,	operational,	tax,	regulatory	and	other liabilities,	fail	to	properly	assess	known	contingent	liabilities	or	assume businesses	with	internal	control	deficiencies.	While	in	most	of	our transactions	we	seek	to	mitigate	these	risks	through,	among	other	things, due	diligence	and	indemnification	provisions,	these	or	other	risk-mitigating provisions	we	put	in	place	may	not	be	sufficient	to	address	these	liabilities and	contingencies.

Various	regulatory	approvals	or	consents	are	generally	required	prior to	closing	of	these	transactions,	which	may	include	approvals	of	the Federal	Reserve	and	other	domestic	and	non-U.S.	regulatory	authorities. These	regulatory	authorities	may	impose	conditions	on	the	completion	of the	acquisition	or	require	changes	to	its	terms	that	materially	affect	the terms	of	the	transaction	or	our	ability	to	capture	some	of	the	opportunities presented	by	the	transaction.	Any	such	conditions,	or	any	associated regulatory	delays,	could	limit	the	benefits	of	the	transaction.	Acquisitions or	joint	ventures	we	announce	may	not	be	completed	if	we	do	not	receive the	required	regulatory	approvals,	if	regulatory	approvals	are	significantly delayed	or	if	other	closing	conditions	are	not	satisfied.

# The	integration	of	our	acquisitions	results	in	risks	to	our	business and	other	uncertainties.

The	integration	of	acquisitions	presents	risks	that	differ	from	the	risks associated	with	our	ongoing	operations.	Integration	activities	are complicated	and	time	consuming	and	can	involve	significant	unforeseen costs.	We	may	not	be	able	to	effectively	assimilate	services,	technologies, key	personnel	or	businesses	of	acquired	companies	into	our	business	or service	offerings	as	anticipated,	alliances	may	not	be	successful,	and	we may	not	achieve	related	revenue	growth	or	cost	savings.	We	also	face	the risk	of	being	unable	to	retain,	or	cross-sell	our	products	or	services	to,	the clients	of	acquired

companies	or	joint	ventures.	Acquisitions	of	investment	servicing businesses	entail	information	technology	systems	conversions,	which involve	operational	risks	and	may	result	in	client	dissatisfaction	and defection.	Clients	of	investment	servicing	businesses	that	we	have acquired	may	be	competitors	of	our	non-custody	businesses.	The	loss	of some	of	these	clients	or	a	significant	reduction	in	the	revenues	generated from	them,	for	competitive	or	other	reasons,	could	adversely	affect	the benefits	that	we	expect	to	achieve	from	these	acquisitions	or	cause impairment	to	goodwill	and	other	intangibles.

With	any	acquisition,	the	integration	of	the	operations	and	resources of	the	businesses	could	result	in	the	loss	of	key	employees,	the	disruption of	our	and	the	acquired	company's	ongoing	businesses	or	inconsistencies in	standards,	controls,	procedures	or	policies	that	could	adversely	affect our	ability	to	maintain	relationships	with	clients	or	employees	or	to	achieve the	anticipated	benefits	of	the	acquisition.	Integration	efforts	may	also divert	management	attention	and	resources.

# Long-term	contracts	expose	us	to	pricing	and	performance	risk.

We	enter	into	long-term	contracts	to	provide	middle	office	or investment	manager	and	alternative	investment	manager	operations outsourcing	services	to	clients,	primarily	for	conversions,	including services	related	but	not	limited	to	certain	trading	activities,	cash	reporting, settlement	and	reconciliation	activities,	collateral	management	and information	technology	development.	We	also	enter	into	longer-term arrangements	with	respect	to	custody,	fund	administration	and	depository services.	These	arrangements	generally	set	forth	our	fee	schedule	for	the term	of	the	contract	and,	absent	a	change	in	service	requirements,	do	not permit	us	to	re-price	the	contract	for	changes	in	our	costs	or	for	market pricing.	The	long-term	contracts	for	these	relationships	require,	in	some cases,	considerable	up-front	investment	by	us,	including	technology	and conversion	costs,	and	carry	the	risk	that	pricing	for	the	products	and services	we	provide	might	not	prove	adequate	to	generate	expected operating	margins	over	the	term	of	the	contracts.

The	profitability	of	these	contracts	is	largely	a	function	of	our	ability	to accurately	calculate	pricing	for	our	services,	efficiently	assume	our contractual	responsibilities	in	a	timely	manner,	control	our	costs	and maintain	the	relationship	with	the	client	for	an	adequate	period	of	time	to recover	our	up-front	investment.	Our	estimate	of	the	profitability	of	these arrangements	can	be	adversely	affected	by	declines	in	the	assets	under the	clients'	management,	whether	due	to	general	declines	in	the	securities markets	or	client-specific	issues.	In	addition,	the	profitability	of

these	arrangements	may	be	based	on	our	ability	to	cross-sell	additional services	to	these	clients,	and	we	may	be	unable	to	do	so.

Performance	risk	exists	in	each	contract,	given	our	dependence	on successful	conversion	and	implementation	onto	our	own	operating platforms	of	the	service	activities	provided.	Our	failure	to	meet	specified service	levels	or	implementation	timelines	may	also	adversely	affect	our revenue	from	such	arrangements,	or	permit	early	termination	of	the contracts	by	the	client.	If	the	demand	for	these	types	of	services	were	to decline,	we	could	see	our	revenue	decline.

# Changes	in	accounting	standards	may	be	difficult	to	predict	and may	adversely	affect	our	consolidated	financial	statements.

New	accounting	standards,	or	changes	to	existing	accounting standards,	resulting	both	from	initiatives	of	the	Financial	Accounting Standards	Board,	or	FASB,	or	their	convergence	efforts	with	the International	Accounting	Standards	Board,	as	well	as	changes	in	the interpretation	of	existing	accounting	standards,	by	the	FASB	or	the	SEC or	otherwise	reflected	in	GAAP,	potentially	could	affect	our	consolidated results	of	operations,	cash	flows	and	financial	condition.	These	changes are	difficult	to	predict,	and	can	materially	affect	how	we	record	and	report our	consolidated	results	of	operations,	cash	flows,	financial	condition	and other	financial	information.	In	some	cases,	we	could	be	required	to	apply a	new	or	revised	standard	retroactively,	resulting	in	the	revised	treatment of	certain	transactions	or	activities,	and,	in	some	cases,	the	restatement of	our	consolidated	financial	statements	for	prior	periods.

Changes	in	tax	laws,	rules	or	regulations,	challenges	to	our	tax positions	with	respect	to	historical	transactions,	and	changes	in	the composition	of	our	pre-tax	earnings	may	increase	our	effective	tax rate	and	thus	adversely	affect	our	consolidated	financial	statements.

Our	businesses	can	be	directly	or	indirectly	affected	by	new	tax legislation,	the	expiration	of	existing	tax	laws	or	the	interpretation	of existing	tax	laws	worldwide.	The	U.S.	federal	government,	state governments,	including	Massachusetts,	and	jurisdictions	around	the	world continue	to	review	proposals	to	amend	tax	laws,	rules	and	regulations applicable	to	our	business	that	could	have	a	negative	impact	on	our	after- tax	earnings.	For	example,	the	expiration	at	the	end	of	2014	of	provisions of	the	U.S.	tax	laws	that	favorably	affected	the	taxation	of	our	non-U.S. operations	could	negatively	affect	our	effective	tax	rate	beginning	in	2015. Although	these	U.S.	tax	laws	have	previously	expired	and	been	re-

enacted,	it	is	uncertain	whether	they	will	be	re-enacted	again.

In	the	normal	course	of	our	business,	we	are	subject	to	review	by U.S.	and	non-U.S.	tax	authorities.	A	review	by	any	such	authority	could result	in	an	increase	in	our	recorded	tax	liability.	In	addition	to	the aforementioned	risks,	our	effective	tax	rate	is	dependent	on	the	nature and	geographic	composition	of	our	pre-tax	earnings	and	could	be negatively	affected	by	changes	in	these	factors.

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

Acts	of	terrorism,	natural	disasters	or	the	emergence	of	a	pandemic could	significantly	affect	our	business.	We	have	instituted	disaster recovery	and	continuity	plans	to	address	risks	from	terrorism,	natural disasters	and	pandemic;	however,	anticipating	or	addressing	all	potential contingencies	is	not	possible	for	events	of	this	nature.	Acts	of	terrorism, either	targeted	or	broad	in	scope,	or	natural	disasters	could	damage	our physical	facilities,	harm	our	employees	and	disrupt	our	operations.	A pandemic,	or	concern	about	a	possible	pandemic,	could	lead	to operational	difficulties	and	impair	our	ability	to	manage	our	business.	Acts of	terrorism,	natural	disasters	and	pandemics	could	also	negatively	affect our	clients,	counterparties	and	service	providers,	as	well	as	result	in disruptions	in	general	economic	activity	and	the	financial	markets.

# ITEM	1B.	UNRESOLVED	STAFF	COMMENTS

# None.

# ITEM	2. PROPERTIES

We	occupy	a	total	of	approximately	7.8	million	square	feet	of	office space	and	related	facilities	worldwide,	of	which	approximately	6.9	million square	feet	are	leased.	Of	the	total	leased	space,	approximately 2.7	million	square	feet	are	located	in	eastern	Massachusetts.	An additional	1.7	million	square	feet	are	located	elsewhere	throughout	the U.S.	and	in	Canada.	We	lease	approximately	1.8	million	square	feet	in	the U.K.	and	elsewhere	in	Europe,	and	approximately	700,000	square	feet	in the	Asia/Pacific	region.

Our	headquarters	is	located	at	State	Street	Financial	Center,	One Lincoln	Street,	Boston,	Massachusetts,	a	36-story	office	building.	Various divisions	of	our	two	lines	of	business,	as	well	as	support	functions,	occupy space	in	this	building.	We	lease	the	entire	1,025,000	square	feet	of	the building,	and	a	related	underground	parking	garage,	at	One	Lincoln Street,	under	20-year	non-cancellable	capital	leases	expiring	in	2023.	A portion	of	the	lease

payments	is	offset	by	subleases	for	approximately	127,000	square	feet	of the	building.

In	2014,	construction	completed	on	the	Channel	Center,	a	build-to- suit	office	building	located	in	Boston,	designed	to	consolidate	our	staff from	various	eastern	Massachusetts	locations.	We	began	leasing	space in	February	and	the	entire	500,000	square	feet	of	this	building	was	leased by	mid	September.	We	occupy	three	buildings	located	in	Quincy, Massachusetts,	one	of	which	we	own	and	two	of	which	we	lease.	The buildings,	containing	a	total	of	approximately	1.1	million	square	feet (720,000	square	feet	owned	and	380,000	square	feet	leased),	function	as State	Street	Bank's	principal	operations	facilities.

We	occupy	other	principal	properties	located	in	Missouri,	New Jersey,	New	York,	California	and	Ontario,	composed	of	five	leased buildings	containing	a	total	of	approximately	1.0	million	square	feet,	under leases	expiring	from	June	2015	to	August	2025.	Significant	properties	in the	U.K.	and	Europe	include	eight	buildings	located	in	England,	Scotland, Poland,	Ireland,	Luxembourg,	Germany,	and	Italy,	containing approximately	1.2	million	square	feet	under	leases	expiring	from	January 2019	through	August	2034.

Principal	properties	located	in	China	and	Australia	consist	of	three buildings	containing	approximately	379,000	square	feet	under	leases expiring	from	September	2020	through	May	2021.

We	believe	that	our	owned	and	leased	facilities	are	suitable	and adequate	for	our	business	needs.	Additional	information	about	our occupancy	costs,	including	our	commitments	under	non-cancelable leases,	is	provided	in	note	20	to	the	consolidated	financial	statements included	under	Item	8	of	this	Form	10-K.

# ITEM	3.				LEGAL	PROCEEDINGS

The	information	required	by	this	Item	is	provided	under	"Legal	and Regulatory	Matters"	in	note	11	to	the	consolidated	financial	statements included	under	Item	8	of	this	Form	10-K,	and	is	incorporated	herein	by reference.

# ITEM	4.				MINE	SAFETY	DISCLOSURES

Not	applicable.

# EXECUTIVE	OFFICERS	OF	THE	REGISTRANT

Michael	F.	Rogers 57 	 President	and	Chief	Operating	Officer

Wai-Kwong	Seck 59 	 Executive	Vice	President

All	executive	officers	are	appointed	by	the	Board	and	hold	office	at the	discretion	of	the	Board.	No	family	relationships	exist	among	any	of	our directors	and	executive	officers.

Mr.	Hooley	joined	State	Street	in	1986	and	currently	serves	as Chairman	and	Chief	Executive	Officer.	He	was	appointed	Chief	Executive Officer	in	March	2010	and	Chairman	of	the	Board	in	January

2011.	He	served	as	our	President	and	Chief	Operating	Officer	from	April 2008	until	December	2014.	From	2002	to	April	2008,	Mr.	Hooley	served as	Executive	Vice	President	and	head	of	Investor	Services	and,	in	2006, was	appointed	Vice	Chairman	and	Global	Head	of	Investment	Servicing and	Investment	Research	and	Trading.	Mr.	Hooley	was	elected	to	serve on	the	Board	of	Directors	effective	October	22,	2009.

Mr.	Antonellis	joined	State	Street	in	1991	and	has	served	as	head	of all	Europe	and	Asia/Pacific	Global	Services	and	Global	Markets businesses	since	March	2010.	Prior	to	this,	in	2003,	he	was	named	head of	Information	Technology	and	Global	Securities	Services.	In	2006,	he was	appointed	Vice	Chairman	with	additional	responsibility	as	head	of Investor	Services	in	North	America	and	Global	Investment	Manager Outsourcing	Services.

Mr.	Bell	joined	State	Street	in	2013	as	Executive	Vice	President	and Chief	Financial	Officer.	Prior	to	joining	State	Street,	Mr.	Bell	served	as executive	vice	president	and	chief	financial	officer	of	Manulife	Financial Corporation,	a	leading	Canada-based	financial	services	group	with principal	operations	in	Asia,	Canada	and	the	U.S.,	from	2009	to	2012. From	2002	to	2009,	he	served	as	executive	vice	president	and	chief financial	officer	at	Cigna	Corporation,	a	global	health	services organization	where	he	had	previously	served	in	several	senior management	positions,	including	as	President	of	Cigna	Group	Insurance.

Mr.	Carp	joined	State	Street	in	2006	as	Executive	Vice	President and	Chief	Legal	Officer.	Later	in	2006,	he	was	also	appointed	Secretary. From	2004	to	2005,	Mr.	Carp	served	as	executive	vice	president	and general	counsel	of	Massachusetts	Financial	Services,	an	investment management	and	research	company.	From	1989	until	2004,	Mr.	Carp	was a	senior	partner	at	the	law	firm	of	Hale	and	Dorr	LLP,	where	he	was	an attorney	since	1982.	Mr.	Carp	served	as	State	Street's	interim	Chief	Risk Officer	from	February	2010	until	September	2010.

Ms.	Kedia	joined	State	Street	in	2008	as	an	executive	vice	president and	is	responsible	for	the	Investment	Servicing	business	in	the	Americas for	mutual	funds,	insurance	and	institutional	clients.	Prior	to	joining	State Street,	Ms.	Kedia	previously	was	an	executive	vice	president,	global product	management	at	Bank	of	New	York	Mellon.	Additionally,	Ms.	Kedia was	a	partner	with	McKinsey	&	Company	focusing	on	financial	institutions and	an	associate	with	PriceWaterhouseCoopers.

Mr.	Klinck	joined	State	Street	in	2006	and	has	served	as	Executive Vice	President	and	global	head	of	Corporate	Development	and	Global Relationship	Management	since	March	2010,	prior	to	which	he	served	as Executive	Vice	President	and	global	head	of	Alternative	Investment Solutions.	Prior	to	joining	State	Street,	Mr.	Klinck	was	with	Mellon Financial	Corporation,	a	global	financial	services	company,	from	1997	to 2006.	During	that	time,	he	served	as	vice	chairman	and	president	of	its Investment	Manager	Solutions	group	and	before	that	as	chairman	for Mellon	Europe,	where	he	was

responsible	for	the	company's	investor	services	business	in	the	region.

Mr.	Kuritzkes	joined	State	Street	in	2010	as	Executive	Vice President	and	Chief	Risk	Officer.	Prior	to	joining	State	Street, Mr.	Kuritzkes	was	a	partner	at	Oliver,	Wyman	&	Company,	an international	management	consulting	firm,	and	led	the	firm's	Public	Policy practice	in	North	America.	He	joined	Oliver,	Wyman	&	Company	in	1988, was	a	managing	director	in	the	firm's	London	office	from	1993	to	1997, and	served	as	vice	chairman	of	Oliver,	Wyman	&	Company	globally	from 2000	until	the	firm's	acquisition	by	MMC	in	2003.	From	1986	to	1988,	he worked	as	an	economist	and	lawyer	for	the	Federal	Reserve	Bank	of	New York.

Mr.	Newth	joined	State	Street	in	2005	and	has	served	as	Senior	Vice President,	Chief	Accounting	Officer	and	Corporate	Controller	since October	2014.	Prior	to	that,	he	held	several	senior	positions	in	State Street's	Accounting	Department,	including	Director	of	Accounting	Policy from	2009	to	2014	and	Deputy	Controller	beginning	in	April	2014.	Before joining	State	Street,	Mr.	Newth	served	in	various	transaction	services, accounting	advisory	and	assurance	roles	at	KPMG,	from	1997	to	2005.

Mr.	O'Neill	has	served	as	Executive	Vice	President	and	head	of Global	Markets	and	Global	Services	in	Europe,	the	Middle	East	and Africa	since	November	2012	and	prior	to	that	he	served	as	head	of	Global Markets	and	Global	Services	in	the	Asia/Pacific	region.	He	joined	State Street	in	1985	and	has	held	several	senior	positions	during	his	tenure, including	his	appointment	in	January	2000	as	managing	director	of	State Street	Global	Markets	in	Europe.	This	role	was	expanded	in	June	2006	to include	responsibility	for	Investor	Services	for	the	U.K.,	Middle	East	and Africa.

Mr.	Perretta	joined	State	Street	in	2007	as	Executive	Vice	President and	Chief	Information	Officer.	Prior	to	joining	State	Street,	from	2002	to 2007,	Mr.	Perretta	was	the	chief	information	officer	for	General	Electric Commercial	Finance,	where	he	had	previously	served	in	several	senior management	positions.	Prior	to	that,	Mr.	Perretta	was	an	associate partner	at	Arthur	Anderson	Consulting	(now	Accenture).

Mr.	Phalen	joined	State	Street	in	1992	and	in	2014	began	serving	as head	of	the	Office	of	Regulatory	Initiatives.	He	was	appointed	Vice Chairman	in	March	2014.	Mr.	Phalen	served	as	Executive	Vice	President and	head	of	Global	Operations,	Technology	and	Product	Development from	2010	to	2014.	Prior	to	that,	starting	in	2000,	he	served	as	Chairman and	Chief	Executive	Officer	of	CitiStreet,	a	global	benefits	provider	and retirement	plan	record	keeper.	In	February	2005,	he	was

appointed	head	of	Investor	Services	in	North	America.	In	2006,	he	was appointed	head	of	international	operations	for	Investment	Servicing	and Investment	Research	and	Trading,	based	in	Europe.	From	January	2008 until	May	2008,	he	served	on	an	interim	basis	as	President	and	Chief Executive	Officer	of	SSGA,	following	which	he	returned	to	his	role	as	head of	international	operations	for	Investment	Servicing	and	Investment Research	and	Trading.

Mr.	Powers	joined	State	Street	in	2008	as	President	and	Chief Executive	Officer	of	State	Street	Global	Advisors.	Prior	to	joining	State Street,	Mr.	Powers	served	as	Chief	Executive	Officer	of	Old	Mutual	US, the	U.S.	operating	unit	of	London-based	Old	Mutual	plc,	an	international savings	and	wealth	management	company,	from	2001	through	2008.

Ms.	Quirk	joined	State	Street	in	2002,	and	since	January	2012	has served	as	Chief	Human	Resources	and	Citizenship	Officer.	She	has served	as	Executive	Vice	President	and	head	of	Global	Human Resources	since	March	2010.	Prior	to	that,	Ms.	Quirk	served	as	Executive Vice	President	in	Global	Human	Resources	and	held	various	senior	roles in	that	group.

Mr.	Rogers	joined	State	Street	in	2007	as	part	of	our	acquisition	of Investors	Financial	Services	Corp.,	and	was	appointed	President	and Chief	Operating	Officer	in	December	2014.	In	that	role,	he	is	responsible for	State	Street	Global	Markets,	State	Street	Global	Services	Americas, Information	Technology,	Global	Operations,	and	Global	Exchange,	State Street's	data	and	analytics	business.	Prior	to	that,	Mr.	Rogers	served	as head	of	Global	Markets	and	Global	Services	-	Americas	since	November 2011	and	served	as	head	of	Global	Services,	including	alternative investment	solutions,	for	all	of	the	Americas	since	March	2010. Mr.	Rogers	was	previously	head	of	the	Relationship	Management	group, a	role	which	he	held	beginning	in	2009.	From	State	Street's	acquisition	of Investors	Financial	Services	Corp.	in	July	2007	to	2009,	Mr.	Rogers headed	the	post-acquisition	Investors	Financial

Services	Corp.	business	and	its	integration	into	State	Street.	Before joining	State	Street	at	the	time	of	the	acquisition,	Mr.	Rogers	spent	27 years	at	Investors	Financial	Services	Corp.	and	its	predecessors	in various	capacities,	most	recently	as	President	beginning	in	2001.

Mr.	Seck	joined	State	Street	in	2011	as	executive	vice	president	and head	of	Global	Markets	and	Global	Services	across	Asia	Pacific.	Prior	to joining	State	Street,	Mr.	Seck	was	chief	financial	officer	of	the	Singapore Exchange	for	eight	years.	Previously	he	held	senior-level	positions	in	the Monetary	Authority	of	Singapore,	the	Government	of	Singapore Investment	Corporation,	Lehman	Brothers	and	DBS	Bank.

# PART	II

# ITEM	5. MARKET	FOR	REGISTRANT'S	COMMON	EQUITY, RELATED	STOCKHOLDER	MATTERS	AND	ISSUER PURCHASES	OF	EQUITY	SECURITIES

# MARKET	FOR	REGISTRANT'S	COMMON	EQUITY

Our	common	stock	is	listed	on	the	New	York	Stock	Exchange	under the	ticker	symbol	STT.	There	were	3,049	shareholders	of	record	as	of January	31,	2015.	The	information	required	by	this	item	concerning	the market	prices	of,	and	dividends	on,	our	common	stock	during	the	past	two years	is	provided	under	"Quarterly	Summarized	Financial	Information (Unaudited)"	included	under	Item	8	of	this	Form	10-K,	and	is	incorporated herein	by	reference.

In	March	2014,	our	Board	of	Directors	approved	a	new	common stock	purchase	program	authorizing	the	purchase	by	us	of	up	to	$1.70 billion	of	our	common	stock	from	April	1,	2014	through	March	31,	2015. As	of	December	31,	2014,	we	had	approximately	 $470	million	remaining under	that	program.

The	following	table	presents	purchases	of	our	common	stock	and	related	information	for	each	of	the	months	in	the	quarter	ended	 December	31, 2014.	All	shares	of	our	common	stock	purchased	during	the	quarter	ended	December	31,	2014	were	purchased	under	the	above-described	Board- approved	program.	We	may	employ	third-party	broker/dealers	to	acquire	shares	on	the	open	market	in	connection	with	our	common	stock	purchase programs.

| (Dollars	in	millions,	except	per	share	amounts,	shares	in	thousands) | Total	Number	of	Shares<br>Purchased	Under<br>Publicly	Announced<br>Program | Average	Price	Paid	Per<br>Share | Approximate	Dollar	Value<br>of	Shares	Purchased<br>Under	Publicly	Announced<br>Program | Approximate	Dollar	Value<br>of	Shares	Yet	to	be<br>Purchased	Under	Publicly<br>Announced	Program |
| :--- | :--- | :--- | :--- | :--- |
| Period: |  |  |  |  |
| October\t1\t-\tOctober\t31,\t2014 | 2,786 | $70.35 | $196 | $684 |
| November\t1\t-\tNovember\t30,\t2014 | 2,108 | 76.64 | 162 | 522 |
| December\t1\t-\tDecember\t31,\t2014 | 668 | 78.48 | 52 | 470 |
| Total | 5,562 | $73.71 | $410 | $470 |

Additional	information	about	our	common	stock,	including	Board authorization	with	respect	to	purchases	by	us	of	our	common	stock,	is provided	under	"Capital"	in	Management's	Discussion	and	Analysis included	under	Item	7,	and	in	note	13	to	the	consolidated	financial statements	included	under	Item	8,	of	this	Form	10-K,	and	is	incorporated herein	by	reference.

# RELATED	STOCKHOLDER	MATTERS

As	a	bank	holding	company,	our	parent	company	is	a	legal	entity separate	and	distinct	from	its	principal	banking	subsidiary,	State	Street Bank,	and	its	non-banking	subsidiaries.	The	right	of	the	parent	company to	participate	as	a	shareholder	in	any	distribution	of	assets	of	State	Street Bank	upon	its	liquidation,	reorganization	or	otherwise	is	subject	to	the prior	claims	by	creditors	of	State	Street	Bank,	including	obligations	for federal	funds	purchased	and	securities	sold	under	repurchase agreements	and	deposit	liabilities.

Payment	of	dividends	by	State	Street	Bank	is	subject	to	the provisions	of	the	Massachusetts	banking	law,	which	provide	that	State Street	Bank's	Board	of	Directors	may	declare,	from	State	Street	Bank's "net	profits,"	as	defined	below,	cash	dividends	annually,	semi-annually	or quarterly	(but	not	more	frequently)	and	can	declare	non-cash	dividends	at any	time.	Under	Massachusetts	banking	law,	for	purposes	of	determining the	amount	of	cash	dividends	that	are	payable	by	State	Street	Bank,	"net profits"	is	defined	as	an	amount	equal	to	the	remainder	of	all	earnings from	current	operations	plus	actual	recoveries	on	loans	and	investments and	other	assets,	after	deducting	from	the	total	thereof	all	current operating	expenses,	actual	losses,	accrued	dividends	on	preferred	stock, if	any,	and	all	federal	and	state	taxes.

No	dividends	may	be	declared,	credited	or	paid	so	long	as	there	is any	impairment	of	State	Street

Bank's	capital	stock.	The	approval	of	the	Massachusetts	Commissioner	of Banks	is	required	if	the	total	of	all	dividends	declared	by	State	Street	Bank in	any	calendar	year	would	exceed	the	total	of	its	net	profits	for	that	year combined	with	its	retained	net	profits	for	the	preceding	two	years,	less any	required	transfer	to	surplus	or	to	a	fund	for	the	retirement	of	any preferred	stock.

Under	the	Federal	Reserve	Act's	Regulation	H:	Membership	of	State Banking	Institutions	in	the	Federal	Reserve	System,	the	approval	of	the Federal	Reserve	would	be	required	for	the	payment	of	dividends	by	State Street	Bank	if	the	total	amount	of	all	dividends	declared	by	State	Street Bank	in	any	calendar	year,	including	any	proposed	dividend,	would exceed	the	total	of	its	net	income	for	such	calendar	year	as	reported	in State	Street	Bank's	Consolidated	Reports	of	Condition	and	Income	for	a Bank	with	Domestic	and	Foreign	Offices	Only	-	FFIEC	031,	commonly referred	to	as	the	"Call	Report,"	as	submitted	through	the	Federal Financial	Institutions	Examination	Council	and	provided	to	the	Federal Reserve,	plus	its	"retained	net	income"	for	the	preceding	two	calendar years.	For	these	purposes,	"retained	net	income,"	as	of	any	date	of determination,	is	defined	as	an	amount	equal	to	State	Street	Bank's	net income	(as	reported	in	its	Call	Reports	for	the	calendar	year	in	which retained	net	income	is	being	determined)	less	any	dividends	declared during	such	year.	In	determining	the	amount	of	dividends	that	are	payable, the	total	of	State	Street	Bank's	net	income	for	the	current	year	and	its retained	net	income	for	the	preceding	two	calendar	years	is	reduced	by any	net	losses	incurred	in	the	current	or	preceding	two-year	period	and	by any	required	transfers	to	surplus	or	to	a	fund	for	the	retirement	of preferred	stock.

Prior	Federal	Reserve	approval	also	must	be	obtained	if	a	proposed dividend	would	exceed	State	Street	Bank's	"undivided	profits"	(retained earnings)	as	reported	in	its	Call	Reports.	State	Street	Bank	may

include	in	its	undivided	profits	amounts	contained	in	its	surplus	account,	if the	amounts	reflect	transfers	of	undivided	profits	made	in	prior	periods and	if	the	Federal	Reserve's	approval	for	the	transfer	back	to	undivided profits	has	been	obtained.

Under	the	prompt	corrective	action,	or	PCA,	provisions	adopted pursuant	to	the	FDIC	Improvement	Act	of	1991,	State	Street	Bank	may not	pay	a	dividend	when	it	is	deemed,	under	the	PCA	framework,	to	be under-capitalized,	or	when	the	payment	of	the	dividend	would	cause State	Street	Bank	to	be	under-capitalized.	If	State	Street	Bank	is	under- capitalized	for	purposes	of	the	PCA	framework,	it	must	cease	paying dividends	for	so	long	as	it	is	deemed	to	be	under-capitalized.	Once earnings	have	begun	to	improve	and	an	adequate	capital	position	has been	restored,	dividend	payments	may	resume	in	accordance	with federal	and	state	statutory	limitations	and	guidelines.

In	2014,	our	parent	company	declared	aggregate	quarterly	common stock	dividends	to	its	shareholders	of	$1.16	per	share,	totaling approximately	$490	million.	In	2013,	our	parent	company	declared aggregate	quarterly	common	stock	dividends	to	its	shareholders	of	$1.04 per	share,	totaling	approximately	$463	million.	Currently,	any	payment	of future	common	stock	dividends	by	our	parent	company	to	its	shareholders is	subject	to	the	review	of	our	capital	plan	by	the	Federal	Reserve	in connection	with	its	CCAR	process.	Information	about	dividends	declared by	our	parent	company	and	dividends	from	our	subsidiary	banks	is provided	under	"Capital"	in	Management's	Discussion	and	Analysis included	under	Item	7,	and	in	note	15	to	the	consolidated	financial statements	included	under	Item	8,	of	this	Form	10-K,	and	is	incorporated herein	by	reference.	Future	dividend	payments	of	State	Street	Bank	and our	non-banking	subsidiaries	cannot	be	determined	at	this	time.	In addition,	refer	to	"Business	-	Supervision	and	Regulation	-	Capital

Planning,	Stress	Tests	and	Dividends"	included	under	Item	1	of	this	Form 10-K	and	the	risk	factor	titled	"Our	business	and	capital-related	activities, including	our	ability	to	return	capital	to	shareholders	and	purchase	our capital	stock,	may	be	adversely	affected	by	our	implementation	of	the revised	regulatory	capital	and	liquidity	standards	that	we	must	meet	under the	Basel	III	final	rule,	the	Dodd-Frank	Act	and	other	regulatory	initiatives, or	in	the	event	our	capital	plan	or	post-stress	capital	ratios	are	determined to	be	insufficient	as	a	result	of	regulatory	capital	stress	testing"	included under	Item	1A	of	this	Form	10-K.

Information	about	our	equity	compensation	plans	is	included	under Item	12,	and	in	note	14	to	the	consolidated	financial	statements	included under	Item	8,	of	this	Form	10-K,	and	is	incorporated	herein	by	reference.

# SHAREHOLDER	RETURN	PERFORMANCE	PRESENTATION

The	graph	presented	below	compares	the	cumulative	total shareholder	return	on	State	Street's	common	stock	to	the	cumulative	total return	of	the	S&P	500	Index,	the	S&P	Financial	Index	and	the	KBW	Bank Index	over	a	five-year	period.	The	cumulative	total	shareholder	return assumes	the	investment	of	$100	in	State	Street	common	stock	and	in each	index	on	December	31,	2009	at	the	closing	price	on	the	last	trading day	of	2009,	and	also	assumes	reinvestment	of	common	stock	dividends. The	S&P	Financial	Index	is	a	publicly	available	measure	of	85	of	the Standard	&	Poor's	500	companies,	representing	25	diversified	financial services	companies,	21	insurance	companies,	22	real	estate	companies and	17	banking	companies.	The	KBW	Bank	Index	seeks	to	reflect	the performance	of	banks	and	thrifts	that	are	publicly	traded	in	the	U.S.,	and	is composed	of	24	leading	national	money	center	and	regional	banks	and thrifts.

|  | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| State\tStreet\tCorporation | $100 | $107 | $114 | $101 | $120 | $190 |
| S&amp;P\t500\tIndex | 100 | 115 | 132 | 135 | 157 | 208 |
| S&amp;P\tFinancial\tIndex | 100 | 112 | 126 | 104 | 135 | 183 |
| KBW\tBank\tIndex | 100 | 123 | 152 | 117 | 153 | 211 |

# ITEM	6. SELECTED	FINANCIAL	DATA

# (Dollars	in	millions,	except	per	share	amounts	or	where	otherwise	noted)

| FOR	THE	YEAR	ENDED	DECEMBER	31: | 2014 | 2013 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Total\tfee\trevenue | $8,031 | $7,590 | $7,088 | $7,194 | $6,540 |
| Net\tinterest\trevenue | 2,260 | 2,303 | 2,538 | 2,333 | 2,699 |
| Gains\t(losses)\trelated\tto\tinvestment\tsecurities,\tnet^(1) | 4 | (9) | 23 | 67 | (286) |
| Total\trevenue | 10,295 | 9,884 | 9,649 | 9,594 | 8,953 |
| Provision\tfor\tloan\tlosses | 10 | 6 | (3) | — | 25 |
| Expenses: |  |  |  |  |  |
| Compensation\tand\temployee\tbenefits | 4,060 | 3,800 | 3,837 | 3,820 | 3,524 |
| Information\tsystems\tand\tcommunications | 976 | 935 | 844 | 776 | 713 |
| Transaction\tprocessing\tservices | 784 | 733 | 702 | 732 | 653 |
| Occupancy | 461 | 467 | 470 | 455 | 463 |
| Claims\tresolution | — | — | (362) | — | — |
| Securities\tlending\tcharge | — | — | — | — | 414 |
| Acquisition\tand\trestructuring\tcosts,\tnet^(2) | 133 | 104 | 225 | 269 | 252 |
| Other | 1,413 | 1,153 | 1,170 | 1,006 | 823 |
| Total\texpenses | 7,827 | 7,192 | 6,886 | 7,058 | 6,842 |
| Income\tbefore\tincome\ttax\texpense | 2,458 | 2,686 | 2,766 | 2,536 | 2,086 |
| Income\ttax\texpense(3) | 421 | 550 | 705 | 616 | 530 |
| Net\tincome | $2,037 | $2,136 | $2,061 | $1,920 | $1,556 |
| Adjustments\tto\tnet\tincome (4) | (64) | (34) | (42) | (38) | (16) |
| Net\tincome\tavailable\tto\tcommon\tshareholders | $1,973 | $2,102 | $2,019 | $1,882 | $1,540 |
| PER\tCOMMON\tSHARE: |  |  |  |  |  |
| Earnings\tper\tcommon\tshare: |  |  |  |  |  |
| Basic | $4.65 | $4.71 | $4.25 | $3.82 | $3.11 |
| Diluted | 4.57 | 4.62 | 4.20 | 3.79 | 3.09 |
| Cash\tdividends\tdeclared | 1.16 | 1.04 | .96 | .72 | .04 |
| Closing\tmarket\tprice\t(at\tyear\tend) | $78.50 | $73.39 | $47.01 | $40.31 | $46.34 |
| AT\tYEAR\tEND: |  |  |  |  |  |
| Investment\tsecurities | $112,636 | $116,914 | $121,061 | $109,153 | $94,130 |
| Average\ttotal\tinterest-earning\tassets | 209,054 | 178,101 | 167,615 | 147,657 | 126,256 |
| Total\tassets | 274,119 | 243,291 | 222,582 | 216,827 | 160,505 |
| Deposits | 209,040 | 182,268 | 164,181 | 157,287 | 98,345 |
| Long-term\tdebt | 10,042 | 9,699 | 7,429 | 8,131 | 8,550 |
| Total\tshareholders'\tequity | 21,473 | 20,378 | 20,869 | 19,398 | 17,787 |
| Assets\tunder\tcustody\tand\tadministration\t(in\tbillions) | 28,188 | 27,427 | 24,371 | 21,807 | 21,527 |
| Assets\tunder\tmanagement\t(in\tbillions) | 2,448 | 2,345 | 2,086 | 1,845 | 2,010 |
| Number\tof\temployees | 29,970 | 29,430 | 29,650 | 29,740 | 28,670 |
| RATIOS: |  |  |  |  |  |
| Return\ton\taverage\tcommon\tshareholders'\tequity | 9.8% | 10.5% | 10.3% | 10.0% | 9.5% |
| Return\ton\taverage\tassets | 0.86 | 1.03 | 1.06 | 1.10 | 1.02 |
| Common\tdividend\tpayout | 24.83 | 21.97 | 22.43 | 18.83 | 1.29 |
| Average\tcommon\tequity\tto\taverage\ttotal\tassets | 8.5 | 9.7 | 10.1 | 10.9 | 10.8 |
| Net\tinterest\tmargin,\tfully\ttaxable-equivalent\tbasis | 1.16 | 1.37 | 1.59 | 1.67 | 2.24 |
| Common\tequity\ttier\t1\tratio(5) | 12.5 | 15.5 | 17.1 | 16.8 | 18.1 |
| Tier\t1\tcapital\tratio(5) | 14.6 | 17.3 | 19.1 | 18.8 | 20.5 |
| Total\tcapital\tratio(5) | 16.6 | 19.7 | 20.6 | 20.5 | 22.0 |
| Tier\t1\tleverage\tratio(5) | 6.4 | 6.9 | 7.1 | 7.3 | 8.2 |

(1)	Amount	for	2012	reflected	a	$46	million	loss	from	the	sale	of	our	Greek	investment	securities;	amount	for	 2010	included	a	net	loss	of	$344	million	related	to	a	repositioning	of	our	investment	portfolio.

(2)	Amounts	for	2012	and	2011	reflected	acquisition	costs	of	$66	million	and	$71	million,	respectively,	offset	by	indemnification	benefits	of	$40	million	and	$55	million,	respectively,	for	the	assumption	of	income	tax	liabilities related	to	the	2010	acquisition	of	the	Intesa	securities	services	business.

(3)	Amount	for	2013	included	a	$71	million	out-of-period	benefit	to	adjust	deferred	taxes.	Amounts	for	2012	and	2011	reflected	the	net	effects	of	certain	tax	matters	( $7	million	benefit	and	$55	million	expense,	respectively) associated	with	the	2010	Intesa	acquisition.	Amounts	for	2011	and	2010	reflected	discrete	tax	benefits	of	$103	million	and	$180	million,	respectively,	attributable	to	costs	incurred	in	terminating	former	conduit	asset structures.

(4)	Amounts	for	2014,	2013,	2012	and	2011	represented	preferred	stock	dividends	and	the	allocation	of	earnings	to	participating	securities	using	the	two-class	method.	Amount	for	2010	represented	the	allocation	of	earnings to	participating	securities	using	the	two-class	method.

(5)	Ratios	for	2014	were	calculated	in	conformity	with	the	advanced	approaches	provisions	of	the	Basel	III	final	rule.	Ratios	for	2013,	2012,	2011	and	2010	were	calculated	in	conformity	with	the	provisions	of	Basel	I.	Ratios for	2014	are	not	directly	comparable	to	ratios	for	prior	years.	Refer	to	note	15	to	the	consolidated	financial	statements	included	under	Item	8	of	this	Form	10-K.

# MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF	FINANCIAL	CONDITION

# AND	RESULTS	OF	OPERATIONS

| General | 49 |
| :--- | :--- |
| Overview\tof\tFinancial\tResults | 50 |
| Consolidated\tResults\tof\tOperations | 52 |
| Total\tRevenue | 52 |
| Fee\tRevenue | 52 |
| Net\tInterest\tRevenue | 59 |
| Gains\t(Losses)\tRelated\tto\tInvestment\tSecurities,\tNet | 62 |
| Provision\tfor\tLoan\tLosses | 62 |
| Expenses | 62 |
| Income\tTax\tExpense | 65 |
| Line\tof\tBusiness\tInformation | 65 |
| Financial\tCondition | 67 |
| Investment\tSecurities | 69 |
| Loans\tand\tLeases | 75 |
| Cross-Border\tOutstandings | 77 |
| Risk\tManagement | 78 |
| Credit\tRisk\tManagement | 83 |
| Liquidity\tRisk\tManagement | 88 |
| Operational\tRisk\tManagement | 94 |
| Market\tRisk\tManagement | 97 |
| Business\tRisk\tManagement | 104 |
| Model\tRisk\tManagement | 105 |
| Capital | 106 |
| Off-Balance\tSheet\tArrangements | 117 |
| Significant\tAccounting\tEstimates | 117 |
| Recent\tAccounting\tDevelopments | 120 |

# ITEM	7. MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF FINANCIAL	CONDITION	AND	RESULTS	OF	OPERATIONS

State	Street	Corporation,	or	the	parent	company,	is	a	financial holding	company	headquartered	in	Boston,	Massachusetts.	Unless otherwise	indicated	or	unless	the	context	requires	otherwise,	all references	in	this	Management's	Discussion	and	Analysis	to	"State Street,"	"we,"	"us,"	"our"	or	similar	terms	mean	State	Street	Corporation and	its	subsidiaries	on	a	consolidated	basis.	Our	principal	banking subsidiary	is	State	Street	Bank	and	Trust	Company,	or	State	Street	Bank. As	of	December	31,	2014,	we	had	consolidated	total	assets	of $274.12 billion,	consolidated	total	deposits	of	 $209.04	billion,	consolidated	total shareholders'	equity	of	$21.47	billion	and	29,970	employees.	With	$28.19 trillion	of	assets	under	custody	and	administration	and	 $2.45	trillion	of assets	under	management	as	of	December	31,	2014,	we	are	a	leading specialist	in	meeting	the	needs	of	institutional	investors	worldwide.

# We	have	two	lines	of	business:

Investment	Servicing	provides	services	for	mutual	funds,	collective investment	funds	and	other	investment	pools,	corporate	and	public retirement	plans,	insurance	companies,	foundations	and	endowments worldwide.	Products	include	custody;	product-	and	participant-level accounting;	daily	pricing	and	administration;	master	trust	and	master custody;	record-keeping;	cash	management;	foreign	exchange,	brokerage and	other	trading	services;	securities	finance;	deposit	and	short-term investment	facilities;	loans	and	lease	financing;	investment	manager	and alternative	investment	manager	operations	outsourcing;	and	performance, risk	and	compliance	analytics	to	support	institutional	investors.

Investment	Management,	through	State	Street	Global	Advisors,	or SSGA,	provides	a	broad	array	of	investment	management,	investment research	and	investment	advisory	services	to	corporations,	public	funds and	other	sophisticated	investors.	SSGA	offers	active	and	passive	asset management	strategies	across	equity,	fixed-income	and	cash	asset classes.	Products	are	distributed	directly	and	through	intermediaries using	a	variety	of	investment	vehicles,	including	exchange-traded	funds, or	ETFs,	such	as	the	SPDR®	ETF	brand.

For	financial	and	other	information	about	our	lines	of	business,	refer to	"Line	of	Business	Information"	included	in	this	Management's Discussion	and	Analysis	and	note	24	to	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.

This	Management's	Discussion	and	Analysis	should	be	read	in conjunction	with	the	consolidated	financial	statements	and	accompanying notes	to	consolidated	financial	statements	included	under	Item	8	of	this Form	10-K.	Certain	previously	reported	amounts	presented	in	this	Form 10-K	have	been	reclassified	to	conform	to	current-year	presentation.

We	prepare	our	consolidated	financial	statements	in	conformity	with accounting	principles	generally	accepted	in	the	U.S.,	referred	to	as	GAAP. The	preparation	of	financial	statements	in	conformity	with	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	consist	of	accounting	for	fair	value	measurements;	other-than- temporary	impairment	of	investment	securities;	impairment	of	goodwill	and other	intangible	assets;	and	contingencies.	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.	Additional	information	about	these significant	accounting	policies	is	included	under	"Significant	Accounting Estimates"	in	this	Management's	Discussion	and	Analysis.

Certain	financial	information	provided	in	this	Form	10-K,	including this	Management's	Discussion	and	Analysis,	is	prepared	on	both	a	GAAP, or	reported	basis,	and	a	non-GAAP,	or	operating	basis,	including	certain non-GAAP	measures	used	in	the	calculation	of	identified	regulatory capital	ratios.	We	measure	and	compare	certain	financial	information	on an	operating	basis,	as	we	believe	that	this	presentation	supports meaningful	comparisons	from	period	to	period	and	the	analysis	of comparable	financial	trends	with	respect	to	State	Street's	normal	ongoing business	operations.	We	believe	that	operating-basis	financial information,	which	reports	non-taxable	revenue,	such	as	interest	revenue associated	with	tax-exempt	investment	securities,	on	a	fully	taxable- equivalent	basis,	facilitates	an	investor's	understanding	and	analysis	of State	Street's	underlying	financial	performance	and	trends	in	addition	to financial	information	prepared	and	reported	in	conformity	with	GAAP.

We	also	believe	that	the	use	of	certain	non-GAAP	measures	in	the calculation	of	identified	regulatory	capital	ratios	is	useful	in	understanding State	Street's	capital	position	and	is	of	interest	to

# MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF	FINANCIAL	CONDITION AND	RESULTS	OF	OPERATIONS	(Continued)

investors.	Operating-basis	financial	information	should	be	considered	in addition	to,	not	as	a	substitute	for	or	superior	to,	financial	information prepared	in	conformity	with	GAAP.	Any	non-GAAP,	or	operating-basis, financial	information	presented	in	this	Form	10-K,	including	this Management's	Discussion	and	Analysis,	is	reconciled	to	its	most	directly comparable	GAAP-basis	measure.

This	Management's	Discussion	and	Analysis	contains	statements that	are	considered	"forward-looking	statements"	within	the	meaning	of U.S.	securities	laws.	Forward-looking	statements	are	based	on	our	current expectations	about	financial	performance,	capital,	market	growth, acquisitions,	joint	ventures	and	divestitures,	new	technologies,	services and	opportunities	and	earnings,	management's	confidence	in	our strategies	and	other	matters	that	do	not	relate	strictly	to	historical	facts. These	forward-looking	statements	involve	certain	risks	and	uncertainties which	could	cause	actual	results	to	differ	materially.	We	undertake	no obligation	to	revise	the	forward-looking	statements	contained	in	this Management's	Discussion	and	Analysis	to	reflect	events	after	the	time	we file	this	Form	10-K	with	the	SEC.	Additional	information	about	forward- looking	statements	and	related	risks	and	uncertainties	is	provided	in	"Risk Factors"	included	under	Item	1A	of	this	Form	10-K.

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	summary	results	of	semi- annual	State	Street-run	stress	tests	which	we	conduct	under	the	Dodd- Frank	Wall	Street	Reform	and	Consumer	Protection	Act,	or	Dodd-Frank Act.	These	additional	disclosures	are	accessible	under	"Filings	and Reports"	on	the	"Investor	Relations"	section	of	our	corporate	website	at www.statestreet.com/stockholder.	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-K.

# TABLE	1:	OVERVIEW	OF	FINANCIAL	RESULTS

| Years	Ended	December	31, | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| (Dollars\tin\tmillions,\texcept\tper\nshare\tamounts) |  |  |  |
| Total\tfee\trevenue | $8,031 | $7,590 | $7,088 |
| Net\tinterest\trevenue | 2,260 | 2,303 | 2,538 |
| Gains\t(losses)\trelated\tto\ninvestment\tsecurities,\tnet | 4 | (9) | 23 |
| Total\trevenue | 10,295 | 9,884 | 9,649 |
| Provision\tfor\tloan\tlosses | 10 | 6 | (3) |
| Total\texpenses | 7,827 | 7,192 | 6,886 |
| Income\tbefore\tincome\ttax\nexpense | 2,458 | 2,686 | 2,766 |
| Income\ttax\texpense(1) | 421 | 550 | 705 |
| Net\tincome | $2,037 | $2,136 | $2,061 |
| Adjustments\tto\tnet\tincome: |  |  |  |
| Dividends\ton\tpreferred\tstock(2) | (61) | (26) | (29) |
| Earnings\tallocated\tto\nparticipating\tsecurities(3) | (3) | (8) | (13) |
| Net\tincome\tavailable\tto\tcommon\nshareholders | $1,973 | $2,102 | $2,019 |
| Earnings\tper\tcommon\tshare: |  |  |  |
| Basic | $4.65 | $4.71 | $4.25 |
| Diluted | 4.57 | 4.62 | 4.20 |
| Average\tcommon\tshares\noutstanding\t(in\tthousands): |  |  |  |
| Basic | 424,223 | 446,245 | 474,458 |
| Diluted | 432,007 | 455,155 | 481,129 |
| Cash\tdividends\tdeclared\tper |  |  |  |
| common\tshare | $1.16 | $1.04 | $.96 |
| Return\ton\taverage\tcommon\tequity | 9.8% | 10.5% | 10.3% |

(1)	2013	included	an	out-of-period	income	tax	benefit	of	$71	million	to	adjust	deferred taxes.	Amount	for	2012	reflected	the	net	effect	of	certain	tax	matters	($7	million benefit)	associated	with	the	2010	Intesa	acquisition.

(2)	2014	included	$35	million	and	$26	million	related	to	Series	D	and	Series	C	preferred stock,	respectively.	Amount	for	2013	included	$26	million	related	to	Series	C preferred	stock.	Amount	for	2012	included	$8	million	related	to	Series	C	preferred stock	and	$21	million	related	to	Series	A	preferred	stock.	Refer	to	note	13	to	the consolidated	financial	statements	included	under	Item	8	of	this	Form	10-K	for additional	information	regarding	our	preferred	stock	dividends.

(3)	Refer	to	note	23	to	the	consolidated	financial	statements	included	under	Item	8	of this	Form	10-K.

The	following	"Highlights"	and	"Financial	Results"	sections	provide information	related	to	significant	events,	as	well	as	highlights	of	our consolidated	financial	results	for	2014	presented	in	Table	1:	Overview	of Financial	Results.	More	detailed	information	about	our	consolidated financial	results,	including	comparisons	of	our	financial	results	for	2014	to those	for	2013,	is	provided	under	"Consolidated	Results	of	Operations," which	follows	these	sections.

# AND	RESULTS	OF	OPERATIONS	(Continued)

# Highlights

•Total	asset	servicing	and	asset	management	fees	increased	 6% and	9%,	respectively,	in	2014	compared	to	2013,	mainly	the result	of	net	new	business	installed	and	stronger	global	equity markets.

•In	2014,	we	purchased	approximately	 23.8	million	shares	of	our common	stock	at	an	average	per-share	cost	of	$69.48	and	an aggregate	cost	of	approximately	$1.65	billion.	We	have approximately	$470	million	under	our	current	$1.70	billion common	stock	purchase	program	effective	through	March	2015.

Additional	information	with	respect	to	our	common	stock purchase	program	is	provided	under	"Financial	Condition	- Capital"	in	this	Management's	Discussion	and	Analysis.

•We	completed	our	Business	Operations	and	Information Technology	Transformation	program	at	the	end	of	2014, achieving,	over	the	course	of	the	program,	greater	than	$625 million	of	total	pre-tax	savings	on	an	annual	basis	with	full	effect in	2015,	based	on	projected	improvement	from	our	total	2010 expenses	from	operations,	all	else	being	equal.

Additional	information	with	respect	to	the	program	is	provided under	"Consolidated	Results	of	Operations	-	Expenses"	in	this Management's	Discussion	and	Analysis.

•For	the	fourth	quarter	of	2014,	we	recorded	a	pre-tax	charge	of $115	million	to	increase	our	legal	accrual	associated	with	indirect foreign	exchange	matters.	This	accrual	reflects	a	$65	million additional	accrual	that	we	announced	on	February	20,	2015.	The effects	of	the	additional	accrual	are	reflected	in	the	financial	and other	information	reported	in	this	Form	10-K.	The	additional accrual	announced	on	February	20,	2015	reflects	continued negotiations	in	connection	with	our	intention	to	seek	to	resolve some,	but	not	all,	of	the	outstanding	and	potential	claims	arising out	of	our	indirect	foreign	exchange	client	activities.	The	total legal	accrual	associated	with	these	matters	as	of	the	time	of	the filing	of	this	Form	10-K	is	$185	million,	all	of	which	is	included	in the	consolidated	statement	of	income	for	the	year	ended December	31,	2014.

# Financial	Results

•Total	revenue	increased	4%	in	2014	compared	to	2013,	primarily due	to	the	increase	in	fee	revenue	of	6%	compared	to	2013, partially	offset	by	a	decline	in	processing	fees	and	other	revenue and	net	interest	revenue.

•Total	expenses	in	2014	increased	9%	compared	to	2013, primarily	driven	by	increases	in	other	expenses,	compensation and	employee	benefit	expenses	and	transaction	processing services.

•In	2014,	we	secured	an	estimated	$1.14	trillion	of	new	business in	assets	to	be	serviced;	of	that	total,	approximately	$767	billion was	installed	prior	to	December	31,	2014,	with	the	remaining balance	expected	to	be	installed	in	2015.

The	new	business	not	installed,	totaling	$406	billion	by December	31,	2014,	which	consisted	of	$371	billion	from	2014 and	$35	billion	from	2013,	was	not	included	in	our	assets	under custody	and	administration	as	of	that	date,	and	had	no	impact	on our	servicing	fee	revenue	in	2014,	as	the	assets	are	not	included until	their	installation	is	complete	and	we	begin	to	service	them. Once	installed,	the	assets	generate	servicing	fee	revenue	in subsequent	periods	in	which	the	assets	are	serviced.

•We	achieved	net	new	assets	to	be	managed	of	approximately $28	billion	in	2014,	including	approximately	$15	billion	of	new asset	management	business,	that	was	awarded	to	SSGA	but	not installed	as	of	December	31,	2014.	This	new	business	had	no impact	on	our	management	fee	revenue	in	2014,	but	will	be reflected	in	assets	under	management	in	future	periods	after installation	and	will	generate	management	fee	revenue	in subsequent	periods.

•Return	on	average	common	shareholders'	equity	in	 2014 decreased	to	9.8%	from	10.5%	in	2013.	The	decrease	was primarily	driven	by	an	increase	in	preferred	stock	dividends	in 2014	compared	to	2013	as	well	as	a	decrease	in	net	income	in 2014	compared	to	2013.

•Our	effective	tax	rate	in	2014	was	17.2%	compared	to	20.5%	in 2013,	which	included	the	impact	of	an	out-of-period	income	tax benefit.	In	addition	to	that	out-of-period	benefit,	the	decline	was also	attributable	to	the	expansion	of	our	tax-exempt	investment securities	portfolio,	an	increase	in	renewable

energy	investments	and	a	greater	benefit	from	our	non-U.S. operations.

# CONSOLIDATED	RESULTS	OF	OPERATIONS

This	section	discusses	our	consolidated	results	of	operations	for 2014	compared	to	2013,	as	well	as	2013	compared	to	2012,	and	should be	read	in	conjunction	with	the	consolidated	financial	statements	and accompanying	notes	included	under	Item	8	of	this	Form	10-K.

# Total	Revenue

# TABLE	2:	TOTAL	REVENUE

| Years	Ended<br>December	31, | 2014 | 2013 | 2012 | %	Change<br>2014	vs.	2013 | %	Change<br>2013	vs.	2012 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Dollars\tin\tmillions) |  |  |  |  |  |
| Fee\trevenue: |  |  |  |  |  |
| Servicing\tfees | $5,129 | $4,819 | $4,414 | 6\t% | 9\t% |
| Management\tfees | 1,207 | 1,106 | 993 | 9 | 11 |
| Trading\tservices: |  |  |  |  |  |
| Foreign\texchange\ntrading | 607 | 589 | 511 | 3 | 15 |
| Brokerage\tand\tother\ntrading\tservices | 477 | 505 | 525 | (6) | (4) |
| Total\ttrading\tservices | 1,084 | 1,094 | 1,036 | (1) | 6 |
| Securities\tfinance | 437 | 359 | 405 | 22 | (11) |
| Processing\tfees\tand\nother | 174 | 212 | 240 | (18) | (12) |
| Total\tfee\trevenue\nNet\tinterest\trevenue: | 8,031 | 7,590 | 7,088 | 6 | 7 |
| \t\t\tInterest\trevenue | 2,652 | 2,714 | 3,014 | (2) | (10) |
| \t\t\tInterest\texpense | 392 | 411 | 476 | (5) | (14) |
| Net\tinterest\trevenue | 2,260 | 2,303 | 2,538 | (2) | (9) |
| Gains\t(losses)\trelated |  |  |  |  |  |
| to\tinvestment |  |  |  |  |  |
| securities,\tnet | 4 | (9) | 23 |  |  |
| Total\trevenue | $10,295 | $9,884 | $9,649 | 4 | 2 |

# Fee	Revenue

Servicing	and	management	fees	collectively	composed approximately	79%	of	our	total	fee	revenue	in	 2014,	compared	to approximately	78%	in	2013.	The	level	of	these	fees	is	influenced	by several	factors,	including	the	mix	and	volume	of	our	assets	under	custody and	administration	and	our	assets	under	management,	the	value	and	type of	securities	positions	held	(with	respect	to	assets	under	custody)	and	the volume	of	portfolio	transactions,	and	the	types	of	products	and	services used	by	our	clients,	and	is	generally	affected	by	changes	in	worldwide equity	and	fixed-income	security	valuations	and	trends	in	market	asset class	preferences.

	Generally,	servicing	fees	are	affected	by	changes	in	daily	average valuations	of	assets	under	custody

and	administration.	Additional	factors,	such	as	the	relative	mix	of	assets serviced,	the	level	of	transaction	volumes,	changes	in	service	level,	the nature	of	services	provided,	balance	credits,	client	minimum	balances, pricing	concessions,	the	geographical	location	in	which	services	are provided	and	other	factors,	may	have	a	significant	effect	on	our	servicing fee	revenue.

Generally,	management	fees	are	affected	by	changes	in	month-end valuations	of	assets	under	management.	Management	fees	for	certain components	of	managed	assets,	such	as	ETFs,	are	affected	by	daily average	valuations	of	assets	under	management.	Management	fee revenue	is	more	sensitive	to	market	valuations	than	servicing	fee revenue,	since	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	and	other	factors,	may	have	a	significant effect	on	our	management	fee	revenue.	While	certain	management	fees are	directly	determined	by	the	values	of	assets	under	management	and the	investment	strategies	employed,	management	fees	may	reflect	other factors	as	well,	including	performance	fee	arrangements,	discussed	later in	this	section,	as	well	as	our	relationship	pricing	for	clients	using	multiple services.

Asset-based	management	fees	for	actively-managed	products	are generally	charged	at	a	higher	percentage	of	assets	under	management than	for	passive	products.	Actively-managed	products	may	also	include performance	fee	arrangements	which	are	recorded	when	the performance	period	is	complete.	Performance	fees	are	generated	when the	performance	of	certain	managed	portfolios	exceeds	benchmarks specified	in	the	management	agreements.	Generally,	we	experience	more volatility	with	performance	fees	than	with	more	traditional	management fees.

In	light	of	the	above,	we	estimate,	using	relevant	information	as	of December	31,	2014	and	assuming	that	all	other	factors	remain	constant, that:	(1)	a	10%	increase	or	decrease	in	worldwide	equity	valuations,	over the	relevant	periods	on	which	our	servicing	and	management	fees	are calculated,	would	result	in	a	corresponding	change	in	our	total	revenue	of approximately	2%;	and	(2)	a	10%	increase	or	decrease	in	worldwide	fixed income	security	valuations,	over	the	relevant	periods	for	or	on	which	our servicing	and	management	fees	are	calculated,	would	result	in	a corresponding	change	in	our	total	revenue	of	approximately	1%.

See	Table	3:	Daily,	Month-end	and	Year-end	Indices	for	selected equity	market	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	can	therefore	differ	from	the	performance	of the	indices	presented.

Daily	averages	and	the	averages	of	month-end	indices	demonstrate worldwide	changes	in	equity

markets	that	affect	our	servicing	and	management	fee	revenue.	Year-end indices	affect	the	values	of	assets	under	custody	and	administration	and assets	under	management	as	of	those	dates.	The	index	names	listed	in the	table	are	service	marks	of	their	respective	owners.

# TABLE	3:	DAILY,	MONTH-END	AND	YEAR-END	INDICES

|  |  | Daily	Averages	of	Indices |  | Averages	of	Month-End	Indices | Averages	of	Month-End	Indices |  |  | Year-End	Indices |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | %\tChange | 2014 | 2013 | %\tChange | 2014 | 2013 | %\tChange |
| S&amp;P\t500® | 1,931 | 1,644 | 17% | 1,944 | 1,652 | 18% | 2,059 | 1,848 | 11\t% |
| NASDAQ® | 4,375 | 3,541 | 24 | 4,415 | 3,575 | 23 | 4,736 | 4,177 | 13 |
| MSCI\tEAFE® | 1,888 | 1,746 | 8 | 1,891 | 1,754 | 8 | 1,775 | 1,916 | (7) |

Table	2:	Total	Revenue	provides	the	breakout	of	fee	revenue	for	the years	ended	December	31,	2014,	2013	and	2012.

# Servicing	Fees

Servicing	fees	increased	6%	in	2014	compared	to	2013	primarily	as a	result	of	stronger	global	equity	markets	and	the	positive	revenue	impact of	net	new	business	(revenue	added	from	new	servicing	business installed	less	revenue	lost	from	the	removal	of	assets	serviced).

Servicing	fees	in	2013	increased	9%	from	2012,	mainly	due	to stronger	equity	markets,	the	impact	of	net	new	business	and	revenue added	from	acquired	businesses,	partially	offset	by	the	impacts	of	the weaker	euro	and	client	de-risking.

Servicing	fees	generated	outside	the	U.S.	were	approximately	 42% of	total	servicing	fees	in	2014,	2013	and	2012.

The	increases	in	total	assets	under	custody	and	administration	for year-end	2014	compared	to	year-end	 2013	resulted	primarily	from stronger	global	equity	markets	and	net	shareholder	subscriptions

experienced	by	our	custody	clients,	partially	offset	by	losses	of	assets serviced.	Asset	levels	as	of	December	31,	2014	did	not	reflect	the estimated	$406	billion	of	new	business	in	assets	to	be	serviced	awarded to	us	in	2014	and	prior	periods	but	not	installed	prior	to	 December	31, 2014.	This	new	business	will	be	reflected	in	assets	under	custody	and administration	in	future	periods	after	installation	and	will	generate servicing	fee	revenue	in	subsequent	periods.

With	respect	to	these	new	assets,	we	will	provide	various	services, including	accounting,	bank	loan	servicing,	compliance	reporting	and monitoring,	custody,	depository	banking	services,	foreign	exchange,	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.

The	value	of	assets	under	custody	and	administration	is	a	broad measure	of	the	relative	size	of	various	markets	served.	Changes	in	the values	of	assets	under	custody	and	administration	from	period	to	period do	not	necessarily	result	in	proportional	changes	in	our	servicing	fee revenue.

# TABLE	4:	COMPONENTS	OF	ASSETS	UNDER	CUSTODY	AND	ADMINISTRATION

| As	of	December	31, | 2014 | 2013 | 2012 | 2011 | 2010 | 2013-2014	Annual<br>Growth	Rate | 2010-2014	Compound<br>Annual	Growth	Rate |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Dollars\tin\tbillions) |  |  |  |  |  |  |  |
| Mutual\tfunds | $6,992 | $6,811 | $5,852 | $5,265 | $5,540 | 3\t% | 6% |
| Collective\tfunds | 6,949 | 6,428 | 5,363 | 4,437 | 4,350 | 8 | 12 |
| Pension\tproducts | 5,746 | 5,851 | 5,339 | 4,837 | 4,726 | (2) | 5 |
| Insurance\tand\tother\tproducts | 8,501 | 8,337 | 7,817 | 7,268 | 6,911 | 2 | 5 |
| Total | $28,188 | $27,427 | $24,371 | $21,807 | $21,527 | 3 | 7 |

# TABLE	5:	COMPOSITION	OF	ASSETS	UNDER	CUSTODY	AND	ADMINISTRATION

(1)	Geographic	mix	is	based	on	the	location	in	which	the	assets	are	serviced.

# Management	Fees

Through	SSGA,	we	provide	a	broad	range	of	investment management	strategies,	specialized	investment	management	advisory services	and	other	financial	services	for	corporations,	public	funds,	and other	sophisticated	investors.	SSGA	offers	a	broad	array	of	investment management	strategies,	including	passive	and	active,	such	as	enhanced indexing,	using	quantitative	and	fundamental	methods	for	both	U.S.	and global	equity	and	fixed-income	securities.	SSGA	also	offers	ETFs,	such as	the	SPDR®	ETF	brand.	While	certain	management	fees	are	directly determined	by	the	values	of	assets	under	management	and	the investment	strategies	employed,	management	fees	reflect	other	factors as	well,	including	our	relationship	pricing	for	clients	who	use	multiple services,	and	the	benchmarks	specified

in	the	respective	management	agreements	related	to	performance	fees.

Management	fees	increased	in	2014	compared	to	2013	primarily	as a	result	of	stronger	global	equity	markets,	net	inflows	and	the	positive revenue	impact	of	the	excess	of	revenue	added	from	newly	installed assets	to	be	managed	over	the	revenue	lost	from	liquidations	of	managed assets.

Management	fees	increased	in	2013	compared	to	2012,	primarily due	to	the	impact	of	stronger	equity	markets,	net	new	business	and	higher performance	fees.

Management	fees	generated	outside	the	U.S.	were	approximately 37%	of	total	management	fees	in	 2014,	2013	and	2012.

# TABLE	7:	ASSETS	UNDER	MANAGEMENT	BY	ASSET	CLASS	AND	INVESTMENT	APPROACH(1)

| As	of	December	31, | 2014 | 2013 | 2012 | 2011 | 2010 | 2013-2014	Annual<br>Growth	Rate | 2010-2014	Compound<br>Annual	Growth	Rate |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Dollars\tin\tbillions) |  |  |  |  |  |  |  |
| Equity: |  |  |  |  |  |  |  |
| \t\t\tActive | $39 | $42 | $45 | $46 | $54 | (7)% | (8)% |
| \t\t\tPassive | 1,436 | 1,334 | 1,047 | 893 | 912 | 8 | 12 |
| Total\tEquity | 1,475 | 1,376 | 1,092 | 939 | 966 | 7 | 11 |
| Fixed-Income: |  |  |  |  |  |  |  |
| \t\t\tActive | 17 | 16 | 17 | 16 | 14 | 6 | 4 |
| \t\t\tPassive | 302 | 311 | 325 | 271 | 373 | (3) | (5) |
| Total\tFixed-Income | 319 | 327 | 342 | 287 | 387 | (2) | (5) |
| Cash(2) | 399 | 385 | 369 | 380 | 422 | 4 | (1) |
| Multi-Asset-Class\tSolutions: |  |  |  |  |  |  |  |
| \t\t\tActive | 30 | 23 | 23 | 15 | 16 | 30 | 17 |
| \t\t\tPassive | 97 | 110 | 94 | 70 | 70 | (12) | 8 |
| Total\tMulti-Asset-Class\tSolutions | 127 | 133 | 117 | 85 | 86 | (5) | 10 |
| Alternative\tInvestments(3): |  |  |  |  |  |  |  |
| \t\t\tActive | 17 | 14 | 18 | 17 | 12 | 21 | 8 |
| \t\t\tPassive | 111 | 110 | 148 | 137 | 137 | 1 | (5) |
| Total\tAlternative\tInvestments | 128 | 124 | 166 | 154 | 149 | 3 | (4) |
| Total | $2,448 | $2,345 | $2,086 | $1,845 | $2,010 | 4 | 5 |

(1)	As	of	December	31,	2013,	the	presentation	was	changed	to	align	with	the	reporting	of	core	businesses,	which	were	revised	for	comparative	purposes	for 2012,	2011	and	2010. (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	Fund,	for	which	State	Street	is	not	the	investment	manager,	but	acts	as	distribution	agent.

# TABLE	8:	EXCHANGE-TRADED	FUNDS	BY	ASSET	CLASS(1)(2)

(1)	Geographic	mix	is	based	on	client	location	or	fund	management	location.	As	of	December	31,	2013,	the	presentation	was	changed	to	align	with	the	reporting	of	core	businesses,	which	were	revised for	comparative	purposes	for	2012,	2011	and	2010.

The	increase	in	total	assets	under	management	as	of	 December	31, 2014	compared	to	December	31,	2013	resulted	primarily	from	net	market appreciation	in	the	values	of	the	assets	managed	and	net	new	business of	approximately	$28	billion,	partially	offset	by	the	impact	of	the	stronger U.S.	dollar.	The	net	new	business	of	approximately	$28	billion	was primarily

composed	of	approximately	$34	billion	from	ETFs	and	approximately	$19 billion	of	net	inflows	into	money	market	funds,	primarily	offset	by	net outflows	of	approximately	$25	billion	from	long-term	institutional portfolios.

# TABLE	10:	ACTIVITY	IN	ASSETS	UNDER	MANAGEMENT	BY	PRODUCT	CATEGORY

|  |  |  |  | Multi-Asset-Class | Alternative |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tbillions) | Equity | Fixed-Income | Cash | Solutions | Investments | Total |
| Balance\tas\tof\tDecember\t31,\t2011 | $939 | $287 | $380 | $85 | $154 | $1,845 |
| Long-term\tinstitutional\tinflows(1) | 226 | 144 | — | 26 | 15 | 411 |
| Long-term\tinstitutional\toutflows(1) | (216) | (102) | — | (31) | (20) | (369) |
| Long-term\tinstitutional\tflows,\tnet | 10 | 42 | — | (5) | (5) | 42 |
| ETF\tflows,\tnet | 22 | 9 | — | — | 10 | 41 |
| Cash\tfund\tflows,\tnet | — | — | (3) | — | — | (3) |
| Total\tflows,\tnet | 32 | 51 | (3) | (5) | 5 | 80 |
| Market\tappreciation(2) | 123 | 11 | (9) | 36 | 6 | 167 |
| Foreign\texchange\timpact(2) | (2) | (7) | 1 | 1 | 1 | (6) |
| Total\tmarket/foreign\texchange\timpact | 121 | 4 | (8) | 37 | 7 | 161 |
| Balance\tas\tof\tDecember\t31,\t2012 | 1,092 | 342 | 369 | 117 | 166 | 2,086 |
| Long-term\tinstitutional\tinflows(1) | 256 | 70 | — | 32 | 13 | 371 |
| Long-term\tinstitutional\toutflows(1) | (283) | (71) | — | (28) | (21) | (403) |
| Long-term\tinstitutional\tflows,\tnet | (27) | (1) | — | 4 | (8) | (32) |
| ETF\tflows,\tnet | 33 | 4 | — | — | (25) | 12 |
| Cash\tfund\tflows,\tnet | — | — | 17 | — | — | 17 |
| Total\tflows,\tnet | 6 | 3 | 17 | 4 | (33) | (3) |
| Market\tappreciation(2) | 291 | (4) | (1) | 12 | (5) | 293 |
| Foreign\texchange\timpact(2) | (13) | (14) | — | — | (4) | (31) |
| Total\tmarket/foreign\texchange\timpact | 278 | (18) | (1) | 12 | (9) | 262 |
| Balance\tas\tof\tDecember\t31,\t2013 | 1,376 | 327 | 385 | 133 | 124 | 2,345 |
| Long-term\tinstitutional\tinflows(1) | 285 | 80 | — | 43 | 13 | 421 |
| Long-term\tinstitutional\toutflows(1) | (297) | (103) | — | (35) | (11) | (446) |
| Long-term\tinstitutional\tflows,\tnet | (12) | (23) | — | 8 | 2 | (25) |
| ETF\tflows,\tnet | 31 | 5 | — | — | (2) | 34 |
| Cash\tfund\tflows,\tnet | — | — | 19 | — | — | 19 |
| Total\tflows,\tnet | 19 | (18) | 19 | 8 | — | 28 |
| Market\tappreciation(2) | 113 | 27 | — | (9) | 11 | 142 |
| Foreign\texchange\timpact(2) | (33) | (17) | (5) | (5) | (7) | (67) |
| Total\tmarket/foreign\texchange\timpact | 80 | 10 | (5) | (14) | 4 | 75 |
| Balance\tas\tof\tDecember\t31,\t2014 | $1,475 | $319 | $399 | $127 | $128 | $2,448 |

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

(2)	Amounts	represent	aggregate	impact	on	each	product	category	for	the	period.

The	net	new	business	of	approximately	$28	billion	for	2014 presented	in	the	preceding	table	did	not	include	approximately	$15	billion of	new	asset	management	business,	which	was	awarded	to	SSGA,	but not	installed	as	of	December	31,	2014.	This	new	business	will	be reflected	in	assets	under	management

in	future	periods	after	installation,	and	will	generate	management	fee revenue	in	subsequent	periods.

Total	assets	under	management	as	of	 December	31,	2014	included managed	assets	lost	but	not	yet	liquidated.	Lost	business	occurs	from time	to	time	and	it	is	difficult	to	predict	the	timing	of	client

behavior	in	transitioning	these	assets.	This	timing	can	vary	significantly.

# Trading	Services

| Years	Ended	December<br>31, | 2014 | 2013 | 2012 | %	Change<br>2014	vs.	2013 | %	Change<br>2013	vs.	2012 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Dollars\tin\tmillions) |  |  |  |  |  |
| Foreign\texchange\ttrading: |  |  |  |  |  |
| Direct\tsales\tand\ttrading | $361 | $304 | $263 | 19\t% | 16\t% |
| Indirect\tforeign\texchange\ntrading | 246 | 285 | 248 | (14) | 15 |
| Total\tforeign\texchange\ntrading | 607 | 589 | 511 | 3 | 15 |
| Brokerage\tand\tother\ntrading\tservices: |  |  |  |  |  |
| Electronic\tforeign\nexchange\tservices | 181 | 218 | 196 | (17) | 11 |
| Other\ttrading,\ttransition |  |  |  |  |  |
| management\tand |  |  |  |  |  |
| brokerage | 296 | 287 | 329 | 3 | (13) |
| Total\tbrokerage\tand\tother\ntrading\tservices | 477 | 505 | 525 | (6) | (4) |
| Total\ttrading\tservices\nrevenue | $1,084 | $1,094 | $1,036 | (1) | 6 |

Trading	services	revenue	is	composed	of	revenue	generated	by foreign	exchange,	or	FX,	trading,	as	well	as	revenue	generated	by brokerage	and	other	trading	services.	We	primarily	earn	FX	trading revenue	by	acting	as	a	principal	market	maker.	We	offer	a	range	of	FX products,	services	and	execution	models.	Most	of	our	FX	products	and execution	services	can	be	grouped	into	three	broad	categories,	which	are further	explained	below:	"direct	sales	and	trading,"	"indirect	FX	trading" and	"electronic	FX	services."	With	respect	to	electronic	FX	services,	we provide	an	execution	venue,	but	do	not	act	as	agent	or	principal.

We	also	offer	a	range	of	brokerage	and	other	trading	products tailored	specifically	to	meet	the	needs	of	the	global	pension	community, including	transition	management	and	commission	recapture.	In	addition, we	act	as	distribution	agent	for	the	SPDR®	Gold	ETF.	These	products	and services	are	generally	differentiated	by	our	role	as	an	agent	of	the institutional	investor.	Revenue	earned	from	these	services	is	recorded	in other	trading,	transition	management	and	brokerage	revenue	within brokerage	and	other	trading	services	revenue.

FX	trading	revenue	is	influenced	by	three	principal	factors:	the volume	and	type	of	client	FX	transactions	and	related	spreads;	currency volatility;	and	the	management	of	market	risk	associated	with	currencies and	interest	rates.	Revenue	earned	from	direct	sales	and	trading	and indirect	FX	trading	is	recorded	in	FX	trading	revenue.

Total	FX	trading	revenue	increased	 3%	compared	to	2013,	primarily the	result	of	higher	client	volumes.	Total	FX	trading	revenue	increased 15%	in	2013	compared	to	2012,	primarily	the	result	of	higher	client volumes,	currency	volatility	and	spreads.

We	enter	into	FX	transactions	with	clients	and	investment	managers that	contact	our	trading	desk	directly.	These	trades	are	all	executed	at negotiated	rates.	We	refer	to	this	activity,	and	our	principal	market-making activities,	as	"direct	sales	and	trading"	and	it	includes	many	transactions for	funds	serviced	by	third	party	custodians	or	prime	brokers,	as	well	as those	funds	under	custody	at	State	Street.

Alternatively,	clients	or	their	investment	managers	may	elect	to	route FX	transactions	to	our	FX	desk	through	our	asset-servicing	operation;	we refer	to	this	activity	as	"indirect	FX	trading,"	and,	in	all	cases,	State	Street is	the	fund's	custodian.	We	execute	indirect	FX	trades	as	a	principal	at rates	disclosed	to	our	clients.	We	calculate	revenue	for	indirect	FX	trading using	an	attribution	methodology.	This	methodology	takes	into consideration	estimated	mark-ups/downs	and	observed	client	volumes. Direct	sales	and	trading	revenue	is	all	other	FX	trading	revenue	other than	the	revenue	attributed	to	indirect	FX	trading.

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	State	Street	continues	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	at	State	Street	as	well	as	those	under	custody	at	another bank.

Our	direct	sales	and	trading	revenue	increased	 19%	in	2014 compared	to	2013.	The	increase	primarily	resulted	from	higher	client volumes,	partially	offset	by	lower	currency	volatility	and	spreads.	Our estimated	indirect	FX	trading	revenue	decreased	14%	in	2014,	compared to	2013.	The	decline	mainly	resulted	from	lower	client	volumes	and spreads.

We	continue	to	expect	that	some	clients	may	choose,	over	time,	to reduce	their	level	of	indirect	FX	trading	transactions	in	favor	of	other execution	methods,	including	either	direct	sales	and	trading	transactions or	electronic	FX	services	which	we	provide.	To	the	extent	that	clients	shift to	other	execution	methods	that	we	provide,	our	FX	trading	revenue	may decrease,	even	if	volumes	remain	consistent.

Total	brokerage	and	other	trading	services	revenue	declined	 6%	for 2014	compared	to	2013.	Our	clients	may	choose	to	execute	FX transactions	through	one	of	our	electronic	trading	platforms.	These transactions	generate	revenue	through	a	"click"	fee.	Revenue	from	such electronic	FX	services	declined	17%	in	2014	compared	to	2013,	mainly due	to	declines	in	client	volumes.

The	3%	increase	in	other	trading,	transition	management	and brokerage	revenue	for	2014	compared	to	2013	was	primarily	due	to	an increase	in	currency	management	revenue,	partially	offset	by	declines	in distribution	fees	associated	with	the	SPDR®	Gold	ETF,	which	resulted from	outflows	as	average	gold	prices	declined	during	the	period.	With respect	to	the	SPDR®	Gold	ETF,	fees	earned	by	us	as	distribution	agent are	recorded	in	other	trading,	transition	management	and	brokerage revenue	within	brokerage	and	other	trading	services	revenue,	and	not	in management	fee	revenue.

Our	revenue	from	transition	management	and	related	expenses	in 2014	and	2013	were	adversely	affected	by	compliance	issues	in	our	U.K. business,	the	reputational	and	regulatory	impact	of	which	may	continue	to adversely	affect	our	transition	management	revenue	in	future	periods.

Trading	services	revenue	increased	6%	in	2013	compared	to	2012, primarily	the	result	of	higher	client	volumes,	currency	volatility	and spreads.

# Securities	Finance

Our	securities	finance	business	consists	of	three	components:	(1)	an agency	lending	program	for	SSGA-managed	investment	funds	with	a broad	range	of	investment	objectives,	which	we	refer	to	as	the	SSGA 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.

See	Table	2:	Total	Revenue,	for	the	comparison	of	securities	finance revenue	for	the	years	ended	December	31,	2014,	2013	and	2012.

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	and	then	lends	such	securities	to	the	subsequent borrower,	either	a	State	Street	client	or	a	broker/dealer.	Our	involvement as	principal	is	utilized	when	the	lending

client	is	unable	to,	or	elects	not	to,	transact	directly	with	the	market	and requires	us	to	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	our	assets	under	custody	and	administration, from	clients	who	have	designated	State	Street	as	an	eligible	borrower.

Securities	finance	revenue	increased	22%	in	2014	compared	to 2013.	The	increase	was	mainly	the	result	of	growth	in	our	enhanced custody	business	and	the	impact	of	higher	lending	volumes	associated with	our	agency	lending	program.	Revenues	from	our	enhanced	custody business	totaled	approximately	$121	million	and	$61	million,	respectively, in	2014	and	2013.

Securities	finance	revenue	declined	11%	in	2013	from	2012	mainly a	result	of	lower	spreads	and	a	slight	decline	in	average	lending	volumes.

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,	recently effective	regulatory	changes	may	affect	the	volume	of	our	securities lending	activity	and	related	revenue	and	profitability	in	future	periods.

# Processing	Fees	and	Other

Processing	fees	and	other	revenue	includes	diverse	types	of	fees and	revenue,	including	fees	from	our	structured	products	business,	fees from	software	licensing	and	maintenance,	equity	income	from	our	joint venture	investments,	gains	and	losses	on	sales	of	leased	equipment	and other	assets,	and	amortization	of	our	tax-advantaged	investments.

Processing	fees	and	other	revenue	declined	 18%	in	2014	compared to	2013,	as	shown	in	 Table	2:	Total	Revenue.	The	decrease	was	mainly due	to	higher	amortization	of	tax-advantaged	investments,	partially	offset by	higher	revenue	from	our	investment	in	bank-owned	life	insurance.

Processing	fees	and	other	revenue	declined	12%	in	2013	compared to	2012.	The	decline	was	primarily	due	to	both	the	fair-value	adjustments related	to	our	withdrawal	from	our	fixed-income	trading	initiative	and	the gain	from	the	sale	of	a	Lehman	Brothers-related	asset,	both	recorded	in 2012,	as	well	as	hedge	ineffectiveness	recorded	in	 2013.	The	decline	in processing	fees	and	other	revenue	was	partially	offset	by	an	increase	in revenue	associated	with	our	investment	in	bank-owned	life	insurance	for 2013	compared	to	2012.

# Net	Interest	Revenue

See	Table	2:	Total	Revenue,	for	the	breakout	of	interest	revenue and	interest	expense	for	the	years	ended	December	31,	2014,	2013	and 2012.

Net	interest	revenue	is	defined	as	interest	revenue	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,	repurchase	agreements, loans	and	leases	and	other	liquid	assets,	are	financed

primarily	by	client	deposits,	short-term	borrowings	and	long-term	debt.	Net interest	margin	represents	the	relationship	between	annualized	fully taxable-equivalent	net	interest	revenue	and	average	total	interest-earning assets	for	the	period.	Revenue	that	is	exempt	from	income	taxes,	mainly that	earned	from	certain	investment	securities	(state	and	political subdivisions),	is	adjusted	to	a	fully	taxable-equivalent	basis	using	a federal	statutory	income	tax	rate	of	35%,	adjusted	for	applicable	state income	taxes,	net	of	the	related	federal	tax	benefit.

# TABLE	12:	AVERAGE	BALANCES	AND	INTEREST	RATES	-	FULLY	TAXABLE-EQUIVALENT	BASIS

| Years	Ended	December	31, | Average<br>Balance | 2014<br>Interest<br>Revenue/<br>Expense | Rate | Average<br>Balance | 2013<br>Interest<br>Revenue/<br>Expense | Rate | Average<br>Balance | 2012<br>Interest<br>Revenue/<br>Expense | Rate |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Dollars\tin\tmillions;\tfully\ttaxable-\nequivalent\tbasis) |  |  |  |  |  |  |  |  |  |
| Interest-bearing\tdeposits\twith\tbanks | $55,353 | $196 | .35% | $28,946 | $125 | .43% | $26,823 | $141 | .53% |
| Securities\tpurchased\tunder\tresale\nagreements | 4,077 | 38 | .94 | 5,766 | 45 | .77 | 7,243 | 51 | .71 |
| Trading\taccount\tassets | 959 | 1 | .13 | 748 | — | — | 651 | — | — |
| Investment\tsecurities | 116,809 | 2,317 | 1.98 | 117,696 | 2,429 | 2.06 | 113,910 | 2,689 | 2.36 |
| Loans\tand\tleases | 15,912 | 266 | 1.67 | 13,781 | 253 | 1.84 | 11,610 | 254 | 2.19 |
| Other\tinterest-earning\tassets | 15,944 | 7 | .05 | 11,164 | 4 | .04 | 7,378 | 3 | .04 |
| Average\ttotal\tinterest-earning\tassets | $209,054 | $2,825 | 1.36 | $178,101 | $2,856 | 1.60 | $167,615 | $3,138 | 1.88 |
| Interest-bearing\tdeposits: |  |  |  |  |  |  |  |  |  |
| U.S. | $21,296 | $21 | .10% | $8,862 | $10 | .12% | $9,333 | $19 | .20% |
| Non-U.S. | 109,003 | 78 | .07 | 100,391 | 83 | .08 | 89,059 | 147 | .16 |
| Securities\tsold\tunder\trepurchase\nagreements | 8,817 | — | — | 8,436 | 1 | .01 | 7,697 | 1 | .01 |
| Federal\tfunds\tpurchased | 20 | — | — | 298 | — | — | 784 | 1 | .09 |
| Other\tshort-term\tborrowings | 4,177 | 5 | .12 | 3,785 | 59 | 1.57 | 4,676 | 71 | 1.52 |
| Long-term\tdebt | 9,309 | 245 | 2.63 | 8,415 | 232 | 2.75 | 7,008 | 222 | 3.17 |
| Other\tinterest-bearing\tliabilities | 7,351 | 43 | .59 | 6,457 | 26 | .40 | 5,898 | 15 | .26 |
| Average\ttotal\tinterest-bearing\tliabilities | $159,973 | $392 | .25 | $136,644 | $411 | .30 | $124,455 | $476 | .39 |
| Interest-rate\tspread |  |  | 1.11% |  |  | 1.30% |  |  | 1.49% |
| Net\tinterest\trevenue—fully\ttaxable- |  |  |  |  |  |  |  |  |  |
| equivalent\tbasis |  | $2,433 |  |  | $2,445 |  |  | $2,662 |  |
| Net\tinterest\tmargin—fully\ttaxable-\nequivalent\tbasis |  |  | 1.16% |  |  | 1.37% |  |  | 1.59% |
| Tax-equivalent\tadjustment |  | (173) |  |  | (142) |  |  | (124) |  |
| Net\tinterest\trevenue—GAAP\tbasis |  | $2,260 |  |  | $2,303 |  |  | $2,538 |  |

Net	interest	revenue	decreased	2%,	and	on	a	fully	taxable- equivalent	basis	remained	relatively	flat,	in	2014	compared	to	2013.	The comparisons	were	generally	the	result	of	lower	yields	on	interest-earning assets,	as	lower	global	interest	rates	affected	our	revenue	from	floating- rate	assets,	partially	offset	by	the	benefit	of	higher	levels	of	interest- earning	assets	and	lower	rates	on	interest	paid.

Net	interest	revenue	declined	9%	in	2013	compared	to	2012.	The overall	decrease	was	primarily	due	to	the	impact	of	lower	yields	on interest-earning	assets	related	to	lower	global	interest	rates,	partially offset	by	lower	funding	costs.

Changes	in	the	components	of	interest-earning	assets	and	interest- bearing	liabilities	are	discussed	in	more	detail	below.	Additional	detail about	the	components	of	interest	revenue	and	interest	expense

is	provided	in	note	18	to	the	consolidated	financial	statements	included under	Item	8	of	this	Form	10-K.

Average	total	interest-earning	assets	were	higher	for	 2014 compared	to	2013,	the	result	of	our	investment	of	elevated	levels	of	client deposits	invested	in	interest-bearing	deposits	with	banks,	higher	levels	of cash	collateral	(included	in	other	interest-earning	assets	in	Table	12: Average	Balances	and	Interest	Rates	-	Fully	Taxable-Equivalent	Basis) provided	in	connection	with	our	enhanced	custody	business,	and	higher average	loans	and	leases.

The	higher	level	of	investment	in	interest-bearing	deposits	with banks	resulted	from	continued	higher	levels	of	client	deposits,	discussed further	below,	while	the	increase	in	average	loans	and	leases	resulted from	growth	in	mutual	fund	lending	and	our	continued	investment	in senior	secured	bank	loans.

During	the	past	year,	our	clients	have	continued	to	place	elevated levels	of	deposits	with	us,	as	low	global	interest	rates	have	made	deposits attractive	relative	to	other	investment	options.	The	portion	of	these	client deposits	characterized	by	us	as	transient	in	nature	has	generally	been placed	with	various	central	banks	globally,	while	deposits	we	characterize as	more	stable	have	generally	been	invested	in	our	investment	securities portfolio	and	used	to	support	growth	in	other	client-related	activities.

A	portion	of	the	increase	in	client	deposits	in	 2014	was	driven	by higher	levels	of	Euro	denominated	deposits,	as	clients	placed	these deposits	with	us	due	to	the	negative	interest	rate	environment	in	Europe. We	have	characterized	these	additional	deposits	as	transient	in	nature and,	accordingly,	have	generally	invested	these	deposits	with	central banks.	The	effects	of	the	recent	stronger	U.S.	dollar	relative	to	other currencies,	particularly	the	Euro,	has	exacerbated	the	associated negative	effect	on	our	net	interest	revenue.		If	European	Central	Bank,	or ECB,	monetary	policy	continues	to	pressure	European	interest	rates downward	and	the	U.S.	dollar	remains	strong	or	strengthens,	the	negative effects	on	our	net	interest	revenue	likely	will	continue	or	increase.

Our	average	other	interest-earning	assets,	largely	associated	with the	enhanced	custody	business,	composed	approximately	8%	of	our average	total	interest-earning	assets	for	2014,	compared	to	approximately 6%	of	our	average	total	interest-earning	assets	for	 2013,	as	this	business continued	to	grow.	While	the	enhanced	custody	business	supports	our overall	profitability	by	generating	securities	finance	fee	revenue,	it	puts downward	pressure	on	our	net	interest	margin,	as	interest	on	the	cash collateral	we	provide	is	earned	at	a	lower	rate	compared	to	our	investment securities	portfolio.

Subsequent	to	the	commercial	paper	conduit	consolidation	in	 2009, we	have	recorded	aggregate	discount	accretion	in	interest	revenue	of $2.02	billion	($119	million	in	2014,	$137	million	in	2013,	$215	million	in 2012,	$220	million	in	2011,	$712	million	in	2010,	and	$621	million	in 2009).	The	timing	and	ultimate	recognition	of	any	applicable	discount accretion	depends,	in	part,	on	factors	that	are	outside	of	our	control, including	anticipated	prepayment	speeds	and	credit	quality.	The	impact	of these	factors	is	uncertain	and	can	be	significantly	influenced	by	general economic	and	financial	market	conditions.	The	timing	and	recognition	of any	applicable	discount	accretion	can	also	be	influenced	by	our	ongoing management	of	the	risks	and	other	characteristics	associated	with	our investment	securities	portfolio,	including	sales	of	securities	which	would otherwise	generate	interest	revenue	through	accretion.

Depending	on	the	factors	discussed	above,	among	others,	we anticipate	that,	until	the	former	conduit	securities	remaining	in	our investment	portfolio	mature	or	are	sold,	discount	accretion	will	continue	to contribute,	though	generally	in	declining	amounts,	to	our	net	interest revenue.	Assuming	that	we	hold	the	remaining	former	conduit	securities to	maturity,	all	else	being	equal,	we	expect	the	remaining	former	conduit securities	carried	in	our	investment	portfolio	as	of	December	31,	2014	to generate	discount	accretion	in	future	periods	of	approximately	$387 million	over	their	remaining	terms,	with	approximately	half	of	this	discount accretion	to	be	recorded	over	the	next	four	years.

Interest-bearing	deposits	with	banks	averaged	$55.35	billion	for	the year	ended	December	31,	2014,	compared	to	$28.95	billion	for	the	year ended	December	31,	2013.	While	these	deposits	reflected	our maintenance	of	cash	balances	at	the	Federal	Reserve,	the	ECB	and	other non-U.S.	central	banks	to	satisfy	regulatory	reserve	requirements,	the above-described	amounts	also	reflect	the	additional	impact	of	continued elevated	levels	of	client	deposits	and	our	investment	of	the	excess deposits	with	central	banks.

Certain	client	deposits	were	characterized	as	transient	in	nature	and were	placed	with	various	central	banks	globally.	If	client	deposits	remain at	or	close	to	current	elevated	levels,	we	expect	to	continue	to	invest	them in	either	money	market	assets,	including	central	bank	deposits,	or	in investment	securities,	depending	on	our	assessment	of	the	underlying characteristics	of	the	deposits.

	Average	investment	securities	decreased	to	$116.81	billion	for	the year	ended	December	31,	2014	compared	to	$117.70	billion	for	2013	as we	continue	to	reposition	our	investment	portfolio	in	light	of	the	liquidity requirements	of	the	liquidity	coverage	ratio.

Detail	with	respect	to	our	investment	portfolio	as	of	 December	31,	2014 and	2013	is	provided	in	note	3	to	the	consolidated	financial	statements included	under	Item	8	of	this	Form	10-K.

Loans	and	leases	averaged	$15.91	billion	for	the	year	ended	2014, up	from	$13.78	billion	in	2013.	The	increase	was	mainly	related	to	mutual fund	lending	and	our	continued	investment	in	senior	secured	bank	loans. Mutual	fund	lending	and	senior	secured	bank	loans	averaged approximately	$9.12	billion	and	$1.40	billion,	respectively,	for	the	year ended	December	31,	2014	compared	to	$8.16	billion	and	$170	million	for the	year	ended	December	31,	2013,	respectively.

Average	loans	and	leases	also	include	short-duration	advances.

# TABLE	13:	U.S.	AND	NON-U.S.	SHORT-DURATION	ADVANCES

# Years	Ended	December	31,

| (In	millions) | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Average\tU.S.\tshort-duration\tadvances | $2,355 | $2,356 | $1,972 |
| Average\tnon-U.S.\tshort-duration\tadvances | 1,512 | 1,393 | 1,393 |
| Average\ttotal\tshort-duration\tadvances | $3,867 | $3,749 | $3,365 |
| Average\tshort-durance\tadvances\tto\naverage\tloans\tand\tleases | 24% | 27% | 29% |

The	decline	in	proportion	of	the	average	daily	short-duration advances	to	average	loans	and	leases	is	primarily	due	to	growth	in	the other	segments	of	the	loan	and	lease	portfolio.	Short-duration	advances provide	liquidity	to	clients	in	support	of	their	investment	activities.

Although	average	short-duration	advances	for	the	year	ended December	31,	2014	increased	compared	to	the	year	ended	December 31,	2013,	such	average	advances	remained	low	relative	to	historical levels,	mainly	the	result	of	clients	continuing	to	hold	higher	levels	of liquidity.

Average	other	interest-earning	assets	increased	to	$15.94	billion	for the	year	ended	December	31,	2014	from	$11.16	billion	for	the	year ended	December	31,	2013.	The	increased	levels	were	primarily	the	result of	higher	levels	of	cash	collateral	provided	in	connection	with	our enhanced	custody	business.

Aggregate	average	interest-bearing	deposits	increased	to	$130.30 billion	for	the	year	ended	December	31,	2014	from	$109.25	billion	for year	ended	2013.	The	higher	levels	were	primarily	the	result	of	increases in	both	U.S.	and	non-U.S.	transaction	accounts	and	time	deposits.	Future transaction	account	levels	will	be	influenced	by	the	underlying	asset servicing	business,	as	well	as

market	conditions,	including	the	general	levels	of	U.S.	and	non-U.S. interest	rates.

Average	other	short-term	borrowings	increased	to	$4.18	billion	for the	year	ended	December	31,	2014	from	$3.79	billion	for	the	year	ended 2013.	The	increase	was	the	result	of	a	higher	level	of	client	demand	for our	commercial	paper.	The	decline	in	rates	paid	from	1.6%	in	2013	to 0.1%	in	2014	resulted	from	a	reclassification	of	certain	derivative contracts	that	hedge	our	interest-rate	risk	on	certain	assets	and	liabilities, which	reduced	interest	revenue	and	interest	expense.

Average	long-term	debt	increased	to	$9.31	billion	for	the	year	ended December	31,	2014	from	$8.42	billion	for	the	year	ended	December	31, 2013.	The	increase	primarily	reflected	the	issuance	of	$1.5	billion	of senior	and	subordinated	debt	in	May	2013,	$1.0	billion	of	senior	debt issued	in	November	2013,	and	$1.0	billion	of	senior	debt	issued	in December	2014.	This	is	partially	offset	by	the	maturities	of	$500	million	of senior	debt	in	May	2014	and	$250	million	of	senior	debt	in	March	2014.

	Average	other	interest-bearing	liabilities	increased	to	$7.35	billion	for the	year	ended	December	31,	2014	from	$6.46	billion	for	the	year	ended December	31,	2013,	primarily	the	result	of	higher	levels	of	cash	collateral received	from	clients	in	connection	with	our	enhanced	custody	business.

Several	factors	could	affect	future	levels	of	our	net	interest	revenue and	margin,	including	the	mix	of	client	liabilities;	actions	of	various	central banks;	changes	in	U.S.	and	non-U.S.	interest	rates;	changes	in	the various	yield	curves	around	the	world;	revised	or	proposed	regulatory capital	or	liquidity	standards,	or	interpretations	of	those	standards;	the amount	of	discount	accretion	generated	by	the	former	conduit	securities that	remain	in	our	investment	securities	portfolio;	and	the	yields	earned	on securities	purchased	compared	to	the	yields	earned	on	securities	sold	or matured.

Based	on	market	conditions	and	other	factors,	we	continue	to reinvest	the	majority	of	the	proceeds	from	pay-downs	and	maturities	of investment	securities	in	highly-rated	securities,	such	as	U.S.	Treasury and	agency	securities,	municipal	securities,	federal	agency	mortgage- backed	securities	and	U.S.	and	non-U.S.	mortgage-	and	asset-backed securities.	The	pace	at	which	we	continue	to	reinvest	and	the	types	of investment	securities	purchased	will	depend	on	the	impact	of	market conditions	and	other	factors	over	time.	We	expect	these	factors	and	the levels	of	global	interest	rates	to	influence	what	effect	our	reinvestment program	will	have	on	future	levels	of	our	net	interest	revenue	and	net interest	margin.

# Gains	(Losses)	Related	to	Investment	Securities,	Net

We	regularly	review	our	investment	securities	portfolio	to	identify other-than-temporary	impairment	of	individual	securities.	Additional information	about	investment	securities,	the	gross	gains	and	losses	that compose	the	net	gains	from	sales	of	securities	and	other-than-temporary impairment	is	provided	in	note	3	to	the	consolidated	financial	statements under	Item	8	of	this	Form	10-K.

# TABLE	14:	INVESTMENT	SECURITIES	GAINS	(LOSSES),	NET

| Years	Ended	December	31, | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| (In\tmillions) |  |  |  |
| Net\trealized\tgains\tfrom\tsales\tof\tavailable-for-sale\nsecurities | $15 | $14 | $55 |
| Net\timpairment\tlosses: |  |  |  |
| Gross\tlosses\tfrom\tother-than-temporary\nimpairment | (1) | (21) | (53) |
| Losses\treclassified\t(from)\tto\tother\ncomprehensive\tincome | (10) | (2) | 21 |
| Net\timpairment\tlosses(1) | (11) | (23) | (32) |
| Gains\t(losses)\trelated\tto\tinvestment\tsecurities,\tnet | $4 | $(9) | $23 |
| (1)\tNet\timpairment\tlosses,\trecognized\tin\tour |  |  |  |
| consolidated\tstatement\tof\tincome,\twere\tcomposed |  |  |  |
| of\tthe\tfollowing: |  |  |  |
| Impairment\tassociated\twith\texpected\tcredit\nlosses | $(10) | $(11) | $(16) |
| Impairment\tassociated\twith\tmanagement's\tintent |  |  |  |
| to\tsell\timpaired\tsecurities\tprior\tto\trecovery\tin |  |  |  |
| value | — | (6) | — |
| Impairment\tassociated\twith\tadverse\tchanges\tin\ntiming\tof\texpected\tfuture\tcash\tflows | (1) | (6) | (16) |
| Net\timpairment\tlosses | $(11) | $(23) | $(32) |

From	time	to	time,	in	connection	with	our	ongoing	management	of our	investment	securities	portfolio,	we	sell	available-for-sale	securities	to manage	risk,	to	take	advantage	of	favorable	market	conditions,	or	for other	reasons.	In	2014,	we	sold	approximately	 $9.77	billion	of	such investment	securities,	compared	to	approximately	$10.26	billion	in	2013, and	recorded	net	realized	gains	of	$15	million	and	$14	million, respectively,	as	presented	in	the	preceding	table.

# PROVISION	FOR	LOAN	LOSSES

We	recorded	a	provision	for	loan	losses	of	 $10	million	in	2014, compared	to	$6	million	in	2013	and	a	negative	provision	of	 $3	million	in 2012.	The	provisions	in	2014	and	2013	were	recorded	in	connection	with our	exposure	to	non-investment-grade	borrowers	composed	of	senior secured	bank	loans,	which	we	purchased	in	connection	with	our participation	in	loan	syndications	in	the	non-investment-grade	lending market.	The	increase	in	the	provision	in	the	year-to-year	comparison reflected	growth	of	the	portfolio.	Additional	information	about	these	senior secured	bank	loans	is	provided	under

"Financial	Condition	-	Loans	and	Leases"	in	this	Management's Discussion	and	Analysis,	and	in	note	4	to	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.

# EXPENSES

# TABLE	15:	EXPENSES

| Years	Ended<br>December	31, | 2014 | 2013 | 2012 | %		Change<br>2014	vs.	2013 | %		Change<br>2013	vs.	2012 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Dollars\tin\tmillions) |  |  |  |  |  |
| Compensation\tand\nemployee\tbenefits | $4,060 | $3,800 | $3,837 | 7\t% | (1)% |
| Information\tsystems\nand\tcommunications | 976 | 935 | 844 | 4 | 11 |
| Transaction\tprocessing\nservices | 784 | 733 | 702 | 7 | 4 |
| Occupancy | 461 | 467 | 470 | (1) | (1) |
| Claims\tresolution | — | — | (362) |  |  |
| Acquisition\tcosts | 58 | 76 | 26 |  |  |
| Restructuring\tcharges,\nnet | 75 | 28 | 199 |  |  |
| Other: |  |  |  |  |  |
| Professional\nservices | 440 | 392 | 381 | 12 | 3 |
| Amortization\tof |  |  |  |  |  |
| other\tintangible |  |  |  |  |  |
| assets | 222 | 214 | 198 | 4 | 8 |
| Securities\nprocessing\tcosts | 68 | 52 | 24 |  |  |
| Regulatory\tfees\nand\tassessments | 74 | 72 | 61 |  |  |
| Other(1) | 609 | 423 | 506 | 44 | (16) |
| Total\tother | 1,413 | 1,153 | 1,170 | 23 | (1) |
| Total\texpenses | $7,827 | $7,192 | $6,886 | 9 | 4 |
| Number\tof\temployees\nat\tyear-end | 29,970 | 29,430 | 29,660 |  |  |

(1)	Included	in	other	for	the	year	ended	December	31,	2014	was	a	$185	million	legal accrual	in	connection	with	management's	intention	to	seek	to	resolve	some,	but	not all,	of	the	outstanding	and	potential	claims	arising	out	of	our	indirect	FX	client activities.	For	additional	information,	refer	to	note	21	to	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.

Compensation	and	employee	benefits	expenses	increased	7%	in 2014	compared	to	2013.	The	increase	was	primarily	the	result	of	costs	for additional	staffing	to	support	new	business,	higher	incentive compensation,	the	impact	of	merit	increases	and	promotions,	and	higher regulatory	compliance	costs,	partially	offset	by	savings	generated	from the	completion	of	our	Business	Operations	and	Information	Technology Transformation	program.

Compensation	and	employee	benefits	expenses	in	2014	included approximately	$53	million	of	costs	related	to	our	Business	Operations	and Information

Technology	Transformation	program,	which	was	completed	at	the	end	of 2014,	compared	to	approximately	$84	million	in	2013.	The	2014	expenses also	included	$84	million	of	net	severance	costs	associated	with	staffing realignment.

Compensation	and	employee	benefits	expenses	declined	1%	in 2013	compared	to	2012,	primarily	the	result	of	lower	staffing	levels, including	savings	related	to	the	implementation	of	our	Business Operations	and	Information	Technology	Transformation	program,	and lower	benefit	costs,	partially	offset	by	expenses	to	support	new	business and	acquisitions	and	higher	incentive	compensation.

Information	systems	and	communications	expenses	increased	 4%	in 2014	compared	to	2013.	The	increase	was	mainly	associated	with	higher infrastructure	costs	related	to	the	completion	of	our	Business	Operations and	Information	Technology	Transformation	program.

Additional	information	with	respect	to	the	impact	of	the	Business Operations	and	Information	Technology	Transformation	program	on future	compensation	and	employee	benefits	and	information	systems	and communications	expenses	is	provided	in	the	following	"Restructuring Charges"	section.

Expenses	for	transaction	processing	services	increased	 7%	in	2014 compared	to	2013.	The	increase	primarily	reflected	higher	equity	market values	and	higher	transaction	volumes	in	the	investment	servicing business.

Transaction	processing	services	expenses	increased	 4%	in	2013 compared	to	2012	primarily	as	a	result	of	higher	equity	market	values	and higher	transaction	volumes	in	the	asset	servicing	business.

Other	expenses	increased	23%	in	2014	compared	to	2013,	primarily due	to	a	legal	accrual	of	$185	million	in	connection	with	management's intention	to	seek	to	resolve	some,	but	not	all,	of	the	outstanding	and potential	claims	arising	out	of	our	indirect	FX	client	activities,	higher	levels of	professional	services	associated	with	regulatory	compliance requirements,	a	charitable	contribution	to	the	State	Street	Foundation,	as well	as	the	impact	of	the	Lehman	Brothers-related	gains	and	recoveries recorded	in	2013.	The	legal	accrual	is	more	fully	discussed	under	"Legal and	Regulatory	Matters"	in	note	11	to	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.

The	decline	in	other	expenses	for	2013	compared	to	2012	was mainly	the	result	of	credits	of	$85	million	related	to	gains	and	recoveries associated	with	Lehman	Brothers-related	assets	in	2013.

Excluding	these	recoveries	from	other	expenses	for	 2013,	and excluding	the	credits	of	$14	million	from

Our	compliance	obligations	have	increased	significantly	due	to	new regulations	in	the	U.S.	and	internationally	that	have	been	adopted	or proposed	in	response	to	the	financial	crisis.	As	a	systemically	important financial	institution,	we	are	subject	to	enhanced	supervision	and prudential	standards.	Our	status	as	a	G-SIB	has	also	resulted	in heightened	prudential	and	conduct	expectations	of	our	U.S.	and international	regulators	with	respect	to	our	capital	and	liquidity management	and	our	compliance	and	risk	oversight	programs.	These heightened	expectations	have	increased	our	regulatory	compliance	costs, including	personnel	and	systems,	as	well	as	significant	additional implementation	and	related	costs	to	enhance	our	programs.	We	anticipate that	these	evolving	and	increasing	regulatory	compliance	requirements and	expectations	will	continue	to	affect	our	expenses.	Our	employee compensation	and	benefits,	information	systems	and	other	expenses could	increase,	as	we	further	adjust	our	operations	in	response	to	new	or proposed	requirements	and	heightened	expectations.

# Claims	Resolution

As	a	result	of	the	2008	Lehman	Brothers	bankruptcy,	we	had	various claims	against	Lehman	Brothers	entities	in	bankruptcy	proceedings	in	the U.S.	and	the	U.K.	We	also	had	amounts	asserted	as	owed,	or	return obligations,	to	Lehman	Brothers	entities.	The	various	claims	and	amounts owed	arose	from	transactions	that	existed	at	the	time	Lehman	Brothers entered	bankruptcy,	including	prime	brokerage	arrangements,	foreign exchange	transactions,	securities	lending	arrangements	and	repurchase agreements.

In	2014,	we	received	distributions	totaling	approximately	 $21	million from	the	Lehman	Brothers	estates,	compared	to	approximately	$186 million	from	the	Lehman	Brothers	estates	in	 2013.	Of	the	distributions received	in	both	2014	and	2013,	approximately	$11	million	and	$101 million,	respectively,	was	related	to	recoveries	of	specific	claims	and applied	to	reduce	remaining	Lehman	Brothers-related	assets,	primarily prime	brokerage	claim-related	receivables,	recorded	in	our	consolidated statement	of	condition;	the	remaining	$10	million	and	$85	million	received in	2014	and	2013,	respectively,	was	recorded	as	a	credit	to	other expenses	in	our	consolidated	statement	of	income.

# Restructuring	Charges

Information	with	respect	to	our	Business	Operations	and	Information Technology	Transformation	program	and	our	2012	expense	control measures,	including	charges,	employee	reductions	and	related	accruals, is	provided	in	the	following	sections.

# Business	Operations	and	Information	Technology	Transformation Program

In	November	2010,	we	announced	a	global	multi-year	Business Operations	and	Information	Technology	Transformation	program.	The program	included	operational,	information	technology	and	targeted	cost initiatives,	including	plans	related	to	reductions	in	both	staff	and occupancy	costs.

The	majority	of	the	annual	savings	have	affected	compensation	and employee	benefits

expenses.	These	savings	have	been	modestly	offset	by	increases	in information	systems	and	communications	expenses.

With	respect	to	our	business	operations,	we	standardized	certain core	business	processes,	primarily	through	our	execution	of	the	State Street	Lean	methodology,	and	we	drove	automation	of	these	business processes.	We	created	a	new	technology	platform,	including	transferring certain	core	software	applications	to	a	private	cloud,	and	we	expanded our	use	of	third-party	service	providers	associated	with	components	of	our information	technology	infrastructure	and	application	maintenance	and support.

We	incurred	aggregate	pre-tax	restructuring	charges	of approximately	$440	million	over	the	four-year	period	ending December	31,	2014	and	we	have	recorded	these	restructuring	charges	in our	consolidated	statement	of	income.

# TABLE	16:	PRE-TAX	AGGREGATE	RESTRUCTURING	CHARGES	-	BUSINESS	OPERATIONS	AND	INFORMATION	TECHNOLOGY	TRANSFORMATION	PROGRAM

| (In	millions) | Employee-Related<br>Costs | Real	Estate<br>Consolidation | Information<br>Technology	Costs | Total |
| :--- | :--- | :--- | :--- | :--- |
| 2010 | $105 | $51 | $— | $156 |
| 2011 | 85 | 7 | 41 | 133 |
| 2012 | 27 | 20 | 20 | 67 |
| 2013 | 13 | 13 | (1) | 25 |
| 2014 | 38 | 21 | — | 59 |
| Total | $268 | $112 | $60 | $440 |

Employee-related	costs	included	severance,	benefits	and outplacement	services.	Real	estate consolidation	costs	resulted	from	actions	taken	to	reduce	our	occupancy costs	through	the	consolidation	of	leases	and	properties.	Information technology	costs	included	transition	fees	related	to	the	above-described expansion	of	our	use	of	third-party	service	providers.

We	originally	identified	a	total	of	1,574	positions	as	part	of	this initiative.	As	of	December	31,	2014,	we	substantially	completed	these reductions.

# 2012	Expense	Control	Measures

In	December	2011,	in	connection	with	expense	control	measures designed	to	better	align	our	expenses	to	our	business	strategy	and	related outlook	for	2013,	we	identified	additional	targeted	staff	reductions.	As	a result	of	these	actions,	we	have

recorded	aggregate	pre-tax	restructuring	charges	of	$133	million	in	2012, $3	million	in	2013	and	$16	million	in	2014	in	our	consolidated	statement of	income.	Employee-related	costs	included	severance,	benefits	and outplacement	services.	Costs	for	asset	and	other	write-offs	were	primarily related	to	contract	terminations.	We	originally	identified	involuntary terminations	of	960	employees	(630	positions	after	replacements).		As	of March	31,	2014,	we	substantially	completed	these	reductions.

The	restructuring	charge	accrual	associated	with	the	Business Operations	and	Information	Technology	Transformation	program	and	the 2012	expense	control	measures	as	of	December	31,	2014	and	2013	was $71	million	and	$106	million,	respectively.

# Income	Tax	Expense

Income	tax	expense	was	$421	million	in	2014	compared	to	$550 million	in	2013.	Our	effective	tax	rate	for	2014	was	17.2%	compared	to 20.5%	in	2013,	which	included	the	impact	of	an	out-of-period	income	tax benefit.	The	decline	in	the	2014	effective	tax	rate	was	primarily attributable	to	an	expansion	of	our	municipal	securities	portfolio,	increased investments	in	alternative	energy	projects	and	greater	benefits	from	our non-U.S.	operations,	net	of	the	2013	out-of-period	benefit.

Additional	information	regarding	income	tax	expense,	including unrecognized	tax	benefits,	and	tax	contingencies	are	provided	in	notes	22 and	11,	to	the	consolidated	financial	statements	under	Item	8	of	this	Form 10-K.

# LINE	OF	BUSINESS	INFORMATION

We	have	two	lines	of	business:	Investment	Servicing	and	Investment Management.	Given	our	services	and	management	organization,	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.	Information	about	our	two	lines	of	business,	as well	as	the	revenues,	expenses	and	capital	allocation	methodologies associated	with	them,	is	provided	in	note	24	to	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.

The	amounts	in	the	"Other"	columns	were	not	allocated	to	our business	lines.	The	"Other"	column	for	2014	included	net	costs	of	$219 million	composed	of	the	following	-

•Net	acquisition	and	restructuring	costs	of	$133	million;

•Net	severance	costs	associated	with	staffing	realignment	of	 $84 million;	and

•Net	provisions	for	litigation	exposure	and	other	costs	of	 $2	million.

The	"Other"	column	for	2013	included	costs	of	$180	million composed	of	the	following	-

•Net	acquisition	and	restructuring	costs	of	$104	million;

•Net	provisions	for	litigation	exposure	and	other	costs	of	 $65 million;	and

•Net	severance	costs	associated	with	staffing	realignment	of	 $11 million.

The	"Other"	column	for	2012	included	net	losses	of	$27	million composed	of	the	following	-

•Net	realized	loss	from	the	sale	of	all	of	our	Greek	investment securities	of	$46	million;

•A	benefit	related	to	claims	associated	with	the	2008	Lehman Brothers	bankruptcy	of	$362	million;

•Net	acquisition	and	restructuring	costs	of	$225	million;	and

Prior	reported	results	reflect	reclassifications,	for	comparative purposes,	related	to	management	changes	in	methodologies	associated with	allocations	of	revenue	and	expenses	reflected	in	line-of-business results	for	2014.

# TABLE	17:	INVESTMENT	SERVICING	LINE	OF	BUSINESS	RESULTS

| Years	Ended	December	31,<br>(Dollars	in	millions,	except	where<br>otherwise	noted) | 2014 | 2013 | 2012 | %	Change<br>2014	vs.<br>2013 |
| :--- | :--- | :--- | :--- | :--- |
| Servicing\tfees | $5,129 | $4,819 | $4,414 | 6% |
| Trading\tservices | 1,039 | 1,027 | 938 | 1 |
| Securities\tfinance | 437 | 359 | 405 | 22 |
| Processing\tfees\tand\tother | 179 | 206 | 235 | (13) |
| Total\tfee\trevenue | 6,784 | 6,411 | 5,992 | 6 |
| Net\tinterest\trevenue | 2,188 | 2,221 | 2,464 | (1) |
| Gains\t(losses)\trelated\tto\tinvestment\nsecurities,\tnet | 4 | (9) | 69 |  |
| Total\trevenue | 8,976 | 8,623 | 8,525 | 4 |
| Provision\tfor\tloan\tlosses | 10 | 6 | (3) |  |
| Total\texpenses | 6,648 | 6,190 | 6,058 | 7 |
| Income\tbefore\tincome\ttax\texpense | $2,318 | $2,427 | $2,470 | (4) |
| Pre-tax\tmargin | 26% | 28% | 29% |  |
| Average\tassets\t(in\tbillions) | $234.2 | $203.2 | $190.1 |  |

Total	revenue	and	total	fee	revenue	in	 2014	for	our	Investment Servicing	line	of	business,	presented	in	Table	17:	Investment	Servicing Line	of	Business	Results,	increased	4%	and	6%,	respectively,	compared to	2013.	The	increase	in	total	fee	revenue	primarily	resulted	from increases	in	servicing	fees,	securities	finance	revenue	and	trading services	revenue,	partially	offset	by	a	decline	in	processing	fees	and	other revenue.

Servicing	fees	increased	6%	in	2014	compared	to	2013,	primarily the	result	of	stronger	global	equity	markets	and	the	positive	revenue impact	of	net	new	business	(revenue	added	from	new	servicing	business installed	less	revenue	lost	from	the	removal	of	assets	serviced).

Trading	services	revenue	increased	1%	in	2014	compared	to	2013, primarily	as	a	result	of	higher	client	volumes	in	direct	sales	and	trading, partially	offset	by	a	decline	in	client	volumes	in	electronic	foreign exchange	trading	services.

Securities	finance	revenue	increased	22%	in	2014	compared	to 2013,	mainly	the	result	of	 growth	in	our	enhanced	custody	business	and higher	volumes.

Processing	fees	and	other	revenue	 decreased	13%	in	2014 compared	to	2013,	primarily	due	to	higher	amortization	of	tax-advantaged investments,	partially	offset	by	higher	loan	service	fees	due	to	higher average	loan	volumes	and	higher	revenue	from	our	investment	in	bank- owned	life	insurance.

Servicing	fees,	securities	finance	revenue	and	net	gains	(losses) related	to	investment	securities	for	our	Investment	Servicing	business	line are	consistent

with	the	respective	consolidated	results.	Refer	to	"Servicing	Fees," "Securities	Finance"	and	"Gains	(Losses)	Related	to	Investment Securities,	Net"	under	"Total	Revenue"	in	this	Management's	Discussion and	Analysis	for	a	more	in-depth	discussion.	A	discussion	of	trading services	revenue	and	processing	fees	and	other	revenue	is	provided under	"Trading	Services"	and	"Processing	Fees	and	Other"	in	"Total Revenue."

Net	interest	revenue	decreased	1%	in	2014	compared	to	2013 generally	the	result	of	lower	yields	on	interest	earning	assets,	as	lower global	interest	rates	affected	our	revenue	from	floating-rate	assets, partially	offset	by	the	benefit	of	higher	levels	of	interest-earning	assets and	lower	rates	on	interest	paid.	A	discussion	of	net	interest	revenue	is provided	under	"Net	Interest	Revenue"	in	"Total	Revenue."

Total	expenses	increased	7%	in	2014	compared	to	2013,	primarily driven	by	increases	in	other	expenses,	compensation	and	employee benefit	expenses	and	transaction	processing	services.

# TABLE	18:	INVESTMENT	MANAGEMENT	LINE	OF	BUSINESS	RESULTS

| Years	Ended	December	31,<br>(Dollars	in	millions,	except	where<br>otherwise	noted) | 2014 | 2013 | 2012 | %	Change<br>2014	vs.<br>2013 |
| :--- | :--- | :--- | :--- | :--- |
| Management\tfees | $1,207 | $1,106 | $993 | 9% |
| Trading\tservices | 45 | 67 | 98 | (33) |
| Processing\tfees\tand\tother | (5) | 6 | 5 |  |
| Total\tfee\trevenue | 1,247 | 1,179 | 1,096 | 6 |
| Net\tinterest\trevenue | 72 | 82 | 74 | (12) |
| Total\trevenue | 1,319 | 1,261 | 1,170 | 5 |
| Total\texpenses | 960 | 822 | 847 | 17 |
| Income\tbefore\tincome\ttax\texpense | $359 | $439 | $323 | (18) |
| Pre-tax\tmargin | 27% | 35% | 28% |  |
| Average\tassets\t(in\tbillions) | $3.9 | $3.8 | $3.7 |  |

Total	revenue	for	our	Investment	Management	line	of	business, presented	in	Table	18:	Investment	Management	Line	of	Business	Results , increased	5%	in	2014	compared	to	2013.	Total	fee	revenue	increased 6%	compared	to	2013,	primarily	the	result	of	increases	in	management fees,	partially	offset	by	decreases	in	trading	services	revenue.

Management	fees	increased	9%	in	2014	compared	to	2013, primarily	the	result	of	stronger	global	equity	markets	and	net	inflows. Trading	services	revenue	declined	33%	in	2014	compared	to	2013, mainly	due	to	lower	distribution	fees	associated	with	the	SPDR®	Gold ETF,	which	resulted	from	outflows	and	a	lower	average	gold	price	during the	period.

Management	fees	for	the	Investment	Management	business	line	are consistent	with	the

respective	consolidated	results.	Refer	to	"Management	Fees"	in	"Total Revenue"	in	this	Management's	Discussion	and	Analysis	for	a	more	in- depth	discussion.	A	discussion	of	trading	services	revenue	is	provided under	"Trading	Services"	in	"Total	Revenue."

Total	expenses	increased	17%	in	2014	compared	to	2013.	The increase	primarily	reflected	the	impact	of	gains	and	recoveries	associated with	Lehman	Brothers-related	assets	recorded	in	2013,	as	well	as	higher incentive	compensation.

Pre-tax	margin	for	Investment	Management	declined	in	 2014 compared	to	2013.	The	higher	margin	for	the	prior-year	was	mainly	the result	of	the	gains	and	recoveries	associated	with	Lehman	Brothers- related	assets	recorded	in	total	expenses	in	2013.

# 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	match	the	liquidity	and	interest-rate characteristics	of	the	liabilities,	although	the	weighted-average	maturities of	our	assets	are	significantly	longer	than	the	contractual	maturities	of	our liabilities.	Our	assets	consist	primarily	of	securities	held	in	our	available- for-sale	or	held-to-maturity	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.

# TABLE	19:	AVERAGE	STATEMENT	OF	CONDITION(1)

| Years	Ended	December	31, | 2014 | 2013 |
| :--- | :--- | :--- |
| (In\tmillions) | Average\tBalance | Average\tBalance |
| Assets: |  |  |
| Interest-bearing\tdeposits\twith\tbanks | $55,353 | $28,946 |
| Securities\tpurchased\tunder\tresale\tagreements | 4,077 | 5,766 |
| Trading\taccount\tassets | 959 | 748 |
| Investment\tsecurities | 116,809 | 117,696 |
| Loans\tand\tleases | 15,912 | 13,781 |
| Other\tinterest-earning\tassets | 15,944 | 11,164 |
| Average\ttotal\tinterest-earning\tassets | 209,054 | 178,101 |
| Cash\tand\tdue\tfrom\tbanks | 4,139 | 3,747 |
| Other\tnoninterest-earning\tassets | 24,935 | 25,182 |
| Average\ttotal\tassets | $238,128 | $207,030 |
| Liabilities\tand\tshareholders'\tequity: |  |  |
| Interest-bearing\tdeposits: |  |  |
| U.S. | $21,296 | $8,862 |
| Non-U.S. | 109,003 | 100,391 |
| Total\tinterest-bearing\tdeposits | 130,299 | 109,253 |
| Securities\tsold\tunder\trepurchase\tagreements | 8,817 | 8,436 |
| Federal\tfunds\tpurchased | 20 | 298 |
| Other\tshort-term\tborrowings | 4,177 | 3,785 |
| Long-term\tdebt | 9,309 | 8,415 |
| Other\tinterest-bearing\tliabilities | 7,351 | 6,457 |
| Average\ttotal\tinterest-bearing\tliabilities | 159,973 | 136,644 |
| Noninterest-bearing\tdeposits | 44,041 | 36,294 |
| Other\tnoninterest-bearing\tliabilities | 12,797 | 13,561 |
| Preferred\tshareholders'\tequity | 1,181 | 490 |
| Common\tshareholders'\tequity | 20,136 | 20,041 |
| Average\ttotal\tliabilities\tand\tshareholders'\tequity | $238,128 | $207,030 |

(1)	Additional	information	about	our	average	statement	of	condition,	primarily	our	interest-earning	assets	and	interest-bearing	liabilities,	is	included	under	"Consolidated	Results	of Operations	-	Total	Revenue	-	Net	Interest	Revenue"	in	this	Management's	Discussion	and	Analysis.

# Investment	Securities

# TABLE	20:	CARRYING	VALUES	OF	INVESTMENT	SECURITIES

| (In	millions) | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Available\tfor\tsale: |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |
| Direct\tobligations | $10,655 | $709 | $841 |
| Mortgage-backed\tsecurities | 20,714 | 23,563 | 32,212 |
| Asset-backed\tsecurities: |  |  |  |
| Student\tloans(1) | 12,460 | 14,542 | 16,421 |
| Credit\tcards | 3,053 | 8,210 | 9,986 |
| Sub-prime | 951 | 1,203 | 1,399 |
| Other | 4,145 | 5,064 | 4,677 |
| Total\tasset-backed\tsecurities\nNon-U.S.\tdebt\tsecurities: | 20,609 | 29,019 | 32,483 |
| Mortgage-backed\tsecurities | 9,606 | 11,029 | 11,405 |
| Asset-backed\tsecurities | 3,226 | 5,390 | 6,218 |
| Government\tsecurities | 3,909 | 3,761 | 3,199 |
| Other | 5,428 | 4,727 | 4,306 |
| Total\tnon-U.S.\tdebt\tsecurities | 22,169 | 24,907 | 25,128 |
| State\tand\tpolitical\tsubdivisions | 10,820 | 10,263 | 7,551 |
| Collateralized\tmortgage\tobligations | 5,339 | 5,269 | 4,954 |
| Other\tU.S.\tdebt\tsecurities | 4,109 | 4,980 | 5,298 |
| U.S.\tequity\tsecurities | 39 | 34 | 31 |
| Non-U.S.\tequity\tsecurities | 2 | 1 | 1 |
| U.S.\tmoney-market\tmutual\tfunds | 449 | 422 | 1,062 |
| Non-U.S.\tmoney-market\tmutual\tfunds | 8 | 7 | 121 |
| Total | $94,913 | $99,174 | $109,682 |
| Held\tto\tMaturity: |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |
| Direct\tobligations | $5,114 | $5,041 | $5,000 |
| Mortgage-backed\tsecurities\nAsset-backed\tsecurities: | 62 | 91 | 153 |
| Student\tloans(1) | 1,814 | 1,627 | — |
| Credit\tcards | 897 | 762 | — |
| Other | 577 | 782 | 16 |
| Total\tasset-backed\tsecurities | 3,288 | 3,171 | 16 |
| Non-U.S.\tdebt\tsecurities: |  |  |  |
| Mortgage-backed\tsecurities | 3,787 | 4,211 | 3,122 |
| Asset-backed\tsecurities | 2,868 | 2,202 | 434 |
| Government\tsecurities | 154 | 2 | 3 |
| Other | 72 | 192 | 167 |
| Total\tnon-U.S.\tdebt\tsecurities | 6,881 | 6,607 | 3,726 |
| State\tand\tpolitical\tsubdivisions | 9 | 24 | 74 |
| Collateralized\tmortgage\tobligations | 2,369 | 2,806 | 2,410 |
| Total | $17,723 | $17,740 | $11,379 |

(1)	Primarily	composed	of	securities	guaranteed	by	the	federal	government	with	respect	to	at	least	97%	of defaulted	principal	and	accrued	interest	on	the	underlying	loans.

The	increase	in	U.S.	Treasury	direct	obligations	as	of	 December	31, 2014	compared	to	December	31,

2013,	as	well	as	decreases	in	certain	of	the	mortgage-	and	asset-backed securities	for	the	same	periods,	presented	in	Table	20:	Carrying	Values	of Investment	Securities,	were	associated	with	our	repositioning	of	the portfolio	in	light	of	the	liquidity	requirements	of	the	liquidity	coverage	ratio, or	LCR.

Additional	information	about	our	investment	securities	portfolio	is provided	in	note	3	to	the	consolidated	financial	statements	included	under Item	8	of	this	Form	10-K.

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.

# TABLE	21:	INVESTMENT	PORTFOLIO	BY	EXTENAL	CREDIT	RATING

|  | 2014 | 2013 |
| :--- | :--- | :--- |
| AAA(1) | 73% | 70% |
| AA | 17 | 19 |
| A | 6 | 6 |
| BBB | 2 | 3 |
| Below\tBBB | 2 | 2 |
|  | 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.

As	of	December	31,	2014,	the	investment	portfolio	of	16,915 securities	was	diversified	with	respect	to	asset	class.	Approximately	64% of	the	aggregate	carrying	value	of	the	portfolio	as	of	that	date	was composed	of	mortgage-backed	and	asset-backed	securities,	compared	to 74%	as	of	December	31,	2013.	The	asset-backed	securities	portfolio,	of which	approximately	96%	and	97%	of	the	carrying	value	as	of December	31,	2014	and	2013,	respectively,	was	floating-rate,	consisted primarily	of	student	loan-backed	and	credit	card-backed	securities. Mortgage-backed	securities	were	composed	of	securities	issued	by	the Federal	National	Mortgage	Association	and	Federal	Home

Loan	Mortgage	Corporation,	as	well	as	U.S.	and	non-U.S.	large-issuer collateralized	mortgage	obligations.

The	Volcker	rule	became	effective	on	July	21,	2012,	and	the	final implementing	regulations	became	effective	on	April	1,	2014.	In	the absence	of	an	applicable	extension	of	the	Volcker	rule's	general conformance	period,	a	banking	entity	must	bring	its	activities	and investments	into	conformance	with	the	Volcker	rule	and	its	final	Volcker rule	regulations	by	July	21,	2015.	In	December	2014,	the	Federal Reserve	issued	an	order,	the	2016	conformance	period	extension, extending	the	Volcker	rule's	general	conformance	period	until	July	21, 2016	for	investments	in	and	relationships	with	covered	funds	and	certain foreign	funds	that	were	in	place	on	or	prior	to	December	31,	2013, referred	to	as	legacy	covered	funds.	Under	the	2016	conformance	period extension,	all	investments	in	and	relationships	related	to	investments	in	a covered	fund	made	or	entered	into	after	that	date	by	a	banking	entity	and its	affiliates,	and	all	proprietary	trading	activities	of	those	entities,	must	be in	conformance	with	the	Volcker	rule	and	its	final	implementing regulations	by	July	21,	2015.	The	Federal	Reserve	stated	in	the	2016 conformance	period	extension	that	it	intends	to	grant	a	final	one-year extension	of	the	general	conformance	period,	to	July	21,	2017,	for banking	entities	to	conform	ownership	interests	in	and	relationships	with legacy	covered	funds.

As	of	December	31,	2014,	we	held	approximately	 $4.54	billion	of investments	in	CLOs.	As	of	the	same	date,	these	investments	had	an aggregate	pre-tax	net	unrealized	gain	of

approximately	$97	million,	composed	of	gross	unrealized	gains	of	 $105 million	and	gross	unrealized	losses	of	 $8	million.	In	the	event	that	we	or our	banking	regulators	conclude	that	such	investments	in	CLOs,	or	other investments,	are	covered	funds,	we	may	be	required	to	divest	of	such investments.	If	other	banking	entities	reach	similar	conclusions	with respect	to	similar	investments	held	by	them,	the	prices	of	such investments	could	decline	significantly,	and	we	may	be	required	to	divest of	such	investments	at	a	significant	discount	compared	to	the	investments' book	value.	This	could	result	in	a	material	adverse	effect	on	our consolidated	results	of	operations	in	the	period	in	which	such	a divestment	occurs	or	on	our	consolidated	financial	condition.

# Non-U.S.	Debt	Securities

Approximately	26%	of	the	aggregate	carrying	value	of	our investment	securities	portfolio	was	composed	of	non-U.S.	debt	securities as	of	December	31,	2014	compared	to	approximately	27%	in	2013.

# TABLE	22:	NON-U.S.	DEBT	SECURITIES

| (In	millions) | 2014 | 2013 |
| :--- | :--- | :--- |
| Available\tfor\tSale: |  |  |
| United\tKingdom | $6,925 | $9,357 |
| Australia | 3,401 | 3,551 |
| Netherlands | 3,219 | 3,471 |
| Canada | 2,711 | 2,549 |
| France | 1,407 | 1,581 |
| South\tKorea | 920 | 744 |
| Japan | 860 | 971 |
| Germany | 810 | 1,410 |
| Finland | 513 | 397 |
| Italy | 464 | — |
| Norway | 438 | 369 |
| Belgium | 120 | — |
| Sweden | 103 | 142 |
| Austria | 73 | 83 |
| Other(1) | 205 | 282 |
| Total | $22,169 | $24,907 |
| Held\tto\tMaturity: |  |  |
| United\tKingdom | $1,779 | $1,474 |
| Australia | 1,712 | 2,216 |
| Germany | 1,651 | 1,263 |
| Netherlands | 1,128 | 934 |
| Spain | 155 | 206 |
| Italy | 79 | 270 |
| Ireland | 68 | 86 |
| Other(2) | 309 | 158 |
| Total | $6,881 | $6,607 |

gross	unrealized	gains	of	$432	million	and	gross	unrealized	losses	of	 $35 million.	These	unrealized	amounts	included	a	pre-tax	net	unrealized	gain of	$229	million,	composed	of	gross	unrealized	gains	of	 $241	million	and gross	unrealized	losses	of	$12	million,	associated	with	non-U.S.	debt securities	available	for	sale.

As	of	December	31,	2014,	the	underlying	collateral	for	non-U.S. mortgage-	and	asset-backed	securities	primarily	included	U.K.	prime mortgages,	Australian	and	Dutch	mortgages	and	German	automobile loans.	The	securities	listed	under	"Canada"	were	composed	of	Canadian government	securities	and	corporate	debt	and	covered	bonds.	The securities	listed	under	"France"	were	composed	of	automobile	loans	and corporate	debt	and	covered	bonds.	The	securities	listed	under	"Japan" were	substantially	composed	of	Japanese	government	securities.	The securities	listed	under	"South	Korea"	were	composed	of	South	Korean government	securities.

Additional	information	on	our	exposures	relating	to	Spain,	Italy, Ireland	and	Portugal	as	of	December	31,	2014	is	provided	under "Financial	Condition	-	Cross-Border	Outstandings"	in	this	Management's Discussion	and	Analysis.

# Municipal	Securities

We	carried	approximately	$10.83	billion	of	municipal	securities classified	as	state	and	political	subdivisions	in	our	investment	securities portfolio	as	of	December	31,	2014	as	shown	in	Table	20:	Carrying	Values of	Investment	Securities.	Substantially	all	of	these	securities	were classified	as	available	for	sale,	with	the	remainder	classified	as	held	to maturity.	As	of	the	same	date,	we	also	provided	approximately	$7.61 billion	of	credit	and	liquidity	facilities	to	municipal	issuers	as	a	form	of credit	enhancement.

respectively,	related	to	Portugal,	Ireland	and	Spain,	all	of	which	were	mortgage-backed securities.

(2)	Included	approximately	$36	and	$44	million	as	of	 December	31,	2014	and	2013,	respectively, of	securities	related	to	Portugal,	all	of	which	were	mortgage-backed	securities.

Approximately	88%	and	89%	of	the	aggregate	carrying	value	of these	non-U.S.	debt	securities	was	rated	"AAA"	or	"AA"	as	of December	31,	2014	and	2013,	respectively.	The	majority	of	these securities	comprise	senior	positions	within	the	security	structures;	these positions	have	a	level	of	protection	provided	through	subordination	and other	forms	of	credit	protection.	As	of	December	31,	2014	and	2013, approximately	74%	and	72%,	respectively,	of	the	aggregate	carrying value	of	these	non-U.S.	debt	securities	was	floating-rate,	and	accordingly, the	securities	are	considered	to	have	minimal	interest-rate	risk.

As	of	December	31,	2014,	these	non-U.S.	debt	securities	had	an average	market-to-book	ratio	of	101.4%,	and	an	aggregate	pre-tax	net unrealized	gain	of	approximately	$397	million,	composed	of

# TABLE	23:	STATE	AND	MUNICIPAL	OBLIGORS(1)

| (Dollars	in	millions) | Total<br>Municipal<br>Securities | Credit	and<br>Liquidity<br>Facilities | Total | %	of	Total	Municipal<br>Exposure |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014 |  |  |  |  |
| State\tof\tIssuer: |  |  |  |  |
| Texas | $1,326 | $1,405 | $2,731 | 15% |
| California | 458 | 1,837 | 2,295 | 12 |
| New\tYork | 920 | 996 | 1,916 | 10 |
| Massachusetts | 989 | 847 | 1,836 | 10 |
| Maryland | 446 | 416 | 862 | 5 |
| Total | $4,139 | $5,501 | $9,640 |  |
| December\t31,\t2013 |  |  |  |  |
| State\tof\tIssuer: |  |  |  |  |
| Texas | $1,233 | $1,628 | $2,861 | 16% |
| New\tYork | 919 | 1,000 | 1,919 | 10 |
| Massachusetts | 967 | 759 | 1,726 | 9 |
| California | 373 | 1,266 | 1,639 | 9 |
| Maryland | 327 | 643 | 970 | 5 |
| Total | $3,819 | $5,296 | $9,115 |  |

Our	aggregate	municipal	securities	exposure	presented	in	 Table	23: State	and	Municipal	Obligors,	was	concentrated	primarily	with	highly- rated	counterparties,	with	approximately	89%	of	the	obligors	rated	"AAA" or	"AA"	as	of	December	31,	2014.	As	of	that	date,	approximately	60%	and 38%	of	our	aggregate	exposure	was	associated	with	general	obligation and	revenue	bonds,	respectively.	In	addition,	we	had	no	exposures associated	with	industrial	development	or	land	development	bonds.	The portfolios	are	also	diversified	geographically,	with	the	states	that	represent our	largest	exposures	widely	dispersed	across	the	U.S.

Additional	information	with	respect	to	our	assessment	of	other-than- temporary	impairment	of	our	municipal	securities	is	provided	in	note	3	to the	consolidated	financial	statements	included	under	Item	8	of	this	Form 10-K.

(1)	Represented	5%	or	more	of	our	aggregate	municipal	credit	exposure	of approximately	$18.44	billion	and	$18.45	billion	across	our	businesses	as	of December	31,	2014	and	2013,	respectively.

# TABLE	24:	CONTRACTUAL	MATURITIES	AND	YIELDS

| As	of	December	31,	2014<br>(Dollars	in	millions) | Under	1	Year<br>Amount | Yield | 1	to	5	Years<br>Amount | Yield | 6	to	10	Years<br>Amount | Yield | Over	10	Years<br>Amount | Yield |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Available\tfor\tsale(1): |  |  |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |  |  |  |  |
| Direct\tobligations | $— | —% | $6,841 | 1.11% | $3,287 | 2.61% | $527 | 2.04% |
| Mortgage-backed\tsecurities | 107 | 2.75 | 2,389 | 3.20 | 4,421 | 3.07 | 13,797 | 3.01 |
| Asset-backed\tsecurities: |  |  |  |  |  |  |  |  |
| \tStudent\tloans | 515 | .90 | 6,100 | .54 | 3,823 | .66 | 2,022 | .68 |
| Credit\tcards | 381 | .80 | 1,562 | .76 | 1,110 | 1.65 | — | — |
| Sub-prime | 3 | 4.86 | 13 | 1.30 | 1 | 6.15 | 934 | .76 |
| Other | 244 | .51 | 961 | .69 | 1,268 | 1.21 | 1,672 | 1.36 |
| Total\tasset-backed | 1,143 |  | 8,636 |  | 6,202 |  | 4,628 |  |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | 2,315 | 1.52 | 3,463 | 1.54 | 576 | 1.19 | 3,252 | 2.93 |
| Asset-backed\tsecurities | 272 | 1.01 | 2,698 | .87 | 166 | 2.13 | 90 | 1.47 |
| Government\tsecurities | 2,321 | .48 | 1,588 | 1.41 | — | — | — | — |
| Other | 1,757 | 2.81 | 2,801 | 1.80 | 870 | .74 | — | — |
| Total\tnon-U.S.\tdebt\tsecurities | 6,665 |  | 10,550 |  | 1,612 |  | 3,342 |  |
| State\tand\tpolitical\tsubdivisions(2) | 699 | 4.96 | 3,003 | 4.90 | 4,715 | 5.98 | 2,403 | 6.04 |
| Collateralized\tmortgage\tobligations | 227 | 4.56 | 1,149 | 2.98 | 1,072 | 2.66 | 2,891 | 2.91 |
| Other\tU.S.\tdebt\tsecurities | 814 | 4.02 | 2,967 | 3.93 | 294 | 3.94 | 34 | .78 |
| Total | $9,655 |  | $35,535 |  | $21,603 |  | $27,622 |  |
| Held\tto\tmaturity(1): |  |  |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |  |  |  |  |
| Direct\tObligations | $— | —% | $— | —% | $5,000 | 2.09% | $114 | .59% |
| Mortgage-backed\tsecurities | 1 | 5.00 | 11 | 5.00 | 12 | 5.00 | 38 | 5.35 |
| Asset-backed\tsecurities |  |  |  |  |  |  |  |  |
| Student\tloans | 6 | 1.26 | 182 | .81 | 375 | .98 | 1,251 | .73 |
| Credit\tcards | — | — | 375 | .61 | 522 | .57 | — | — |
| Other | 15 | .57 | 367 | .47 | 191 | .62 | 4 | .61 |
| Total\tasset-backed | 21 |  | 924 |  | 1,088 |  | 1,255 |  |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | 503 | 1.30 | 1,102 | 1.06 | 157 | 3.74 | 2,025 | 1.59 |
| Asset-backed\tsecurities | 105 | 1.58 | 2,567 | .69 | 196 | .97 | — | — |
| Government\tsecurities | 154 | .64 | — | — | — | — | — | — |
| Other | — | — | 72 | .44 | — | — | — | — |
| Total\tnon-U.S.\tdebt\tsecurities | 762 |  | 3,741 |  | 353 |  | 2,025 |  |
| State\tand\tpolitical\tsubdivisions(2) | 7 | 5.78 | 2 | 6.38 | — | — | — | — |
| Collateralized\tmortgage\tobligations | 574 | 2.62 | 460 | 3.72 | 498 | 1.41 | 837 | 2.08 |
| Total | $1,365 |  | $5,138 |  | $6,951 |  | $4,269 |  |

(1)	The	maturities	of	mortgage-backed	securities,	asset-backed	securities	and	collateralized	mortgage	obligations	are	based	on	expected	principal	payments.

(2)	Yields	were	calculated	on	a	fully	taxable-equivalent	basis,	using	applicable	federal	and	state	income	tax	rates.

# Impairment

Impairment	exists	when	the	fair	value	of	an	individual	security	is below	its	amortized	cost	basis.	Impairment	of	a	security	is	further assessed	to	determine	whether	such	impairment	is	other-than-temporary. When	the	impairment	is	deemed	to	be	other-than-temporary,	we	record the	loss	in	our	consolidated	statement	of	income.	In	addition,	for	debt securities	available	for	sale	and	held	to	maturity,

we	record	impairment	in	our	consolidated	statement	of	income	when management	intends	to	sell	(or	may	be	required	to	sell)	the	securities before	they	recover	in	value,	or	when	management	expects	the	present value	of	cash	flows	expected	to	be	collected	from	the	securities	to	be	less than	the	amortized	cost	of	the	impaired	security	(a	credit	loss).

The	improvement	to	a	net	unrealized	gain	position	as	of	 December	31,	2014	from	a	net	unrealized	loss	position	as	of	 December	31,	2013,	presented in	Table	25:	Amortized	Cost,	Fair	Value	and	Net	Unrealized	Gains	(Losses)	of	Investment	Securities ,	was	primarily	attributable	to	narrowing	spreads	in 2014.

# TABLE	25:	AMORTIZED	COST,	FAIR	VALUE	AND	NET	UNREALIZED	GAINS	(LOSSES)	OF	INVESTMENT	SECURITIES

|  |  | 2014 |  |  | 2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) | Amortized\nCost | Net\tUnrealized\nGains(Losses) | Fair\tValue | Amortized\nCost | Net\tUnrealized\nGains(Losses) | Fair\tValue |
| Available\tfor\tsale(1) | $94,108 | $805 | $94,913 | $99,159 | $15 | $99,174 |
| Held\tto\tmaturity(1) | 17,723 | 119 | 17,842 | 17,740 | (180) | 17,560 |
| Total\tinvestment\tsecurities | $111,831 | $924 | $112,755 | $116,899 | $(165) | $116,734 |
| Net\tafter-tax\tunrealized\tgain\t(loss) |  | $554 |  |  | $(96) |  |

(1)	Securities	available	for	sale	are	carried	at	fair	value,	with	after-tax	net	unrealized	gains	and	losses	recorded	in	AOCI.	Securities	held	to	maturity	are	carried	at	cost,	and	unrealized gains	and	losses	are	not	recorded	in	our	consolidated	financial	statements.

We	conduct	periodic	reviews	of	individual	securities	to	assess whether	other-than-temporary	impairment	exists.	Our	assessment	of other-than-temporary	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,	other-than-temporary	impairment	could increase,	in	particular	the	credit-related	component	that	would	be recorded	in	our	consolidated	statement	of	income.

In	the	aggregate,	we	recorded	net	losses	from	other-than-temporary impairment	of	$11	million	and	$23	million	in	2014	and	2013,	respectively. Additional	information	with	respect	to	other-than-temporary	impairments and	net	impairment	losses,	as	well	as	information	about	our	assessment of	impairment,	is	provided	in	note	3	to	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.

Given	our	mortgage-backed	securities	exposure,	our	assessment	of other-than-temporary	impairment	relies,	in	part,	on	our	estimates	of	trends in	the	U.S.	housing	market	in	addition	to	trends	in	unemployment	rates, interest	rates	and	the	timing	of	defaults.	Overall,	our	evaluation	of	other- than-temporary	impairment	as	of	December	31,	2014	continued	to	include an	expectation	of	a	U.S.	housing	recovery	characterized	by	relatively modest	growth	in	national	housing	prices	over	the	next	few	years.	The other-than-temporary	impairment	of	our	investment	securities	portfolio continues	to	be	sensitive	to	our	estimates	of	future	cumulative	losses. However,	given	our	positive	outlook	for	U.S.	national	housing

prices,	our	sensitivity	analysis	indicated,	as	of	 December	31,	2014,	that our	investment	securities

portfolio	was	less	exposed	to	the	U.S.	housing	market	outlook	relative	to other	factors,	including	unemployment	rates,	interest	rates	and	timing	of default.	The	timeline	to	liquidate	distressed	loans	continues	to	extend,	but to	a	lesser	degree	as	a	result	of	strengthening	in	the	national	housing market.	The	timing	of	default	may	affect,	among	other	things,	the	timing	of cash	flows	or	the	credit	quality	associated	with	the	mortgages collateralizing	certain	of	our	residential	mortgage-backed	securities	which, accordingly,	could	result	in	the	recognition	of	additional	other-than- temporary	impairment	in	future	periods.

Our	evaluation	of	potential	other-than-temporary	impairment	of mortgage-backed	securities	with	collateral	in	countries	with	slow economic	growth	and	government	austerity	measures	takes	into	account government	intervention	in	the	corresponding	mortgage	markets	and assumes	a	conservative	baseline	macroeconomic	environment.	Our baseline	view	assumes	a	recessionary	period	characterized	by	high unemployment	and	by	additional	declines	in	housing	prices	of	between 5%	and	15%.	Our	evaluation	of	other-than-temporary	impairment	in	our base	case	does	not	assume	a	disorderly	sovereign	debt	restructuring	or	a break-up	of	the	Eurozone.

In	addition,	we	perform	stress	testing	and	sensitivity	analyses	in order	to	assess	the	impact	of	more	severe	assumptions	on	potential other-than-temporary	impairment.	For	example,	we	estimate,	using relevant	information	as	of	December	31,	2014	and	assuming	that	all	other factors	remain	constant,	that	in	more	stressful	scenarios	in	which unemployment,	gross	domestic	product	and	housing	prices	deteriorate over	the	relevant	periods	more	than	we	expected	as	of	December	31, 2014,	other-than-temporary	impairment	could	increase	by	a	range	of	zero to	$24	million.	This	sensitivity	estimate	is	based

on	a	number	of	factors,	including,	but	not	limited	to,	the	level	of	housing prices	and	the	timing	of	defaults.	To	the	extent	that	such	factors	differ significantly	from	management's	current	expectations,	resulting	loss estimates	may	differ	materially	from	those	stated.

Excluding	other-than-temporary	impairment	recorded	in	2014, management	considers	the	aggregate	decline	in	fair	value	of	the remaining	investment	securities	and	the	resulting	gross	unrealized	losses as	of	December	31,	2014	to	be	temporary	and	not	the	result	of	any material	changes	in	the	credit	characteristics	of	the	securities.	Additional information	about	these	gross	unrealized	losses	is	provided	in	note	3	to the	consolidated	financial	statements	included	under	Item	8	of	this	Form 10-K.

# Loans	and	Leases

| (In	millions) | 2014 | 2013 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Institutional: |  |  |  |  |  |
| U.S. | $14,908 | $10,623 | $9,645 | $7,115 | $7,001 |
| Non-U.S. | 3,263 | 2,654 | 2,251 | 2,478 | 4,192 |
| Commercial\treal\nestate: |  |  |  |  |  |
| U.S. | 28 | 209 | 411 | 460 | 764 |
| Total\tloans\tand\nleases | $18,199 | $13,486 | $12,307 | $10,053 | $11,957 |
| Average\tloans\nand\tleases | $15,912 | $13,781 | $11,610 | $12,180 | $12,094 |

The	increase	in	loans	in	the	institutional	segment	as	of December	31,	2014	as	compared	to	December	31,	2013	was	primarily driven	by	higher	levels	of	short-duration	advances	and	increased investment	in	the	non-investment-grade	lending	market	through participations	in	loan	syndications,	specifically	senior	secured	bank	loans.

Short-duration	advances	to	our	clients	included	in	the	institutional segment	were	$3.54	billion	and	$2.45	billion	as	of	December	31,	2014 and	2013,	respectively.	These	short-duration	advances	provide	liquidity	to fund	clients	in	support	of	their	transaction	flows	associated	with	securities settlement	activities.

As	of	December	31,	2014	and	2013,	our	investment	in	senior secured	bank	loans	totaled	approximately	$2.07	billion	and	$724	million, respectively.	In	addition,	we	had	binding	unfunded	commitments	as	of December	31,	2014	totaling	$337	million	to	participate	in	such syndications.

These	senior	secured	bank	loans,	which	we	have	rated "speculative"	under	our	internal	risk-rating	framework	(refer	to	note	4	to the	consolidated	financial	statements	included	under	Item	8	of	this	Form 10-K),	are	externally	rated	"BBB,"	"BB"	or	"B,"	with	approximately	95%	of the	loans	rated	"BB"	or	"B"	as	of	December	31,	2014,	compared	to	94% as	of	December	31,	2013.	Our	investment	strategy	involves	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.	As	of	December	31,	2014,	our allowance	for	loan	losses	included	approximately	$26	million	related	to these	senior	secured	bank	loans.	As	this	portfolio	grows	and	becomes more	seasoned,	our	allowance	for	loan	losses	related	to	these	loans	may increase	through	additional	provisions	for	credit	losses.

As	of	December	31,	2014	and	2013,	unearned	income	deducted from	our	investment	in	leveraged	lease	financing	was	$109	million	and $121	million,	respectively,	for	U.S.	leases	and	 $261	million	and	$298 million,	respectively,	for	non-U.S.	leases.

The	commercial	real	estate,	or	CRE,	loans	are	composed	of	the loans	acquired	in	2008	pursuant	to	indemnified	repurchase	agreements with	an	affiliate	of	Lehman	as	a	result	of	the	Lehman	Brothers	bankruptcy. Additional	information	about	all	of	our	loan-and-lease	segments,	as	well as	underlying	classes,	is	provided	in	note	4	to	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.

The	decrease	in	the	CRE	loans	as	of	December	31,	2014	compared to	December	31,	2013	resulted	from	one	of	the	loans,	acquired	in	2008 pursuant	to	indemnified	repurchase	agreement	with	an	affiliate	of	Lehman as	a	result	of	the	Lehman	Brothers	bankruptcy	being	repaid.

As	of	December	31,	2014	no	CRE	loans	were	modified	in	troubled debt	restructurings.	As	of	December	31,	2013,	we	held	a	CRE	loan	for approximately	$130	million	which	had	previously	been	modified	in	a troubled	debt	restructuring.	No	loans	were	modified	in	troubled	debt restructurings	in	2014	or	2013.

# TABLE	27:	CONTRACTUAL	MATURITIES	FOR	LOANS	AND	LEASES

| (In	millions) | Total | Under	1	Year | 1	to	5	Years | Over	5	Years |
| :--- | :--- | :--- | :--- | :--- |
| Institutional: |  |  |  |  |
| Investment\tfunds: |  |  |  |  |
| U.S. | $11,388 | $9,045 | $2,326 | $17 |
| Non-U.S. | 2,333 | 1,836 | 497 | — |
| Commercial\tand\tfinancial: |  |  |  |  |
| U.S. | 3,061 | 819 | 839 | 1,403 |
| Non-U.S. | 256 | 171 | 66 | 19 |
| Purchased\treceivables: |  |  |  |  |
| U.S. | 124 | — | 77 | 47 |
| Non-U.S. | 6 | — | 6 | — |
| Lease\tfinancing: |  |  |  |  |
| U.S. | 335 | — | — | 335 |
| Non-U.S. | 668 | 88 | 225 | 355 |
| Total\tinstitutional | 18,171 | 11,959 | 4,036 | 2,176 |
| Commercial\treal\testate: |  |  |  |  |
| U.S. | 28 | — | 28 | — |
| Total\tloans\tand\tleases | $18,199 | $11,959 | $4,064 | $2,176 |

# TABLE	28:	CLASSIFICATION	OF	LOAN	AND	LEASE	BALANCES	DUE	AFTER	ONE	YEAR

|  |  | For	the	Years	ended	December	31, | For	the	Years	ended	December	31, |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 | 2011 | 2010 |
| (In\tmillions) |  |  |  |  |  |
| Allowance\tfor\tloan\tlosses: |  |  |  |  |  |
| Beginning\tbalance | $28 | $22 | $22 | $100 | $79 |
| Provision\tfor\tloan\tlosses: |  |  |  |  |  |
| Commercial\treal\testate | — | — | (3) | 9 | 22 |
| Institutional | 10 | 6 | — | (9) | 3 |
| Charge-offs: |  |  |  |  |  |
| Commercial\treal\testate | — | — | — | (78) | (4) |
| Recoveries: |  |  |  |  |  |
| Commercial\treal\testate | — | — | 3 | — | — |
| Ending\tbalance | $38 | $28 | $22 | $22 | $100 |

The	provision	of	$10	million	recorded	in	2014	was	composed	of	a provision	of	$20	million	associated	with	senior	secured	bank	loans,	offset by	a	negative	provision	of	$10	million	associated	with	the	pay-down	of	an unrelated	commercial	and	financial	loan	with	speculative-rated	credit quality.

As	of	December	31,	2014,	approximately	$26	million	of	our allowance	for	loan	losses	was	related	to	senior	secured	bank	loans included	in	the	institutional

segment;	the	remaining	$12	million	was	related	to	other	commercial	and financial	loans	in	the	institutional	segment.

# 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	foreign	exchange	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,	foreign	exchange needed	by	borrowers	to	repay	their	obligations.

We	place	deposits	with	non-U.S.	counterparties	that	have	strong internal	State	Street	risk	ratings.	Counterparties	are	approved	and monitored	by	our	Country	Risk	Committee.	This	process	includes	financial analysis	of	non-U.S.	counterparties	and	the	use	of	an	internal	risk-rating system.	Each	counterparty	is	reviewed	at	least	annually	and	potentially more	frequently	based	on	deteriorating	credit	fundamentals	or	general market	conditions.	We	also	utilize	risk	mitigation	and	other	facilities	that may	reduce	our	exposure	through	the	use	of	cash	collateral	and/or balance	sheet	netting	where	we	deem	appropriate.	In	addition,	the Country	Risk	Committee	performs	a	country-risk	analysis	and	monitors limits	on	country	exposure.

The	aggregate	of	the	total	cross-border	outstandings	presented	in Table	30:	Cross-border	Outstandings	represented	approximately	17%, 19%,	and	22%	of	our	consolidated	total	assets	as	of	 December	31,	2014, 2013	and	2012	respectively.

| (In	millions) | Investment<br>Securities	and	Other<br>Assets | Derivatives	and<br>Securities	on	Loan | Total	Cross-Border<br>Outstandings |
| :--- | :--- | :--- | :--- |
| December\t31,\t2014 |  |  |  |
| United\tKingdom | $15,288 | $1,769 | $17,057 |
| Japan | 9,465 | 644 | 10,109 |
| Australia | 5,981 | 1,039 | 7,020 |
| Netherlands | 4,425 | 330 | 4,755 |
| Canada | 3,227 | 974 | 4,201 |
| Germany | 3,075 | 792 | 3,867 |
| December\t31,\t2013 |  |  |  |
| United\tKingdom | $15,422 | $1,697 | $17,119 |
| Australia | 7,309 | 672 | 7,981 |
| Netherlands | 4,542 | 277 | 4,819 |
| Canada | 3,675 | 620 | 4,295 |
| Germany | 4,062 | 147 | 4,209 |
| France | 2,887 | 735 | 3,622 |
| Japan | 2,445 | 605 | 3,050 |
| December\t31,\t2012 |  |  |  |
| United\tKingdom | $18,046 | $1,033 | $19,079 |
| Australia | 7,585 | 328 | 7,913 |
| Japan | 6,625 | 1,041 | 7,666 |
| Germany | 7,426 | 220 | 7,646 |
| Netherlands | 3,130 | 188 | 3,318 |
| Canada | 2,730 | 500 | 3,230 |

(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	December	31,	2014	there	were	no	countries	whose	aggregate cross-border	outstandings	amounted	to	between	0.75%	and	1%	of	our consolidated	total	assets.	As	of	December	31,	2013,	aggregate	cross- border	outstandings	in	countries	which	amounted	to	between	0.75%	and 1%	of	our	total	consolidated	assets	totaled	approximately	$1.85	billion	to China.	As	of	December	31,	2012,	aggregate	cross-border	outstandings	in countries	which	amounted	to	between	0.75%	and	1%	of	our	total consolidated	assets	totaled	approximately	$1.81	billion	to	France.

# TABLE	31:	CROSS-BORDER	OUTSTANDINGS	(ITALY,	IRELAND,	SPAIN	AND	PORTUGAL)

| (In	millions) | Investment<br>Securities	and<br>Other	Assets | Derivatives	and<br>Securities	on<br>Loan | Total	Cross-Border<br>Outstandings |
| :--- | :--- | :--- | :--- |
| December\t31,\t2014 |  |  |  |
| Ireland | $510 | $1,253 | $1,763 |
| Italy | 907 | 11 | 918 |
| Spain | 155 | 71 | 226 |
| Portugal | 69 | — | 69 |
| December\t31,\t2013 |  |  |  |
| Italy | $763 | $2 | $765 |
| Ireland | 369 | 304 | 673 |
| Spain | 271 | 11 | 282 |
| Portugal | 78 | — | 78 |
| December\t31,\t2012 |  |  |  |
| Italy | $937 | $1 | $938 |
| Ireland | 342 | 277 | 619 |
| Spain | 277 | 16 | 293 |
| Portugal | 76 | — | 76 |

The	aggregate	cross-border	exposures	presented	in	Table	31: Cross-Border	Outstandings	(Italy,	Ireland,	Spain	and	Portugal),	consisted primarily	of	interest-bearing	deposits,	investment	securities,	loans, including	short-duration	advances,	and	foreign	exchange	contracts.	We had	not	recorded	any	provisions	for	loan	losses	with	respect	to	any	of	our exposure	in	these	countries	as	of	December	31,	2014.

Our	aggregate	exposure	to	Spain,	Italy,	Ireland	and	Portugal	as	of December	31,	2014	did	not	include	any	direct	sovereign	debt	exposure	to any	of	these	countries.	Our	indirect	exposure	to	these	countries	totaled approximately	$860	million	of	mortgage-	and	asset-backed	securities composed	of	$146	million	in	Spain,	$543	million	in	Italy,	$102	million	in Ireland	and	$69	million	in	Portugal	as	of	December	31,	2014.	These mortgage-	and	asset-backed	securities	had	an	aggregate	pre-tax	net unrealized	gain	of	approximately	$118	million,	composed	of	gross unrealized	gains	of	$119	million	and	gross	unrealized	losses	of	 $1	million as	of	December	31,	2014.	We	recorded	no	other-than-temporary impairment	on	these	mortgage-	and	asset-backed	securities	in	our consolidated	statement	of	income	in	2014.	We	recorded	other-than- temporary	impairment	of	$6	million	on	one	of	these	securities	in	our consolidated	statement	of	income	in	2013,	all	of	which	was	associated with	management's	intent	to	sell	an	impaired	security	prior	to	its	recovery in	value.

Throughout	the	sovereign	debt	crisis,	the	major	independent	credit rating	agencies	have	downgraded	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.

# 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;

•market	risk	associated	with	our	trading	activities;

•market	risk	associated	with	our	non-trading	activities,	which	we refer	to	as	asset-and-

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

•business	risk,	including	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	under	Item	1A,	"Risk Factors,"	included	in	this	Form	10-K.

The	scope	of	our	business	requires	that	we	balance	these	risks	with a	comprehensive	and	well-integrated	risk	management	function.	The identification,	assessment,	monitoring,	mitigation	and	reporting	of	risks are	essential	to	our	financial	performance	and	successful	management	of our	businesses.	These	risks,	if	not	effectively	managed,	can	result	in losses	to	State	Street	as	well	as	erosion	of	our	capital	and	damage	to	our reputation.	Our	systematic	approach	allows	for	an	assessment	of	risks within	a	framework	for	evaluating	opportunities	for	the	prudent	use	of capital	that	appropriately	balances	risk	and	return.

Our	objective	is	to	optimize	our	return	while	operating	at	a	prudent level	of	risk.	In	support	of	this	objective,	we	have	instituted	a	risk	appetite framework	that	aligns	our	business	strategy	and	financial	objectives	with the	level	of	risk	that	we	are	willing	to	incur.

Our	risk	management	is	based	on	the	following	major	goals:

▪A	culture	of	risk	awareness	that	extends	across	all	of	our business	activities;

▪The	identification,	classification	and	quantification	of	State Street's	material	risks;

▪The	establishment	of	our	risk	appetite	and	associated	limits	and policies,	and	our	compliance	with	these	limits;

▪The	establishment	of	a	risk	management	structure	at	the	"top	of the	house"	that

enables	the	control	and	coordination	of	risk-taking	across	the business	lines;

▪The	implementation	of	stress	testing	practices	and	a	dynamic

risk-assessment	capability;	and

▪The	overall	flexibility	to	adapt	to	the	ever-changing	business	and market	conditions.

Our	risk	appetite	framework	outlines	the	quantitative	limits	and qualitative	goals	that	define	our	risk	appetite,	as	well	as	the responsibilities	for	measuring	and	monitoring	risk	against	limits,	and	for reporting,	escalating,	approving	and	addressing	exceptions.	Our	risk appetite	framework	is	established	by	management	with	the	guidance	of Enterprise	Risk	Management,	or	ERM,	a	corporate	risk	oversight	group,	in conjunction	with	our	Board	of	Directors.	The	Board	formally	reviews	and approves	our	risk	appetite	statement	annually.

The	risk	appetite	framework	describes	the	level	and	types	of	risk	that we	are	willing	to	accommodate	in	executing	our	business	strategy,	and also	serves	as	a	guide	in	setting	risk	limits	across	our	business	units.	In addition	to	our	risk	appetite	framework,	we	use	stress	testing	as	another important	tool	in	our	risk	management	practice.	Additional	information with	respect	to	our	stress	testing	process	and	practices	is	provided	under "Capital"	in	Management's	Discussion	and	Analysis	included	under	Item	7 in	this	Form	10-K.

Disclosures	about	our	management	of	significant	risks	can	be	found on	the	following	pages	within	this	Form	10-K.

|  | Form	10-K	Page<br>Number |
| :--- | :--- |
| Governance\tand\tStructure | 79 |
| Credit\tRisk\tManagement | 83 |
| Liquidity\tRisk\tManagement | 88 |
| Operational\tRisk\tManagement | 94 |
| Market\tRisk\tManagement | 97 |
| Business\tRisk\tManagement | 104 |
| Model\tRisk\tManagement | 105 |

# Governance	and	Structure

We	have	an	approach	to	risk	management	that	involves	all	levels	of management,	from	the	Board	and	its	committees,	including	its	Risk Committee,	referred	to	as	the	RC,	its	Examining	and	Audit	Committee, referred	to	as	the	E&A	Committee,	the	Executive	Compensation Committee,	or	ECC,	and	its	Technology	Committee,	to	each	business	unit and	each	employee.	We	allocate	responsibility	for	risk	oversight	so	that risk/return	decisions	are	made	at	an	appropriate	level,	and	are	subject	to robust	and	effective	review	and	challenge.	Risk	management	is	the responsibility	of	each	employee,	and	is	implemented	through	three	lines of	defense:	the	business	units,	which	own	and	manage	the	risks	inherent in	their	business,	are	considered	the	first	line	of	defense;	ERM	and	other support	functions,	such	as	Legal,	Compliance,	Finance	and	Vendor Management,	provide	the	second	line	of	defense;	and	Corporate	Audit, which	assesses	the	effectiveness	of	the	first	two	lines	of	defense.

The	responsibilities	for	effective	review	and	challenge	reside	with senior	managers,	management	oversight	committees,	Corporate	Audit and,	ultimately,	the	Board	and	its	committees.	While	we	believe	that	our risk	management	program	is	effective	in	managing	the	risks	in	our businesses,	internal	and	external	factors	may	create	risks	that	cannot always	be	identified	or	anticipated.

Corporate-level	risk	committees	provide	focused	oversight,	and establish	corporate	standards	and	policies	for	specific	risks,	including credit,	sovereign	exposure,	market,	liquidity,	operational	information technology	as	well	as	new	business	products,	regulatory	compliance	and ethics,	vendor	risk	and	model	risks.	These	committees	have	been delegated	the	responsibility	to	develop	recommendations	and	remediation strategies	to	address	issues	that	affect	or	have	the	potential	to	affect	State Street.

We	maintain	a	risk	governance	committee	structure	which	serves	as the	formal	governance	mechanism	through	which	we	seek	to	undertake the	consistent	identification,	management	and	mitigation	of	various	risks facing	State	Street	in	connection	with	its	business	activities.	This governance	structure	is	enhanced	and	integrated	through	multi- disciplinary	involvement,	particularly	through	ERM,	as	illustrated	below.

# Management	Risk	Governance	Committee	Structure

# 	Executive	Management	Committees:

Management	Risk	and	Capital Committee

Business	Conduct Risk	Committee

Technology	and	Operational	Risk Committee

# 	Risk	Committees:

Asset-Liability	Committee

Credit	Risk	and	Policy Committee

Fiduciary	Review Committee

Operational	Risk	Committee

Technology	Risk Governance	Committee

Trading	and	Markets	Risk Committee

Basel	Oversight Committee

New	Business	and Product	Committee

Executive	Continuity Steering	Committee

Executive	Information Steering	Committee

Country	Risk	Committee

Securities	Finance	Risk Management Committee

Vendor	Management Steering	Committee

Access	Control	Board

Recovery	and	Resolution Planning	Executive	Steering Group Model	Risk	Committee

CCAR	Steering	Committee

# Enterprise	Risk	Management

The	goal	of	ERM	is	to	ensure	that	risks	are	proactively	identified, well-understood	and	prudently	managed	in	support	of	our	business strategy.	ERM	provides	risk	oversight,	support	and	coordination	to	allow for	the	consistent	identification,	measurement	and	management	of	risks across	business	units	separate	from	the	business	units'	activities,	and	is responsible	for	the	formulation	and	maintenance	of	corporate-wide	risk management	policies	and	guidelines.	In	addition,	ERM	establishes	and reviews	limits	and,	in	collaboration	with	business	unit	management, monitors	key	risks.	Ultimately,	ERM	works	to	validate	that	risk-taking occurs	within	the	risk	appetite	statement	approved	by	the	Board	and conforms	to	associated	risk	policies,	limits	and	guidelines.

The	Chief	Risk	Officer,	or	CRO,	is	responsible	for	State	Street's	risk management	globally,	leads	ERM	and	has	a	dual	reporting	line	to	State Street's	Chief	Executive	Officer	and	the	Board's	RC.	ERM

manages	its	responsibilities	globally	through	a	three-dimensional organization	structure:

•"Vertical"	business	unit-aligned	risk	groups	that	support	business managers	with	risk	management,	measurement	and	monitoring activities;

•"Horizontal"	risk	groups	that	monitor	the	risks	that	cross	all	of	our business	units	(for	example,	credit	and	operational	risk);	and

•Risk	oversight	for	international	activities,	which	adds	important regional	and	legal	entity	perspectives	to	global	vertical	and	horizontal risk	management.

Sitting	on	top	of	this	three-dimensional	organization	structure	is	a centralized	group	responsible	for	the	aggregation	of	risk	exposures across	the	vertical,	horizontal	and	regional	dimensions,	for	consolidated reporting,	for	setting	the	corporate-level	risk	appetite	framework	and

associated	limits	and	policies,	and	for	dynamic	risk	assessment	across State	Street.

# Board	Committees

The	Board	of	Directors	has	four	committees	which	assist	it	in discharging	its	responsibilities	with	respect	to	risk	management:	the	Risk Committee,	or	RC,	the	Examining	and	Audit	Committee,	or	the	E&A Committee,	the	ECC,	and	the	Technology	Committee.

The	RC	is	responsible	for	oversight	related	to	the	operation	of	our global	risk	management	framework,	including	policies	and	procedures establishing	risk	management	governance	and	processes,	and	risk control	infrastructure	for	our	global	operations.	The	RC	is	responsible	for reviewing	and	discussing	with	management	our	assessment	and management	of	all	risk	applicable	to	our	operations,	including	credit, market,	interest	rate,	liquidity,	operational	and	business	risks,	as	well	as compliance	and	reputational	risk	and	related	policies.	In	addition,	the	RC provides	oversight	on	strategic	capital	governance	principles	and	controls, and	monitors	capital	adequacy	in	relation	to	risk.	The	RC	is	also responsible	for	discharging	the	duties	and	obligations	of	the	Board	under applicable	Basel	and	other	regulatory	requirements.

The	E&A	Committee	oversees	the	operation	of	our	system	of	internal controls	covering	the	integrity	of	our	consolidated	financial	statements	and reports,	compliance	with	laws,	regulations	and	corporate	policies.	The E&A	Committee	acts	on	behalf	of	the	Board	in	monitoring	and	overseeing the	performance	of	Corporate	Audit	and	in	reviewing	certain communications	with	banking	regulators.	The	E&A	Committee	has	direct responsibility	for	the	appointment,	compensation,	retention,	evaluation and	oversight	of	the	work	of	our	independent	registered	public	accounting firm,	including	sole	authority	for	the	establishment	of	pre-approval	policies and	procedures	for	all	audit	engagements	and	any	non-audit engagements.

The	ECC	has	direct	responsibility	for	the	oversight	of	all compensation	plans,	policies,	and	programs	of	State	Street	in	which executive	officers	participate	and	incentive,	retirement,	welfare	as	well	as equity	plans	in	which	certain	other	employees	of	State	Street	participate. In	addition,	the	ECC	oversees	the	alignment	of	our	incentive compensation	arrangements	with	our	safety	and	soundness,	including	the integration	of	risk	management	objectives,	and	related	policies, arrangements	and	control	processes,	consistent	with	applicable	related regulatory	rules	and	guidance.

The	Technology	Committee	leads	and	assists	in	the	Board's oversight	of	the	role	of	technology	in	executing	State	Street's	strategy	and supporting

State	Street's	global	business	and	operational	requirements.	The Technology	Committee	reviews	the	use	of	technology	in	our	activities	and operations,	as	well	as	significant	technology	and	technology-related strategies,	investments	and	policies.	In	addition,	the	Technology Committee	reviews	and	approves	technology	and	technology-related	risk matters,	including	information	and	cyber	security.

The	Management	Risk	and	Capital	Committee,	referred	to	as	MRAC, is	the	senior	management	decision-making	body	for	risk	and	capital issues,	and	oversees	our	financial	risks,	our	consolidated	statement	of condition,	and	our	capital	adequacy,	liquidity	and	recovery	and	resolution planning.	Its	responsibilities	include:

•The	approval	of	our	risk	appetite	framework	and	top	level	risk limits	and	policies;

•The	monitoring	and	assessment	of	our	capital	adequacy	based on	regulatory	requirements	and	internal	policies;	and

•The	ongoing	monitoring	and	review	of	risks	undertaken	within	the businesses,	and	our	senior	management	oversight	and	approval of	risk	strategies	and	tactics.

MRAC,	which	is	co-chaired	by	our	CRO	and	CFO,	regularly	presents a	report	to	the	RC	outlining	developments	in	the	risk	environment	and performance	trends	in	our	key	business	areas.

The	Business	Conduct	Risk	Committee,	referred	to	as	the	BCRC, provides	additional	risk	governance	and	leadership,	by	overseeing	our business	practices	in	terms	of	our	compliance	with	law,	regulation	and	our standards	of	business	conduct,	our	commitments	to	clients	and	others with	whom	we	do	business,	and	potential	reputational	risks.	Management considers	adherence	to	high	ethical	standards	to	be	critical	to	the	success of	our	business	and	to	our	reputation.	The	BCRC	is	co-chaired	by	our CRO	and	our	Chief	Legal	Officer.

The	Technology	and	Operational	Risk	Committee,	referred	to	as TORC,	oversees	and	assesses	the	effectiveness	of	corporate-wide technology	and	operational	risk	management	programs,	to	manage	and control	technology	and	operational	risk	consistently	across	the organization.	TORC	is	co-chaired	by	our	Vice	Chairman	and	our	Head	of Global	Operations	and	Technology.	TORC	may	meet	jointly	with	MRAC periodically	to	review	or	approve	common	areas	of	interest	such	as	risk frameworks	and	policies.

The	following	risk	committees,	under	the	oversight	of	the	respective executive	management

committees,	have	focused	responsibilities	for	oversight	of	specific	areas of	risk	management:

•The	Asset-Liability	Committee,	referred	to	as	ALCO,	oversees	the management	of	our	consolidated	statement	of	condition	and	the management	of	our	global	liquidity,	our	interest-rate	risk,	and	our non-traded	market	risk	positions,	as	well	as	the	business activities	of	our	Global	Treasury	group	and	the	risks	associated with	the	generation	of	net	interest	revenue	and	overall	balance sheet	management.	ALCO's	roles	and	responsibilities	are designed	to	work	complementary	to,	and	be	coordinated	with, MRAC,	which	approves	our	corporate	risk	appetite	and associated	balance	sheet	strategy;

•The	Credit	Risk	and	Policy	Committee	has	primary	responsibility for	the	oversight	and	review	of	credit	and	counterparty	risk	across business	units,	as	well	as	oversight,	review	and	approval	of	the credit	risk	policies	and	guidelines;	the	Committee	consists	of senior	executives	within	ERM,	including	the	CRO,	and	reviews policies	and	guidelines	related	to	all	aspects	of	our	business which	give	rise	to	credit	risk;	our	business	units	are	also represented	on	the	Credit	Risk	and	Policy	Committee;	credit	risk policies	and	guidelines	are	reviewed	periodically,	but	at	least annually;

•The	Trading	and	Markets	Risk	Committee,	referred	to	as	the TMRC,	reviews	the	effectiveness	of,	and	approves,	the	market risk	framework	at	least	annually;	it	is	the	senior	oversight	and decision-making	committee	for	risk	management	within	our	global markets	and	trading-and-clearing	businesses;	the	TMRC	is responsible	for	the	formulation	of	guidelines,	strategies	and workflows	with	respect	to	the	measurement,	monitoring	and control	of	our	trading	market	risk,	and	also	approves	market	risk tolerance	limits	and	dealing	authorities;	the	TMRC	meets regularly	to	monitor	the	management	of	our	trading	market	risk activities;

•The	Basel	Oversight	Committee	provides	oversight	and governance	over	Basel	related	regulatory	requirements, assesses	compliance	with	respect	to	Basel	regulations	and approves	all	material	methodologies	and	changes,	policies	and reporting;

•The	Country	Risk	Committee	oversees	the	identification, assessment,	monitoring,

reporting	and	mitigation,	where	necessary,	of	country	risks;

•The	Securities	Finance	Risk	Management	Committee	oversees the	risks	in	our	securities	finance	business,	including	collateral and	margin	policies;

•The	Recovery	and	Resolution	Planning	Executive	Steering	Group oversees	the	development	of	recovery	and	resolution	plans	as required	by	banking	regulators;

•The	Model	Risk	Committee,	referred	to	as	the	MRC,	monitors	the overall	level	of	model	risk	and	provides	oversight	of	the	model governance	process	pertaining	to	financial	models,	including	the validation	of	key	models	and	the	ongoing	monitoring	of	model performance.	The	MRC	may	also,	as	appropriate,	mandate remedial	actions	and	compensating	controls	to	be	applied	to models	to	address	modeling	deficiencies	as	well	as	other	issues identified;	and

•The	CCAR	Steering	Committee	provides	primary	supervision	of the	stress	tests	performed	in	conformity	with	the	Federal Reserve's	CCAR	process	and	the	Dodd-Frank	Act,	and	is responsible	for	the	overall	management,	review,	and	approval	of all	material	assumptions,	methodologies,	and	results	of	each stress	scenario.

•The	Fiduciary	Review	Committee	reviews	and	assesses	the	risk management	programs	of	those	units	in	which	we	serve	in	a fiduciary	capacity;

•The	New	Business	and	Product	Committee	provides	oversight	of the	evaluation	of	the	risk	inherent	in	proposed	new	products	or services	and	new	business,	and	extensions	of	existing	products or	services,	evaluations	including	economic	justification,	material risk,	compliance,	regulatory	and	legal	considerations,	and	capital and	liquidity	analyses;	and

•The	Compliance	and	Ethics	Committee	provides	review	and oversight	of	our	compliance	programs,	including	its	culture	of compliance	and	high	standards	of	ethical	behavior.

•The	Technology	Risk	Governance	Committee	provides	regular reporting	to	TORC	and	escalates	technology	risk	issues	to	TORC, as	appropriate;

•The	Executive	Continuity	Steering	Committee	reviews	overall business	continuity	program	performance,	provides	for	executive accountability	for	compliance	with	the	business	continuity program	and	standards,	and	reviews	and	approves	major changes	or	exceptions	to	program	policy	and	standards;

•The	Executive	Information	Steering	Committee	is	responsible	for managing	the	Enterprise	Information	Security	posture	and program,	provides	enterprise-wide	oversight	of	the	Information Security	Program	to	provide	that	controls	are	measured	and managed,	and	serves	as	an	escalation	point	for	issues	identified during	the	execution	of	information	technology	activities	and	risk mitigation;

•The	Vendor	Management	Steering	Committee	provides	oversight over	the	vendor	management	program,	approves	policies,	and serves	as	an	escalation	path	for	program	compliance	exceptions;

•The	Access	Control	Board	establishes	and	provides	appropriate governance	and	controls	over	our	access	control	security framework;	and

•The	Operational	Risk	Committee,	which	functions	under	the oversight	of	both	the	BCRC	and	TORC,	provides	cross-business oversight	of	operational	risk	and	reviews	and	approves operational	risk	guidelines	that	implement	the	corporate operational	risk	policy;	these	guidelines	and	other	operational	risk methodologies	are	used	to	identify,	measure,	manage	and	control operational	risk	in	a	consistent	manner	across	State	Street.

# Credit	Risk	Management

# Core	Policies	and	Principles

We	define	credit	risk	as	the	risk	of	financial	loss	if	a	counterparty, borrower	or	obligor,	collectively	referred	to	as	counterparty,	is	either unable	or	unwilling	to	repay	borrowings	or	settle	a	transaction	in accordance	with	underlying	contractual	terms.	We	assume	credit	risk	in our	traditional	non-trading	lending	activities,	such	as	loans	and	contingent commitments,	in	our	investment	securities	portfolio,	where	recourse	to	a counterparty	exists,	and	in	our	direct	and	indirect	trading	activities,	such as	principal	securities	lending	and	foreign	exchange	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.

We	distinguish	between	three	major	types	of	credit	risk:

▪Default	risk	-	the	risk	that	a	counterparty	fails	to	meet	its contractual	payment	obligations;

▪Country	risk	-	the	risk	that	we	may	suffer	a	loss,	in	any	given country,	due	to	any	of	the	following	reasons:	deterioration	of economic	conditions,	political	and	social	upheaval, nationalization	and	appropriation	of	assets,	government repudiation	of	indebtedness,	exchange	controls,	and	disruptive currency	depreciation	or	devaluation;	and

▪Settlement	risk	-	the	risk	that	the	settlement	or	clearance	of transactions	will	fail,	which	arises	whenever	the	exchange	of cash,	securities	and/or	other	assets	is	not	simultaneous.

The	acceptance	of	credit	risk	is	governed	by	corporate	policies	and guidelines,	which	include	standardized	procedures	applied	across	the entire	organization.	These	policies	and	guidelines	include	specific requirements	related	to	each	counterparty's	risk	profile;	the	markets served;	counterparty,	industry	and	country	concentrations;	and	regulatory compliance.	These	policies	and	procedures	also	implement	a	number	of core	principles,	which	include	the	following:

•We	measure	and	consolidate	all	credit	risks	to	each counterparty,	or	group	of	counterparties,	in	accordance	with	a "one-obligor"	principle	that	aggregates	risks	across	all	of	our business	units;

•ERM	reviews	and	approves	all	extensions	of	credit,	or	material changes	to	extensions	of	credit	(such	as	changes	in	term, collateral	structure	or	covenants),	in	accordance	with	assigned credit-approval	authorities;

•Credit-approval	authorities	are	assigned	to	individuals	according to	their	qualifications,	experience	and	training,	and	these authorities	are	periodically	reviewed.	Our	largest	exposures require	approval	by	the	Credit	Committee,	a	sub-committee	of the	Credit	Risk	and	Policy	Committee.	With	respect	to	small	and low-risk	extensions	of	credit	to	certain	types	of	counterparties, approval	authority	is	granted	to	individuals	outside	of	ERM;

•We	seek	to	avoid	or	limit	undue	concentrations	of	risk. Counterparty	(or	groups	of	counterparties),	industry,	country	and product-specific	concentrations	of	risk	are	subject	to	frequent review	and	approval	in	accordance	with	our	risk	appetite;

•We	determine	the	creditworthiness	of	all	counterparties	through a	detailed	risk	assessment,	including	the	use	of	comprehensive internal	risk-rating	methodologies;

•We	review	all	extensions	of	credit	and	the	creditworthiness	of	all counterparties	at	least	annually.	The	nature	and	extent	of	these reviews	are	determined	by	the	size,	nature	and	term	of	the extensions	of	credit	and	the	creditworthiness	of	the	counterparty; and

•We	subject	all	core	policies	and	principles	to	annual	review	as an	integral	part	of	our	periodic	assessment	of	our	risk	appetite.

Our	corporate	policies	and	guidelines	require	that	the	business	units which	engage	in	activities	that	give	rise	to	credit	and	counterparty	risk comply	with	procedures	that	promote	the	extension	of	credit	for	legitimate business	purposes;	are	consistent	with	the	maintenance	of	proper	credit standards;	limit	credit-related	losses;	and	are	consistent	with	our	goal	of maintaining	a	strong	financial	condition.

# Structure	and	Organization

The	Credit	Risk	Management	group,	an	integral	part	of	ERM,	is responsible	for	the	assessment,	approval	and	monitoring	of	all	types	of credit	risk	across	State	Street.	The	group	is	managed	centrally,	and	has dedicated	teams	in	a	number	of	locations	worldwide,	across	our businesses.	The	Credit	Risk	Management	group	is	responsible	for	all requisite	policies	and	procedures,	and	for	our	advanced	internal	credit- rating	systems	and	methodologies.	In	addition,	the	group,	in	conjunction with	the	appropriate	business	units,	establishes	appropriate measurements	and	limits	to	control	the	amount	of	credit	risk	accepted across	its	various	business	activities,	both	at	the	portfolio	level	and	for each	individual	counterparty	or	group	of	counterparties,	to	individual industries,	and	also	to	counterparties	by	product	and	country	of	risk. These	measurements	and	limits	are	reviewed	periodically,	but	at	least annually.

In	conjunction	with	other	groups	in	ERM,	Credit	Risk	Management	is jointly	responsible	for	the	design,	implementation	and	oversight	of	our credit	risk	measurement	and	management	systems,	including	data	and assessment	systems,	quantification	systems	and	the	reporting	framework.

Various	key	committees	within	State	Street	are	responsible	for	the oversight	of	credit	risk	and	associated	credit	risk	policies,	systems	and models.	All	credit-related	activities	are	governed	by	our	risk	appetite framework	and	our	credit	risk	guidelines,	which	define	our	general philosophy	with	respect	to

credit	risk	and	the	manner	in	which	we	control,	manage	and	monitor	such risks.

The	previously	described	Credit	Risk	and	Policy	Committee	(refer	to "Risk	Committees"	in	this	Management's	Discussion	and	Analysis)	has primary	responsibility	for	the	oversight,	review	and	approval	of	the	credit risk	guidelines	and	policies.	Credit	risk	guidelines	and	policies	are reviewed	periodically,	but	at	least	annually.

The	Credit	Committee,	a	sub-committee	of	the	Credit	Risk	and Policy	Committee,	has	responsibility	for	assigning	credit	authority	and approving	the	largest	and	higher-risk	extensions	of	credit	to	individual counterparties	or	groups	of	counterparties.

Both	the	Credit	Risk	and	Policy	Committee	and	the	Credit Committee	provide	periodic	updates	to	MRAC	and	the	Board's	RC.

# Credit	Ratings

We	seek	to	limit	credit	risk	arising	from	transactions	with	our counterparties	by	performing	initial	and	ongoing	due	diligence	on	their creditworthiness	when	conducting	any	business	with	them	or	approving any	credit	limits.

This	due	diligence	process	includes	the	assignment	of	an	internal credit	rating,	which	is	determined	by	the	use	of	internally	developed	and validated	methodologies,	scorecards	and	a	15-grade	rating	scale.	This risk-rating	process	incorporates	the	use	of	risk-rating	tools	in	conjunction with	management	judgment;	qualitative	and	quantitative	inputs	are captured	in	a	replicable	manner	and,	following	a	formal	review	and approval	process,	an	internal	credit	rating	based	on	our	rating	scale	is assigned.	All	credit	ratings	are	reviewed	and	approved	by	the	Credit	Risk Management	group	or	designees	within	ERM.	To	facilitate	comparability across	the	portfolio,	counterparties	within	a	given	sector	are	rated	using	a risk-rating	tool	developed	for	that	sector.

All	risk-rating	methodologies	are	approved	by	the	Credit	Risk	and Policy	Committee,	after	completion	of	internal	model	validation	processes, and	are	subject	to	an	annual	review,	including	re-validation.

We	generally	rate	our	counterparties	individually,	although	certain portfolios	defined	by	us	as	low-risk	are	rated	on	a	pooled	basis.	We evaluate	and	rate	the	credit	risk	of	our	counterparties	on	an	ongoing basis.

# Risk	Parameter	Estimates

Our	internal	risk-rating	system	promotes	a	clear	and	consistent approach	to	the	determination	of	appropriate	credit	risk	classifications	for all	of	our	credit	counterparties	and	exposures,	tracking	the

changes	in	risk	associated	with	these	counterparties	and	exposures	over time.	This	capability	enhances	our	ability	to	more	accurately	calculate both	risk	exposures	and	capital,	enabling	better	strategic	decision	making across	the	organization.

We	use	credit	risk	parameter	estimates	for	the	following	purposes: •The	assessment	of	the	creditworthiness	of	new	counterparties and,	in	conjunction	with	our	risk	appetite	statement,	the development	of	appropriate	credit	limits	for	all	products	and services,	including	loans,	foreign	exchange,	securities	finance, placements	and	repurchase	agreements;

•The	use	of	an	automated	process	for	limit	approvals	for	certain low-risk	counterparties,	as	defined	in	our	credit	risk	guidelines, based	on	the	counterparty's	probability-of-default,	or	PD,	rating class;

•The	development	of	approval	authority	matrices	based	on	PD; riskier	counterparties	with	higher	ratings	require	higher	levels	of approval	for	a	comparable	PD	and	limit	size	compared	to	less risky	counterparties	with	lower	ratings;

•The	analysis	of	risk	concentration	trends	using	historical	PD	and exposure-at-default,	or	EAD,	data;

•The	standardization	of	rating	integrity	testing	by	the	Global Counterparty	Review	group	using	rating	parameters;

•The	determination	of	the	level	of	management	review	of	short- duration	advances	depending	on	PD;	riskier	counterparties	with higher	rating	class	values	generally	trigger	higher	levels	of management	escalation	for	comparable	short-duration	advances compared	to	less	risky	counterparties	with	lower	rating-class values;

•The	monitoring	of	credit	facility	utilization	levels	using	EAD values	and	the	identification	of	instances	where	counterparties have	exceeded	limits;

•The	aggregation	and	comparison	of	counterparty	exposures	with risk	appetite	levels	to	determine	if	businesses	are	maintaining appropriate	risk	levels;	and

•The	determination	of	our	regulatory	capital	requirements	for	the advanced	internal	ratings-based	approach	provided	in	the	Basel framework.

# Credit	Risk	Mitigation

We	seek	to	limit	our	credit	exposure	and	reduce	our	potential	credit losses	through	various	types	of	risk	mitigation.	In	our	day-to-day management	of	credit	risks,	we	utilize	and	recognize	the	following	types of	risk	mitigation.

•Collateral.	In	many	parts	of	our	business,	we	regularly	require	or agree	for	collateral	to	be	received	from	or	provided	to	clients	and counterparties	in	connection	with	contracts	that	incur	credit	risk. In	our	trading	businesses,	this	collateral	is	typically	in	the	form	of cash	and	securities	(government	securities	and	other	bonds	or equity	securities).	Credit	risks	in	our	non-trading	and	securities finance	businesses	are	also	often	secured	by	bonds	and	equity securities	and	by	other	types	of	assets.	In	all	instances, collateral	serves	to	reduce	the	risk	of	loss	inherent	in	an exposure	by	improving	the	prospect	of	recovery	in	the	event	of	a counterparty	default.	While	collateral	is	often	an	alternative source	of	repayment,	it	generally	does	not	replace	the requirement	within	our	policies	and	guidelines	for	high-quality underwriting	standards.

Our	credit	risk	guidelines	require	that	the	collateral	we	accept	for	risk mitigation	purposes	is	of	high	quality,	can	be	reliably	valued	and	can	be liquidated	if	or	when	required.	Generally,	when	collateral	is	of	lower quality,	more	difficult	to	value	or	more	challenging	to	liquidate,	higher discounts	to	market	values	are	applied	for	the	purposes	of	measuring credit	risk.	For	certain	less	liquid	collateral,	longer	liquidation	periods	are assumed	when	determining	the	credit	exposure.

All	types	of	collateral	are	assessed	regularly	by	ERM,	as	is	the	basis on	which	the	collateral	is	valued.	Our	assessment	of	collateral,	including the	ability	to	liquidate	collateral	in	the	event	of	a	counterparty	default,	is an	integral	component	of	our	assessment	of	risk	and	approval	of	credit limits.	We	also	seek	to	identify,	limit	and	monitor	instances	of	"wrong-way" risk,	where	a	counterparty's	risk	of	default	is	positively	correlated	with	the risk	of	our	collateral	eroding	in	value.

We	maintain	policies	and	procedures	requiring	that	all documentation	used	to	collateralize	a	transaction	is	legal,	valid,	binding and	enforceable	in	the	relevant	jurisdictions.	We	also	conduct	legal reviews	to	assess	whether	our	documentation	meets	these	standards	on an	ongoing	basis.

•Netting.	Netting	is	a	mechanism	that	allows	institutions	and counterparties	to	net	offsetting	exposures	and	payment obligations	against	one	another	through	the

use	of	qualifying	master	netting	agreements.	A	master	netting agreement	allows	the	netting	of	rights	and	obligations	arising under	derivative	or	other	transactions	that	have	been	entered into	under	such	an	agreement	upon	the	counterparty's	default, resulting	in	a	single	net	claim	owed	by,	or	to,	the	counterparty. This	is	commonly	referred	to	as	"close-out	netting,"	and	is pursued	wherever	possible.	We	may	also	enter	into	master agreements	that	allow	for	the	netting	of	amounts	payable	on	a given	day	and	in	the	same	currency,	reducing	our	settlement risk.	This	is	commonly	referred	to	as	"payment	netting,"	and	is widely	used	in	our	foreign	exchange	activities.

As	with	collateral,	we	have	policies	and	procedures	in	place	to	apply close-out	and	payment	netting	only	to	the	extent	that	we	have	verified legal	validity	and	enforceability	of	the	master	agreement.	In	the	case	of payment	netting,	operational	constraints	with	our	counterparties	may preclude	us	from	reducing	settlement	risk,	notwithstanding	the	legal	right to	require	the	same	under	the	master	netting	agreement.

Generally,	given	the	nature	of	our	operations	and	our	risk	profile,	we do	not	employ	risk	mitigation	in	the	form	of	guarantees	and	credit derivatives	as	extensively	as	traditional	commercial	and	investment banks.	Accordingly,	while	we	may	benefit	from	third-party	guarantees	in some	instances,	we	do	not	currently	recognize	the	full	potential	benefit	of related	risk	reduction	in	our	measurement	or	risk-weighting	of	our	credit exposure.	We	have	established	systematic	processes	to	allow	only eligible	collateral	and	permitted	netting,	as	defined	in	the	Basel framework,	to	be	recognized	in	our	measurement	of	credit	risk.

# Credit	Limits

Central	to	our	philosophy	for	our	management	of	credit	risk	is	the approval	and	imposition	of	credit	limits,	against	which	we	monitor	the actual	and	potential	future	credit	exposure	arising	from	our	business activities	with	counterparties	or	groups	of	counterparties.	Credit	limits	are a	reflection	of	our	risk	appetite,	which	may	be	determined	by	the creditworthiness	of	the	counterparty,	the	nature	of	the	risk	inherent	in	the business	undertaken	with	the	counterparty,	or	a	combination	of	relevant credit	factors.	Our	risk	appetite	for	certain	sectors	and	certain	countries and	geographic	regions	may	also	influence	the	level	of	risk	we	are	willing to	assume	to	certain	counterparties.

The	analysis	and	approval	of	credit	limits	is	undertaken	in	a consistent	manner	across	all	of	our	businesses,	although	the	nature	and extent	of	the	analysis	may	vary,	based	on	the	type,	term	and

magnitude	of	the	risk	being	assumed.	Credit	limits	and	underlying	trading- related	exposures	are	assessed	and	measured	on	both	a	gross	and	net basis,	with	net	exposure	determined	by	deducting	the	value	of	collateral. In	nearly	all	instances,	credit	limit	approvals,	for	all	our	business	units	and products,	are	undertaken	by	the	Credit	Risk	Management	group,	by individuals	to	whom	credit	authority	has	been	delegated,	or	by	the	Credit Committee.

Credit	limits	are	re-evaluated	annually,	or	more	frequently	as needed,	and	are	revised	periodically	on	prevailing	and	anticipated	market conditions,	changes	in	counterparty	or	country-specific	credit	ratings	and outlook,	changes	in	our	risk	appetite	for	certain	counterparties,	sectors	or countries,	and	enhancements	to	the	measurement	of	credit	utilization.

# Reporting

Ongoing	active	monitoring	and	management	of	our	credit	risk	is	an integral	part	of	our	credit	risk	management	framework.	We	maintain management	information	systems	to	identify,	measure,	monitor	and	report credit	risk	across	businesses	and	legal	entities,	enabling	ERM	and	our businesses	to	have	timely	access	to	accurate	information	on	all	credit limits	and	exposures.	Monitoring	is	performed	along	the	dimensions	of counterparty,	industry,	country	and	product-specific	risks	to	facilitate	the identification	of	concentrations	of	risk	and	emerging	trends.

Key	aspects	of	this	credit	risk	reporting	structure	include	governance and	oversight	groups,	policies	that	define	standards	for	the	reporting	of credit	risk,	data	aggregation	and	sourcing	systems,	and	separate	testing of	relevant	risk	reporting	functions	by	Corporate	Audit.

The	Credit	Portfolio	Management	group	routinely	assesses	the composition	of	our	overall	credit	risk	portfolio	for	alignment	with	our	stated risk	appetite.	This	assessment	includes	routine	analysis	and	reporting	of the	portfolio,	monitoring	of	market-based	indicators,	the	assessment	of industry	trends	and	developments,	and	regular	reviews	of	concentrated risks.	The	Credit	Portfolio	Management	group	is	also	responsible,	in conjunction	with	the	business	units,	for	defining	the	appetite	for	credit	risk in	the	major	sectors	in	which	we	have	a	concentration	of	business activities.	These	sector-level	risk	appetite	statements,	which	include counterparty	selection	criteria	and	granular	underwriting	guidelines,	are reviewed	periodically	and	approved	by	the	Credit	Risk	and	Policy Committee.

# Monitoring

Regular	surveillance	of	credit	and	counterparty	risks	is	undertaken by	our	business	units,	the	Credit	Risk	Management	group	and	designees with	ERM,

allowing	for	frequent	and	extensive	oversight.	This	surveillance	process includes,	but	is	not	limited	to,	the	following	components:

•Annual	Reviews.	A	formal	review	is	conducted	at	least	annually on	all	counterparties,	and	includes	a	thorough	review	of operating	performance,	primary	risk	factors	and	our	internal credit	risk	rating.	This	annual	review	also	includes	a	review	of current	and	proposed	credit	limits,	an	assessment	of	our ongoing	risk	appetite	and	verification	that	supporting	legal documentation	remains	effective.

•Interim	Monitoring.	Periodic	monitoring	of	our	largest	and riskiest	counterparties	is	undertaken	more	frequently,	utilizing financial	information,	market	indicators	and	other	relevant	credit and	performance	measures.	The	nature	and	extent	of	this interim	monitoring	is	individually	tailored	to	certain counterparties	and/or	industry	sectors	to	identify	material changes	to	the	risk	profile	of	a	counterparty	(or	group	of counterparties)	and	assign	an	updated	internal	risk	rating	in	a timely	manner.

We	maintain	an	active	"watch	list"	for	all	counterparties	where	we have	identified	a	concern	that	the	actual	or	potential	risk	of	default	has increased.	The	watch-list	status	denotes	a	concern	with	some	aspect	of	a counterparty's	risk	profile	that	warrants	closer	monitoring	of	the counterparty's	financial	performance	and	related	risk	factors.	Our	ongoing monitoring	processes	are	designed	to	facilitate	the	early	identification	of counterparties	whose	creditworthiness	is	deteriorating;	any	counterparty may	be	placed	on	the	watch	list	by	ERM	at	its	sole	discretion.

Counterparties	that	receive	an	internal	risk	rating	within	a	certain range	on	our	rating	scale	are	eligible	for	watch	list	designation.	These	risk ratings	generally	correspond	with	the	non-investment	grade	or	near	non- investment	grade	ratings	established	by	the	major	independent	credit- rating	agencies,	and	also	include	the	regulatory	classifications	of	"Special Mention,"	"Substandard,"	"Doubtful"	and	"Loss."	Counterparties	whose internal	ratings	are	outside	this	range	may	also	be	placed	on	the	watch list.

The	Global	Credit	Review	group,	referred	to	as	GCR,	maintains primary	responsibility	for	our	watch	list	processes,	and	generates	a monthly	report	of	all	watch	list	counterparties.	The	watch	list	is	reviewed monthly	in	recurring	meetings	conducted	by	GCR	with	participation	from the	business	units,	senior	ERM	staff,	and	representatives	from	our corporate	finance	and	legal	groups	as	appropriate.	These	meetings include	a	review	of	all	individual	watch	list

counterparties,	together	with	credit	limits	and	prevailing	exposures,	and are	focused	on	actions	to	contain,	reduce	or	eliminate	the	risk	of	loss	to State	Street.	Identified	actions	are	documented	and	monitored.

# Controls

GCR	provides	a	separate	level	of	surveillance	and	oversight	over	the integrity	of	our	internal	risk-rating	system,	by	providing	a	separate	review of	all	ratings	processes.	As	a	critical	function,	GCR	is	subject	to	oversight by	the	Credit	Risk	and	Policy	Committee,	and	provides	periodic	updates to	the	Board's	RC.	GCR	reviews	all	counterparty	credit	ratings	for	all sectors	on	an	ongoing	basis.

Specific	activities	of	GCR	include	the	following:

•Separate	and	objective	assessments	of	our	credit	and counterparty	exposures	to	determine	the	nature	and	extent	of	risk undertaken	by	the	business	units;

•Periodic	business	unit	reviews,	focusing	on	the	assessment	of credit	analysis,	policy	compliance,	prudent	transaction	structure and	underwriting	standards,	administration	and	documentation, risk-rating	integrity,	and	relevant	trends;

•Identification	and	monitoring	of	developing	counterparty,	market and/or	industry	sector	trends	to	limit	risk	of	loss	and	protect capital;

•Regular	and	formal	reporting	of	reviews,	including	findings	and requisite	actions	to	remedy	identified	deficiencies;

•Allocation	of	resources	for	specialized	risk	assessments	(on	an as-needed	basis);

•Assessment	of	the	appropriate	level	of	the	allowance	for	loan	and lease	losses;	and

•Liaison	with	auditors	and	regulatory	personnel	on	matters	relating to	risk	rating,	reporting,	and	measurement.

# Reserve	for	Credit	Losses

We	maintain	an	allowance	for	loan	losses	to	support	our	on-balance sheet	credit	exposures.	We	also	maintain	a	reserve	for	unfunded commitments	and	letters	of	credit	to	support	our	off-balance	credit exposure.	The	two	components	together	represent	the	reserve	for	credit losses.	Review	and	evaluation	of	the	adequacy	of	the	reserve	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,	the	volume	of	adversely	classified	loans,	previous	loss experience,	current	trends,	and	economic	conditions	and	their	effect	on our	counterparties.	Additional	information	about	the	allowance	for	loan losses	is

provided	in	note	4	to	the	consolidated	financial	statements	included	under Item	8	of	this	Form	10-K.

# Liquidity	Risk	Management

Liquidity	risk	is	defined	as	the	potential	that	our	financial	condition	or overall	viability	could	be	adversely	affected	by	an	actual	or	perceived inability	to	meet	cash	and	collateral	obligations.	The	goal	of	liquidity	risk management	is	to	maintain,	even	in	the	event	of	stress,	our	ability	to	meet our	cash	and	collateral	obligations.

Liquidity	is	managed	to	meet	our	financial	obligations	in	a	timely	and cost-effective	manner,	as	well	as	maintain	sufficient	flexibility	to	fund strategic	corporate	initiatives	as	they	arise.	Our	effective	management	of liquidity	involves	the	assessment	of	the	potential	mismatch	between	the future	cash	demands	of	our	clients	and	our	available	sources	of	cash under	both	normal	and	adverse	economic	and	business	conditions.

We	manage	our	liquidity	on	a	global,	consolidated	basis.	We	also manage	liquidity	on	a	stand-alone	basis	at	the	parent	company,	as	well	as at	certain	branches	and	subsidiaries	of	State	Street	Bank.	State	Street Bank	generally	has	access	to	markets	and	funding	sources	limited	to banks,	such	as	the	federal	funds	market	and	the	Federal	Reserve's discount	window.	Our	parent	company	is	managed	to	a	more conservative	liquidity	profile,	reflecting	narrower	market	access.	Our parent	company	typically	holds	enough	cash,	primarily	in	the	form	of overnight	interest-bearing	deposits	with	its	banking	subsidiaries,	to	meet its	current	debt	maturities	and	cash	needs,	as	well	as	those	projected over	the	next	one-year	period.	As	of	December	31,	2014,	the	value	of	the parent	company's	net	liquid	assets	totaled	$6.03	billion,	compared	with $4.42	billion	as	of	December	31,	2013.

Based	on	our	level	of	consolidated	liquid	assets	and	our	ability	to access	the	capital	markets	for	additional	funding	when	necessary, including	our	ability	to	issue	debt	and	equity	securities	under	our	current universal	shelf	registration,	management	considers	our	overall	liquidity	as of	December	31,	2014	to	be	sufficient	to	meet	its	current	commitments and	business	needs,	including	accommodating	the	transaction	and	cash management	needs	of	its	clients.

# Governance

Global	Treasury	is	responsible	for	our	management	of	liquidity.	This includes	the	day-to-day	management	of	our	global	liquidity	position,	the development	and	monitoring	of	early	warning	indicators,	key	liquidity	risk metrics,	the	creation	and	execution	of	stress	tests,	the	evaluation	and implementation	of	regulatory	requirements,	the

maintenance	and	execution	of	our	liquidity	guidelines	and	contingency funding	plan,	and	routine	management	reporting	to	ALCO,	MRAC	and	the Board's	RC.

Global	Treasury	Risk	Management,	part	of	ERM,	provides	separate oversight	over	the	identification,	communication,	and	management	of Global	Treasury's	risks	in	support	of	our	business	strategy.	Global Treasury	Risk	Management	reports	to	the	CRO.	Global	Treasury	Risk Management's	responsibilities	relative	to	liquidity	risk	management include	the	development	and	review	of	policies	and	guidelines;	the monitoring	of	limits	related	to	adherence	to	the	liquidity	risk	guidelines	and associated	reporting.

# Liquidity	Framework

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	liquidity	according	to	several	principles	that	are	equally important	to	our	overall	liquidity	risk	management	framework:

•Structural	liquidity	management	addresses	liquidity	by	monitoring and	directing	the	composition	of	our	consolidated	statement	of condition.	Structural	liquidity	is	measured	by	metrics	such	as	the percentage	of	total	wholesale	funds	to	consolidated	total	assets, and	the	percentage	of	non-government	investment	securities	to client	deposits.	In	addition,	on	a	regular	basis	and	as	described below,	our	structural	liquidity	is	evaluated	under	various	stress scenarios.

•Tactical	liquidity	management	addresses	our	day-to-day	funding requirements	and	is	largely	driven	by	changes	in	our	primary source	of	funding,	which	are	client	deposits.	Fluctuations	in	client deposits	may	be	supplemented	with	short-term	borrowings,	which generally	include	commercial	paper	and	certificates	of	deposit. •Stress	testing	and	contingent	funding	planning	are	longer-term strategic	liquidity	risk	management	practices.	Regular	and	ad	hoc liquidity	stress	testing	are	performed

under	various	severe	but	plausible	scenarios	at	the	consolidated level	and	at	significant	subsidiaries,	including	State	Street	Bank. These	tests	contemplate	severe	market	and	State	Street-specific events	under	various	time	horizons	and	severities.	Tests contemplate	the	impact	of	material	changes	in	key	funding sources,	credit	ratings,	additional	collateral	requirements, contingent	uses	of	funding,	systemic	shocks	to	the	financial markets,	and	operational	failures	based	on	market	and	State Street-specific	assumptions.	The	stress	tests	evaluate	the required	level	of	funding	versus	available	sources	in	an	adverse environment.	As	stress	testing	contemplates	potential	forward- looking	scenarios,	results	also	serve	as	a	trigger	to	activate specific	liquidity	stress	levels	and	contingent	funding	actions.

Contingency	Funding	Plans,	or	CFPs,	are	designed	to	assist	senior management	with	decision-making	associated	with	any	contingency funding	response	to	a	possible	or	actual	crisis	scenario.	The	CFPs	define roles,	responsibilities	and	management	actions	to	be	taken	in	the	event	of deterioration	of	our	liquidity	profile	caused	by	either	a	State	Street-specific event	or	a	broader	disruption	in	the	capital	markets.	Specific	actions	are linked	to	the	level	of	stress	indicated	by	these	measures	or	by management	judgment	of	market	conditions.

# Liquidity	Risk	Metrics

In	managing	our	liquidity,	we	employ	early	warning	indicators	and metrics.	Early	warning	indicators	are	intended	to	detect	situations	which may	result	in	a	liquidity	stress,	including	changes	in	our	common	stock price	and	the	spread	on	our	long-term	debt.	Additional	metrics	that	are critical	to	the	management	of	our	consolidated	statement	of	condition	and monitored	as	part	of	our	routine	liquidity	management	include	measures of	our	fungible	cash	position,	purchased	wholesale	funds,	unencumbered liquid	assets,	deposits,	and	the	total	of	investment	securities	and	loans	as a	percentage	of	total	client	deposits.

# Asset	Liquidity

Central	to	the	management	of	our	liquidity	is	asset	liquidity,	which generally	consists	of	unencumbered	highly	liquid	securities,	cash	and cash	equivalents	carried	in	our	consolidated	statement	of	condition.	We restrict	the	eligibility	of	securities	of	asset	liquidity	to	U.S.	Government	and federal	agency	securities	(including	mortgage-backed	securities),	selected non-U.S.	Government	and	supranational	securities	as	well	as	certain other	high-	quality	securities	which	generally	are	more	liquid	than	other types	of	assets	even	in	times	of	stress.	Our

asset	liquidity	metric	is	similar	to	the	high-quality	liquid	assets	under	the U.S.	liquidity	coverage	ratio,	and	for	comparison	purposes	our	high-quality liquid	assets,	under	the	LCR	final	rule	definition,	are	estimated	to	be $115.56	billion	as	of	December	31,	2014.

# TABLE	32:	COMPONENTS	OF	ASSET	LIQUIDITY

| (In	millions) | December	31,	2014 | December	31,	2013 |
| :--- | :--- | :--- |
| Asset\tLiquidity: |  |  |
| Highly\tliquid\tshort-term\tinvestments (1) | $93,523 | $64,257 |
| Investment\tsecurities | 26,670 | 22,322 |
| Total | $120,193 | $86,579 |

| (In	millions) | 2014 | 2013 |
| :--- | :--- | :--- |
| Average\tAsset\tLiquidity: |  |  |
| Highly\tliquid\tshort-term\tinvestments (1) | $55,229 | $28,946 |
| Investment\tsecurities | 23,577 | 22,032 |
| Total | $78,806 | $50,978 |

# (1)	Composed	of	interest-bearing	deposits	with	banks.

With	respect	to	highly	liquid	short-term	investments	presented	in	the preceding	table,	due	to	the	continued	elevated	level	of	client	deposits	as of	December	31,	2014,	we	maintained	cash	balances	in	excess	of regulatory	requirements	governing	deposits	with	the	Federal	Reserve	of approximately	$83.40	billion	at	the	Federal	Reserve,	the	ECB	and	other non-U.S.	central	banks,	compared	to	$51.03	billion	as	of	December	31, 2013.	The	increase	in	investment	securities	as	of	 December	31,	2014 compared	to	December	31,	2013,	presented	in	the	table,	was	mainly associated	with	our	repositioning	of	the	investment	portfolio	in	light	of	the liquidity	requirements	of	the	LCR.

Liquid	securities	carried	in	our	asset	liquidity	include	securities pledged	without	corresponding	advances	from	the	Federal	Reserve	Bank of	Boston,	or	FRB,	the	Federal	Home	Loan	Bank	of	Boston,	or	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.

Access	to	primary,	intra-day	and	contingent	liquidity	provided	by these	utilities	is	an	important	source	of	contingent	liquidity	with	utilization subject	to	underlying	conditions.	As	of	December	31,	2014	and	2013,	we had	no	outstanding	primary	credit	borrowings	from	the	FRB	discount window	or	any	other	central	bank	facility,	and	as	of	the	same	dates,	no FHLB	advances	were	outstanding.

In	addition	to	the	securities	included	in	our	asset	liquidity,	we	have significant	amounts	of	other	high-quality,	unencumbered	investment securities.	The	aggregate	fair	value	of	those	securities	was	$60.06	billion as	of	December	31,	2014,	compared	to	$66.16	billion	as	of	December	31, 2013.	These	securities	are	available	sources	of	liquidity,	although	not	as rapidly	deployed	as	those	included	in	our	asset	liquidity.

# Liquidity	Coverage	Ratio

On	September	3,	2014,	U.S.	banking	regulators	issued	a	final	rule	to implement	the	Basel	Committee's	LCR	in	the	U.S.	The	LCR	is	intended	to promote	the	short-term	resilience	of	internationally	active	banking organizations,	like	State	Street,	to	improve	the	banking	industry's	ability	to absorb	shocks	arising	from	idiosyncratic	or	market	stress,	and	improve the	measurement	and	management	of	liquidity	risk.

The	LCR	measures	an	institution's	high-quality	liquid	assets,	or HQLA,	against	its	net	cash	outflows.	The	LCR	will	be	phased	in, beginning	on	January	1,	2015,	at	80%,	with	full	implementation	beginning on	January	1,	2017.

The	LCR	final	rule	is	largely	similar	to	the	proposed	rule	issued	by U.S.	banking	regulators	in	October	2013;	however,	the	final	rule	contains several	changes	and	clarifications,	including	revisions	to	the	definition	of operational	deposits	and	more	favorable	foreign	exchange	netting treatment,	both	of	which	we	expect	to	benefit	our	LCR	ratio,	and	the exclusion	as	operational	deposits	of	deposits	from	non-regulated	funds, which	we	expect	to	negatively	affect	our	LCR	ratio.

Compliance	with	the	LCR	has	required	that	we	maintain	an investment	portfolio	that	contains	an	adequate	amount	of	HQLA.	In general,	HQLA	investments	generate	a	lower	investment	return	than other	the	types	of	investments,	resulting	in	a	negative	impact	on	our	net interest	revenue	and	our	net	interest	margin.		In	addition,	the	level	of HQLA	we	are	required	to	maintain	under	the	LCR	is	dependent	upon	our client	relationships	and	the	nature	of	services	we	provide,	which	may change	over	time.		For	example,	if	the	percentage	of	our	operational deposits	relative	to	non-operational	deposits	increases,	we	would	expect to	require	less	HQLA	in	order	to	maintain	our	LCR.		Conversely,	if	the percentage	of	non-operational	deposits	increases	relative	to	our operational	deposits,	we	would	expect

to	require	additional	HQLA	in	order	to	maintain	our	LCR.

# Net	Stable	Funding	Ratio

In	October	2014,	the	Basel	Committee	issued	final	guidance	with respect	to	the	Net	Stable	Funding	Ratio,	or	NSFR.	The	NSFR	will	require banking	organizations	to	maintain	a	stable	funding	profile	relative	to	the composition	of	their	assets	and	off-balance	sheet	activities.	The	NSFR limits	over-reliance	on	short-term	wholesale	funding,	encourages	better assessment	of	funding	risk	across	all	on-	and	off-balance	sheet exposures,	and	promotes	funding	stability.	The	final	guidance	establishes a	one-year	liquidity	standard	representing	the	proportion	of	long-term assets	funded	by	long-term	stable	funding,	with	the	NSFR	scheduled	to become	a	minimum	standard	beginning	on	January	1,	2018.

We	are	reviewing	the	specifics	of	the	final	guidance	and	will	evaluate the	U.S.	implementation	of	this	standard	to	analyze	the	impact	and develop	strategies	for	compliance.	U.S.	banking	regulators	have	not	yet issued	a	proposal	to	implement	the	NSFR.

# Uses	of	Liquidity

Significant	uses	of	our	liquidity	could	result	from	the	following: withdrawals	of	client	deposits;	draw-downs	of	unfunded	commitments	to extend	credit	or	to	purchase	securities,	generally	provided	through	lines	of credit;	and	short-duration	advance	facilities.	Such	circumstances	would generally	arise	under	stress	conditions	including	deterioration	in	credit ratings.	We	had	unfunded	commitments	to	extend	credit	with	gross contractual	amounts	totaling	$24.25	billion	and	$21.30	billion	as	of December	31,	2014	and	2013,	respectively.	These	amounts	do	not	reflect the	value	of	any	collateral.	As	of	December	31,	2014,	approximately	76% of	our	unfunded	commitments	to	extend	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.

# Funding

# Deposits:

We	provide	products	and	services	including	custody,	accounting, administration,	daily	pricing,	foreign	exchange	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	State	Street	entities	in	various	currencies.	We	invest	these client	deposits	in	a	combination	of	investment	securities	and	short- duration	financial	instruments	whose	mix	is	determined	by	the characteristics	of	the	deposits.

For	the	past	several	years,	we	have	experienced	higher	client deposit	inflows	toward	the	end	of	the	quarter	or	the	end	of	the	year.	As	a result,	we	believe	average	client	deposit	balances	are	more	reflective	of ongoing	funding	than	period-end	balances.

# TABLE	33:	CLIENT	DEPOSITS

(1)	Balance	as	of	December	31,	2014	excluded	term	wholesale	certificates	of	deposit,	or	CDs,	of $13.76	billion;	average	balances	for	the	year	ended	December	31,	2014	and	2013	excluded average	CDs	of	$6.87	billion	and	$2.50	billion,	respectively.

# Short-Term	Funding:

Our	corporate	commercial	paper	program,	under	which	we	can issue	up	to	$3.0	billion	of	commercial	paper	with	original	maturities	of	up to	270	days	from	the	date	of	issuance,	had	$2.48	billion	and	$1.82	billion of	commercial	paper	outstanding	as	of	December	31,	2014	and	2013, respectively.

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	at	reasonable rates	of	interest	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	$8.93	billion	and	$7.95	billion as	of	December	31,	2014	and	2013,	respectively.

State	Street	Bank	currently	maintains	a	line	of	credit	with	a	financial institution	of	CAD	$800	million,	or	approximately	$690	million	as	of December	31,	2014,	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	December	31,	2014, there	was	no	balance	outstanding	on	this	line	of	credit.

# Long-Term	Funding:

As	of	December	31,	2014,	State	Street	Bank	had	Board	authority	to issue	unsecured	senior	debt	securities	from	time	to	time,	provided	that	the aggregate	principal	amount	of	such	unsecured	senior	debt	outstanding	at any	one	time	does	not	exceed	$5	billion.	As	of	December	31,	2014,	$4.1 billion	was	available	for	issuance	pursuant	to	this	authority.	As	of December	31,	2014,	State	Street	Bank	also	had	Board	authority	to	issue an	additional	$500	million	of	subordinated	debt.

We	maintain	an	effective	universal	shelf	registration	that	allows	for the	public	offering	and	sale	of	debt	securities,	capital	securities,	common stock,	depositary	shares	and	preferred	stock,	and	warrants	to	purchase such	securities,	including	any	shares	into	which	the	preferred	stock	and depositary	shares	may	be	convertible,	or	any	combination	thereof.	We have	issued	in	the	past,	and	we	may	issue	in	the	future,	securities pursuant	to	our	shelf	registration.	The	issuance	of	debt	or	equity	securities will	depend	on	future	market	conditions,	funding	needs	and	other	factors.

# 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,	serve	markets,	and	engage	in	transactions	in which	clients	value	high	credit	ratings.	A	downgrade	or	reduction	of	our credit	ratings	could	have	a	material	adverse	effect	on	our	liquidity	by restricting	our	ability	to	access	the	capital

markets,	which	could	increase	the	related	cost	of	funds.	In	turn,	this	could cause	the	sudden	and	large-scale	withdrawal	of	unsecured	deposits	by our	clients,	which	could	lead	to	draw-downs	of	unfunded	commitments	to extend	credit	or	trigger	requirements	under	securities	purchase commitments;	or	require	additional	collateral	or	force	terminations	of certain	trading	derivative	contracts.

A	majority	of	our	derivative	contracts	have	been	entered	into	under bilateral	agreements	with	counterparties	who	may	require	us	to	post collateral	or	terminate	the	transactions	based	on	changes	in	our	credit ratings.	We	assess	the	impact	of	these	arrangements	by	determining	the collateral	or	termination	payments	that	would	be	required	assuming	a downgrade	by	all	rating	agencies.	The	following	table	presents	the additional	collateral	or	termination	payments	related	to	our	net	derivative liabilities	under	these	arrangements	that	could	have	been	called	as	of	the dates	indicated	by	counterparties	in	the	event	of	a	one-notch	or	two-notch downgrade	in	our	credit	ratings.	Other	funding	sources,	such	as	secured financing	transactions	and	other	margin	requirements,	for	which	there	are no	explicit	triggers,	could	also	be	adversely	affected.

# TABLE	34:	ADDITIONAL	COLLATERAL	OR	TERMINATION	PAYMENTS RELATED	TO	NET	DERIVATIVE	LIABILITIES

# TABLE	35:	CREDIT	RATINGS

# Contractual	Cash	Obligations	and	Other	Commitments

The	long-term	contractual	cash	obligations	included	within	Table	36:	Long-Term	Contractual	Cash	Obligations,	and	other	commercial	commitments included	in	Table	37:	Other	Commercial	Commitments,	were	recorded	in	our	consolidated	statement	of	condition	as	of	 December	31,	2014,	except	for operating	leases	and	the	interest	portions	of	long-term	debt	and	capital	leases.

# TABLE	36:	LONG-TERM	CONTRACTUAL	CASH	OBLIGATIONS

|  |  | PAYMENTS	DUE	BY	PERIOD | PAYMENTS	DUE	BY	PERIOD |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| As\tof\tDecember\t31,\t2014 |  | Less\tthan\t1 | 1-3 | 4-5 | Over\t5 |
| (In\tmillions) | Total | year | years | years | years |
| Long-term\tdebt(1)\t(2) | $10,763 | $454 | $3,223 | $1,749 | $5,337 |
| Operating\tleases | 935 | 179 | 286 | 205 | 265 |
| Capital\tlease\tobligations(2) | 962 | 105 | 173 | 164 | 520 |
| Total\tcontractual\tcash\tobligations | $12,660 | $738 | $3,682 | $2,118 | $6,122 |

(1)	Long-term	debt	excludes	capital	lease	obligations	(presented	as	a	separate	line	item)	and	the	effect	of	interest-rate	swaps.	Interest	payments	were	calculated	at	the	stated	rate	with the	exception	of	floating-rate	debt,	for	which	payments	were	calculated	using	the	indexed	rate	in	effect	as	of	December	31,	2014.

(2)	Additional	information	about	contractual	cash	obligations	related	to	long-term	debt	and	operating	and	capital	leases	is	provided	in	notes	9	and	20	to	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.	Our	consolidated	statement	of	cash	flows,	also	included	under	Item	8	of	this	Form	10-K,	provides	additional	liquidity information.

Total	contractual	cash	obligations	shown	in	 Table	36:	Long-Term Contractual	Cash	Obligations,	do	not	include:

•Obligations	which	will	be	settled	in	cash,	primarily	in	less	than one	year,	such	as	client	deposits,	federal	funds	purchased, securities	sold	under	repurchase	agreements	and	other	short- term	borrowings.

Additional	information	about	deposits,	federal	funds	purchased, securities	sold	under	repurchase	agreements	and	other	short- term	borrowings	is	provided	in	notes	8	and	9	to	the	consolidated financial	statements	included	under	Item	8	of	this	Form	10-K. •Obligations	related	to	derivative	instruments	because	the derivative-related	amounts

recorded	in	our	consolidated	statement	of	condition	as	of December	31,	2014	did	not	represent	the	amounts	that	may ultimately	be	paid	under	the	contracts	upon	settlement.

Additional	information	about	our	derivative	instruments	is provided	in	note	16	to	the	consolidated	financial	statements included	under	Item	8	of	this	Form	10-K.	We	have	obligations under	pension	and	other	post-retirement	benefit	plans,	more	fully described	in	note	19	to	the	consolidated	financial	statements included	under	Item	8	of	this	Form	10-K,	which	are	not	included in	Table	36:	Long-Term	Contractual	Cash	Obligations.

# TABLE	37:	OTHER	COMMERCIAL	COMMITMENTS

|  | Total |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| As\tof\tDecember\t31,\t2014 | amounts | Less\tthan | 1-3 | 4-5 | Over\t5 |
| (In\tmillions) | committed(1) | 1\tyear | years | years | years |
| Indemnified\tsecurities\tfinancing | $349,766 | $349,766 | $— | $— | $— |
| Unfunded\tcommitments\tto\textend\tcredit | 24,247 | 18,529 | 1,852 | 3,351 | 515 |
| Asset\tpurchase\tagreements | 4,107 | 1,385 | 2,212 | 510 | — |
| Standby\tletters\tof\tcredit | 4,720 | 894 | 1,840 | 1,960 | 26 |
| Purchase\tobligations(2) | 285 | 61 | 57 | 46 | 121 |
| Total\tcommercial\tcommitments | $383,125 | $370,635 | $5,961 | $5,867 | $662 |

(1)	Total	amounts	committed	reflect	participations	to	independent	third	parties,	if	any.

(2)	Amounts	represent	obligations	pursuant	to	legally	binding	agreements,	where	we	have	agreed	to	purchase	products	or	services	with	a	specific	minimum	quantity	defined	at	a	fixed, minimum	or	variable	price	over	a	specified	period	of	time.

Additional	information	about	the	commitments	presented	in	Table 37:	Other	Commercial	Commitments,	except	for	purchase	obligations,	is provided	in	note	10	to	the	consolidated	financial	statements	included under	Item	8	of	this	Form	10-K.

# Operational	Risk	Management

We	consider	operational	risk	to	be	the	risk	of	loss	resulting	from inadequate	or	failed	internal	processes	and	systems,	human	error,	or from	external	events.	This	encompasses	legal	risk	and	fiduciary	risk.	We consider	legal	risk	to	be	the	risk	of	loss	resulting	from	failure	to	comply with	laws,	contractual	obligations	or	prudent	business	practices,	often	in the	form	of	litigation	or	fines.	We	consider	fiduciary	risk	to	be	the	failure	to properly	exercise	discretion	when	acting	on	behalf	of	our	clients,	or	not properly	monitoring	or	controlling	the	exercise	of	discretion	by	a	third party.

Operational	risk	is	inherent	in	the	performance	of	investment servicing	and	investment	management	activities	on	behalf	of	our	clients. Whether	it	be	fiduciary	risk,	risk	associated	with	execution	and	processing or	other	types	of	operational	risk,	a	consistent,	transparent	and	effective operational	risk	framework	is	key	to	identifying,	monitoring	and	managing operational	risk.

We	have	established	an	operational	risk	framework	that	is	based	on three	major	goals:

•Strong,	active	governance;

•Ownership	and	accountability;	and

•Consistency	and	transparency.

Our	Board	is	responsible	for	the	approval	and	oversight	of	our overall	operational	risk	framework.	It	does	so	through	its	RC,	which reviews	our	operational	risk	framework	and	approves	our	operational	risk policy	annually.

The	policy	identifies	the	responsibilities	of	individuals	and committees	charged	with	oversight	of	the	management	of	operational	risk, and	articulates	a	broad	mandate	that	supports	implementation	of	the operational	risk	framework.

ERM	and	other	control	groups	provide	the	oversight,	validation	and verification	of	the	management	and	measurement	of	operational	risk.	Our CRO,	who	leads	ERM,	manages	the	day-to-day	oversight.

Executive	management	actively	manages	and	oversees	our operational	risk	framework	through	membership	on	various	risk management	committees,	including	MRAC,	the	BCRC,	TORC,	the Operational	Risk	Committee	and	the	Fiduciary

Review	Committee,	all	of	which	ultimately	report	to	the	RC.

The	Operational	Risk	Committee,	chaired	by	the	global	head	of Operational	Risk,	provides	cross-business	oversight	of	operational	risk and	reviews	and	approves	operational	risk	guidelines	intended	to maintain	a	consistent	implementation	of	our	corporate	operational	risk policy	and	framework.

# Ownership	and	Accountability

We	have	implemented	our	operational	risk	framework	to	support	the broad	mandate	established	by	our	operational	risk	policy.	This	framework represents	an	integrated	set	of	processes	and	tools	that	assists	us	in	the management	and	measurement	of	operational	risk,	including	our calculation	of	required	capital	and	risk-weighted	assets.

The	framework	takes	a	holistic	view	and	integrates	the	methods	and tools	used	to	manage	and	measure	operational	risk.	The	framework utilizes	aspects	of	the	Committee	of	Sponsoring	Organizations	of	the Treadway	Commission,	or	COSO,	framework	and	other	industry	leading practices,	and	is	designed	foremost	to	address	our	risk	management needs	while	complying	with	regulatory	requirements.	The	operational	risk framework	is	intended	to	provide	a	number	of	important	benefits, including:

•A	common	understanding	of	operational	risk	management	and	its supporting	processes;

•The	clarification	of	responsibilities	for	the	management	of operational	risk	across	State	Street;

•The	alignment	of	business	priorities	with	risk	management objectives;

•The	active	management	of	risk	and	early	identification	of emerging	risks;

•The	consistent	application	of	policies	and	the	collection	of	data for	risk	management	and	measurement;	and

•The	estimation	of	our	operational	risk	capital	requirement.

The	operational	risk	framework	employs	a	distributed	risk management	infrastructure	executed	by	ERM	groups	aligned	with	the business	units,	which	are	responsible	for	the	implementation	of	the operational	risk	framework	at	the	business	unit	level.

As	with	other	risks,	senior	business	unit	management	is	responsible for	the	day-to-day	operational	risk	management	of	their	respective businesses.	It	is	business	unit	management's	responsibility	to	provide oversight	of	the	implementation	and	ongoing	execution	of	the	operational risk	framework	within	their	respective

organizations,	as	well	as	coordination	and	communication	with	ERM.

A	number	of	corporate	control	functions	are	directly	responsible	for implementing	and	assessing	various	aspects	of	our	operational	risk framework,	with	the	overarching	goal	of	consistency	and	transparency	to meet	the	evolving	needs	of	the	business:

•The	global	head	of	Operational	Risk,	a	member	of	the	CRO's executive	management	team,	leads	ERM's	corporate	Operational Risk	Management	group,	referred	to	as	ORM.	ORM	is responsible	for	the	strategy,	evolution	and	consistent implementation	of	our	operational	risk	guidelines,	framework	and supporting	tools	across	State	Street.	ORM	reviews	and	analyzes operational	key	risk	information,	events,	metrics	and	indicators	at the	business	unit	and	corporate	level	for	purposes	of	risk management,	reporting	and	escalation	to	the	CRO,	senior management	and	governance	committees;

•ERM's	Corporate	Risk	Analytics	group	develops	and	maintains operational	risk	capital	estimation	models,	and	ERM's	Operations group	calculates	our	required	capital	for	operational	risk;

•ERM's	Model	Validation	Group,	referred	to	as	MVG,	separately validates	the	quantitative	models	used	to	measure	operational risk,	and	ORM	performs	validation	checks	on	the	output	of	the model;	and

•Corporate	Audit	performs	separate	reviews	of	the	application	of operational	risk	management	practices	and	methodologies utilized	across	State	Street.

Our	operational	risk	framework	consists	of	five	components,	each described	below,	which	provide	a	working	structure	that	integrates	distinct risk	programs	into	a	continuous	process	focused	on	managing	and measuring	operational	risk	in	a	coordinated	and	consistent	manner.

# Risk	Identification,	Assessment	and Measurement

The	objective	of	risk	identification,	assessment	and	measurement	is to	understand	business	unit	strategy,	risk	profile	and	potential	exposures. It	is	achieved	through	a	series	of	risk	assessments	across	State	Street using	techniques	for	the	identification,	assessment	and	measurement	of risk	across	a	spectrum	of	potential	frequency	and	severity	combinations. Three	primary	risk	assessment

programs,	which	occur	annually,	augmented	by	other	business-specific programs,	are	the	core	of	this	component:

•The	Risk	and	Control	Self-Assessment	program,	referred	to	as the	RCSA,	seeks	to	understand	the	risks	associated	with	day-to- day	activities,	and	the	effectiveness	of	controls	intended	to manage	potential	exposures	arising	from	these	activities.	These risks	are	typically	frequent	in	nature	but	generally	not	severe	in terms	of	exposure;

•The	Material	Risk	Identification	process	utilizes	a	bottom-up approach	to	identify	State	Street's	most	significant	risk	exposures across	all	on-	and	off-balance	sheet	risk-taking	activities.	The program	is	specifically	designed	to	consider	risks	that	could	have a	material	impact	irrespective	of	their	likelihood	or	frequency.	This can	include	risks	that	may	have	an	impact	on	longer-term business	objectives,	such	as	significant	change	management activities	or	long-term	strategic	initiatives;

•The	Scenario	Analysis	program	focuses	on	the	set	of	risks	with the	highest	severity	and	most	relevance	from	a	capital perspective.	These	are	generally	referred	to	as	"tail	risks,"	and serve	as	important	benchmarks	for	our	loss	distribution	approach model	(see	below);	they	also	provide	inputs	into	stress	testing; and

•Business-specific	programs	to	identify,	assess	and	measure	risk, including	new	business	and	product	review	and	approval,	new client	screening,	and,	as	deemed	appropriate,	targeted	risk assessments.

The	primary	measurement	tool	used	is	an	internally	developed	loss distribution	approach	model,	referred	to	as	the	LDA	model.	We	use	the LDA	model	to	quantify	required	operational	risk	capital,	from	which	we calculate	risk-weighted	assets	related	to	operational	risk.	Such	risk- weighted	assets	totaled	$35.87	billion	as	of	December	31,	2014;	refer	to the	"Capital"	section	of	this	Management's	Discussion	and	Analysis.

The	LDA	model	incorporates	the	four	required	operational	risk elements	described	below:

•Internal	loss	event	data	is	collected	from	across	State	Street	in conformity	with	our	operating	loss	policy	that	establishes	the requirements	for	collecting	and	reporting	individual	loss	events. We	categorize	the	data	into	seven	Basel-defined	event	types	and further	subdivide	the	data	by	business

unit,	as	deemed	appropriate.	Each	of	these	loss	events	are represented	in	a	Unit	of	Measure,	referred	to	as	a	UOM,	which	is used	to	estimate	a	specific	amount	of	capital	required	for	the types	of	loss	events	that	fall	into	each	specific	category.	Some UOMs	are	measured	at	the	corporate	level	because	they	are	not "business	specific,"	such	as	damage	to	physical	assets,	where the	cause	of	an	event	is	not	primarily	driven	by	the	behavior	of	a single	business	unit.	Internal	losses	of	$500	or	greater	are captured,	analyzed	and	included	in	the	modeling	approach.	Loss event	data	is	collected	using	a	corporate-wide	data	collection tool,	which	stores	the	data	in	a	Loss	Event	Data	Repository, referred	to	as	the	LEDR,	to	support	processes	related	to	analysis, management	reporting	and	the	calculation	of	required	capital. Internal	loss	event	data	provides	State	Street-specific	frequency and	severity	information	to	our	capital	calculation	process	for historical	loss	events	experienced	by	State	Street.

•External	loss	event	data	provides	information	with	respect	to	loss event	severity	from	other	financial	institutions	to	inform	our	capital estimation	process	of	events	in	similar	business	units	at	other banking	organizations.	This	information	supplements	the	data pool	available	for	use	in	our	LDA	model.	Assessments	of	the sufficiency	of	internal	data	and	the	relevance	of	external	data	are completed	before	pooling	the	two	data	sources	for	use	in	our LDA	model.

•Scenario	analysis	workshops	are	conducted	annually	across State	Street	to	inform	management	of	the	less	frequent	but	most severe,	or	"tail,"	risks	that	the	organization	faces.	The	workshops are	attended	by	senior	business	unit	managers,	other	support and	control	partners	and	business-aligned	risk-management staff.	The	workshops	are	designed	to	capture	information	about the	significant	risks	and	to	estimate	potential	exposures	for individual	risks	should	a	loss	event	occur.	Workshops	are	aligned with	specific	UOMs	and	business	units	where	appropriate.	The results	of	these	workshops	are	used	to	benchmark	our	LDA model	results	to	determine	that	our	calculation	of	required	capital considers	relevant	risk-related	information.

•Business	environment	and	internal	control	factors,	referred	to	as BEICFs,	are	gathered	as	part	of	our	scenario	analysis	program	to

inform	the	scenario	analysis	workshop	participants	of	internal loss	event	data	and	business-relevant	metrics,	such	as	RCSA results,	along	with	industry	loss	event	data	and	case	studies where	appropriate.	BEICFs	are	those	characteristics	of	a	bank's internal	and	external	operating	environment	that	bear	an exposure	to	operational	risk.	The	use	of	this	information	indirectly influences	our	calculation	of	required	capital	by	providing additional	relevant	data	to	workshop	participants	when	reviewing specific	UOM	risks.

The	objective	of	risk	monitoring	is	to	proactively	monitor	the changing	business	environment	and	corresponding	operational	risk exposure.	It	is	achieved	through	a	series	of	quantitative	and	qualitative monitoring	tools	that	are	designed	to	allow	us	to	understand	changes	in the	business	environment,	internal	control	factors,	risk	metrics,	risk assessments,	exposures	and	operating	effectiveness,	as	well	as	details	of loss	events	and	progress	on	risk	initiatives	implemented	to	mitigate potential	risk	exposures.

# Effectiveness	and	Testing

The	objective	of	effectiveness	and	testing	is	to	verify	that	internal controls	are	designed	appropriately,	are	consistent	with	corporate	and regulatory	standards,	and	are	operating	effectively.	It	is	achieved	through a	series	of	assessments	by	both	internal	and	external	parties,	including Corporate	Audit,	independent	registered	public	accounting	firms,	business self-assessments	and	other	control	function	reviews,	such	as	a	Sarbanes- Oxley	testing	program.

Consistent	with	our	standard	model	validation	process,	the operational	risk	LDA	model	is	subject	to	a	detailed	review,	overseen	by the	MRC.	In	addition,	the	model	is	subject	to	a	rigorous	internal governance	process.	All	changes	to	the	model	or	input	parameters,	and the	deployment	of	model	updates,	are	reviewed	and	approved	by	the Operational	Risk	Committee,	which	has	oversight	responsibility	for	the model,	with	technical	input	from	the	MRC.

Operational	risk	reporting	is	intended	to	provide	transparency, thereby	enabling	management	to	manage	risk,	provide	oversight	and escalate	issues	in	a	timely	manner.	It	is	designed	to	allow	the	business units,	executive	management,	and	the	Board's	control	functions	and committees	to	gain	insight	into	activities	that	may	result	in	risks	and potential	exposures.	Reports	are	intended	to	identify	business	activities that	are	experiencing	processing	issues,	whether	or	not	they	result	in actual	loss	events.	Reporting

includes	results	of	monitoring	activities,	internal	and	external examinations,	regulatory	reviews,	and	control	assessments.	These elements	combine	in	a	manner	designed	to	provide	a	view	of	potential and	emerging	risks	facing	State	Street	and	information	that	details	its progress	on	managing	risks.

# Documentation	and	Guidelines

Documentation	and	guidelines	allow	for	consistency	and repeatability	of	the	various	processes	that	support	the	operational	risk framework	across	State	Street.

Operational	risk	guidelines	document	our	practices	and	describe	the key	elements	in	a	business	unit's	operational	risk	management	program. The	purpose	of	the	guidelines	is	to	set	forth	and	define	key	operational risk	terms,	provide	further	detail	on	State	Street's	operational	risk programs,	and	detail	the	business	units'	responsibilities	to	identify, assess,	measure,	monitor	and	report	operational	risk.	The	guideline supports	our	operational	risk	policy.

Data	standards	have	been	established	to	maintain	consistent	data repositories	and	systems	that	are	controlled,	accurate	and	available	on	a timely	basis	to	support	operational	risk	management.

# 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.

We	engage	in	trading	activities	primarily	to	support	our	clients'	needs and	to	contribute	to	our	overall	corporate	earnings	and	liquidity.	In connection	with	certain	of	these	trading	activities,	we	enter	into	a	variety of	derivative	financial	instruments	to	support	our	clients'	needs	and	to manage	our	interest-rate	and	currency	risk.	These	activities	are	generally intended	to	generate	trading	services	revenue	and	to	manage	potential earnings	volatility.	In	addition,	we

provide	services	related	to	derivatives	in	our	role	as	both	a	manager	and a	servicer	of	financial	assets.

Our	clients	use	derivatives	to	manage	the	financial	risks	associated with	their	investment	goals	and	business	activities.	With	the	growth	of cross-border	investing,	our	clients	often	enter	into	foreign	exchange forward	contracts	to	convert	currency	for	international	investments	and	to manage	the	currency	risk	in	their	international	investment	portfolios.	As an	active	participant	in	the	foreign	exchange	markets,	we	provide	foreign exchange	forward	and	option	contracts	in	support	of	these	client	needs, and	also	act	as	a	dealer	in	the	currency	markets.

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	December	31,	2014,	the	notional	amount	of	these	derivative contracts	was	$1.24	trillion,	of	which	$1.23	trillion	was	composed	of foreign	exchange	forward,	swap	and	spot	contracts.	We	seek	to	match positions	closely	with	the	objective	of	minimizing	related	currency	and interest-rate	risk.	All	foreign	exchange	contracts	are	valued	daily	at	current market	rates.

Our	assumption	of	market	risk	in	our	trading	activities	is	an	integral part	of	our	corporate	risk	appetite.	Our	Board	reviews	and	oversees	our management	of	market	risk,	including	the	approval	of	key	market	risk policies	and	the	receipt	and	review	of	regular	market	risk	reporting,	as	well as	periodic	updates	on	selected	market	risk	topics.

The	previously	described	TMRC	(refer	to	"Risk	Committees"	in	this Management's	Discussion	and	Analysis)	oversees	all	market	risk-taking activities	across	State	Street	associated	with	trading.	The	TMRC,	which reports	to	MRAC,	is	composed	of	members	of	ERM,	our	global	markets business	and	our	Global	Treasury	group,	as	well	as	our	senior	executives who	manage	our	trading	businesses	and	other	members	of	management who	possess	specialized	knowledge	and	expertise.	The	TMRC	meets regularly	to	monitor	the	management	of	our	trading	market	risk	activities.

Our	business	units	identify,	actively	manage	and	are	responsible	for the	market	risks	inherent	in	their	businesses.	A	dedicated	market	risk management	group	within	ERM,	and	other	groups	within	ERM,	work	with those	business	units	to	assist	them	in	the	identification,	assessment, monitoring,	management	and	control	of	market	risk,	and	assist	business unit	managers	with	their	market	risk	management	and

measurement	activities.	ERM	provides	an	additional	line	of	oversight, support	and	coordination	designed	to	promote	the	consistent identification,	measurement	and	management	of	market	risk	across business	units,	separate	from	those	business	units'	discrete	activities.

The	ERM	market	risk	management	group	is	responsible	for	the management	of	corporate-wide	market	risk,	the	monitoring	of	key	market risks	and	the	development	and	maintenance	of	market	risk	management policies,	guidelines,	and	standards	aligned	with	our	corporate	risk appetite.	This	group	also	establishes	and	approves	market	risk	tolerance limits	and	dealing	authorities	based	on,	but	not	limited	to,	measures	of notional	amounts,	sensitivity,	VaR	and	stress.	Such	limits	and	authorities are	specified	in	our	trading	and	market	risk	guidelines	which	govern	our management	of	trading	market	risk.

# Covered	Positions

Our	trading	positions	are	subject	to	regulatory	market	risk	capital requirements	if	they	meet	the	regulatory	definition	of	a	"covered	position." A	covered	position	is	generally	defined	by	U.S.	banking	regulators	as	an on-	or	off-balance	sheet	position	associated	with	the	organization's	trading activities	that	is	free	of	any	restrictions	on	its	tradability,	including	foreign exchange	or	commodity	positions,	and	excluding	intangible	assets,	certain credit	derivatives	recognized	as	guarantees	and	certain	equity	positions not	publicly	traded.	The	identification	of	covered	positions	for	inclusion	in our	market	risk	capital	framework	is	governed	by	our	covered	positions policy,	which	outlines	the	standards	we	use	to	determine	whether	a trading	position	is	a	covered	position.

Our	covered	positions	consist	primarily	of	the	trading	portfolios	held by	our	global	markets	business.	They	also	arise	from	certain	positions held	by	our	Global	Treasury	group.	These	trading	positions	include products	such	as	spot	foreign	exchange,	foreign	exchange	forwards,	non- deliverable	forwards,	foreign	exchange	options,	foreign	exchange	funding swaps,	currency	futures,	financial	futures,	and	interest	rate	futures.	Any new	activities	are	analyzed	to	determine	if	the	positions	arising	from	such new	activities	meet	the	definition	of	a	covered	position	and	conform	to	our covered	positions	policy.	This	documented	analysis,	including	any decisions	with	respect	to	market	risk	treatments,	must	receive	approval from	the	TMRC.

# Value-at-Risk,	Stress	Testing	and	Stressed	VaR

As	noted	above,	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	trading activities	in	conformity	with	currently	applicable	bank	regulatory	market risk	requirements.

We	utilize	an	internal	VaR	model	to	calculate	our	regulatory	market risk	capital	requirements.	We	use	a	historical	simulation	model	to calculate	daily	VaR-	and	stressed	VaR-based	measures	for	our	covered positions	in	conformity	with	regulatory	requirements.	Our	VaR	model seeks	to	capture	identified	material	risk	factors	associated	with	our covered	positions,	including	risks	arising	from	market	movements	such	as changes	in	foreign	exchange	rates,	interest	rates	and	option-implied volatilities.

We	have	adopted	standards	and	guidelines	to	value	our	covered positions	which	govern	our	VaR-	and	stressed	VaR-based	measures.	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	also	use	the	same	platform	to	calculate	a	one-tail, 99%	confidence	interval,	one-business-day	VaR	for	internal	risk management	purposes.	A	99%	one-tail	confidence	interval	implies	that daily	trading	losses	are	not	expected	to	exceed	the	estimated	VaR	more than	1%	of	the	time,	or	less	than	three	business	days	out	of	a	year.

Our	market	risk	models,	including	our	VaR	model,	are	subject	to change	in	connection	with	the	governance,	validation	and	back-testing processes	described	below.	These	models	can	change	as	a	result	of changes	in	our	business	activities,	our	historical	experiences,	market forces	and	events,	regulations	and	regulatory	interpretations	and	other factors.	In	addition,	the	models	are	subject	to	continuing	regulatory	review and	approval.	Changes	in	our	models	may	result	in	changes	in	our measurements	of	our	market	risk	exposures,	including	VaR,	and	related measures,	including	regulatory	capital.	These	changes	could	result	in material	changes	in	those	risk	measurements	and	related	measures	as calculated	and	compared	from	period	to	period.

# Value-at-Risk

VaR	measures	are	based	on	the	most	recent	two	years	of	historical price	movements	for	instruments	and	related	risk	factors	to	which	we have	exposure.	The	instruments	in	question	are	limited	to	foreign exchange	spot,	forward	and	options	contracts	and	interest-rate	contracts, including	futures	and	interest-rate	swaps.	Historically,	these	instruments have	exhibited	a	higher	degree	of	liquidity	relative	to	other	available capital	markets	instruments.	As	a	result,	the

VaR	measures	shown	reflect	our	ability	to	rapidly	adjust	exposures	in highly	dynamic	markets.	For	this	reason,	risk	inventory,	in	the	form	of	net open	positions,	across	all	currencies	is	typically	limited.	In	addition,	long and	short	positions	in	major,	as	well	as	minor,	currencies	provide	risk offsets	that	limit	our	potential	downside	exposure.

Our	VaR	methodology	uses	a	historical	simulation	approach	based on	market-observed	changes	in	foreign	exchange	rates,	U.S.	and	non- U.S.	interest	rates	and	implied	volatilities,	and	incorporates	the	resulting diversification	benefits	provided	from	the	mix	of	our	trading	positions.	Our VaR	model	incorporates	approximately	5,000	risk	factors	and	includes correlations	among	currency,	interest	rates,	and	other	market	rates.

# Stress	Testing	and	Stressed	VaR

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).

We	calculate	a	stressed	VaR-based	measure	using	the	same	model we	use	to	calculate	VaR,	but	with	model	inputs	calibrated	to	historical data	from	a	range	of	continuous	twelve-month	periods	that	reflect significant	financial	stress.	The	stressed	VaR	model	identifies	the	second- worst	outcome	occurring	in	the	worst	continuous	one-year	rolling	period since	July	2007.	This	stressed	VaR	meets	the	regulatory	requirement	as the	rolling	ten-day	period	with	an	outcome	that	is	worse	than	99%	of	other outcomes	during	that	twelve-month	period	of	financial	stress.	For	each portfolio,	the	stress	period	is	determined	algorithmically	by	seeking	the one-year	time	horizon	that	produces	the	largest	ten-business-day	VaR from	within	the	available	historical	data.	This	historical	data	set	includes the	financial	crisis	of	2008,	the	highly	volatile	period	surrounding	the Eurozone	sovereign	debt	crisis	and	the	Standard	&	Poor's	downgrade	of U.S.	Treasury	debt	in	August	2011.	As	the	historical	data	set	used	to determine	the	stress	period	expands	over	time,	future	market	stress events	will	be	automatically	incorporated.

The	sixty-day	moving	average	of	our	stressed	VaR-based	measure was	approximately	$69	million	for	the	twelve	months	ended December	31,	2014,	compared	to	a	sixty-day	moving	average	of	 $28 million	for	the	twelve	months	ended	 December	31,	2013.

The	increase	in	the	sixty-day	moving	average	of	our	stressed	VaR- based	measure	for	the	twelve	months	ended	December	31,	2014 compared	to	the	twelve	months	ended	December	31,	2013	was	primarily the	result	of	an	extension	of	the	tenor	of	FX	swaps	by	Global	Treasury designed	to	improve	our	liquidity	position.	The	tenor	extension	gives	rise to	additional	market	risk	in	our	stressed	VaR	calculation.

Stress-testing	results	and	limits	are	actively	monitored	on	a	daily basis	by	ERM	and	reported	to	the	TMRC.	Limit	breaches	are	addressed by	ERM	risk	managers	in	conjunction	with	the	business	units,	escalated as	appropriate,	and	reviewed	by	the	TMRC	if	material.	In	addition,	we have	established	several	action	triggers	that	prompt	immediate	review	by management	and	the	implementation	of	a	remediation	plan.

# Validation	and	Back-Testing

We	perform	daily	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	actual Profit-and-Loss	outcomes,	referred	to	as	P&L,	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	net	interest revenue,	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	2014.	We	experienced one	back-testing	exception	in	2013,	which	occurred	in	the	third	quarter. The	trading	P&L	that	day	exceeded	the	VaR	based	on	the	prior	day's closing	positions,	following	larger-than-usual	moves	in	several	emerging market	currencies	and	U.S.	interest	rates.

Our	market	risk	models	are	governed	by	our	model	risk	governance guidelines,	in	conformity	with	our	model	risk	governance	policy,	which outline	the	standards	we	use	to	assess	the	conceptual	soundness	and effectiveness	of	our	models.	Our	market	risk	models	are	subject	to	regular review	and	validation	by	MVG	within	ERM	and	overseen	by	the	MRC.	The MRC	includes	members	with	expertise	in	modeling	methodologies	and has	representation	from

the	various	business	units	throughout	State	Street.	Additional	information about	the	MRC	and	MVG	is	provided	under	"Model	Risk	Management"	in this	Disclosure.

Our	model	validation	process	also	evaluates	the	integrity	of	our	VaR models	through	the	use	of	regular	outcome	analysis.	Such	outcome analysis	includes	back-testing,	which	compares	the	VaR	model's predictions	to	actual	outcomes	using	out-of-sample	information.	MVG examined	back-testing	results	for

the	market	risk	regulatory	capital	model	used	for	2012.	Consistent	with regulatory	guidance,	the	back-testing	compared	"clean"	P&L,	defined above,	with	the	one-day	VaR	produced	by	the	model.	The	back-testing was	performed	for	a	time	period	not	used	for	model	development.	The number	of	occurrences	where	"clean"	trading-book	P&L	exceeded	the one-day	VaR	was	within	our	expected	VaR	tolerance	level.

The	following	tables	present	VaR	and	stressed	VaR	associated	with	our	trading	activities	for	covered	positions	held	during	the	years	ended	and	as	of December	31,	2014	and	2013,	as	measured	by	our	VaR	methodology.

# TABLE	38:	TEN-DAY	VaR	ASSOCIATED	WITH	TRADING	ACTIVITIES	FOR	COVERED	POSITIONS

|  | Year	Ended	December	31,	2014 | Year	Ended	December	31,	2014 | Year	Ended	December	31,	2014 | Year	Ended	December	31,	2013 | Year	Ended	December	31,	2013 | Year	Ended	December	31,	2013 | As	of	December	31,<br>2014 | As	of	December	31,<br>2013 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tthousands) | Average | Maximum | Minimum | Average | Maximum | Minimum | VaR | VaR |
| Global\tMarkets | $6,365 | $12,327 | $2,273 | $6,386 | $22,835 | $1,626 | $4,566 | $5,463 |
| Global\tTreasury | 4,027 | 6,467 | 683 | 97 | 559 | 24 | 4,759 | 58 |
| Total\tVaR | $8,100 | $12,278 | $3,244 | $6,361 | $22,834 | $1,641 | $8,281 | $5,441 |

# TABLE	39:	TEN-DAY	STRESSED	VaR	ASSOCIATED	WITH	TRADING	ACTIVITIES	FOR	COVERED	POSITIONS

|  |  | Year	Ended	December	31,	2014 |  |  | Year	Ended	December	31,	2013 | Year	Ended	December	31,	2013 | As	of	December<br>31,	2014 | As	of	December<br>31,	2013 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tthousands) | Average | Maximum | Minimum | Average | Maximum | Minimum | Stressed\tVaR | Stressed\tVaR |
| Global\tMarkets | $32,639 | $64,510 | $15,625 | $22,907 | $47,531 | $4,933 | $30,255 | $30,338 |
| Global\tTreasury | 36,344 | 59,253 | 10,454 | 291 | 1,075 | 56 | 39,050 | 280 |
| Total\tStressed\tVaR | $61,874 | $89,053 | $29,689 | $22,815 | $47,514 | $4,889 | $58,945 | $30,403 |

The	VaR-based	measures	presented	in	the	preceding	tables	are primarily	a	reflection	of	the	overall	level	of	market	volatility	and	our appetite	for	trading	market	risk.	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.

The	decline	in	the	maximum	ten-day	VaR-based	measure	for	foreign exchange	was	caused	by	reduced	exposure	to	certain	emerging	market currencies	(Table	38:	Ten-day	VaR	Associated	with	Trading	Activities	for Covered	Positions).	The	increase	seen	in	ten-day	stressed	VaR-based measure	for	foreign	exchange	was	mainly	due	to	our	businesses maintaining	slightly	larger	exposures,	as

compared	to	a	year	ago,	in	what	was	a	predominantly	trending	market	in 2014	(Table	39:	Ten-day	Stressed	VaR	Associated	with	Trading	Activities for	Covered	Positions).

The	increases	in	the	average	ten-day	VaR-based	and	stressed	VaR- based	measures	for	the	twelve	months	ended	December	31,	2014 compared	to	the	twelve	months	ended	December	31,	2013	were	primarily the	result	of	an	extension	of	the	tenor	of	FX	swaps	by	Global	Treasury designed	to	improve	our	liquidity	position.	The	tenor	extension	gives	rise to	additional	market	risk	in	our	ten-day	VaR-based	and	stressed	VaR- based	calculations.

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

The	following	tables	present	the	VaR	and	stressed	VaR	associated	with	our	trading	activities	attributable	to	foreign	exchange	risk,	interest	rate	risk and	volatility	risk	as	of	December	31,	2014	and	2013.	The	totals	of	the	VaR-based	and	stressed	VaR-based	measures	for	the	three	attributes	for	each VaR	and	stressed-VaR	component	exceeded	the	related	total	VaR	and	total	stressed	VaR	presented	in	the	foregoing	tables	as	of	each	period-end, primarily	due	to	the	benefits	of	diversification	across	risk	types.

# TABLE	40:	TEN-DAY	VaR	ASSOCIATED	WITH	TRADING	ACTIVITIES	BY	RISK	FACTOR(1)

|  | As	of	December	31,	2014 | As	of	December	31,	2014 |  | As	of	December	31,	2013 | As	of	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tthousands) | Foreign\nExchange\tRisk | Interest\nRate\tRisk | Volatility\nRisk | Foreign\nExchange\tRisk | Interest\nRate\tRisk | Volatility\nRisk |
| By\tcomponent: |  |  |  |  |  |  |
| Global\tMarkets | $5,584 | $3,230 | $349 | $3,492 | $4,561 | $306 |
| Global\tTreasury | — | 4,759 | — | 46 | 52 | — |
| Total\tVaR | $5,584 | $5,892 | $349 | $3,457 | $4,577 | $306 |

# TABLE	41:	TEN-DAY	STRESSED	VaR	ASSOCIATED	WITH	TRADING	ACTIVITIES	BY	RISK	FACTOR(1)

|  | As	of	December	31,	2014 | As	of	December	31,	2014 |  | As	of	December	31,	2013 | As	of	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tthousands) | Foreign\nExchange\tRisk | Interest\nRate\tRisk | Volatility\nRisk | Foreign\nExchange\tRisk | Interest\nRate\tRisk | Volatility\nRisk |
| By\tcomponent: |  |  |  |  |  |  |
| Global\tMarkets | $8,305 | $39,220 | $468 | $8,788 | $37,030 | $345 |
| Global\tTreasury | — | 39,050 | — | 119 | 299 | — |
| Total\tStressed\tVaR | $8,305 | $62,923 | $468 | $8,845 | $36,949 | $345 |

(1)	For	purposes	of	risk	attribution	by	component	in	both	Tables	40	and	41,	foreign	exchange	risk	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.

Total	stressed	VaR	as	of	December	31,	2014	increased	compared	to December	31,	2013,	as	presented	in	Table	41:	Ten-day	Stressed	VaR Associated	with	Trading	Activities	by	Risk	Factor.	The	increase	was primarily	the	result	of	an	extension	of	the	tenor	of	FX	swaps	by	Global Treasury	designed	to	improve	our	liquidity	position.	Additionally,	the stressed	VaR	attributable	to	foreign	exchange	exposures	also	increased as	we	maintained	risk	positions	in	a	predominantly	trending	market environment.

# Asset-and-Liability	Management	Activities

The	primary	objective	of	asset-and-liability	management	is	to	provide sustainable	net	interest	revenue,	referred	to	as	NIR,	under	varying economic	conditions,	while	protecting	the	economic	value	of	the	assets and	liabilities	carried	in	our	consolidated	statement	of	condition	from	the adverse	effects	of	changes	in	interest	rates.	While	many	market	factors affect	the	level	of	NIR	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	NIR	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,	but	we	manage our	overall	interest-rate	risk	position	in	the	context	of	current	and anticipated	market	conditions	and	within	internally-approved	risk guidelines.

Our	overall	interest-rate	risk	position	is	maintained	within	a	series	of policies	approved	by	the	Board	and	guidelines	established	and	monitored by	ALCO.	Our	Global	Treasury	group	has	responsibility	for	managing	our day-to-day	interest-rate	risk.	To	effectively	manage	our	consolidated statement	of	condition	and	related	NIR,	Global	Treasury	has	the	authority to	assume	a	limited	amount	of	interest-rate	risk	based	on	market conditions	and	its	views	about	the	direction	of	global	interest	rates	over both	short-term	and	long-term	time	horizons.	Global	Treasury	manages our	exposure	to	changes	in	interest	rates	on	a	consolidated	basis organized	into	three	regional	treasury	units,	North	America,	Europe	and Asia/Pacific,	to	reflect	the	growing,	global	nature	of	our	exposures	and	to capture	the	impact	of	changes	in	regional	market	environments	on	our total	risk	position.

The	economic	value	of	our	consolidated	statement	of	condition	is	a metric	designed	to	estimate	the	fair	value	of	assets	and	liabilities	which could	be	garnered	if	those	assets	and	liabilities	were

sold	today.	The	economic	values	represent	discounted	cash	flows	from	all financial	instruments;	therefore,	changes	in	the	yield	curves,	which	are used	to	discount	the	cash	flows,	affect	the	values	of	these	instruments.

Our	investment	activities	and	our	use	of	derivative	financial instruments	are	the	primary	tools	used	in	managing	interest-rate	risk.	We invest	in	financial	instruments	with	currency,	repricing,	and	maturity characteristics	we	consider	appropriate	to	manage	our	overall	interest- rate	risk	position.	In	addition,	we	use	certain	derivative	instruments, primarily	interest-rate	swaps,	to	alter	the	interest-rate	characteristics	of specific	balance	sheet	assets	or	liabilities.

Because	no	one	individual	measure	can	accurately	assess	all	of	our exposures	to	changes	in	interest	rates,	we	use	several	quantitative measures	in	our	assessment	of	current	and	potential	future	exposures	to changes	in	interest	rates	and	their	impact	on	NIR	and	balance	sheet values.	NIR	simulation	is	the	primary	tool	used	in	our	evaluation	of	the potential	range	of	possible	NIR	results	that	could	occur	under	a	variety	of interest-rate	environments.	We	also	use	market	valuation	and	duration analysis	to	assess	changes	in	the	economic	value	of	balance	sheet assets	and	liabilities	caused	by	assumed	changes	in	interest	rates.

To	measure,	monitor,	and	report	on	our	interest-rate	risk	position, we	use	NIR	simulation,	referred	to	as	NIR-at-risk,	and	Economic	Value	of Equity,	referred	to	as	EVE,	sensitivity.	NIR-at-risk	measures	the	impact on	NIR	over	the	next	twelve	months	to	immediate,	or	"rate	shock,"	and gradual,	or	"rate	ramp,"	changes	in	market	interest	rates.	EVE	sensitivity is	a	total	return	view	of	interest-rate	risk,	which	measures	the	impact	on the	present	value	of	all	NIR-related	principal	and	interest	cash	flows	of	an immediate	change	in	interest	rates.	Although	NIR-at-risk	and	EVE sensitivity	measure	interest-rate	risk	over	different	time	horizons,	both utilize	consistent	assumptions	when	modeling	the	positions	currently	held by	State	Street;	however,	NIR-at-risk	also	incorporates	future	actions planned	by	management	over	the	time	horizons	being	modeled.

In	estimating	our	NIR-at-risk,	we	start	with	a	base	amount	of	NIR that	is	projected	over	the	next	twelve	months,	assuming	our	forecast	yield curve	over	the	period.	Our	existing	balance	sheet	assets	and	liabilities	are adjusted	by	the	amount	and	timing	of	transactions	that	are	forecast	to occur	over	the	next	twelve	months.	That	yield	curve	is	then	"shocked,"	or moved	immediately,	+/-100	basis	points	in	a	parallel	fashion,	or	at	all points	along	the	yield	curve.	Two	new	twelve-month	NIR	projections	are then	developed	using	the	same	balance	sheet	and

forecast	transactions,	but	with	the	new	yield	curves,	and	compared	to	the base	scenario.	We	also	perform	the	calculations	using	interest-rate ramps,	which	are	+/-100-basis-point	changes	in	interest	rates	that	are assumed	to	occur	gradually	over	the	next	twelve	months,	rather	than immediately	as	we	do	with	interest-rate	shocks.

EVE	is	based	on	the	change	in	the	present	value	of	all	NIR-related principal	and	interest	cash	flows	for	changes	in	market	rates	of	interest. The	present	value	of	existing	cash	flows	with	a	then-current	yield	curve serves	as	the	base	case.	We	then	apply	an	immediate	parallel	shock	to that	yield	curve	of	+/-200	basis	points	and	recalculate	the	cash	flows	and related	present	values.	A	large	shock	is	used	to	better	capture	the embedded	option	risk	in	our	mortgage-backed	securities	that	results	from borrowers'	prepayment	opportunities.

Key	assumptions	used	in	the	models,	described	in	more	detail below,	along	with	changes	in	market	conditions,	are	inherently	uncertain. Actual	results	necessarily	differ	from	model	results	as	market	conditions differ	from	assumptions.	As	such,	management	performs	back-testing, stress	testing,	and	model	integrity	analyses	to	validate	that	the	modeled results	produce	predictive	NIR-at-risk	and	EVE	sensitivity	estimates	which can	be	used	in	our	management	of	interest-rate	risk.	Primary	factors affecting	the	actual	results	are	changes	in	our	balance	sheet	size	and	mix; the	timing,	magnitude	and	frequency	of	changes	in	interest	rates, including	the	slope	and	the	relationship	between	the	interest-rate	level	of U.S.	dollar	and	non-U.S.	dollar	yield	curves;	changes	in	market conditions;	and	management	actions	taken	in	response	to	the	preceding conditions.

Both	NIR-at-risk	and	EVE	sensitivity	results	are	managed	against ALCO-approved	limits	and	guidelines	and	are	monitored	regularly,	along with	other	relevant	simulations,	scenario	analyses	and	stress	tests,	by both	Global	Treasury	and	ALCO.	Our	ALCO-approved	guidelines	are,	we believe,	in	line	with	industry	standards	and	are	periodically	examined	by the	Federal	Reserve.

As	a	result	of	differences	in	measurement	between	NIR-at-risk	and EVE	with	respect	to	certain	assumptions,	such	as	the	reinvestment	of	our interest-earning	assets,	reported	results	of	NIR-at-risk	could	present	an increase	in	NIR	from	an	increase	in	rates	while	EVE	presents	a	loss. Changes	in	assumptions	may	result	in	different	outcomes	under	both NIR-at-risk	and	EVE.	NIR-at-risk	depicts	the	change	in	the	nominal	(un- discounted)	dollar	net	interest	flows	which	are	generated	from	the forecast	statement	of	condition	over	the	next	twelve	months.		As	interest rates	increase,	the	interest	expense

associated	with	our	client	deposit	liabilities	is	assumed	to	increase	at	a slower	pace	than	the	investment	returns	derived	from	our	current	balance sheet	or	the	associated	reinvestment	of	our	interest-earning	assets, resulting	in	an	overall	increase	to	NIR.	EVE,	on	the	other	hand,	measures the	present	value	change	of	both	principal	and	interest	cash	flows	based on	the	current	period-end	balance	sheet.	As	a	result,	EVE	does	not contemplate	reinvestment	of	our	assets	associated	with	a	change	in	the interest-rate	environment.

Although	NIR	in	both	NIR-at-risk	and	EVE	sensitivity	is	higher	in response	to	increased	interest	rates,	the	future	principal	flows	from	fixed- rate	investments	are	discounted	at	higher	rates	for	EVE,	which	results	in lower	asset	values	and	a	corresponding	reduction	or	loss	in	EVE.	As noted	above,	NIR-at-risk	does	not	analyze	changes	in	the	value	of principal	cash	flows	and	therefore	does	not	experience	the	same reduction	experienced	by	EVE	sensitivity	associated	with	discounting principal	cash	flows	at	higher	rates.

# Net	Interest	Revenue	at	Risk

NIR-at-risk	is	designed	to	estimate	the	potential	impact	of	changes in	global	market	interest	rates	on	NIR	in	the	short	term.	The	impact	of changes	in	market	rates	on	NIR	is	measured	against	a	baseline	NIR which	encompasses	management's	expectations	regarding	the	evolving balance	sheet	volumes	and	interest	rates	in	the	near-term.	The	goal	is	to achieve	an	acceptable	level	of	NIR	under	various	interest-rate environments.	Assumptions	regarding	levels	of	client	deposits	and	our ability	to	price	these	deposits	under	various	rate	environments	have	a significant	impact	on	the	results	of	the	NIR	simulations.	Similarly,	the timing	of	cash	flows	from	our	investment	portfolio,	especially	option- embedded	financial	instruments	like	mortgage-backed	securities,	and	our ability	to	replace	these	cash	flows	in	line	with	management's	expectations, can	affect	the	results	of	NIR	simulations.

The	following	table	presents	the	estimated	exposure	of	our	NIR	for the	next	twelve	months,	calculated	as	of	the	dates	indicated,	due	to	an immediate	+/-100-basis-point	shift	to	our	internal	forecast	of	global	interest rates.	We	manage	our	NIR	sensitivity	to	limit	declines	to	15%	or	less	from baseline	NIR.	Estimated	incremental	exposures	presented	below	are dependent	on	management's	assumptions,	and	do	not	reflect	any additional	actions	management	may	undertake	in	order	to	mitigate	some of	the	adverse	effects	of	changes	in	interest	rates	on	our	financial performance.

# TABLE	42:	NIR	ESTIMATED	EXPOSURE

| (Dollars	in	millions) | December	31,<br>2014 |  | December	31,<br>2013 |  |
| :--- | :--- | :--- | :--- | :--- |
| Rate\tchange: | Exposure | %\tof\tBase\tNIR | Exposure | %\tof\tBase\tNIR |
| +100\tbps\tshock | $384 | 16.6% | $334 | 14.0% |
| –100\tbps\tshock | (328) | (14.2) | (261) | (10.9) |
| +100\tbps\tramp | 149 | 6.5 | 126 | 5.3 |
| –100\tbps\tramp | (192) | (8.3) | (124) | (5.2) |

As	of	December	31,	2014,	NIR	sensitivity	to	an	upward-100-basis- point	shock	in	global	interest	rates	was	higher	compared	to	such sensitivity	as	of	December	31,	2013,	due	to	a	higher	level	of	forecast client	deposits.	The	benefit	to	NIR	of	an	upward-100-basis-point	ramp	is less	significant	than	a	shock,	since	interest	rates	are	assumed	to	increase gradually.

NIR	sensitivity	to	a	downward-100-basis-point	shock	in	global interest	rates	as	of	December	31,	2014	increased	compared	to	such sensitivity	as	of	December	31,	2013,	due	to	higher	levels	of	forecast	client deposits.	Increased	levels	of	forecast	client	deposits,	while	beneficial	to baseline	NIR,	do	not	provide	relief	in	the	downward	shock	scenario,	as the	deposits	have	no	room	to	fully	re-price	from	current	levels	as	their pricing	basis	falls.	A	downward-100-basis-point	shock	in	global	interest rates	places	pressure	on	NIR,	as	deposit	rates	reach	their	implicit	floors due	to	the	exceptionally	low	global	interest-rate	environment,	and	provide little	funding	relief	on	the	liability	side,	while	assets	re-price	into	the	lower- rate	environment.	The	adverse	impact	on	projected	NIR	due	to	a downward-100-basis-point	ramp	is	less	significant	than	a	shock	since interest	rates	are	assumed	to	decrease	gradually,	thereby	reducing	the level	of	projected	spread	compression	experienced	between	assets	and liabilities	over	a	twelve-month	horizon.

Our	baseline	NIR	incorporates	an	expectation	that	short-term interest	rates	will	begin	to	rise	in	anticipation	of	central	bank	tightening	of current	monetary	policies.	While	this	rise	in	rates	benefits	our	baseline NIR,	it	is	detrimental	to	our	NIR	sensitivity	to	a	downward-100-basis-point shock,	as	rising	short-term	interest	rates	allow	asset	yields	to	re-price lower	in	a	downward	shock	scenario	than	previously,	while	deposits	are still	priced	close	to	natural	floors.

Other	important	factors	which	affect	the	levels	of	NIR	are	the	size and	mix	of	assets	carried	in	our	consolidated	statement	of	condition; interest-rate	spreads;	the	slope	and	interest-rate	level	of	U.S.	and	non- U.S.	dollar	yield	curves	and	the	relationship	between	them;	the	pace	of change	in	global	market

interest	rates;	and	management	actions	taken	in	response	to	the preceding	conditions.

# Economic	Value	of	Equity

EVE	sensitivity	measures	changes	in	the	market	value	of	equity	to quantify	potential	losses	to	shareholders	due	to	an	immediate	+/-200- basis-point	rate	shock	compared	to	current	interest-rate	levels	if	the balance	sheet	were	liquidated	immediately.	Management	compares	the change	in	EVE	sensitivity	against	State	Street's	aggregate	tier	1	and	tier 2	risk-based	capital,	calculated	in	conformity	with	currently	applicable regulatory	requirements,	to	evaluate	whether	the	magnitude	of	the exposure	to	interest	rates	is	acceptable.	Generally,	a	change	resulting from	a	+/-200-basis-point	rate	shock	that	is	less	than	20%	of	aggregate tier	1	and	tier	2	capital	is	an	exposure	that	management	deems acceptable.	To

the	extent	that	we	manage	changes	in	EVE	sensitivity	within	the	20% threshold,	we	would	seek	to	take	action	to	remain	below	the	threshold	if the	magnitude	of	our	exposure	to	interest	rates	approached	that	limit.

Similar	to	NIR-at-risk	measures,	the	timing	of	cash	flows	affects	EVE sensitivity,	as	changes	in	asset	and	liability	values	under	different	rate scenarios	are	dependent	on	when	interest	and	principal	payments	are received.	In	contrast	to	NIR	simulations,	however,	EVE	sensitivity	does not	incorporate	assumptions	regarding	reinvestment	of	these	cash	flows. In	addition,	our	ability	to	price	client	deposits	has	a	much	smaller	impact on	EVE	sensitivity,	as	EVE	sensitivity	does	not	consider	the	ongoing benefit	of	investing	client	deposits.

The	following	table	presents	estimated	EVE	exposures,	calculated	as	of	the	dates	indicated,	assuming	an	immediate	and	prolonged	shift	in	global interest	rates,	the	impact	of	which	would	be	spread	over	a	number	of	years.

# TABLE	43:	ESTIMATED	EVE	EXPOSURES

| TABLE	43:	ESTIMATED	EVE	EXPOSURES<br>(Dollars	in	millions) | December	31,<br>2014 | Estimated	Sensitivity	of<br>Economic	Value	of	Equity | December	31,<br>2013 |  |
| :--- | :--- | :--- | :--- | :--- |
| Rate\tchange: | Exposure | %\tof\tTier\t1/Tier\t2\nCapital | Exposure | %\tof\tTier\t1/Tier\t2\nCapital |
| +200\tbps\tshock | $(2,291) | (12.8)% | $(2,359) | (14.9)% |
| –200\tbps\tshock | 942 | 5.3 | 1,149 | 7.2 |

The	dollar	measure	of	EVE	sensitivity	to	an	upward-200-basis-point shock	as	of	December	31,	2014	improved	compared	to	December	31, 2013,	and	the	dollar	measure	of	EVE	sensitivity	to	a	downward-200- basis-point	shock	as	of	December	31,	2014	declined	compared	to December	31,	2013,	with	both	comparisons	due	primarily	to	portfolio decay	and	lower	rates	as	of	December	31,	2014	compared	to December	31,	2013.

EVE	sensitivity	to	an	upward-200-basis-point	shock	as	of December	31,	2014,	as	a	percentage	of	the	total	of	tier	1	and	tier	2 regulatory	capital,	declined	compared	to	December	31,	2013.	EVE sensitivity	to	a	downward-200-basis-point	shock	as	of	December	31, 2014,	as	a	percentage	of	the	total	of	tier	1	and	tier	2	regulatory	capital, declined	compared	to	December	31,	2013.	These	improvements	were primarily	due	to	the	above	changes	in	the	dollar	measures	of	EVE sensitivity	as	well	as	an	increase	in	the	total	of	tier	1	and	tier	2	capital	as of	December	31,	2014	compared	to	December	31,	2013	(refer	to	the "Capital	-	Regulatory	Capital"	section	of	this	Management's	Discussion and	Analysis).

# Business	Risk	Management

We	define	business	risk	as	the	risk	of	adverse	changes	in	our earnings	related	to	business	factors,	including	changes	in	the	competitive environment,	changes	in	the	operational	economics	of	our	business activities	and	the	potential	effect	of	strategic	and	reputation	risks,	not already	captured	as	trading	market,	interest-rate,	credit,	operational	or liquidity	risks.	We	incorporate	business	risk	into	our	assessment	of	our strategic	plans	and	capital	management	processes.	Active	management of	business	risk	is	an	integral	component	of	all	aspects	of	our	business, and	responsibility	for	the	management	of	business	risk	lies	with	every employee	at	State	Street.

Separating	the	effects	of	a	potential	material	adverse	event	into operational	and	business	risk	is	sometimes	difficult.	For	instance,	the direct	financial	impact	of	an	unfavorable	event	in	the	form	of	fines	or penalties	would	be	classified	as	an	operational	risk	loss,	while	the	impact on	our	reputation	and	consequently	the	potential	loss	of	clients	and corresponding	decline	in	revenue	would	be	classified	as	a	business	risk loss.	An	additional	example	of	business	risk	is	the	integration	of	a	major acquisition.	Failure	to	successfully	integrate	the	operations	of	an

acquired	business,	and	the	resultant	inability	to	retain	clients	and	the associated	revenue,	would	be	classified	as	a	loss	due	to	business	risk.

Business	risk	is	managed	with	a	long-term	focus.	Techniques	for	its assessment	and	management	include	the	development	of	business	plans and	appropriate	management	oversight.	The	potential	impact	of	the various	elements	of	business	risk	is	difficult	to	quantify	with	any	degree	of precision.	We	use	a	combination	of	historical	earnings	volatility,	scenario analysis,	stress-testing	and	management	judgment	to	help	assess	the potential	effect	on	State	Street	attributable	to	business	risk.	Management and	control	of	business	risks	are	generally	the	responsibility	of	the business	units	as	part	of	their	overall	strategic	planning	and	internal	risk management	processes.

# Model	Risk	Management

The	use	of	quantitative	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	new	source	of risk.	In	large	banking	organizations	like	ours,	model	results	influence business	decisions,	and	model	failure	could	have	a	harmful	effect	on	our financial	performance.	As	a	result,	we	manage	model	risk	within	a comprehensive	model	risk	management	framework.

Our	model	risk	management	program	has	three	principal components:

•A	model	risk	governance	program	that	defines	roles	and responsibilities,	including	the	authority	to	restrict	model	usage, provides	policies	and	guidance,	and	evaluates	the	models'	key assumptions,	limitations	and	overall	degree	of	risk; •A	model	development	process	which	focuses	on	sound	design and	computational	accuracy,	and	includes	ongoing	model integrity	activities	designed	to	test	for	robustness,	stability,	and sensitivity	to	assumptions;	and •A	separate	model	validation	function	designed	to	verify	that models	are	theoretically	sound,	performing	as	expected,	and	are in	line	with	their	design	objectives.

Model	risk	is	overseen	at	the	corporate	level	by	our	Board	and	senior management.	Models	used	in	the	regulatory	capital	calculation	can	only be	deployed	for	use	after	receiving	a	satisfactory	validation	review	and being	granted	approval	by	the	appropriate	corporate	oversight	committee.

The	MRC,	which	is	composed	of	senior	staff	with	technical expertise,	reports	to	MRAC,	and	formally	recommends	proposed	findings with	respect	to	modeling	weaknesses	or	deficiencies.	Proposed	findings are	brought	to	the	MRC	by	MVG	for	discussion.	MVG	is	part	of	Model Risk	Management	within	ERM.	The	most	material	findings	may	preclude	a model's	deployment	and	use;	other	findings	may	require	resolution	by specified	deadlines.

ERM's	Model	Risk	Management	group	is	responsible	for	defining	the corporate-wide	model	risk	governance	framework,	and	maintains	policies that	achieve	the	framework's	objectives.	The	team	is	responsible	for overall	model	risk	governance	capabilities,	with	particular	emphasis	in	the areas	of	model	risk	reporting,	model	performance	monitoring,	tracking	of new	model	development	status,	and	committee-level	review	and challenge.

# Model	Development	and	Usage

Models	are	developed	under	standards	governing	data	sourcing, methodology	selection	and	model	integrity	testing.	Model	development includes	a	clear	statement	of	purpose	to	align	development	with	intended use.	It	also	includes	a	comparison	of	alternative	approaches	to	implement a	sound	modeling	approach.

Model	developers	conduct	an	assessment	of	data	quality	and relevance.	The	development	teams	conduct	a	variety	of	tests	of	the accuracy,	robustness	and	stability	of	each	model.

Model	owners	monitor	model	performance,	update	model	reference data	and/or	functionality	as	appropriate,	and	submit	models	to	MVG	for validation	on	a	regular	basis,	as	described	below.

# Model	Validation

MVG	separately	validates	models	through	a	review	that	assesses the	soundness	and	suitability	of	data	inputs,	methodologies,	assumptions, coding	and	model	outputs.	Model	validation	also	encompasses	an assessment	of	a	model's	potential	limitations	given	its	particular assumptions	or	deficiencies.	MVG	maintains	a	model	risk-rating	system, which	assigns	a	risk	rating	to	each	model	based	on	the	severity	of	review findings.	These	ratings	aid	in	the	understanding	and	reporting	of	model risk	across	the	model	portfolio,	and	enable	the	triaging	of	needs	for remediation.

Although	model	validation	is	the	primary	method	of	subjecting models	to	separate	review	and	challenge,	in	practice,	a	multi-step governance	process	provides	the	opportunity	for	challenge	by	multiple parties.	First,	MVG	conducts	model	validation	and	prepares	findings. These	proposed

findings	are	then	discussed	with	and	formally	recommended	by	the	MRC. Finally,	model	usage	decisions,	made	by	the	appropriate	corporate oversight	committee,	are	influenced	by	the	model	findings.

# Capital

The	management	of	our	capital	involves	key	metrics	evaluated	by management	to	assess	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	based	on	relevant	regulatory	capital	adequacy requirements,	as	well	as	our	own	internal	capital	targets.

# Framework

Our	objective	with	respect	to	management	of	our	capital	is	to maintain	a	strong	capital	base	in	order	to	provide	financial	flexibility	for our	business	needs,	including	funding	corporate	growth	and	supporting clients'	cash	management	needs,	and	to	provide	protection	against	loss	to depositors	and	creditors.	We	strive	to	maintain	an	appropriate	level	of capital,	commensurate	with	our	risk	profile,	on	which	an	attractive	return to	shareholders	is	expected	to	be	realized	over	both	the	short	and	long term,	while	protecting	our	obligations	to	depositors	and	creditors	and complying	with	regulatory	capital	adequacy	requirements.

Our	capital	management	process	focuses	on	our	risk	exposures,	the regulatory	requirements	applicable	to	us	with	respect	to	capital	adequacy, the	evaluations	and	resulting	credit	ratings	of	the	major	independent	credit rating	agencies,	our	return	on	capital	at	both	the	consolidated	and	line-of- business	level,	and	our	capital	position	relative	to	our	peers.

Our	evaluation	of	capital	includes	the	comparison	of	capital	sources with	capital	uses,	as	well	as	the	consideration	of	the	quality	and	quantity of	the	various	components	of	capital,	as	two	of	several	inputs	in	our overall	assessment	of	our	capital	adequacy.	The	goals	of	the	capital adequacy	process	are	to	determine	the	optimal	level	of	capital	and composition	of	capital	instruments	to	satisfy	all	constituents	of	capital,	with the	lowest	overall	cost	to	shareholders.	Other	factors	considered	in	our capital	adequacy	process	are	strategic	and	contingency	planning,	stress testing	and	planned	capital	actions.

# Capital	Adequacy	Process

Our	primary	federal	banking	regulator	is	the	Federal	Reserve.	Both State	Street	and	State	Street	Bank	are	subject	to	the	minimum	regulatory capital	requirements	established	by	the	Federal	Reserve	and

defined	in	the	Federal	Deposit	Insurance	Corporation	Improvement	Act	of 1991,	or	FDICIA.	State	Street	Bank	must	exceed	the	regulatory	capital thresholds	for	"well	capitalized"	in	order	for	our	parent	company	to maintain	its	status	as	a	financial	holding	company.	Accordingly,	one	of	our primary	goals	with	respect	to	capital	adequacy	is	to	exceed	all	applicable minimum	regulatory	capital	requirements	and	to	be	"well-capitalized" under	the	Prompt	Corrective	Action	guidelines	established	by	the	FDIC. Our	capital	management	activities	include	our	Capital	Adequacy	Process, or	CAP,	and	associated	Capital	Policy	and	guidelines.

We	consider	capital	adequacy	to	be	a	key	element	of	our	financial well-being,	which	affects	our	ability	to	attract	and	maintain	client relationships;	operate	effectively	in	the	global	capital	markets;	and	satisfy regulatory,	security	holder	and	shareholder	needs.	Capital	is	one	of several	elements	that	affect	our	debt	ratings	and	the	ratings	of	our principal	subsidiaries.

In	conformity	with	our	Capital	Policy	and	guidelines,	we	strive	to maintain	adequate	capital,	not	just	at	a	point	in	time,	but	over	time	and during	periods	of	stress,	to	account	for	changes	in	our	strategic	direction, evolving	economic	conditions,	and	financial	and	market	volatility.	We	have developed	and	implemented	a	corporate-wide	CAP	to	assess	our	overall capital	in	relation	to	our	risk	profile	and	to	provide	a	comprehensive strategy	for	maintaining	appropriate	capital	levels.	The	CAP	considers material	risks	under	multiple	scenarios,	with	an	emphasis	on	stress scenarios.	The	CAP	builds	on	and	leverages	existing	processes	and systems	used	to	measure	our	capital	adequacy.	Our	Capital	Policy	is reviewed	and	approved	by	the	Board's	RC.

# Capital	Contingency	Planning

Contingency	planning	is	an	integral	component	of	our	capital management	program.	The	objective	of	our	contingency	planning	process is	to	monitor	current	and	forecast	levels	of	select	measures	that	serve	as early	indicators	of	a	potentially	adverse	capital	or	liquidity	adequacy situation.	These	measures	are	one	of	the	inputs	used	to	set	our	capital adequacy	level.	We	review	these	measures	annually	for	appropriateness and	relevance	in	relation	to	our	financial	budget	and	capital	plan.

# Stress	Testing

We	administer	a	robust	State	Street-wide	stress-testing	program that	executes	multiple	stress	tests	each	year	to	assess	the	institution's capital	adequacy	and/or	future	performance	under	adverse	conditions. Our	stress	testing	program	is	structured	around	what	we	determine	to	be the	key	risks	incurred	by	State	Street,	as	assessed	through	a	recurring material	risk

identification	process.	The	material	risk	identification	process	represents a	bottom-up	approach	to	identifying	the	institution's	most	significant	risk exposures	across	all	on-	and	off-balance	sheet	risk-taking	activities, including	credit,	market,	liquidity,	interest	rate,	operational,	fiduciary, business,	reputation,	and	regulatory	risks.	These	key	risks	serve	as	an organizing	principle	for	much	of	our	risk	management	framework,	as	well as	reporting,	including	the	"risk	dashboard"	provided	to	the	Board.	Over the	past	few	years,	stress	scenarios	have	included	a	deep	recession	in the	U.S.,	a	break-up	of	the	Eurozone,	a	severe	recession	in	China	and	an oil	shock	precipitated	by	turmoil	in	the	Middle	East/North	Africa	region.

In	connection	with	the	focus	on	our	key	risks,	each	stress	test incorporates	idiosyncratic	loss	events	tailored	to	State	Street's	unique	risk profile	and	business	activities.	Due	to	the	nature	of	our	business	model and	our	consolidated	statement	of	condition,	our	risks	differ	from	those	of a	traditional	commercial	bank.

The	Federal	Reserve	requires	bank	holding	companies	with	total consolidated	assets	of	$50	billion	or	more,	which	includes	State	Street,	to submit	a	capital	plan	on	an	annual	basis.	The	Federal	Reserve	uses	its annual	CCAR	process,	which	incorporates	hypothetical	financial	and economic	stress	scenarios,	to	review	those	capital	plans	and	assess whether	banking	organizations	have	capital	planning	processes	that account	for	idiosyncratic	risks	and	provide	for	sufficient	capital	to	continue operations	throughout	times	of	economic	and	financial	stress.	As	part	of its	CCAR	process,	the	Federal	Reserve	assesses	each	organization's capital	adequacy,	capital	planning	process,	and	plans	to	distribute	capital, such	as	dividend	payments	or	stock	purchase	programs.	Management and	Board	risk	committees	review,	challenge,	and	approve	CCAR	results and	assumptions	before	submission	to	the	Federal	Reserve.

Through	the	evaluation	of	State	Street's	capital	adequacy	and/or future	performance	under	adverse	conditions,	the	stress	testing processes	provide	important	insights	for	capital	planning,	risk management,	and	strategic	decision-making	at	State	Street.

In	order	to	support	integrated	decision	making,	we	have	identified three	management	elements	to	aid	in	the	compatibility	and	coordination	of our	capital	adequacy	strategies	and	processes:

•Risk	Management	-	identification,	measurement,	monitoring	and forecasting	of	different	types	of	risk	and	their	combined	impact	on capital	adequacy;

•Capital	Management	-	determination	of	optimal	capital	levels;	and

•Business	Management	-	strategic	planning,	budgeting, forecasting,	and	performance	management.

We	have	a	hierarchical	structure	supporting	appropriate	committee review	of	relevant	risk	and	capital	information.	The	ongoing	responsibility for	capital	management	rests	with	our	Treasurer.	The	Capital	Planning group	within	Global	Treasury	is	responsible	for	the	Capital	Policy	and guidelines,	development	of	the	Capital	Plan,	the	management	of	global capital,	capital	optimization,	and	business	unit	capital	management.

MRAC	provides	oversight	of	our	capital	management,	our	capital adequacy,	our	internal	targets	and	the	expectations	of	the	major independent	credit	rating	agencies.	In	addition,	MRAC	approves	our balance	sheet	strategy	and	related	activities.	The	Board's	RC	assists	the Board	in	fulfilling	its	oversight	responsibilities	related	to	the	assessment and	management	of	risk	and	capital.

# Regulatory	Capital

We	are	subject	to	risk-based	regulatory	capital	requirements	issued by	the	Federal	Reserve.	With	the	adoption	of	the	Basel	III	rules	by	U.S. regulators,	we	became	subject	to	the	U.S.	Basel	III	final	rule	as	of	January 1,	2014.	The	Basel	III	final	rule	incorporates	several	multi-year	transition provisions	for	capital	components	and	minimum	ratio	requirements	for common	equity	tier	1	capital,	tier	1	capital	and	total	capital.	The	transition period	started	in	January	2014	and	is	completed	by	January	1,	2019 which	is	concurrent	with	the	full	implementation	of	the	Basel	III	final	rule	in the	U.S.

The	U.S.	Basel	III	final	rule	replaced	the	Basel	I-	and	Basel	II-based capital	regulations	in	the	United	States.	As	an	"advanced	approaches" banking	organization,	we	became	subject	to	the	U.S.	Basel	III	final	rule beginning	on	January	1,	2014.	However,	certain	aspects	of	the	U.S.	Basel III	final	rule,	including	the	new	minimum	risk-based	and	leverage	capital ratios,	capital	buffers,	regulatory	adjustments	and	deductions	and revisions	to	the	calculation	of	risk-weighted	assets	under	the	so-called "standardized	approach,"	will	commence	at	a	later	date	or	be	phased	in over	several	years.

Among	other	things,	the	U.S.	Basel	III	final	rule	introduces	a minimum	common	equity	tier	1	risk-based	capital	ratio	of	4.5%,	raises	the minimum	tier	1

risk-based	capital	ratio	from	4%	to	6%,	and,	for	advanced	approaches banking	organizations	such	as	State	Street,	imposes	a	minimum supplementary	tier	1	leverage	ratio	of	3%,	the	numerator	of	which	is	tier	1 capital	and	the	denominator	of	which	includes	both	on-balance	sheet assets	and	certain	off-balance	sheet	exposures.	In	addition	to	the supplementary	leverage	ratio,	we	are	subject	to	a	minimum	tier	1	leverage ratio	of	4%,	which	differs	from	the	supplementary	leverage	ratio	primarily in	that	the	denominator	of	the	tier	1	leverage	ratio	is	quarterly	average	on- balance	sheet	assets.

In	addition	to	introducing	new	capital	ratios	and	buffers,	the	U.S. Basel	III	final	rule	revises	the	eligibility	criteria	for	regulatory	capital instruments	and	provides	for	the	phase-out	of	existing	capital	instruments that	do	not	satisfy	the	new	criteria.	For	example,	existing	trust	preferred capital	securities	are	being	phased	out	from	tier	1	capital	over	a	two-year period	beginning	on	January	1,	2014	and	ending	on	January	1,	2016,	and subsequently,	the	qualification	of	these	securities	as	tier	2	capital	will	be phased	out	over	a	multi-year	transition	period	beginning	on	January	1, 2016	and	ending	on	January	1,	2022.	We	had	trust	preferred	capital securities	of	$475	million	outstanding	as	of	December	31,	2014.

On	February	21,	2014,	we	were	notified	by	the	Federal	Reserve	that we	had	completed	our	parallel	run	period.	Beginning	with	the	three months	ended	June	30,	2014	and	ending	with	December	31,	2014,	the lower	of	our	regulatory	capital	ratios	calculated	under	the	advanced approaches	provisions	of	the

Basel	III	final	rule	and	those	ratios	calculated	under	the	transitional provisions	of	Basel	III	(capital	calculated	in	conformity	with	Basel	III	and risk-weighted	assets	calculated	in	conformity	with	Basel	I)	applied	in	the assessment	of	our	capital	adequacy	for	regulatory	purposes.

On	January	1,	2015,	the	U.S.	Basel	III	final	rule	replaced	the	existing Basel	I-based	approach	for	calculating	risk-weighted	assets	with	the	U.S. Basel	III	standardized	approach	that,	among	other	things,	modifies	certain existing	risk	weights	and	introduces	new	methods	for	calculating	risk- weighted	assets	for	certain	types	of	assets	and	exposures.	The	final	rule also	revised	the	Basel	II-based	advanced	approaches	capital	rules	to implement	Basel	III	and	certain	provisions	of	the	Dodd-Frank	Act.	The Dodd-Frank	Act	applies	a	"capital	floor"	to	advanced	approaches	banking organizations	such	as	State	Street	and	State	Street	Bank.	Beginning	on January	1,	2015,	the	Basel	III	standardized	approach	acts	as	that	capital floor,	and	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	the	prompt	corrective	action	framework.

The	following	table	sets	forth	the	transition	to	full	implementation	and the	minimum	risk-based	capital	ratio	requirements	under	the	Basel	III	final rule.	This	does	not	include	the	potential	imposition	of	an	additional countercyclical	capital	buffer	discussed	above.

# TABLE	44:	BASEL	III	FINAL	RULES	TRANSITION	ARRANGEMENTS	AND	MINIMUM	RISK-BASED	CAPITAL	RATIOS

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Capital\tconservation\tbuffer\t(CET1) | —% | —% | 0.625% | 1.250% | 1.875% | 2.500% |
| Minimum\tcommon\tequity\ttier\t1 | 4.0 | 4.5 | 5.125 | 5.750 | 6.375 | 7.000 |
| Minimum\ttier\t1\tcapital | 5.5 | 6.0 | 6.625 | 7.250 | 7.875 | 8.500 |
| Minimum\ttotal\tcapital | 8.0 | 8.0 | 8.625 | 9.250 | 9.875 | 10.500 |

Note:	Minimum	ratios	described	above	do	not	incorporate	any	proposed	G-SIB	surcharge,	based	on	the	December	9,	2014	Federal	Reserve	proposal,	the	surcharge	is	currently	estimated	at	1.5%	for	State	Street.	Including the	1.5%	surcharge,	State	Street's	minimum	risk-based	capital	ratio	requirements	as	of	January	1,	2019	would	be	8.5%	for	common	equity	tier	1	capital,	10.0%	for	tier	1	capital	and	12.0%	for	total	capital.

The	specific	calculation	of	State	Street's	and	State	Street	Bank's	risk-based	capital	ratios	will	change	as	the	provisions	of	the	Basel	III	final	rule	related to	the	numerator	(capital)	and	denominator	(risk-weighted	assets)	are	phased	in,	and	as	our	risk-weighted	assets	calculated	using	the	advanced approaches	change	due	to	potential	changes	in	methodology.	These	ongoing	methodological	changes	will	result	in	differences	in	our	reported	capital ratios	from	one	reporting	period	to	the	next	that	are	independent	of	applicable	changes	to	our	capital	base,	our	asset	composition,	our	off-balance	sheet exposures	or	our	risk	profile.

The	following	table	presents	the	regulatory	capital	structure	and	related	regulatory	capital	ratios	for	State	Street	and	State	Street	Bank	as	of	the	dates indicated.	As	a	result	of	changes	in	the	methodologies	used	to	calculate	our	regulatory	capital	ratios	from	period	to	period,	as	the	provisions	of	the	Basel	III final	rule	are	phased	in,	the	ratios	presented	in	the	table	for	each	period	are	not	directly	comparable.	Refer	to	the	footnotes	following	the	table.

# TABLE	45:	REGULATORY	CAPITAL	STRUCTURE	AND	RELATED	REGULATORY	CAPITAL	RATIOS

|  |  |  |  |  |  | State	Street |  |  | State	Street	Bank |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  | Basel\tIII |  |  | Basel\tIII |  |
|  |  |  |  |  | Basel\tIII\tAdvanced | Transitional |  | Basel\tIII\tAdvanced | Transitional |  |
|  |  |  |  |  | Approaches | Approach |  | Approaches | Approach |  |
|  |  |  |  |  | December\t31, | December\t31, | December\t31, | December\t31, | December\t31, | December\t31, |
| (Dollars\tin\tmillions) |  |  |  |  | 2014(1) | 2014(2) | 2013(3) | 2014(1) | 2014(2) | 2013(3) |
| \t\tCommon\tshareholders'\tequity: |  |  |  |  |  |  |  |  |  |  |
| Common\tstock\tand\trelated\tsurplus |  |  |  |  | $10,295 | $10,295 | $10,280 | $10,867 | $10,867 | $10,786 |
| Retained\tearnings |  |  |  |  | 14,882 | 14,882 | 13,395 | 9,416 | 9,416 | 9,064 |
| Accumulated\tother\tcomprehensive\nincome\t(loss) |  |  |  |  | (641) | (641) | 215 | (535) | (535) | 209 |
| Treasury\tstock,\tat\tcost |  |  |  |  | (5,158) | (5,158) | (3,693) | — | — | — |
| Total |  |  |  |  | 19,378 | 19,378 | 20,197 | 19,748 | 19,748 | 20,059 |
| Regulatory\tcapital\tadjustments: |  |  |  |  |  |  |  |  |  |  |
| Goodwill\tand\tother\tintangible\tassets, |  |  |  |  |  |  |  |  |  |  |
| net\tof\tassociated\tdeferred\ttax |  |  |  |  |  |  |  |  |  |  |
| liabilities(4) |  |  |  |  | (5,869) | (5,869) | (7,743) | (5,577) | (5,577) | (7,341) |
| Other\tadjustments |  |  |  |  | (36) | (36) | — | (128) | (128) | — |
| \t\tCommon\tequity\ttier\t1\tcapital |  |  |  |  | 13,473 | 13,473 | 12,454 | 14,043 | 14,043 | 12,718 |
| Preferred\tstock |  |  |  |  | 1,961 | 1,961 | 491 | — | — | — |
| Trust\tpreferred\tcapital\tsecurities |  |  |  |  |  |  |  |  |  |  |
| subject\tto\tphase-out\tfrom\ttier\t1 |  |  |  |  |  |  |  |  |  |  |
| capital |  |  |  |  | 475 | 475 | 950 | — | — | — |
| Other\tadjustments |  |  |  |  | (145) | (145) | — | — | — | — |
| \t\tTier\t1\tcapital |  |  |  |  | 15,764 | 15,764 | 13,895 | 14,043 | 14,043 | 12,718 |
| Qualifying\tsubordinated\tlong-term\ndebt |  |  |  |  | 1,618 | 1,618 | 1,918 | 1,634 | 1,634 | 1,936 |
| Trust\tpreferred\tcapital\tsecurities\nphased\tout\tof\ttier\t1\tcapital |  |  |  |  | 475 | 475 | NA | — | — | NA |
| Other\tadjustments |  |  |  |  | 4 | 4 | (26) | — | — | 45 |
| \t\tTotal\tcapital |  |  |  |  | $17,861 | $17,861 | $15,787 | $15,677 | $15,677 | $14,699 |
| \t\tRisk-weighted\tassets: |  |  |  |  |  |  |  |  |  |  |
| Credit\trisk |  |  |  |  | $66,874 | $87,502 | $78,864 | $59,836 | $84,433 | $76,197 |
| Operational\trisk |  |  |  |  | 35,866 | NA | NA | 35,449 | NA | NA |
| Market\trisk(5) |  |  |  |  | 5,087 | 2,910 | 1,262 | 5,048 | 2,909 | 1,262 |
| Total\trisk-weighted\tassets |  |  |  |  | $107,827 | $90,412 | $80,126 | $100,333 | $87,342 | $77,459 |
| Adjusted\tquarterly\taverage\tassets |  |  |  |  | $247,740 | $247,740 | $202,801 | $243,549 | $243,549 | $199,301 |
|  | Minimum |  | Minimum |  |  |  |  |  |  |  |
| \t\tCapital\tRatios: | Requirements(6) | \t2014 | Requirements(7) | \t2013 |  |  |  |  |  |  |
| Common\tequity\ttier\t1\tcapital | 4.0% | 4.0% | NA |  | 12.5% | 14.9% | 15.5% | 14.0% | 16.1% | 16.4% |
| Tier\t1\tcapital | 5.5 |  | 4.0% | 4.0% | 14.6 | 17.4 | 17.3 | 14.0 | 16.1 | 16.4 |
| Total\tcapital | 8.0 |  | 8.0 |  | 16.6 | 19.8 | 19.7 | 15.6 | 17.9 | 19.0 |
| Tier\t1\tleverage | 4.0 |  | 4.0 |  | 6.4 | 6.4 | 6.9 | 5.8 | 5.8 | 6.4 |

NA:	Not	applicable.

(1)	Common	equity	tier	1	capital,	tier	1	capital	and	total	capital	ratios	as	of	December	31,	2014	were	calculated	in	conformity	with	the	advanced	approaches	provisions	of	the	Basel	III	final	rule.	Tier	1	leverage	ratio	as	of	December	31,	2014	was calculated	in	conformity	with	the	Basel	III	final	rule.

(2)	Common	equity	tier	1	capital,	tier	1	capital,	total	capital	and	tier	1	leverage	ratios	as	of	December	31,	2014	were	calculated	in	conformity	with	the	transitional	provisions	of	the	Basel	III	final	rule.	Specifically,	these	ratios	reflect	common	equity	tier	1,

tier	1	and	total	capital	(the	numerator)	calculated	in	conformity	with	the	provisions	of	the	Basel	III	final	rule,	and	total	risk-weighted	assets	or,	with	respect	to	the	tier	1	leverage	ratio,	quarterly	average	assets	(in	both	cases,	the	denominator), calculated	in	conformity	with	the	provisions	of	Basel	I.

(3)	Common	equity	tier	1	capital,	tier	1	capital,	total	capital	and	tier	1	leverage	ratios	as	of	December	31,	2013	were	calculated	in	conformity	with	the	provisions	of	Basel	I.

(4)	Amounts	for	State	Street	and	State	Street	Bank	as	of	December	31,	2014	consisted	of	goodwill,	net	of	associated	deferred	tax	liabilities,	and	20%	of	other	intangible	assets,	net	of	associated	deferred	tax	liabilities,	the	latter	phased	in	as	a	deduction from	capital,	in	conformity	with	the	Basel	III	final	rule.

(5)	Market	risk	risk-weighted	assets	reported	in	conformity	with	the	Basel	III	advanced	approaches	included	a	credit	valuation	adjustment,	referred	to	as	the	CVA,	which	reflected	the	risk	of	potential	fair-value	adjustments	for	credit	risk	reflected	in	our valuation	of	over-the-counter	derivative	contracts.		The	CVA	was	not	provided	for	in	the	final	market	risk	capital	rule;	however,	it	was	required	by	the	advanced	approaches	provisions	of	the	Basel	III	final	rule.		State	Street	used	the	simple	CVA approach	in	conformity	with	the	Basel	III	advanced	approaches.

(6)	Minimum	requirements	will	be	phased	in	up	to	full	implementation	beginning	on	January	1,	2019;	minimum	requirements	listed	are	as	of	December	31,	2014.

(7)	Minimum	requirements	listed,	governed	by	Basel	I,	are	as	of	December	31,	2013.

The	increases	in	State	Street's	tier	1	and	total	capital	as	of December	31,	2014	compared	to	December	31,	2013	were	the	result	of the	first-quarter	2014	and	fourth-quarter	2014	issuances	of	preferred stock,	the	impact	of	the	phase-in	provisions	of	the	Basel	III	final	rule related	to	other	intangible	assets	and	the	positive	effect	of	year-to-date net	income,	partially	offset	by	declarations	of	common	and	preferred	stock dividends	and	purchases	by	us	of	our	common	stock	in	2014.	State	Street Bank's	tier	1	and	total	capital	increased	as	of	December	31,	2014 compared	to	December	31,	2013,	the	result	of	the	previously-described phase-in	provisions	of	the	Basel	III	final	rule	related	to	other	intangible assets	and	the	positive	effect	of	year-to-date	net	income,	partially	offset by	the	payment	of	dividends	by	State	Street	Bank	to	its	parent	company	in 2014.

The	increases	in	State	Street's	total	risk-weighted	assets	under	the transitional	approach	as	of	December	31,	2014	compared	to December	31,	2013	was	primarily	associated	with	higher	off-balance sheet	and	market	risk-equivalent	assets,	mainly	associated	with	an increase	in	exposure	associated	with	our	participation	in	principal securities	finance	transactions,	an	increase	in	foreign	exchange	contracts due	to	an	increase	in	contract	volumes	as	well	as	an	increase	in	market risk-equivalent	risk-weighted	assets,	primarily	due	to	an	increase	in	the sixty-day	moving	average	of	our	stressed	VaR-based	measure.	Our stressed	VaR-based	measure	was	impacted	by	the	extension	of	the	tenor of	FX	swaps	by	Global	Treasury	designed	to	improve	our	liquidity	position.

The	regulatory	capital	ratios	for	State	Street	and	State	Street	Bank as	of	December	31,	2014,	presented	in	Table	45:	Regulatory	Capital Structure	and	Related	Regulatory	Capital	Ratios,	differ	from	such	ratios	as of	December	31,	2013.	These	differences	are	independent	of	applicable changes	to	our	capital	base,	our	asset	composition,	our	off-balance	sheet exposures	or	our	risk	profile,	and	resulted	from	changes	in	the methodologies,	required	by	applicable	regulatory	requirements,	used	to calculate	capital	and	total	risk-weighted	assets.	As	a	result,	the	ratios presented	in	the	table	for	each	period	are	not	directly	comparable. Beginning	with	the	second	quarter	of	2014,	we	used	both	the	advanced approaches	provisions	in	the	Basel	III	final	rule,	and	the	provisions	of Basel	I,	to	calculate	our	risk-weighted	assets.	For	2013,	we	used	the provisions	of	Basel	I	to	calculate	our	risk-weighted	assets.

The	table	below	presents	a	roll-forward	of	common	equity	tier	1 capital,	tier	1	capital	and	total	capital	for	the	years	ended	December	31, 2014	and	2013.

# TABLE	46:	CAPITAL	ROLL-FORWARD

| (Dollars	in	millions) | Year	ended<br>December	31,	2014 | Year	ended<br>December	31,	2013 |
| :--- | :--- | :--- |
| Common\tequity\ttier\t1\tcapital: |  |  |
| Common\tequity\ttier\t1\tcapital\tbalance,\tbeginning\tof\nperiod | $12,454 | $12,322 |
| Net\tincome | 2,037 | 2,136 |
| Changes\tin\ttreasury\tstock,\tat\tcost | (1,465) | (1,791) |
| Dividends\tdeclared | (551) | (489) |
| Goodwill\tand\tother\tintangible\tassets,\tnet\tof\nassociated\tdeferred\ttax\tliabilities | 1,874 | 74 |
| Effect\tof\tcertain\titems\tin\taccumulated\tother\ncomprehensive\tincome\t(loss) | (857) | 84 |
| Other\tadjustments | (19) | 118 |
| Changes\tin\tcommon\tequity\ttier\t1\tcapital | 1,019 | 132 |
| Common\tequity\ttier\t1\tcapital\tbalance,\tend\tof\tperiod | 13,473 | 12,454 |
| Additional\ttier\t1\tcapital: |  |  |
| Tier\t1\tcapital\tbalance,\tbeginning\tof\tperiod | 13,895 | 13,760 |
| Change\tin\tcommon\tequity\ttier\t1\tcapital | 1,019 | 132 |
| Net\tissuance\tof\tpreferred\tstock | 1,470 | — |
| Trust\tpreferred\tcapital\tsecurities\tphased\tout\tof\ttier\t1\ncapital | (475) | — |
| Other\tadjustments | (145) | 3 |
| Changes\tin\ttier\t1\tcapital | 1,869 | 135 |
| Tier\t1\tcapital\tbalance,\tend\tof\tperiod | 15,764 | 13,895 |
| Tier\t2\tcapital: |  |  |
| Tier\t2\tcapital\tbalance,\tbeginning\tof\tperiod | 1,892 | 1,069 |
| Net\tissuance\tand\tchanges\tin\tlong-term\tdebt\nqualifying\tas\ttier\t2 | (300) | 699 |
| Trust\tpreferred\tcapital\tsecurities\tphased\tinto\ttier\t2\ncapital | 475 | — |
| Change\tin\tother\tadjustments | 30 | 124 |
| Changes\tin\ttier\t2\tcapital | 205 | 823 |
| Tier\t2\tcapital\tbalance,\tend\tof\tperiod | 2,097 | 1,892 |
| Total\tcapital: |  |  |
| Total\tcapital\tbalance,\tbeginning\tof\tperiod | 15,787 | 14,829 |
| Changes\tin\ttier\t1\tcapital | 1,869 | 135 |
| Changes\tin\ttier\t2\tcapital | 205 | 823 |
| Total\tcapital\tbalance,\tend\tof\tperiod | $17,861 | $15,787 |

Beginning	in	the	second	quarter	of	2014	we	calculated	risk-weighted assets	under	the	advanced	approaches	provision	of	the	Basel	III	final rule.	The	following	table	presents	a	roll-forward	of	the	Basel	III	advanced approaches	risk-weighted	assets	for	the	three	and	six	months	ended December	31,	2014.

# TABLE	47:	RWA	ROLL-FORWARD

| (Dollars	in	millions) | Three	Months	Ended<br>December	31,	2014 | Six	Months	Ended<br>December	31,	2014 |
| :--- | :--- | :--- |
| Total\trisk-weighted\tassets,\tbeginning\tof\nperiod | $108,078 | $111,015 |
| Changes\tin\tcredit\trisk-weighted\tassets |  |  |
| Net\tincrease\t(decrease)\tin\tinvestment\nsecurities-\twholesale | (209) | (1,082) |
| Net\tincrease\t(decrease)\tin\tloans\tand\nleases | 1,209 | 1,381 |
| Net\tincrease\t(decrease)\tin\tsecuritization\nexposures | (1,223) | (5,949) |
| Net\tincrease\t(decrease)\tin\tall\tother^(1) | (818) | 1,431 |
| Net\tincrease\t(decrease)\tin\tcredit\trisk-\nweighted\tassets | (1,041) | (4,219) |
| Net\tincrease\t(decrease)\tin\tcredit\tvaluation\nadjustment | (603) | (80) |
| Net\tincrease\t(decrease)\tin\tmarket\trisk-\nweighted\tassets | 1,487 | 1,230 |
| Net\tincrease\t(decrease)\tin\toperational\trisk-\nweighted\tassets | (94) | (119) |
| Total\trisk-weighted\tassets,\tend\tof\tperiod | $107,827 | $107,827 |

(1)	Includes	assets	not	in	a	definable	category,	non-material	portfolio,	cleared	transactions,	other wholesale,	cash	and	due	from,	and	interest-bearing	deposits	with,	banks,	repo-style	exposures,	equity exposures,	over-the-counter	derivative	exposures,	and	6%	credit	risk	supervisory	charge.

For	the	three	and	six	months	ended	 December	31,	2014,	total	risk- weighted	assets	decreased	from	beginning	of	period	balances	primarily due	to	lower	credit	risk-weighted	assets,	partially	offset	by	an	increase	in market	risk-equivalent	risk-weighted	assets,	primarily	due	to	an	increase in	the	sixty-day	moving	average	of	our	stressed	VaR-based	measure.	Our stressed	VaR-based	measure	was	impacted	by	the	extension	of	the	tenor of	FX	swaps	by	Global	Treasury	designed	to	improve	our	liquidity	position. The	decrease	in	credit	risk-weighted	assets	primarily	related	to	sales, maturities	and	pay-downs	of	both	wholesale	and	securitized	investments, partially	offset	by	an	increase	in	loan	activity.

The	regulatory	capital	ratios	as	of	 December	31,	2014,	presented	in Table	45:	Regulatory	Capital	Structure	and	Related	Regulatory	Capital Ratios,	calculated	under	the	advanced	approaches	in	conformity	with	the Basel	III	final	rule,	reflect	calculations	and	determinations	with	respect	to our

capital	and	related	matters	as	of	 December	31,	2014,	based	on	State Street	and	external	data,	quantitative	formulae,	statistical	models, historical	correlations	and	assumptions,	collectively	referred	to	as "advanced	systems,"	in	effect	and	used	by	State	Street	for	those purposes	as	of	the	time	we	filed	this	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	accurately	represent	or calculate	the	scenarios,	circumstances,	outputs	or	other	results	for	which they	are	designed	or	intended.

Due	to	the	influence	of	changes	in	these	advanced	systems, whether	resulting	from	changes	in	data	inputs,	regulation	or	regulatory supervision	or	interpretation,	State	Street-specific	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.	Models	implemented	under	the	Basel	III	final	rule, particularly	those	implementing	the	advanced	approaches,	remain	subject to	regulatory	review	and	approval.	The	full	effects	of	the	Basel	III	final	rule on	State	Street	and	State	Street	Bank	are	therefore	subject	to	further evaluation	and	also	to	further	regulatory	guidance,	action	or	rule-making.

Estimated	Basel	III	Standardized	Approach	and	Fully	Phased-in	Capital Ratios

Table	48:	Regulatory	Capital	Structure	and	Related	Regulatory Capital	Ratios	-	State	Street	and	Table	49:	Regulatory	Capital	Structure and	Related	Regulatory	Capital	Ratios	-	State	Street	Bank	present	our capital	ratios	for	State	Street	and	State	Street	Bank	as	of	December	31, 2014,	calculated	in	conformity	with	the	advanced	approaches	provisions of	the	Basel	III	final	rule,	our	estimated	ratios	as	of	December	31,	2014, calculated	in	conformity	with	the	Basel	III	standardized	approach,	and pro-forma	estimates	of	our	fully	phased-in	capital	ratios	as	of December	31,	2014.	The	Basel	III	capital	ratios,	calculated	in	conformity with	the	standardized	approach	in	the	Basel	III	final	rule	and	on	a	pro- forma	fully	phased-in	basis	are	preliminary	estimates,	based	on	our present	interpretations	of	the	Basel	III	final	rule.

# TABLE	48:	REGULATORY	CAPITAL	STRUCTURE	AND	RELATED	REGULATORY	CAPITAL	RATIOS	-	STATE	STREET

| December	31,	2014	(Dollars<br>in	millions) |  |  |  | Basel	III	Advanced<br>Approaches(1) | Phase-In<br>Provisions | Basel	III	Advanced<br>Approaches	Fully<br>Phased-In	Pro-<br>Forma	Estimate(3) | Basel	III<br>Standardized<br>Approach<br>Estimate(2) | Phase-In<br>Provisions | Basel	III<br>Standardized<br>Approach	Fully<br>Phased-In	Pro-<br>Forma	Estimate(3) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Total\tcommon\tshareholders'\nequity |  |  |  | $19,378 | $133 | $19,511 | $19,378 | $133 | $19,511 |
| Regulatory\tcapital\nadjustments: |  |  |  |  |  |  |  |  |  |
| Goodwill\tand\tother |  |  |  |  |  |  |  |  |  |
| intangible\tassets,\tnet\tof |  |  |  |  |  |  |  |  |  |
| associated\tdeferred\ttax |  |  |  |  |  |  |  |  |  |
| liabilities |  |  |  | (5,869) | (1,160) | (7,029) | (5,869) | (1,160) | (7,029) |
| Other\tadjustments |  |  |  | (36) | (146) | (182) | (36) | (146) | (182) |
| Common\tequity\ttier\t1\ncapital |  |  |  | 13,473 | (1,173) | 12,300 | 13,473 | (1,173) | 12,300 |
| Additional\ttier\t1\tcapital: |  |  |  |  |  |  |  |  |  |
| Preferred\tstock |  |  |  | 1,961 | — | 1,961 | 1,961 | — | 1,961 |
| Trust\tpreferred\tcapital\nsecurities |  |  |  | 475 | (475) | — | 475 | (475) | — |
| Other\tadjustments |  |  |  | (145) | 145 | — | (145) | 145 | — |
| Additional\ttier\t1\tcapital |  |  |  | 2,291 | (330) | 1,961 | 2,291 | (330) | 1,961 |
| Tier\t1\tcapital |  |  |  | 15,764 | (1,503) | 14,261 | 15,764 | (1,503) | 14,261 |
| Tier\t2\tcapital: |  |  |  |  |  |  |  |  |  |
| Qualifying\tsubordinated\nlong-term\tdebt |  |  |  | 1,618 | — | 1,618 | 1,618 | — | 1,618 |
| Trust\tpreferred\tcapital\nsecurities |  |  |  | 475 | 370 | 845 | 475 | 370 | 845 |
| Other |  |  |  | 4 | (4) | — | 4 | (4) | — |
| Tier\t2\tcapital |  |  |  | 2,097 | 366 | 2,463 | 2,097 | 366 | 2,463 |
| Total\tcapital |  |  |  | $17,861 | $(1,137) | $16,724 | $17,861 | $(1,137) | $16,724 |
| Risk\tweighted\tassets(4) |  |  |  | $107,827 | $(1,010) | $106,817 | $125,011 | $(953) | $124,058 |
| Adjusted\taverage\tassets |  |  |  | 247,740 | (433) | 247,307 | 247,740 | (433) | 247,307 |
| Total\tassets\tfor\tSLR |  |  |  | 278,690 | (1,161) | 277,529 | 278,690 | (1,161) | 277,529 |
| Capital\tratios(5): | Minimum\nRequirement\t2014 | Minimum\nRequirement\t2019 | Minimum\tRequirement\nIncluding\tCapital\nConservation\tBuffer\tof\n2.5%\t2019 |  |  |  |  |  |  |
| Common\tequity\ttier\t1\tcapital | 4.0% | 4.5% | 7.0% | 12.5% |  | 11.5% | 10.8% |  | 9.9% |
| Tier\t1\tcapital | 5.5 | 6.0 | 8.5 | 14.6 |  | 13.4 | 12.6 |  | 11.5 |
| Total\tcapital | 8.0 | 8.0 | 10.5 | 16.6 |  | 15.7 | 14.3 |  | 13.5 |
| Tier\t1\tleverage | 4.0 | 4.0 | NA | 6.4 |  | 5.8 | 6.4 |  | 5.8 |
| Supplementary\tleverage | NA | 5.0 | NA | 5.7 |  | 5.1 | 5.7 |  | 5.1 |

(1)	The	common	equity	tier	1	ratio	was	calculated	in	conformity	with	the	provisions	of	the	Basel	III	final	rule;	refer	to Table	45:	Regulatory	Capital	Structure	and	Related	Regulatory	Capital	Ratios .

(2)	As	of	 December	31,	2014,	for	purposes	of	the	calculations	completed	in	conformity	with	the	Basel	III	final	rule,	total	risk-weighted	assets	under	the	standardized	approach	were	calculated	using	State	Street's	estimates, based	on	our	current	interpretations	of	Basel	III	final	rule.

(3)	As	of	 December	31,	2014,	represents	State	Street's	estimates	calculated	in	conformity	with	the	fully	phased-in	provisions	of	the	Basel	III	Final	rule	for	both	Basel	III	advanced	and	standardized	approaches,	based	on	our current	interpretations	of	the	Basel	III	final	rule.

(4)	As	of	 December	31,	2014,	State	Street's	estimated	risk-weighted	assets	calculated	in	conformity	with	the	standardized	approach	of	the	Basel	III	final	rule	exceeded	risk-weighted	assets	calculated	in	conformity	with	the advanced	approaches	provisions	of	the	Basel	III	final	rule	by	$17.2	million	($125.0	million	minus	$107.8	million).

(5)	Common	equity	tier	1	ratio	is	calculated	by	dividing	common	equity	tier	1	capital	(numerator)	by	risk-weighted	assets	(denominator);	tier	1	capital	ratio	is	calculated	by	dividing	tier	1	capital	(numerator)	by	risk-weighted assets	(denominator);	total	capital	ratio	is	calculated	by	dividing	total	capital	(numerator)	by	risk-weighted	assets	(denominator);	tier	1	leverage	ratio	is	calculated	by	dividing	tier	1	capital	(numerator)	by	adjusted	average assets	(denominator);	and	supplementary	leverage	ratio	is	calculated	by	dividing	tier	1	capital	(numerator)	by	total	assets	for	SLR	(denominator).

# TABLE	49:	REGULATORY	CAPITAL	STRUCTURE	AND	RELATED	REGULATORY	CAPITAL	RATIOS	-	STATE	STREET	BANK

| December	31,	2014	(Dollars<br>in	millions) |  |  |  | Basel	III	Advanced<br>Approaches(1) | Phase-In<br>Provisions | Basel	III	Advanced<br>Approaches	Fully<br>Phased-In	Pro-<br>Forma	Estimate(3) | Basel	III<br>Standardized<br>Approach<br>Estimate(2) | Phase-In<br>Provisions | Basel	III<br>Standardized<br>Approach	Fully<br>Phased-In	Pro-<br>Forma	Estimate(3) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Total\tcommon\tshareholders'\nequity |  |  |  | $19,748 | $144 | $19,892 | $19,748 | $144 | $19,892 |
| Regulatory\tcapital\nadjustments: |  |  |  |  |  |  |  |  |  |
| Goodwill\tand\tother |  |  |  |  |  |  |  |  |  |
| intangible\tassets,\tnet\tof |  |  |  |  |  |  |  |  |  |
| associated\tdeferred\ttax |  |  |  |  |  |  |  |  |  |
| liabilities |  |  |  | (5,577) | (1,085) | (6,662) | (5,577) | (1,085) | (6,662) |
| Other\tadjustments |  |  |  | (128) | — | (128) | (128) | — | (128) |
| Common\tequity\ttier\t1\ncapital |  |  |  | 14,043 | (941) | 13,102 | 14,043 | (941) | 13,102 |
| Additional\ttier\t1\tcapital: |  |  |  |  |  |  |  |  |  |
| Preferred\tstock |  |  |  | — | — | — | — | — | — |
| Trust\tpreferred\tcapital\nsecurities |  |  |  | — | — | — | — | — | — |
| Other\tadjustments |  |  |  | — | — | — | — | — | — |
| Additional\ttier\t1\tcapital |  |  |  | — | — | — | — | — | — |
| Tier\t1\tcapital |  |  |  | 14,043 | (941) | 13,102 | 14,043 | (941) | 13,102 |
| Tier\t2\tcapital: |  |  |  |  |  |  |  |  |  |
| Qualifying\tsubordinated\nlong-term\tdebt |  |  |  | 1,634 | — | 1,634 | 1,634 | — | 1,634 |
| Trust\tpreferred\tcapital\nsecurities |  |  |  | — | — | — | — | — | — |
| Other |  |  |  | — | — | — | — | — | — |
| Tier\t2\tcapital |  |  |  | 1,634 | — | 1,634 | 1,634 | — | 1,634 |
| Total\tcapital |  |  |  | $15,677 | $(941) | $14,736 | $15,677 | $(941) | $14,736 |
| Risk\tweighted\tassets(4) |  |  |  | $100,333 | $(1,409) | $98,924 | $118,147 | $(1,328) | $116,819 |
| Adjusted\taverage\tassets |  |  |  | 243,549 | (365) | 243,184 | 243,549 | (365) | 243,184 |
| Total\tassets\tfor\tSLR |  |  |  | 274,331 | (1,085) | 273,246 | 274,331 | (1,085) | 273,246 |
| Capital\tratios(5): | Minimum\nRequirement\t2014 | Minimum\nRequirement\t2019 | Minimum\tRequirement\nIncluding\tCapital\nConservation\tBuffer\tof\n2.5%\t2019 |  |  |  |  |  |  |
| Common\tequity\ttier\t1\tcapital | 4.0% | 4.5% | 7.0% | 14.0% |  | 13.2% | 11.9% |  | 11.2% |
| Tier\t1\tcapital | 5.5 | 6.0 | 8.5 | 14.0 |  | 13.2 | 11.9 |  | 11.2 |
| Total\tcapital | 8.0 | 8.0 | 10.5 | 15.6 |  | 14.9 | 13.3 |  | 12.6 |
| Tier\t1\tleverage | 4.0 | 4.0 | NA | 5.8 |  | 5.4 | 5.8 |  | 5.4 |
| Supplementary\tleverage | NA | 5.0 | NA | 5.1 |  | 4.8 | 5.1 |  | 4.8 |

(2)	As	of	 December	31,	2014,	for	purposes	of	the	calculations	completed	in	conformity	with	the	Basel	III	final	rule,	total	risk-weighted	assets	under	the	standardized	approach	were	calculated	using	State	Street	Bank's estimates,	based	on	our	current	interpretations	of	Basel	III	final	rule.

(3)	As	of	 December	31,	2014,	represents	State	Street	Bank's	estimates	calculated	in	conformity	with	the	fully	phased-in	provisions	of	the	Basel	III	Final	rule	for	both	Basel	III	advanced	and	standardized	approaches,	based	on our	current	interpretations	of	the	Basel	III	final	rule.

(4)	As	of	 December	31,	2014,	State	Street	Bank's	estimated	risk-weighted	assets	calculated	in	conformity	with	the	standardized	approach	of	the	Basel	III	final	rule	exceeded	risk-weighted	assets	calculated	in	conformity	with the	advanced	approaches	provisions	of	the	Basel	III	final	rule	by	$17.8	million	($118.1	million	minus	$100.3	million).

Fully	phased-in	pro-forma	estimates	of	common	shareholders'	equity include	100%	of	accumulated	other	comprehensive	income,	including accumulated	other	comprehensive	income	attributable	to	available-for- sale	securities,	cash	flow	hedges	and	defined	benefit	pension	plans.	Fully phased-in	pro-forma	estimates	of	common	equity	tier	1	capital	reflect 100%	of	applicable	deductions,	including	but	not	limited	to,	intangible assets	net	of	deferred	tax	liabilities.	For	2014,	tier	1	capital	and	tier	2 capital	each	include	50%	of	trust	preferred	capital	securities.	Fully phased-in	tier	1	capital	reflects	the	transition	of	trust	preferred	capital securities	from	tier	1	capital	to	tier	2	capital.	For	both	Basel	III	advanced and	standardized	approaches,	fully	phased-in	pro-forma	estimates	of	risk- weighted	assets	reflect	the	exclusion	of	intangible	assets,	offset	by additions	related	to	non-significant	equity	exposures	and	deferred	tax assets	related	to	temporary	differences.

# Global	Systemically	Important	Bank

We	are	designated	as	a	large	bank	holding	company	subject	to enhanced	supervision	and	prudential	standards,	commonly	referred	to	as a	"systemically	important	financial	institution,"	or	SIFI,	and	we	are	one among	a	group	of	30	institutions	worldwide	that	have	been	identified	by the	Financial	Stability	Board,	or	FSB,	and	the	Basel	Committee	as	"global systemically	important	banks,"	or	G-SIBs.	Our	designation	as	a	G-SIB	will require	us	to	maintain	an	additional	capital	buffer	above	the	Basel	III	final rule	minimum	common	equity	tier	1	capital	ratio	of	4.5%,	based	on	a number	of	factors,	as	evaluated	by	banking	regulators.	Factors	in	this evaluation	will	include	our	size,	interconnectedness,	substitutability, complexity	and	cross-jurisdictional	activities.	In	November	2014,	the	FSB designated	us	as	a	category-1	organization,	with	a	capital	surcharge	of 1%,	although	this	designation	and	the	associated	additional	capital	buffer are	subject	to	change.

On	December	9,	2014,	the	Federal	Reserve	released	a	proposal	on the	implementation	of	capital	requirements	for	U.S.	G-SIBs.	For	most firms,	the	proposal	would	require	a	higher	G-SIB	buffer	than	would	the earlier	Basel	Committee	on	Banking	Supervision,	or	BCBS,	proposal.	The proposal	would	be	phased	in	beginning	on	January	1,	2016	and	be	fully effective	on	January	1,	2019.	The	eight	U.S.	banks	deemed	to	be	G-SIBs would	be	required	to	calculate	the	G-SIB	buffer	according	to	two	methods and	be	bound	by	the	higher	of	the	two:

•Method	1:	Same	methodology	as	proposed	by	the	BCBS, assessing	systemic	importance	based	upon	five	equally-weighted components:	size,	interconnectedness,	complexity,	cross- jurisdictional	activity	and	substitutability

•Method	2:	Alters	the	calculation	from	method	1	by	factoring	in	a wholesale	funding	score	in	place	of	substitutability	and	applying	a 2x	multiplier	to	the	sum	of	the	five	components

We	preliminarily	estimate,	based	on	our	relevant	metrics	as	of December	31,	2014,	that	Method	2	would	be	the	binding	methodology	for State	Street	and	that	our	G-SIB	buffer	may	increase	from	the	1% proposed	under	the	FSB	designation	to	1.5%	under	the	Federal Reserve's	December	2014	proposal.	The	actual	buffer	applicable	will depend	on	the	final	rules	implemented	by	the	Federal	Reserve,	including the	treatment	of	excess	deposits	we	invest	with	U.S.	and	non-U.S.	central banks.	Assuming	completion	of	the	phase-in	period	for	the	capital conservation	buffer,	and	no	countercyclical	buffer,	the	minimum	capital ratios	as	of	January	1,	2019,	including	a	capital	conservation	buffer	and an	estimated	G-SIB	capital	surcharge	of	1.5%,	would	be	10.0%	for	tier	1 risk-based	capital,	12.0%	for	total	risk-based	capital,	and	8.5%	for common	equity	tier	1	capital,	in	order	for	State	Street	to	make	capital distributions	and	discretionary	bonus	payments	without	limitation.	Not	all of	our	competitors	have	similarly	been	designated	as	systemically important,	and	therefore	some	of	our	competitors	may	not	be	subject	to the	same	additional	capital	requirements.

# Supplementary	Leverage	Ratio

On	April	8,	2014,	U.S.	banking	regulators	issued	a	final	rule enhancing	the	supplementary	leverage	ratio,	or	SLR,	standards	for certain	bank	holding	companies,	like	State	Street,	and	their	insured depository	institution	subsidiaries,	like	State	Street	Bank.	We	refer	to	this final	rule	as	the	eSLR	final	rule.	Under	the	eSLR	final	rule,	upon implementation	as	of	January	1,	2018,	State	Street	Bank	must	maintain	a supplementary	leverage	ratio	of	at	least	6%	to	be	well	capitalized	under the	U.S.	banking	regulators'	Prompt	Corrective	Action	framework.	The eSLR	final	rule	also	provides	that	if	State	Street	maintains	an	SLR	of	at least	5%,	it	is	not	subject	to	limitations	on	distribution	and	discretionary bonus	payments	under	the	eSLR	final	rule.

On	September	3,	2014,	U.S.	banking	regulators	issued	a	final	rule modifying	the	definition	of	the	denominator	of	the	SLR	in	a	manner consistent	with	the	final	rule	issued	by	the	Basel	Committee	on	Banking Supervision	on	January	12,	2014.	The	revisions	to	the	SLR	apply	to	all banking	organizations	subject	to	the	advanced	approaches	provisions	of the	Basel	III	final	rule,	like	State	Street	and	State	Street	Bank.	Specifically, the	SLR	final	rule	modifies	the	methodology	for	including	off-balance sheet	assets,	including	credit	derivatives,	repo-style	transactions,	and lines	of	credit,	in	the	denominator	of	the	SLR,	and	requires	banking organizations	to

calculate	their	total	leverage	exposure	using	daily	averages	for	on- balance	sheet	assets	and	the	average	of	three	month-end	calculations	for off-balance	sheet	exposures.	Certain	public	disclosures	required	by	the SLR	final	rule	must	be	provided	beginning	with	the	first	quarter	of	2015, and	the	minimum	SLR	requirement	using	the	SLR	final	rule's denominator	calculations	is	effective	beginning	on	January	1,	2018.

Estimated	pro-forma	fully	phased-in	supplementary	leverage	ratios as	of	December	31,	2014	are	preliminary	estimates	by	State	Street	(in each	case,	fully	phased-in	as	of	January	1,	2018,	as	per	the	phase-in requirements	of	the	SLR	final	rule),	calculated	based	on	our interpretations	of	the	SLR	final	rule	as	of	the	time	this	Form	10-K	is	filed with	the	SEC	and	as	applied	to	our	businesses	and	operations	as	of December	31,	2014.

# TABLE	50:	SUPPLEMENTARY	LEVERAGE	RATIO

| (Dollars	in	millions) | Transitional	SLR | Fully	Phased-in	SLR |
| :--- | :--- | :--- |
| State\tStreet: |  |  |
| Tier\t1\tcapital | $15,764 | $14,261 |
| On-\tand\toff-balance\tsheet\tleverage\texposure | 284,740 | 284,740 |
| Less:\tregulatory\tdeductions | (6,050) | (7,211) |
| Total\tassets\tfor\tSLR | 278,690 | 277,529 |
| Supplementary\tleverage\tratio | 5.7% | 5.1% |
| State\tStreet\tBank: |  |  |
| Tier\t1\tcapital | $14,043 | $13,102 |
| On-\tand\toff-balance\tsheet\tleverage\texposure | 280,036 | 280,036 |
| Less:\tregulatory\tdeductions | (5,705) | (6,790) |
| Total\tassets\tfor\tSLR | 274,331 | 273,246 |
| Supplementary\tleverage\tratio | 5.1% | 4.8% |

# Capital	Actions

# Preferred	Stock

In	November	2014,	we	issued	 30	million	depositary	shares,	each representing	a	1/4,000th	ownership	interest	in	a	share	of	State	Street's non-cumulative	perpetual	preferred	stock,	Series	E,	without	par	value	per share,	with	a	liquidation	preference	of	$100,000	per	share	(equivalent	to $25	per	depositary	share),	which	we	refer	to	as	our	Series	E	preferred stock,	in	a	public	offering.	The	aggregate	proceeds	from	the	offering,	net of	underwriting	discounts,	commissions	and	other	issuance	costs,	were approximately	$728	million.

In	January	2015,	we	declared	dividends	on	our	Series	E	preferred stock	of	$1,833	per	share,	or	approximately	 $0.46	per	depositary	share, totaling	approximately	$14	million,	which	will	be	paid	in	March	2015.

In	February	2014,	we	issued	30	million	depositary	shares,	each representing	a	1/4,000th	ownership	interest	in	a	share	of	State	Street's fixed-to-floating-rate	non-cumulative	perpetual	preferred	stock,	Series	D, without	par	value	per	share,	with	a	liquidation	preference	of	$100,000	per share	(equivalent	to	$25	per	depositary	share),	which	we	refer	to	as	our Series	D	preferred	stock,	in	a	public	offering.	The	aggregate	proceeds from	the	offering,	net	of	underwriting	discounts,	commissions	and	other issuance	costs,	were	approximately	$742	million.

In	2014,	we	declared	aggregate	dividends	on	our	Series	D	preferred stock	of	$4,605	per	share,	or	approximately	 $1.15	per	depository	share, totaling	approximately	$35	million.	In	January	2015,	we	declared dividends	on	our	Series	D	preferred	stock	of	$1,475	per	share,	or approximately	$0.37	per	depositary	share,	totaling	approximately	 $11 million,	which	will	be	paid	in	March	2015.

In	2014,	we	declared	aggregate	dividends	on	our	non-cumulative perpetual	preferred	stock,	Series	C	(represented	by	depositary	shares, each	representing	a	1/4,000th	ownership	interest	in	a	share	of	State Street's	non-cumulative	perpetual	preferred	stock,	Series	C),	or	Series	C preferred	stock,	of	$5,252	per	share,	or	approximately	 $1.32	per depositary	share,	totaling	approximately	$26	million.	In	2013,	dividends on	our	Series	C	preferred	stock	totaled	approximately	$26	million.	In January	2015,	we	declared	dividends	on	our	Series	C	preferred	stock	of $1,313	per	share,	or	approximately	 $0.33	per	depositary	share,	totaling approximately	$7	million,	which	will	be	paid	in	March	2015.

# Common	Stock

In	2014,	under	a	purchase	program	approved	by	our	Board	of Directors	in	March	2014	which	authorizes	us	to	purchase	up	to	 $1.70 billion	of	our	common	stock	through	 March	31,	2015,	we	purchased approximately	17.7	million	shares	of	our	common	stock	at	an	average cost	of	$69.59	per	share	and	an	aggregate	cost	of	approximately	 $1.23 billion	under	that	program.	As	of	December	31,	2014,	approximately	$470 million	remained	available	for	purchases	of	our	common	stock	under	the March	2014	program.

In	the	first	quarter	of	2014,	we	completed	the	$2.10	billion	program authorized	by	the	Board	in	March	2013	by	purchasing	approximately	6.1 million	shares	of	our	common	stock,	at	an	average	price	of $69.14	per share	and	an	aggregate	cost	of	approximately	$420	million.

Under	both	programs,	in	2014,	we	purchased	in	the	aggregate approximately	23.8	million	shares	of	our	common	stock	at	an	average per-share	cost	of	$69.48	and	an	aggregate	cost	of	approximately	 $1.65

billion.	Shares	acquired	under	the	March	2014	common	stock	purchase program	which	remained	unissued	as	of	December	31,	2014	were recorded	as	treasury	stock	in	our	consolidated	statement	of	condition	as of	December	31,	2014.

In	2013,	under	common	stock	purchase	programs	approved	by	the Board	in	March	2012	and	March	2013,	we	purchased	an	aggregate	of 31.2	million	shares	of	our	common	stock	at	an	average	price	of	 $65.30 per	share	and	an	aggregate	cost	of$2.04	billion.

In	2014,	we	declared	aggregate	quarterly	common	stock	dividends of	$1.16	per	share,	totaling	approximately	$490	million,	compared	to aggregate	common	stock	dividends	of	$1.04	per	share,	totaling approximately	$463	million,	declared	in	2013.

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.	Information	concerning	limitations	on dividends	from	our	subsidiary	banks	is	provided	in	"Related	Stockholder Matters"	included	under	Item	5,	and	in	note	13	to	the	consolidated financial	statements,	included	under	Item	8	of	this	Form	10-K.

# Economic	Capital

We	define	economic	capital	as	the	capital	required	to	protect	holders of	our	senior	debt,	and	obligations	higher	in	priority,	against	unexpected economic	losses	over	a	one-year	period.	Economic	capital	is	one	of several	measures	used	by	us	to	assess	the	adequacy	of	our	capital	levels in	relation	to	our	risk	profile;	the	relative	importance	of	this	measure	to	our capital	requirements	has	declined	as	new	regulatory	metrics,	including	the Basel	III	advanced	and	standardized	ratios;	the	G-SIB	buffer,	and	the Supplementary	Leverage	Ratio,	have	been	introduced,	and	our enterprise-wide	stress	testing	framework	has	evolved.	Due	to	the	evolving nature	of	quantification	techniques,	we	expect	to	periodically	refine	the methodologies,	assumptions,	and	information	used	to	estimate	our	capital requirements	under	different	scenarios	and	stress	environments,	which could	result	in	a	different	amount	of	capital	needed	to	support	our business	activities.

# 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	$349.77	billion	as	of	December	31, 2014,	compared	to	$320.08	billion	as	of	December	31,	2013.	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	$364.41	billion	and	$331.73	billion	as	collateral	for indemnified	securities	on	loan	as	of	December	31,	2014	and	2013, 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	$364.41	billion	and	$331.73	billion,	referenced	above,	$85.31 billion	and	$85.37	billion	was	invested	in	indemnified	repurchase agreements	as	of	December	31,	2014	and	2013,	respectively.	We	or	our agents	held	$90.82	billion	and	$91.10	billion	as	collateral	for	indemnified investments	in	repurchase	agreements	as	of	December	31,	2014	and 2013,	respectively.

Additional	information	about	our	securities	finance	activities	and other	off-balance	sheet	arrangements	is	provided	in	notes	10	and	16	to the	consolidated	financial	statements	included	under	Item	8	of	this	Form 10-K.

# SIGNIFICANT	ACCOUNTING	ESTIMATES

Our	consolidated	financial	statements	are	prepared	in	conformity with	GAAP,	and	we	apply	accounting	policies	that	affect	the	determination of	amounts	reported	in	these	consolidated	financial	statements.	Additional information	on	our	significant	accounting	policies,	including	references	to applicable	footnotes,	is	provided	in	note	1	to	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.

Certain	of	our	accounting	policies,	by	their	nature,	require management	to	make	judgments,	involving	significant	estimates	and assumptions,	about	the	effects	of	matters	that	are	inherently

uncertain.	These	estimates	and	assumptions	are	based	on	information available	as	of	the	date	of	the	consolidated	financial	statements,	and changes	in	this	information	over	time	could	materially	affect	the	amounts of	assets,	liabilities,	equity,	revenue	and	expenses	reported	in subsequent	consolidated	financial	statements.

Based	on	the	sensitivity	of	reported	financial	statement	amounts	to the	underlying	estimates	and	assumptions,	the	relatively	more	significant accounting	policies	applied	by	State	Street	have	been	identified	by management	as	those	associated	with	recurring	fair-value measurements,	other-than-temporary	impairment	of	investment securities,	impairment	of	goodwill	and	other	intangible	assets,	and contingencies.	These	accounting	policies	require	the	most	subjective	or complex	judgments,	and	underlying	estimates	and	assumptions	could	be most	subject	to	revision	as	new	information	becomes	available.	An understanding	of	the	judgments,	estimates	and	assumptions	underlying these	accounting	policies	is	essential	in	order	to	understand	our	reported consolidated	results	of	operations	and	financial	condition.

The	following	is	a	brief	discussion	of	the	above-mentioned	significant accounting	estimates.	Management	has	discussed	these	significant accounting	estimates	with	the	E&A	Committee	of	the	Board.

# Fair-Value	Measurements

We	carry	certain	of	our	financial	assets	and	liabilities	at	fair	value	in our	consolidated	financial	statements	on	a	recurring	basis,	including trading	account	assets,	investment	securities	available	for	sale	and derivative	instruments.

Changes	in	the	fair	value	of	these	financial	assets	and	liabilities	are recorded	either	as	components	of	our	consolidated	statement	of	income, or	as	components	of	other	comprehensive	income	within	shareholders' equity	in	our	consolidated	statement	of	condition.	In	addition	to	those financial	assets	and	liabilities	that	we	carry	at	fair	value	in	our consolidated	financial	statements	on	a	recurring	basis,	we	estimate	the fair	values	of	other	financial	assets	and	liabilities	that	we	carry	at amortized	cost	in	our	consolidated	statement	of	condition,	and	we disclose	these	fair	value	estimates	in	the	notes	to	our	consolidated financial	statements.	We	estimate	the	fair	values	of	these	financial	assets and	liabilities	using	the	definition	of	fair	value	described	below.

As	of	December	31,	2014,	approximately	$103.77	billion	of	our financial	assets	and	approximately	$6.31	billion	of	our	financial	liabilities were	carried	at	fair	value	on	a	recurring	basis,	compared	to	$105.59 billion	and	$6.36	billion,

respectively,	as	of	December	31,	2013.	The	amounts	as	of	 December	31, 2014	represented	approximately	38%	of	our	consolidated	total	assets	and approximately	2%	of	our	consolidated	total	liabilities,	compared	to 43% and	3%,	respectively,	as	of	December	31,	2013.	The	decrease	in	the relative	percentage	of	consolidated	total	assets	as	of	December	31,	2014 compared	to	2013	mainly	reflects	a	decline	in	the	investment	securities portfolio,	associated	with	a	lower	level	of	purchases	in	2014	compared	to 2013,	and	an	increase	in	interest-bearing	deposits	with	banks,	the	result of	the	continued	elevated	level	of	client	deposits.	Additional	information with	respect	to	the	assets	and	liabilities	carried	by	us	at	fair	value	on	a recurring	basis	is	provided	in	note	2	to	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.

GAAP	defines	fair	value	as	the	price	that	would	be	received	to	sell an	asset	or	paid	to	transfer	a	liability	in	the	principal	or	most advantageous	market	for	an	asset	or	liability	in	an	orderly	transaction between	market	participants	on	the	measurement	date.	When	we measure	fair	value	for	our	financial	assets	and	liabilities,	we	consider	the principal	or	the	most	advantageous	market	in	which	we	would	transact; we	also	consider	assumptions	that	market	participants	would	use	when pricing	the	asset	or	liability.	When	possible,	we	look	to	active	and observable	markets	to	measure	the	fair	value	of	identical,	or	similar, financial	assets	and	liabilities.	When	identical	financial	assets	and liabilities	are	not	traded	in	active	markets,	we	look	to	market-observable data	for	similar	assets	and	liabilities.	In	some	instances,	certain	assets and	liabilities	are	not	actively	traded	in	observable	markets;	as	a	result, we	use	alternate	valuation	techniques	to	measure	their	fair	value.

We	categorize	the	financial	assets	and	liabilities	that	we	carry	at	fair value	in	our	consolidated	statement	of	condition	on	a	recurring	basis based	on	GAAP's	prescribed	three-level	valuation	hierarchy.	The hierarchy	gives	the	highest	priority	to	quoted	prices	in	active	markets	for identical	assets	or	liabilities	(level	1)	and	the	lowest	priority	to	valuation methods	using	significant	unobservable	inputs	(level	3).	As	of December	31,	2014,	including	the	effect	of	netting,	we	categorized approximately	10%	of	our	financial	assets	carried	at	fair	value	in	level	1, approximately	85%	of	our	financial	assets	carried	at	fair	value	in	level	2, and	approximately	5%	of	our	financial	assets	carried	at	fair	value	in	level 3	of	the	fair	value	hierarchy.	As	of	December	31,	2013,	including	the effect	of	netting,	we	categorized	less	than	1%	of	our	financial	assets carried	at	fair	value	in	level	1,	approximately	92%	of	our	financial	assets carried	at	fair	value	in	level	2,	and	approximately	7%	of	our	financial assets	carried	at	fair	value	in	level	3	of

the	fair	value	hierarchy.	As	of	December	31,	2014,	on	the	same	basis,	we categorized	approximately	99%	of	our	financial	liabilities	carried	at	fair value	in	level	2,	and	approximately	1%	of	our	financial	liabilities	carried	at fair	value	in	level	3	of	the	fair	value	hierarchy.	As	of	December	31,	2013, on	the	same	basis,	we	categorized	approximately	2%	of	our	financial liabilities	carried	at	fair	value	in	level	1,	approximately	98%	of	our	financial liabilities	carried	at	fair	value	in	level	2,	and	less	than	1%	of	our	financial liabilities	carried	at	fair	value	in	level	3	of	the	fair	value	hierarchy.

The	assets	categorized	in	level	1	were	substantially	composed	of trading	account	assets.	Fair	value	for	these	securities	was	measured	by management	using	unadjusted	quoted	prices	in	active	markets	for identical	securities.

The	assets	categorized	in	level	2	were	composed	of	investment securities	available	for	sale	and	derivative	instruments.	Fair	value	for	the investment	securities	was	measured	by	management	primarily	using information	obtained	from	independent	third	parties.	Information	obtained from	third	parties	is	subject	to	review	by	management	as	part	of	a validation	process.	Management	utilizes	a	process	to	verify	the information	provided,	including	an	understanding	of	underlying assumptions	and	the	level	of	market-participant	information	used	to support	those	assumptions.	In	addition,	management	compares significant	assumptions	used	by	third	parties	to	available	market information.	Such	information	may	include	known	trades	or,	to	the	extent that	trading	activity	is	limited,	comparisons	to	market	research	information pertaining	to	credit	expectations,	execution	prices	and	the	timing	of	cash flows	and,	where	information	is	available,	back-testing.

The	derivative	instruments	categorized	in	level	2	predominantly represented	foreign	exchange	and	interest-rate	contracts	used	in	our trading	activities,	for	which	fair	value	was	measured	by	management using	discounted	cash	flow	techniques,	with	inputs	consisting	of observable	spot	and	forward	points,	as	well	as	observable	interest	rate curves.

The	substantial	majority	of	our	financial	assets	categorized	in	level	3 were	composed	of	asset-backed	and	mortgage-backed	securities available	for	sale.	Level-3	assets	also	included	foreign	exchange derivative	contracts.	The	aggregate	fair	value	of	our	financial	assets	and liabilities	categorized	in	level	3	as	of	December	31,	2014	decreased approximately	27%	compared	to	2013,	primarily	the	result	of	transfers	out of	level	3	and	paydowns	of	asset-backed	and	non-U.S.	debt	securities.

With	respect	to	derivative	instruments,	we	evaluated	the	impact	on valuation	of	the	credit	risk	of

our	counterparties	and	of	our	own	credit.	We	considered	such	factors	as the	market-based	probability	of	default	by	us	and	our	counterparties,	and our	current	and	expected	potential	future	net	exposures	by	remaining maturities,	in	determining	the	appropriate	measurements	of	fair	value. Valuation	adjustments	associated	with	derivative	instruments	were	not significant	to	our	consolidated	financial	performance	in	2014,	2013	or 2012.

# Other-Than-Temporary	Impairment	of	Investment	Securities

Our	portfolio	of	fixed-income	investment	securities	constitutes	a significant	portion	of	the	assets	carried	in	our	consolidated	statement	of condition.	GAAP	requires	the	use	of	expected	future	cash	flows	to evaluate	other-than-temporary	impairment	of	these	investment	securities. The	amount	and	timing	of	these	expected	future	cash	flows	are	significant estimates	used	in	our	evaluation	of	other-than-temporary	impairment.	An other-than-temporary	impairment	is	triggered	if	the	intent	is	to	sell	the security,	the	security	will	more	likely	than	not	have	to	be	sold	before maturity	or	the	amortized	cost	basis	is	not	expected	to	be	recovered. Additional	information	with	respect	to	management's	assessment	of	other- than-temporary	impairment	is	provided	in	note	3	to	the	consolidated financial	statements	included	under	Item	8	of	this	Form	10-K.

Expectations	of	defaults	and	prepayments	are	the	most	significant assumptions	underlying	our	estimates	of	future	cash	flows.	In	determining these	estimates,	management	relies	on	relevant	and	reliable	information, including	but	not	limited	to	deal	structure,	including	optional	and mandatory	calls,	market	interest-rate	curves,	industry	standard	asset- class-specific	prepayment	models,	recent	prepayment	history, independent	credit	ratings,	and	recent	actual	and	projected	credit	losses. Management	considers	this	information	based	on	its	relevance	and	uses its	best	judgment	in	order	to	determine	its	assumptions	for	underlying cash-flow	expectations	and	resulting	estimates.	Management	reviews	its underlying	assumptions	and	develops	expected	future	cash-flow estimates	at	least	quarterly.	Additional	detail	with	respect	to	the	sensitivity of	these	default	and	prepayment	assumptions	is	provided	under "Financial	Condition	-	Investment	Securities"	in	this	Management's Discussion	and	Analysis.

# Impairment	of	Goodwill	and	Other	Intangible	Assets

Goodwill	represents	the	excess	of	the	cost	of	an	acquisition	over	the fair	value	of	the	net	tangible	and	other	intangible	assets	acquired.	Other intangible	assets	represent	purchased	assets	that	can	be	distinguished from	goodwill	because	of	contractual	rights	or	because	the	asset	can	be exchanged	on	its	own	or	in	combination	with	a	related	contract,	asset	or liability.	Goodwill	is	not	amortized,	while	other	intangible	assets	are amortized	over	their	estimated	useful	lives.

Goodwill	is	ultimately	supported	by	revenue	from	our	Investment Servicing	and	Investment	Management	lines	of	business.	A	decline	in earnings	as	a	result	of	a	lack	of	growth,	or	our	inability	to	deliver	cost- effective	services	over	sustained	periods,	could	lead	to	a	perceived impairment	of	goodwill,	which	would	be	evaluated	and,	if	necessary,	be recorded	as	a	write-down	of	the	reported	amount	of	goodwill	through	a charge	to	other	expenses	in	our	consolidated	statement	of	income.

On	an	annual	basis,	or	more	frequently	if	circumstances	arise, management	reviews	goodwill	and	evaluates	events	or	other developments	that	may	indicate	impairment	of	the	carrying	amount.	We perform	this	evaluation	at	the	reporting	unit	level,	which	is	one	level	below our	two	major	lines	of	business.	The	evaluation	methodology	for	potential impairment	is	inherently	complex	and	involves	significant	management judgment	in	the	use	of	estimates	and	assumptions.

We	evaluate	goodwill	for	impairment	using	a	two-step	process.	First, we	compare	the	aggregate	fair	value	of	the	reporting	unit	to	its	carrying amount,	including	goodwill.	If	the	fair	value	exceeds	the	carrying	amount, no	impairment	exists.	If	the	carrying	amount	of	the	reporting	unit	exceeds the	fair	value,	then	we	compare	the	"implied"	fair	value	of	the	reporting unit's	goodwill	to	its	carrying	amount.	If	the	carrying	amount	of	the goodwill	exceeds	the	implied	fair	value,	then	goodwill	impairment	is recognized	by	writing	the	goodwill	down	to	the	implied	fair	value.	The implied	fair	value	of	the	goodwill	is	determined	by	allocating	the	fair	value of	the	reporting	unit	to	all	of	the	assets	and	liabilities	of	that	unit,	as	if	the unit	had	been	acquired	in	a	business	combination	and	the	overall	fair value	of	the	unit	was	the	purchase	price.

To	determine	the	aggregate	fair	value	of	the	reporting	unit	being evaluated	for	goodwill	impairment,	we	use	one	of	two	principal methodologies:	a	market	approach,	based	on	a	comparison	of	the reporting	unit	to	publicly-traded	companies	in	similar	lines	of	business;	or an	income	approach,	based	on	the	value	of	the	cash	flows	that

the	business	can	be	expected	to	generate	in	the	future.

Events	that	may	indicate	impairment	include	significant	or	adverse changes	in	the	business,	economic	or	political	climate;	an	adverse	action or	assessment	by	a	regulator;	unanticipated	competition;	and	a	more- likely-than-not	expectation	that	we	will	sell	or	otherwise	dispose	of	a business	to	which	the	goodwill	or	other	intangible	assets	relate.	Additional information	about	goodwill	and	other	intangible	assets,	including information	by	line	of	business,	is	provided	in	note	5	to	the	consolidated financial	statements	included	under	Item	8	of	this	Form	10-K.

Our	evaluation	of	goodwill	and	other	intangible	assets	indicated	that no	significant	impairment	occurred	in	2014,	2013	or	2012.	Goodwill	and other	intangible	assets	recorded	in	our	consolidated	statement	of condition	as	of	December	31,	2014	totaled	approximately	$5.83	billion and	$2.03	billion,	respectively,	compared	to	$6.04	billion	and	$2.36	billion, respectively,	as	of	December	31,	2013.

# Contingencies

The	significant	estimates	and	judgments	related	with	establishing litigation	reserves	are	discussed	in	note	11	of	the	consolidated	financial statements	included	under	Item	8	of	this	Form	10-K.

# RECENT	ACCOUNTING	DEVELOPMENTS

Information	with	respect	to	recent	accounting	developments	is provided	in	note	1	to	the	consolidated	financial	statements	included	under Item	8	of	this	Form	10-K.

# ITEM	7A.	QUANTITATIVE	AND	QUALITATIVE	DISCLOSURES	ABOUT

# MARKET	RISK

The	information	provided	under	"Financial	Condition	-	Market	Risk

Management"	in	Management's	Discussion	and	Analysis,	included	under

Item	7	of	this	Form	10-K,	is	incorporated	by	reference	herein.

# ITEM	8. 	FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY

Additional	information	about	restrictions	on	the	transfer	of	funds from	State	Street	Bank	to	the	parent	company	is	provided	under	Item	5, and	in	"Financial	Condition	-	Capital"	in	Management's	Discussion	and Analysis	included	under	Item	7,	of	this	Form	10-K.

# Report	of	Independent	Registered	Public	Accounting	Firm

The	Shareholders	and	Board	of	Directors	of

We	have	audited	the	accompanying	consolidated	statement	of	condition	of	State	Street	Corporation	(the	"Corporation")	as	of	 December	31,	2014	and 2013,	and	the	related	consolidated	statements	of	income,	comprehensive	income,	changes	in	shareholders'	equity,	and	cash	flows	for	each	of	the	three years	in	the	period	ended	December	31,	2014.	These	financial	statements	are	the	responsibility	of	the	Corporation's	management.	Our	responsibility	is	to express	an	opinion	on	these	financial	statements	based	on	our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards require	that	we	plan	and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An audit	includes	examining,	on	a	test	basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing the	accounting	principles	used	and	significant	estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

In	our	opinion,	the	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	consolidated	financial	position	of	State	Street Corporation	at	December	31,	2014	and	2013,	and	the	consolidated	results	of	its	operations	and	its	cash	flows	for	each	of	the	three	years	in	the	period ended	December	31,	2014,	in	conformity	with	U.S.	generally	accepted	accounting	principles.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	State	Street Corporation's	internal	control	over	financial	reporting	as	of	December	31,	2014,	based	on	criteria	established	in	Internal	Control-Integrated	Framework issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(2013	framework)	and	our	report	dated	February	20,	2015	expressed an	unqualified	opinion	thereon.

/s/	Ernst	&	Young	LLP

Boston,	Massachusetts

# CONSOLIDATED	FINANCIAL	STATEMENTS

# Consolidated	Statement	of	Income

| Years	Ended	December	31, | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| (Dollars\tin\tmillions,\texcept\tper\tshare\tamounts) |  |  |  |
| Fee\trevenue: |  |  |  |
| Servicing\tfees | $5,129 | $4,819 | $4,414 |
| Management\tfees | 1,207 | 1,106 | 993 |
| Trading\tservices | 1,084 | 1,094 | 1,036 |
| Securities\tfinance | 437 | 359 | 405 |
| Processing\tfees\tand\tother | 174 | 212 | 240 |
| Total\tfee\trevenue | 8,031 | 7,590 | 7,088 |
| Net\tinterest\trevenue: |  |  |  |
| Interest\trevenue | 2,652 | 2,714 | 3,014 |
| Interest\texpense | 392 | 411 | 476 |
| Net\tinterest\trevenue | 2,260 | 2,303 | 2,538 |
| Gains\t(losses)\trelated\tto\tinvestment\tsecurities,\tnet: |  |  |  |
| Net\tgains\t(losses)\tfrom\tsales\tof\tavailable-for-sale\tsecurities | 15 | 14 | 55 |
| Losses\tfrom\tother-than-temporary\timpairment | (1) | (21) | (53) |
| Losses\treclassified\t(from)\tto\tother\tcomprehensive\tincome | (10) | (2) | 21 |
| Gains\t(losses)\trelated\tto\tinvestment\tsecurities,\tnet | 4 | (9) | 23 |
| Total\trevenue | 10,295 | 9,884 | 9,649 |
| Provision\tfor\tloan\tlosses | 10 | 6 | (3) |
| Expenses: |  |  |  |
| Compensation\tand\temployee\tbenefits | 4,060 | 3,800 | 3,837 |
| Information\tsystems\tand\tcommunications | 976 | 935 | 844 |
| Transaction\tprocessing\tservices | 784 | 733 | 702 |
| Occupancy | 461 | 467 | 470 |
| Claims\tresolution | — | — | (362) |
| Acquisition\tand\trestructuring\tcosts | 133 | 104 | 225 |
| Professional\tservices | 440 | 392 | 381 |
| Amortization\tof\tother\tintangible\tassets | 222 | 214 | 198 |
| Other | 751 | 547 | 591 |
| Total\texpenses | 7,827 | 7,192 | 6,886 |
| Income\tbefore\tincome\ttax\texpense | 2,458 | 2,686 | 2,766 |
| Income\ttax\texpense | 421 | 550 | 705 |
| Net\tincome | $2,037 | $2,136 | $2,061 |
| Net\tincome\tavailable\tto\tcommon\tshareholders | $1,973 | $2,102 | $2,019 |
| Earnings\tper\tcommon\tshare: |  |  |  |
| Basic | $4.65 | $4.71 | $4.25 |
| Diluted | 4.57 | 4.62 | $4.20 |
| Average\tcommon\tshares\toutstanding\t(in\tthousands): |  |  |  |
| Basic | 424,223 | 446,245 | 474,458 |
| Diluted | 432,007 | 455,155 | 481,129 |
| Cash\tdividends\tdeclared\tper\tcommon\tshare | $1.16 | $1.04 | $.96 |

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

# Consolidated	Statement	Of	Comprehensive	Income

| Years	Ended	December	31, | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| (In\tmillions) |  |  |  |
| Net\tincome | $2,037 | $2,136 | $2,061 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\trelated\ttaxes: |  |  |  |
| Foreign\tcurrency\ttranslation,\tnet\tof\trelated\ttaxes\tof\t($94),\t($20)\tand\t$45,\trespectively | (889) | 95 | 134 |
| Net\tunrealized\tgains\t(losses)\ton\tavailable-for-sale\tsecurities,\tnet\tof\treclassification\tadjustment\tand\tnet\tof\trelated\ntaxes\tof\t($269),\t($521)\tand\t$469,\trespectively | 437 | (826) | 798 |
| Net\tunrealized\tgains\t(losses)\ton\tavailable-for-sale\tsecurities\tdesignated\tin\tfair\tvalue\thedges,\tnet\tof\trelated\ttaxes\tof\n($15),\t$56\tand\t$17,\trespectively | (24) | 86 | 27 |
| Other-than-temporary\timpairment\ton\theld-to-maturity\tsecurities\trelated\tto\tfactors\tother\tthan\tcredit,\tnet\tof\trelated\ntaxes\tof\t$12,\t$11\tand\t$13,\trespectively | 18 | 18 | 21 |
| Net\tunrealized\tgains\t(losses)\ton\tcash\tflow\thedges,\tnet\tof\trelated\ttaxes\tof\t$74,\t$62\tand\t$52,\trespectively | 115 | 92 | 74 |
| Net\tunrealized\tgains\t(losses)\ton\tretirement\tplans,\tnet\tof\trelated\ttaxes\tof\t($50),\t$71\tand\t($36),\trespectively | (69) | 80 | (35) |
| Other\tcomprehensive\tincome\t(loss) | (412) | (455) | 1,019 |
| Total\tcomprehensive\tincome | $1,625 | $1,681 | $3,080 |

# Consolidated	Statement	Of	Condition

| As	of	December	31, | 2014 | 2013 |
| :--- | :--- | :--- |
| (Dollars\tin\tmillions,\texcept\tper\tshare\tamounts) |  |  |
| Assets: |  |  |
| Cash\tand\tdue\tfrom\tbanks | $1,855 | $3,220 |
| Interest-bearing\tdeposits\twith\tbanks | 93,523 | 64,257 |
| Securities\tpurchased\tunder\tresale\tagreements | 2,390 | 6,230 |
| Trading\taccount\tassets | 924 | 843 |
| Investment\tsecurities\tavailable\tfor\tsale | 94,913 | 99,174 |
| Investment\tsecurities\theld\tto\tmaturity\t(fair\tvalue\tof\t$17,842\tand\t$17,560) | 17,723 | 17,740 |
| Loans\tand\tleases\t(less\tallowance\tfor\tlosses\tof\t$38\tand\t$28) | 18,161 | 13,458 |
| Premises\tand\tequipment\t(net\tof\taccumulated\tdepreciation\tof\t$4,599\tand\t$4,417) | 1,937 | 1,860 |
| Accrued\tinterest\tand\tfees\treceivable | 2,242 | 2,123 |
| Goodwill | 5,826 | 6,036 |
| Other\tintangible\tassets | 2,025 | 2,360 |
| Other\tassets | 32,600 | 25,990 |
| Total\tassets | $274,119 | $243,291 |
| Liabilities: |  |  |
| Deposits: |  |  |
| Noninterest-bearing | $70,490 | $65,614 |
| Interest-bearing—U.S. | 33,012 | 13,392 |
| Interest-bearing—non-U.S. | 105,538 | 103,262 |
| Total\tdeposits | 209,040 | 182,268 |
| Securities\tsold\tunder\trepurchase\tagreements | 8,925 | 7,953 |
| Federal\tfunds\tpurchased | 21 | 19 |
| Other\tshort-term\tborrowings | 4,381 | 3,780 |
| Accrued\texpenses\tand\tother\tliabilities | 20,237 | 19,194 |
| Long-term\tdebt | 10,042 | 9,699 |
| Total\tliabilities | 252,646 | 222,913 |
| Commitments,\tguarantees\tand\tcontingencies\t(notes\t10\tand\t11) |  |  |
| Shareholders'\tequity: |  |  |
| Preferred\tstock,\tno\tpar,\t3,500,000\tshares\tauthorized: |  |  |
| Series\tC,\t5,000\tshares\tissued\tand\toutstanding | 491 | 491 |
| Series\tD,\t7,500\tshares\tissued\tand\toutstanding | 742 | — |
| Series\tE,\t7,500\tshares\tissued\tand\toutstanding | 728 | — |
| Common\tstock,\t$1\tpar,\t750,000,000\tshares\tauthorized: |  |  |
| 503,880,120\tand\t503,882,841\tshares\tissued | 504 | 504 |
| Surplus | 9,791 | 9,776 |
| Retained\tearnings | 14,882 | 13,395 |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | (507) | (95) |
| Treasury\tstock,\tat\tcost\t(88,684,969\tand\t69,754,255\tshares) | (5,158) | (3,693) |
| Total\tshareholders'\tequity | 21,473 | 20,378 |
| Total\tliabilities\tand\tshareholders'\tequity | $274,119 | $243,291 |

# Consolidated	Statement	Of	Changes	In	Shareholders'	Equity

|  |  |  |  |  |  | Accumulated |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | COMMON\tSTOCK | COMMON\tSTOCK |  |  | Other | TREASURY\tSTOCK | TREASURY\tSTOCK |  |
| (Dollars\tin\tmillions,\texcept\tper\tshare\tamounts,\nshares\tin\tthousands) | PREFERRED\nSTOCK | Shares | Amount | Surplus | Retained\nEarnings | Comprehensive\nIncome\t(Loss) | Shares | Amount | Total |
| Balance\tas\tof\tDecember\t31,\t2011 | $500 | 503,966 | $504 | $9,557 | $10,176 | $(659) | 16,542 | $(680) | $19,398 |
| Net\tincome |  |  |  |  | 2,061 |  |  |  | 2,061 |
| Other\tcomprehensive\tincome |  |  |  |  |  | 1,019 |  |  | 1,019 |
| Redemption\tof\tpreferred\tstock | (500) |  |  |  |  |  |  |  | (500) |
| Preferred\tstock\tissued | 488 |  |  |  |  |  |  |  | 488 |
| Accretion\tof\tissuance\tcosts | 1 |  |  |  | (1) |  |  |  | — |
| Cash\tdividends\tdeclared: |  |  |  |  |  |  |  |  |  |
| \t\tCommon\tstock\t-\t$.96\tper\tshare |  |  |  |  | (456) |  |  |  | (456) |
| \t\tPreferred\tstock |  |  |  |  | (29) |  |  |  | (29) |
| Common\tstock\tacquired |  |  |  |  |  |  | 33,408 | (1,440) | (1,440) |
| Common\tstock\tawards\tand\toptions\texercised,\nincluding\trelated\ttaxes\tof\t$(6) |  | (66) |  | 110 |  |  | (4,693) | 217 | 327 |
| Other |  |  |  |  |  |  | (19) | 1 | 1 |
| Balance\tas\tof\tDecember\t31,\t2012 | 489 | 503,900 | 504 | 9,667 | 11,751 | 360 | 45,238 | (1,902) | 20,869 |
| Net\tincome |  |  |  |  | 2,136 |  |  |  | 2,136 |
| Other\tcomprehensive\tloss |  |  |  |  |  | (455) |  |  | (455) |
| Accretion\tof\tissuance\tcosts | 2 |  |  |  | (2) |  |  |  | — |
| Cash\tdividends\tdeclared: |  |  |  |  |  |  |  |  |  |
| \t\tCommon\tstock\t-\t$1.04\tper\tshare |  |  |  |  | (463) |  |  |  | (463) |
| \t\tPreferred\tstock |  |  |  |  | (26) |  |  |  | (26) |
| Common\tstock\tacquired |  |  |  |  |  |  | 31,237 | (2,040) | (2,040) |
| Common\tstock\tawards\tand\toptions\texercised,\nincluding\tincome\ttax\tbenefit\tof\t$51 |  | (17) |  | 113 |  |  | (6,709) | 249 | 362 |
| Other |  |  |  | (4) | (1) |  | (12) |  | (5) |
| Balance\tas\tof\tDecember\t31,\t2013 | 491 | 503,883 | 504 | 9,776 | 13,395 | (95) | 69,754 | (3,693) | 20,378 |
| Net\tincome |  |  |  |  | 2,037 |  |  |  | 2,037 |
| Other\tcomprehensive\tloss |  |  |  |  |  | (412) |  |  | (412) |
| Preferred\tstock\tissued | 1,470 |  |  |  |  |  |  |  | 1,470 |
| Cash\tdividends\tdeclared: |  |  |  |  |  |  |  |  |  |
| \t\tCommon\tstock\t-\t$1.16\tper\tshare |  |  |  |  | (490) |  |  |  | (490) |
| \t\tPreferred\tstock |  |  |  |  | (61) |  |  |  | (61) |
| Common\tstock\tacquired |  |  |  |  |  |  | 23,749 | (1,650) | (1,650) |
| Common\tstock\tawards\tand\toptions\texercised,\nincluding\tincome\ttax\tbenefit\tof\t$72 |  | (3) |  | 17 |  |  | (4,805) | 185 | 202 |
| Other |  |  |  | (2) | 1 |  | (13) |  | (1) |
| Balance\tas\tof\tDecember\t31,\t2014 | $1,961 | 503,880 | $504 | $9,791 | $14,882 | $(507) | 88,685 | $(5,158) | $21,473 |

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

# Consolidated	Statement	Of	Cash	Flows

| Years	Ended	December	31, | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| (In\tmillions) |  |  |  |
| Operating\tActivities: |  |  |  |
| Net\tincome | $2,037 | $2,136 | $2,061 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\t(used\tin)\tprovided\tby\toperating\tactivities: |  |  |  |
| Deferred\tincome\ttax\texpense | 79 | 62 | 231 |
| Amortization\tof\tother\tintangible\tassets | 222 | 214 | 198 |
| Other\tnon-cash\tadjustments\tfor\tdepreciation,\tamortization\tand\taccretion,\tnet | 477 | 461 | 291 |
| (Gains)\tlosses\trelated\tto\tinvestment\tsecurities,\tnet | (4) | 9 | (23) |
| Change\tin\ttrading\taccount\tassets,\tnet | (81) | (206) | 70 |
| Change\tin\taccrued\tinterest\tand\tfees\treceivable,\tnet | (119) | (153) | (148) |
| Change\tin\tcollateral\tdeposits,\tnet | (4,362) | (4,046) | (1,443) |
| Change\tin\tunrealized\t(gains)\tlosses\ton\tforeign\texchange\tderivatives,\tnet | (2,042) | (128) | 982 |
| Change\tin\tother\tassets,\tnet | 3,612 | (819) | (360) |
| Change\tin\taccrued\texpenses\tand\tother\tliabilities,\tnet | (669) | 113 | (250) |
| Other,\tnet | 289 | 333 | 324 |
| Net\tcash\t(used\tin)\tprovided\tby\toperating\tactivities | (561) | (2,024) | 1,933 |
| Investing\tActivities: |  |  |  |
| Net\t(increase)\tdecrease\tin\tinterest-bearing\tdeposits\twith\tbanks | (29,266) | (13,494) | 8,123 |
| Net\tdecrease\t(increase)\tin\tsecurities\tpurchased\tunder\tresale\tagreements | 3,840 | (1,214) | 2,029 |
| Proceeds\tfrom\tsales\tof\tavailable-for-sale\tsecurities | 9,766 | 10,261 | 5,399 |
| Proceeds\tfrom\tmaturities\tof\tavailable-for-sale\tsecurities | 36,120 | 37,529 | 44,375 |
| Purchases\tof\tavailable-for-sale\tsecurities | (43,146) | (39,097) | (60,812) |
| Proceeds\tfrom\tmaturities\tof\theld-to-maturity\tsecurities | 3,217 | 2,080 | 3,176 |
| Purchases\tof\theld-to-maturity\tsecurities | (3,778) | (8,415) | (3,577) |
| Net\tincrease\tin\tloans | (4,785) | (1,214) | (2,303) |
| Business\tacquisitions,\tnet\tof\tcash\tacquired | — | — | (511) |
| Purchases\tof\tequity\tinvestments\tand\tother\tlong-term\tassets | (182) | (272) | (251) |
| Purchases\tof\tpremises\tand\tequipment | (427) | (388) | (355) |
| Other,\tnet | 149 | 139 | 116 |
| Net\tcash\tused\tin\tinvesting\tactivities | (28,492) | (14,085) | (4,591) |
| Financing\tActivities: |  |  |  |
| Net\tincrease\t(decrease)\tin\ttime\tdeposits | 54,404 | (14,507) | 7,627 |
| Net\t(decrease)\tincrease\tin\tall\tother\tdeposits | (27,632) | 32,594 | (733) |
| Net\tincrease\t(decrease)\tin\tshort-term\tborrowings | 1,575 | (1,155) | (1,587) |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt,\tnet\tof\tissuance\tcosts | 994 | 2,485 | 998 |
| Payments\tfor\tlong-term\tdebt\tand\tobligations\tunder\tcapital\tleases | (788) | (134) | (1,781) |
| Proceeds\tfrom\tissuance\tof\tpreferred\tstock | 1,470 | — | 488 |
| Proceeds\tfrom\texercises\tof\tcommon\tstock\toptions | 14 | 121 | 53 |
| Purchases\tof\tcommon\tstock | (1,650) | (2,040) | (1,440) |
| Excess\ttax\tbenefit\t(expense)\trelated\tto\tstock-based\tcompensation | 72 | 50 | (6) |
| Repurchases\tof\tcommon\tstock\tfor\temployee\ttax\twithholding | (232) | (189) | (101) |
| Payments\tfor\tcash\tdividends | (539) | (486) | (463) |
| Net\tcash\tprovided\tby\tfinancing\tactivities | 27,688 | 16,739 | 3,055 |
| Net\t(decrease)\tincrease | (1,365) | 630 | 397 |
| Cash\tand\tdue\tfrom\tbanks\tat\tbeginning\tof\tperiod | 3,220 | 2,590 | 2,193 |
| Cash\tand\tdue\tfrom\tbanks\tat\tend\tof\tperiod | $1,855 | $3,220 | $2,590 |
| Supplemental\tdisclosure: |  |  |  |
| Interest\tpaid | $398 | $416 | $516 |
| Income\ttaxes\tpaid\t(refunded),\tnet | 358 | 406 | (186) |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# Note	1.				Summary	of	Significant	Accounting	Policies

The	accounting	and	financial	reporting	policies	of	State	Street Corporation	conform	to	U.S.	generally	accepted	accounting	principles, referred	to	as	GAAP.	State	Street	Corporation,	the	parent	company,	is	a financial	holding	company	headquartered	in	Boston,	Massachusetts. Unless	otherwise	indicated	or	unless	the	context	requires	otherwise,	all references	in	these	notes	to	consolidated	financial	statements	to	"State Street,"	"we,"	"us,"	"our"	or	similar	references	mean	State	Street Corporation	and	its	subsidiaries	on	a	consolidated	basis.	Our	principal banking	subsidiary	is	State	Street	Bank	and	Trust	Company,	or	State Street	Bank.

# Basis	of	Presentation:

Our	consolidated	financial	statements	include	the	accounts	of	the parent	company	and	its	majority-	and	wholly-owned	and	otherwise controlled	subsidiaries,	including	State	Street	Bank.	All	material	inter- company	transactions	and	balances	have	been	eliminated.	Certain previously	reported	amounts	have	been	reclassified	to	conform	to	current- year	presentation.

We	consolidate	subsidiaries	in	which	we	exercise	control. Investments	in	unconsolidated

subsidiaries,	recorded	in	other	assets,	generally	are	accounted	for	under the	equity	method	of	accounting	if	we	have	the	ability	to	exercise significant	influence	over	the	operations	of	the	investee.	For	investments accounted	for	under	the	equity	method,	our	share	of	income	or	loss	is recorded	in	processing	fees	and	other	revenue	in	our	consolidated statement	of	income.	Investments	not	meeting	the	criteria	for	equity- method	treatment	are	accounted	for	under	the	cost	method	of	accounting.

The	preparation	of	consolidated	financial	statements	in	conformity with	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.

# Foreign	Currency	Translation:

The	assets	and	liabilities	of	our	operations	with	functional	currencies other	than	the	U.S.	dollar	are	translated	at	month-end	exchange	rates, and	revenue	and	expenses	are	translated	at	rates	that	approximate average	monthly	exchange	rates.	Gains	or	losses	from	the	translation	of the	net	assets	of	subsidiaries	with	functional	currencies	other	than	the U.S.	dollar,	net	of	related	taxes,	are	recorded	in	accumulated	other comprehensive	income,	or	AOCI,	a	component	of	shareholders'	equity.

# Cash	and	Cash	Equivalents:

For	purposes	of	the	consolidated	statement	of	cash	flows,	cash	and cash	equivalents	are	defined	as	cash	and	due	from	banks.

# Interest-Bearing	Deposits	with	Banks:

Interest-bearing	deposits	with	banks	generally	consist	of	highly liquid,	short-term	investments	maintained	at	the	Federal	Reserve	Bank and	other	non-U.S.	central	banks	with	original	maturities	at	the	time	of purchase	of	one	month	or	less.

# Securities	Purchased	Under	Resale	Agreements	and	Securities	Sold Under	Repurchase	Agreements:

Securities	purchased	under	resale	agreements	and	sold	under repurchase	agreements	are	treated	as	collateralized	financing transactions,	and	are	recorded	in	our	consolidated	statement	of	condition at	the	amounts	at	which	the	securities	will	be	subsequently	resold	or repurchased,	plus	accrued	interest.	Our	policy	is	to	take	possession	or control	of	securities	underlying	resale	agreements	either

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS	(Continued)

directly	or	through	agent	banks,	allowing	borrowers	the	right	of	collateral substitution	and/or	short-notice	termination.	We	revalue	these	securities daily	to	determine	if	additional	collateral	is	necessary	from	the	borrower	to protect	us	against	credit	exposure.	We	can	use	these	securities	as collateral	for	repurchase	agreements.

For	securities	sold	under	repurchase	agreements	collateralized	by our	investment	securities	portfolio,	the	dollar	value	of	the	securities remains	in	investment	securities	in	our	consolidated	statement	of condition.	Where	a	master	netting	agreement	exists	or	both	parties	are members	of	a	common	clearing	organization,	resale	and	repurchase agreements	with	the	same	counterparty	or	clearing	house	and	maturity date	are	recorded	on	a	net	basis.

# Fee	and	Net	Interest	Revenue:

Fees	from	investment	servicing,	investment	management,	securities finance,	trading	services	and	certain	types	of	processing	fees	and	other revenue	are	recorded	in	our	consolidated	statement	of	income	based	on estimates	or	specific	contractual	terms,	including	mutually	agreed changes	to	terms,	as	transactions	occur	or	services	are	rendered, provided	that	persuasive	evidence	exists,	the	price	to	the	client	is	fixed	or determinable	and	collectibility	is	reasonably	assured.	Amounts	accrued	at period-end	are	recorded	in	accrued	interest	and	fees	receivable	in	our consolidated	statement	of	condition.	Performance	fees	generated	by	our investment	management	activities	are	recorded	when	earned,	based	on predetermined	benchmarks	associated	with	the	applicable	fund's performance.

Interest	revenue	on	interest-earning	assets	and	interest	expense	on interest-bearing	liabilities	are	recorded	in	our	consolidated	statement	of income	as	components	of	net	interest	revenue,	and	are	generally	based on	the	effective	yield	of	the	related	financial	asset	or	liability.

In	February	2015,	the	FASB	issued	an	amendment	to	GAAP	that updates	the	considerations	on	whether	an	entity	should	consolidate certain	legal	entities.	All	legal	entities	are	subject	to	reevaluation	under the	revised	consolidation	model.	The	amendment	is	effective	for	State Street	beginning	on	January	1,	2016,	and	may	be	applied	retrospectively or	via	a	modified	retrospective	approach.	Early	adoption	is	permitted.	We are	currently	assessing	the	potential	impact	of	this	amendment	on	our consolidated	financial	statements.

In	November	2014,	the	FASB	issued	an	amendment	to	GAAP	that allows,	but	does	not

require,	an	acquired	entity	to	apply	pushdown	accounting	in	its	stand- alone	financial	statements	upon	acquisition	by	a	new	parent.	The	decision to	apply	pushdown	accounting	may	be	made	independently	for	each change-in-control	event.	The	new	guidance	was	effective	on	November 18,	2014	and	can	be	applied	retrospectively.	We	will	assess	the	need	to apply	pushdown	accounting	for	future	acquisitions	on	an	individual	basis, when	necessary.

In	November	2014,	the	FASB	issued	an	amendment	to	GAAP	that requires	entities	that	issue	or	invest	in	hybrid	instruments	in	the	form	of	a share	to	determine	the	nature	of	the	host	contract	by	considering	all stated	and	implied	substantive	terms	and	features	of	the	hybrid	financial instrument,	including	the	potential	outcomes	of	the	hybrid	financial instrument.	Classifying	the	host	contract	as	equity	or	debt	may	result	in substantially	different	answers	on	whether	certain	features	must	be accounted	for	separately.	The	new	guidance	will	require	a	modified retrospective	application	to	all	existing	hybrid	financial	instruments	in	the form	of	a	share,	with	the	option	of	retrospective	application.	The amendment	is	effective	for	State	Street,	for	the	annual	and	interim	period beginning	on	January	1,	2016.	We	have	not	issued	and	we	do	not currently	hold	any	hybrid	instruments	within	the	scope	of	this	guidance. We	will	assess	its	impact	in	conjunction	with	new	transactions,	as applicable.

In	August	2014,	the	FASB	issued	an	amendment	to	GAAP	that requires	management	to	evaluate	whether	there	is	substantial	doubt about	the	entity's	ability	to	continue	as	a	going	concern	and,	if	so, disclose	that	fact.	The	amendment	is	effective	for	our	annual	consolidated financial	statements	as	of	December	31,	2016	and	interim	periods thereafter.	Our	adoption	of	this	amendment	will	not	have	a	material	effect on	our	consolidated	financial	statements.

In	June	2014,	the	FASB	issued	an	amendment	to	GAAP	for	"repo- to-maturity"	transactions	and	repurchase	agreements	executed	as repurchase	financings.	The	amendment	requires	enhanced	disclosure	for repurchase	agreements	and	securities	lending	transactions	accounted	for as	secured	borrowings	and	for	certain	transfers	of	financial	assets.	The amendment	is	effective	for	State	Street	beginning	on	January	1,	2015. Our	adoption	of	this	amendment	will	not	have	a	material	effect	on	our consolidated	financial	statements.

In	May	2014,	the	FASB	issued	an	amendment	to	GAAP	that provides	for	a	single	comprehensive	model	to	be	applied	in	the accounting	for	revenue	arising	from	contracts	with	clients.	In	applying	this

model,	an	entity	would	recognize	revenue	that	represents	the	transfer	of promised	goods	or	services	to	clients	in	an	amount	that	reflects	the consideration	to	which	the	entity	expects	to	be	entitled	in	exchange	for those	goods	or	services.	The	amendment	supersedes	most	current GAAP	related	to	revenue	recognition,	including	industry-specific guidance.	The	amendment	is	effective	for	State	Street	beginning	on January	1,	2017,	and	must	be	applied	retrospectively.	Early	adoption	is prohibited.	We	are	currently	assessing	the	potential	impact	of	this amendment	on	our	consolidated	financial	statements.

In	April	2014,	the	FASB	issued	an	amendment	to	GAAP	that	revises the	criteria	for	the	treatment	and	disclosure	of	discontinued	operations. The	amendment	allows	entities	to	have	significant	continuing	involvement and	continuing	cash	flows	with	the	discontinued	operation,	but	requires additional	disclosure	for	discontinued	operations	and	disclosure	for disposals	deemed	to	be	material	that	do	not	meet	the	definition	of	a discontinued	operation.	The	presentation	and	disclosure	requirements	are effective	for	State	Street	beginning	on	January	1,	2015,	and	are	required to	be	applied	prospectively	to	discontinued	operations	occurring	after	that date.	We	did	not	have	any	transactions	that	qualified	as	discontinued operations	during	the	periods	presented	in	our	consolidated	financial statements.

In	January	2014,	the	FASB	issued	an	amendment	to	GAAP	that allows	an	investor	in	an	affordable	housing	project,	if	the	project	meets certain	defined	conditions,	to	amortize	the	cost	of	their	investment	in proportion	to	the	tax	credits	and	other	tax	benefits	they	receive,	and reflect	it	as	part	of	income	tax	expense	rather	than	as	revenue	from operations.	The	amendment	is	effective,	for	State	Street,	for	interim	and annual	periods	beginning	January	1,	2015,	and	will	not	have	a	material effect	on	our	consolidated	financial	statements.

# Other	Significant	Policies:

The	following	table	identifies	our	other	significant	accounting	policies and	the	note	and	page	where	a	detailed	description	of	each	policy	can	be found.

| Fair	Value | Note | 2 | Page | 130 |
| :--- | :--- | :--- | :--- | :--- |
| Investment\tSecurities | Note | 3 | Page | 142 |
| Loans\tand\tLeases | Note | 4 | Page | 150 |
| Goodwill\tand\tOther\tIntangible\tAssets | Note | 5 | Page | 154 |
| Contingencies | Note | 11 | Page | 160 |
| Variable\tInterest\tEntities | Note | 12 | Page | 162 |
| Equity-Based\tCompensation | Note | 14 | Page | 168 |
| Regulatory\tCapital | Note | 15 | Page | 170 |
| Derivative\tFinancial\tInstruments | Note | 16 | Page | 173 |
| Income\tTaxes | Note | 22 | Page | 185 |
| Earnings\tPer\tCommon\tShare | Note | 23 | Page | 187 |

We	carry	trading	account	assets,	investment	securities	available	for sale	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	accumulated	other	comprehensive	income,	or	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	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	GAAP.	We	categorize	the	financial	assets and	liabilities	that	we	carry	at	fair	value	based	on	a	prescribed	three-level valuation	hierarchy.	The	hierarchy	gives	the	highest	priority	to	quoted prices	in	active	markets	for	identical	assets	or	liabilities	(level	1)	and	the lowest	priority	to	valuation	methods	using	significant	unobservable	inputs (level	3).	If	the	inputs	used	to	measure	a	financial	asset	or	liability	cross different	levels	of	the	hierarchy,	categorization	is	based	on	the	lowest- level	input	that	is	significant	to	the	fair-value	measurement.

Management's	assessment	of	the	significance	of	a	particular	input	to	the overall	fair-value	measurement	of	a	financial	asset	or	liability	requires judgment,	and	considers	factors	specific	to	that	asset	or	liability.	The	three levels	of	the	valuation	hierarchy	are	described	below.

Level	1.	Financial	assets	and	liabilities	with	values	based	on unadjusted	quoted	prices	for	identical	assets	or	liabilities	in	an	active market.	Our	level-1	financial	assets	and	liabilities	primarily	include positions	in	U.S.	government	securities	and	highly	liquid	U.S.	and	non- U.S.	government	fixed-income	securities	carried	in	trading	account assets.	We	may	carry	U.S.	government	securities	in	our	available-for-sale portfolio	in	connection	with	our	asset-and-liability	management	activities. Our	level-1	financial	assets	also	include	active	exchange-traded	equity securities	and	non-cash	collateral	received	from	counterparties	in connection	with	our	enhanced	custody	business.

Level	2.	Financial	assets	and	liabilities	with	values	based	on	quoted prices	for	similar	assets	and	liabilities	in	active	markets,	and	inputs	that are	observable	for	the	asset	or	liability,	either	directly	or	indirectly,	for substantially	the	full	term	of	the	asset	or	liability.	Level-2	inputs	include the	following:

•Quoted	prices	for	similar	assets	or	liabilities	in	active	markets;

•Quoted	prices	for	identical	or	similar	assets	or	liabilities	in	non- active	markets;

•Pricing	models	whose	inputs	are	observable	for	substantially	the full	term	of	the	asset	or	liability;	and

•Pricing	models	whose	inputs	are	derived	principally	from,	or corroborated	by,	observable	market	information	through correlation	or	other	means	for	substantially	the	full	term	of	the asset	or	liability.

Our	level-2	financial	assets	and	liabilities	primarily	include	non-U.S. debt	securities	carried	in	trading	account	assets	and	various	types	of fixed-income	investment	securities	available-for-sale,	as	well	as	various types	of	foreign	exchange	and	interest-rate	derivative	instruments.

Fair	value	for	our	investment	securities	available-for-sale categorized	in	level	2	is	measured	primarily	using	information	obtained from	independent	third	parties.	This	third-party	information	is	subject	to review	by	management	as	part	of	a	validation	process,	which	includes obtaining	an	understanding	of	the	underlying	assumptions	and	the	level	of market	participant	information	used	to	support	those	assumptions.	In addition,	management	compares	significant	assumptions	used	by	third parties	to	available	market	information.	Such	information	may	include known	trades	or,	to	the	extent	that	trading	activity	is	limited,	comparisons to	market	research	information	pertaining	to	credit	expectations,	execution prices	and	the	timing	of	cash	flows,	and	where	information	is	available, back-testing.

Derivative	instruments	categorized	in	level	2	predominantly represent	foreign	exchange	contracts	used	in	our	trading	activities,	for which	fair	value	is	measured	using	discounted	cash-flow	techniques,	with inputs	consisting	of	observable	spot	and	forward	points,	as	well	as observable	interest-rate	curves.	With	respect	to	derivative	instruments,	we evaluate	the	impact	on	valuation	of	the	credit	risk	of	our	counterparties and	our	own	credit	risk.	We	consider	factors	such	as	the	likelihood	of default	by	us	and	our	counterparties,	our	current	and	potential	future	net exposures	and	remaining	maturities	in	determining	the	fair	value. Valuation	adjustments	associated	with	derivative	instruments	were	not material	to	those	instruments	for	the	years	ended	December	31,	2014, 2013	or	2012.

Level	3.	Financial	assets	and	liabilities	with	values	based	on	prices or	valuation	techniques	that	require	inputs	that	are	both	unobservable	in the	market	and	significant	to	the	overall	measurement	of	fair	value.	These inputs	reflect	management's	judgment	about	the	assumptions	that	a market	participant	would	use	in	pricing	the	financial	asset	or	liability,	and are	based	on	the	best	available	information,	some	of	which	is	internally developed.	The	following	provides	a	more	detailed	discussion	of	our financial	assets	and	liabilities	that	we	may	categorize	in	level	3	and	the related	valuation	methodology.

•The	fair	value	of	our	investment	securities	categorized	in	level	3 is	measured	using	information	obtained	from	third-party	sources, typically	non-binding	broker	or	dealer	quotes,	or	through	the	use of	internally-developed	pricing	models.	Management	has evaluated	its	methodologies	used	to	measure	fair	value,	but	has considered	the	level	of	observable	market	information	to	be insufficient	to	categorize	the	securities	in	level	2.

•The	fair	value	of	foreign	exchange	contracts,	primarily	options,	is measured	using	an	option-pricing	model.	Because	of	a	limited number	of	observable	transactions,	certain	model	inputs	are	not observable,	such	as	implied	volatility	surface,	but	are	derived from	observable	market	information.

•The	fair	value	of	certain	interest-rate	caps	with	long-dated maturities	is	measured	using	a	matrix-pricing	approach. Observable	market	prices	are	not	available	for	these	derivatives, so	extrapolation	is	necessary	to	value	these	instruments,	since they	have	a	strike	and/or	maturity	outside	of	the	matrix.

Our	level-3	financial	assets	and	liabilities	are	similar	in	structure	and profile	to	our	level-1	and	level-2	financial	instruments,	but	they	trade	in less	liquid	markets,	and	the	measurement	of	their	fair	value	is	inherently more	difficult.	As	of	December	31,	2014,	on	a	gross	basis,	we categorized	in	level	3	approximately	5%	of	our	financial	assets	carried	at fair	value	on	a	recurring	basis.	As	of	the	same	date	and	on	the	same basis,	the	percentage	of	our	financial	liabilities	categorized	in	level	3	to our	financial	liabilities	carried	at	fair	value	on	a	recurring	basis	was	de minimis.	The	fair	value	of	investment	securities	categorized	in	level	3	that was	measured	using	non-binding	quotes	and	internally-developed	pricing- model	inputs	was	approximately	98%	and	2%,	respectively,	of	the	total fair	value	of	our	investment	securities	categorized	in	level	3	as	of December	31,	2014.

The	process	used	to	measure	the	fair	value	of	our	level-3	financial assets	and	liabilities	is	overseen	by	a	valuation	group	within	Corporate Finance,	separate	from	the	business	units	that	manage	the	assets	and liabilities.	This	function,	which	develops	and	manages	the	valuation process,	reports	to	State	Street's	Valuation	Committee.	The	Valuation Committee	comprises	senior	management	from	separate	business	units, Enterprise	Risk	Management,	a	corporate	risk	oversight	group,	and Corporate	Finance,	and	oversees	adherence	to	State	Street's	valuation policies.

The	valuation	group	performs	validation	of	the	pricing	information obtained	from	third-party	sources	in	order	to	evaluate	reasonableness and	consistency	with	market	experience	in	similar	asset	classes.	Monthly analyses	include	a	review	of	price	changes	relative	to	overall	trends, credit	analysis	and	other	relevant	procedures	(discussed	below).	In addition,	prices	for	level-3	securities	carried	in	our	investment	portfolio	are tested	on	a	sample	basis	based	on	unexpected	pricing	movements. These	sample	prices	are	then	corroborated	through	price	recalculations, when	applicable,	using	available	market	information,	which	is	obtained separately	from	the	third-party	pricing	source.	The	recalculated	prices	are compared	to	market-research	information	pertaining	to	credit expectations,	execution	prices	and	the	timing	of	cash	flows,	and	where information	is	available,	back-testing.	If	a	difference	is	identified	and	it	is determined	that	there	is	a	significant	impact	requiring	an	adjustment,	the adjustment	is	presented

to	the	Valuation	Committee	for	review	and	consideration.

Validation	is	also	performed	on	fair-value	measurements	determined using	internally-developed	pricing	models.	The	pricing	models	are	subject to	validation	through	our	Model	Assessment	Committee,	a	corporate	risk oversight	committee	that	provides	technical	support	and	input	to	the Valuation	Committee.	This	validation	process	incorporates	a	review	of	a diverse	set	of	model	and	trade	parameters	across	a	broad	range	of	values in	order	to	evaluate	the	model's	suitability	for	valuation	of	a	particular financial	instrument	type,	as	well	as	the	model's	accuracy	in	reflecting	the characteristics	of	the	related	financial	asset	or	liability	and	its	significant risks.	Inputs	and	assumptions,	including	any	price-valuation	adjustments, are	developed	by	the	business	units	and	separately	reviewed	by	the valuation	group.	Model	valuations	are	compared	to	available	market information	including	appropriate	proxy	instruments	and	other benchmarks	to	highlight	abnormalities	for	further	investigation.

Measuring	fair	value	requires	the	exercise	of	management judgment.	The	level	of	subjectivity	and	the	degree	of	management judgment	required	is	more	significant	for	financial	instruments	whose	fair value	is	measured	using	inputs	that	are	not	observable.	The	areas requiring	significant	judgment	are	identified,	documented	and	reported	to the	Valuation	Committee	as	part	of	the	valuation	control	framework.	We believe	that	our	valuation	methods	are	appropriate;	however,	the	use	of different	methodologies	or	assumptions,	particularly	as	they	apply	to	level- 3	financial	assets	and	liabilities,	could	materially	affect	our	fair-value measurements	as	of	the	reporting	date.

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.	No	transfers	of financial	assets	or	liabilities	between	levels	1	and	2	occurred	during	2014 or	2013.

| (In	millions) | Quoted	Market<br>Prices	in	Active<br>Markets<br>(Level	1) | Pricing	Methods<br>with	Significant<br>Observable<br>Market	Inputs<br>(Level	2) | Pricing	Methods<br>with	Significant<br>Unobservable<br>Market	Inputs<br>(Level	3) | Impact	of<br>Netting(1) | Total	Net<br>Carrying	Value<br>in	Consolidated<br>Statement	of<br>Condition |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Assets: |  |  |  |  |  |
| Trading\taccount\tassets: |  |  |  |  |  |
| U.S.\tgovernment\tsecurities | $20 | $— | $— |  | $20 |
| Non-U.S.\tgovernment\tsecurities | 378 | — | — |  | 378 |
| Other | 20 | 506 | — |  | 526 |
| Total\ttrading\taccount\tassets | 418 | 506 | — |  | 924 |
| Investment\tsecurities\tavailable\tfor\tsale: |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |  |
| Direct\tobligations | 10,056 | 599 | — |  | 10,655 |
| Mortgage-backed\tsecurities | — | 20,714 | — |  | 20,714 |
| Asset-backed\tsecurities: |  |  |  |  |  |
| Student\tloans | — | 12,201 | 259 |  | 12,460 |
| Credit\tcards | — | 3,053 | — |  | 3,053 |
| Sub-prime | — | 951 | — |  | 951 |
| Other(2) | — | 365 | 3,780 |  | 4,145 |
| Total\tasset-backed\tsecurities | — | 16,570 | 4,039 |  | 20,609 |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |  |
| Mortgage-backed\tsecurities | — | 9,606 | — |  | 9,606 |
| Asset-backed\tsecurities | — | 2,931 | 295 |  | 3,226 |
| Government\tsecurities | — | 3,909 | — |  | 3,909 |
| Other(3) | — | 5,057 | 371 |  | 5,428 |
| Total\tnon-U.S.\tdebt\tsecurities | — | 21,503 | 666 |  | 22,169 |
| State\tand\tpolitical\tsubdivisions | — | 10,782 | 38 |  | 10,820 |
| Collateralized\tmortgage\tobligations | — | 4,725 | 614 |  | 5,339 |
| Other\tU.S.\tdebt\tsecurities | — | 4,100 | 9 |  | 4,109 |
| U.S.\tequity\tsecurities | — | 39 | — |  | 39 |
| Non-U.S.\tequity\tsecurities | — | 2 | — |  | 2 |
| U.S.\tmoney-market\tmutual\tfunds | — | 449 | — |  | 449 |
| Non-U.S.\tmoney-market\tmutual\tfunds | — | 8 | — |  | 8 |
| Total\tinvestment\tsecurities\tavailable\tfor\tsale | 10,056 | 79,491 | 5,366 |  | 94,913 |
| Other\tassets: |  |  |  |  |  |
| Derivative\tinstruments: |  |  |  |  |  |
| Foreign\texchange\tcontracts | — | 15,054 | 81 | $(7,211) | 7,924 |
| Interest-rate\tcontracts | — | 77 | — | (68) | 9 |
| Other\tderivative\tcontracts | — | 2 | — | (1) | 1 |
| Total\tderivative\tinstruments | — | 15,133 | 81 | (7,280) | 7,934 |
| Total\tassets\tcarried\tat\tfair\tvalue | $10,474 | $95,130 | $5,447 | $(7,280) | $103,771 |
| Liabilities: |  |  |  |  |  |
| Accrued\texpenses\tand\tother\tliabilities: |  |  |  |  |  |
| Derivative\tinstruments: |  |  |  |  |  |
| Foreign\texchange\tcontracts | — | 14,851 | 74 | (8,879) | $6,046 |
| Interest-rate\tcontracts | — | 239 | — | (46) | 193 |
| Other\tderivative\tcontracts | — | 61 | 9 | (1) | 69 |
| Total\tderivative\tinstruments | — | 15,151 | 83 | (8,926) | 6,308 |
| Total\tliabilities\tcarried\tat\tfair\tvalue | $— | $15,151 | $83 | $(8,926) | $6,308 |

(1)	Represents	counterparty	netting	against	level-2	financial	assets	and	liabilities,	where	a	legally	enforceable	master	netting	agreement	exists	between	State	Street	and	the	counterparty.	Netting	also reflects	asset	and	liability	reductions	of	$983	million	and	$2.63	billion,	respectively,	for	cash	collateral	received	from	and	provided	to	derivative	counterparties.

(2)	As	of	December	31,	2014	the	fair	value	of	other	asset-backed	securities	was	composed	primarily	of	 $3.8	billion	of	collateralized	loan	obligations	and	approximately	$315	million	of	automobile	loan securities.

(3)	As	of	December	31,	2014	the	fair	value	of	other	non-U.S.	debt	securities	was	composed	primarily	of	 $3.3	billion	of	covered	bonds	and	$1.2	billion	of	corporate	bonds.

# Fair-Value	Measurements	on	a	Recurring	Basis

| (In	millions) | Quoted	Market<br>Prices	in	Active<br>Markets<br>(Level	1) | Pricing	Methods<br>with	Significant<br>Observable<br>Market	Inputs<br>(Level	2) | Pricing	Methods<br>with	Significant<br>Unobservable<br>Market	Inputs<br>(Level	3) | Impact	of<br>Netting(1) | Total	Net<br>Carrying	Value<br>in	Consolidated<br>Statement	of<br>Condition |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Assets: |  |  |  |  |  |
| Trading\taccount\tassets: |  |  |  |  |  |
| U.S.\tgovernment\tsecurities | $20 | $— | $— |  | $20 |
| Non-U.S.\tgovernment\tsecurities | 399 | — | — |  | 399 |
| Other | 67 | 357 | — |  | 424 |
| Total\ttrading\taccount\tassets | 486 | 357 | — |  | 843 |
| Investment\tsecurities\tavailable\tfor\tsale: |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |  |
| Direct\tobligations | — | 709 | — |  | 709 |
| Mortgage-backed\tsecurities | — | 22,847 | 716 |  | 23,563 |
| Asset-backed\tsecurities: |  |  |  |  |  |
| Student\tloans | — | 14,119 | 423 |  | 14,542 |
| Credit\tcards | — | 8,186 | 24 |  | 8,210 |
| Sub-prime | — | 1,203 | — |  | 1,203 |
| Other(2) | — | 532 | 4,532 |  | 5,064 |
| Total\tasset-backed\tsecurities | — | 24,040 | 4,979 |  | 29,019 |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |  |
| Mortgage-backed\tsecurities | — | 10,654 | 375 |  | 11,029 |
| Asset-backed\tsecurities | — | 4,592 | 798 |  | 5,390 |
| Government\tsecurities | — | 3,761 | — |  | 3,761 |
| Other(3) | — | 4,263 | 464 |  | 4,727 |
| Total\tnon-U.S.\tdebt\tsecurities | — | 23,270 | 1,637 |  | 24,907 |
| State\tand\tpolitical\tsubdivisions | — | 10,220 | 43 |  | 10,263 |
| Collateralized\tmortgage\tobligations | — | 5,107 | 162 |  | 5,269 |
| Other\tU.S.\tdebt\tsecurities | — | 4,972 | 8 |  | 4,980 |
| U.S.\tequity\tsecurities | — | 34 | — |  | 34 |
| Non-U.S.\tequity\tsecurities | — | 1 | — |  | 1 |
| U.S.\tmoney-market\tmutual\tfunds | — | 422 | — |  | 422 |
| Non-U.S.\tmoney-market\tmutual\tfunds | — | 7 | — |  | 7 |
| Total\tinvestment\tsecurities\tavailable\tfor\tsale | — | 91,629 | 7,545 |  | 99,174 |
| Other\tassets: |  |  |  |  |  |
| Derivatives\tinstruments: |  |  |  |  |  |
| Foreign\texchange\tcontracts | — | 11,892 | 19 | $(6,442) | 5,469 |
| Interest-rate\tcontracts | — | 65 | — | (59) | 6 |
| Other\tderivative\tcontracts | — | 1 | — | — | 1 |
| Total\tderivative\tinstruments | — | 11,958 | 19 | (6,501) | 5,476 |
| Other | 97 | — | — | — | 97 |
| Total\tassets\tcarried\tat\tfair\tvalue | $583 | $103,944 | $7,564 | $(6,501) | $105,590 |
| Liabilities: |  |  |  |  |  |
| Accrued\texpenses\tand\tother\tliabilities: |  |  |  |  |  |
| Derivative\tinstruments: |  |  |  |  |  |
| Foreign\texchange\tcontracts | $— | $11,454 | $17 | $(5,458) | $6,013 |
| Interest-rate\tcontracts | — | 331 | — | (94) | 237 |
| Other\tderivative\tcontracts | — | — | 9 | — | 9 |
| Total\tderivative\tinstruments | — | 11,785 | 26 | (5,552) | 6,259 |
| Other | 97 | — | — | — | 97 |
| Total\tliabilities\tcarried\tat\tfair\tvalue | $97 | $11,785 | $26 | $(5,552) | $6,356 |

(1)	Represents	counterparty	netting	against	level-2	financial	assets	and	liabilities,	where	a	legally	enforceable	master	netting	agreement	exists	between	State	Street	and	the	counterparty.	Netting	also	reflects	asset	and	liability reductions	of	$1.93	billion	and	$979	million,	respectively,	for	cash	collateral	received	from	and	provided	to	derivative	counterparties.

(2)	As	of	 December	31,	2013,	the	fair	value	of	other	asset-backed	securities	was	composed	primarily	of	 $4.5	billion	of	collateralized	loan	obligations	and	approximately $470	million	of	automobile	loan	securities.

The	following	tables	present	activity	related	to	our	level-3	financial	assets	and	liabilities	during	the	 years	ended	December	31,	2014	and	2013, respectively.	Transfers	into	and	out	of	level	3	are	reported	as	of	the	beginning	of	the	period	presented.	During	the	years	ended	December	31,	2014	and 2013,	transfers	out	of	level	3	were	mainly	related	to	certain	mortgage-	and	asset-backed	securities,	including	non-U.S.	debt	securities,	for	which	fair	value was	measured	using	prices	for	which	observable	market	information	became	available.

| (In	millions) | Fair	Value		as	of<br>December	31,	2013 | Total	Realized	and<br>Unrealized	Gains	(Losses)<br>Recorded<br>in<br>Revenue | Recorded<br>in	Other<br>Comprehensive<br>Income | Purchases | Sales | Settlements | Transfers<br>into<br>Level	3 | Transfers<br>out	of<br>Level	3 | Fair	Value		as	of<br>December	31,	2014 | Change	in<br>Unrealized<br>Gains<br>(Losses)<br>Related	to<br>Financial<br>Instruments<br>Held	as	of<br>December	31,<br>2014 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Assets: |  |  |  |  |  |  |  |  |  |  |
| Investment\tsecurities\tavailable\tfor\tsale:\nU.S.\tTreasury\tand\tfederal\tagencies,\nmortgage-backed\tsecurities | $716 | $— | $— | $168 | $— | $(14) | $— | $(870) | $— |  |
| Asset-backed\tsecurities: |  |  |  |  |  |  |  |  |  |  |
| Student\tloans | 423 | 2 | 1 | 24 | (75) | (37) | — | (79) | 259 |  |
| Credit\tcards | 24 | — | — | — | — | (24) | — | — | — |  |
| Other | 4,532 | 65 | (28) | 282 | — | (1,071) | — | — | 3,780 |  |
| Total\tasset-backed\tsecurities | 4,979 | 67 | (27) | 306 | (75) | (1,132) | — | (79) | 4,039 |  |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | 375 | — | — | — | — | — | — | (375) | — |  |
| Asset-backed\tsecurities | 798 | 6 | (1) | — | — | (272) | 76 | (312) | 295 |  |
| Other | 464 | — | 1 | 55 | (1) | (41) | 85 | (192) | 371 |  |
| Total\tnon-U.S.\tdebt\tsecurities | 1,637 | 6 | — | 55 | (1) | (313) | 161 | (879) | 666 |  |
| State\tand\tpolitical\tsubdivisions | 43 | 1 | (3) | — | — | (3) | — | — | 38 |  |
| Collateralized\tmortgage\tobligations | 162 | — | 1 | 633 | (6) | (32) | — | (144) | 614 |  |
| Other\tU.S.\tdebt\tsecurities | 8 | — | 1 | — | — | — | — | — | 9 |  |
| Total\tinvestment\tsecurities\tavailable\nfor\tsale | 7,545 | 74 | (28) | 1,162 | (82) | (1,494) | 161 | (1,972) | 5,366 |  |
| Other\tassets: |  |  |  |  |  |  |  |  |  |  |
| Derivative\tinstruments:\nDerivative\tinstruments,\tForeign\nexchange\tcontracts | 19 | 36 | — | 36 | — | (10) | — | — | 81 | $44 |
| Total\tderivative\tinstruments | 19 | 36 | — | 36 | — | (10) | — | — | 81 | 44 |
| Total\tassets\tcarried\tat\tfair\tvalue | $7,564 | $110 | $(28) | $1,198 | $(82) | $(1,504) | $161 | $(1,972) | $5,447 | $44 |

# Fair-Value	Measurements	Using	Significant	Unobservable	Inputs

| (In	millions) | Fair	Value		as	of<br>December	31,	2013 | Total	Realized	and<br>Unrealized	(Gains)	Losses<br>Recorded<br>in<br>Revenue | Issuances | Settlements | Fair	Value		as	of<br>December	31,	2014(1) | Change	in<br>Unrealized<br>(Gains)<br>Losses	Related	to<br>Financial<br>Instruments<br>Held	as	of<br>December	31,<br>2014 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Liabilities: |  |  |  |  |  |  |
| Accrued\texpenses\tand\tother\tliabilities: |  |  |  |  |  |  |
| Derivative\tinstruments: |  |  |  |  |  |  |
| Foreign\texchange\tcontracts | $17 | $25 | $39 | $(7) | $74 | $35 |
| Other | 9 | — | — | — | 9 | — |
| Total\tderivative\tinstruments | 26 | 25 | 39 | (7) | 83 | 35 |
| Total\tliabilities\tcarried\tat\tfair\tvalue | $26 | $25 | $39 | $(7) | $83 | $35 |

(1)	There	were	no	transfers	of	liabilities	into	or	out	of	level	3	during	the	year	ended	December	31,	2014.

| (In	millions) | Fair	Value		as	of<br>December	31,<br>2012 | Recorded<br>in<br>Revenue | Total	Realized	and<br>Unrealized	Gains	(Losses)<br>Recorded<br>in	Other<br>Comprehensive<br>Income | Purchases | Sales | Settlements | Transfers<br>into<br>Level	3 | Transfers<br>out	of<br>Level	3 | Fair	Value		as	of<br>December	31,<br>2013 | Change	in<br>Unrealized<br>Gains<br>(Losses)<br>Related	to<br>Financial<br>Instruments<br>Held	as	of<br>December	31,<br>2013 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Assets: |  |  |  |  |  |  |  |  |  |  |
| Investment\tsecurities\tavailable\tfor\tsale:\nU.S.\tTreasury\tand\tfederal\tagencies,\nmortgage-backed\tsecurities | $825 | $— | $— | $92 | $— | $(109) | $— | $(92) | $716 |  |
| Asset-backed\tsecurities: |  |  |  |  |  |  |  |  |  |  |
| Student\tloans | 588 | 2 | 12 | 79 | (26) | (31) | — | (201) | 423 |  |
| Credit\tcards | 67 | — | — | — | — | (43) | — | — | 24 |  |
| Other | 3,994 | 53 | 9 | 1,721 | (34) | (1,188) | — | (23) | 4,532 |  |
| Total\tasset-backed\tsecurities | 4,649 | 55 | 21 | 1,800 | (60) | (1,262) | — | (224) | 4,979 |  |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | 555 | — | (1) | 33 | — | (4) | — | (208) | 375 |  |
| Asset-backed\tsecurities | 524 | 5 | 3 | 531 | — | (142) | 160 | (283) | 798 |  |
| Other | 140 | — | 1 | 397 | — | 20 | — | (94) | 464 |  |
| Total\tnon-U.S.\tdebt\tsecurities | 1,219 | 5 | 3 | 961 | — | (126) | 160 | (585) | 1,637 |  |
| State\tand\tpolitical\tsubdivisions | 48 | 1 | (2) | — | — | (4) | — | — | 43 |  |
| Collateralized\tmortgage\tobligations | 117 | 1 | (5) | 218 | — | (39) | 14 | (144) | 162 |  |
| Other\tU.S.\tdebt\tsecurities | 9 | — | (1) | — | — | — | — | — | 8 |  |
| Total\tinvestment\tsecurities\tavailable\nfor\tsale | 6,867 | 62 | 16 | 3,071 | (60) | (1,540) | 174 | (1,045) | 7,545 |  |
| Other\tassets: |  |  |  |  |  |  |  |  |  |  |
| Derivative\tinstruments:\nDerivative\tinstruments,\tForeign\nexchange\tcontracts | 113 | 103 | — | 20 | — | (217) | — | — | 19 | $(2) |
| Total\tderivative\tinstruments | 113 | 103 | — | 20 | — | (217) | — | — | 19 | (2) |
| Total\tassets\tcarried\tat\tfair\tvalue | $6,980 | $165 | $16 | $3,091 | $(60) | $(1,757) | $174 | $(1,045) | $7,564 | $(2) |

| (In	millions) | Fair	Value		as	of<br>December	31,<br>2012 | Total	Realized	and<br>Unrealized	(Gains)	Losses<br>Recorded<br>in<br>Revenue | Issuances | Settlements | Fair	Value		as	of<br>December	31,	2013(1) | Change	in<br>Unrealized<br>(Gains)<br>Losses<br>Related	to<br>Financial<br>Instruments<br>Held	as	of<br>December	31,<br>2013 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Liabilities: |  |  |  |  |  |  |
| Accrued\texpenses\tand\tother\tliabilities: |  |  |  |  |  |  |
| Derivative\tinstruments: |  |  |  |  |  |  |
| Foreign\texchange\tcontracts | $106 | $40 | $18 | $(147) | $17 | $(1) |
| Other | 9 | — | — | — | 9 | — |
| Total\tderivative\tinstruments | 115 | 40 | 18 | (147) | 26 | (1) |
| Total\tliabilities\tcarried\tat\tfair\tvalue | $115 | $40 | $18 | $(147) | $26 | $(1) |

The	following	table	presents	total	realized	and	unrealized	gains	and	losses	for	our	level-3	financial	assets	and	liabilities	and	where	they	are	presented in	our	consolidated	statement	of	income	for	the	years	indicated:

|  |  | Total	Realized	and<br>Unrealized	Gains<br>(Losses)	Recorded<br>in	Revenue |  |  | Change	in<br>Unrealized	Gains<br>(Losses)	Related	to<br>Financial<br>Instruments	Held	as	of<br>December	31, |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 |
| Fee\trevenue: |  |  |  |  |  |  |
| Trading\tservices | $11 | $63 | $9 | $9 | $(1) | $3 |
| Total\tfee\trevenue | 11 | 63 | 9 | 9 | (1) | 3 |
| Net\tinterest\trevenue | 74 | 62 | 420 | — | — | — |
| Total\trevenue | $85 | $125 | $429 | $9 | $(1) | $3 |

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	or	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

(1)	Relates	to	stable	value	wrap	contracts;	refer	to	the	sensitivity	discussion	following	the	tables	presented	below,	and	to	note 10. (2)	Significant	changes	in	these	unobservable	inputs	would	result	in	significant	changes	in	fair	value	measure.

The	following	tables	present	information	with	respect	to	the	composition	of	our	level-3	financial	assets	and	liabilities,	by	availability	of	significant	unobservable inputs,	as	of	the	dates	indicated:

| December	31,	2014 | Significant	Unobservable	Inputs<br>Readily	Available	to	State	Street(1) | Significant	Unobservable	Inputs	Not<br>Developed	by	State	Street	and	Not<br>Readily	Available(2) | Total	Assets	and	Liabilities	with<br>Significant	Unobservable	Inputs |
| :--- | :--- | :--- | :--- |
| (In\tmillions) |  |  |  |
| Assets: |  |  |  |
| Asset-backed\tsecurities,\tstudent\tloans | $— | $259 | $259 |
| Asset-backed\tsecurities,\tother | 59 | 3,721 | 3,780 |
| Non-U.S.\tdebt\tsecurities,\tasset-backed\tsecurities | — | 295 | 295 |
| Non-U.S.\tdebt\tsecurities,\tother | — | 371 | 371 |
| State\tand\tpolitical\tsubdivisions | 38 | — | 38 |
| Collateralized\tmortgage\tobligations | — | 614 | 614 |
| Other\tU.S.\tdebt\tsecurities | — | 9 | 9 |
| Derivative\tinstruments,\tforeign\texchange\tcontracts | 81 | — | 81 |
| Total | $178 | $5,269 | $5,447 |
| Liabilities: |  |  |  |
| Derivative\tinstruments,\tforeign\texchange\tcontracts | $74 | $— | $74 |
| Derivative\tinstruments,\tother | 9 | — | 9 |
| Total | $83 | $— | $83 |

(1)	Information	with	respect	to	these	model-priced	financial	assets	and	liabilities	is	provided	above	in	a	separate	table.

(2)	Fair	value	for	these	financial	assets	is	measured	using	non-binding	broker	or	dealer	quotes.

| December	31,	2013 | Significant	Unobservable	Inputs<br>Readily	Available	to	State	Street(1) | Significant	Unobservable	Inputs<br>Not	Developed	by	State	Street	and<br>Not	Readily	Available(2) | Total	Assets	and	Liabilities	with<br>Significant	Unobservable	Inputs |
| :--- | :--- | :--- | :--- |
| (In\tmillions) |  |  |  |
| Assets: |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies,\tmortgage-backed\tsecurities | $— | $716 | $716 |
| Asset-backed\tsecurities,\tstudent\tloans | 13 | 410 | 423 |
| Asset-backed\tsecurities,\tcredit\tcards | 24 | — | 24 |
| Asset-backed\tsecurities,\tother | 92 | 4,440 | 4,532 |
| Non-U.S.\tdebt\tsecurities,\tmortgage-backed\tsecurities | — | 375 | 375 |
| Non-U.S.\tdebt\tsecurities,\tasset-backed\tsecurities | — | 798 | 798 |
| Non-U.S.\tdebt\tsecurities,\tother | — | 464 | 464 |
| State\tand\tpolitical\tsubdivisions | 43 | — | 43 |
| Collateralized\tmortgage\tobligations | — | 162 | 162 |
| Other\tU.S.\tdebt\tsecurities | — | 8 | 8 |
| Derivative\tinstruments,\tforeign\texchange\tcontracts | 19 | — | 19 |
| Total | $191 | $7,373 | $7,564 |
| Liabilities: |  |  |  |
| Derivative\tinstruments,\tforeign\texchange\tcontracts | $17 | $— | $17 |
| Derivative\tinstruments,\tother | 9 | — | 9 |
| Total | $26 | $— | $26 |

We	use	internally-developed	pricing	models	that	incorporate discounted	cash	flow	and	option	model	techniques	to	measure	the	fair value	of	our	level-3	financial	assets	and	liabilities.	Use	of	these	techniques requires	the	determination	of	relevant	inputs	and	assumptions,	some	of which	represent	significant	unobservable	inputs	as	indicated	in	the preceding	table.	Accordingly,	changes	in	these	unobservable	inputs	may have	a	significant	impact	on	fair	value.

Certain	of	these	unobservable	inputs	will,	in	isolation,	have	a directionally	consistent	impact	on	the	fair	value	of	the	instrument	for	a given	change	in	that	input.	Alternatively,	the	fair	value	of	the	instrument may	move	in	an	opposite	direction	for	a	given	change	in	another	input. Where	multiple	inputs	are	used	within	the	valuation	technique	of	an	asset or	liability,	a	change	in	one	input	in	a	certain	direction	may	be	offset	by	an opposite	change	in	another	input,	resulting	in	a	potentially	muted	impact on	the	overall	fair	value	of	that	particular	instrument.	Additionally,	a change	in	one	unobservable	input	may	result	in	a	change	to	another unobservable	input	(that	is,	changes	in	certain	inputs	are	interrelated	to one	another),	which	may	counteract	or	magnify	the	fair-value	impact.

# Fair	Value	Estimates:

Estimates	of	fair	value	for	financial	instruments	not	carried	at	fair value	on	a	recurring	basis	in	our	consolidated	statement	of	condition	are generally	subjective	in	nature,	and	are	determined	as	of	a	specific	point	in time	based	on	the	characteristics	of	the	financial	instruments	and	relevant market	information.	Disclosure	of	fair-value	estimates	is	not	required	by GAAP	for	certain	items,	such	as	lease	financing,	equity-method investments,	obligations	for	pension	and	other	post-retirement	plans, premises	and	equipment,	other	intangible	assets	and	income-tax	assets and	liabilities.	Accordingly,	aggregate	fair-value	estimates	presented	do not	purport	to	represent,	and	should	not	be	considered	representative	of, our	underlying	"market"	or	franchise	value.	In	addition,	because	of potential	differences	in	methodologies	and	assumptions	used	to	estimate fair	values,	our	estimates	of	fair	value	should	not	be	compared	to	those	of other	financial	institutions.

We	use	the	following	methods	to	estimate	the	fair	values	of	our financial	instruments:

•For	financial	instruments	that	have	quoted	market	prices,	those quoted	prices	are	used	to	estimate	fair	value.

•For	financial	instruments	that	have	no	defined	maturity,	have	a remaining	maturity	of	180	days	or	less,	or	reprice	frequently	to	a market	rate,	we	assume	that	the	fair	value	of	these

instruments	approximates	their	reported	value,	after	taking	into consideration	any	applicable	credit	risk.

•For	financial	instruments	for	which	no	quoted	market	prices	are available,	fair	value	is	estimated	using	information	obtained	from independent	third	parties,	or	by	discounting	the	expected	cash flows	using	an	estimated	current	market	interest	rate	for	the financial	instrument.

The	generally	short	duration	of	certain	of	our	assets	and	liabilities results	in	a	significant	number	of	financial	instruments	for	which	fair	value equals	or	closely	approximates	the	amount	recorded	in	our	consolidated statement	of	condition.	These	financial	instruments	are	reported	in	the following	captions	in	our	consolidated	statement	of	condition:	cash	and due	from	banks;	interest-bearing	deposits	with	banks;	securities purchased	under	resale	agreements;	accrued	interest	and	fees receivable;	deposits;	securities	sold	under	repurchase	agreements; federal	funds	purchased;	and	other	short-term	borrowings.

In	addition,	due	to	the	relatively	short	duration	of	certain	of	our	net loans	(excluding	leases),	we	consider	fair	value	for	these	loans	to approximate	their	reported	value.	The	fair	value	of	other	types	of	loans, such	as	senior	secured	bank	loans,	commercial	real	estate	loans, purchased	receivables	and	municipal	loans	is	estimated	using	information obtained	from	independent	third	parties	or	by	discounting	expected	future cash	flows	using	current	rates	at	which	similar	loans	would	be	made	to borrowers	with	similar	credit	ratings	for	the	same	remaining	maturities. Commitments	to	lend	have	no	reported	value	because	their	terms	are	at prevailing	market	rates.

The	following	tables	present	the	reported	amounts	and	estimated	fair values	of	the	financial	assets	and	liabilities	not	carried	at	fair	value	on	a recurring	basis,	as	they	would	be	categorized	within	the	fair-value hierarchy,	as	of	the	dates	indicated.

# Fair-Value	Hierarchy

| December	31,	2014 | Reported	Amount | Estimated	Fair	Value | Quoted	Market<br>Prices	in	Active	Markets<br>(Level	1) | Pricing	Methods	with<br>Significant<br>Observable	Market	Inputs<br>(Level	2) | Pricing	Methods	with<br>Significant<br>Unobservable	Market	Inputs<br>(Level	3) |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) |  |  |  |  |  |
| Financial\tAssets: |  |  |  |  |  |
| Cash\tand\tdue\tfrom\tbanks | $1,855 | $1,855 | $1,855 | $— | $— |
| Interest-bearing\tdeposits\twith\tbanks | 93,523 | 93,523 | — | 93,523 | — |
| Securities\tpurchased\tunder\tresale\tagreements | 2,390 | 2,390 | — | 2,390 | — |
| Investment\tsecurities\theld\tto\tmaturity | 17,723 | 17,842 | — | 17,842 | — |
| Net\tloans\t(excluding\tleases) | 17,158 | 17,131 | — | 16,964 | 167 |
| Financial\tLiabilities: |  |  |  |  |  |
| Deposits: |  |  |  |  |  |
| \t\t\t\t\tNoninterest-bearing | $70,490 | $70,490 | $— | $70,490 | $— |
| \t\t\t\t\tInterest-bearing\t-\tU.S. | 33,012 | 33,012 | — | 33,012 | — |
| \t\t\t\t\tInterest-bearing\t-\tnon-U.S. | 105,538 | 105,538 | — | 105,538 | — |
| Securities\tsold\tunder\trepurchase\tagreements | 8,925 | 8,925 | — | 8,925 | — |
| Federal\tfunds\tpurchased | 21 | 21 | — | 21 | — |
| Other\tshort-term\tborrowings | 4,381 | 4,381 | — | 4,381 | — |
| Long-term\tdebt | 10,042 | 10,229 | — | 9,382 | 847 |

| December	31,	2013 | Reported	Amount | Estimated	Fair	Value | Quoted	Market<br>Prices	in	Active	Markets<br>(Level	1) | Pricing	Methods	with<br>Significant<br>Observable	Market	Inputs<br>(Level	2) | Pricing	Methods	with<br>Significant<br>Unobservable	Market	Inputs<br>(Level	3) |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) |  |  |  |  |  |
| Financial\tAssets: |  |  |  |  |  |
| Cash\tand\tdue\tfrom\tbanks | $3,220 | $3,220 | $3,220 | $— | $— |
| Interest-bearing\tdeposits\twith\tbanks | 64,257 | 64,257 | — | 64,257 | — |
| Securities\tpurchased\tunder\tresale\tagreements | 6,230 | 6,230 | — | 6,230 | — |
| Investment\tsecurities\theld\tto\tmaturity | 17,740 | 17,560 | — | 17,560 | — |
| Net\tloans\t(excluding\tleases) | 12,363 | 12,355 | — | 11,908 | 447 |
| Financial\tLiabilities: |  |  |  |  |  |
| Deposits: |  |  |  |  |  |
| \t\t\t\t\tNoninterest-bearing | $65,614 | $65,614 | $— | $65,614 | $— |
| \t\t\t\t\tInterest-bearing\t-\tU.S. | 13,392 | 13,392 | — | 13,392 | — |
| \t\t\t\t\tInterest-bearing\t-\tnon-U.S. | 103,262 | 103,262 | — | 103,262 | — |
| Securities\tsold\tunder\trepurchase\tagreements | 7,953 | 7,953 | — | 7,953 | — |
| Federal\tfunds\tpurchased | 19 | 19 | — | 19 | — |
| Other\tshort-term\tborrowings | 3,780 | 3,780 | — | 3,780 | — |
| Long-term\tdebt | 9,699 | 9,809 | — | 8,956 | 853 |

# Note	3.				Investment	Securities

Investment	securities	held	by	us	are	classified	as	either	trading, available-for-sale	or	held-to-maturity	at	the	time	of	purchase,	based	on management's	intent.

Generally,	trading	assets	are	debt	and	equity	securities	purchased	in connection	with	our	trading	activities	and,	as	such,	are	expected	to	be sold	in	the	near	term.	Our	trading	activities	typically	involve	active	and frequent	buying	and	selling	with	the	objective	of	generating	profits	on short-term	movements.	Securities	available-for-sale	are	those	securities that	we	intend	to	hold	for	an	indefinite	period	of	time.	Available-for-sale securities	include	securities	utilized	as	part	of	our	asset-and-liability management	activities	that	may	be	sold	in	response	to	changes	in	interest rates,	prepayment	risk,	liquidity

needs	or	other	factors.	Securities	held	to	maturity	are	debt	securities	that management	has	the	intent	and	the	ability	to	hold	to	maturity.

Trading	assets	are	carried	at	fair	value.	Both	realized	and	unrealized gains	and	losses	on	trading	assets	are	recorded	in	trading	services revenue	in	our	consolidated	statement	of	income.	Debt	and	marketable equity	securities	classified	as	available	for	sale	are	carried	at	fair	value, and	after-tax	net	unrealized	gains	and	losses	are	recorded	in	AOCI. Gains	or	losses	realized	on	sales	of	available-for-sale	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.	Securities	held	to	maturity	are	carried	at	cost, adjusted	for	amortization	of	premiums	and	accretion	of	discounts.

The	following	table	presents	the	amortized	cost	and	fair	value,	and	associated	unrealized	gains	and	losses,	of	investment	securities	as	of	the	dates indicated:

|  |  | December	31,	2014 | December	31,	2014 |  |  | December	31,	2013 | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Gross |  |  |  | Gross |  |  |
| (In\tmillions) | Amortized\nCost | Unrealized\nGains | Losses | Fair\nValue | Amortized\nCost | Unrealized\nGains | Losses | Fair\nValue |
| Available\tfor\tsale: |  |  |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |  |  |  |  |
| Direct\tobligations | $10,573 | $83 | $1 | $10,655 | $702 | $9 | $2 | $709 |
| Mortgage-backed\tsecurities | 20,648 | 193 | 127 | 20,714 | 23,744 | 211 | 392 | 23,563 |
| Asset-backed\tsecurities: |  |  |  |  |  |  |  |  |
| Student\tloans(1) | 12,478 | 106 | 124 | 12,460 | 14,718 | 92 | 268 | 14,542 |
| Credit\tcards | 3,077 | 10 | 34 | 3,053 | 8,230 | 21 | 41 | 8,210 |
| Sub-prime | 1,005 | 2 | 56 | 951 | 1,291 | 3 | 91 | 1,203 |
| Other(2) | 4,055 | 100 | 10 | 4,145 | 4,949 | 138 | 23 | 5,064 |
| Total\tasset-backed\tsecurities | 20,615 | 218 | 224 | 20,609 | 29,188 | 254 | 423 | 29,019 |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | 9,442 | 168 | 4 | 9,606 | 10,808 | 230 | 9 | 11,029 |
| Asset-backed\tsecurities | 3,215 | 11 | — | 3,226 | 5,369 | 23 | 2 | 5,390 |
| Government\tsecurities | 3,899 | 10 | — | 3,909 | 3,759 | 2 | — | 3,761 |
| Other(3) | 5,383 | 52 | 7 | 5,428 | 4,679 | 59 | 11 | 4,727 |
| Total\tnon-U.S.\tdebt\tsecurities | 21,939 | 241 | 11 | 22,169 | 24,615 | 314 | 22 | 24,907 |
| State\tand\tpolitical\tsubdivisions | 10,532 | 325 | 37 | 10,820 | 10,301 | 160 | 198 | 10,263 |
| Collateralized\tmortgage\tobligations | 5,280 | 71 | 12 | 5,339 | 5,275 | 70 | 76 | 5,269 |
| Other\tU.S.\tdebt\tsecurities | 4,033 | 88 | 12 | 4,109 | 4,876 | 138 | 34 | 4,980 |
| U.S.\tequity\tsecurities | 29 | 10 | — | 39 | 28 | 6 | — | 34 |
| Non-U.S.\tequity\tsecurities | 2 | — | — | 2 | 1 | — | — | 1 |
| U.S.\tmoney-market\tmutual\tfunds | 449 | — | — | 449 | 422 | — | — | 422 |
| Non-U.S.\tmoney-market\tmutual\tfunds | 8 | — | — | 8 | 7 | — | — | 7 |
| Total | $94,108 | $1,229 | $424 | $94,913 | $99,159 | $1,162 | $1,147 | $99,174 |
| Held\tto\tmaturity: |  |  |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |  |  |  |  |
| Direct\tobligations | $5,114 | $— | $147 | $4,967 | $5,041 | $— | $448 | $4,593 |
| Mortgage-backed\tsecurities | 62 | 4 | — | 66 | 91 | 6 | — | 97 |
| Asset-backed\tsecurities: |  |  |  |  |  |  |  |  |
| Student\tloans(1) | 1,814 | 2 | 4 | 1,812 | 1,627 | — | 10 | 1,617 |
| Credit\tcards | 897 | 2 | — | 899 | 762 | 1 | — | 763 |
| Other | 577 | 3 | 1 | 579 | 782 | 1 | 2 | 781 |
| Total\tasset-backed\tsecurities | 3,288 | 7 | 5 | 3,290 | 3,171 | 2 | 12 | 3,161 |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | 3,787 | 177 | 22 | 3,942 | 4,211 | 150 | 48 | 4,313 |
| Asset-backed\tsecurities | 2,868 | 14 | 1 | 2,881 | 2,202 | 19 | — | 2,221 |
| Government\tsecurities | 154 | — | — | 154 | 2 | — | — | 2 |
| Other | 72 | — | — | 72 | 192 | — | — | 192 |
| Total\tnon-U.S.\tdebt\tsecurities | 6,881 | 191 | 23 | 7,049 | 6,607 | 169 | 48 | 6,728 |
| State\tand\tpolitical\tsubdivisions | 9 | — | — | 9 | 24 | 1 | — | 25 |
| Collateralized\tmortgage\tobligations | 2,369 | 107 | 15 | 2,461 | 2,806 | 176 | 26 | 2,956 |
| Total | $17,723 | $309 | $190 | $17,842 | $17,740 | $354 | $534 | $17,560 |
| (2)\tAs\tof\t December\t31,\t2014\tand\t2013,\tthe\tfair\tvalue\tof\tother\tasset-backed\tsecurities\twas\tcomposed\tprimarily\tof | (2)\tAs\tof\t December\t31,\t2014\tand\t2013,\tthe\tfair\tvalue\tof\tother\tasset-backed\tsecurities\twas\tcomposed\tprimarily\tof | (2)\tAs\tof\t December\t31,\t2014\tand\t2013,\tthe\tfair\tvalue\tof\tother\tasset-backed\tsecurities\twas\tcomposed\tprimarily\tof |  |  |  |  |  | $315\tmillion |

(1)	Substantially	composed	of	securities	guaranteed	by	the	federal	government	with	respect	to	at	least	97%	of	defaulted	principal	and	accrued	interest	on	the	underlying	loans.

(2)	As	of	 December	31,	2014	and	2013,	the	fair	value	of	other	asset-backed	securities	was	composed	primarily	of $3.8	billion	and	$4.5	billion,	respectively,	of	collateralized	loan	obligations	and	approximately $315	million and	approximately	$470	million,	respectively,	of	automobile	loan	securities.

(3)	As	of	 December	31,	2014	and	2013,	the	fair	value	of	other	non-U.S.	debt	securities	was	composed	primarily	of $3.3	billion	and	$2.3	billion,	respectively,	of	covered	bonds	and $1.2	billion	and	$1.4	billion,	respectively,	of corporate	bonds.

Aggregate	investment	securities	with	carrying	values	of	 $44.02 billion	and	$46.99	billion	as	of	December	31,	2014	and	2013, short-term	borrowings	and	for	other	purposes	as	provided	by	law.

respectively,	were	designated	as	pledged	for	public	and	trust	deposits,

The	following	tables	present	the	aggregate	fair	values	of	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:

|  | Less	than	12	months | Less	than	12	months | 12	months	or	longer | 12	months	or	longer |  | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014 | Gross | Gross | Gross | Gross |  | Gross |
| (In\tmillions) | Fair\nValue | Unrealized\nLosses | Fair\nValue | Unrealized\nLosses | Fair\nValue | Unrealized\nLosses |
| Available\tfor\tsale: |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |  |  |
| Direct\tobligations | $— | $— | $167 | $1 | $167 | $1 |
| Mortgage-backed\tsecurities | 2,569 | 9 | 6,466 | 118 | 9,035 | 127 |
| Asset-backed\tsecurities: |  |  |  |  |  |  |
| Student\tloans | 1,473 | 15 | 5,025 | 109 | 6,498 | 124 |
| Credit\tcards | 344 | 1 | 1,270 | 33 | 1,614 | 34 |
| Sub-prime | — | — | 896 | 56 | 896 | 56 |
| Other | 547 | 1 | 791 | 9 | 1,338 | 10 |
| Total\tasset-backed\tsecurities | 2,364 | 17 | 7,982 | 207 | 10,346 | 224 |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | 1,350 | 2 | 170 | 2 | 1,520 | 4 |
| Other | 581 | 4 | 328 | 3 | 909 | 7 |
| Total\tnon-U.S.\tdebt\tsecurities | 1,931 | 6 | 498 | 5 | 2,429 | 11 |
| State\tand\tpolitical\tsubdivisions | 610 | 3 | 1,315 | 34 | 1,925 | 37 |
| Collateralized\tmortgage\tobligations | 731 | 2 | 311 | 10 | 1,042 | 12 |
| Other\tU.S.\tdebt\tsecurities | 327 | 2 | 244 | 10 | 571 | 12 |
| Total | $8,532 | $39 | $16,983 | $385 | $25,515 | $424 |
| Held\tto\tmaturity: |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |  |  |
| Direct\tobligations | $76 | $1 | $4,891 | $146 | $4,967 | $147 |
| Asset-backed\tsecurities: |  |  |  |  |  |  |
| Student\tloans | 780 | 3 | 192 | 1 | 972 | 4 |
| Other | 124 | 1 | — | — | 124 | 1 |
| Total\tasset-backed\tsecurities | 904 | 4 | 192 | 1 | 1,096 | 5 |
| Non-U.S.\tmortgage-backed\tsecurities: |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | 507 | 3 | 590 | 19 | 1,097 | 22 |
| Asset-backed\tsecurities | 699 | 1 | — | — | 699 | 1 |
| Total\tnon-U.S.\tdebt\tsecurities | 1,206 | 4 | 590 | 19 | 1,796 | 23 |
| Collateralized\tmortgage\tobligations | 422 | 4 | 547 | 11 | 969 | 15 |
| Total | $2,608 | $13 | $6,220 | $177 | $8,828 | $190 |

|  | Less	than	12	months | Less	than	12	months | 12	months	or	longer | 12	months	or	longer |  | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2013 | Gross | Gross | Gross | Gross |  | Gross |
| (In\tmillions) | Fair\nValue | Unrealized\nLosses | Fair\nValue | Unrealized\nLosses | Fair\nValue | Unrealized\nLosses |
| Available\tfor\tsale: |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |  |  |
| Direct\tobligations | $182 | $1 | $113 | $1 | $295 | $2 |
| Mortgage-backed\tsecurities | 10,562 | 316 | 2,389 | 76 | 12,951 | 392 |
| Asset-backed\tsecurities: |  |  |  |  |  |  |
| Student\tloans | 1,930 | 16 | 7,252 | 252 | 9,182 | 268 |
| Credit\tcards | 3,714 | 30 | 161 | 11 | 3,875 | 41 |
| Sub-prime | — | — | 1,150 | 91 | 1,150 | 91 |
| Other | 1,896 | 12 | 439 | 11 | 2,335 | 23 |
| Total\tasset-backed\tsecurities | 7,540 | 58 | 9,002 | 365 | 16,542 | 423 |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | 868 | 2 | 258 | 7 | 1,126 | 9 |
| Asset-backed\tsecurities | 551 | 1 | 16 | 1 | 567 | 2 |
| Other | 1,655 | 9 | 150 | 2 | 1,805 | 11 |
| Total\tnon-U.S.\tdebt\tsecurities | 3,074 | 12 | 424 | 10 | 3,498 | 22 |
| State\tand\tpolitical\tsubdivisions | 3,242 | 113 | 1,268 | 85 | 4,510 | 198 |
| Collateralized\tmortgage\tobligations | 1,581 | 55 | 510 | 21 | 2,091 | 76 |
| Other\tU.S.\tdebt\tsecurities | 1,039 | 25 | 58 | 9 | 1,097 | 34 |
| Total | $27,220 | $580 | $13,764 | $567 | $40,984 | $1,147 |
| Held\tto\tmaturity: |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |  |  |
| Direct\tobligations | $4,571 | $448 | $— | $— | $4,571 | $448 |
| Asset-backed\tsecurities: |  |  |  |  |  |  |
| Student\tLoans | 1,352 | 10 | — | — | 1,352 | 10 |
| Other | 297 | 1 | 29 | 1 | 326 | 2 |
| Total\tasset-backed\tsecurities | 1,649 | 11 | 29 | 1 | 1,678 | 12 |
| Non-U.S.\tmortgage-backed\tsecurities | 834 | 3 | 878 | 45 | 1,712 | 48 |
| Collateralized\tmortgage\tobligations | 759 | 18 | 161 | 8 | 920 | 26 |
| Total | $7,813 | $480 | $1,068 | $54 | $8,881 | $534 |

The	following	table	presents	contractual	maturities	of	debt	investment	securities	as	of	 December	31,	2014:

| (In	millions) | Under	1<br>Year | 1	to	5<br>Years | 6	to	10<br>Years | Over	10<br>Years |
| :--- | :--- | :--- | :--- | :--- |
| Available\tfor\tsale: |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |
| Direct\tobligations | $— | $6,841 | $3,287 | $527 |
| Mortgage-backed\tsecurities | 107 | 2,389 | 4,421 | 13,797 |
| Asset-backed\tsecurities: |  |  |  |  |
| Student\tloans | 515 | 6,100 | 3,823 | 2,022 |
| Credit\tcards | 381 | 1,562 | 1,110 | — |
| Sub-prime | 3 | 13 | 1 | 934 |
| Other | 244 | 961 | 1,268 | 1,672 |
| Total\tasset-backed\tsecurities | 1,143 | 8,636 | 6,202 | 4,628 |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |
| Mortgage-backed\tsecurities | 2,315 | 3,463 | 576 | 3,252 |
| Asset-backed\tsecurities | 272 | 2,698 | 166 | 90 |
| Government\tsecurities | 2,321 | 1,588 | — | — |
| Other | 1,757 | 2,801 | 870 | — |
| Total\tnon-U.S.\tdebt\tsecurities | 6,665 | 10,550 | 1,612 | 3,342 |
| State\tand\tpolitical\tsubdivisions | 699 | 3,003 | 4,715 | 2,403 |
| Collateralized\tmortgage\tobligations | 227 | 1,149 | 1,072 | 2,891 |
| Other\tU.S.\tdebt\tsecurities | 814 | 2,967 | 294 | 34 |
| Total | $9,655 | $35,535 | $21,603 | $27,622 |
| Held\tto\tmaturity: |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies: |  |  |  |  |
| Direct\tobligations | $— | $— | $5,000 | $114 |
| Mortgage-backed\tsecurities | 1 | 11 | 12 | 38 |
| Asset-backed\tsecurities: |  |  |  |  |
| Student\tloans | 6 | 182 | 375 | 1,251 |
| Credit\tcards | — | 375 | 522 | — |
| Other | 15 | 367 | 191 | 4 |
| Total\tasset-backed\tsecurities | 21 | 924 | 1,088 | 1,255 |
| Non-U.S.\tdebt\tsecurities: |  |  |  |  |
| Mortgage-backed\tsecurities | 503 | 1,102 | 157 | 2,025 |
| Asset-backed\tsecurities | 105 | 2,567 | 196 | — |
| Government\tsecurities | 154 | — | — | — |
| Other | — | 72 | — | — |
| Total\tnon-U.S.\tdebt\tsecurities | 762 | 3,741 | 353 | 2,025 |
| State\tand\tpolitical\tsubdivisions | 7 | 2 | — | — |
| Collateralized\tmortgage\tobligations | 574 | 460 | 498 | 837 |
| Total | $1,365 | $5,138 | $6,951 | $4,269 |

The	maturities	of	asset-backed	securities,	mortgage-backed	securities,	and	collateralized	mortgage	obligations	are	based	on	expected	principal payments.

The	following	tables	present	gross	realized	gains	and	losses	from sales	of	available-for-sale	securities,	and	the	components	of	net impairment	losses	included	in	net	gains	and	losses	related	to	investment securities,	for	the	years	ended	December	31:

| (In	millions) | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Gross\trealized\tgains\tfrom\tsales\tof\navailable-for-sale\tsecurities | $64 | $104 | $101 |
| Gross\trealized\tlosses\tfrom\tsales\tof\navailable-for-sale\tsecurities(1) | (49) | (90) | (46) |
| Net\timpairment\tlosses: |  |  |  |
| Gross\tlosses\tfrom\tother-than-temporary\nimpairment | (1) | (21) | (53) |
| Losses\treclassified\t(from)\tto\tother\ncomprehensive\tincome | (10) | (2) | 21 |
| Net\timpairment\tlosses(2) | (11) | (23) | (32) |
| Gains\trelated\tto\tinvestment\tsecurities,\tnet | $4 | $(9) | $23 |
| (2)\tNet\timpairment\tlosses,\trecognized\tin\tour |  |  |  |
| consolidated\tstatement\tof\tincome,\twere |  |  |  |
| composed\tof\tthe\tfollowing: |  |  |  |
| Impairment\tassociated\twith\texpected\ncredit\tlosses | $(10) | $(11) | $(16) |
| Impairment\tassociated\twith |  |  |  |
| management's\tintent\tto\tsell\timpaired |  |  |  |
| securities\tprior\tto\trecovery\tin\tvalue |  | (6) | — |
| Impairment\tassociated\twith\tadverse |  |  |  |
| changes\tin\ttiming\tof\texpected\tfuture |  |  |  |
| cash\tflows | (1) | (6) | (16) |
| Net\timpairment\tlosses | $(11) | $(23) | $(32) |

(1) Amount	for	the	year	ended	December	31,	2012	represented	a	pre-tax	loss	from	the	sale	of	all of	our	Greek	investment	securities,	which	had	an	aggregate	carrying	value	of	approximately $91	million.

The	following	table	presents	a	roll-forward	with	respect	to	net impairment	losses	that	have	been	recognized	in	income	for	the	years ended	December	31:

| (In	millions) | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Balance,\tbeginning\tof\tperiod | $122 | $124 | $113 |
| Additions: |  |  |  |
| Losses\tfor\twhich\tother-than-temporary\nimpairment\twas\tnot\tpreviously\trecognized | — | 14 | 4 |
| Losses\tfor\twhich\tother-than-temporary\nimpairment\twas\tpreviously\trecognized | 11 | 9 | 28 |
| Reductions: |  |  |  |
| Previously\trecognized\tlosses\trelated\tto\nsecurities\tsold\tor\tmatured | (12) | (25) | (21) |
| Losses\trelated\tto\tsecurities\tintended\tor\nrequired\tto\tbe\tsold | (6) | — | — |
| Balance,\tend\tof\tperiod | $115 | $122 | $124 |

Interest	revenue	related	to	debt	securities	is	recognized	in	our consolidated	statement	of	income

using	the	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	nonrefundable	fees	or	costs,	as	well	as	purchase premiums	or	discounts,	resulting	in	amortization	or	accretion,	accordingly.

For	debt	securities	acquired	for	which	we	consider	it	probable	as	of the	date	of	acquisition	that	we	will	be	unable	to	collect	all	contractually required	principal,	interest	and	other	payments,	the	excess	of	our estimate	of	undiscounted	future	cash	flows	from	these	securities	over their	initial	recorded	investment	is	accreted	into	interest	revenue	on	a level-yield	basis	over	the	securities'	estimated	remaining	terms. Subsequent	decreases	in	these	securities'	expected	future	cash	flows	are either	recognized	prospectively	through	an	adjustment	of	the	yields	on	the securities	over	their	remaining	terms,	or	are	evaluated	for	other-than- temporary	impairment.	Increases	in	expected	future	cash	flows	are recognized	prospectively	over	the	securities'	estimated	remaining	terms through	the	recalculation	of	their	yields.

For	certain	debt	securities	acquired	which	are	considered	to	be beneficial	interests	in	securitized	financial	assets,	the	excess	of	our estimate	of	undiscounted	future	cash	flows	from	these	securities	over their	initial	recorded	investment	is	accreted	into	interest	revenue	on	a level-yield	basis	over	the	securities'	estimated	remaining	terms. Subsequent	decreases	in	these	securities'	expected	future	cash	flows	are either	recognized	prospectively	through	an	adjustment	of	the	yields	on	the securities	over	their	remaining	terms,	or	are	evaluated	for	other-than- temporary	impairment.	Increases	in	expected	future	cash	flows	are recognized	prospectively	over	the	securities'	estimated	remaining	terms through	the	recalculation	of	their	yields.

We	conduct	periodic	reviews	of	individual	securities	to	assess whether	other-than-temporary	impairment	exists.	Impairment	exists	when the	current	fair	value	of	an	individual	security	is	below	its	amortized	cost basis.	When	the	decline	in	the	security's	fair	value	is	deemed	to	be	other than	temporary,	the	loss	is	recorded	in	our	consolidated	statement	of income.	In	addition,	for	debt	securities	available	for	sale	and	held	to maturity,	impairment	is	recorded	in	our	consolidated	statement	of	income when	management	intends	to	sell	(or	may	be	required	to	sell)	the securities	before	they	recover	in	value,	or	when	management	expects	the present	value	of	cash	flows	expected	to	be	collected	from	the	securities	to be	less	than	the	amortized	cost	of	the	impaired	security	(a	credit	loss).

	Our	review	of	impaired	securities	generally	includes:

•the	identification	and	evaluation	of	securities	that	have	indications of	potential	other-than-temporary	impairment,	such	as	issuer- specific	concerns,	including	deteriorating	financial	condition	or bankruptcy;

•the	analysis	of	expected	future	cash	flows	of	securities,	based	on quantitative	and	qualitative	factors;

•the	analysis	of	the	collectibility	of	those	future	cash	flows, including	information	about	past	events,	current	conditions,	and reasonable	and	supportable	forecasts;

•the	analysis	of	the	underlying	collateral	for	mortgage-	and	asset- backed	securities;

•the	analysis	of	individual	impaired	securities,	including consideration	of	the	length	of	time	the	security	has	been	in	an unrealized	loss	position,	the	anticipated	recovery	period,	and	the magnitude	of	the	overall	price	decline;

•evaluation	of	factors	or	triggers	that	could	cause	individual securities	to	be	deemed	other-than-temporarily	impaired	and those	that	would	not	support	other-than-temporary	impairment; and

•documentation	of	the	results	of	these	analyses.

Factors	considered	in	determining	whether	impairment	is	other	than temporary	include:

•certain	macroeconomic	drivers;

•certain	industry-specific	drivers;

•the	length	of	time	the	security	has	been	impaired;

•the	severity	of	the	impairment;

•the	cause	of	the	impairment	and	the	financial	condition	and	near- term	prospects	of	the	issuer;

•activity	in	the	market	with	respect	to	the	issuer's	securities,	which may	indicate	adverse	credit	conditions;	and

•our	intention	not	to	sell,	and	the	likelihood	that	we	will	not	be required	to	sell,	the	security	for	a	period	of	time	sufficient	to	allow for	its	recovery	in	value.

Substantially	all	of	our	investment	securities	portfolio	is	composed	of debt	securities.	A	critical	component	of	our	assessment	of	other-than- temporary	impairment	of	these	debt	securities	is	the	identification	of credit-impaired	securities	for	which

management	does	not	expect	to	receive	cash	flows	sufficient	to	recover the	entire	amortized	cost	basis	of	the	security.

Debt	securities	that	are	not	deemed	to	be	credit-impaired	are subject	to	additional	management	analysis	to	assess	whether management	intends	to	sell,	or,	more	likely	than	not,	would	be	required	to sell,	the	security	before	the	expected	recovery	of	its	amortized	cost	basis.

The	following	provides	a	description	of	our	process	for	the identification	and	assessment	of	other-than-temporary	impairment,	as	well as	information	about	other-than-temporary	impairment	recorded	in	the years	ended	2014	and	2013	and	changes	in	period-end	unrealized losses,	for	major	security	types	as	of	December	31,	2014.

# U.S.	Agency	Securities

Our	portfolio	of	U.S.	agency	direct	obligations	and	mortgage-backed securities	receives	the	implicit	or	explicit	backing	of	the	U.S.	government in	conjunction	with	specified	financial	support	of	the	U.S.	Treasury.	We recorded	no	other-than-temporary	impairment	on	these	securities	in	the years	ended	2014	or	2013.	The	overall	improvement	in	the	unrealized losses	on	these	securities	as	of	December	31,	2014	was	primarily attributable	to	narrowing	spreads	in	2014.

# Asset-Backed	Securities	-	Student	Loans

Asset-backed	securities	collateralized	by	student	loans	are	primarily composed	of	securities	collateralized	by	Federal	Family	Education	Loan Program,	or	FFELP,	loans.	FFELP	loans	benefit	from	a	federal government	guarantee	of	at	least	97%	of	defaulted	principal	and	accrued interest,	with	additional	credit	support	provided	in	the	form	of	over- collateralization,	subordination	and	excess	spread,	which	collectively	total in	excess	of	100%.	Accordingly,	the	vast	majority	of	FFELP	loan-backed securities	are	protected	from	traditional	consumer	credit	risk.

We	recorded	no	other-than-temporary	impairment	on	these securities	in	2014	or	2013.	The	gross	unrealized	losses	in	our	FFELP loan-backed	securities	portfolio	as	of	December	31,	2014	were	primarily attributable	to	the	lower	spreads	on	these	securities	relative	to	those associated	with	more	current	issuances.

Our	assessment	of	other-than-temporary	impairment	of	these securities	considers,	among	many	other	factors,	the	strength	of	the	U.S. government	guarantee,	the	performance	of	the	underlying	collateral,	and the	remaining	average	term

of	the	FFELP	loan-backed	securities	portfolio,	which	was	approximately 4.4	years	as	of	December	31,	2014.

Our	total	exposure	to	private	student	loan-backed	securities	was less	than	$700	million	as	of	December	31,	2014.	Our	assessment	of other-than-temporary	impairment	of	private	student	loan-backed	securities considers,	among	other	factors,	the	impact	of	high	unemployment	rates on	the	collateral	performance	of	private	student	loans.	We	recorded	no other-than-temporary	impairment	on	these	securities	in	2014	or	2013.

# Non-U.S.	Mortgage-	and	Asset-Backed	Securities

Non-U.S.	mortgage-	and	asset-backed	securities	are	primarily composed	of	U.K.,	Australian	and	Dutch	securities	collateralized	by residential	mortgages	and	German	securities	collateralized	by	automobile loans	and	leases.	Our	assessment	of	impairment	with	respect	to	these securities	considers	the	location	of	the	underlying	collateral,	collateral enhancement	and	structural	features,	expected	credit	losses	under	base- case	and	stressed	conditions	and	the	macroeconomic	outlook	for	the country	in	which	the	collateral	is	located,	including	housing	prices	and unemployment.	Where	appropriate,	any	potential	loss	after	consideration of	the	above-referenced	factors	is	further	evaluated	to	determine	whether any	other-than-temporary	impairment	exists.

We	recorded	other-than-temporary	impairment	of	$1	million	and	$6 million	for	the	years	ended	December	31,	2014	and	2013,	respectively, on	non-U.S.	residential	mortgage-backed	securities	in	our	consolidated statement	of	income	associated	with	adverse	changes	in	the	timing	of expected	future	cash	flows	from	the	securities.

In	addition,	in	the	year	ended	December	31,	2013,	we	recorded other-than-temporary	impairment	of	$6	million	on	these	securities	in	our consolidated	statement	of	income	associated	with	management's	intent	to sell	the	impaired	security	prior	to	its	recovery	in	value.

Our	assessment	of	other-than-temporary	impairment	of	these securities	takes	into	account	government	intervention	in	the corresponding	mortgage	markets	and	assumes	a	conservative	baseline macroeconomic	environment	for	this	region,	factoring	in	slower	economic growth	and	continued	government	austerity	measures.	Our	baseline	view assumes	a	recessionary	period	characterized	by	high	unemployment	and by	additional	housing	price	declines	of	between	5%	and	15%	across these	four	countries.	Our	evaluation	of	other-than-temporary	impairment in	our	base	case	does	not	assume	a

disorderly	sovereign-debt	restructuring	or	a	break-up	of	the	Eurozone.	In addition,	we	perform	stress	testing	and	sensitivity	analysis	in	order	to understand	the	impact	of	more	severe	assumptions	on	potential	other- than-temporary	impairment.

# State	and	Political	Subdivisions	and	Other	U.S.	Debt	Securities

Our	municipal	securities	portfolio	primarily	includes	securities	issued by	U.S.	states	and	their	municipalities.	A	portion	of	this	portfolio	is	held	in connection	with	our	tax-exempt	investment	program,	more	fully	described in	note	12.	Our	portfolio	of	other	U.S.	debt	securities	is	primarily composed	of	securities	issued	by	U.S.	corporations.

Our	assessment	of	other-than-temporary	impairment	of	these portfolios	considers,	among	other	factors,	adverse	conditions	specifically related	to	the	industry,	geographic	area	or	financial	condition	of	the issuer;	the	structure	of	the	security,	including	collateral,	if	any,	and payment	schedule;	rating	agency	changes	to	the	security's	credit	rating; the	volatility	of	the	fair	value	changes;	and	our	intent	and	ability	to	hold	the security	until	its	recovery	in	value.		If	the	impairment	of	the	security	is credit-related,	we	estimate	the	future	cash	flows	from	the	security,	tailored to	the	security	and	considering	the	above-described	factors,	and	any resulting	impairment	deemed	to	be	other-than-temporary	is	recorded	in our	consolidated	statement	of	income.

We	recorded	no	other-than-temporary	impairment	on	these securities	in	2014	or	2013.	The	decline	in	the	unrealized	losses	on	these securities	as	of	December	31,	2014	was	primarily	attributable	to	the narrowing	of	spreads	and	U.S.	Treasury	rates	in	2014.

# U.S.	Non-Agency	Residential	Mortgage-Backed	Securities

We	assess	other-than-temporary	impairment	of	our	portfolio	of	U.S. non-agency	residential	mortgage-backed	securities	using	cash	flow models,	tailored	for	each	security,	that	estimate	the	future	cash	flows	from the	underlying	mortgages,	using	the	security-specific	collateral	and transaction	structure.	Estimates	of	future	cash	flows	are	subject	to management	judgment.	The	future	cash	flows	and	performance	of	our portfolio	of	U.S.	non-agency	residential	mortgage-backed	securities	are	a function	of	a	number	of	factors,	including,	but	not	limited	to,	the	condition of	the	U.S.	economy,	the	condition	of	the	U.S.	residential	mortgage markets,	and	the	level	of	loan	defaults,	prepayments	and	loss	severities. Management's	estimates	of	future	losses	for	each	security	also	consider the	underwriting	and	historical

performance	of	each	specific	security,	the	underlying	collateral	type, vintage,	borrower	profile,	third-party	guarantees,	current	levels	of subordination,	geography	and	other	factors.

We	recorded	no	other-than-temporary	impairment	on	these securities	in	2014	or	2013.

# U.S.	Non-Agency	Commercial	Mortgage-Backed	Securities

With	respect	to	our	portfolio	of	U.S.	non-agency	commercial mortgage-backed	securities,	other-than-temporary	impairment	is assessed	by	considering	a	number	of	factors,	including,	but	not	limited	to, the	condition	of	the	U.S.	economy	and	the	condition	of	the	U.S. commercial	real	estate	market,	as	well	as	capitalization	rates. Management	estimates	of	future	losses	for	each	security	also	consider the	underlying	collateral	type,	property	location,	vintage,	debt-service coverage	ratios,	expected	property	income,	servicer	advances	and estimated	property	values,	as	well	as	current	levels	of	subordination.	We recorded	$10	million	of	other-than-temporary	impairment	on	these securities	in	the	year	ended	December	31,	2014,	all	associated	with expected	credit	losses.	In	the	year	ended	December	31,	2013,	we recorded	$11	million	of	other	than	temporary	impairment	on	these securities,	all	associated	with	expected	credit	losses.

The	estimates,	assumptions	and	other	risk	factors	utilized	in	our assessment	of	impairment	as	described	above	are	used	by	management to	identify	securities	which	are	subject	to	further	analysis	of	potential credit	losses.	Additional	analyses	are	performed	using	more	stressful assumptions	to	further	evaluate	the	sensitivity	of	losses	relative	to	the above-described	factors.	However,	since	the	assumptions	are	based	on the	unique	characteristics	of	each	security,	management	uses	a	range	of estimates	for	prepayment	speeds,	default,	and	loss	severity	forecasts	that reflect	the	collateral	profile	of	the	securities	within	each	asset	class.	In addition,	in	measuring	expected	credit	losses,	the	individual characteristics	of	each	security	are	examined	to	determine	whether	any additional	factors	would	increase	or	mitigate	the	expected	loss.	Once losses	are	determined,	the	timing	of	the	loss	will	also	affect	the	ultimate other-than-temporary	impairment,	since	the	loss	is	ultimately	subject	to	a discount	commensurate	with	the	purchase	yield	of	the	security.

After	a	review	of	the	investment	portfolio,	taking	into	consideration current	economic	conditions,	adverse	situations	that	might	affect	our ability	to	fully	collect	principal	and	interest,	the	timing	of	future	payments, the	credit	quality	and	performance	of	the

collateral	underlying	mortgage-	and	asset-backed	securities	and	other relevant	factors,	and	excluding	other-than-temporary	impairment	recorded in	the	year	ended	December	31,	2014,	management	considers	the aggregate	decline	in	fair	value	of	the	investment	securities	portfolio	and the	resulting	gross	pre-tax	unrealized	losses	of	$614	million	as	of December	31,	2014,	related	to	1,482	securities,	to	be	temporary,	and	not the	result	of	any	material	changes	in	the	credit	characteristics	of	the securities.

# Note	4.				Loans	and	Leases

Loans	are	generally	recorded	at	their	principal	amount	outstanding, net	of	the	allowance	for	loan	losses,	unearned	income,	and	any	net unamortized	deferred	loan	origination	fees.	Acquired	loans	have	been initially	recorded	at	fair	value	based	on	management's	expectation	with respect	to	future	principal	and	interest	collection	as	of	the	date	of acquisition.	Acquired	loans	are	held	for	investment,	and	as	such	their initial	fair	value	is	not	adjusted	subsequent	to	acquisition.

Interest	revenue	related	to	loans	is	recognized	in	our	consolidated statement	of	income	using	the	interest	method,	or	on	a	basis approximating	a	level	rate	of	return	over	the	term	of	the	loan.	Fees received	for	providing	loan	commitments	and	letters	of	credit	that	we anticipate	will	result	in	loans	typically	are	deferred	and	amortized	to interest	revenue	over	the	term	of	the	related	loan,	beginning	with	the initial	borrowing.	Fees	on	commitments	and	letters	of	credit	are	amortized to	processing	fees	and	other	revenue	over	the	commitment	period	when funding	is	not	known	or	expected.

Leveraged-lease	investments	are	reported	at	the	aggregate	of	lease payments	receivable	and	estimated	residual	values,	net	of	non-recourse debt	and	unearned	income.	Lease	residual	values	are	reviewed	regularly for	other-than-temporary	impairment,	with	valuation	adjustments	recorded against	processing	fees	and	other	revenue.	Unearned	income	is recognized	to	yield	a	level	rate	of	return	on	the	net	investment	in	the leases.	Gains	and	losses	on	residual	values	of	leased	equipment	sold	are recorded	in	processing	fees	and	other	revenue.

The	following	table	presents	our	recorded	investment	in	loans	and leases,	by	segment	and	class,	as	of	December	31:

| (In	millions) | 2014 | 2013 |
| :--- | :--- | :--- |
| Institutional: |  |  |
| Investment\tfunds: |  |  |
| U.S. | $11,388 | $8,695 |
| Non-U.S. | 2,333 | 1,718 |
| Commercial\tand\tfinancial: |  |  |
| U.S. | 3,061 | 1,372 |
| Non-U.S. | 256 | 154 |
| Purchased\treceivables: |  |  |
| U.S. | 124 | 217 |
| Non-U.S. | 6 | 26 |
| Lease\tfinancing: |  |  |
| U.S. | 335 | 339 |
| Non-U.S. | 668 | 756 |
| Total\tinstitutional | 18,171 | 13,277 |
| Commercial\treal\testate: |  |  |
| U.S. | 28 | 209 |
| Total\tloans\tand\tleases | 18,199 | 13,486 |
| Allowance\tfor\tloan\tlosses | (38) | (28) |
| Loans\tand\tleases,\tnet\tof\tallowance\tfor\nloan\tlosses | $18,161 | $13,458 |

The	components	of	our	net	investment	in	leveraged	lease	financing, included	in	the	institutional	segment	in	the	preceding	table,	were	as follows	as	of	December	31:

| (In	millions) | 2014 | 2013 |
| :--- | :--- | :--- |
| Net\trental\tincome\treceivable | $1,284 | $1,404 |
| Estimated\tresidual\tvalues | 89 | 110 |
| Unearned\tincome | (370) | (419) |
| Investment\tin\tleveraged\tlease\tfinancing | 1,003 | 1,095 |
| Less\trelated\tdeferred\tincome\ttax\tliabilities | (326) | (359) |
| Net\tinvestment\tin\tleveraged\tlease\tfinancing | $677 | $736 |

We	segregate	our	loans	and	leases	into	two	segments:	institutional and	commercial	real	estate,	or	CRE.	Within	the	institutional	and	CRE segments,	we	further	segregate	the	receivables	into	classes	based	on their	risk	characteristics,	their	initial	measurement	attributes	and	the methods	we	use	to	monitor	and	assess	credit	risk.

The	institutional	segment	is	composed	of	the	following	classes: investment	funds,	commercial-and-	financial,	purchased	receivables	and lease	financing.	The	investment	funds	class	includes	lending	to	mutual and	other	collective	investment	funds.	The	commercial-and-financial	class includes	lending	to	corporate	borrowers,	including	broker/dealers,	as	well as	purchased	loans	composed	of	senior	secured	bank	loans.	These senior	secured	bank	loans,	which	are	more	fully	described	below,	are carried	in	connection	with	our	participation	in	loan	syndications	in	the non-investment-grade	lending	market.	The	purchased	receivables	class represents	undivided	interests	in	securitized	pools	of	underlying	third- party	receivables	added	in	connection	with	the	commercial	paper	conduit consolidation	in	2009.	The	lease	financing	class	includes	our	investment in	leveraged	lease	financing.

The	commercial-and-financial	class	in	the	institutional	segment presented	in	the	preceding	table	included	approximately	$2.07	billion	and $724	million	of	senior	secured	bank	loans	as	of	 December	31,	2014	and 2013,	respectively.	These	senior	secured	bank	loans	are	included	in	the "speculative"	category	in	the	credit-quality-indicator	tables	presented below.	As	of	December	31,	2014,	our	allowance	for	loan	losses	included approximately	$26	million	related	to	these	loans.

The	CRE	segment	is	composed	of	the	loans	acquired	in	2008 pursuant	to	indemnified	repurchase	agreements	with	an	affiliate	of Lehman	as	a	result	of	the	Lehman	Brothers	bankruptcy.	The	CRE	loans, are	primarily	collateralized	by	direct	and	indirect	interests	in	commercial real	estate,	were	recorded	at	their	then-current	fair	value,	based	on management's	expectations	with	respect	to	future	cash	flows	from	the loans	using	appropriate	market	discount	rates	as	of	the	date	of acquisition.	These	cash	flow	estimates	are	updated	quarterly	to	reflect changes	in	management's	expectations,	which	consider	market conditions	and	other	factors.

The	following	tables	present	our	recorded	investment	in	each	class	of	loans	and	leases	by	credit	quality	indicator	as	of	the	dates	indicated:

|  |  | Institutional |  |  | Commercial	Real	Estate | Commercial	Real	Estate |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014\n(In\tmillions) | Investment\nFunds | Commercial\tand\nFinancial | Purchased\nReceivables | Lease\nFinancing | Property\tDevelopment | Other | Total\nLoans\tand\nLeases |
| Investment\tgrade(1) | $13,304 | $1,011 | $130 | $976 | $— | $— | $15,421 |
| Speculative(2) | 417 | 2,306 | — | 27 | — | 28 | 2,778 |
| Total | $13,721 | $3,317 | $130 | $1,003 | $— | $28 | $18,199 |

|  |  | Institutional |  |  | Commercial	Real	Estate | Commercial	Real	Estate |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2013\n(In\tmillions) | Investment\nFunds | Commercial\tand\nFinancial | Purchased\nReceivables | Lease\nFinancing | Property\nDevelopment | Other | Total\nLoans\tand\nLeases |
| Investment\tgrade(1) | $10,282 | $740 | $243 | $1,068 | $— | $29 | $12,362 |
| Speculative(2) | 131 | 770 | — | 27 | 180 | — | 1,108 |
| Special\tmention(3) | — | 16 | — | — | — | — | 16 |
| Total | $10,413 | $1,526 | $243 | $1,095 | $180 | $29 | $13,486 |

(1)	Investment-grade	loans	and	leases	consist	of	counterparties	with	strong	credit	quality	and	low	expected	credit	risk	and	probability	of	default.	Ratings	apply	to	counterparties	with	a strong	capacity	to	support	the	timely	repayment	of	any	financial	commitment.

(2)	Speculative	loans	and	leases	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.

(3)	Special	mention	loans	and	leases	consist	of	counterparties	with	potential	weaknesses	that,	if	uncorrected,	may	result	in	deterioration	of	repayment	prospects.

We	use	an	internal	risk-rating	system	to	assess	our	risk	of	credit	loss for	each	loan	or	lease.	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.

In	assessing	the	risk	rating	assigned	to	each	individual	loan	or	lease, 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	sources	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	December	31,	2014.

The	following	table	presents	our	recorded	investment	in	loans	and	leases,	disaggregated	based	on	our	impairment	methodology,	as	of	the	dates indicated:

|  |  | December	31,	2014 |  |  | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) | Institutional | Commercial\tReal\nEstate | Total\tLoans\tand\nLeases | Institutional | Commercial\tReal\nEstate | Total\tLoans\tand\nLeases |
| Loans\tand\tleases: |  |  |  |  |  |  |
| Individually\tevaluated\tfor\timpairment | $— | $— | $— | $26 | $180 | $206 |
| Collectively\tevaluated\tfor\timpairment(1) | 18,171 | 28 | 18,199 | 13,251 | 29 | 13,280 |
| Total | $18,171 | $28 | $18,199 | $13,277 | $209 | $13,486 |

(1)	For	those	portfolios	where	there	are	a	small	number	of	loans	each	with	a	large	balance,	we	review	each	loan	annually	for	indicators	of	impairment.	For	those	loans	where	no	such indicators	are	identified,	the	loans	are	collectively	evaluated	for	impairment.	As	of	December	31,	2014	and	2013,	all	of	the	allowance	for	loan	losses	of	$38	million	and	$28	million, respectively,	related	to	institutional	loans	collectively	evaluated	for	impairment.

The	following	tables	present	information	related	to	our	recorded	investment	in	impaired	loans	and	leases	as	of	the	dates	indicated:

|  | December	31,	2014 |  | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) | Recorded\nInvestment | Unpaid\nPrincipal\nBalance(1) | Recorded\nInvestment | Unpaid\nPrincipal\nBalance(1) |
| With\tno\trelated\tallowance\trecorded: |  |  |  |  |
| CRE—property\tdevelopment(2) | $— | $— | $130 | $143 |
| CRE—property\tdevelopment—acquired\tcredit-impaired | — | 34 | — | 34 |
| CRE—other—acquired\tcredit-impaired | — | 22 | — | 21 |
| Total\tCRE | $— | $56 | $130 | $198 |

(1) As	of	December	31,	2014	and	2013,	all	of	the	allowance	for	loan	losses	of	$38	million	and	$28	million,	respectively,	related	to	institutional	loans	collectively	evaluated	for impairment.

(2)	Represents	loans	that	were	previously	modified	in	troubled	debt	restructurings	and	that	were	repaid	in	2014.

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.	No	loans	were	modified	in	troubled	debt	restructurings during	the	years	ended	December	31,	2014	and	2013.

We	generally	place	loans	on	non-accrual	status	once	principal	or interest	payments	are	60	days	contractually	past	due,	or	earlier	if management	determines	that	full	collection	is	not	probable.	Loans	60 days	past	due,	but	considered	both	well-secured	and	in	the	process	of collection,	may	be	excluded	from	non-accrual	status.	When	we	place	a loan	on	non-accrual	status,	the	accrual	of	interest	is

discontinued	and	previously	recorded	but	unpaid	interest	is	reversed	and generally	charged	against	interest	revenue.	For	loans	on	non-accrual status,	revenue	is	recognized	on	a	cash	basis	after	recovery	of	principal, if	and	when	interest	payments	are	received.	Loans	may	be	removed	from non-accrual	status	when	repayment	is	reasonably	assured	and performance	under	the	terms	of	the	loan	has	been	demonstrated.

As	of	December	31,	2014	and	2013,	no	institutional	loans	or	leases and	no	CRE	loans	were	on	non-accrual	status	or	90	days	or	more contractually	past	due.

The	allowance	for	loan	losses,	recorded	as	a	reduction	of	loans	and leases	in	our	consolidated	statement	of	condition,	represents management's	estimate	of	incurred	credit	losses	in	our	loan-and-lease portfolio	as	of	the	balance	sheet	date.	The	allowance	is	evaluated	on	a regular	basis	by	management.	Factors	considered	in	evaluating	the appropriate	level	of	the	allowance	for	both	the	institutional	and commercial	real	estate	segments	of

our	loan-and-lease	portfolio	include	loss	experience,	the	probability	of default	reflected	in	our	internal	risk	rating	of	the	counterparty's creditworthiness,	current	economic	conditions	and	adverse	situations	that may	affect	the	borrower's	ability	to	repay,	the	estimated	value	of	the underlying	collateral,	if	any,	the	performance	of	individual	credits	in relation	to	contract	terms,	and	other	relevant	factors.

Loans	are	charged	off	to	the	allowance	for	loan	losses	in	the reporting	period	in	which	either	an	event	occurs	that	confirms	the existence	of	a	loss	on	a	loan	or	a	portion	of	a	loan	is	determined	to	be uncollectible.	In	addition,	any	impaired	loan	that	is	determined	to	be collateral-dependent	is	reduced	to	an	amount	equal	to	the	fair	value	of	the collateral	less	costs	to	sell.	A	loan	is	identified	as	collateral-dependent when	management	determines	that	it	is	probable	that	the	underlying collateral	will	be	the	sole	source	of	repayment.	Recoveries	are	recorded on	a	cash	basis	as	adjustments	to	the	allowance.

The	reserve	for	off-balance	sheet	credit	exposures,	recorded	in accrued	expenses	and	other	liabilities	in	our	consolidated	statement	of condition,	represents	management's	estimate	of	probable	credit	losses	in outstanding	letters	and	lines	of	credit	and	other	credit-enhancement facilities	provided	to	our	clients	and	outstanding	as	of	the	balance	sheet date.	The	reserve	is	evaluated	on	a	regular	basis	by	management. Factors	considered	in	evaluating	the	appropriate	level	of	this	reserve	are similar	to	those	considered	with	respect	to	the	allowance	for	loan	losses. Provisions	to	maintain	the	reserve	at	a	level	considered	by	us	to	be appropriate	to	absorb	estimated	incurred	credit	losses	in	outstanding facilities	are	recorded	in	other	expenses	in	our	consolidated	statement	of income.

The	following	tables	present	activity	in	the	allowance	for	loan	losses for	the	periods	indicated:

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| (In\tmillions) | Total\tLoans\tand\nLeases | Total\tLoans\tand\nLeases | Total\tLoans\tand\nLeases |
| Allowance\tfor\tloan\nlosses(1): |  |  |  |
| Beginning\tbalance | $28 | $22 | $22 |
| Provisions | 10 | 6 | (3) |
| Recoveries | — | — | 3 |
| Ending\tbalance | $38 | $28 | $22 |

(1)	As	of	December	31,	2014,	approximately	$26	million	of	our	allowance	for	loan	losses	was related	to	senior	secured	bank	loans	included	in	the	institutional	segment;	the	remaining	$12 million	was	related	to	other	commercial-and-financial	loans	in	the	institutional	segment.

The	provision	of	$10	million	recorded	in	the	year	ended December	31,	2014	was	composed	of	a	provision	of	 $20	million associated	with	the	senior

# Note	5.				Goodwill	and	Other	Intangible	Assets

Goodwill	represents	the	excess	of	the	cost	of	an	acquisition	over	the fair	value	of	the	net	tangible	and	other	intangible	assets	acquired.	Other intangible	assets	represent	purchased	assets	that	can	be	distinguished from	goodwill	because	of	contractual	rights	or	because	the	asset	can	be exchanged	on	its	own	or	in	combination	with	a	related	contract,	asset	or liability.	Goodwill	is	not	amortized,	but	is	subject	to	annual	evaluation	for impairment.	Other	intangible	assets,	which	are	also	subject	to	annual evaluation	for	impairment,	are	mainly	related	to	client	relationships,	which are	amortized	on	a	straight-line	basis	over	periods	ranging	from	five	to twenty	years,	and	core	deposit	intangible	assets,	which	are	amortized over	periods	ranging	from	sixteen	to	twenty-two	years,	with	such amortization	recorded	in

secured	bank	loans,	as	the	portfolio	continued	to	grow	and	become	more seasoned,	offset	by	a	negative	provision	of	$10	million	associated	with the	pay-down	of	an	unrelated	commercial	and	financial	loan	with speculative-rated	credit	quality.	The	senior	secured	bank	loans	are	held	in connection	with	our	participation	in	loan	syndications	in	the	non- investment-grade	lending	market.

The	provision	of	$6	million	recorded	in	the	year	ended December	31,	2013	resulted	from	our	estimate	of	credit	losses	incurred on	our	portfolio	of	senior	secured	bank	loans.

Loans	and	leases	are	reviewed	on	a	regular	basis,	and	any provisions	for	loan	losses	that	are	recorded	reflect	management's estimate	of	the	amount	necessary	to	maintain	the	allowance	for	loan losses	at	a	level	considered	appropriate	to	absorb	estimated	incurred losses	in	the	loan-and-lease	portfolio.

other	expenses	in	our	consolidated	statement	of	income.

Impairment	of	goodwill	is	deemed	to	exist	if	the	carrying	value	of	a reporting	unit,	including	its	allocation	of	goodwill	and	other	intangible assets,	exceeds	its	estimated	fair	value.	Impairment	of	other	intangible assets	is	deemed	to	exist	if	the	balance	of	the	other	intangible	asset exceeds	the	cumulative	expected	net	cash	inflows	related	to	the	asset over	its	remaining	estimated	useful	life.	If	these	reviews	determine	that goodwill	or	other	intangible	assets	are	impaired,	the	value	of	the	goodwill or	the	other	intangible	asset	is	written	down	through	a	charge	to	other expenses	in	our	consolidated	statement	of	income.

The	following	table	presents	changes	in	the	carrying	amount	of	goodwill	during	the	periods	indicated:

|  |  | 2014 |  |  | 2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) | Investment\nServicing | Investment\nManagement | Total | Investment\nServicing | Investment\nManagement | Total |
| Goodwill: |  |  |  |  |  |  |
| Beginning\tbalance | $5,999 | $37 | $6,036 | $5,941 | $36 | $5,977 |
| Foreign\tcurrency\ttranslation\tand\tother,\tnet | (206) | (4) | (210) | 58 | 1 | 59 |
| Ending\tbalance | $5,793 | $33 | $5,826 | $5,999 | $37 | $6,036 |

The	following	table	presents	changes	in	the	net	carrying	amount	of	other	intangible	assets	during	the	periods	indicated:

|  |  | 2014 |  |  | 2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) | Investment\nServicing | Investment\nManagement | Total | Investment\nServicing | Investment\nManagement | Total |
| Other\tintangible\tassets: |  |  |  |  |  |  |
| Beginning\tbalance | $2,321 | $39 | $2,360 | $2,492 | $47 | $2,539 |
| Amortization | (213) | (9) | (222) | (205) | (9) | (214) |
| Foreign\tcurrency\ttranslation\tand\tother,\tnet | (110) | (3) | (113) | 34 | 1 | 35 |
| Ending\tbalance | $1,998 | $27 | $2,025 | $2,321 | $39 | $2,360 |

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:

|  |  | December	31,	2014 |  |  | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) | Gross\nCarrying\nAmount | Accumulated\nAmortization | Net\nCarrying\nAmount | Gross\nCarrying\nAmount | Accumulated\nAmortization | Net\nCarrying\nAmount |
| Client\trelationships | $2,569 | $(1,088) | $1,481 | $2,706 | $(975) | $1,731 |
| Core\tdeposits | 688 | (219) | 469 | 717 | (191) | 526 |
| Other | 214 | (139) | 75 | 234 | (131) | 103 |
| Total | $3,471 | $(1,446) | $2,025 | $3,657 | $(1,297) | $2,360 |

Amortization	expense	related	to	other	intangible	assets	was	 $222 million,	$214	million	and	$198	million	for	the	years	ended	December	31, 2014,	2013	and	2012,	respectively.	An	impairment	of	approximately	$9 million	associated	with	intangible	assets	was	included	in	amortization expense	in	2014.	Expected	future	amortization	expense	for	other intangible	assets	recorded	as	of	December	31,	2014	is	$203	million	for 2015,	$199	million	for	2016,	$192	million	for	2017,	$166	million	for	2018 and	$151	million	for	2019.

# Note	6.				Other	Assets

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

| (In	millions) | December	31,	2014 | December	31,	2013 |
| :--- | :--- | :--- |
| Collateral\tdeposits,\tnet | $18,134 | $13,706 |
| Unrealized\tgains\ton\tderivative\tfinancial\ninstruments,\tnet | 7,934 | 5,476 |
| Bank-owned\tlife\tinsurance | 2,402 | 2,343 |
| Investments\tin\tjoint\tventures\tand\tother\nunconsolidated\tentities | 1,798 | 1,644 |
| Accounts\treceivable | 513 | 950 |
| Income\ttaxes\treceivable | 396 | 337 |
| Prepaid\texpenses | 259 | 286 |
| Receivable\tfor\tsecurities\tsettlement | 218 | 195 |
| Deferred\ttax\tassets,\tnet\tof\tvaluation\nallowance(1) | 214 | 263 |
| Deposits\twith\tclearing\torganizations | 197 | 177 |
| Other(2) | 535 | 613 |
| Total | $32,600 | $25,990 |

(1)	Deferred	tax	assets	and	liabilities	recorded	in	our	consolidated	statement	of	condition	are netted	within	the	same	tax	jurisdiction.	Gross	deferred	tax	assets	and	liabilities	are	presented in	note	22.

(2)	Includes	other	real	estate	owned	of	approximately	$62	million	and	$59	million	as	of December	31,	2014	and	2013,	respectively.

# Note	7. Deposits

purchased	and	other	short-term	borrowings;	other	short-term	borrowings include	borrowings	associated	with	our	tax-exempt	investment	program, more	fully	described	in	note	12,	and	commercial	paper	issued	in connection	with	our	corporate	program,	under	which	we	can	issue	up	to $3	billion	of	commercial	paper	with	original	maturities	of	up	to	 270	days from	the	date	of	issuance.	Collectively,	short-term	borrowings	had weighted-average	interest	rates	of	0.04%	and	0.48%	for	the	years	ended December	31,	2014	and	2013,	respectively.

# Note	8. Short-Term	Borrowings

Our	short-term	borrowings	include	securities	sold	under	repurchase agreements,	federal	funds

The	following	tables	present	information	with	respect	to	the	amounts	outstanding	and	weighted-average	interest	rates	of	the	primary	components	of our	short-term	borrowings	as	of	and	for	the	years	ended	December	31:

# December	31,	2014	and	2013,	there	was	no	balance	outstanding	on	this

line	of	credit.

# Note	9.	Long-Term	Debt

| As	of	December	31, | 2014 | 2013 |
| :--- | :--- | :--- |
| (In\tmillions) |  |  |
| Statutory\tbusiness\ttrusts: |  |  |
| Floating-rate\tsubordinated\tnotes\tdue\tto\tState\tStreet\tCapital\tTrust\tIV\tin\t2037 | $800 | $800 |
| Floating-rate\tsubordinated\tnotes\tdue\tto\tState\tStreet\tCapital\tTrust\tI\tin\t2028 | 155 | 155 |
| Parent\tcompany\tand\tnon-banking\tsubsidiary\tissuances: |  |  |
| 3.70%\tnotes\tdue\tin\t2023(1) | 1,043 | 974 |
| 2.875%\tnotes\tdue\t2016 | 1,005 | 1,010 |
| 3.30%\tnotes\tdue\t2024(1) | 999 | — |
| 3.10%\tsubordinated\tnotes\tdue\t2023(1) | 983 | 918 |
| Long-term\tcapital\tleases | 769 | 788 |
| 4.375%\tnotes\tdue\t2021 | 730 | 727 |
| 4.956%\tjunior\tsubordinated\tdebentures\tdue\t2018 | 528 | 537 |
| 4.30%\tnotes\tdue\t2014 | — | 502 |
| 1.35%\tnotes\tdue\t2018(1) | 492 | 487 |
| 5.375%\tnotes\tdue\t2017 | 450 | 450 |
| Floating-rate\tnotes\tdue\t2014 | — | 250 |
| 7.35%\tnotes\tdue\t2026 | 150 | 150 |
| State\tStreet\tBank\tissuances: |  |  |
| Floating-rate\textendible\tnotes\tdue\t2016 | 900 | 900 |
| 5.25%\tsubordinated\tnotes\tdue\t2018 | 433 | 442 |
| 5.30%\tsubordinated\tnotes\tdue\t2016 | 405 | 409 |
| Floating-rate\tsubordinated\tnotes\tdue\t2015 | 200 | 200 |
| Total\tlong-term\tdebt | $10,042 | $9,699 |

(1)	We	have	entered	into	interest-rate	swap	agreements,	recorded	as	fair	value	hedges,	to	modify	our	interest	expense	on	these	senior	and	subordinated	notes	from	a	fixed	rate	to	a floating	rate.	As	of	December	31,	2014,	the	carrying	value	of	long-term	debt	associated	with	these	fair	value	hedges	increased	$76	million.	As	of	December	31,	2013,	the	carrying value	of	long-term	debt	associated	with	these	fair	value	hedges	decreased	$35	million.	Refer	to	note	16	for	additional	information	about	fair	value	hedges.

We	maintain	an	effective	universal	shelf	registration	that	allows	for the	offering	and	sale	of	debt	securities,	capital	securities,	common	stock, depositary	shares	and	preferred	stock,	and	warrants	to	purchase	such securities,	including	any	shares	into	which	the	preferred	stock	and depositary	shares	may	be	convertible,	or	any	combination	thereof.

# Statutory	Business	Trusts:

As	of	December	31,	2014,	we	had	 two	statutory	business	trusts, State	Street	Capital	Trusts	I	and	IV,	which	as	of	December	31,	2014	had collectively	issued	$955	million	of	trust	preferred	capital	securities. Proceeds	received	by	each	of	the	trusts	from	their	capitalization	and	from their	capital	securities	issuances	are	invested	in	junior	subordinated debentures	issued	by	the	parent	company.	The	junior	subordinated debentures	are	the	sole	assets	of	Capital	Trusts	I	and	IV.	Each	of	the trusts	is	wholly-owned	by	us;	however,	in	conformity	with	GAAP,	we	do not	record	the	trusts	in	our	consolidated	financial	statements.

Payments	made	by	the	trusts	to	holders	of	the	capital	securities	are dependent	on	our	payments	made	to	the	trusts	on	the	junior	subordinated debentures.	Our	fulfillment	of	these	commitments	has	the	effect	of providing	a	full,	irrevocable	and	unconditional	guarantee	of	the	trusts' obligations

under	the	capital	securities.	While	the	capital	securities	issued	by	the trusts	are	not	recorded	in	our	consolidated	statement	of	condition,	the junior	subordinated	debentures	qualify	for	inclusion	in	tier	1	regulatory capital	under	current	federal	regulatory	capital	guidelines.	Information about	restrictions	on	our	ability	to	obtain	funds	from	our	subsidiary	banks is	provided	in	note	15.

Interest	paid	by	the	parent	company	on	the	debentures	is	recorded in	interest	expense.	Distributions	to	holders	of	the	capital	securities	by	the trusts	are	payable	from	interest	payments	received	on	the	debentures and	are	due	quarterly	by	State	Street	Capital	Trusts	I	and	IV,	subject	to deferral	for	up	to	five	years	under	certain	conditions.	The	capital	securities are	subject	to	mandatory	redemption	in	whole	at	the	stated	maturity	upon repayment	of	the	debentures,	with	an	option	by	us	to	redeem	the debentures	at	any	time.	Such	optional	redemption	is	subject	to	federal regulatory	approval.

# Parent	Company	and	Non-Banking	Subsidiary	Issuances:

Interest	on	the	2.875%	senior	notes	and	the	4.375%	senior	notes	is payable	semi-annually	in	arrears	on	March	7	and	September	7	of	each year.

In	December	2014,	we	issued	 $1.0	billion	of	3.30%	senior	notes	due December	16,	2024.	Interest	on	the	senior	notes	is	payable	semi-annually in	arrears	on	June	16	and	December	16	of	each	year,	beginning	on	June 16,	2015.

Interest	on	the	3.70%	senior	notes	is	payable	semi-annually	in arrears	on	May	20	and	November	20	of	each	year.

Interest	on	the	3.10%	subordinated	notes	is	payable	semi-annually in	arrears	on	May	15	and	November	15	of	each	year.	The	3.10% subordinated	notes	qualify	for	inclusion	in	tier	2	regulatory	capital	under current	federal	regulatory	capital	guidelines.

As	of	December	31,	2014	and	2013,	long-term	capital	leases included	$336	million	and	$363	million,	respectively,	related	to	our	One Lincoln	Street	headquarters	building	and	related	underground	parking garage;	$241	million	and	$267	million,	respectively,	related	to	an	office building	in	the	U.K.;	and	$191	million	and	$158	million,	respectively, related	to	obligations	associated	with	the	completed	construction	of	the Channel	Center,	a	build-to-suit	office	building	located	in	Boston,	and	other premises	and	equipment.	Refer	to	note	20	for	additional	information.

Interest	on	the	4.956%	junior	subordinated	debentures	is	payable semi-annually	in	arrears	on	March	15	and	September	15	of	each	year. The	debentures	mature	on	March	15,	2018,	and	we	do	not

have	the	right	to	redeem	the	debentures	prior	to	maturity	other	than	upon the	occurrence	of	specified	events.	Such	redemption	is	subject	to	federal regulatory	approval.	The	junior	subordinated	debentures	qualify	for inclusion	in	tier	2	regulatory	capital	under	current	federal	regulatory	capital guidelines.

Interest	on	the	1.35%	senior	notes	is	payable	semi-annually	in arrears	on	May	15	and	November	15	of	each	year.

Interest	on	the	5.375%	senior	notes	is	payable	semi-annually	in arrears	on	April	30	and	October	30	of	each	year.

Interest	on	the	7.35%	senior	notes	is	payable	semi-annually	in arrears	on	June	15	and	December	15	of	each	year.	We	may	not	redeem the	notes	prior	to	their	maturity.

# State	Street	Bank	Issuances:

Each	of	the	floating-rate	extendible	notes,	issued	in	2012,	had	an initial	maturity	date	of	January	13,	2014;	on	the	18th	day	of	each	month, holders	are	entitled	to	extend	the	maturity	date	of	their	notes	for successive	one-month	periods	in	accordance	with	defined	procedures.	In no	event	may	the	maturity	of	any	note	be	extended	beyond	January	15, 2016,	the	final	maturity	date.	Beginning	on	January	15,	2015,	State	Street Bank	may	redeem	some	or	all	of	the	notes	at	100%	of	the	principal amount	of	the	notes	to	be	redeemed,	plus	accrued	interest	to	the redemption	date,	and	on	February	17,	2015,	State	Street	Bank	issued	a notice	of	redemption	for	100%	of	the	principal	amount	of	the	notes.	The redemption	will	occur	on	February	26,	2015.

State	Street	Bank	is	required	to	make	semi-annual	interest	payments on	the	outstanding	principal	balance	of	the	5.25%	subordinated	bank notes	on	April	15	and	October	15	of	each	year,	and	the	notes	qualify	for inclusion	in	tier	2	regulatory	capital	under	current	federal	regulatory	capital guidelines.

State	Street	Bank	is	required	to	make	semi-annual	interest	payments on	the	outstanding	principal	balance	of	the	5.30%	subordinated	notes	on January	15	and	July	15	of	each	year,	and	quarterly	interest	payments	on the	outstanding	principal	balance	of	the	floating-rate	notes	on	March	8, June	8,	September	8	and	December	8	of	each	year.	Each	of	the subordinated	notes	qualifies	for	inclusion	in	tier	2	regulatory	capital	under current	federal	regulatory	capital	guidelines.

# Note	10.				Commitments	and	Guarantees Commitments:

We	had	unfunded	off-balance	sheet	commitments	to	extend	credit totaling	$24.25	billion	and	$21.30	billion	as	of	December	31,	2014	and 2013,	respectively.	The	potential	losses	associated	with	these commitments	equal	the	gross	contractual	amounts,	and	do	not	consider the	value	of	any	collateral.	As	of	December	31,	2014,	approximately	76% of	our	unfunded	commitments	to	extend	credit	expire	within	one	year. Since	many	of	these	commitments	are	expected	to	expire	or	renew without	being	drawn	upon,	the	gross	contractual	amounts	do	not necessarily	represent	our	future	cash	requirements.

# Guarantees:

Off-balance	sheet	guarantees	comprise	indemnified	securities financing,	stable	value	protection,	unfunded	commitments	to	purchase assets,	and	standby	letters	of	credit.	The	potential	losses	associated	with these	guarantees	equal	the	gross	contractual	amounts,	and	do	not consider	the	value	of	any	collateral.	The	following	table	presents	the aggregate	gross	contractual	amounts	of	our	off-balance	sheet	guarantees as	of	the	dates	indicated.	Amounts	presented	do	not	reflect	participations to	independent	third	parties.

| (In	millions) | December	31,	2014 | December	31,	2013 |
| :--- | :--- | :--- |
| Indemnified\tsecurities\tfinancing | $349,766 | $320,078 |
| Stable\tvalue\tprotection | 23,409 | 24,906 |
| Asset\tpurchase\tagreements | 4,107 | 4,685 |
| Standby\tletters\tof\tcredit | 4,720 | 4,612 |

# Indemnified	Securities	Financing

On	behalf	of	our	clients,	we	lend	their	securities,	as	agent,	to	brokers 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.	We	require	the	borrowers	to	maintain	collateral	in an	amount	in	excess	of	100%	of	the	fair	market	value	of	the	securities borrowed.	Securities	on	loan	and	the	collateral	are	revalued	daily	to determine	if	additional	collateral	is	necessary	or	if	excess	collateral	is required	to	be	returned	to	the	borrower.	Collateral	received	in	connection with	our	securities	lending	services	is	held	by	us	as	agent	and	is	not recorded	in	our	consolidated	statement	of	condition.

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.

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) | December	31,	2014 | December	31,	2013 |
| :--- | :--- | :--- |
| Fair\tvalue\tof\tindemnified\tsecurities\nfinancing | $349,766 | \t $320,078 |
| Fair\tvalue\tof\tcash\tand\tsecurities |  |  |
| held\tby\tus,\tas\tagent,\tas\tcollateral |  |  |
| for\tindemnified\tsecurities\tfinancing | 364,411 | 331,732 |
| Fair\tvalue\tof\tcollateral\tfor |  |  |
| indemnified\tsecurities\tfinancing |  |  |
| invested\tin\tindemnified |  |  |
| repurchase\tagreements | 85,309 | 85,374 |
| Fair\tvalue\tof\tcash\tand\tsecurities |  |  |
| held\tby\tus\tor\tour\tagents\tas |  |  |
| collateral\tfor\tinvestments\tin |  |  |
| indemnified\trepurchase |  |  |
| agreements | 90,819 | 91,097 |

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	a	State Street	client	or	a	broker/dealer.	Collateral	provided	and	received	in connection	with	such	transactions	is	recorded	in	other	assets	and accrued	expenses	and	other	liabilities,	respectively,	in	our	consolidated statement	of	condition.	As	of	December	31,	2014	and	2013,	we	had approximately	$15.94	billion	and	$11.29	billion,	respectively,	of	collateral provided	and	approximately	$6.48	billion	and	$6.62	billion,	respectively,	of collateral	received	from	clients	in	connection	with	our	participation	in principal	securities	finance	transactions.

# Stable	Value	Protection

In	the	normal	course	of	our	business,	we	offer	products	that	provide book-value	protection,	primarily	to	plan	participants	in	stable	value	funds managed	by	non-affiliated	investment	managers	of	post-retirement defined	contribution	benefit	plans,	particularly	401(k)	plans.	The	book- value	protection	is	provided	on	portfolios	of	intermediate	investment	grade fixed-income	securities,	and	is	intended	to	provide	safety	and	stable growth	of	principal	invested.	The	protection	is	intended	to	cover	any shortfall	in	the

event	that	a	significant	number	of	plan	participants	withdraw	funds	when book	value	exceeds	market	value	and	the	liquidation	of	the	assets	is	not sufficient	to	redeem	the	participants.	The	investment	parameters	of	the underlying	portfolios,	combined	with	structural	protections,	are	designed to	provide	cushion	and	guard	against	payments	even	under	extreme stress	scenarios.

These	contingencies	are	individually	accounted	for	as	derivative financial	instruments.	The	notional	amounts	of	the	stable	value	contracts are	presented	as	"derivatives	not	designated	as	hedging	instruments"	in the	table	of	aggregate	notional	amounts	of	derivative	financial	instruments provided	in	note	16.	We	have	not	made	a	payment	under	these contingencies	that	we	consider	material	to	our	consolidated	financial condition,	and	management	believes	that	the	probability	of	payment	under these	contingencies	in	the	future,	that	we	would	consider	material	to	our consolidated	financial	condition,	is	remote.

# Note	11.				Contingencies

# Legal	and	Regulatory	Matters:

In	the	ordinary	course	of	business,	we	and	our	subsidiaries	are involved	in	disputes,	litigation,	and	governmental	or	regulatory	inquiries and	investigations,	both	pending	and	threatened.	These	matters,	if resolved	adversely	against	us	or	settled,	may	result	in	monetary damages,	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	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	proceedings	on	a	case-by-case	basis.	When	we	have	a	liability	that we	deem	probable	and	that	we	deem	can	be	reasonably	estimated	as	of the	date	of	our	consolidated	financial	statements,	we	accrue	for	our estimate	of	the	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	proceedings	and	the

reasonably	estimable	loss	(or	range	thereof)	are	inherently	difficult	to predict,	especially	in	the	early	stages	of	proceedings.	Even	if	a	loss	is probable,	due	to	many	complex	factors,	such	as	speed	of	discovery	and the	timing	of	court	decisions	or	rulings,	a	loss	or	range	of	loss	might	not be	reasonably	estimated	until	the	later	stages	of	the	proceeding.

As	of	December	31,	2014,	our	aggregate	accruals	for	legal	loss contingencies	and	regulatory	matters,	net	of	anticipated	insurance recoveries,	totaled	approximately	$224	million.	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.	We	may	be	subject	to	proceedings	in	the	future	that,	if adversely	resolved,	would	have	a	material	adverse	effect	on	our businesses	or	on	our	future	consolidated	financial	statements.	Except where	otherwise	noted	below,	we	have	not	established	accruals	with respect	to	the	claims	discussed	and	do	not	believe	that	potential	exposure is	probable	and	can	be	reasonably	estimated.

The	following	discussion	provides	information	with	respect	to significant	legal	and	regulatory	matters.

Two	related	participants	in	our	agency	securities	lending	program have	brought	suit	against	us	challenging	actions	taken	by	us	in	response to	their	withdrawal	from	the	program.	We	believe	that	certain	withdrawals by	these	participants	were	inconsistent	with	the	redemption	policy applicable	to	the	agency	lending	collateral	pools	and,	consequently, redeemed	their	remaining	interests	through	an	in-kind	distribution	that reflected	the	assets	these	participants	would	have	received	had	they acted	in	accordance	with	the	collateral	pools'	redemption	policy.	In	taking these	actions,	we	believe	that	we	acted	in	the	best	interests	of	all participants	in	the	collateral	pools.	The	two	participants	have	asserted damages	of	$125	million,	an	amount	that	plaintiffs	attribute	to	alleged deficiencies	in	the	methodology	that	State	Street	used	to	construct	the	in- kind	distribution	and	alleged	errors	in	the	pricing	of	the	securities	that plaintiffs	received	on	or	about	August	2009.	While	management	does	not believe	that	such	difference	is	an	appropriate	measure	of	damages,	we have	been	informed	that	the	participants	liquidated	these	securities	in June	2013,	and	we	estimate	the	loss	on	those	sales	to	be	approximately $11	million.	Discovery	with	respect	to	this	matter	is	expected	to	be completed	in	2015.	As	of	December	31,	2014,	we

had	$10	million	accrued	in	connection	with	this	matter.

# Foreign	Exchange

We	offer	our	custody	clients	and	their	investment	managers	the option	to	route	foreign	exchange	transactions	to	our	foreign	exchange desk	through	our	asset	servicing	operation.	We	record	as	revenue	an amount	approximately	equal	to	the	difference	between	the	rates	we	set for	those	trades	and	indicative	interbank	market	rates	at	the	time	of settlement	of	the	trade.

As	discussed	more	fully	below,	claims	have	been	asserted	on	behalf of	certain	current	and	former	custody	clients,	and	future	claims	may	be asserted,	alleging	that	our	indirect	foreign	exchange	rates	(including	the differences	between	those	rates	and	indicative	interbank	market	rates	at the	time	we	executed	the	trades)	were	not	adequately	disclosed	or	were otherwise	improper,	and	seeking	to	recover,	among	other	things,	the	full amount	of	the	revenue	we	obtained	from	our	indirect	foreign	exchange trading	with	them.

In	October	2009,	the	Attorney	General	of	the	State	of	California commenced	an	action	under	the	California	False	Claims	Act	and California	Business	and	Professional	Code	related	to	services	State Street	provides	to	California	state	pension	plans.	The	California	Attorney General	asserts	that	the	pricing	of	certain	foreign	exchange	trades	for these	pension	plans	was	governed	by	the	custody	contracts	for	these plans	and	that	our	pricing	was	not	consistent	with	the	terms	of	those contracts	and	related	disclosures	to	the	plans,	and	that,	as	a	result,	State Street	made	false	claims	and	engaged	in	unfair	competition.	The	Attorney General	asserts	actual	damages	of	approximately	$100	million	for	periods from	2001	to	2009	and	seeks	additional	penalties,	including	treble damages.	This	action	is	in	the	discovery	phase.

We	provide	custody	services	to	and	engage	in	principal	foreign exchange	trading	with	government	pension	plans	in	other	jurisdictions. Since	the	commencement	of	the	litigation	in	California,	attorneys	general and	other	government	authorities	from	a	number	of	jurisdictions,	as	well as	U.S.	Attorney's	offices,	the	U.S.	Department	of	Labor	and	the	SEC, have	requested	information	or	issued	subpoenas	in	connection	with inquiries	into	the	pricing	of	our	indirect	foreign	exchange	trading.	We continue	to	respond	to	such	inquiries	and	subpoenas.

We	engage	in	indirect	foreign	exchange	trading	with	a	broad	range of	custody	clients	in	the	U.S.	and	internationally.	We	have	responded	and are	responding	to	information	requests	from	a	number	of

clients	concerning	our	indirect	foreign	exchange	rates.	In	February	2011, a	putative	class	action	was	filed	in	federal	court	in	Boston	seeking unspecified	damages,	including	treble	damages,	on	behalf	of	all	custodial clients	that	executed	certain	foreign	exchange	transactions	with	State Street	from	1998	to	2009.	The	putative	class	action	alleges,	among	other things,	that	the	rates	at	which	State	Street	executed	foreign	currency trades	constituted	an	unfair	and	deceptive	practice	under	Massachusetts law	and	a	breach	of	the	duty	of	loyalty.

Two	other	putative	class	actions	are	currently	pending	in	federal court	in	Boston	alleging	various	violations	of	ERISA	on	behalf	of	all ERISA	plans	custodied	with	us	that	executed	indirect	foreign	exchange trades	with	State	Street	from	1998	onward.	The	complaints	allege	that State	Street	caused	class	members	to	pay	unfair	and	unreasonable	rates on	indirect	foreign	exchange	trades	with	State	Street.	The	complaints seek	unspecified	damages,	disgorgement	of	profits,	and	other	equitable relief.	Other	claims	may	be	asserted	in	the	future,	including	in	response	to developments	in	the	actions	discussed	above	or	governmental proceedings.

We	expect	that	plaintiffs	will	seek	to	recover	their	share	of	all	or	a portion	of	the	revenue	that	we	have	recorded	from	indirect	foreign exchange	trades.	We	cannot	predict	whether	a	court,	in	the	event	of	an adverse	resolution,	would	consider	our	revenue	to	be	the	appropriate measure	of	damages.

We	believe	that	the	amount	of	our	revenue	from	such	trading	has been	of	a	similar	or	lesser	order	of	magnitude	for	many	years	prior	to 2008.	Our	revenue	calculations	related	to	indirect	foreign	exchange trading	reflect	a	judgment	concerning	the	relationship	between	the	rates we	charge	for	indirect	foreign	exchange	execution	and	indicative interbank	market	rates	near	in	time	to	execution.	Our	revenue	from foreign	exchange	trading	generally	depends	on	the

difference	between	the	rates	we	set	for	those	indirect	trades	and indicative	interbank	market	rates	at	the	time	of	settlement	of	the	trade.

In	the	third	quarter	of	2014,	we	recorded	an	accrual	of	 $70	million reflecting	our	intention	to	seek	to	resolve	some,	but	not	all,	of	the outstanding	and	potential	claims	arising	out	of	our	indirect	foreign exchange	client	activities.	We	increased	this	accrual	to	$185	million	as	of December	31,	2014.	We	are	engaged	in	discussions	with	some,	but	not all,	of	the	governmental	agencies	and	civil	litigants	discussed	above regarding	potential	settlements	of	their	outstanding	or	potential	claims. There	can	be	no	assurance	that	we	will	reach	a	settlement	in	any	of	these matters,	that	the	cost	of	such	settlements	will	not	materially	exceed	our accrued	reserve,	or	that	other	claims	will	not	be	asserted.	We	do	not currently	intend	to	seek	to	negotiate	settlements	with	respect	to	all outstanding	and	potential	claims,	and	our	current	efforts,	even	if successful,	will	not	address	all	of	our	potential	material	legal	exposure arising	out	of	our	indirect	foreign	exchange	client	activities.

# Transition	Management

In	January	2014,	we	entered	into	a	settlement	with	the	U.K. Financial	Conduct	Authority,	or	FCA,	pursuant	to	which	we	paid	a	fine	of £22.9	million	(approximately	$37.8	million),	as	a	result	of	our	having charged	six	clients	of	our	U.K.	transition	management	business	during 2010	and	2011	amounts	in	excess	of	the	contractual	terms.	The	SEC	and the	U.S.	Attorney	are	conducting	separate	investigations	into	this	matter. As	of	December	31,	2014,	we	had	remaining	accruals	of	approximately $3.0	million	for	indemnification	costs	associated	with	this	matter.

State	Street	has	been	named	as	a	defendant	in	related	complaints by	investment	management	clients	of	TAG	Virgin	Islands,	Inc.,	or	TAG, who	hold	or	held	custodial	accounts	with	State	Street.	The	complaints collectively	have	alleged	various	claims	in	connection	with	certain	assets managed	by	TAG.	As	of	December	31,	2014,	one	action	remains pending.	As	of	December	31,	2014,	we	had	$4.3	million	accrued	with respect	to	these	matters.

# 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.	Additional	information	with	respect	to	our	provision	for	income taxes	and	tax	benefits,	including	unrecognized	tax	benefits,	is	provided	in note	22.

We	are	presently	under	audit	by	a	number	of	tax	authorities.	The earliest	tax	year	open	to	examination	in	jurisdictions	where	we	have material	operations	is	2009.	The	Internal	Revenue	Service,	or	IRS, completed	their	audit	field	procedures	for	the	current	audit	related	to	our U.S.	income	tax	returns	for	the	tax	years	2010	and	2011.

# Note	12.				Variable	Interest	Entities

# Asset-Backed	Investment	Securities:

We	are	involved,	in	the	normal	course	of	our	business,	with	various types	of	special	purpose	entities,	some	of	which	meet	the	definition	of variable	interest	entities,	or	VIEs.	We	are	required	by	GAAP	to	consolidate a	VIE	when	we	are	deemed	to	be	the	primary	beneficiary.	This determination	is	evaluated	periodically	as	facts	and	circumstances change.

We	invest	in	various	forms	of	asset-backed	securities,	which	we carry	in	our	investment	securities	portfolio.	These	asset-backed	securities meet	the	GAAP	definition	of	asset	securitization	entities,	which	are considered	to	be	VIEs.	We	are	not	considered	to	be	the	primary beneficiary	of	these	VIEs	since	we	do	not	have	control	over	their activities.	Additional	information	about	our	asset-backed	securities	is provided	in	note	3.

# 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	investment	securities available	for	sale	and	other	short-term	borrowings.	We	may	also	provide liquidity	and	re-marketing	services	to	the	trusts.	As	of	December	31,	2014 and	2013,	we	carried	investment	securities	available	for	sale,	composed of	securities	related	to	state	and	political	subdivisions,	with	a	fair	value	of $2.27	billion	and	$2.33	billion,	respectively,	and	other	short-term borrowings	of	$1.87	billion	and	$1.95	billion,	respectively,	in	our consolidated	statement	of	condition	in	connection	with	these	trusts.	The interest	revenue	and	interest	expense	generated	by	the	investments	and certificated	interests,	respectively,	are	recorded	as	components	of	net interest	revenue	when	earned	or	incurred.

We	transfer	assets	to	the	trusts	from	our	investment	securities portfolio	at	adjusted	book	value,	and	the	trusts	finance	the	acquisition	of these	assets	by	selling	certificated	interests	issued	by	the	trusts	to	third- party	investors	and	to	State	Street	as	residual	holder.	These	transfers	do not	meet	the	de-recognition	criteria	defined	by	GAAP,	and	therefore,	the assets	continue	to	be	recorded	in	our	consolidated	financial	statements. The	trusts	had	a	weighted-average	life	of	approximately	5.9	years	as	of December	31,	2014,	compared	to	approximately	6.5	years	as	of December	31,	2013.

Under	separate	legal	agreements,	we	provide	standby	bond- purchase	agreements	to	these	trusts	and,	with	respect	to	certain securities,	letters	of	credit.	Our	commitments	to	the	trusts	under	these standby	bond-purchase	agreements	and	letters	of	credit	totaled	$1.91 billion	and	$674	million,	respectively,	as	of	December	31,	2014,	none	of which	was	utilized	as	of	that	date.	In	the	event	that	our	obligations	under these	agreements	are	triggered,	no	material	impact	to	our	consolidated results	of	operations	or	financial	condition	is	expected	to	occur,	because the	securities	are	already	recorded	at	fair	value	in	our	consolidated statement	of	condition.

# Interests	in	Sponsored	Investment	Funds:

In	the	normal	course	of	business,	we	manage	various	types	of sponsored	investment	funds	through	SSGA.	The	services	we	provide	to these	sponsored	investment	funds	generate	management	fee	revenue. From	time	to	time,	we	may	invest	cash	in	the	funds,	which	we	refer	to	as seed	capital,	in	order	for	the

funds	to	establish	a	performance	history	for	newly-launched	strategies.

With	respect	to	our	interests	in	sponsored	investment	funds	that meet	the	definition	of	a	VIE,	a	primary	beneficiary	assessment	is performed	to	determine	if	our	variable	interest	(or	combination	of	variable interests,	including	those	of	related	parties)	absorbs	the	majority	of	the entity's	expected	losses,	receives	a	majority	of	the	entity's	expected residual	returns,	or	both.	As	part	of	our	assessment,	we	consider	all	the facts	and	circumstances	regarding	the	terms	and	characteristics	of	the variable	interest(s),	the	design	and	characteristics	of	the	fund	and	the other	involvements	of	the	enterprise	with	the	fund.	Upon	consolidation	of certain	sponsored	investment	funds,	we	retain	the	specialized	investment company	accounting	rules	followed	by	the	underlying	funds.

All	of	the	underlying	investments	held	by	such	consolidated sponsored	investment	funds	are	carried	at	fair	value,	with	corresponding changes	in	the	investments'	fair	values	reflected	in	trading	services revenue	in	our	consolidated	statement	of	income.	When	we	no	longer control	these	funds	due	to	a	reduced	ownership	interest	or	other	reasons, the	funds	are	de-consolidated	and	accounted	for	under	another accounting	method	if	we	continue	to	maintain	an	investment	in	the	fund.

As	of	December	31,	2014,	we	were	an	investor	in	a	sponsored investment	fund,	considered	to	be	a	VIE,	which	was	initially	launched	on December	31,	2013.	Given	the	extent	of	our	exposure	to	the	variability	of the	net	assets	of	the	fund,	we	were	deemed	to	be	the	fund's	primary beneficiary,	and	as	a	result	we	include	the	fund	in	our	consolidated financial	statements.	The	fund's	activities	consist	primarily	of	active trading	in	various	equity,	fixed-income,	currency,	commodity	and	futures markets.	Such	activities	are	included	in	our	consolidated	financial statements.

As	of	December	31,	2014,	the	aggregate	assets	and	liabilities	of	this consolidated	sponsored	investment	fund	totaled	$65	million	and	$13 million,	respectively.	As	of	December	31,	2013,	the	fund's	assets consisted	solely	of	$50	million	in	cash.

As	of	December	31,	2014	our	potential	maximum	total	exposure associated	with	the	consolidated	sponsored	investment	fund	totaled	$52 million	and	represented	the	value	of	our	economic	ownership	interest	in the	fund.	We	expect	any	financial	losses	that	we	realize	over	time	from these	seed	investments	to	be	limited	to	the	actual	fair	value	of	the	amount invested	in	the	consolidated	fund,	which	is	based	on	the	fair	value	of	the underlying

investment	securities	held	by	the	funds.	However,	in	the	event	of	a	fund wind-down,	gross	gains	and	losses	of	the	fund	may	be	recognized	for financial	accounting	purposes	in	different	periods	during	the	time	the	fund is	consolidated	but	not	wholly	owned.	Although	we	expect	the	actual economic	loss	to	be	limited	to	the	amount	invested,	our	losses	in	any period	could	exceed	the	value	of	our	economic	interests	in	the	fund	and could	exceed	the	value	of	our	initial	seed	capital	investment.

Our	conclusion	to	consolidate	a	sponsored	investment	fund	may vary	from	period	to	period,	most	commonly	as	a	result	of	fluctuation	in	our ownership	interest	as	a	result	of	changes	in	the	number	of	fund	shares held	by	either	us	or	by	third	parties.	Given	that	the	funds	follow specialized	investment	company	accounting	rules	which	prescribe	fair value,	a	de-consolidation	generally	would	not	result	in	gains	or	losses	for us.

The	net	assets	of	any	consolidated	fund	are	solely	available	to	settle the	liabilities	of	the	fund	and	to	settle	any	investors'	ownership	redemption requests,	including	any	seed	capital	invested	in	the	fund	by	State	Street. We	are	not	contractually	required	to	provide	financial	or	any	other	support to	any	of	our	sponsored	investment	funds.	In	addition,	neither	creditors nor	equity	investors	in	the	sponsored	investment	funds	have	any	recourse to	State	Street's	general	credit.

As	of	December	31,	2014	and	2013,	we	managed	certain	sponsored investment	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	$45	million	and	$18	million	as	of	December	31,	2014	and	2013, respectively,	and	represented	the	carrying	value	of	our	seed	capital investment,	which	is	recorded	in	either	investment	securities	available	for sale	or	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	seed	capital	investment	in	the	unconsolidated fund.

# Note	13.				Shareholders'	Equity

# Preferred	Stock,	Series	E

In	November	2014,	we	issued	 30	million	depositary	shares,	each representing	a	1/4,000th	ownership	interest	in	a	share	of	State	Street's non-cumulative	perpetual	preferred	stock,	Series	E,	without	par	value	per share,	with	a	liquidation	preference	of	$100,000	per	share	(equivalent	to $25

per	depositary	share),	which	we	refer	to	as	our	Series	E	preferred	stock, in	a	public	offering.	The	aggregate	proceeds	from	the	offering,	net	of underwriting	discounts,	commissions	and	other	issuance	costs,	were approximately	$728	million.

On	December	15,	2019,	or	any	dividend	payment	date	thereafter, the	Series	E	preferred	stock	and	corresponding	depositary	shares	may	be redeemed	by	us,	in	whole	or	in	part,	at	a	redemption	price	equal	to $100,000	per	share	(equivalent	to	$25	per	depositary	share)	plus	any declared	and	unpaid	dividends,	without	accumulation	of	any	undeclared dividends.	The	Series	E	preferred	stock	and	corresponding	depositary shares	may	be	redeemed	at	our	option	in	whole,	but	not	in	part,	prior	to December	15,	2019,	upon	the	occurrence	of	a	regulatory	capital	treatment event,	as	defined	in	the	certificate	of	designation	with	respect	to	the Series	E	preferred	stock,	at	a	redemption	price	equal	to	$100,000	per share	(equivalent	to	$25	per	depositary	share)	plus	any	declared	and unpaid	dividends,	without	accumulation	of	any	undeclared	dividends.

# Preferred	Stock,	Series	D

On	March	15,	2024,	or	any	dividend	payment	date	thereafter,	the Series	D	preferred	stock	and	corresponding	depositary	shares	may	be redeemed	by	us,	in	whole	or	in	part,	at	a	redemption	price	equal	to $100,000	per	share	(equivalent	to	$25	per	depositary	share)	plus	any declared	and	unpaid	dividends,	without	accumulation	of	any	undeclared dividends.	The	Series	D	preferred	stock	and	corresponding	depositary shares	may	be	redeemed	at	our	option	in	whole,	but	not	in	part,	prior	to March	15,	2024,	upon	the	occurrence	of	a	regulatory	capital	treatment event,	as	defined	in	the	certificate	of	designation	with	respect	to	the Series	D	preferred	stock,	at	a	redemption	price	equal	to	$100,000	per share	(equivalent	to	$25	per	depositary	share)	plus

any	declared	and	unpaid	dividends,	without	accumulation	of	any undeclared	dividends.

In	2014,	we	declared	aggregate	dividends	on	our	Series	D	preferred stock	of	$4,605	per	share,	or	approximately	 $1.15	per	depositary	share, totaling	approximately	$35	million.	In	January	2015,	we	declared dividends	on	our	Series	D	preferred	stock	of	$1,475	per	share,	or approximately	$0.37	per	depositary	share,	totaling	approximately	 $11 million,	which	will	be	paid	in	March	2015.

# Preferred	Stock,	Series	C

In	2014,	we	declared	aggregate	dividends	on	our	Series	C	preferred stock	of	$5,252	per	share,	or	approximately	 $1.32	per	depositary	share, totaling	approximately	$26	million.	In	2013,	we	declared	aggregate dividends	on	our	Series	C	preferred	stock	of	$5,250	per	share,	or approximately	$1.31	per	depositary	share,	totaling	approximately	 $26 million.	In	January	2015,	we	declared	dividends	on	our	Series	C	preferred stock	of	$1,313	per	share,	or	approximately	 $0.33	per	depositary	share, totaling	approximately	$7	million,	which	will	be	paid	in	March	2015.

On	September	15,	2017,	or	any	dividend	payment	date	thereafter, the	Series	C	preferred	stock	and	corresponding	depositary	shares	may	be redeemed	by	us,	in	whole	or	in	part,	at	a	redemption	price	equal	to $100,000	per	share	(equivalent	to	$25	per	depositary	share)	plus	any declared	and	unpaid	dividends,	without	accumulation	of	any	undeclared dividends.	The	Series	C	preferred	stock	and	corresponding	depositary shares	may	be	redeemed	at	our	option,	in	whole	but	not	in	part,	prior	to September	15,	2017,	upon	the	occurrence	of	a	regulatory	capital treatment	event,	as	defined	in	the	certificate	of	designation	with	respect	to the	Series	C	preferred	stock,	at	a	redemption	price	equal	to	$100,000	per share	(equivalent	to	$25	per	depositary	share)	plus	any	declared	and unpaid	dividends,	without	accumulation	of	any	undeclared	dividends.

Dividends	on	shares	of	our	Series	C,	Series	D	and	Series	E preferred	stock	are	not	mandatory	and	are	not	cumulative.	If	declared, dividends	will	be	payable	on	the	liquidation	preference	of	$100,000	per share	quarterly	in	arrears	on	March	15,	June	15,	September	15	or December	15	of	each	year	at	annual	rates	of	5.25%,	5.90%	and	6.00%, respectively.	If	we	issue	additional	shares	of	our	Series	C,	Series	D	or Series	E	preferred	stock	after	the	original	issue	date,	dividend	rights	with respect	to	such	shares	will	commence	from	the	original	issue	date	of	such additional	shares.	Dividends	on	our	Series	C,	Series	D	and	Series	E preferred	stock	will	not	be	declared	to	the	extent	that	such	declaration

would	cause	us	to	fail	to	comply	with	applicable	laws	and	regulations, including	applicable	federal	regulatory	capital	guidelines.

In	March	2014,	our	Board	of	Directors	approved	a	common	stock purchase	program	authorizing	the	purchase	of	up	to	$1.70	billion	of	our common	stock	through	March	31,	2015.	In	2014,	we	purchased approximately	17.7	million	shares	of	our	common	stock	at	an	average per-share	cost	of	$69.59	and	an	aggregate	cost	of	approximately	 $1.23 billion	under	the	program.	As	of	December	31,	2014,	approximately	$470 million	remained	available	for	purchases	of	our	common	stock	under	the program.	Shares	acquired	under	the	program	which	remained	unissued as	of	December	31,	2014	were	recorded	as	treasury	stock	in	our consolidated	statement	of	condition	as	of	December	31,	2014.

In	2014,	we	completed	a	previous	Board-authorized	common	stock purchase	program	with	the	purchase	of	approximately	6.1	million	shares of	our	common	stock	at	an	average	cost	of	$69.14	per	share	and	an aggregate	cost	of	approximately	$420	million.

In	2014,	in	the	aggregate	under	both	programs,	we	purchased approximately	23.8	million	shares	of	our	common	stock	at	an	average per-share	cost	of	$69.48	and	an	aggregate	cost	of	approximately	 $1.65 billion.

In	2014,	we	declared	aggregate	common	stock	dividends	of	 $1.16 per	share,	totaling	approximately	$490	million,	compared	to	aggregate common	stock	dividends	of	$1.04	per	share,	totaling	approximately	$463 million,	declared	in	2013.

# Accumulated	Other	Comprehensive	Income	(Loss):

The	following	table	presents	the	after-tax	components	of	AOCI	as	of	December	31:

| (In	millions) | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Net\tunrealized\tgains\ton\tcash\tflow\thedges | $276 | $161 | $69 |
| Net\tunrealized\tgains\t(losses)\ton\tavailable-for-sale\tsecurities\tportfolio | 273 | (56) | 815 |
| Net\tunrealized\tgains\t(losses)\trelated\tto\treclassified\tavailable-for-sale\tsecurities | 39 | (72) | (110) |
| Net\tunrealized\tgains\t(losses)\ton\tavailable-for-sale\tsecurities | 312 | (128) | 705 |
| Net\tunrealized\tlosses\ton\tavailable-for-sale\tsecurities\tdesignated\tin\tfair\tvalue\thedges | (121) | (97) | (183) |
| Other-than-temporary\timpairment\ton\tavailable-for-sale\tsecurities\trelated\tto\tfactors\tother\tthan\tcredit | 1 | 4 | (3) |
|  | (14) | (14) | (14) |
| Other-than-temporary\timpairment\ton\theld-to-maturity\tsecurities\trelated\tto\tfactors\tother\tthan\tcredit | (29) | (47) | (65) |
| Net\tunrealized\tlosses\ton\tretirement\tplans | (272) | (203) | (283) |
| Foreign\tcurrency\ttranslation | (660) | 229 | 134 |
| Total | $(507) | $(95) | $360 |

In	the	year	ended	December	31,	2014,	we	realized	net	gains	of	 $15 million,	or	$9	million	net	of	related	taxes	from	sales	of	available-for-sale securities.	Unrealized	pre-tax	losses	of	$43	million	were	included	in	AOCI as	of	December	31,	2013,	net	of	deferred	tax	benefits	of	$17	million, related	to	these	sales.	In	the	year	ended	December	31,	2013,	we

realized	net	gains	of	$14	million,	or	$9	million	net	of	related	taxes,	from sales	of	available-for-sale	securities.	Unrealized	pre-tax	gains	of	$25 million	were	included	in	AOCI	as	of	 December	31,	2012,	net	of	deferred taxes	of	$10	million,	related	to	these	sales.

The	following	tables	present	changes	in	AOCI	by	component,	net	of	related	taxes,	for	the	periods	indicated:

|  |  |  |  | Year	Ended	December	31,	2014 |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) | Net\tUnrealized\nGains\t(Losses)\non\tCash\tFlow\nHedges | Net\tUnrealized\nGains\t(Losses)\non\tAvailable-for-\nSale\tSecurities | Net\tUnrealized\nLosses\ton\tHedges\nof\tNet\tInvestments\nin\tNon-U.S.\nSubsidiaries | Other-Than-\nTemporary\nImpairment\ton\tHeld-\nto-Maturity\nSecurities | Net\tUnrealized\nLosses\ton\nRetirement\nPlans | Foreign\nCurrency\nTranslation | Total |
| Balance\tas\tof\tDecember\t31,\t2012 | $69 | $519 | $(14) | $(65) | $(283) | $134 | $360 |
| Other\tcomprehensive\tincome\t(loss)\tbefore\nreclassifications | 89 | (735) | — | 15 | 60 | 96 | (475) |
| Amounts\treclassified\tinto\tearnings | 3 | (5) | — | 3 | 20 | (1) | 20 |
| Other\tcomprehensive\tincome\t(loss) | 92 | (740) | — | 18 | 80 | 95 | (455) |
| Balance\tas\tof\tDecember\t31,\t2013 | 161 | (221) | (14) | (47) | (203) | 229 | (95) |
| Other\tcomprehensive\tincome\t(loss)\tbefore\nreclassifications | 112 | 422 | — | 17 | — | (889) | (338) |
| Amounts\treclassified\tinto\tearnings | 3 | (9) | — | 1 | (69) | — | (74) |
| Other\tcomprehensive\tincome\t(loss) | 115 | 413 | — | 18 | (69) | (889) | (412) |
| Balance\tas\tof\tDecember\t31,\t2014 | $276 | $192 | $(14) | $(29) | $(272) | $(660) | $(507) |

The	following	tables	present	after-tax	reclassifications	into	earnings	for	the	periods	indicated:

| Interest-rate	contracts,	net	of	related	tax	benefit	of	$2	and	$2,	respectively | $3 | $3 | Net	interest	revenue |
| :--- | :--- | :--- | :--- |
| Available-for-sale\tsecurities: |  |  |  |
| Net\trealized\tgains\tfrom\tsales\tof\tavailable-for-sale\tsecurities,\tnet\tof\trelated\ttaxes\tof\t($6) |  |  | Net\tgains\t(losses)\tfrom\tsales\tof\tavailable- |
| and\t($5),\trespectively | (9) | (9) | for-sale\tsecurities |
| Other-than-temporary\timpairment\ton\tavailable-for-sale\tsecurities\trelated\tto\tfactors\tother |  |  | Losses\treclassified\t(from)\tto\tother |
| than\tcredit,\tnet\tof\trelated\ttax\tbenefit\tof\t$2 | — | 4 | comprehensive\tincome |
| Held-to-maturity\tsecurities: |  |  |  |
| Other-than-temporary\timpairment\ton\theld-to-maturity\tsecurities\trelated\tto\tfactors\tother |  |  | Losses\treclassified\t(from)\tto\tother |
| than\tcredit,\tnet\tof\trelated\ttax\tbenefit\tof\t$3\tfor\t2013 | 1 | 3 | comprehensive\tincome |
| Retirement\tplans: |  |  |  |
| Amortization\tof\tactuarial\tlosses,\tnet\tof\trelated\ttaxes\tof\t($50)\tand\ttax\tbenefits\tof\t$13, |  |  | Compensation\tand\temployee\tbenefits |
| respectively | (69) | 20 | expenses |
| Foreign\tcurrency\ttranslation: |  |  |  |
| Sales\tof\tnon-U.S.\tentities,\tnet\tof\trelated\ttaxes\tof\t($1) | — | (1) | Processing\tfees\tand\tother\trevenue |
| Total\treclassifications\tout\tof\tAOCI | $(74) | $20 |  |

# Note	14.				Equity-Based	Compensation

We	record	compensation	expense	for	equity-based	awards,	such	as restricted	stock,	deferred	stock	and	performance	awards,	based	on	the closing	price	of	our	common	stock	on	the	date	of	grant,	adjusted	if appropriate	based	on	the	award's	eligibility	to	receive	dividends.	The	fair value	of	stock	options	and	stock	appreciation	rights	is	determined	using the	Black-Scholes	valuation	model.

Compensation	expense	related	to	equity-based	awards	with	service- only	conditions	and	terms	that	provide	for	a	graded	vesting	schedule	is recognized	on	a	straight-line	basis	over	the	required	service	period	for the	entire	award.	Compensation	expense	related	to	equity-based	awards with	performance	conditions	and	terms	that	provide	for	a	graded	vesting schedule	is	recognized	over	the	requisite	service	period	for	each separately	vesting	tranche	of	the	award,	and	is	based	on	the	probable outcome	of	the	performance	conditions	at	each	reporting	date. Compensation	expense	is	adjusted	for	assumptions	with	respect	to	the estimated	amount	of	awards	that	will	be	forfeited	prior	to	vesting,	and	for employees	who	have	met	certain	retirement	eligibility	criteria.

Dividend	equivalents	for	certain	equity-based	awards	are	paid	on stock	units	on	a	current	basis	prior	to	vesting	and	distribution. Compensation	expense	for	common	stock	awards	granted	to	employees meeting	early	retirement	eligibility	criteria	is	fully	expensed	and	accrued on	the	grant	date.

As	of	December	31,	2014,	a	cumulative	total	of	 56.9	million	shares had	been	awarded	under	the	2006	Equity	Incentive	Plan,	the	2006	Plan, compared	with	cumulative	totals	of	52.4	million	shares	and	45.3	million shares	as	of	December	31,	2013	and	2012,	respectively.	The	2006	Plan allows	for	shares	withheld	in	payment	of	the	exercise	price	of	an	award	or in	satisfaction	of	tax	withholding	requirements,	shares	forfeited	due	to employee	termination,	shares	expired	under	options	awards,	or	shares not	delivered	when	performance	conditions	have	not	been	met,	to	be added	back	to	the	pool	of	shares	available	for	awards.	As	of December	31,	2014,	17.8	million	shares	had	been	awarded	under	the 2006	Plan	but	not	delivered,	and	have	become	available	for	reissue.	A total	of	60.5	million	shares	is	available	for	issuance	under	the	2006	Plan.

The	exercise	price	of	non-qualified	and	incentive	stock	options	and stock	appreciation	rights	may	not	be	less	than	the	fair	value	of	such shares	on	the	date	of	grant.	Stock	options	and	stock	appreciation	rights granted	under	the	1997	Equity	Incentive	Plan,	the	1997	Plan,	and	the 2006	Plan,	collectively	the	Plans,

generally	vest	over	four	years	and	expire	no	later	than	ten	years	from	the date	of	grant.	No	common	stock	options	or	stock	appreciation	rights	have been	granted	since	2009.	For	restricted	stock	awards	granted	under	the Plans,	common	stock	is	issued	at	the	time	of	grant	and	recipients	have dividend	and	voting	rights.	In	general,	these	grants	vest	over	three	to	four years.	No	restricted	stock	awards	have	been	granted	since	2010.

For	deferred	stock	awards	granted	under	the	Plans,	no	common stock	is	issued	at	the	time	of	grant	and	the	stock	does	not	have	dividend and	voting	rights.	Generally,	these	grants	vest	over	one	to	four	years. Performance	awards	granted	are	earned	over	a	performance	period based	on	the	achievement	of	defined	goals,	generally	over	one	to	four years.	Payment	for	performance	awards	is	made	in	shares	of	our common	stock	equal	to	its	fair	market	value	per	share,	based	on	certain financial	ratios,	after	the	conclusion	of	each	performance	period.

Beginning	with	2012,	malus-based	forfeiture	provisions	were included	in	deferred	stock	awards	granted	to	employees	identified	as "material	risk-takers,"	as	defined	by	management.	These	malus-based forfeiture	provisions	provide	for	the	reduction	or	cancellation	of	unvested deferred	compensation,	such	as	deferred	stock	awards,	if	it	is	determined that	a	material	risk-taker	made	risk-based	decisions	that	exposed	State Street	to	inappropriate	risks	that	resulted	in	a	material	unexpected	loss	at the	business-unit,	line-of-business	or	corporate	level.

Compensation	expense	related	to	stock	options,	stock	appreciation rights,	restricted	stock	awards,	deferred	stock	awards	and	performance awards,	which	we	record	as	a	component	of	compensation	and	employee benefits	expense	in	our	consolidated	statement	of	income,	was	$329 million,	$355	million	and	$353	million	for	the	years	ended	December	31, 2014,	2013	and	2012,	respectively.	Such	expense	for	2014,	2013	and 2012	excluded	$20	million,	$3	million	and	$26	million,	respectively, associated	with	acceleration	of	expense	in	connection	with	the	staff reductions	discussed	in	note	21.	This	expense	was	included	in	the severance-related	portion	of	the	associated	restructuring	charges recorded	in	each	respective	year.	The	aggregate	income	tax	benefit recorded	in	our	consolidated	statement	of	income	related	to	compensation expense	recorded	as	a	component	of	compensation	and	employee benefits	expense	was	$130	million,	$140	million	and	$139	million	for	the years	ended	December	31,	2014,	2013	and	2012,	respectively.

The	following	table	presents	information	about	the	Plans	as	of	December	31,	2014,	and	related	activity	during	the	years	indicated:

|  | Shares<br>(in	thousands) | Weighted-Average<br>Grant	Date	Fair<br>Value |
| :--- | :--- | :--- |
| Performance\tAwards: |  |  |
| Outstanding\tas\tof\tDecember\t31,\n2012 | 2,547 | $40.7 |
| Granted | 494 | 53.6 |
| Forfeited | (4) | 41.62 |
| Paid\tout | (813) | 41.62 |
| Outstanding\tas\tof\tDecember\t31,\n2013 | 2,224 | 43.24 |
| Granted | 437 | 64.56 |
| Forfeited | (1) | 53.16 |
| Paid\tout | (1,033) | 42.48 |
| Outstanding\tas\tof\tDecember\t31,\n2014 | 1,627 | $49.46 |

The	weighted-average	grant	date	fair	value	of	performance	awards granted	in	2012	was	$37.78	per	share.	The	total	fair	value	of performance	awards	paid	out	was	$44	million,	$34	million	and	$28	million for	the	years	ended	December	31,	2014,	2013	and	2012,	respectively.	As of	December	31,	2014,	total	unrecognized	compensation	cost	related	to performance	awards,	net	of	estimated	forfeitures,	was	$5	million,	which	is expected	to	be	recognized	over	a	weighted-average	period	of	2.3	years.

We	utilize	either	treasury	shares	or	authorized	but	unissued	shares to	satisfy	the	issuance	of	common	stock	under	our	equity	incentive	plans. We	do	not	have	a	specific	policy	concerning	purchases	of	our	common stock	to	satisfy	stock	issuances,	including	exercises	of	stock	options.	We have	a	general	policy	concerning	purchases	of	our	common	stock	to	meet issuances	under	our	employee	benefit	plans,	including	option	exercises and	other	corporate	purposes.	Various	factors	determine	the	amount	and timing	of	our	purchases	of	our	common	stock,	including	regulatory reviews,	our	regulatory	capital	requirements,	the	number	of	shares	we expect	to	issue	under	employee	benefit	plans,	market	conditions (including	the	trading	price	of	our	common	stock),	and	legal considerations.	These	factors	can	change	at	any	time,	and	the	number	of shares	of	common	stock	we	will	purchase	or	when	we	will	purchase	them cannot	be	assured.

# Note	15.				Regulatory	Capital

We	are	subject	to	various	regulatory	capital	requirements administered	by	federal	banking	agencies.	Failure	to	meet	minimum regulatory	capital	requirements	can	initiate	certain	mandatory	and discretionary	actions	by	regulators	that,	if	undertaken,	could	have	a	direct material	effect	on	our	consolidated	financial	condition.	Under	current regulatory	capital	adequacy	guidelines,	we	must	meet

specified	capital	requirements	that	involve	quantitative	measures	of	our consolidated	assets,	liabilities	and	off-balance	sheet	exposures	calculated in	conformity	with	regulatory	accounting	practices.	Our	capital components	and	their	classifications	are	subject	to	qualitative	judgments by	regulators	about	components,	risk	weightings	and	other	factors.

As	of	December	31,	2013,	we	were	subject	to	the	generally applicable	minimum	regulatory	capital	requirements	enforced	by	U.S. banking	regulators,	referred	to	as	Basel	I.	These	requirements	were based	on	a	1988	international	accord	developed	by	the	Basel	Committee on	Banking	Supervision,	or	Basel	Committee.

In	July	2013,	U.S.	banking	regulators	jointly	issued	a	final	rule	to implement	the	Basel	III	framework	in	the	U.S.,	referred	to	as	the	Basel	III final	rule,	provisions	of	which	become	effective	under	a	transition timetable	which	began	on	January	1,	2014,	with	full	implementation required	beginning	on	January	1,	2019.	As	provided	in	the	Basel	III	final rule,	banking	organizations	in	their	Basel	II	qualification	period,	or	parallel run,	were	required	to	complete	a	superseding	parallel	run	under	Basel	III.

We	were	notified	by	the	Federal	Reserve	on	February	21,	2014	that we	completed	our	parallel	run	and	would	be	required	to	begin	using	the advanced	approaches	framework	in	the	Basel	III	final	rule	in	the determination	of	our	risk-based	capital	requirements.	Pursuant	to	this notification,	we	began	to	use	the	advanced	approaches	to	calculate	and disclose	our	risk-based	capital	ratios	starting	with	the	three	months	ended June	30,	2014.

As	required	by	the	Dodd-Frank	Wall	Street	Reform	and	Consumer Protection	Act,	or	Dodd-Frank	Act,	enacted	in	2010,	State	Street	and State	Street	Bank,	as	advanced	approaches	banking	organizations,	are subject	to	a	permanent	"capital	floor"	in	the	calculation	and	assessment	of their	regulatory	capital	adequacy	by	U.S.	banking	regulators.	Beginning on	January	1,	2014,	this	capital	floor	is	based	on	the	provisions	of	Basel	I, as	adjusted	by	the	final	market	risk	capital	rule	issued	by	U.S.	banking regulators	in	2012.

Beginning	on	January	1,	2014,	we	became	subject	to	the	provisions of	the	Basel	III	final	rule	that	govern	our	calculation	of	regulatory	capital, including	transitional,	or	phase-in,	provisions.	Beginning	with	the	three months	ended	June	30,	2014	and	ending	with	December	31,	2014,	the lower	of	our	regulatory	capital	ratios	calculated	under	the	advanced approaches	provisions	of	the	Basel	III	final	rule	and	those	ratios	calculated under	the	transitional	provisions	of	Basel	III	(capital	calculated	in conformity	with	Basel	III	and	risk-weighted	assets	calculated	in	conformity with	Basel	I	as	described	above)	applied	in

the	assessment	of	our	capital	adequacy	for	regulatory	purposes.

As	of	December	31,	2014,	the	minimum	required	regulatory	capital ratios	are	as	follows:

•common	equity	tier	1	risk-based	capital	-	 4%;

•total	risk-based	capital	-	8%;	and

The	methods	for	the	calculation	of	our	and	State	Street	Bank's	risk- based	capital	ratios	will	change	as	the	provisions	of	the	Basel	III	final	rule related	to	the	numerator	(capital)	and	denominator	(risk-weighted	assets) are	phased	in,	and	as	we	begin	calculating	our	risk-weighted	assets	using the	advanced	approaches.	These	ongoing	methodological	changes

will	result	in	differences	in	our	reported	capital	ratios	from	one	reporting period	to	the	next	that	are	independent	of	applicable	changes	to	our capital	base,	our	asset	composition,	our	off-balance	sheet	exposures	or our	risk	profile.

As	of	December	31,	2014,	State	Street	and	State	Street	Bank exceeded	all	regulatory	capital	adequacy	requirements	to	which	they	were subject.	As	of	December	31,	2014,	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	December	31,	2014	that	have	changed	the	capital categorization	of	State	Street	Bank.

The	following	table	presents	the	regulatory	capital	structure,	total	risk-weighted	assets	and	related	regulatory	capital	ratios	for	State	Street	and	State Street	Bank	as	of	the	dates	indicated.	As	a	result	of	changes	in	the	methodologies	used	to	calculate	our	regulatory	capital	ratios	from	period	to	period	as the	provisions	of	the	Basel	III	final	rule	are	phased	in,	the	ratios	presented	in	the	table	for	each	period-end	are	not	directly	comparable.	Refer	to	the footnotes	following	the	table.

|  |  |  |  | State	Street |  |  | State	Street	Bank |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | Basel\tIII |  |  | Basel\tIII |  |
|  |  |  | Basel\tIII\tAdvanced | Transitional |  | Basel\tIII\tAdvanced | Transitional |  |
|  |  |  | Approaches | Provisions |  | Approaches | Provisions |  |
|  |  |  | December\t31, | December\t31, | Basel\tI\tDecember | December\t31, | December\t31, | Basel\tI\tDecember |
| (Dollars\tin\tmillions) |  |  | 2014(1) | 2014(2) | 31,\t2013(3) | 2014(1) | 2014(2) | 31,\t2013(3) |
| \t\tCommon\tshareholders'\tequity: |  |  |  |  |  |  |  |  |
| Common\tstock\tand\trelated\tsurplus |  |  | $10,295 | $10,295 | $10,280 | $10,867 | $10,867 | $10,786 |
| Retained\tearnings |  |  | 14,882 | 14,882 | 13,395 | 9,416 | 9,416 | 9,064 |
| Accumulated\tother\tcomprehensive\nincome\t(loss) |  |  | (641) | (641) | 215 | (535) | (535) | 209 |
| Treasury\tstock,\tat\tcost |  |  | (5,158) | (5,158) | (3,693) | — | — | — |
| Total |  |  | 19,378 | 19,378 | 20,197 | 19,748 | 19,748 | 20,059 |
| Regulatory\tcapital\tadjustments: |  |  |  |  |  |  |  |  |
| Goodwill\tand\tother\tintangible |  |  |  |  |  |  |  |  |
| assets,\tnet\tof\tassociated\tdeferred |  |  |  |  |  |  |  |  |
| tax\tliabilities(4) |  |  | (5,869) | (5,869) | (7,743) | (5,577) | (5,577) | (7,341) |
| Other\tadjustments |  |  | (36) | (36) | — | (128) | (128) | — |
| \t\tCommon\tequity\ttier\t1\tcapital |  |  | 13,473 | 13,473 | 12,454 | 14,043 | 14,043 | 12,718 |
| Preferred\tstock |  |  | 1,961 | 1,961 | 491 | — | — | — |
| Trust\tpreferred\tcapital\tsecurities |  |  |  |  |  |  |  |  |
| subject\tto\tphase-out\tfrom\ttier\t1 |  |  |  |  |  |  |  |  |
| capital |  |  | 475 | 475 | 950 | — | — | — |
| Other\tadjustments |  |  | (145) | (145) | — | — | — | — |
| \t\tTier\t1\tcapital |  |  | 15,764 | 15,764 | 13,895 | 14,043 | 14,043 | 12,718 |
| Qualifying\tsubordinated\tlong-term\ndebt |  |  | 1,618 | 1,618 | 1,918 | 1,634 | 1,634 | 1,936 |
| Trust\tpreferred\tcapital\tsecurities\nphased\tout\tof\ttier\t1\tcapital |  |  | 475 | 475 | NA | — | — | NA |
| Other\tadjustments |  |  | 4 | 4 | (26) | — | — | 45 |
| \t\tTotal\tcapital |  |  | $17,861 | $17,861 | $15,787 | $15,677 | $15,677 | $14,699 |
| \t\tRisk-weighted\tassets: |  |  |  |  |  |  |  |  |
| Credit\trisk |  |  | $66,874 | $87,502 | $78,864 | $59,836 | $84,433 | $76,197 |
| Operational\trisk |  |  | 35,866 | NA | NA | 35,449 | NA | NA |
| Market\trisk(5) |  |  | 5,087 | 2,910 | 1,262 | 5,048 | 2,909 | 1,262 |
| Total\trisk-weighted\tassets |  |  | $107,827 | $90,412 | $80,126 | $100,333 | $87,342 | $77,459 |
| Adjusted\tquarterly\taverage\tassets |  |  | $247,740 | $247,740 | $202,801 | $243,549 | $243,549 | $199,301 |
|  | Minimum\tRequirements(6) | Minimum\tRequirements(7) |  |  |  |  |  |  |
| \t\tCapital\tRatios: | 2014 | 2013 |  |  |  |  |  |  |
| Common\tequity\ttier\t1\tcapital | 4.0% | NA | 12.5% | 14.9% | 15.5% | 14.0% | 16.1% | 16.4% |
| Tier\t1\tcapital | 5.5 | 4.0% | 14.6 | 17.4 | 17.3 | 14.0 | 16.1 | 16.4 |
| Total\tcapital | 8.0 | 8.0 | 16.6 | 19.8 | 19.7 | 15.6 | 17.9 | 19.0 |
| Tier\t1\tleverage | 4.0 | 4.0 | 6.4 | 6.4 | 6.9 | 5.8 | 5.8 | 6.4 |

(2)	Common	equity	tier	1	capital,	tier	1	capital,	total	capital	and	tier	1	leverage	ratios	as	of	 December	31,	2014	were	calculated	in	conformity	with	the	transitional	provisions	of	the	Basel	III	final	rule.	Specifically,	these	ratios reflect	common	equity	tier	1,	tier	1	and	total	capital	(the	numerator)	calculated	in	conformity	with	the	provisions	of	the	Basel	III	final	rule,	and	total	risk-weighted	assets	or,	with	respect	to	the	tier	1	leverage	ratio,	quarterly average	assets	(in	both	cases,	the	denominator),	calculated	in	conformity	with	the	provisions	of	Basel	I.

(6)	Minimum	requirements	will	be	phased	in	up	to	full	implementation	beginning	on	January	1,	2019;	minimum	requirements	listed	are	as	of December	31,	2014. (7)	Minimum	requirements	listed,	governed	by	Basel	I,	were	as	of	 December	31,	2013.

# Cash,	Dividend,	Loan	and	Other	Restrictions:

In	2014,	our	banking	subsidiaries	were	required	by	the	Federal Reserve	to	maintain	average	aggregate	cash	balances	of	approximately $5.72	billion	to	satisfy	reserve	requirements.	Federal	and	state	banking regulations	place	certain	restrictions	on	dividends	paid	by	banking subsidiaries	to	a	parent	company.	For	2015,	aggregate	dividend payments	by	State	Street	Bank	to	the	parent	company	without	prior regulatory	approval	are	limited	to	approximately	$663	million	of	its undistributed	earnings	as	of	December	31,	2014,	plus	an	additional amount	equal	to	its	net	profits,	as	defined	by	the	aforementioned	banking regulations,	for	2015	up	to	the	date	of	any	dividend	payment.	Currently, the	payment	of	future	common	stock	dividends	by	the	parent	company	to its	shareholders	is	subject	to	the	review	of	our	capital	plan	by	the	Federal Reserve	in	connection	with	its	Comprehensive	Capital	Analysis	and Review	process.

The	Federal	Reserve	Act	requires	that	extensions	of	credit	by	State Street	Bank	to	certain	affiliates,	including	the	parent	company,	be	secured by	specific	collateral,	that	the	extension	of	credit	to	any	one	affiliate	be limited	to	10%	of	State	Street	Bank's	capital	and	surplus,	as	defined,	and that	extensions	of	credit	to	all	such	affiliates	be	limited	to	20%	of	State Street	Bank's	capital	and	surplus.

As	of	December	31,	2014,	our	consolidated	retained	earnings included	$492	million	representing	undistributed	earnings	of unconsolidated	entities	that	are	accounted	for	under	the	equity	method	of accounting.

# Note	16.				Derivative	Financial	Instruments

A	derivative	financial	instrument	is	a	financial	instrument	or	other contract	which	has	one	or	more	referenced	indices	and	one	or	more notional	amounts,	either	no	initial	net	investment	or	a	smaller	initial	net investment	than	would	be	expected	for	similar	types	of	contracts,	and which	requires	or	permits	net	settlement.

We	use	derivative	financial	instruments	to	support	our	clients'	needs and	to	manage	our	interest-rate	and	currency	risk.	In	undertaking	these activities,	we	assume	positions	in	both	the	foreign	exchange	and	interest- rate	markets	by	buying	and	selling	cash	instruments	and	using	derivative financial	instruments,	including	foreign	exchange	forward	contracts, foreign	exchange	and	interest-rate	options	and	interest-rate	swaps, interest-rate	forward	contracts	and	interest-rate	futures.	Our	derivative positions	include	derivative	contracts	held	by	a	consolidated	sponsored investment	fund	(refer	to

note	12).	We	record	derivatives	in	our	consolidated	statement	of	condition at	their	fair	value	on	a	recurring	basis.

Interest-rate	contracts	involve	an	agreement	with	a	counterparty	to exchange	cash	flows	based	on	the	movement	of	an	underlying	interest- rate	index.	An	interest-rate	swap	agreement	involves	the	exchange	of	a series	of	interest	payments,	at	either	a	fixed	or	variable	rate,	based	on	the notional	amount	without	the	exchange	of	the	underlying	principal	amount. An	interest-rate	option	contract	provides	the	purchaser,	for	a	premium, the	right,	but	not	the	obligation,	to	receive	an	interest	rate	based	upon	a predetermined	notional	amount	during	a	specified	period.	An	interest-rate futures	contract	is	a	commitment	to	buy	or	sell,	at	a	future	date,	a	financial instrument	at	a	contracted	price;	it	may	be	settled	in	cash	or	through	the delivery	of	the	contracted	instrument.

Foreign	exchange	contracts	involve	an	agreement	to	exchange	one currency	for	another	currency	at	an	agreed-upon	rate	and	settlement date.	Foreign	exchange	contracts	generally	consist	of	foreign	exchange forward	and	spot	contracts,	option	contracts	and	cross-currency	swaps. Future	cash	requirements,	if	any,	related	to	foreign	exchange	contracts are	represented	by	the	gross	amount	of	currencies	to	be	exchanged under	each	contract	unless	we	and	the	counterparty	have	agreed	to	pay or	to	receive	the	net	contractual	settlement	amount	on	the	settlement date.

Derivative	financial	instruments	involve	the	management	of	interest- rate	and	foreign	currency	risk,	and	involve,	to	varying	degrees,	market	risk and	credit	and	counterparty	risk	(risk	related	to	repayment).	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	use	a	variety	of	risk	management	tools	and	methodologies	to measure,	monitor	and	manage	the	market	risk	associated	with	our	trading activities,	which	include	our	use	of	derivative	financial	instruments.	One such	risk-management	measure	is	Value-at-Risk,	or	VaR.	VaR	is	an estimate	of	potential	loss	for	a	given	period	within	a	stated	statistical confidence	interval.	We	use	a	risk-measurement	system	to	measure	VaR daily.	We	have	adopted	standards	for	measuring	VaR,	and	we	maintain regulatory	capital	for	market	risk	in	accordance	with	currently	applicable regulatory	market	risk	requirements.

Derivative	financial	instruments	are	also	subject	to	credit	and counterparty	risk,	which	is	defined	as	the

risk	of	financial	loss	if	a	borrower	or	counterparty	is	either	unable	or unwilling	to	repay	borrowings	or	settle	a	transaction	in	accordance	with the	underlying	contractual	terms.	We	manage	credit	and	counterparty	risk by	performing	credit	reviews,	maintaining	individual	counterparty	limits, entering	into	netting	arrangements	and	requiring	the	receipt	of	collateral. Collateral	requirements	are	determined	after	a	review	of	the creditworthiness	of	each	counterparty,	and	these	requirements	are monitored	and	adjusted	daily.	Collateral	is	generally	held	in	the	form	of cash	or	highly	liquid	U.S.	government	securities.	We	may	be	required	to provide	collateral	to	the	counterparty	in	connection	with	our	entry	into derivative	financial	instruments.	Cash	collateral	received	from	and provided	to	counterparties	in	connection	with	derivative	financial instruments	is	recorded	in	accrued	expenses	and	other	liabilities	and other	assets,	respectively,	in	our	consolidated	statement	of	condition.	As of	December	31,	2014	and	2013,	we	had	recorded	approximately	 $1.79 billion	and	$2.58	billion,	respectively,	of	cash	collateral	received	from counterparties	and	approximately	$4.79	billion	and	$3.36	billion, respectively,	of	cash	collateral	provided	to	counterparties	in	connection with	derivative	financial	instruments	in	our	consolidated	statement	of condition.

We	enter	into	master	netting	agreements	with	many	of	our	derivative counterparties,	and	we	have	elected	to	net	derivative	assets	and	liabilities, including	cash	collateral	received	or	deposited,	which	are	subject	to	those agreements.	Certain	of	these	agreements	contain	credit	risk-related contingent	features	in	which	the	counterparty	has	the	right	to	declare State	Street	in	default	and	accelerate	cash	settlement	of	our	net derivative	liabilities	with	the	counterparty	in	the	event	that	our	credit	rating falls	below	specified	levels.	The	aggregate	fair	value	of	all	derivative instruments	with	credit	risk-related	contingent	features	that	were	in	a	net liability	position	as	of	December	31,	2014	totaled	approximately	$2.54 billion,	against	which	we	posted	aggregate	collateral	of	approximately $105	million.	If	State	Street's	credit	rating	were	downgraded	below	levels specified	in	the	agreements,	the	maximum	additional	amount	of	payments related	to	termination	events	that	could	have	been	required	pursuant	to these	contingent	features	as	of	December	31,	2014	was	approximately $2.43	billion.	Such	accelerated	settlement	would	not	affect	our consolidated	results	of	operations.

On	the	date	a	derivative	contract	is	entered	into,	we	designate	the derivative	as:	(1)	a	hedge	of	the	fair	value	of	a	recognized	fixed-rate	asset or	liability	or	of	an	unrecognized	firm	commitment	(a	"fair-value"	hedge); (2)	a	hedge	of	a	forecast	transaction	or	of	the	variability	of	cash	flows	to be	received	or	paid	related	to	a	recognized	variable-rate	asset	or	liability (a

"cash-flow"	hedge);	(3)	a	foreign	currency	fair	value	or	cash	flow	hedge	(a "foreign	currency"	hedge);	(4)	a	hedge	of	a	net	investment	in	a	non-U.S. operation;	or	(5)	a	derivative	utilized	in	either	our	trading	activities	or	in	our asset-and-liability	management	activities	that	is	not	designated	as	a hedge	of	an	asset	or	liability.

At	both	the	inception	of	the	hedge	and	on	an	ongoing	basis,	we formally	assess	and	document	the	effectiveness	of	a	derivative designated	as	a	hedge	in	offsetting	changes	in	the	fair	value	of	hedged items	and	the	likelihood	that	the	derivative	will	be	an	effective	hedge	in future	periods.	We	discontinue	hedge	accounting	prospectively	when	we determine	that	the	derivative	is	no	longer	highly	effective	in	offsetting changes	in	fair	value	or	cash	flows	of	the	underlying	risk	being	hedged, the	derivative	expires,	terminates	or	is	sold,	or	management	discontinues the	hedge	designation.

Unrealized	gains	and	losses	on	foreign	exchange	and	interest-rate contracts	are	reported	at	fair	value	in	our	consolidated	statement	of condition	as	a	component	of	other	assets	and	accrued	expenses	and other	liabilities,	respectively,	on	a	gross	basis,	except	where	such	gains and	losses	arise	from	contracts	covered	by	qualifying	master	netting agreements.

# Derivatives	Not	Designated	as	Hedging	Instruments:

In	connection	with	our	trading	activities,	we	use	derivative	financial instruments	in	our	role	as	a	financial	intermediary	and	as	both	a	manager and	servicer	of	financial	assets,	in	order	to	accommodate	our	clients' investment	and	risk	management	needs.	In	addition,	we	use	derivative financial	instruments	for	risk	management	purposes	as	economic	hedges, which	are	not	formally	designated	as	accounting	hedges,	in	order	to contribute	to	our	overall	corporate	earnings	and	liquidity.	These	activities are	designed	to	generate	trading	services	revenue	and	to	manage volatility	in	our	net	interest	revenue.	The	level	of	market	risk	that	we assume	is	a	function	of	our	overall	objectives	and	liquidity	needs,	our clients'	requirements	and	market	volatility.

With	respect	to	cross-border	investing,	our	clients	often	enter	into foreign	exchange	forward	contracts	to	convert	currency	for	international investments	and	to	manage	the	currency	risk	in	their	international investment	portfolios.	As	an	active	participant	in	the	foreign	exchange markets,	we	provide	foreign	exchange	forward	contracts	and	options	in support	of	these	client	needs,	and	also	act	as	a	dealer	in	the	currency markets.	As	part	of	our	trading	activities,	we	assume	positions	in	both	the foreign	exchange	and	interest-rate	markets	by	buying	and	selling	cash instruments	and	using	derivative

financial	instruments,	including	foreign	exchange	forward	contracts, foreign	exchange	and	interest-rate	options	and	interest-rate	swaps, interest-rate	forward	contracts,	and	interest-rate	futures.	In	the	aggregate, we	seek	to	match	positions	closely	with	the	objective	of	minimizing	related currency	and	interest-rate	risk.	We	also	use	foreign	currency	swap contracts	to	manage	the	foreign	exchange	risk	associated	with	certain foreign	currency-denominated	liabilities.	The	foreign	exchange	swap contracts	are	entered	into	for	periods	generally	consistent	with	foreign currency	exposure	of	the	underlying	transactions.

We	offer	products	that	provide	book-value	protection	primarily	to plan	participants	in	stable	value	funds	managed	by	non-affiliated investment	managers	of	post-retirement	defined	contribution	benefit plans,	particularly	401(k)	plans.	We	account	for	the	associated contingencies,	more	fully	described	in	note	10,	individually	as	derivative financial	instruments.	These	contracts	are	valued	quarterly	and	unrealized losses,	if	any,	are	recorded	in	other	expenses	in	our	consolidated statement	of	income.

In	2013	and	2014,	we	granted	deferred	cash	awards	to	certain	of	our employees	as	part	of	our	employee	incentive	compensation	plans.	We account	for	these	awards	as	derivative	financial	instruments,	as	the underlying	referenced	shares	are	not	equity	instruments	of	State	Street. The	fair	value	of	these	derivatives	is	referenced	to	the	value	of	units	in State	Street-sponsored	investment	funds	or	funds	sponsored	by	other unrelated	entities.	We	re-measure	these	derivatives	to	fair	value	quarterly, and	record	the	change	in	value	in	compensation	and	employee	benefits expenses	in	our	consolidated	statement	of	income.

# Derivatives	Designated	as	Hedging	Instruments:

In	connection	with	our	asset-and-liability	management	activities,	we use	derivative	financial	instruments	to	manage	our	interest-rate	risk. Interest-rate	risk,	defined	as	the	sensitivity	of	income	or	financial	condition to	variations	in	interest	rates,	is	a	significant	non-trading	market	risk	to which	our	assets	and	liabilities	are	exposed.	We	manage	our	interest-rate risk	by	identifying,	quantifying	and	hedging	our	exposures,	using	fixed-rate portfolio	securities	and	a	variety	of	derivative	financial	instruments,	most frequently	interest-rate	swaps	and	options	(for	example,	interest-rate	caps and	floors).	Interest-rate	swap	agreements	alter	the	interest-rate characteristics	of	specific	balance	sheet	assets	or	liabilities.	When appropriate,	forward-rate	agreements,	options	on	swaps,	and	exchange- traded	futures	and	options	are	also	used.	Our	hedging	relationships	are formally	designated,	and	qualify	for	hedge	accounting,	as	fair	value	or cash	flow	hedges.

# 	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. Differences	between	the	gains	and	losses	on	fair	value	hedges	and	the gains	and	losses	on	the	asset	or	liability	attributable	to	the	hedged	risk represent	hedge	ineffectiveness.	We	use	interest-rate	or	foreign exchange	contracts	in	this	manner	to	manage	our	exposure	to	changes	in the	fair	value	of	hedged	items	caused	by	changes	in	interest	rates	or foreign	exchange	rates.	Changes	in	the	fair	value	of	a	derivative	that	is highly	effective,	and	that	is	designated	and	qualifies	as	a	fair-value	hedge, are	recorded	in	processing	fees	and	other	revenue,	along	with	the changes	in	fair	value	of	the	hedged	asset	or	liability	attributable	to	the hedged	risk.

We	have	entered	into	interest-rate	swap	agreements	to	modify	our interest	revenue	from	certain	available-for-sale	investment	securities	from a	fixed	rate	to	a	floating	rate.	The	hedged	trusts	had	a	weighted-average life	of	approximately	5.9	years	as	of	December	31,	2014,	compared	to	6.5 years	as	of	December	31,	2013.	These	trusts	are	hedged	with	interest- rate	swap	contracts	of	similar	maturity,	repricing	and	fixed-rate	coupons. The	interest-rate	swap	contracts	convert	the	interest	revenue	from	a	fixed rate	to	a	floating	rate	indexed	to	LIBOR,	thereby	mitigating	our	exposure to	fluctuations	in	the	fair	value	of	the	securities	attributable	to	changes	in the	benchmark	interest	rate.

We	have	entered	into	interest-rate	swap	agreements	to	modify	our interest	expense	on	three	senior	notes	and	one	subordinated	note	from fixed	rates	to	floating	rates.	The	senior	notes	mature	in	2018,	2023	and 2024	and	pay	fixed	interest	at	annual	rates	of	1.35%,	3.70%	and	3.30%, respectively.	The	subordinated	note	matures	in	2023	and	pays	fixed interest	at	a	3.10%	annual	rate.	The	senior	and	subordinated	notes	are hedged	with	interest-rate	swap	contracts	with	notional	amounts, maturities	and	fixed-rate	coupon	terms	that	align	with	the	hedged	notes. The	interest-rate	swap	contracts	convert	the	fixed-rate	coupons	to	floating rates	indexed	to	LIBOR,	thereby	mitigating	our	exposure	to	fluctuations	in the	fair	values	of	the	senior	and	subordinated	notes	stemming	from changes	in	the	benchmark	interest	rates.

We	have	entered	into	forward	foreign	exchange	contracts	to	hedge the	change	in	fair	value	attributable	to	foreign	exchange	movements	in the	funding	of	non-functional	currency-denominated	investment	securities. These	forward	contracts	convert	the	foreign	currency	risk	to	U.S.	dollars, thereby	mitigating	our	exposure	to	fluctuations	in	the	fair	value	of	the securities	attributable	to	changes	in

foreign	exchange	rates.	Generally,	no	ineffectiveness	is	recorded	in earnings,	since	the	notional	amount	of	the	hedging	instruments	is	aligned with	the	carrying	value	of	the	hedged	securities.	The	forward	points	on the	hedging	instruments	are	considered	to	be	a	hedging	cost,	and accordingly	are	excluded	from	the	evaluation	of	hedge	effectiveness	and recorded	in	net	interest	revenue.

# Cash	flow	hedges

Derivatives	categorized	as	cash	flow	hedges	are	utilized	to	offset	the variability	of	cash	flows	to	be	received	from	or	paid	on	a	floating-rate asset	or	liability.	Ineffectiveness	of	cash	flow	hedges	is	defined	as	the extent	to	which	the	changes	in	fair	value	of	the	derivative	exceed	the variability	of	cash	flows	of	the	forecast	transaction.

We	had	entered	into	an	interest-rate	swap	agreement	to	modify	our interest	revenue	from	an	available-for-sale	debt	security	from	a	floating rate	to	a	fixed	rate.	The	hedged	security	matured	in	October	2014	and had	a	remaining	life	of	approximately	10	months	as	of	December	31, 2013.	The	security	was	hedged	with	an	interest-rate	swap	contract	of similar	maturity,	repricing	and	other	characteristics.	The	interest-rate	swap contract	converted	the	interest	revenue	from	a	floating	rate	to	a	fixed	rate, thereby	mitigating	our	exposure	to	fluctuations	in	the	cash	flows	of	the security	attributable	to	changes	in	the	benchmark	interest	rate.

We	have	entered	into	foreign	exchange	contracts	to	hedge	the change	in	cash	flows	attributable	to	foreign	exchange	movements	in	the funding	of	non-functional	currency-denominated	investment	securities. These	foreign	exchange	contracts	convert	the	foreign	currency	risk	to U.S.	dollars,	thereby	mitigating	our	exposure	to	fluctuations	in	the	cash flows	of	the	securities	attributable	to	changes	in	foreign	exchange	rates. Generally,	no	ineffectiveness	is	recorded	in	earnings,	since	the	critical terms	of	the	hedging	instruments	and	the	hedged	securities	are	aligned.

Changes	in	the	fair	value	of	a	derivative	that	are	highly	effective,	and that	are	designated	and	qualify	as	a	foreign	currency	hedge,	are	recorded either	in	processing	fees	and	other	revenue	or	in	other	comprehensive income,	net	of	taxes,	depending	on	whether	the	hedge	transaction	meets the	criteria	for	a	fair-value	or	a	cash-flow	hedge.	If,	however,	a	derivative is	used	as	a	hedge	of	a	net	investment	in	a	non-U.S.	operation, its	changes	in	fair	value,	to	the	extent	effective	as	a	hedge,	are	recorded, net	of	taxes,	in	the	foreign	currency	translation	component	of	other comprehensive	income.	Lastly,	entire	changes	in	the	fair	value	of derivatives	utilized	in	our	trading	activities	are	recorded	in	trading	services revenue,	and	entire	changes	in	the	fair	value	of

derivatives	utilized	in	our	asset-and-liability	management	activities	are recorded	in	processing	fees	and	other	revenue.

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

| (In	millions) | December	31,<br>2014 | December	31,<br>2013 |
| :--- | :--- | :--- |
| Derivatives\tnot\tdesignated\tas\nhedging\tinstruments: |  |  |
| Interest-rate\tcontracts: |  |  |
| Swap\tagreements\tand\tforwards | $645 | $1,023 |
| Options\tand\tcaps\tpurchased | 7 | 27 |
| Options\tand\tcaps\twritten | 7 | 27 |
| Futures | 3,939 | 3,282 |
| Foreign\texchange\tcontracts: |  |  |
| Forward,\tswap\tand\tspot | 1,231,344 | 1,124,355 |
| Options\tpurchased | 2,767 | 1,666 |
| Options\twritten | 2,404 | 1,423 |
| Credit\tderivative\tcontracts: |  |  |
| Credit\tswap\tagreements | 191 | 141 |
| Commodity\tand\tequity\tcontracts: |  |  |
| Commodity(1) | 26 | 2 |
| Equity(1) | 2 | 1 |
| Other: |  |  |
| Stable\tvalue\tcontracts | 23,409 | 24,906 |
| Deferred\tvalue\tawards(2) | 210 | 42 |
| Derivatives\tdesignated\tas\nhedging\tinstruments: |  |  |
| Interest-rate\tcontracts: |  |  |
| Swap\tagreements | 6,077 | 5,221 |
| Foreign\texchange\tcontracts: |  |  |
| Forward\tand\tswap | 2,705 | 2,783 |

(1)	Primarily	composed	of	positions	held	by	a	consolidated	sponsored	investment	fund,	more	fully	described in	note	12.

(2)	Represents	grants	of	deferred	value	awards	to	employees;	refer	to	discussion	in	this	note	under "Derivatives	Not	Designated	as	Hedging	Instruments."

In	connection	with	our	asset-and-liability	management	activities,	we have	entered	into	interest-rate	contracts	designated	as	fair	value	and cash	flow	hedges	to	manage	our	interest-rate	risk.	The	following	table presents	the	aggregate	notional	amounts	of	these	interest-rate	contracts and	the	related	assets	or	liabilities	being	hedged	as	of	the	dates indicated:

| (In	millions) | Fair<br>Value<br>Hedges | Cash<br>Flow<br>Hedges | Total |
| :--- | :--- | :--- | :--- |
| Investment\tsecurities\tavailable\nfor\tsale | $2,589 | $132 | $2,721 |
| Long-term\tdebt(2) | 2,500 | — | 2,500 |
| Total | $5,089 | $132 | $5,221 |

(1) As	of	December	31,	2014	there	were	no	interest-rate	contracts	designated	as	cash flow	hedges.

(2)	As	of	December	31,	2014,	these	fair	value	hedges	increased	the	carrying	value	of long-term	debt	presented	in	our	consolidated	statement	of	condition	by	$76	million.	As of	December	31,	2013,	these	fair	value	hedges	decreased	the	carrying	value	of	long- term	debt	presented	in	our	consolidated	statement	of	condition	by	$35	million.

The	following	tables	present	the	contractual	and	weighted-average interest	rates	for	long-term	debt,	which	include	the	effects	of	the	fair value	hedges	presented	in	the	table	above,	for	the	periods	indicated:

|  |  | 2014 |  | 2013 |
| :--- | :--- | :--- | :--- | :--- |
|  | Contractual\nRates | Rate\nIncluding\nImpact\tof\tHedges | Contractual\nRates | Rate\nIncluding\nImpact\tof\tHedges |
| Long-term\ndebt | 3.44% | 2.63% | 3.46% | 2.75% |

The	following	tables	present	the	fair	value	of	derivative	financial instruments,	excluding	the	impact	of	master	netting	agreements, recorded	in	our	consolidated	statement	of	condition	as	of	the	dates indicated.	The	impact	of	master	netting	agreements	is	disclosed	in	note 2.

| (In	millions) | December	31,	2014 | December	31,	2013 |
| :--- | :--- | :--- |
| Derivatives\tnot\tdesignated\tas\nhedging\tinstruments: |  |  |
| Foreign\texchange\tcontracts | $14,626 | $11,552 |
| Interest-rate\tcontracts | 15 | 29 |
| Other\tderivative\tcontracts | 2 | 1 |
| Total | $14,643 | $11,582 |
| Derivatives\tdesignated\tas\thedging\ninstruments: |  |  |
| Foreign\texchange\tcontracts | $509 | $359 |
| Interest-rate\tcontracts | 62 | 36 |
| Total | $571 | $395 |

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

| (In	millions) | December	31,	2014 | December	31,	2013 |
| :--- | :--- | :--- |
| Derivatives\tnot\tdesignated\tas\nhedging\tinstruments: |  |  |
| Foreign\texchange\tcontracts | $14,922 | $11,428 |
| Other\tderivative\tcontracts | 70 | 23 |
| Interest-rate\tcontracts | 16 | 29 |
| Total | $15,008 | $11,480 |
| Derivatives\tdesignated\tas\thedging\ninstruments: |  |  |
| Interest-rate\tcontracts | $223 | $302 |
| Foreign\texchange\tcontracts | 3 | 43 |
| Total | $226 | $345 |

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

The	following	tables	present	the	impact	of	our	use	of	derivative	financial	instruments	on	our	consolidated	statement	of	income	for	the	periods indicated:

| (In	millions) |  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- | :--- |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments: |  |  |  |  |
| Foreign\texchange\tcontracts | Trading\tservices\trevenue | $612 | $586 | $576 |
| Foreign\texchange\tcontracts | Processing\tfees\tand\tother\trevenue | — | — | (2) |
| Interest-rate\tcontracts | Trading\tservices\trevenue | 1 | 2 | (86) |
| Interest-rate\tcontracts | Processing\tfees\tand\tother\trevenue | — | — | 6 |
| Credit\tderivative\tcontracts | Trading\tservices\trevenue | 1 | — | — |
| Credit\tderivative\tcontracts | Processing\tfees\tand\tother\trevenue | (1) | 1 | — |
| Other\tderivative\tcontracts | Trading\tservices\trevenue | (2) | — | — |
| Total |  | $611 | $589 | $494 |

(1)	Represents	amounts	reclassified	out	of	or	into	other	comprehensive	income,	or	OCI.	For	the	year	ended	December	31,	2014,	$24	million	of	unrealized	losses	on	available-for-sale securities	designated	in	fair	value	hedges	were	recognized	in	OCI.	For	the	year	ended	December	31,	2013	and	2012,	$86	million	and	$27	million,	respectively,	of	unrealized	gains on	available-for-sale	securities	designated	in	fair	value	hedges	were	recognized	in	OCI.

Differences	between	the	gains	(losses)	on	the	derivative	and	the	gains	(losses)	on	the	hedged	item,	excluding	any	amounts	recorded	in	net	interest revenue,	represent	hedge	ineffectiveness.

|  |  | Amount	of	Gain |  | (Loss)	Reclassified |  | Amount	of	Gain |  | Location	of |  | Amount	of	Gain |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | (Loss)\ton\tDerivative |  | from\tOCI\tto |  | (Loss)\tReclassified |  | Gain\t(Loss)\ton |  | (Loss)\ton\tDerivative |  |
|  |  | Recognized\tin\tOther |  | Consolidated |  | from\tOCI\tto |  | Derivative\tRecognized |  | Recognized\tin |  |
|  |  | Comprehensive\nIncome |  | Statement\tof\nIncome | Statement\tof\tIncome | Consolidated |  | in\tConsolidated\nStatement\tof\tIncome | Statement\tof\tIncome | Consolidated |  |
|  | Years\tEnded\tDecember\t31, | Years\tEnded\tDecember\t31, | Years\tEnded\tDecember\t31, |  | Years\tEnded\tDecember\t31, | Years\tEnded\tDecember\t31, | Years\tEnded\tDecember\t31, |  |  | Years\tEnded\tDecember\t31, | Years\tEnded\tDecember\t31, |
|  | 2014 | 2013 | 2012 |  | 2014 | 2013 | 2012 |  | 2014 | 2013 | 2012 |
| (In\tmillions)\nDerivatives\tdesignated\tas\ncash\tflow\thedges: |  |  |  |  |  |  |  |  |  |  |  |
| Interest-rate\tcontracts | $(2) | $9 | $4 | Net\tinterest\trevenue | $(4) | $(4) | $(5) | Net\tinterest\trevenue | $3 | $3 | $3 |
| Foreign\texchange\tcontracts | 126 | 153 | 122 | Net\tinterest\trevenue | — | — | — | Net\tinterest\trevenue | 6 | 6 | 6 |
| Total | $124 | $162 | $126 |  | $(4) | $(4) | $(5) |  | $9 | $9 | $9 |

# Note	17.	Offsetting	Arrangements

	We	manage	credit	and	counterparty	risk	by	entering	into enforceable	netting	agreements	and	other	collateral	arrangements	with counterparties	to	derivative	contracts	and	secured	financing	transactions, including	resale	and	repurchase	agreements,	and	principal	securities borrowing	and	lending	agreements.	These	netting	agreements	mitigate our	counterparty	credit	risk	by	providing	for	a	single	net	settlement	with	a counterparty	of	all	financial	transactions	covered	by	the	agreement	in	an event	of	default	as	defined	under	such	agreement.	In	limited	cases,	a netting	agreement	may	also	provide	for	the	periodic	netting	of	settlement payments	with	respect	to	multiple	different	transaction	types	in	the	normal course	of	business.

Certain	of	our	derivative	contracts	are	executed	under	either standardized	netting	agreements	or,	for	exchange-traded	derivatives,	the relevant	contracts	for	a	particular	exchange	which	contain	enforceable netting	provisions.	In	certain	cases,	we	may	have	cross-product	netting arrangements	which	allow	for	netting	and	set-off	of	a	variety	of	types	of derivatives	with	a	single	counterparty.	A	derivative	netting	arrangement creates	an	enforceable	right	of	set-off	that	becomes	effective,	and	effects the	realization	or	settlement	of	individual	financial	assets	and	liabilities, only	following	a	specified	event	of	default.	Collateral	requirements associated	with	our	derivative	contracts	are	determined	after	a	review	of the	creditworthiness	of	each	counterparty,	and	the	requirements	are monitored	and	adjusted	daily,	typically	based	on	net	exposure	by counterparty.	Collateral	is	generally	in	the	form	of	cash	or	highly	liquid U.S.	government	securities.

In	connection	with	secured	financing	transactions,	we	enter	into netting	agreements	and	other	collateral	arrangements	with counterparties,

which	provide	for	the	right	to	liquidate	collateral	in	the	event	of	default. Collateral	is	generally	required	in	the	form	of	cash,	equity	securities	or fixed-income	securities.	Default	events	may	include	the	failure	to	make payments	or	deliver	securities	timely,	material	adverse	changes	in financial	condition	or	insolvency,	the	breach	of	minimum	regulatory	capital requirements,	or	loss	of	license,	charter	or	other	legal	authorization necessary	to	perform	under	the	contract.

In	order	for	an	arrangement	to	be	eligible	for	netting,	we	must	have	a reasonable	basis	to	conclude	that	such	netting	arrangements	are	legally enforceable.	The	analysis	of	the	legal	enforceability	of	an	arrangement differs	by	jurisdiction,	depending	on	the	laws	of	that	jurisdiction.	In	many jurisdictions,	specific	legislation	exists	that	provides	for	the	enforceability in	bankruptcy	of	close-out	netting	under	a	netting	agreement,	typically	by way	of	specific	exception	from	more	general	prohibitions	on	the	exercise of	creditor	rights.

When	we	have	a	basis	to	conclude	that	a	legally	enforceable	netting arrangement	exists	between	us	and	the	derivative	counterparty	and	the relevant	transaction	is	the	type	of	transaction	that	is	recorded	in	our consolidated	statement	of	condition,	we	offset	derivative	assets	and liabilities,	and	the	related	collateral	received	and	provided,	in	our consolidated	statement	of	condition.	We	also	offset	assets	and	liabilities related	to	secured	financing	transactions	with	the	same	counterparty	or clearinghouse	which	have	the	same	maturity	date	and	are	settled	in	the normal	course	of	business	on	a	net	basis.

Collateral	that	we	receive	in	the	form	of	securities	in	connection	with secured	financing	transactions	and	derivative	contracts	can	be	transferred or	re-pledged	as	collateral	in	many

instances	to	enter	into	repurchase	agreements	or	securities	finance	or derivative	transactions.	The	securities	collateral	received	in	connection with	our	securities	finance	activities	is	recorded	at	fair	value	in	other assets	in	our	consolidated	statement	of	condition,	with	a	related	liability	to return	the	collateral,	if	we	have	the	right	to	transfer	or	re-pledge	the collateral.	As	of	December	31,	2014	and	2013,

the	fair	value	of	securities	received	as	collateral	where	we	are	permitted to	transfer	or	re-pledge	the	securities	totaled	$2.60	billion	and	$5.64 billion,	respectively,	and	the	fair	value	of	the	portion	that	had	been transferred	or	re-pledged	as	of	the	same	date	was	$125	million	and	$1.77 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: |  | December	31,	2014 |  |  | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) | Gross\tAmounts\tof\nRecognized\nAssets(1) | Gross\tAmounts\nOffset\tin\tStatement\nof\tCondition(2) | Net\tAmounts\tof\nAssets\tPresented\nin\tStatement\tof\nCondition | Gross\tAmounts\tof\nRecognized\nAssets(1) | Gross\tAmounts\nOffset\tin\tStatement\nof\tCondition(2) | Net\tAmounts\tof\nAssets\tPresented\nin\tStatement\tof\nCondition |
| Derivatives: |  |  |  |  |  |  |
| Foreign\texchange\tcontracts | $15,135 | $(6,275) | $8,860 | $11,911 | $(4,514) | $7,397 |
| Interest-rate\tcontracts | 77 | (21) | 56 | 65 | (59) | 6 |
| Other\tderivative\tcontracts | 2 | (1) | 1 | 1 | — | 1 |
| Cash\tcollateral\tnetting | — | (983) | (983) | — | (1,928) | (1,928) |
| Total\tderivatives | $15,214 | $(7,280) | $7,934 | $11,977 | $(6,501) | $5,476 |
| Other\tfinancial\tinstruments: |  |  |  |  |  |  |
| Resale\tagreements\tand\tsecurities\nborrowing(3) | $47,488 | $(29,157) | $18,331 | $48,221 | $(30,700) | $17,521 |
| Total\tderivatives\tand\tother\nfinancial\tinstruments | $62,702 | $(36,437) | $26,265 | $60,198 | $(37,201) | $22,997 |

(1)	Amounts	include	all	transactions	regardless	of	whether	or	not	they	are	subject	to	an	enforceable	netting	arrangement.

(2)	Amounts	subject	to	netting	arrangements	which	have	been	determined	to	be	legally	enforceable.

(3)	Included	in	the	$18,331	million	as	of	December	31,	2014	were	$2,390	million	of	resale	agreements	and	$15,941	million	of	collateral	provided	related	to	securities	borrowing.

Included	in	the	$17,521	million	as	of	December	31,	2013	were	$6,230	million	of	resale	agreements	and	$11,291	million	of	collateral	provided	related	to	securities	borrowing.	Resale agreements	and	collateral	provided	related	to	securities	borrowing	were	recorded	in	securities	purchased	under	resale	agreements	and	other	assets,	respectively,	in	our consolidated	statement	of	condition.	Refer	to	note	10	for	additional	information	with	respect	to	principal	securities	finance	transactions.

| (In	millions) | Assets<br>Presented	in<br>Statement	of<br>Condition | Counterparty<br>Netting | Collateral<br>Received | Net	Amount(2) | Net	Amount	of<br>Assets	Presented<br>in	Statement	of<br>Condition | Counterparty<br>Netting | Collateral<br>Received | Net	Amount(2) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Derivatives | $7,934 | $— | $(1,490) | $6,444 | $5,476 | $— | $(181) | $5,295 |
| Resale\tagreements |  |  |  |  |  |  |  |  |
| and\tsecurities |  |  |  |  |  |  |  |  |
| borrowing | 18,331 | (128) | (18,157) | 46 | 17,521 | (131) | (14,983) | 2,407 |
| Total | $26,265 | $(128) | $(19,647) | $6,490 | $22,997 | $(131) | $(15,164) | $7,702 |

(2)	Includes	amounts	secured	by	collateral	not	determined	to	be	subject	to	enforceable	netting	arrangements.

The	following	tables	present	information	about	the	offsetting	of	liabilities	related	to	derivative	contracts	and	secured	financing	transactions,	as	of	the dates	indicated:

| Liabilities: |  | December	31,	2014 |  |  | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions) | Gross\tAmounts\tof\nRecognized\nLiabilities(1) | Gross\tAmounts\nOffset\tin\tStatement\nof\tCondition(2) | Net\tAmounts\tof\nLiabilities\nPresented\tin\nStatement\tof\nCondition | Gross\tAmounts\tof\nRecognized\nLiabilities(1) | Gross\tAmounts\nOffset\tin\tStatement\nof\tCondition(2) | Net\tAmounts\tof\nLiabilities\nPresented\tin\nStatement\tof\nCondition |
| Derivatives: |  |  |  |  |  |  |
| Foreign\texchange\tcontracts | $14,925 | $(6,275) | $8,650 | $11,471 | $(4,514) | $6,957 |
| Interest-rate\tcontracts | 239 | (20) | 219 | 331 | (59) | 272 |
| Other\tderivative\tcontracts | 70 | (1) | 69 | 9 | — | 9 |
| Cash\tcollateral\tnetting | — | (2,630) | (2,630) | — | (979) | (979) |
| Total\tderivatives | $15,234 | $(8,926) | $6,308 | $11,811 | $(5,552) | $6,259 |
| Other\tfinancial\tinstruments: |  |  |  |  |  |  |
| Repurchase\tagreements\tand\nsecurities\tlending(3) | $44,562 | $(29,157) | $15,405 | $45,273 | $(30,700) | $14,573 |
| Total\tderivatives\tand\tother\nfinancial\tinstruments | $59,796 | $(38,083) | $21,713 | $57,084 | $(36,252) | $20,832 |

(3)	Included	in	the	$15,405	million	as	of	December	31,	2014	were	$8,925	million	of	repurchase	agreements	and	$6,480	million	of	collateral	received	related	to	securities	lending.

Included	in	the	$14,573	million	as	of	December	31,	2013	were	$7,953	million	of	repurchase	agreements	and	$6,620	million	of	collateral	received	related	to	securities	lending.

Repurchase	agreements	and	collateral	received	related	to	securities	lending	were	recorded	in	securities	sold	under	repurchase	agreements	and	accrued	expenses	and	other liabilities,	respectively,	in	our	consolidated	statement	of	condition.	Refer	to	note	10	for	additional	information	with	respect	to	principal	securities	finance	transactions.

|  |  | December	31,	2014 | December	31,	2014 |  |  | December	31,	2013 | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Gross\tAmounts\tNot\tOffset\tin\nStatement\tof\tCondition(1) | Gross\tAmounts\tNot\tOffset\tin\nStatement\tof\tCondition(1) |  |  | Gross\tAmounts\tNot\tOffset\tin\nStatement\tof\tCondition(1) | Gross\tAmounts\tNot\tOffset\tin\nStatement\tof\tCondition(1) |  |
| (In\tmillions) | Net\tAmount\tof\nLiabilities\nPresented\tin\nStatement\tof\nCondition | Counterparty\nNetting | Collateral\nProvided | Net\tAmount(2) | Net\tAmount\tof\nLiabilities\nPresented\tin\nStatement\tof\nCondition | Counterparty\nNetting | Collateral\nProvided | Net\tAmount(2) |
| Derivatives | $6,308 | $— | $(19) | $6,289 | $6,259 | $— | $(6) | $6,253 |
| Repurchase |  |  |  |  |  |  |  |  |
| agreements\tand |  |  |  |  |  |  |  |  |
| securities\tlending | 15,405 | (128) | (13,872) | 1,405 | 14,573 | (131) | (13,036) | 1,406 |
| Total | $21,713 | $(128) | $(13,891) | $7,694 | $20,832 | $(131) | $(13,042) | $7,659 |

# Note	18.				Net	Interest	Revenue

The	following	table	presents	the	components	of	interest	revenue	and interest	expense,	and	related	net	interest	revenue,	for	the	periods indicated:

| (In	millions) | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Interest\trevenue: |  |  |  |
| Deposits\twith\tbanks | $196 | $125 | $141 |
| Investment\tsecurities: |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies | 672 | 707 | 799 |
| State\tand\tpolitical\tsubdivisions | 231 | 249 | 214 |
| Other\tinvestments | 1,241 | 1,331 | 1,552 |
| Securities\tpurchased\tunder\tresale\tagreements | 38 | 45 | 51 |
| Trading\taccount\tassets | 1 | — | — |
| Loans\tand\tleases | 266 | 253 | 254 |
| Other\tinterest-earning\tassets | 7 | 4 | 3 |
| Total\tinterest\trevenue | 2,652 | 2,714 | 3,014 |
| Interest\texpense: |  |  |  |
| Deposits | 99 | 93 | 166 |
| Short-term\tborrowings | 5 | 60 | 73 |
| Long-term\tdebt | 245 | 232 | 222 |
| Other\tinterest-bearing\tliabilities | 43 | 26 | 15 |
| Total\tinterest\texpense | 392 | 411 | 476 |
| Net\tinterest\trevenue | $2,260 | $2,303 | $2,538 |

# Note	19.				Employee	Benefits

# Defined	Benefit	Pension	and	Other	Post-Retirement	Benefit	Plans

State	Street	Bank	and	certain	of	its	U.S.	subsidiaries	participate	in	a non-contributory,	tax-qualified	defined	benefit	pension	plan.	The	U.S. defined	benefit	pension	plan	was	frozen	as	of	December	31,	2007	and	no new	employees	were	eligible	to	participate	after	that	date.	State	Street has	agreed	to	contribute	sufficient	amounts	as	necessary	to	meet	the benefits	paid	to	plan	participants	and	to	fund	the	plan's	service	cost,	plus interest.	U.S.	employee	account	balances	earn	annual	interest	credits until	the	employee's	retirement.	Non-U.S.	employees	participate	in	local defined	benefit	plans	which	are	funded	as	required	in	each	local jurisdiction.	In	addition	to	the	defined	benefit	pension	plans,	we	have	non- qualified	unfunded	supplemental	retirement	plans,	referred	to	as	SERPs, that	provide	certain	officers	with	defined	pension	benefits	in	excess	of allowable	qualified	plan	limits.	State	Street	Bank	and	certain	of	its	U.S. subsidiaries	also	participate	in	a	post-retirement	plan	that	provides	health care	and	insurance	benefits	for	certain	retired	employees.	The	total expense	for	these	tax-qualified	and	non-qualified	plans	was	$32	million, $42	million

We	recognize	the	funded	status	of	our	defined	benefit	pension	plans and	other	post-retirement	benefit	plans,	measured	as	the	difference between	the	fair	value	of	the	plan	assets	and	the	projected	benefit obligation,	in	the	consolidated	statement	of	position.	The	assets	held	by the	defined	benefit	pension	plans	are	largely	made	up	of	common, collective	funds	that	are	liquid	and	invest	principally	in	U.S.	equities	and high-quality	fixed	income	investments.	The	majority	of	these	assets	fall within	Level	2	of	the	fair	value	hierarchy.	The	benefit	obligations associated	with	our	primary	U.S.	and	non-U.S.	defined	benefit	plans,	non- qualified	unfunded	supplemental	retirement	plans	and	post-retirement plans	were	$1.26	billion,	$168	million	and	$120	million,	respectively,	as	of December	31,	2014	and	$1.08	billion,	$154	million	and	$108	million, respectively,	as	of	December	31,	2013.	As	the	primary	defined	benefit plans	are	frozen,	the	benefit	obligation	will	only	vary	over	time	as	a	result of	changes	in	market	interest	rates,	the	life	expectancy	of	the	plan participants	and	payments	made	from	the	plans.	The	primary	U.S.	and non-U.S.	defined	benefit	pension	plans	were	underfunded	$50	million	at December	31,	2014	and	overfunded	$40	million	at	December	31,	2013. The	non-qualified	supplemental	retirement	plans	were	underfunded	by $168	million	and	$154	million	at	December	31,	2014	and	2013, respectively.	The	other	post-retirement	benefit	plans	were	underfunded	by $120	million	and	$108	million	at	December	31,	2014	and	2013, respectively.	The	funded	status	is	included	in	other	assets	(overfunded) and	in	other	liabilities	(underfunded).

# Defined	Contribution	Retirement	Plans

We	contribute	to	employer-sponsored	U.S.	and	non-U.S.	defined contribution	plans.	Our	contribution	to	these	plans	was	$147	million	for 2014,	$134	million	for	2013	and	$146	million	for	2012.

# Note	20.				Occupancy	Expense	and	Information	Systems	and Communications	Expense

Occupancy	expense	and	information	systems	and	communications expense	include	depreciation	of	buildings,	leasehold	improvements, computer	hardware	and	software,	equipment,	and	furniture	and	fixtures. Total	depreciation	expense	for	the	years	ended	December	31,	2014, 2013	and	2012	was	$417	million,	$401	million	and	$407	million, respectively.

We	lease	1,025,000	square	feet	at	One	Lincoln	Street,	our headquarters	building	located	in	Boston,	Massachusetts,	and	a	related underground	parking	garage,	under	20-year,	non-cancelable	capital leases

expiring	in	September	2023.	A	portion	of	the	lease	payments	is	offset	by subleases	for	approximately	127,000	square	feet	of	the	building.	In	2014, we	began	leasing	approximately	500,000	square	feet	at	the	Channel Center	in	Boston,	Massachusetts	under	a	16-year	capital	lease	expiring	in December	2029.	In	addition,	we	lease	approximately	 362,000	square	feet at	20	Churchill	Place,	an	office	building	located	in	the	U.K.,	under	a	20- year	capital	lease	expiring	in	December	2028.	As	of	December	31,	2014 and	2013,	an	aggregate	net	book	value	of	$624	million	and	$646	million, respectively,	related	to	the	above-described	capital	leases	was	recorded in	premises	and	equipment,	with	the	related	liability	recorded	in	long-term debt,	in	our	consolidated	statement	of	condition.

Capital	lease	asset	amortization	is	recorded	in	occupancy	expense in	our	consolidated	statement	of	income	over	the	respective	lease	term. Lease	payments	are	recorded	as	a	reduction	of	the	liability,	with	a	portion recorded	as	imputed	interest	expense.	For	the	years	ended December	31,	2014,	2013	and

2012,	interest	expense	related	to	these	capital	lease	obligations,	reflected in	net	interest	revenue,	was	$38	million,	$40	million	and	$42	million, respectively.	As	of	December	31,	2014	and	2013,	accumulated amortization	of	capital	lease	assets	was	$426	million	and	$369	million, respectively.

We	have	entered	into	non-cancelable	operating	leases	for	premises and	equipment.	Nearly	all	of	these	leases	include	renewal	options.	Costs related	to	operating	leases	for	office	space	are	recorded	in	occupancy expense.	Costs	related	to	operating	leases	for	equipment	are	recorded	in information	systems	and	communications	expense.

Total	rental	expense,	net	of	sublease	revenue,	amounted	to	 $204 million,	$224	million	and	$227	million	for	the	years	ended	December	31, 2014,	2013	and	2012,	respectively.	Total	rental	expense	was	reduced	by sublease	revenue	of	$6	million	for	both	years	ended	December	31,	2014, and	2013	and	$4	million	for	the	year	ended	December	31,	2012.

The	following	table	presents	a	summary	of	future	minimum	lease	payments	under	non-cancelable	capital	and	operating	leases	as	of	 December	31, 2014.	Aggregate	future	minimum	rental	commitments	have	been	reduced	by	aggregate	sublease	rental	commitments	of	$55	million	for	capital	leases	and $15	million	for	operating	leases.

| (In	millions) | Capital<br>Leases | Operating<br>Leases | Total |
| :--- | :--- | :--- | :--- |
| 2015 | $105 | $179 | $284 |
| 2016 | 91 | 141 | 232 |
| 2017 | 82 | 145 | 227 |
| 2018 | 82 | 119 | 201 |
| 2019 | 82 | 86 | 168 |
| Thereafter | 520 | 265 | 785 |
| Total\tminimum\tlease\tpayments | 962 | $935 | $1,897 |

# Severance	Costs:

We	recorded	$84	million	and	$11	million	of	net	severance	costs	in the	years	ended	December	31,	2014	and	2013,	respectively.	These severance	costs	were	the	result	of	staff	reductions	associated	with	the realignment	of	our	cost	base,	and	were	recorded	in	compensation	and employee	benefits	expenses	in	our	consolidated	statement	of	income.

# Acquisition	and	Restructuring	Costs:

The	following	table	presents	net	acquisition	and	restructuring	costs recorded	in	the	periods	indicated:

|  |  | Years	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
| (In\tmillions) | 2014 | 2013 | 2012 |
| Acquisition\tcosts | $58 | $76 | $26 |
| Restructuring\tcharges,\tnet | 75 | 28 | 199 |
| Total\tacquisition\tand\nrestructuring\tcosts | $133 | $104 | $225 |

# Acquisition	Costs

Acquisition	costs	recorded	in	the	years	ended	December	31,	2014, 2013	and	2012	were	related	to	previously	disclosed	acquisitions.

In	November	2010,	we	announced	a	global	multi-year	Business Operations	and	Information	Technology	Transformation	program	which we	completed	in	the	fourth	quarter	of	2014.	The	program	included operational,	information	technology	and	targeted	cost	initiatives,	including reductions	in	both	staff	and	occupancy	costs.

The	majority	of	the	annual	savings	have	affected	compensation	and employee	benefits	expenses.	These	savings	have	been	modestly	offset by	increases	in	information	systems	and	communications	expenses.

The	charges	related	to	the	program	included	costs	related	to severance,	benefits	and	outplacement	services,	as	well	as	costs	which resulted	from	actions	taken	to	reduce	our	occupancy	costs	through	the consolidation	of	leases	and	properties.	The	charges	also	included	costs related	to	information	technology,	including	transition	fees	associated	with the	expansion	of	our	use	of	third-party	service	providers	associated	with components	of	our	information	technology	infrastructure	and	application maintenance	and	support.

In	2010,	in	connection	with	the	program,	we	initiated	the	involuntary termination	of	1,400	employees,	or	approximately	5%	of	our	global workforce,	which	we	completed	by	the	end	of	2011.	In	addition,	in connection	with	our	announcement	in	2011	of	the	expansion	of	our	use	of third-party	service	providers	associated	with	our	information	technology infrastructure	and	application	maintenance	and	support,	as	well	as	the continued	execution	of	the	business	operations	transformation	component of	the	program,	we	identified	1,574	additional	involuntary	terminations.	As of	December	31,	2014,	we	substantially	completed	these	reductions.

# Aggregate	Restructuring-Related	Accrual	Activity

The	following	table	presents	aggregate	activity	associated	with	accruals	that	resulted	from	the	charges	associated	with	the	Business	Operations	and Information	Technology	Transformation	program	and	2012	expense	control	measures:

| (In	millions) | Employee-<br>Related<br>Costs | Real	Estate<br>Consolidation | Asset	and	Other<br>Write-Offs | Total |
| :--- | :--- | :--- | :--- | :--- |
| Balance\tas\tof\tDecember\t31,\t2013 | $50 | $49 | $7 | $106 |
| Additional\taccruals\tfor\tBusiness\tOperations\tand\tInformation\tTechnology\nTransformation\tprogram | 38 | 21 | — | 59 |
| Additional\taccruals\tfor\t2012\texpense\tcontrol\tmeasures | (2) | — | 18 | 16 |
| Payments\tand\tadjustments | (46) | (46) | (18) | (110) |
| Balance\tas\tof\tDecember\t31,\t2014 | $40 | $24 | $7 | $71 |

# Other	Expenses:

Other	expenses	of	$751	million	in	2014	included	a	legal	accrual	of $185	million	in	connection	with	management's	intention	to	seek	to	resolve some,	but	not	all,	of	the	outstanding	and	potential	claims	arising	out	of	our indirect	FX	client	activities.	These	matters	are	more	fully	discussed	under "Legal	and	Regulatory	Matters"	in	note	11	to	the	consolidated	financial statements.

As	a	result	of	the	2008	Lehman	Brothers	bankruptcy,	we	had	various claims	against	Lehman	Brothers	entities	in	bankruptcy	proceedings	in	the U.S.	and	the	U.K.	We	also	had	amounts	asserted	as	owed,	or	return obligations,	to	Lehman	Brothers	entities.	The	various	claims	and	amounts owed	arose	from	transactions	that	existed	at	the	time	Lehman	Brothers entered	bankruptcy,	including	prime	brokerage	arrangements,	foreign exchange	transactions,	securities	lending	arrangements	and	repurchase agreements.	In	2011,	we	reached	an	agreement	with	certain	Lehman Brothers	estates	in	the	U.S.	to	resolve	the	value	of	deficiency	claims arising	out	of	indemnified	repurchase	transactions	in	the	U.S.,	and	the bankruptcy	court	allowed	those	claims	in	the	amount	of	$400	million.

In	2012,	we	reached	an	agreement	to	settle	the	claims	against	the Lehman	Brothers	estate	in	the	U.K.	related	to	the	close-out	of	securities lending	and	repurchase	arrangements.

In	connection	with	our	resolution	of	the	indemnified	repurchase	and securities	lending	claims	in	the	U.S.	and	the	U.K.,	we	recognized	a	credit of	approximately	$362	million	in	our	consolidated	statement	of	income	in 2012.	Both	certified	claims	retained	as	part	of	the	settlement	agreements were	subsequently	sold	at	their	respective	fair	values,	resulting	in	an additional	gain	of	approximately	$10	million,	which	was	also	recorded	in our	consolidated	statement	of	income	in	2012.

In	2014,	we	received	aggregate	distributions	totaling	approximately $21	million	from	the	Lehman	Brothers	estates,	compared	to approximately	$186	million	from	the	Lehman	Brothers	estates	in	2013.	Of the	aggregate	distributions	received	in	both	2014	and	2013, approximately	$11	million	and	$101	million	was	applied	to	reduce remaining	Lehman	Brothers-related	assets,	primarily	prime	brokerage claim-related	receivables,	recorded	in	our	consolidated	statement	of condition;	the	remaining	$10	million	and	$85	million,	respectively,	was recorded	as	an	aggregate	credit	to	other	expenses	in	our	consolidated statement	of	income.

We	use	an	asset-and-liability	approach	to	account	for	income	taxes. Our	objective	is	to	recognize	the	amount	of	taxes	payable	or	refundable for	the	current	year	through	charges	or	credits	to	the	current	tax	provision, and	to	recognize	deferred	tax	assets	and	deferred	tax	liabilities	for	the future	tax	consequences	resulting	from	temporary	differences	between the	amounts	reported	in	our	consolidated	financial	statements	and	their respective	tax	bases.	The	measurement	of	tax	assets	and	liabilities	is based	on	enacted	tax	laws	and	applicable	tax	rates.	The	effects	of	a	tax position	on	our	consolidated	financial	statements	are	recognized	when	we believe	it	is	more	likely	than	not	that	the	position	will	be	sustained.	A deferred-tax-asset	valuation	allowance	is	established	if	it	is	considered more	likely	than	not	that	all	or	a	portion	of	the	deferred	tax	assets	will	not be	realized.	Deferred	tax	assets	and	deferred	tax	liabilities	recorded	in our	consolidated	statement	of	condition	are	netted	within	the	same	tax jurisdiction.

The	following	table	presents	the	components	of	income	tax	expense for	the	years	ended	December	31:

| (In	millions) | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Current: |  |  |  |
| Federal | $59 | $193 | $148 |
| State | 39 | 47 | 64 |
| Non-U.S. | 257 | 248 | 262 |
| Total\tcurrent\texpense | 355 | 488 | 474 |
| Deferred: |  |  |  |
| Federal | 42 | 28 | 267 |
| State | 11 | 17 | 27 |
| Non-U.S. | 13 | 17 | (63) |
| Total\tdeferred\texpense | 66 | 62 | 231 |
| Total\tincome\ttax\texpense | $421 | $550 | $705 |

In	2014	we	expanded	our	municipal	securities	portfolio,	increased	our investments	in	alternative	energy	projects	and	realized	greater	benefits from	our	non-U.S.	operations.

In	2013,	we	completed	a	multi-year	tax	data	enhancement	process, the	final	stages	of	which	identified	a	reconciliation	difference	in	our deferred	tax	accounts,	and	we	determined	that	our	deferred	tax	liabilities were	overstated	by	$50	million	and	our	deferred	tax	assets	were understated	by	$21	million,	which	resulted	in	an	out-of-period	income	tax benefit	of	$71	million.	This	income	tax	benefit	is	reflected	in	the	table above	as	a	reduction	of	total	deferred	income	tax	expense	for	2013.

The	amount	for	2012	presented	in	the	table	included	income	tax expense	of	$40	million	associated	with	indemnification	benefits,	recorded as	offsets	to	acquisition	costs,	for	the	assumption	of	income	tax	liabilities related	to	the	2010	Intesa	acquisition.

The	amount	of	income	tax	expense	(benefit)	related	to	net	gains (losses)	from	sales	of	investment	securities	was	$5	million,	$6	million	and $22	million	in	2014,	2013	and	2012,	respectively.	Pre-tax	income attributable	to	our	operations	located	outside	the	U.S.	was	approximately $1.33	billion,	$1.25	billion	and	$1.11	billion	for	2014,	2013	and	2012, respectively.

Pre-tax	earnings	of	our	non-U.S.	subsidiaries	are	subject	to	U.S. income	tax	when	effectively	repatriated.	As	of	December	31,	2014,	we have	chosen	to	indefinitely	reinvest	approximately	$4.2	billion	of	earnings of	certain	of	our	non-U.S.	subsidiaries.	No	provision	has	been	recorded for	U.S.	income	taxes	that	could	be	incurred	upon	repatriation.	As	of December	31,	2014,	if	such	earnings	had	been	repatriated	to	the	U.S.,	we would	have	provided	for	approximately	$876	million	of	additional	income tax	expense.

The	following	table	presents	significant	components	of	our	gross deferred	tax	assets	and	gross	deferred	tax	liabilities	as	of	December	31:

| (In	millions) | 2014 | 2013 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Unrealized\tlosses\ton\tinvestment\tsecurities,\tnet | $— | $421 |
| Deferred\tcompensation(1) | 168 | 209 |
| Defined\tbenefit\tpension\tplan | 193 | 97 |
| Restructuring\tcharges\tand\tother\treserves | 160 | 126 |
| Foreign\tcurrency\ttranslation | 56 | — |
| Real\testate | 9 | 18 |
| Other | 68 | 57 |
| Total\tdeferred\ttax\tassets | 654 | 928 |
| Valuation\tallowance\tfor\tdeferred\ttax\tassets | (54) | (33) |
| Deferred\ttax\tassets,\tnet\tof\tvaluation\tallowance | $600 | $895 |
| Deferred\ttax\tliabilities: |  |  |
| Unrealized\tgains\ton\tsecurities,\tnet | $5 | $— |
| Leveraged\tlease\tfinancing | 326 | 359 |
| Fixed\tand\tintangible\tassets | 1,006 | 1,073 |
| Non-U.S.\tearnings | 167 | 105 |
| Foreign\tcurrency\ttranslation | — | 35 |
| Other(2) | 83 | 44 |
| Total\tdeferred\ttax\tliabilities | $1,587 | $1,616 |

million	associated	with	an	out-of-period	income	tax	benefit	recorded	in	2013.

(2)	Amount	as	of	December	31,	2013	was	adjusted	to	reflect	a	decrease	of	$50	million associated	with	an	out-of-period	income	tax	benefit	recorded	in	2013.

Management	considers	the	valuation	allowance	adequate	to	reduce the	total	deferred	tax	assets	to	an	aggregate	amount	that	will	more	likely than	not	be	realized.	Management	has	determined	that	a	valuation allowance	is	not	required	for	the	remaining	deferred	tax	assets	because	it is	more	likely	than	not	that	there	is	sufficient	taxable	income	of	the appropriate	nature	within	the	carryback	and	carryforward	periods	to realize	these	assets.

As	of	December	31,	2014	and	2013,	we	had	deferred	tax	assets associated	with	tax	credit	carryforwards	of	$2	million	and	$3	million, respectively,	which	are	presented	in	the	table.	The	tax	credit carryforwards	expire	in	2033.	As	of	December	31,	2014	and	2013,	we had	deferred	tax	assets	associated	with	non-U.S.	and	state	loss carryforwards	of	$53	million	and	$50	million,	respectively,	included	in "other"	in	the	table.	Of	the	total	loss	carryforwards	of	$53	million	as	of December	31,	2014,	$41	million	do	not	expire,	and	the	remaining	 $12 million	expire	through	2033.	The	loss	carryforwards	have	a	valuation allowance	of	$45	million	and	$30	million	for	the	years	ending December	31,	2014	and	2013.

The	following	table	presents	a	reconciliation	of	the	U.S.	statutory income	tax	rate	to	our	effective	tax	rate	based	on	income	before	income tax	expense	for	the	years	ended	December	31:

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| U.S.\tfederal\tincome\ttax\trate | 35.0\t% | 35.0\t% | 35.0\t% |
| Changes\tfrom\tstatutory\trate: |  |  |  |
| State\ttaxes,\tnet\tof\tfederal\tbenefit | 1.5 | 1.6 | 1.8 |
| Tax-exempt\tincome | (5.0) | (3.7) | (2.6) |
| Tax\tcredits | (6.7) | (3.6) | (2.8) |
| Foreign\ttax\tdifferential | (8.5) | (5.9) | (5.5) |
| Out-of-period\tincome\ttax\tbenefit(1) | — | (2.7) | — |
| Other,\tnet | .9 | (.2) | (.4) |
| Effective\ttax\trate | 17.2\t% | 20.5\t% | 25.5\t% |

(1)	Excluding	the	impact	of	the	out-of-period	income	tax	benefit	of	$71	million	described earlier	in	this	note,	our	effective	tax	rate	for	2013	would	have	been	23.2%.

The	following	table	presents	activity	related	to	unrecognized	tax benefits	as	of	December	31:

| (In	millions) | 2014 | 2013 |
| :--- | :--- | :--- |
| Beginning\tbalance | $158 | $95 |
| Decrease\trelated\tto\tagreements\twith\ttax\tauthorities | (9) | (4) |
| Increase\trelated\tto\ttax\tpositions\ttaken\tduring\tcurrent\tyear | 8 | 10 |
| Increase\trelated\tto\ttax\tpositions\ttaken\tduring\tprior\tyear | 6 | 57 |
| Ending\tbalance | $163 | $158 |

The	amount	of	unrecognized	tax	benefits	that,	if	recognized,	would reduce	income	tax	expense	and	our	effective	tax	rate	was	$96	million	as of	December	31,	2014.	Unrecognized	tax	benefits	do	not	include	accrued interest	of	approximately	$9	million	and	$7	million	as	of	December	31, 2014	and	2013,	respectively.

We	recorded	interest	and	penalties	related	to	income	taxes	as	a component	of	income	tax	expense.	Income	tax	expense	included	related interest	and	penalties	of	approximately	$3	million	for	the	years	ended December	31,	2014	and	2013.

It	is	reasonably	possible	that	the	unrecognized	tax	benefits	could decrease	by	up	to	$120	million	within	the	next	12	months	due	to	the resolution	of	an	audit,	of	which	$61	million	would	reduce	our	income	tax expense	and	our	effective	tax	rate.	Management	believes	that	we	have sufficient	accrued	liabilities	as	of	December	31,	2014	for	tax	exposures and	related	interest	expense.

# Note	23.				Earnings	Per	Common	Share

Basic	earnings	per	share,	or	EPS,	is	calculated	pursuant	to	the	"two- class"	method,	by	dividing	net	income	available	to	common	shareholders by	the	weighted-average	common	shares	outstanding	during	the	period. Diluted	EPS	is	calculated	pursuant	to	the	two-class	method,	by	dividing net	income	available	to	common	shareholders	by	the	total	weighted- average	number	of	common	shares	outstanding	for	the	period	plus	the shares	representing	the	dilutive	effect	of	common	stock	options	and	other equity-based	awards.	The	effect	of	common	stock	options	and	other equity-based	awards	is	excluded	from	the	calculation	of	diluted	EPS	in periods	in	which	their	effect	would	be	anti-dilutive.

The	two-class	method	requires	the	allocation	of	undistributed	net income	between	common	and	participating	shareholders.	Net	income available	to	common	shareholders,	presented	separately	in	our consolidated	statement	of	income,	is	the	basis	for	the	calculation	of	both basic	and	diluted	EPS.	Participating	securities	are	composed	of	unvested restricted	stock	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	common shareholders	in	undistributed	earnings.

The	following	tables	present	the	computation	of	basic	and	diluted earnings	per	common	share	for	the	years	ended	December	31:

| amounts) | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Net\tincome | $2,037 | $2,136 | $2,061 |
| Less: |  |  |  |
| Preferred\tstock\tdividends | (61) | (26) | (29) |
| Dividends\tand\tundistributed |  |  |  |
| earnings\tallocated\tto\tparticipating |  |  |  |
| securities(1) | (3) | (8) | (13) |
| Net\tincome\tavailable\tto\tcommon\nshareholders | $1,973 | $2,102 | $2,019 |
| Average\tcommon\tshares\noutstanding\t(in\tthousands): |  |  |  |
| Basic\taverage\tcommon\tshares | 424,223 | 446,245 | 474,458 |
| Effect\tof\tdilutive\tsecurities:\tcommon |  |  |  |
| stock\toptions\tand\tcommon\tstock |  |  |  |
| awards | 7,784 | 8,910 | 6,671 |
| Diluted\taverage\tcommon\tshares | 432,007 | 455,155 | 481,129 |
| Anti-dilutive\tsecurities(2) | 1,498 | 1,855 | 5,619 |
| Earnings\tper\tCommon\tShare: |  |  |  |
| Basic | $4.65 | $4.71 | $4.25 |
| Diluted(3) | 4.57 | 4.62 | 4.20 |

(1)	Represents	the	portion	of	net	income	available	to	common	equity	allocated	to	participating securities,	composed	of	fully	vested	deferred	director	stock	and	unvested	restricted	stock	that contain	non-forfeitable	rights	to	dividends	during	the	vesting	period	on	a	basis	equivalent	to dividends	paid	to	common	shareholders.

(2)	Represents	common	stock	options	and	other	equity-based	awards	outstanding	but	not included	in	the	computation	of	diluted	average	common	shares,	because	their	effect	was anti-dilutive.

(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.

# Note	24.				Line	of	Business	Information

We	have	two	lines	of	business:	Investment	Servicing	and	Investment Management.	Given	our	services	and	management	organization,	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	provides	services	for	U.S.	mutual	funds, collective	investment	funds	and	other	investment	pools,	corporate	and public	retirement	plans,	insurance	companies,	foundations	and endowments	worldwide.	Products	include	custody;	product-	and participant-level	accounting;	daily	pricing	and	administration;	master	trust and	master	custody;	record-keeping;	cash	management;	foreign exchange,	brokerage	and	other	trading	services;

securities	finance;	deposit	and	short-term	investment	facilities;	loans	and lease	financing;	investment	manager	and	alternative	investment	manager operations	outsourcing;	and	performance,	risk	and	compliance	analytics to	support	institutional	investors.	We	provide	shareholder	services,	which include	mutual	fund	and	collective	investment	fund	shareholder accounting,	through	50%-owned	affiliates,	Boston	Financial	Data Services,	Inc.	and	the	International	Financial	Data	Services	group	of companies.

Investment	Management,	through	SSGA,	provides	a	broad	array	of investment	management,	investment	research	and	investment	advisory services	to	corporations,	public	funds	and	other	sophisticated	investors. SSGA	offers	active	and	passive	asset	management	strategies	across equity,	fixed-income	and	cash	asset	classes.	Products	are	distributed directly	and	through	intermediaries	using	a	variety	of	investment	vehicles, including	exchange-traded	funds,	or	ETFs,	such	as	the	SPDR®	ETF brand.

Our	investment	servicing	strategy	is	to	focus	on	total	client relationships	and	the	full	integration	of	our	products	and	services	across our	client	base	through	cross-selling	opportunities.	In	general,	our	clients will	use	a	combination	of	services,	depending	on	their	needs,	rather	than one	product	or	service.	For	instance,	a	custody	client	may	purchase securities	finance	and	cash	management	services	from	different	business units.	Products	and	services	that	we	provide	to	our	clients	are	parts	of	an integrated	offering	to	these	clients.	We	price	our	products	and	services	on the	basis	of	overall	client	relationships	and	other	factors;	as	a	result, revenue	may	not	necessarily	reflect	the	stand-alone	market	price	of	these products	and	services	within	the	business	lines	in	the	same	way	it	would for	separate	business	entities.

Generally,	approximately	70%	to	75%	of	our	consolidated	total revenue	(fee	revenue	from	investment	servicing	and	investment management,	as	well	as	trading	services	and	securities	finance	activities) is	generated	by	these	two	business	lines.	The	remaining	25%	to	30%	is composed	of	processing	fees	and	other	revenue,	net	interest	revenue, which	is	largely	generated	by	our	investment	of	client	deposits,	short-term borrowings	and	long-term	debt	in	a	variety	of	assets,	and	net	gains (losses)	related	to	investment	securities.	These	other	revenue	types	are generally	fully	allocated	to,	or	reside	in,	Investment	Servicing	and Investment	Management.

Revenue	and	expenses	are	directly	charged	or	allocated	to	our	lines of	business	through	management	information	systems.	Assets	and liabilities	are	allocated	according	to	policies	that	support	management's strategic	and	tactical	goals.	Capital	is	allocated	based	on	the	relative	risks and	capital	requirements	inherent	in	each	business	line,	along	with management	judgment.	Capital	allocations	may	not	be	representative	of the	capital	that	might	be	required	if	these	lines	of	business	were	separate business	entities.

The	following	is	a	summary	of	our	line-of-business	results	for	the periods	indicated.

The	"Other"	column	for	the	year	ended	December	31,	2014	included net	costs	$219	million	composed	of	the	following	-

The	"Other"	column	for	the	year	ended	December	31,	2013	included net	costs	of	$180	million	composed	of	the	following	-

The	"Other"	column	for	the	year	ended	December	31,	2012	included net	losses	of	$27	million	composed	of	the	following	-

The	amounts	in	the	"Other"	columns	were	not	allocated	to	State Street's	business	lines.	Prior	reported	results	reflect	reclassifications,	for comparative	purposes,	related	to	management	changes	in	methodologies associated	with	allocations	of	revenue	and	expenses	to	lines-of-business in	2014.

|  |  |  |  |  | Years	Ended	December	31, | Years	Ended	December	31, | Years	Ended	December	31, |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2014 | Investment\nServicing\n2013 | 2012 | 2014 | Investment\nManagement\n2013 | 2012 | 2014 | Other\n2013 | 2012 | 2014 | Total\n2013 | 2012 |
| (Dollars\tin\tmillions,\nexcept\twhere\totherwise\tnoted) |  |  |  |  |  |  |  |  |  |  |  |  |
| Servicing\tfees | $5,129 | $4,819 | $4,414 | $— | $— | $— | $— | $— | $— | $5,129 | $4,819 | $4,414 |
| Management\tfees | — | — | — | 1,207 | 1,106 | 993 | — | — | — | 1,207 | 1,106 | 993 |
| Trading\tservices | 1,039 | 1,027 | 938 | 45 | 67 | 98 | — | — | — | 1,084 | 1,094 | 1,036 |
| Securities\tfinance | 437 | 359 | 405 | — | — | — | — | — | — | 437 | 359 | 405 |
| Processing\tfees\tand\tother | 179 | 206 | 235 | (5) | 6 | 5 | — | — | — | 174 | 212 | 240 |
| Total\tfee\trevenue | 6,784 | 6,411 | 5,992 | 1,247 | 1,179 | 1,096 | — | — | — | 8,031 | 7,590 | 7,088 |
| Net\tinterest\trevenue | 2,188 | 2,221 | 2,464 | 72 | 82 | 74 | — | — | — | 2,260 | 2,303 | 2,538 |
| Gains\t(losses)\trelated\tto\ninvestment\tsecurities,\tnet | 4 | (9) | 69 | — | — | — | — | — | (46) | 4 | (9) | 23 |
| Total\trevenue | 8,976 | 8,623 | 8,525 | 1,319 | 1,261 | 1,170 | — | — | (46) | 10,295 | 9,884 | 9,649 |
| Provision\tfor\tloan\tlosses | 10 | 6 | (3) | — | — | — | — | — | — | 10 | 6 | (3) |
| Total\texpenses | 6,648 | 6,190 | 6,058 | 960 | 822 | 847 | 219 | 180 | (19) | 7,827 | 7,192 | 6,886 |
| Income\tbefore\tincome\ttax\nexpense | $2,318 | $2,427 | $2,470 | $359 | $439 | $323 | $(219) | $(180) | $(27) | $2,458 | $2,686 | $2,766 |
| Pre-tax\tmargin | 26% | 28% | 29% | 27% | 35% | 28% |  |  |  | 24% | 27% | 29% |
| Average\tassets\t(in\tbillions) | $234.2 | $203.2 | $190.1 | $3.9 | $3.8 | $3.7 |  |  |  | $238.1 | $207.0 | $193.8 |

We	generally	define	our	non-U.S.	activities	as	those	revenue- producing	business	activities	that	arise	from	clients	domiciled	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	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.	Interest	expense allocations	are	based	on	our	internal	funds	transfer	pricing	methodology.

The	following	table	presents	our	non-U.S.	financial	results	for	the years	ended	December	31:

| (In	millions) | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Total\tfee\trevenue | $3,364 | $3,119 | $2,917 |
| Net\tinterest\trevenue | 1,236 | 1,191 | 953 |
| Gains\t(losses)\trelated\tto\ninvestment\tsecurities,\tnet | 6 | (11) | (40) |
| Total\trevenue | 4,606 | 4,299 | 3,830 |
| Expenses | 3,272 | 3,130 | 3,013 |
| Income\tbefore\tincome\ttaxes | 1,334 | 1,169 | 817 |
| Income\ttax\texpense | 319 | 289 | 204 |
| Net\tincome | $1,015 | $880 | $613 |

Gain	(losses)	related	to	investment	securities,	net,	for	the	year ended	December	31,	2012	included	a	loss	of	$46	million	from	the	sale	of all	of	our	Greek	investment	securities.	Non-U.S.	revenue	for	the	year ended	December	31,	2014	included	$1.02	billion	in	the	U.K.,	primarily from	our	London	operations.

The	following	table	presents	the	significant	components	of	our	non- U.S.	assets	as	of	December	31,	based	on	the	domicile	of	the	underlying counterparties:

| (In	millions) | 2014 | 2013 |
| :--- | :--- | :--- |
| Interest-bearing\tdeposits\twith\nbanks | $17,382 | $9,584 |
| Investment\tsecurities | 29,060 | 31,522 |
| Other\tassets | 13,577 | 16,778 |
| Total\tnon-U.S.\tassets | $60,019 | $57,884 |

# Note	26.				Subsequent	Event

On	February	20,	2015,	we	announced	an	increase	from	$50	million to	$115	million	of	the	fourth-quarter	2014	legal	accrual	associated	with indirect	foreign	exchange	matters	that	we	announced	on	January	23, 2015,	when	we	initially	reported	on	our	results	for	the	fourth-quarter	and year-ended	December	31,	2014.	See	our	Current	Report	on	Form	8-K dated,	and	filed	with	the	SEC	on,	February	20,	2015	for	additional information	regarding	this	additional	accrual.	The	effects	of	the	additional accrual	are	reflected	in	the	financial	and	other	information	reported	in	this Form	10-K.

# Note	27. Parent	Company	Financial	Statements

The	following	tables	present	the	financial	statements	of	the	parent	company	without	consolidation	of	its	banking	and	non-banking	subsidiaries,	as	of and	for	the	years	ended	December	31:

# STATEMENT	OF	INCOME	-	PARENT	COMPANY

| Years	Ended	December	31, | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| (In\tmillions) |  |  |  |
| Cash\tdividends\tfrom\tconsolidated\tbanking\tsubsidiary | $1,470 | $1,694 | $1,785 |
| Cash\tdividends\tfrom\tconsolidated\tnon-banking\tsubsidiaries\tand\tunconsolidated\tentities | 138 | 250 | 68 |
| Other,\tnet | 63 | 35 | 38 |
| Total\trevenue | 1,671 | 1,979 | 1,891 |
| Interest\texpense | 193 | 169 | 163 |
| Other\texpenses | 55 | 88 | 85 |
| Total\texpenses | 248 | 257 | 248 |
| Income\ttax\tbenefit | (83) | (84) | (63) |
| Income\t(loss)\tbefore\tequity\tin\tundistributed\tincome\tof\tconsolidated\tsubsidiaries\tand\nunconsolidated\tentities | 1,506 | 1,806 | 1,706 |
| Equity\tin\tundistributed\tincome\tof\tconsolidated\tsubsidiaries\tand\tunconsolidated\tentities: |  |  |  |
| Consolidated\tbanking\tsubsidiary | 375 | 237 | 173 |
| Consolidated\tnon-banking\tsubsidiaries\tand\tunconsolidated\tentities | 156 | 93 | 182 |
| Net\tincome | $2,037 | $2,136 | $2,061 |

# STATEMENT	OF	CONDITION	-	PARENT	COMPANY

| As	of	December	31, | 2014 | 2013 |
| :--- | :--- | :--- |
| (In\tmillions) |  |  |
| Assets: |  |  |
| Interest-bearing\tdeposits\twith\tconsolidated\tbanking\tsubsidiary | $6,030 | $4,419 |
| Trading\taccount\tassets | 279 | 216 |
| Investment\tsecurities\tavailable\tfor\tsale | 35 | 31 |
| Investments\tin\tsubsidiaries: |  |  |
| Consolidated\tbanking\tsubsidiary | 20,123 | 19,985 |
| Consolidated\tnon-banking\tsubsidiaries | 2,739 | 2,617 |
| Unconsolidated\tentities | 288 | 272 |
| Notes\tand\tother\treceivables\tfrom: |  |  |
| Consolidated\tbanking\tsubsidiary | 1,526 | 1,528 |
| Consolidated\tnon-banking\tsubsidiaries\tand\tunconsolidated\tentities | 331 | 256 |
| Other\tassets | 447 | 327 |
| Total\tassets | $31,798 | $29,651 |
| Liabilities: |  |  |
| Commercial\tpaper | $2,485 | $1,819 |
| Accrued\texpenses\tand\tother\tliabilities | 514 | 447 |
| Long-term\tdebt | 7,326 | 7,007 |
| Total\tliabilities | 10,325 | 9,273 |
| Shareholders'\tequity | 21,473 | 20,378 |
| Total\tliabilities\tand\tshareholders'\tequity | $31,798 | $29,651 |

# STATEMENT	OF	CASH	FLOWS	-	PARENT	COMPANY

| Years	Ended	December	31, | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| (In\tmillions) |  |  |  |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\tactivities | $1,767 | $2,296 | $2,706 |
| Investing\tActivities: |  |  |  |
| Net\tdecrease\t(increase)\tin\tinterest-bearing\tdeposits\twith\tconsolidated\tbanking\tsubsidiary | (1,610) | (620) | 1,115 |
| Investments\tin\tconsolidated\tbanking\tand\tnon-banking\tsubsidiaries | (1,142) | (1,100) | (68) |
| Sale\tor\trepayment\tof\tinvestment\tin\tconsolidated\tbanking\tand\tnon-banking\tsubsidiaries | 1,011 | 32 | 28 |
| Business\tacquisitions | — | — | (2) |
| Net\tcash\tprovided\tby\t(used\tin)\tinvesting\tactivities | (1,741) | (1,688) | 1,073 |
| Financing\tActivities: |  |  |  |
| Net\tdecrease\tin\tshort-term\tborrowings | — | — | (500) |
| Net\tdecrease\tin\tcommercial\tpaper | 667 | (499) | (66) |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt,\tnet\tof\tissuance\tcosts | 994 | 2,485 | — |
| Payments\tfor\tlong-term\tdebt | (750) | — | (1,750) |
| Proceeds\tfrom\tissuance\tof\tpreferred\tstock,\tnet\tof\tissuance\tcosts | 1,470 | — | 488 |
| Proceeds\tfrom\texercises\tof\tcommon\tstock\toptions | 14 | 121 | 53 |
| Purchases\tof\tcommon\tstock | (1,650) | (2,040) | (1,440) |
| Repurchases\tof\tcommon\tstock\tfor\temployee\ttax\twithholding | (232) | (189) | (101) |
| Payments\tfor\tcash\tdividends | (539) | (486) | (463) |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | (26) | (608) | (3,779) |
| Net\tchange | — | — | — |
| Cash\tand\tdue\tfrom\tbanks\tat\tbeginning\tof\tyear | — | — | — |
| Cash\tand\tdue\tfrom\tbanks\tat\tend\tof\tyear | $— | $— | $— |

# Distribution	of	Average	Assets,	Liabilities	and	Shareholders'	Equity;	Interest	Rates	and	Interest	Differential	(Unaudited)

The	following	table	presents	consolidated	average	statements	of	condition	and	net	interest	revenue	for	the	years	indicated.

| Years	Ended	December	31,<br>(Dollars	in	millions;	fully<br>taxable-equivalent	basis) | Average<br>Balance | 2014<br>Interest | Average<br>Rate | Average<br>Balance | 2013<br>Interest | Average<br>Rate | Average<br>Balance | 2012<br>Interest | Average<br>Rate |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Assets: |  |  |  |  |  |  |  |  |  |
| Interest-bearing\tdeposits\twith\tU.S.\tbanks | $45,158 | $115 | .25% | $15,858 | $40 | .25% | $9,305 | $25 | .26% |
| Interest-bearing\tdeposits\twith\tnon-U.S.\tbanks | 10,195 | 81 | .80 | 13,088 | 85 | .65 | 17,518 | 116 | .66 |
| Securities\tpurchased\tunder\tresale\tagreements | 4,077 | 38 | .94 | 5,766 | 45 | .77 | 7,243 | 51 | .71 |
| Trading\taccount\tassets | 959 | 1 | .13 | 748 | — | — | 651 | — | — |
| Investment\tsecurities: |  |  |  |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies(1) | 32,481 | 672 | 2.07 | 33,003 | 707 | 2.14 | 34,576 | 799 | 2.31 |
| \tState\tand\tpolitical\tsubdivisions (1) | 10,619 | 404 | 3.81 | 8,637 | 391 | 4.53 | 7,346 | 338 | 4.60 |
| Other\tinvestments | 73,709 | 1,241 | 1.68 | 76,056 | 1,331 | 1.75 | 71,988 | 1,552 | 2.16 |
| Loans | 14,838 | 231 | 1.56 | 12,660 | 215 | 1.70 | 10,404 | 212 | 2.03 |
| Lease\tfinancing(1) | 1,074 | 35 | 3.26 | 1,121 | 38 | 3.43 | 1,206 | 42 | 3.54 |
| Other\tinterest-earning\tassets | 15,944 | 7 | .05 | 11,164 | 4 | .04 | 7,378 | 3 | .04 |
| Total\tinterest-earning\tassets(1) | 209,054 | 2,825 | 1.36 | 178,101 | 2,856 | 1.60 | 167,615 | 3,138 | 1.88 |
| Cash\tand\tdue\tfrom\tbanks | 4,139 |  |  | 3,747 |  |  | 3,811 |  |  |
| Other\tassets | 24,935 |  |  | 25,182 |  |  | 22,384 |  |  |
| Total\tassets | $238,128 |  |  | $207,030 |  |  | $193,810 |  |  |
| Liabilities\tand\tshareholders'\tequity: |  |  |  |  |  |  |  |  |  |
| Interest-bearing\tdeposits: |  |  |  |  |  |  |  |  |  |
| Time | $7,254 | $15 | .20% | $2,504 | $6 | .23% | $7,245 | $16 | .17% |
| Savings | 14,042 | 6 | .04 | 6,358 | 4 | .07 | 2,088 | 3 | .15 |
| Non-U.S. | 109,003 | 78 | .07 | 100,391 | 83 | .08 | 89,059 | 147 | .16 |
| Total\tinterest-bearing\tdeposits | 130,299 | 99 | .08 | 109,253 | 93 | .14 | 98,392 | 166 | .17 |
| Securities\tsold\tunder\trepurchase\tagreements | 8,817 | — | — | 8,436 | 1 | .01 | 7,697 | 1 | .01 |
| Federal\tfunds\tpurchased | 20 | — | — | 298 | — | — | 784 | 1 | .09 |
| Other\tshort-term\tborrowings | 4,177 | 5 | .12 | 3,785 | 59 | 1.57 | 4,676 | 71 | 1.52 |
| Long-term\tdebt | 9,309 | 245 | 2.63 | 8,415 | 232 | 2.75 | 7,008 | 222 | 3.17 |
| Other\tinterest-bearing\tliabilities | 7,351 | 43 | .59 | 6,457 | 26 | .40 | 5,898 | 15 | .26 |
| Total\tinterest-bearing\tliabilities | 159,973 | 392 | .25 | 136,644 | 411 | .30 | 124,455 | 476 | .39 |
| Noninterest-bearing\tdeposits: |  |  |  |  |  |  |  |  |  |
| Special\ttime | 5,862 |  |  | 769 |  |  | 1,203 |  |  |
| Demand | 37,900 |  |  | 34,725 |  |  | 34,850 |  |  |
| Non-U.S.(2) | 279 |  |  | 800 |  |  | 459 |  |  |
| Other\tliabilities | 12,797 |  |  | 13,561 |  |  | 12,660 |  |  |
| Shareholders'\tequity | 21,317 |  |  | 20,531 |  |  | 20,183 |  |  |
| Total\tliabilities\tand\tshareholders'\tequity\nNet\tinterest\trevenue | $238,128 | $2,433 |  | $207,030 | $2,445 |  | $193,810 | $2,662 |  |
| Excess\tof\trate\tearned\tover\trate\tpaid |  |  | 1.11% |  |  | 1.30% |  |  | 1.49% |
| Net\tinterest\tmargin(3) |  |  | 1.16 |  |  | 1.37 |  |  | 1.59 |

(1)	Fully	taxable-equivalent	revenue	is	a	method	of	presentation	in	which	the	tax	savings	achieved	by	investing	in	tax-exempt	investment	securities	and	certain	leases	are	included	in	interest	revenue	with	a	corresponding charge	to	income	tax	expense.	This	method	facilitates	the	comparison	of	the	performance	of	these	assets.	The	adjustments	are	computed	using	a	federal	income	tax	rate	of	35%,	adjusted	for	applicable	state	income taxes,	net	of	the	related	federal	tax	benefit.	The	fully	taxable-equivalent	adjustments	included	in	interest	revenue	presented	above	were	$173	million,	$142	million	and	$124	million	for	the	years	ended	 December	31,	2014, 2013	and	2012,	respectively,	and	were	substantially	related	to	tax-exempt	securities	(state	and	political	subdivisions).

(3)	Net	interest	margin	is	calculated	by	dividing	fully	taxable-equivalent	net	interest	revenue	by	average	total	interest-earning	assets.

The	following	table	summarizes	changes	in	fully	taxable-equivalent	interest	revenue	and	interest	expense	due	to	changes	in	volume	of	interest- earning	assets	and	interest-bearing	liabilities,	and	due	to	changes	in	interest	rates.	Changes	attributed	to	both	volumes	and	rates	have	been	allocated based	on	the	proportion	of	change	in	each	category.

| Years	Ended	December	31, |  | 2014	Compared	to	2013 |  |  | 2013	Compared	to	2012 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (In\tmillions;\tfully\ntaxable-equivalent\tbasis) | Change\tin\nVolume | Change\tin\nRate | Net\t(Decrease)\nIncrease | Change\tin\nVolume | Change\tin\nRate | Net\t(Decrease)\nIncrease |
| Interest\trevenue\trelated\tto: |  |  |  |  |  |  |
| Interest-bearing\tdeposits\twith\tU.S.\tbanks | $73 | $2 | $75 | $17 | $(2) | $15 |
| Interest-bearing\tdeposits\twith\tnon-U.S.\tbanks | (19) | 15 | (4) | (29) | (2) | (31) |
| Securities\tpurchased\tunder\tresale\nagreements | (13) | 6 | (7) | (10) | 4 | (6) |
| Trading\taccount\tassets | — | 1 | 1 | — | — | — |
| Investment\tsecurities: |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tfederal\tagencies | (11) | (24) | (35) | (36) | (56) | (92) |
| State\tand\tpolitical\tsubdivisions | 90 | (77) | 13 | 59 | (6) | 53 |
| Other\tinvestments | (41) | (49) | (90) | 88 | (309) | (221) |
| Loans | 37 | (21) | 16 | 46 | (43) | 3 |
| Lease\tfinancing | (2) | (1) | (3) | (3) | (1) | (4) |
| Other\tinterest-earning\tassets | 2 | 1 | 3 | 2 | (1) | 1 |
| Total\tinterest-earning\tassets | 116 | (147) | (31) | 134 | (416) | (282) |
| Interest\texpense\trelated\tto: |  |  |  |  |  |  |
| Deposits: |  |  |  |  |  |  |
| Time | 11 | (2) | 9 | (8) | (2) | (10) |
| Savings | 5 | (3) | 2 | 6 | (5) | 1 |
| Non-U.S. | 7 | (12) | (5) | 18 | (82) | (64) |
| Securities\tsold\tunder\trepurchase\tagreements | — | (1) | (1) | — | — | — |
| Federal\tfunds\tpurchased | — | — | — | — | (1) | (1) |
| Other\tshort-term\tborrowings | 6 | (60) | (54) | (14) | 2 | (12) |
| Long-term\tdebt | 25 | (12) | 13 | 45 | (35) | 10 |
| Other\tinterest-bearing\tliabilities | 4 | 13 | 17 | 1 | 10 | 11 |
| Total\tinterest-bearing\tliabilities | 58 | (77) | (19) | 48 | (113) | (65) |
| Net\tinterest\trevenue | $58 | $(70) | $(12) | $86 | $(303) | $(217) |

# Quarterly	Summarized	Financial	Information	(Unaudited)

| except	per	share	amounts) | Fourth | Third | Second | First | Fourth | Third | Second | First |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Total\tfee\trevenue | $2,056 | $2,012 | $2,039 | $1,924 | $1,879 | $1,883 | $1,971 | $1,857 |
| Interest\trevenue | 676 | 671 | 650 | 655 | 684 | 643 | 700 | 687 |
| Interest\texpense | 102 | 101 | 89 | 100 | 99 | 97 | 104 | 111 |
| Net\tinterest\trevenue | 574 | 570 | 561 | 555 | 585 | 546 | 596 | 576 |
| Gains\t(losses)\trelated\tto\tinvestment\tsecurities,\tnet | — | — | (2) | 6 | — | (4) | (7) | 2 |
| Total\trevenue | 2,630 | 2,582 | 2,598 | 2,485 | 2,464 | 2,425 | 2,560 | 2,435 |
| Provision\tfor\tloan\tlosses | 4 | 2 | 2 | 2 | 6 | — | — | — |
| Total\texpenses | 2,057 | 1,892 | 1,850 | 2,028 | 1,846 | 1,722 | 1,798 | 1,826 |
| Income\tbefore\tincome\ttax\texpense | 569 | 688 | 746 | 455 | 612 | 703 | 762 | 609 |
| Income\ttax\texpense | 77 | 128 | 124 | 92 | 59 | 163 | 183 | 145 |
| Net\tincome | $492 | $560 | $622 | $363 | $553 | $540 | $579 | $464 |
| Net\tincome\tavailable\tto\tcommon\tshareholders | $473 | $542 | $602 | $356 | $545 | $531 | $571 | $455 |
| Earnings\tper\tcommon\tshare(1): |  |  |  |  |  |  |  |  |
| \t\t\t\t\tBasic | $1.14 | $1.28 | $1.41 | $.83 | $1.25 | $1.20 | $1.26 | $1.00 |
| \t\t\t\t\tDiluted | 1.12 | 1.26 | 1.38 | .81 | 1.22 | 1.17 | 1.24 | .98 |
| Average\tcommon\tshares\toutstanding: |  |  |  |  |  |  |  |  |
| \t\t\t\t\tBasic | 417 | 422 | 428 | 431 | 436 | 443 | 452 | 454 |
| \t\t\t\t\tDiluted | 424 | 430 | 435 | 439 | 445 | 452 | 461 | 463 |
| \t\t\t\t\tDividends\tper\tcommon\tshare | $.30 | $.30 | $.30 | $.26 | $.26 | $.26 | $.26 | $.26 |
| Common\tstock\tprice: |  |  |  |  |  |  |  |  |
| \t\t\t\t\tHigh | $80.92 | $76.78 | $70.20 | $76.24 | $73.63 | $71.27 | $68.18 | $60.65 |
| \t\t\t\t\tLow | 64.21 | 66.42 | 62.67 | 64.21 | 64.25 | 64.92 | 54.57 | 47.71 |
| \t\t\t\t\tClosing | 78.50 | 73.61 | 67.26 | 69.55 | 73.39 | 65.75 | 65.21 | 59.09 |

(1)	Basic	earnings	per	common	share	for	full-year	2014	do	not	equal	the	sum	of	the	four	quarters	for	the	year.	Diluted	earnings	per	common	share	for	full-year	2013	do	not	equal	the sum	of	the	four	quarters	for	the	year.

# ITEM	9.	CHANGES	IN	AND	DISAGREEMENTS	WITH	ACCOUNTANTS	ON	ACCOUNTING	AND	FINANCIAL	DISCLOSURE

# ITEM	9A. CONTROLS	AND	PROCEDURES

DISCLOSURE	CONTROLS	AND	PROCEDURES;	CHANGES	IN	INTERNAL	CONTROL	OVER	FINANCIAL	REPORTING

State	Street	has	established	and	maintains	disclosure	controls	and	procedures	that	are	designed	to	ensure	that	material	information	related	to	State Street	and	its	subsidiaries	on	a	consolidated	basis	required	to	be	disclosed	in	its	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	State	Street's	management,	including	its	Chief	Executive	Officer	and	Chief	Financial	Officer,	as	appropriate,	to	allow	timely decisions	regarding	required	disclosure.	For	the	quarter	ended	December	31,	2014,	State	Street's	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	State	Street's	disclosure	controls and	procedures.	Based	on	the	evaluation	of	these	disclosure	controls	and	procedures,	the	Chief	Executive	Officer	and	Chief	Financial	Officer	concluded that	State	Street's	disclosure	controls	and	procedures	were	effective	as	of	December	31,	2014.

State	Street	has	also	established	and	maintains	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	GAAP.	In	the	ordinary	course	of	business,	State	Street	routinely	enhances	its	internal controls	and	procedures	for	financial	reporting	by	either	upgrading	its	current	systems	or	implementing	new	systems.	Changes	have	been	made	and	may be	made	to	State	Street's	internal	controls	and	procedures	for	financial	reporting	as	a	result	of	these	efforts.	During	the	quarter	ended	December	31,	2014, no	change	occurred	in	State	Street's	internal	control	over	financial	reporting	that	has	materially	affected,	or	is	reasonably	likely	to	materially	affect,	State Street's	internal	control	over	financial	reporting.

# INTERNAL	CONTROL	OVER	FINANCIAL	REPORTING

# Management's	Report	on	Internal	Control	Over	Financial	Reporting

The	management	of	State	Street	is	responsible	for	the	preparation	and	fair	presentation	of	the	financial	statements	and	other	financial	information contained	in	this	Form	10-K.	Management	is	also	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting. Management	has	designed	business	processes	and	internal	controls	and	has	also	established	and	is	responsible	for	maintaining	a	business	culture	that fosters	financial	integrity	and	accurate	reporting.	To	these	ends,	management	maintains	a	comprehensive	system	of	internal	controls	intended	to	provide reasonable	assurances	regarding	the	reliability	of	financial	reporting	and	the	preparation	of	the	consolidated	financial	statements	of	State	Street	in conformity	with	GAAP.	State	Street's	accounting	policies	and	internal	control	over	financial	reporting,	established	and	maintained	by	management,	are under	the	general	oversight	of	State	Street's	Board	of	Directors,	including	the	Board's	Examining	and	Audit	Committee.

Management	has	made	a	comprehensive	review,	evaluation	and	assessment	of	State	Street's	internal	control	over	financial	reporting	as	of December	31,	2014.	The	standard	measures	adopted	by	management	in	making	its	evaluation	are	the	measures	in	the	Internal	Control	-	Integrated Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(2013	framework)	(the	"COSO	criteria").

Based	on	its	review	and	evaluation,	management	concluded	that	State	Street's	internal	control	over	financial	reporting	was	effective	as	of December	31,	2014,	and	that	State	Street's	internal	control	over	financial	reporting	as	of	that	date	had	no	material	weaknesses.

Ernst	&	Young	LLP,	an	independent	registered	public	accounting	firm,	which	has	audited	and	reported	on	the	consolidated	financial	statements contained	in	this	Form	10-K,	has	issued	its	written	attestation	report	on	its	assessment	of	State	Street's	internal	control	over	financial	reporting,	which follows	this	report.

We	have	audited	State	Street	Corporation's	(the	"Corporation")	internal	control	over	financial	reporting	as	of	 December	31,	2014,	based	on	criteria established	in	Internal	Control	-	Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(2013 framework)	(the	"COSO	criteria").	State	Street	Corporation	management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting	and for	its	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting	included	in	the	accompanying	Management's	Report	on	Internal	Control Over	Financial	Reporting.	Our	responsibility	is	to	express	an	opinion	on	the	Corporation's	internal	control	over	financial	reporting	based	on	our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards require	that	we	plan	and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained in	all	material	respects.	Our	audit	included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material weakness	exists,	testing	and	evaluating	the	design	and	operating	effectiveness	of	internal	control	based	on	the	assessed	risk,	and	performing	such	other procedures	as	we	considered	necessary	in	the	circumstances.	We	believe	that	our	audit	provides	a	reasonable	basis	for	our	opinion.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial reporting	and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's internal	control	over	financial	reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail, accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are recorded	as	necessary	to	permit	preparation	of	financial	statements	in	accordance	with	generally	accepted	accounting	principles	and	that	receipts	and expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of	management	and	directors	of	the	company;	and	(3)	provide reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or	disposition	of	the	company's	assets	that	could	have	a material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any evaluation	of	effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the degree	of	compliance	with	the	policies	or	procedures	may	deteriorate.

In	our	opinion,	State	Street	Corporation	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of December	31, 2014,	based	on	the	COSO	criteria.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated statement	of	condition	of	State	Street	Corporation	as	of	December	31,	2014	and	2013,	and	the	related	consolidated	statements	of	income,	comprehensive income,	changes	in	shareholders'	equity	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2014	and	our	report	dated February	20,	2015	expressed	an	unqualified	opinion	thereon.

# ITEM	9B.	OTHER	INFORMATION

# PART	III

# ITEM	10. DIRECTORS,	EXECUTIVE	OFFICERS	AND	CORPORATE GOVERNANCE

Information	concerning	our	directors	will	appear	in	our	Proxy Statement	for	the	2015	Annual	Meeting	of	Shareholders,	to	be	filed pursuant	to	Regulation	14A	on	or	before	April	30,	2015,	referred	to	as	the 2015	Proxy	Statement,	under	the	caption	"Election	of	Directors." Information	concerning	compliance	with	Section	16(a)	of	the	Exchange Act	will	appear	in	our	2015	Proxy	Statement	under	the	caption	"Section 16(a)	Beneficial	Ownership	Reporting	Compliance."	Information concerning	our	Code	of	Ethics	for	Senior	Financial	Officers	and	our Examining	and	Audit	Committee	will	appear	in	our	2015	Proxy	Statement under	the	caption	"Corporate	Governance	at	State	Street."	Such information	is	incorporated	herein	by	reference.

"Executive	Compensation."	Such	information	is	incorporated	herein	by reference.

# ITEM	12.	SECURITY	OWNERSHIP	OF	CERTAIN	BENEFICIAL OWNERS	AND	MANAGEMENT	AND	RELATED STOCKHOLDER	MATTERS

Information	concerning	security	ownership	of	certain	beneficial owners	and	management	will	appear	in	our	2015	Proxy	Statement	under the	caption	"Security	Ownership	of	Certain	Beneficial	Owners	and Management."	Such	information	is	incorporated	herein	by	reference.

The	following	table	presents	the	number	of	outstanding	common stock	awards,	options,	warrants	and	rights	granted	by	State	Street	to participants	in	our	equity	compensation	plans,	as	well	as	the	number	of securities	available	for	future	issuance	under	these	plans,	as	of December	31,	2014.	The	table	provides	this	information	separately	for equity	compensation	plans	that	have	and	have	not	been	approved	by shareholders.	Shares	presented	in	the	table	and	in	the	footnotes	following the	table	are	stated	in	thousands	of	shares.

Information	about	our	executive	officers	is	included	under	Part	I.

# ITEM	11. EXECUTIVE	COMPENSATION

Information	in	response	to	this	item	will	appear	in	our	2015	Proxy Statement	under	the	caption

| (Shares	in	thousands) | (a)<br>Number	of	securities<br>to	be	issued<br>upon	exercise	of<br>outstanding<br>options,<br>warrants	and	rights |  | (b)<br>Weighted-average<br>exercise	price	of<br>outstanding<br>options,<br>warrants	and	rights(1) | (c)<br>Number	of	securities<br>remaining	available	for<br>future	issuance	under<br>equity	compensation<br>plans	(excluding<br>securities	reflected<br>in	column	(a)) |
| :--- | :--- | :--- | :--- | :--- |
| Plan\tcategory: |  |  |  |  |
| Equity\tcompensation\tplans\tapproved\tby\tshareholders | 15,919 | (2) | $74.12 | 21,309 |
| Equity\tcompensation\tplans\tnot\tapproved\tby\tshareholders | 24 | (3) |  | — |
| Total | 15,943 |  |  | 21,309 |

(1)	Excludes	deferred	stock	awards	and	performance	awards	for	which	there	is	no	exercise	price.

(2)	Consists	of	12,431	shares	subject	to	deferred	stock	awards,	60	shares	subject	to	stock	options,	1,801	stock	appreciation	rights,	or	SARs,	and	1,627	shares	subject	to	performance awards	(assuming	payout	at	100%	for	all	awards	regarding	which	performance	is	uncertain).

(3)	Consists	of	shares	subject	to	deferred	stock	awards.

Individual	directors	who	are	not	our	employees	have	received	stock awards	and	cash	retainers,	both	of	which	may	be	deferred.	Directors	may elect	to	receive	shares	of	our	common	stock	in	place	of	cash.	If	payment is	in	the	form	of	common	stock,	the	number	of	shares	is	determined	by dividing	the	approved	cash	amount	by	the	closing	price	on	the	date	of	the annual	shareholders'	meeting	or	date	of	grant,	if	different.	All	deferred shares,	whether	stock	awards	or	common	stock	received	in	place	of	cash retainers,	are	increased	to	reflect	dividends	paid	on	the	common	stock and,	for	certain	directors,	may

include	share	amounts	in	respect	of	an	accrual	under	a	terminated retirement	plan.	Directors	may	elect	to	defer	50%	or	100%	of	cash	or stock	awards	until	a	date	that	they	specify,	usually	after	termination	of service	on	the	Board.		The	deferral	may	also	be	paid	in	either	a	lump	sum or	in	installments	over	a	two-	to	ten-year	period.	Stock	awards	totaling 206,868	shares	of	common	stock	were	outstanding	as	of	 December	31, 2014;	awards	made	through	June	30,	2003,	totaling	 23,606	shares outstanding	as	of	December	31,	2014,	have	not	been	approved	by shareholders.	There	are	no	other	equity

compensation	plans	under	which	our	equity	securities	are	authorized	for issuance	that	have	been	adopted	without	shareholder	approval.	Awards of	stock	made	or	retainer	shares	paid	to	individual	directors	after	June	30, 2003	have	been	or	will	be	made	under	our	1997	or	2006	Equity	Incentive Plan,	both	of	which	were	approved	by	shareholders.

# ITEM	13.	CERTAIN	RELATIONSHIPS	AND	RELATED

# TRANSACTIONS,	AND	DIRECTOR	INDEPENDENCE

Information	concerning	certain	relationships	and	related	transactions and	director	independence	will

appear	in	our	2015	Proxy	Statement	under	the	caption	"Corporate Governance	at	State	Street."	Such	information	is	incorporated	herein	by reference.

# ITEM	14.	PRINCIPAL	ACCOUNTING	FEES	AND	SERVICES

Information	concerning	principal	accounting	fees	and	services	and the	Examining	and	Audit	Committee's	pre-approval	policies	and procedures	will	appear	in	our	2015	Proxy	Statement	under	the	caption "Examining	and	Audit	Committee	Matters."	Such	information	is incorporated	herein	by	reference.

# PART	IV

# ITEM	15.				EXHIBITS,	FINANCIAL	STATEMENT	SCHEDULES

# (A)(1)	FINANCIAL	STATEMENTS

The	following	consolidated	financial	statements	of	State	Street	are	included	in	Item	8	hereof:

# (A)(2)	FINANCIAL	STATEMENT	SCHEDULES

Certain	schedules	to	the	consolidated	financial	statements	have	been	omitted	if	they	were	not	required	by	Article	9	of	Regulation	S-X	or	if,	under	the related	instructions,	they	were	inapplicable,	or	the	information	was	contained	elsewhere	herein.

The	exhibits	listed	in	the	Exhibit	Index	following	the	signature	page	of	this	Form	10-K	are	filed	herewith	or	are	incorporated	herein	by	reference	to other	SEC	filings.

# SIGNATURES

Pursuant	to	the	requirement	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on its	behalf	by	the	undersigned,	on	February	20,	2015,	hereunto	duly	authorized.

# SEAN	P.	NEWTH

Senior	Vice	President,	Chief	Accounting	Officer	and	Controller

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	on persons	on	behalf	of	the	registrant	and	in	the	capacities	indicated.

# OFFICERS:

/s/	JOSEPH	L.	HOOLEY /s/	MICHAEL	W.	BELL JOSEPH	L.	HOOLEY, 	 MICHAEL	W.	BELL, Chairman	and	Chief	Executive	Officer;	Director Executive	Vice	President	and Chief	Financial	Officer

/s/	SEAN	P.	NEWTH SEAN	P.	NEWTH Senior	Vice	President,	Chief	Accounting	Officer	and	Controller

# DIRECTORS:

/s/	JOSEPH	L.	HOOLEY

JOSEPH	L.	HOOLEY

/s/	JOSE	E.	ALMEIDA

JOSE	E.	ALMEIDA

/s/	KENNETT	F.	BURNES

KENNETT	F.	BURNES

LINDA	A.	HILL

/s/	AMELIA	C.	FAWCETT AMELIA	C.	FAWCETT

/s/	WILLIAM	C.	FREDA

WILLIAM	C.	FREDA

/s/	GREGORY	L.	SUMME 	 GREGORY	L.	SUMME

/s/	THOMAS	J.	WILSON THOMAS	J.	WILSON

# EXHIBIT	INDEX

(Note:	None	of	the	instruments	defining	the	rights	of	holders	of	State	Street's	outstanding	long-term	debt	are	in	respect	of indebtedness	in	excess	of	10%	of	the	total	assets	of	State	Street	and	its	subsidiaries	on	a	consolidated	basis.	State	Street	hereby agrees	to	furnish	to	the	SEC	upon	request	a	copy	of	any	other	instrument	with	respect	to	long-term	debt	of	State	Street	and	its subsidiaries.)

10.5† Employment	Agreement	entered	into	with	Michael	W.	Bell	dated	June	17,	2013	(filed	as	Exhibit	10.5	to	State	Street's	Annual	Report on	Form	10-K	(File	No.	001-07511)	for	the	year	ended	December	31,	2013	filed	with	the	SEC	on	February	21,	2014	and incorporated	herein	by	reference)	and	Form	of	Amendment	dated	March	26,	2014	to	Employment	Agreement	(filed	as	Exhibit	99.1 to	State	Street's	Current	Report	on	Form	8-K	(File	No.	001-07511)	dated	March	26,	2014	filed	with	the	SEC	on	March	31,	2014	and incorporated	herein	by	reference)

10.6† State	Street's	Executive	Compensation	Trust	Agreement	dated	December	6,	1996	(Rabbi	Trust)	(filed	as	Exhibit	10.5	to	State Street's	Annual	Report	on	Form	10-K	(File	No.	001-07511)	for	the	year	ended	December	31,	2008	filed	with	the	SEC	on	February 27,	2009	and	incorporated	herein	by	reference)

10.7† State	Street's	1997	Equity	Incentive	Plan,	as	amended,	and	forms	of	award	agreements	thereunder	(filed	as	Exhibit	10.6	to	State Street's	Annual	Report	on	Form	10-K	(File	No.	001-07511)	for	the	year	ended	December	31,	2008	filed	with	the	SEC	on	February 27,	2009	and	incorporated	herein	by	reference)

10.8† State	Street's	2006	Equity	Incentive	Plan,	as	amended,	and	forms	of	award	agreements	thereunder

† 	 Denotes	management	contract	or	compensatory	plan	or	arrangement

* Submitted	electronically	herewith

Attached	as	Exhibit	101	to	this	report	are	the	following	formatted	in	XBRL	(Extensible	Business	Reporting	Language):	(i)	consolidated	statement	of income	for	the	years	ended	December	31,	2014,	2013	and	2012,	(ii)	consolidated	statement	of	comprehensive	income	for	the	 years	ended	December	31, 2014,	2013	and	2012,	(iii)	consolidated	statement	of	condition	as	of	 December	31,	2014	and	December	31,	2013,	(iv)	consolidated	statement	of	changes in	shareholders'	equity	for	the	years	ended	December	31,	2014,	2013	and	2012,	(v)	consolidated	statement	of	cash	flows	for	the	 years	ended December	31,	2014,	2013	and	2012,	and	(vi)	notes	to	consolidated	financial	statements.



Question: what is the roi of an investment in state street corporation from 20011 to 2012?
Calculation: start_value = 114
end_value = 101
years = 1
answer = (end_value - start_value) / start_value * 100
Answer: -11.4%