Back to GetFilings.com






================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NO. 0-5108

STATE STREET BOSTON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MASSACHUSETTS 04-2456637
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)

225 FRANKLIN STREET
BOSTON, MASSACHUSETTS 02110
(ADDRESS OF PRINCIPAL (ZIP CODE)
EXECUTIVE OFFICE)

617-786-3000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
----------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

(TITLE OF CLASS) (NAME OF EXCHANGE ON WHICH REGISTERED)
---------------- --------------------------------------
COMMON STOCK, $1 PAR VALUE BOSTON STOCK EXCHANGE,
NEW YORK STOCK EXCHANGE AND
PACIFIC STOCK EXCHANGE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
----------------

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 IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K 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]

THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY NON-
AFFILIATES (PERSONS OTHER THAN DIRECTORS AND EXECUTIVE OFFICERS) OF THE
REGISTRANT ON FEBRUARY 29, 1996 WAS $3,658,343,000.

THE NUMBER OF SHARES OF THE REGISTRANT'S COMMON STOCK OUTSTANDING ON
FEBRUARY 29, 1996 WAS 81,275,387.

PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED INTO THE PARTS OF THIS
REPORT ON FORM 10-K INDICATED BELOW:

(1) ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1995
(PARTS I AND II) AND

(2) THE REGISTRANT'S DEFINITIVE PROXY STATEMENT DATED MARCH 12, 1996
(PART III)
================================================================================

PART I
ITEM 1. BUSINESS

GENERAL DEVELOPMENT OF BUSINESS
State Street Boston Corporation ("State Street") is a bank holding company
organized under the laws of the Commonwealth of Massachusetts.

State Street was organized in 1970 and conducts its business principally
through its subsidiary, State Street Bank and Trust Company ("State Street
Bank"), which traces its beginnings to the founding of the Union Bank in 1792.
The charter under which State Street Bank now operates was authorized by a
special act of the Massachusetts Legislature in 1891, and its present name was
adopted in 1960.

State Street is the fifth largest provider of trust services in the United
States as ranked on the basis of 1994 fiduciary compensation. State Street had
$2.3 trillion of assets under custody, $283 billion of bonds under trusteeship,
and $226 billion of assets under management at year-end 1995. Ranked on the
basis of total assets as of September 1995, State Street is the 33rd largest
bank holding company in the United States. State Street's total assets were
$25.8 billion at December 31, 1995, of which $18.6 billion, or 72%, were
investment securities and money market assets and $3.9 billion, or 15%, were
loans.

Services are provided from offices in the United States, as well as from
offices in Canada, Grand Cayman, Netherland Antilles, the United Kingdom,
France, Belgium, Luxembourg, Denmark, Germany, United Arab Emirates, Hong Kong,
Taiwan, Japan, Australia, and New Zealand. State Street's executive offices are
located at 225 Franklin Street, Boston, Massachusetts. For information as to
foreign activities, refer to Note T to the Notes to Financial Statements which
appear in State Street's 1995 Annual Report to Stockholders. Such information is
incorporated by reference.

LINES OF BUSINESS
State Street has three lines of business: financial asset services,
investment management and commercial lending. In 1995, 65% of net income came
from the broad and growing array of financial asset services, 24% came from
commercial lending and 16% came from investment management. Corporate items
reduced net income by 5%. The results of operations for State Street's lines of
business are set forth in tabular form and discussed on pages 30 and 31 of State
Street's 1995 Annual Report to Stockholders in management's discussion and
analysis of financial condition and results of operation. Such information is
incorporated by reference.

FINANCIAL ASSET SERVICES
Financial asset services are primarily accounting, custody and other
services for large pools of assets such as mutual funds and pension plans, both
defined benefit and defined contribution, and corporate trusteeship. A broad
array of other services is provided, including accounting, information services
and recordkeeping. Also provided are banking functions of accepting deposits,
managing global cash, making loans and trading foreign exchange.

With $1 trillion of mutual fund assets under custody, State Street is the
leading mutual fund custodian in the United States, servicing 41% of the
registered funds. State Street began providing mutual fund services in 1924 and
servicing pension assets in 1974. Customers who sponsor the 2,842 U.S. mutual
funds that State Street services include investment companies, broker/dealers,
insurance companies and others. In addition, State Street services 242 offshore
mutual funds and collective investment funds in other countries.

State Street offers a full array of mutual fund services, including custody,
portfolio and general ledger accounting, pricing, fund administration and
information services. Shareholder accounting is provided through a 50%-owned
affiliate.

Servicing $927 billion of pension and other assets for North American
customers, State Street is ranked as the largest servicer of tax-exempt assets
for corporations and public funds in the United States and the largest global
custodian for U.S. pension assets. Services include portfolio accounting,
securities custody, securities lending, and other related services for
retirement and other financial assets of benefit pension plans, unions,
endowments, foundations, and nuclear decommissioning trusts. In addition, State
Street provides global and domestic custody-related services for $115 billion in
assets for customers outside North America.

State Street acts as participant recordkeeper, securities custodian and
trustee for defined contribution plans, such as 401(k) plans and ESOPs, and
issues checks for employee benefit distributions. Corporate trust services for
asset-backed securities, corporate securities, leveraged leases, and municipal
securities are provided to investment banks, corporations, municipalities and
government agencies from four offices in the United States. At year end 1995,
bonds under trusteeship totaled $283 billion.

State Street provides foreign exchange trading and global cash management
services to financial institutions and corporations. Funds are gathered in the
form of domestic and foreign deposits, federal funds purchased and securities
sold under repurchase agreements from local, national and international sources.
Trading and arbitrage operations are conducted with government securities,
futures and options. Municipal dealer activities include underwriting, trading
and distribution of general obligation tax-exempt bonds and notes. Treasury
centers are located in Boston, London, Hong Kong, Tokyo, Sydney, Munich and
Luxembourg. State Street also provides corporate finance services, including
private placement of debt and equity, acquisitions and divestitures, and project
finance.

INVESTMENT MANAGEMENT
State Street was a pioneer in the development of domestic and international
index funds through State Street Global Advisors ("SSgA"). The products now
offered by SSgA include enhanced index and fully-active equity strategies,
short-term investment funds and fixed income products. These products are sold
and managed both domestically and from locations outside the United States.
State Street is ranked as the largest manager of internationally-indexed assets
and the second largest manager of tax-exempt money in the United States. State
Street is a leading New England trustee and money manager for individuals, and
provides planned gift management services for non-profit organizations
throughout the United States. At year-end 1995, institutional and personal trust
assets under management totaled $226 billion.

COMMERCIAL LENDING
State Street provides corporate banking, specialized lending and
international banking to business and financial institutions. One-third of the
loan portfolio supports the short-term needs of financial asset services
customers and securities brokers in conjunction with their trading and
settlement activity. Corporate banking services are offered primarily to middle
market companies in the Northeast as well as small businesses in the local
community. Specialized lending is both regional and national, with specialities
that include cable television, security alarm monitoring, technology-based
companies, publishing, law firms, non-profit institutions, broker/dealers and
other financial institutions. In addition, State Street engages in asset-based
finance, leasing, real estate, and trade finance transactions. Trade finance
includes letters of credit, collection, payment and other specialized services
for importers and exporters.

SELECTED STATISTICAL INFORMATION
The following tables contain State Street's consolidated statistical
information relating to, and should be read in conjunction with, the
consolidated financial statements, selected financial data and management's
discussion and analysis of financial condition and results of operation, all of
which appear in State Street's 1995 Annual Report to Stockholders and is
incorporated by reference herein. Information reported in State Street's 1994
Form 10-K was restated for the acquisition of Investors Fiduciary Trust Company
which was accounted for as a pooling of interests. This restated information was
filed with the SEC on Form 8-K, dated May 19, 1995.

DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
The average statements of condition and net interest revenue analysis for
the years indicated are presented below.





1995 1994 1993
------------------------------ ------------------------------ -------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------- ------- -------- ------ ------- -------- ----
(DOLLARS IN THOUSANDS)


ASSETS
Interest-bearing
deposits with
banks(1) ............ $ 5,465,950 $286,749 5.25% $ 5,182,776 $209,355 4.04% $ 5,022,194 $201,400 4.01%
Securities purchased
under resale
agreements and
securities
borrowed ............ 5,568,532 329,128 5.91 3,101,649 132,112 4.26 3,255,014 102,332 3.14
Federal funds sold .... 474,730 28,350 5.97 537,433 23,889 4.45 533,644 16,181 3.03
Trading account assets 412,413 21,137 5.13 532,108 26,095 4.90 415,525 16,693 4.02
Investment securities:
U.S. Treasury and
Federal agencies .. 4,139,383 243,936 5.89 3,454,886 184,251 5.33 2,181,353 124,699 5.72
State and political
subdivisions ...... 1,183,372 70,562 5.96 1,119,909 56,956 5.09 731,943 39,780 5.43
Other investments ... 2,211,650 133,712 6.05 2,596,978 138,942 5.35 2,168,790 117,843 5.43
Loans(2):
Domestic ............ 2,925,345 201,168 6.88 2,728,849 145,609 5.34 2,261,915 113,272 5.01
Foreign ............. 738,368 56,767 7.69 672,509 44,091 6.56 314,122 19,137 6.09
------------ --------- ------------ --------- ------------ ---------
Total interest-
earning assets .... 23,119,743 1,371,509 5.93 19,927,097 961,300 4.82 16,884,500 751,337 4.45
--------- --------- ---------
Cash and due from
banks ................ 1,025,646 1,285,560 979,258
Allowance for loan
losses ............... (61,749) (58,089) (57,522)
Premises and equipment 481,000 462,005 435,475
Customers' acceptance
liability(3) ........ 63,252 29,580 33,363
Other assets .......... 1,554,066 1,148,959 651,863
------------ ------------ ------------
Total Assets ........ $26,181,958 $22,795,112 $18,926,937
============ ============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Savings ............. $ 1,912,798 85,160 4.45 $ 1,991,910 56,673 2.85 $ 2,253,434 55,199 2.45
Time ................ 131,008 7,170 5.47 172,411 7,790 4.52 234,250 12,281 5.24
Foreign ............. 8,470,367 323,717 3.82 7,391,851 216,227 2.93 4,953,696 146,051 2.95
Federal funds
purchased ............ 504,079 29,695 5.89 410,784 16,019 3.90 741,082 21,023 2.84
Securities sold under
repurchase
agreements .......... 7,080,311 400,224 5.65 4,957,940 201,992 4.07 4,180,945 121,403 2.90
Other short-term
borrowings ........... 760,586 40,453 5.32 563,221 24,787 4.40 215,948 8,156 3.78
Notes payable ......... 213,802 12,241 5.73 258,252 11,979 4.64 510,719 19,943 3.90
Long-term debt ........ 127,036 8,525 6.71 128,130 8,625 6.73 122,403 10,023 8.19
------------ --------- ------------ --------- ------------ ---------
Total interest-
bearing
liabilities ....... 19,199,987 907,185 4.72 15,874,499 544,092 3.43 13,212,477 394,079 2.98
--------- ----- --------- ----- --------- -----
Noninterest-bearing
deposits ............ 4,113,458 4,700,888 4,059,011
Acceptances outstanding
(3) ................. 63,570 30,098 33,956
Other liabilities ..... 1,322,130 905,514 496,938
Stockholders' equity .. 1,482,813 1,284,113 1,124,555
------------ ------------ ------------
Total Liabilities and
Stockholders'
Equity ............ $26,181,958 $22,795,112 $18,926,937
============ ============ ============

Net interest revenue $464,324 $417,208 $357,258
======== ======== ========
Excess of rate earned
over rate paid .... 1.21% 1.39% 1.47%
===== ==== ====
Net Interest Margin(4) 2.01% 2.09% 2.12%
===== ==== ====

- ----------
(1) Amounts reported were with non-U.S. domiciled offices of other banks.
(2) Non-accrual loans are included in the average loan amounts outstanding.
(3) In 1995, 1994 and 1993, 22%, 43% and 13% of acceptances were foreign.
(4) Net interest margin is taxable equivalent net interest revenue divided by
total average interest-earning assets.

Interest revenue on non-taxable investment securities and loans in the above
table includes the effect of taxable-equivalent adjustments, using a Federal
income tax rate of 35%, adjusted for applicable state income taxes net of the
related Federal tax benefit.



DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL (CONTINUED)
The table below summarizes changes in interest revenue and interest expense
due to changes in volume of interest-earning assets and interest-bearing
liabilities, and changes in interest rates. Changes attributed to both volume
and rate have been allocated based on the proportion of change in each category.



1995 COMPARED TO 1994 1994 COMPARED TO 1993
--------------------------------------------- ---------------------------------------------
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO NET DUE TO NET
---------------------------- INCREASE ---------------------------- INCREASE
VOLUME RATE (DECREASE) VOLUME RATE (DECREASE)
------ ---- ---------- ------ ---- ----------
(DOLLARS IN THOUSANDS)

Interest revenue related to:
Interest-bearing deposits
with banks ............... $ 11,967 $ 65,427 $ 77,394 $ 6,478 $ 1,477 $ 7,955
Securities purchased under
resale agreements and
securities borrowed ...... 132,459 64,557 197,016 (4,560) 34,340 29,780
Federal funds sold ......... (2,295) 6,756 4,461 116 7,592 7,708
Trading account assets ..... (6,201) 1,243 (4,958) 5,262 4,140 9,402
Investment securities:
U.S. Treasury and Federal
agencies ............... 39,010 20,675 59,685 67,284 (7,732) 59,552
State and political
subdivisions ........... 3,365 10,241 13,606 19,544 (2,368) 17,176
Other investments ........ (42,292) 37,062 (5,230) 22,879 (1,780) 21,099
Loans:
Domestic ................. 11,089 44,470 55,559 24,546 7,791 32,337
Foreign .................. 4,588 8,088 12,676 23,392 1,562 24,954
------- ------- ------- ------- ------- -------
Total interest-earning
assets .................. 151,690 258,519 410,209 164,941 45,022 209,963
------- ------- ------- ------- ------- -------
Interest expense related to:
Deposits:
Savings ................ (2,155) 30,642 28,487 (3,764) 5,238 1,474
Time ................... (5,161) 4,541 (620) (2,948) (1,543) (4,491)
Foreign ................ 34,667 72,823 107,490 71,312 (1,136) 70,176
Federal funds purchased .... 4,210 9,466 13,676 (31,393) 26,389 (5,004)
Securities sold under
repurchase agreements .... 104,053 94,179 198,232 25,432 55,157 80,589
Other short-term borrowings 9,821 5,845 15,666 15,081 1,550 16,631
Notes payable .............. (725) 987 262 (12,846) 4,882 (7,964)
Long-term debt ............. (73) (27) (100) 499 (1,897) (1,398)
------- ------- ------- ------- ------- -------
Total interest-bearing
liabilities ............... 144,637 218,456 363,093 61,373 88,640 150,013
------- ------- ------- ------- ------- -------
Net Interest Revenue ..... $ 7,053 $ 40,063 $ 47,116 $103,568 $(43,618) $ 59,950
======== ======== ======== ======== ======== ========


INVESTMENT PORTFOLIO
State Street adopted Statement of Financial Accounting Standards (SFAS) No.
115, "Accounting for Certain Investments in Debt and Equity Securities," on
January 1, 1994. Under SFAS No. 115, debt securities for which State Street has
the intent and ability to hold to maturity are classified as held-to- maturity
securities and reported at amortized cost. Securities that are classified as
available-for-sale securities are reported at fair value. Investment securities
consisted of the following at December 31:


1995 1994 1993
--------- --------- ---------
(DOLLARS IN THOUSANDS)

HELD TO MATURITY (at amortized cost)
U.S. Treasury and Federal agencies ........................ $ 824,399 $1,668,987 $1,272,370
State and political subdivisions .......................... 1,130,197 1,083,879
Asset-backed securities ................................... 2,346,931 2,028,099
Other investments ......................................... 41,155 99,756
---------- ---------- ----------
Total ................................................. $ 824,399 $5,187,270 $4,484,104
========== ========== ==========
AVAILABLE FOR SALE (at fair value*)
U.S. Treasuries and Federal agencies ...................... $2,283,982 $3,319,417 $1,317,880
State and political subdivisions .......................... 1,306,233
Asset-backed securities ................................... 1,665,361
Other investments ......................................... 279,788 162,892 483,502
---------- ---------- ----------
Total ................................................. $5,535,364 $3,482,309 $1,801,382
========== ========== ==========

* In 1993 at lower of cost or market

On November 15, 1995, the Financial Accounting Standards Board issued a
Special Report, "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities." In accordance with
provisions in that Special Report, State Street chose to reclassify certain
securities from held to maturity to available for sale on December 1, 1995. At
the date of transfer, the amortized cost of those securities was $3,828,808,000
and the net unrealized gain on those securities was $2,684,000, which was
recorded net of tax in stockholders' equity at the date of transfer.

The maturities of investment securities at December 31, 1995 and the
weighted average yields (fully taxable equivalent basis) were as follows:


MATURING
------------------------------------------------------------------------------------------------------
AFTER ONE AFTER FIVE
ONE YEAR BUT WITHIN BUT WITHIN AFTER
OR LESS FIVE YEARS TEN YEARS TEN YEARS
------------------------ ------------------------ ------------------------ ------------------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)

HELD TO MATURITY
U.S. Treasury and
Federal agencies .......... $ 444,480 5.20% $ 379,919 6.22%
---------- ----------
Total ................... $ 444,480 $ 379,919
========== ==========
AVAILABLE FOR SALE
U.S. Treasury and
Federal agencies .......... $ 470,584 6.49 $1,677,034 6.01 $ 45,173 7.07% $ 91,186 7.25%
State and political
subdivisions .............. 560,360 6.84 615,342 6.98 88,999 6.98 41,537 7.50
Asset-backed securities...... 1,086,784 6.16 492,833 6.14 51,697 6.00 34,046 6.00
Other investments ........... 39,653 6.03 240,136 5.53
---------- ---------- -------- --------
Total ................... $2,157,381 $3,025,345 $185,869 $166,769
========== ========== ======== ========



LOAN PORTFOLIO
Domestic and foreign loans at December 31 and average loans outstanding for
the years ended December 31, were as follows:



1995 1994 1993 1992 1991
-------------- -------------- -------------- -------------- --------------
(DOLLARS IN THOUSANDS)

Domestic:
Commercial and financial . $2,572,553 $2,070,145 $1,889,143 $1,519,037 $1,411,994
Real estate .............. 95,782 100,549 94,073 105,156 128,376
Consumer ................. 47,355 41,323 46,315 64,841 75,366
Lease financing .......... 315,115 341,640 254,525 251,761 211,350
---------- ---------- ---------- ---------- ----------
Total domestic ......... 3,030,805 2,553,657 2,284,056 1,940,795 1,827,086
---------- ---------- ---------- ---------- ----------

Foreign:
Commercial and industrial 633,601 510,638 295,716 50,838 67,622
Banks and other financial
institutions ............ 56,984 52,597 25,940 8,838 7,495

Government and official
institutions ........... 2,012 1,000 1,000 1,000 1,000
Lease financing .......... 256,146 110,055 70,976
Other .................... 6,594 5,274 2,486 2,242 2,112
---------- ---------- ---------- ---------- ----------
Total foreign .......... 955,337 679,564 396,118 62,918 78,229
---------- ---------- ---------- ---------- ----------
Total loans ............ $3,986,142 $3,233,221 $2,680,174 $2,003,713 $1,905,315
========== ========== ========== ========== ==========
Average loans outstanding .. $3,663,713 $3,401,358 $2,576,037 $2,070,345 $2,107,388
========== ========== ========== ========== ==========

Loan maturities for selected loan categories at December 31, 1995 were as follows:

AFTER ONE
ONE YEAR BUT WITHIN AFTER
OR LESS FIVE YEARS FIVE YEARS
------- ---------- ----------
(DOLLARS IN THOUSANDS)

Commercial and financial .......................................... $2,089,580 $313,478 $169,495
Real estate ....................................................... 33,175 49,643 12,964
Foreign ........................................................... 678,777 5,845 270,714


The following table shows the classification of the above loans due after one year according to sensitivity to changes in
interest rates:
(DOLLARS IN THOUSANDS)

Loans with predetermined interest rates .................................... $407,101
Loans with floating or adjustable interest rates ........................... 415,038
-------
Total .................................................................. $822,139
========


Loans are evaluated on an individual basis to determine the appropriateness
of renewing each loan. State Street does not have a general rollover policy.
Unearned revenue included in loans was $3,458,000 and $4,112,000 at December 31,
1995 and 1994, respectively.

NON-ACCRUAL LOANS
It is State Street's policy to place loans on a non-accrual basis when they
become 60 days past due as to either principal or interest, or when in the
opinion of management, full collection of principal or interest is unlikely.
Loans eligible for non-accrual, but considered both well secured and in the
process of collection, are treated as exceptions and may be exempted from
nonaccrual status. When the loan is placed on non-accrual, the accrual of
interest is discontinued and previously recorded but unpaid interest is reversed
and charged against current earnings. Past due loans are loans on which
principal or interest payments are over 90 days delinquent, but where interest
continues to be accrued.

The following schedule discloses information concerning non-accrual and past
due loans:



DECEMBER 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)

Non-accrual:
Domestic ............................. $15,502 $23,043 $26,804 $39,954 $39,620
Foreign .............................. 323 1,337
------- ------- ------- ------- -------
Total non-accrual .................. $15,502 $23,043 $26,804 $40,277 $40,957
======= ======= ======= ======= =======
Past due:
Domestic ............................. $ 250 $ 41 $ 86 $ 288 $ 44
Foreign .............................. 65 507
------- ------- ------- ------- -------
Total past due ..................... $ 250 $ 41 $ 86 $ 353 $ 551
======= ======= ======= ======= =======

The interest revenue for 1995 which would have been recorded related to
these non-accrual loans is $2,034,000 for domestic loans. The interest revenue
that was recorded on these non-accrual loans was $445,000, all of which relates
to domestic loans.

ALLOWANCE FOR LOAN LOSSES
The changes in the allowance for loan losses for the years ended December
31, were as follows:

1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)

Balance at beginning of year:
Domestic ............................. $52,424 $50,968 $56,987 $64,323 $49,007
Foreign .............................. 5,760 3,348 944 1,565 1,968
------- ------- ------- ------- -------
Total allowance for loan losses .... 58,184 54,316 57,931 65,888 50,975
------- ------- ------- ------- -------
Provision (credit) for loan losses:
Domestic ............................. 3,789 9,485 10,247 11,734 59,989
Foreign .............................. 4,211 2,084 1,073 467 23
------- ------- ------- ------- -------
Total provision for loan losses .... 8,000 11,569 11,320 12,201 60,012
------- ------- ------- ------- -------
Loan charge-offs:
Commercial and financial ............. 4,649 10,189 15,241 9,794 33,687
Real estate .......................... 538 1,627 10,553 10,940
Consumer ............................. 140 288 1,416 1,811 2,273
Lease Financing ...................... 203
Foreign .............................. 1,196 261 1,356 870
------- ------- ------- ------- -------
Total loan charge-offs ............. 6,726 10,477 18,545 23,514 47,770
------- ------- ------- ------- -------
Recoveries:
Commercial and financial ............. 1,874 1,818 1,178 1,414 1,494
Real estate .......................... 895 215 279 747 52
Consumer ............................. 350 415 561 927 681
Foreign .............................. 914 328 187 268 444
-------- ------- ------- ------- -------
Total recoveries ................... 4,033 2,776 2,205 3,356 2,671
------- ------- ------- ------- -------
Net loan charge-offs ............... 2,693 7,701 16,340 20,158 45,099
------- ------- ------- ------- -------
Allowance of foreign subsidiary purchased 1,405
Balance at end of year:
Domestic ............................. 53,802 52,424 50,968 56,987 64,323
Foreign .............................. 9,689 5,760 3,348 944 1,565
------- ------- ------- ------- -------
Total allowance for loan losses .... $63,491 $58,184 $54,316 $57,931 $65,888
======= ======= ======= ======= =======
Ratio of net charge-offs to average
loans outstanding ..................... .07% .23% .63% .97% 2.14%
======= ======= ======= ======= =======


ALLOWANCE FOR LOAN LOSSES (continued)
State Street establishes an allowance for loan losses to absorb probable
credit losses. Management's review of the adequacy of the allowance for loan
losses is ongoing throughout the year and is based, among other factors, on the
evaluation of the level of risk in the portfolio, the volume of adversely
classified loans, previous loss experience, current trends, and expected
economic conditions and its effect on borrowers.

State Street adopted Statement of Financial Accounting Standards ("SFAS")
No. 114, "Accounting by Creditors for Impairment of a Loan," as amended by SFAS
No. 118 on January 1, 1995. SFAS No. 114 requires that the allowance for loan
losses related to certain loans be evaluated based on discounted cash flows
using the loans initial effective interest rate or the fair value of the
underlying collateral for certain collateral dependent loans. Prior to January
1, 1995, the allowance for loan losses related to these loans was based on
undiscounted cash flows or the fair value of the collateral for collateral
dependent loans. The adoption of SFAS No. 114 did not have a material effect on
the financial statements of State Street.

While the allowance is established to absorb probable losses inherent in the
total loan portfolio, management allocates the allowance for loan losses to
specific loans, selected portfolio segments and certain off-balance sheet
exposures and commitments. Adversely classified loans in excess of $1 million
are individually reviewed to evaluate risk of loss and assigned a specific
allocation of the allowance. The allocations are based on an assessment of
potential risk of loss and include evaluations of the borrowers' financial
strength, discounted cash flows, collateral, appraisals and guarantees. The
allocations to portfolio segments and off-balance sheet exposures are based on
management's evaluation of relevant factors, including the current level of
problem loans and current economic trends. These allocations are also based on
subjective estimates and management judgment, and are subject to change from
quarter-to-quarter. In addition, a portion of the allowance remains unallocated
as a general reserve for the entire loan portfolio.

The provision for loan losses is a charge to earnings for the current period
which is required to maintain the total allowance at a level considered adequate
in relation to the level of risk in the loan portfolio. The provision for loan
losses was $8.0 million in 1995, compared with $11.6 million for 1994.

At December 31, 1995, the allowance for loan losses was $63.5 million, or
1.59% of loans. This compares with an allowance of $58.2 million or 1.80% of
loans a year ago. This decline reflects improvement in measures of credit
quality and a continuing satisfactory outlook for general economic conditions
and its effect on borrowers.

CREDIT QUALITY
At December 31, 1995, loans comprised 15% of State Street's assets. State
Street's loan policies limit the size of individual loan exposures to reduce
risk through diversification.

In 1995, net charge-offs declined to $2.7 million from $7.7 million in 1994.
Net charge-offs as a percentage of average loans were .07% compared to .23% for
1994.

At December 31, 1995, total non-performing assets were $18.7 million, an
$8.7 million decrease from year-end 1994. For 1995 and 1994, respectively,
non-performing assets include $15.5 million and $23.0 million of non-accrual
loans and $3.2 million and $4.4 million of other real estate owned. In 1995,
loans placed on non-accrual status were more than offset by charge-offs,
payments, and the return to accrual status of several loans. The decline in
other real estate owned resulted from property sales.

In 1995, measures of credit quality improved, as discussed above, as did the
general economic outlook. We expect these levels of credit quality to continue
in 1996. It is anticipated that gross charge-offs in 1996 will generally
approximate the 1995 level and are expected to be primarily in the commercial
and financial category.

CROSS-BORDER OUTSTANDINGS
Countries with which State Street has cross-border outstandings (primarily
deposits and letters of credit to banks and other financial institutions) of at
least 1% of its total assets at December 31, 1995, 1994 and 1993, were as
follows:

1995 1994 1993
----------- ----------- -----------
(DOLLARS IN THOUSANDS)
Japan ................................. $ 920,426 $1,708,021 $1,688,130
France ................................ 852,257 461,919 519,565
United Kingdom ........................ 834,392 543,055 613,515
Australia ............................. 784,241 648,697 498,671
Germany ............................... 727,741 438,624 339,477
Italy ................................. 620,044 527,682 367,931
Netherlands ........................... 487,270 101,797 224,622
Canada ................................ 359,025 265,322 289,152
Belgium ............................... 336,681
Hong Kong ............................. 206,443
---------- ---------- ----------
Total outstandings ................ $5,922,077 $4,695,117 $4,747,506
========== ========== ==========

Aggregate of cross-border outstandings in countries having between .75% and
1% of total assets at December 31, 1995 was $240,169,000 (Austria); at December
31, 1994 was $176,988,000 (Switzerland); and at December 31, 1993 was
$171,688,000 (Belgium).

DEPOSITS
The average balance and rates paid on interest-bearing deposits for the
years ended December 31, were as follows:



1995 1994 1993
---------------------- --------------------- ---------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE
------------ -------- ----------- -------- ----------- --------
(DOLLARS IN THOUSANDS)

Domestic:
Noninterest-bearing deposits ........ $4,063,553 $4,639,336 $4,025,974
Savings deposits .................... 1,912,798 4.45% 1,991,910 2.85% 2,253,434 2.45%
Time deposits ....................... 131,008 5.47 172,411 4.52 234,250 5.24
---------- ---------- ----------
Total domestic ............... $6,107,359 $6,803,657 $6,513,658
========== ========== ==========
Foreign:
Noninterest-bearing deposits ...... $ 49,905 $ 61,552 $ 33,037
Interest-bearing .................. 8,470,367 3.82% 7,391,851 2.93% 4,953,696 2.95%
----------

Total foreign .................. $8,520,272 $7,453,403 $4,986,733
========== ========== ==========


Maturities of domestic certificates of deposit of $100,000 or more at
December 31, 1995, were as follows:

(DOLLARS IN THOUSANDS)

3 months or less ..................................... $148,937
3 to 6 months ........................................ 13,513
6 to 12 months ....................................... 14,693
Over 12 months ....................................... 1,905
--------
Total ............................................ $179,048
========

At December 31, 1995, substantially all foreign time deposit liabilities
were in amounts of $100,000 or more. Included in noninterest-bearing deposits
were foreign deposits of $28,265,000, $44,816,000 and $28,519,000 at December
31, 1995, 1994 and 1993, respectively.

RETURN ON EQUITY AND ASSETS AND CAPITAL RATIOS
The return on equity, return on assets, dividend payout ratio, equity to
assets ratio and capital ratios for the years ended December 31, were as
follows:


1995 1994 1993
---- ---- ----

Net income to:
Average stockholders' equity ............................ 16.7% 17.2% 16.8%
Average total assets .................................... .94 .97 1.00
Dividends declared to net income .......................... 22.7 20.8 20.8
Average equity to average assets .......................... 5.7 5.6 5.9

Risk-based capital ratios:
Tier 1 capital ......................................... 14.0 13.6 12.6
Total capital .......................................... 14.5 14.2 13.1
Leverage Ratio ............................................ 5.6 5.6 5.5


SHORT-TERM BORROWINGS
The following table reflects the amounts outstanding and weighted average
interest rates of the primary components of short-term borrowings as of and for
the years ended:



FEDERAL SECURITIES SOLD
FUNDS UNDER REPURCHASE
PURCHASED AGREEMEMTS
--------- -------------
(DOLLARS IN THOUSANDS)
Balance as of December 31:

1995 ......................................................... $ 467,305 $5,120,950
1994 ......................................................... 113,143 4,798,261
1993 ......................................................... 269,083 3,012,498
Maximum outstanding at any month end:
1995 ......................................................... $ 970,530 $7,372,277
1994 ......................................................... 745,443 6,684,105
1993 ......................................................... 1,081,811 5,352,620
Average outstanding during the year:
1995 ......................................................... $ 504,079 $7,080,311
1994 ......................................................... 410,784 4,957,940
1993 ......................................................... 741,082 4,180,945
Weighted average interest rate at end of year:
1995 ......................................................... 3.47% 5.17%
1994 ......................................................... 5.28 4.91
1993 ......................................................... 2.72 2.72
Weighted average interest rate during the year:
1995 ......................................................... 5.89% 5.65%
1994 ......................................................... 3.90 4.07
1993 ......................................................... 2.84 2.89


COMPETITION
State Street operates in a highly competitive environment in all areas of
its business on a worldwide basis, including servicing financial assets,
investment management and commercial lending. In addition to facing strong
competition from other deposit taking institutions, State Street faces strong
competition from investment management firms, private trustees, insurance
companies, mutual funds, broker/dealers, investment banking firms, law firms,
benefit consultants, and business service companies. As State Street expands
globally, additional sources of competition are encountered.

EMPLOYEES
At December 31, 1995, State Street had 11,324 employees, of whom 10,996 were
full-time.

REGULATION AND SUPERVISION
State Street is registered with the Board of Governors of the Federal
Reserve System (the "Board") as a bank holding company pursuant to the Bank
Holding Company Act of 1956, as amended (the "Act"). The Act, with certain
exceptions, limits the activities that may be engaged in by State Street and its
non-bank subsidiaries, which includes non bank companies which it owns or
controls more than 5% of a class of voting shares, to those which are deemed by
the Board to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. In making such determination, the Board must
consider whether the performance of any such activity by a subsidiary of State
Street can reasonably be expected to produce benefits to the public, such as
greater convenience, increased competition or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest or unsound banking practices. The
Board is authorized to differentiate between activities commenced de novo and
those commenced by the acquisition in whole or in part of a going concern. The
Board may order a bank holding company to terminate any activity or its
ownership or control of a nonbank subsidiary if the Board finds that such
activity or ownership or control constitutes a serious risk to the financial
safety, soundness or stability of a subsidiary bank and is inconsistent with
sound banking principles or statutory purposes. In the opinion of management,
all of State Street's present subsidiaries are within the statutory standard or
are otherwise permissible. The Act also requires a bank holding company to
obtain prior approval of the Board before it may acquire substantially all the
assets of any bank or ownership or control of more than 5% of the voting shares
of any bank.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Act") generally permits bank holding companies to acquire banks
located in any state, without regard as to whether the transaction is prohibited
under state law, commencing on September 29, 1995. In addition, it generally
permits national and state chartered banks to merge across state lines (and
thereby create interstate branches) commencing June 1, 1997. Under the
provisions of the Interstate Act, states are permitted to "opt out" of this
latter interstate branching authority by taking action prior to the commencement
date. States may also "opt in" early (i.e., prior to June 1, 1997) to the
interstate merger provisions. Further, the Interstate Act provides that states
may act affirmatively to permit de novo branching by banking institutions across
state lines.

The Board has established risk-based capital guidelines that require minimum
ratios of capital to risk-weighted assets and certain off-balance sheet credit
exposure. The Board also maintains a leverage ratio guideline that is a measure
of capital to total average balance sheet assets. Information on State Street's
capital appears on the return on equity and assets and capital ratio table of
this report.

State Street and its non-bank subsidiaries are affiliates of State Street
Bank under the federal banking laws, which impose certain restrictions on
transfers of funds in the form of loans, extensions of credit, investments or
asset purchases by State Street Bank to State Street and its non-bank
subsidiaries. Transfers of this kind to State Street and its non-bank
subsidiaries by State Street Bank are limited to 10% of State Street Bank's
capital and surplus with respect to each affiliate and to 20% in the aggregate,
and are also subject to certain collateral requirements. A bank holding company
and its subsidiaries are 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 also provides that certain transactions with
affiliates must 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-qualified companies or, in the absence of comparable transactions, on terms
and under circumstances, including credit standards, that in good faith would be
offered to, or would apply to, nonaffiliated companies. The Board has
jurisdiction to regulate the terms of certain debt issues of bank holding
companies.

State Street, State Street Bank and their affiliates are also subject to
restrictions with respect to issuing, floating and underwriting, or publicly
selling or distributing, securities in the United States. State Street and its
affiliates are able to underwrite and deal in specific categories of securities,
including U.S. government and certain agency, state, and municipal securities.

Federal Reserve Board regulations require a bank holding company to act as a
source of financial and managerial strength to its subsidiary banks. Under this
regulation, State Street may be required to commit resources to its subsidiary
banks in circumstances where it might not do so absent such regulation. In the
event of a bank holding company's bankruptcy, any commitment by the bank holding
company to a federal bank regulatory agency to maintain the capital of a
subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority payment.

The primary banking agency responsible for regulating State Street and its
subsidiaries, including State Street Bank, for both domestic and international
operations is the Federal Reserve Bank of Boston. State Street is also subject
to the Massachusetts bank holding company statute. The Massachusetts statute
requires prior approval by the Massachusetts Board of Bank Incorporation for the
acquisition by State Street of more than 5% of the voting shares of any
additional bank and for other forms of bank acquisitions.

State Street's banking subsidiaries are subject to supervision and
examination by various regulatory authorities. State Street Bank is a member of
the Federal Reserve System and the Federal Deposit Insurance Corporation (the
"FDIC") and is subject to applicable federal and state banking laws and to
supervision and examination by the Federal Reserve Bank of Boston, as well as by
the Massachusetts Commissioner of Banks, the FDIC, and the regulatory
authorities of those countries in which a branch of State Street Bank is
located. Other subsidiary banks are subject to supervision and examination by
the Office of the Comptroller of the Currency or by the appropriate state
banking regulatory authorities of the states in which they are located. State
Street's foreign banking subsidiaries are also subject to regulation by the
regulatory authorities of the countries in which they are located. The capital
of each of these banking subsidiaries is in excess of the minimum legal capital
requirements as set by those authorities.

The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") broadened the enforcement powers of the federal banking agencies,
including increased power to impose fines and penalties, over all financial
institutions, including bank holding companies and commercial banks. As a result
of FIRREA, State Street Bank and any or all of its subsidiaries can be held
liable for any loss incurred by, or reasonably expected to be incurred by, the
FDIC after August 9, 1989, in connection with (a) the default of State Street
Bank or any other subsidiary bank or (b) any assistance provided by the FDIC to
State Street Bank or any other subsidiary bank in danger of default. The Crime
Control Act of 1990 further broadened the enforcement powers of the federal
banking agencies in a significant number of areas.

The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
has as its primary objectives to recapitalize the Bank Insurance Fund and
strengthen the regulation and supervision of financial institutions. During
1995, the federal banking agencies continued the process of promulgating
regulations to implement the statute.

The "Prompt Corrective Action" provisions of the FDICIA are for the stated
purpose: "to resolve the problems of insured depository institutions at the
least possible long-term loss to the deposit insurance fund." Each federal
banking agency has implemented prompt corrective action regulations for the
institutions that it regulates. The statute requires or permits the agencies to
take certain supervisory actions when an insured depository institution falls
within one of five specifically enumerated capital categories. It also restricts
or prohibits certain activities and requires the submission of a capital
restoration plan when an insured institution becomes undercapitalized. The
implementing regulations establish the numerical limits for the capital
categories and establish procedures for issuing and contesting prompt corrective
action directives. The five tiers of capital measurement range from "well
capitalized" to "critically undercapitalized". To be within the category "well
capitalized", an insured depository institution must have a total risk- based
capital ratio of 10.0 percent or greater, a Tier 1 risk-based capital ratio of
6.0 percent or greater, and a leverage ratio of 5.0 percent or greater, and the
institution must not be subject to an order, written agreement, capital
directive, or prompt corrective action directive to meet specific capital
requirements. An insured institution is "adequately capitalized" if it has a
total risk-based capital ratio of 8.0 percent or greater, a Tier 1 risk-based
capital ratio of 4.0 percent or greater, and a leverage ratio of 4.0 percent or
greater (or a leverage ratio of 3.0 percent or greater if the institution is
rated composite 1 under the regulatory rating system). The final three capital
categories are levels of undercapitalized, which trigger mandatory statutory
provisions. While other factors in addition to capital ratios determine an
institution's capital category, State Street Bank's capital ratios were within
the "well-capitalized" category at December 31, 1995.

The Federal Reserve Board adopted a final rule, as required by the FDICIA,
prescribing standards that will limit the risks posed by an insured depository
institution's exposure to any other depository institution. Banks are required
to develop written policies and procedures to monitor credit exposure to other
banks, and to limit to 50% and 25% of total capital exposure to
"undercapitalized" banks in 1995 and 1996, respectively.

As required by the FDICIA, the FDIC adopted a regulation that permits only
well capitalized banks, and adequately capitalized banks that have received
waivers from the FDIC, to accept, renew or roll over brokered deposits.
Regulations have also been adopted by the FDIC to limit the activities conducted
as a principal by, and the equity investments of, state-chartered banks to those
permitted for national banks. Banks may apply to the FDIC for approval to
continue to engage in accepted investments and activities.

Other FDICIA regulations adopted require independent audits, an independent
audit committee of the bank's board of directors, stricter truth- in-savings
provisions, and standards for real estate lending. The FDICIA amended deposit
insurance coverage and the FDIC has implemented a rule specifying the treatment
of accounts to be insured up to $100,000.

Under other provisions of FDICIA, the federal banking agencies have adopted
safety and soundness standards for banks in a number of areas including:
internal controls, internal audit systems, information systems, credit
underwriting, interest rate risk, executive compensation and minimum earnings.
The agencies have also adopted rules to revise risk-based capital standards to
take account of interest rate risk, as required by FDICIA.

Legislation enacted as part of the Omnibus Budget Reconciliation Act of 1993
provides that deposits in U.S. offices and certain claims for administrative
expenses and employee compensation against a U.S. insured depository institution
which has failed will be afforded a priority over other general unsecured
claims, including deposits in non-U.S. offices and claims under non-depository
contracts in all offices, against such an institution in the "liquidation or
other resolution" of such and institution by any receiver. Accordingly, such
priority creditors (including FDIC, as the subrogee of insured depositors) of
State Street Bank will be entitled to priority over unsecured creditors in the
event of a "liquidation or other resolution" of such institution.

DIVIDENDS
As a bank holding company, State Street is a legal entity separate and
distinct from State Street Bank and its other non-bank subsidiaries. State
Street's principal source of cash revenues is dividends from State Street Bank
and its other non-bank subsidiaries. The right of State Street to participate as
a stockholder in any distribution of assets of a subsidiary upon its liquidation
or reorganization or otherwise is subject to the prior claims by creditors of
the subsidiary, including obligations for federal funds purchased and securities
sold under repurchase agreements, as well as deposit liabilities. Payment of
dividends by State Street Bank is subject to provisions of the Massachusetts
banking law which provides that dividends may be paid out of net profits
provided (i) capital stock and surplus remain unimpaired, (ii) dividend and
retirement fund requirements of any preferred stock have been met, (iii) surplus
equals or exceeds capital stock, and (iv) there are deducted from net profits
any losses and bad debts, as defined, in excess of reserves specifically
established therefore. Under the Federal Reserve Act, the approval of the Board
of Governors of the Federal Reserve System would be required if dividends
declared by the Bank in any year would exceed the total of its net profits for
that year combined with retained net profits for the preceding two years, less
any required transfers to surplus. Under applicable federal and state law
restrictions, at December 31, 1995, State Street Bank could have declared and
paid dividends of $426,266,000 without regulatory approval. Future dividend
payments of the Bank and non-bank subsidiaries cannot be determined at this
time.

ECONOMIC CONDITIONS AND GOVERNMENT POLICIES
Economic policies of the government and its agencies influence the operating
environment of State Street. Monetary policy conducted by the Federal Reserve
Board directly affects the level of interest rates and overall credit conditions
of the economy. Policy instruments utilized by the Federal Reserve Board include
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.

ITEM 2. PROPERTIES

State Street's headquarters are located in the State Street Bank Building, a
34-story building at 225 Franklin Street, Boston, Massachusetts, which was
completed in 1965. State Street leases approximately 451,000 square feet (or
approximately 49% of the space in this building) for a 30-year initial term with
two successive extension options of 20 years each at negotiated rental rates.
State Street exercised the first of the two options which became effective on
January 1, 1996 for a term of 20 years.

State Street owns five buildings located in Quincy, Massachusetts, a suburb
of Boston. Four of the buildings, containing a total of approximately 1,365,000
square feet, function as State Street Bank's operations facilities. State Street
Bank occupies approximately 1,320,000 square feet and subleases the remaining
space. The fifth building, with 186,000 square feet, is leased to Boston
Financial Data Services, Inc., a 50% owned affiliate. Additionally, State Street
owns a 98,000 square foot building in Westborough, Massachusetts which is used
as a second data center.

The remaining offices and facilities of State Street and its subsidiaries
are leased. As of December 31, 1995, the aggregate mortgage and lease payments,
net of sublease revenue, payable within one year amounted to $38,143,000, plus
assessments for real estate tax, cleaning and operating escalations.

For additional information relating to premises, see Note E to the Notes to
Financial Statements.

ITEM 3. LEGAL PROCEEDINGS

State Street is subject to pending and threatened legal actions that arise
in the normal course of business. In the opinion of management, after discussion
with counsel, these can be successfully defended or resolved without a material
adverse effect on State Street's financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 4.A. EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information with regard to each
executive officer of State Street. As used herein, the term "executive officer"
means an officer who performs policy-making functions for State Street.

NAME AGE POSITION
- ---- --- --------
Marshall N. Carter .............. 55 Chairman and Chief Executive Officer
David A. Spina .................. 53 President and Chief Operating Officer
A. Edward Allinson .............. 61 Executive Vice President
Dale L. Carleton ................ 50 Executive Vice President
Nicholas A. Lopardo ............. 48 Executive Vice President
Ronald L. O'Kelley .............. 50 Executive Vice President, Chief
Financial Officer and Treasurer
Albert E. Petersen .............. 49 Executive Vice President
David J. Sexton ................. 55 Executive Vice President

All executive officers are elected by the Board of Directors. There are no
family relationships among any of the directors and executive officers of State
Street. With the exception of Messrs. Carter, O'Kelley and Petersen, all of the
executive officers have been officers of State Street for five years of more.

Mr. Carter became President of State Street in July, 1991, Chief Executive
Officer in January, 1992 and Chairman in January 1993. Prior to joining State
Street, he was with Chase Manhattan Bank for 15 years, including the last three
as head of global securities services.

Mr. Spina became President and Chief Operating Officer in December, 1995.

Mr. O'Kelley became an officer of State Street in December, 1995. Prior to
joining State Street, he was Vice President and Chief Financial Officer of
Douglas Aircraft Company, a subsidiary of McDonnell Douglas Corporation. Prior
to that he was Senior Vice President and Chief Financial Officer of Rolls-
Royce, Inc.

Mr. Petersen became an officer of State Street in August, 1991. Prior to
joining State Street, he was an Executive Vice President at First Empire State
Corporation, a bank holding company, responsible for operations and systems.



PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS

Information concerning the market prices of and dividends on State Street's
common stock during the past two years appears on page 36 of State Street's 1995
Annual Report to Stockholders and is incorporated by reference. There were 5,773
stockholders of record at December 31, 1995. Prior to February 1995, State
Street common stock was traded on the NASDAQ National Market System, ticker
symbol: STBK. In February 1995, State Street's common stock was listed for
trading on the New York Stock Exchange, ticker symbol: STT.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is set forth on page 23 of State
Street's 1995 Annual Report to Stockholders and is incorporated by reference.

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

The information required by this item appears in State Street's 1995 Annual
Report to Stockholders on pages 2 through 4 and pages 24 through 39 and is
incorporated by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL FINANCIAL DATA

The Consolidated Financial Statements, Report of Independent Auditors and
Supplemental Financial Data appear on pages 40 through 61 of State Street's 1995
Annual Report to Stockholders and are incorporated by reference. In addition,
discussion of restrictions on transfer of funds from State Street Bank to
Registrant is included in Part 1, Item 1, "Dividends."

ITEM 9. CHANGES IN OR DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning State Street's directors appears on pages 2 through 6
of State Street's Proxy Statement for the 1996 Annual Meeting of Stockholders
under the caption "Election of Directors" which Statement is to be filed with
the Securities and Exchange Commission. Such information is incorporated by
reference.

Information concerning State Street's executive officers appears under the
caption "Executive Officers of the Registrant" in Item 4.A of this Report.

Information concerning compliance with Section 16(a) of the Securities
Exchange Act appears on page 9 of State Street's Proxy Statement for the 1996
Annual Meeting of Stockholders under the caption "Compliance with Section 16 (a)
of the Securities Exchange Act." Such information is incorporated by reference.

ITEM 11. EXECUTIVE COMPENSATION

Information concerning compensation of the executives of State Street
appears on pages 10 through 23 in State Street's Proxy Statement for the 1996
Annual Meeting of Stockholders. Such information is incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information concerning security ownership of certain beneficial owners and
management appears on pages 8 and 9 in State Street's Proxy Statement for the
1996 Annual Meeting of Stockholders. Such information is incorporated by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information concerning certain relationships and related transactions
appears on pages 9 and 10 in State Street's Proxy Statement for the 1996 Annual
Meeting of Stockholders under the caption "Certain Transactions." Such
information is incorporated by reference.

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K

(a) (1) Financial Statements -- The following consolidated financial
statements of State Street included in its Annual Report to
Stockholders for the year ended December 31, 1995, are incorporated by
reference in Item 8 hereof:

Consolidated Statement of Income -- Years ended December 31, 1995,
1994 and 1993

Consolidated Statement of Condition -- December 31, 1995 and 1994

Consolidated Statement of Cash Flows -- Years ended December 31, 1995,
1994 and 1993

Consolidated Statement of Changes in Stockholders' Equity - Years
ended December 31, 1995, 1994 and 1993

Notes to Financial Statements

Report of Independent Auditors

(2) Financial Statement Schedules -- Schedules to the consolidated
financial statements required by Article 9 of Regulation S-X are not
required under the related instructions, are inapplicable, or the
information is contained herein and therefore have been omitted.

(3) Exhibits
A list of the exhibits filed or incorporated by reference appears
following page 18 of this Report, which information is incorporated by
reference.

(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, on March 21, 1996, thereunto duly authorized.

STATE STREET BOSTON CORPORATION
By /s/ REX S. SCHUETTE
-----------------------------
REX S. SCHUETTE
Senior Vice President and Comptroller

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 21, 1996 by the following persons on
behalf of the registrant and in the capacities indicated.

OFFICERS:




/s/ MARSHALL N. CARTER /s/ RONALD L. O'KELLEY
------------------------------------------------- ---------------------------------------------
MARSHALL N. CARTER, Chairman RONALD L. O'KELLEY, Executive
and Chief Executive Officer Vice President and Chief Financial Officer

/s/ REX S. SCHUETTE
---------------------------------------------
REX S. SCHUETTE, Senior Vice President
and Comptroller

DIRECTORS:

/s/ TENLEY E. ALBRIGHT /s/ JOSEPH A. BAUTE
------------------------------------------------- ---------------------------------------------
TENLEY E. ALBRIGHT JOSEPH A. BAUTE

/s/ I. MACALLISTER BOOTH /s/ JAMES I. CASH
------------------------------------------------- ---------------------------------------------
I. MACALLISTER BOOTH JAMES I. CASH

/s/ TRUMAN S. CASNER /s/ NADER F. DAREHSHORI
------------------------------------------------- ---------------------------------------------
TRUMAN S. CASNER NADER F. DAREHSHORI

/s/ ARTHUR L. GOLDSTEIN /s/ CHARLES F. KAYE
------------------------------------------------- ---------------------------------------------
ARTHUR L. GOLDSTEIN CHARLES F. KAYE

/s/ JOHN M. KUCHARSKI /s/ CHARLES R. LAMANTIA
------------------------------------------------- ---------------------------------------------
JOHN M. KUCHARSKI CHARLES R. LAMANTIA

/s/ DAVID B. PERINI /s/ DENNIS J. PICARD
------------------------------------------------- ---------------------------------------------
DAVID B. PERINI DENNIS J. PICARD

/s/ ALFRED POE /s/ BERNARD W. REZNICEK
------------------------------------------------- ---------------------------------------------
ALFRED POE BERNARD W. REZNICEK

/s/ DAVID A. SPINA /s/ ROBERT E. WEISSMAN
------------------------------------------------- ---------------------------------------------
DAVID A. SPINA ROBERT E. WEISSMAN




EXHIBIT INDEX

EXHIBIT 2. PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION

2.1 Acquisition agreement dated September 27, 1994 among Registrant,
Kemper Financial Services, Inc. and DST Systems, Inc. pertaining to
the acquisition of IFTC Holdings, Inc. (filed with the Securities and
Exchange Commission as Exhibit 2 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994 and incorporated by
reference)

EXHIBIT 3. ARTICLES OF INCORPORATION AND BY-LAWS

3.1 Restated Articles of Organization as amended (filed herewith)

3.2 By-laws as amended (filed with the Securities and Exchange Commission
as Exhibit 3.2 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991 and incorporated by reference)

3.3 Certificate of Designation, Preferences and Rights (filed with the
Securities and Exchange Commission as Exhibit 3.1 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated by reference)

EXHIBIT 4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS

4.1 The description of the Company's Common Stock included in the
Company's effective registration statement report on Form 10, as filed
with the Securities and Exchange Commission on September 3, 1970 and
amended on May 12, 1971 and incorporated by reference.

4.2 Rights Agreement dated as of September 15, 1988 between State Street
Boston Corporation and The First National Bank of Boston, Rights Agent
(filed with the Securities and Exchange Commission as Exhibit 4 to
Registrant's Current Report on Form 8-K dated September 30, 1988 and
incorporated by reference)

4.3 Amendment to Rights Agreement dated as of September 20, 1990 between
State Street Boston Corporation and The First National Bank of Boston,
Rights Agent (filed with the Securities and Exchange Commission as
Exhibit 4 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990 and incorporated by reference)

4.4 Indenture dated as of May 1, 1983 between State Street Boston
Corporation and Morgan Guaranty Trust Company of New York, Trustee,
relating to the Company's 7 3/4% Convertible Subordinated Debentures
due 2008 (filed with the Securities and Exchange Commission as Exhibit
4 to the Registrant's Registration Statement on Form S-3 filed on
April 22, 1983, Commission File No. 2-83251 and incorporated by
reference)

4.5 Indenture dated as of August 2, 1993 between State Street Boston
Corporation and The First National Bank of Boston, as trustee (filed
with the Securities and Exchange Commission as Exhibit 4 to the
Registrant's Current Report on Form 8-K dated October 8, 1993 and
incorporated by reference)

4.6 Instrument of Resignation, appointment, and acceptance, dated as of
February 14, 1996 between State Street Boston Corporation, The First
National Bank of Boston (resigning trustee) and Fleet National Bank of
Massachusetts (successor trustee) (filed herewith)

EXHIBIT 10. MATERIAL CONTRACTS

Executive Compensation Plans and Agreements:

10.1 State Street Boston Corporation 1981 Stock Option and Performance
Share Plan, as amended (filed with the Securities and Exchange
Commission as Exhibit 10.2 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1981 and incorporated by reference)

10.2 State Street Boston Corporation 1984 Stock Option Plan as amended
(filed with the Securities and Exchange Commission as Exhibit 4(a) to
Registrant's Registration Statement on Form S-8 (File No. 2-93157) and
incorporated by reference)

10.3 State Street Boston Corporation 1985 Stock Option and Performance
Share Plan as amended (filed with the Securities and Exchange
Commission as Exhibit 10.1 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1985 and incorporated by reference)

10.4 State Street Boston Corporation 1989 Stock Option Plan as amended
(filed with the Securities and Exchange Commission as Exhibit 10.1 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1989 and incorporated by reference)

10.5 State Street Boston Corporation 1990 Stock Option and Performance
Share Plan as amended (filed with the Securities and Exchange
Commission as Exhibit 10.1 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1990 and incorporated by reference)

10.6 State Street Boston Corporation Supplemental Executive Retirement
Plan, together with individual benefit agreements (filed with the
Securities and Exchange Commission as Exhibit 10.1 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated by reference)

10.6A Amendment No. 1 dated as of October 19, 1995, to State Street Boston
Corporation Supplemental Executive Retirement Plan (filed herewith)

10.7 Individual Pension Agreement with Marshall N. Carter (filed with the
Securities and Exchange Commission as Exhibit 10.10 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated by reference)

10.8 Individual Pension Agreement with A. Edward Allinson dated September
14, 1990 (filed with the Securities and Exchange Commission as Exhibit
10.10 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991 and incorporated by reference)

10.9 Individual Pension Agreement with Albert E. Petersen dated April 5,
1992 (filed with the Securities and Exchange Commission as Exhibit
10.12 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993 and incorporated by reference)

10.10 Revised Termination Benefits Arrangement with Marshall N. Carter
(filed herewith)

10.11 State Street Global Advisors Incentive Plan for 1993 (filed with the
Securities and Exchange Commission as Exhibit 10.14 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993 and
incorporated by reference)

10.12 State Street Global Advisors Incentive Plan for 1994 (filed with the
Securities and Exchange Commission as Exhibit 10.15 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993 and
incorporated by reference)

10.13 1994 Stock Option and Performance Unit Plan (filed with the
Securities and Exchange Commission as Exhibit 10.17 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993 and
incorporated by reference)

10.13A Amendment No. 1 dated as of October 19, 1995, to 1994 Stock Option
and Performance Unit Plan (filed herewith)

10.14 Compensation agreement with J.R. Towers dated September 30, 1994
(filed with the Securities and Exchange Commission as Exhibit 10 to
Registrant's Annual Report on Form 10-Q for the year ended September
30, 1994 and incorporated by reference)

10.15 Senior Executives Annual Incentive Plan (filed with the Securities
and Exchange Commission as Exhibit 10.16 to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993 and incorporated by
reference)

10.15A Amendment No. 1 dated as of December 21, 1995, to Senior Executive
Annual Incentive Plan (filed herewith)

10.16 State Street Global Advisors Incentive Plan for 1995 (filed with the
Securities and Exchange Commission as Exhibit 10.20 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994 and
incorporated by reference)

10.17 Supplemental Defined Benefit Pension Plan for Senior Executive
Officers (filed with the Securities and Exchange Commission as Exhibit
10.21 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 and incorporated by reference)

10.18 Nonemployee Director Retirement Plan (filed with the Securities and
Exchange Commission as Exhibit 10.22 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 and incorporated by
reference)

10.19 State Street Global Advisors Incentive Plan for 1996 (filed herewith)

10.20 Forms of Employment Agreement with Officers (Levels 1, 2, and 3)
approved by the Board of Directors on September, 1995 (filed herewith)

10.21 Compensation Agreement with Ronald L. O'Kelley (filed herewith)

EXHIBIT 11. STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
11.1 State Street Boston Corporation Computation of Earnings Per Share

EXHIBIT 12. STATEMENT RE COMPUTATION OF RATIOS
12.1 Statement of ratio of earnings to fixed charges

EXHIBIT 13. PORTIONS OF ANNUAL REPORT TO STOCKHOLDERS
13.1 Five Year Selected Financial Data

13.2 Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Three Years Ended December 31, 1995 (not
covered by the Report of Independent Public Accountants)

13.3 Letter to Stockholders

13.4 State Street Boston Corporation Consolidated Financial Statements and
Schedules

EXHIBIT 21. SUBSIDIARIES
21.1 Subsidiaries of State Street Boston Corporation

EXHIBIT 23. CONSENTS OF EXPERTS AND COUNSEL
23.1 Consent of Independent Auditors

EXHIBIT 27. FINANCIAL DATA SCHEDULE

27.1 Financial Data Schedule (such schedule is furnished for information
of the Securities and Exchange Commission and is not to be deemed
"filed" as part of Form 10-K or otherwise subject to the liabilities
of Section 18 of the Securities Exchange Act of 1934) (filed
herewith)