Increasing its balance sheet flexibility in deploying its capital

Enhancing its capital ratios under evolving regulatory capital standards and

Reducing its exposure to certain asset classes

As of 09/30/10

Total capital

Tier 1 capital

Tier 1 leverage

Tier 1 common

All ratios were adjusted to give effect to the December 2010 sale of investment securities of approximately $11 billion, as part of the repositioning of State Street’s investment portfolio,

including the related $350 million after-tax loss, announced in this news release. As opportunities arise, State Street expects to reinvest the proceeds from the sale through 2011 primarily in AAA and AA asset-backed and mortgage-backed securities as well as U.S. treasuries and agency securities. For purposes of these pro forma adjustments, we have assumed that this investment portfolio repositioning, including the related loss, occurred on September 30, 2010 and excludes the reinvestment of proceeds.

As of September 30, 2010, actual (unaudited) total risk-weighted assets, calculated in accordance with presently applicable bank regulatory requirements, were $75.6 billion. For purposes of calculating the total capital, tier 1 capital and tier 1 common ratios solely to adjust for the portfolio repositioning transaction, total risk-weighted assets as of September 30, 2010 reflect a reduction of $11.9 billion, therefore total risk-weighted assets used in the calculation were $63.7 billion ($75.6 billion less the reduction of $11.9 billion).

Total risk-weighted assets are not used in the calculation of the leverage ratio. That ratio uses consolidated quarterly average total assets (as specified in applicable bank regulations) in the denominator, which were $144.8 billion as of September 30, 2010 (actual, unaudited). For purposes of calculating the leverage ratio only to reflect the portfolio repositioning transaction, consolidated quarterly average total assets were not affected.

Also for purposes of ratios adjusted only to reflect the portfolio repositioning transaction, actual (unaudited) tier 1 capital as of September 30, 2010, calculated in accordance with presently applicable bank regulatory requirements, of $12.0 billion was reduced by the after-tax loss of $350 million, resulting in tier 1 capital of $11.6 billion for these purposes.

The total capital ratio uses total capital rather than tier 1 capital in the numerator. As of September 30, 2010, actual (unaudited) total capital was $12.9 billion. For purposes of adjusting the total capital ratio solely to reflect the portfolio repositioning transaction, total capital of $12.6 billion was used, reflecting a reduction for the $350 million after-tax loss from the actual (unaudited) amount.

For purposes of calculating the tier 1 common ratio only to reflect the portfolio repositioning transaction, tier 1 common capital of $10.5 billion was reduced by the $350 million after- tax loss to be $10.2 billion.

Total risk-weighted assets used in the calculation of the total capital, tier 1 capital and tier 1 common ratios were $105.9 billion, reflecting an increase of $42.2 billion as a result of applying estimated Basel III requirements to the adjusted risk-weighted assets of $63.7 billion described (and reconciled to actual (unaudited) risk-weighted assets as of September 30, 2010) in footnote (2) (which only reflect adjustments for the portfolio repositioning transaction).

Consolidated quarterly average total assets used in the calculation of the leverage ratio were $204.8 billion, reflecting an increase of $60.0 billion as a result of applying estimated Basel III requirements to the actual consolidated quarterly average total assets as of September 30, 2010 of $144.8 billion.

Tier 1 capital used in the calculation of the tier 1 capital and leverage ratios was $10.7 billion, reflecting a decrease of $.9 billion as a result of applying estimated Basel III requirements to the adjusted tier 1 capital of $11.6 billion described (and reconciled to actual (unaudited) tier 1 capital as of September 30, 2010) in footnote (2) (which only reflects adjustments for the portfolio repositioning transaction).

Total capital used in the calculation of the total capital ratio was $11.7 billion, reflecting a decrease of $.9 billion as a result of applying estimated Basel III requirements to the adjusted total capital of $12.6 billion described (and reconciled to actual (unaudited) total capital as of September 30, 2010) in footnote (2) (which only reflects adjustments for the portfolio repositioning transaction).

Tier 1 common capital used in the calculation of the tier 1 common ratio was $9.4 billion, reflecting the adjustments to tier 1 capital described in the third sub-bullet of this footnote (3). Tier 1 common capital used in the calculation is therefore calculated as adjusted tier 1 capital of $10.7 billion less non-common elements of capital, composed of trust preferred securities of $1.3 billion as of September 30, 2010, resulting in tier 1 common capital of $9.4 billion.

the manner in which the Federal Reserve implements the Dodd-Frank Act and Basel III, and whether State Street is designated as systemically important for purposes of the Dodd-Frank Act;

material differences between the actual required capital ratios under Basel III, as applicable to State Street, when fully implemented by the Federal Reserve Board, and the estimates of such ratios provided in the news release, resulting in the need for substantial additional capital in the future;

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

financial market disruptions and the economic recession, whether in the U.S. or internationally, and monetary and other governmental actions, including regulation, taxes and fees, designed to address or otherwise be responsive to such disruptions and recession, including actions taken in the U.S. and internationally to address the financial and economic disruptions that began in 2007;

increases in the volatility of, or declines in the levels of, our net interest revenue, changes in the composition of the assets on our consolidated balance sheet and the possibility that we may be required to change the manner in which we fund those assets;

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;

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

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

the finalization and execution of our previously announced planned global multi-year program designed to enhance service excellence and innovation, deliver increased efficiencies in our operating model and position us for accelerated growth, including our ability to implement programs to transform and improve technology and business processes and create efficiencies, to develop constructive vendor, outsourcing and other third-party relationships and to promote other business model enhancement and cost savings initiatives; and increases in the volatility of our GAAP-basis and operating-basis earnings resulting from a change in our estimate of the charges or expenses necessary to execute the planned global multi-year program and the resulting savings from such program;

the maintenance of credit agency ratings for our debt and depository obligations as well as the level of credibility of credit agency ratings;

the risks that acquired businesses will not be integrated successfully, or that the integration will take longer than anticipated, that expected synergies will not be achieved or unexpected disynergies 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 relationships with clients, employees or regulators;

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

the performance and demand for the products and services we offer, including the level and timing of redemptions and withdrawals from our collateral pools and other collective investment products;

the possibility of our clients incurring substantial losses in investment pools where we act as agent, and the possibility of further general reductions in the valuation of assets;

our ability to attract deposits and other low-cost, short-term funding;

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

the level and volatility of interest rates and the performance and volatility of securities, credit, currency and other markets in the U.S. and internationally;

our ability to measure the fair value of the investment securities on our consolidated balance sheet;

the results of litigation, government investigations and similar disputes or proceedings;

our ability to control operating risks, information technology systems risks and outsourcing risks, and 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 fail or be circumvented;

adverse publicity or other reputational harm;

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

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