STATE STREET CORP - FORM 8-K - EX-99.1 - PRESENTATION SLIDES

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8-K - FORM 8-K - STATE STREET CORP	d266229d8k.htm
EX-99.2 - APPENDIX: DESCRIPTION OF AND RELATED RECONCILIATIONS - STATE STREET CORP	d266229dex992.htm

Joseph L. Hooley

Chairman of the Board, President and

Chief Executive Officer

Goldman Sachs

Financial Services Conference

December 7, 2011

Resilience in a Challenging Environment

Exhibit 99.1

Resilience in a Challenging Environment

Agenda

Overview

Business Environment

Widening Our Lead

Summary

Forward-looking Statements

This presentation contains forward-looking statements as defined by United States securities laws, including statements relating to our financial, operational, strategic, commercial, technological

and other goals and expectations regarding our Business Operations and Information Technology Transformation program, as well as regarding other goals and expectations for our business,

financial and capital condition, results of operations, operating margins, strategies and the business environment. Forward-looking statements are often, but not always, identified by such

forward-looking terminology as "plan," "expect," "look," "believe," "anticipate," "estimate," "seek," "may," "will," "trend," "target,” and "goal," or similar statements or variations of such terms.

These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and

uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our

expectations or beliefs as of any date subsequent to December 7, 2011.

Important factors that may affect future results and outcomes include, but are not limited to: delays or difficulties in the execution of our previously announced business operations and

information technology transformation program, which could lead to changes in our estimates of the charges, expenses or savings associated with the planned program, resulting in increased

volatility of our earnings; our ability to control operating risks, data security breach 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 prove insufficient, fail or be circumvented; the potential

for new products and services to impose additional costs on us and expose us to increased operational risk; the manner in which the Federal Reserve and other regulators implement the Dodd-

Frank Act and other regulatory initiatives in the U.S. and internationally, including any increases in the minimum regulatory capital ratios applicable to us and regulatory developments that result

in changes to our operating model or other changes to the provision of our services in order to comply with or respond to such regulations; required regulatory capital ratios under Basel II and

Basel III, in each case as fully implemented by State Street and State Street Bank (and in the case of Basel III, when finally adopted by the Federal Reserve), which may result in the need for

substantial additional capital or increased levels of liquidity 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; the liquidity of the U.S. and international securities markets, particularly the markets for fixed-

income securities, and the liquidity requirements of our clients; 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 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 maintenance of credit agency ratings for our debt and depository obligations as well as the level of credibility of credit agency ratings; the results of, and

costs associated with, government investigations, litigation and similar claims, disputes, or proceedings; 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 closing conditions; the

performance of 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 that our clients will incur substantial losses in investment pools where we act as agent, and the possibility of significant 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; adverse publicity or other reputational harm; our ability to grow revenue,

attract and/or retain and compensate highly skilled people, control expenses and attract the capital necessary to achieve our business goals and comply with regulatory requirements; 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.

Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in our 2010 Annual Report on Form 10-K and our

subsequent SEC filings. We encourage investors to read these filings, particularly the sections on risk factors, for additional information with respect to any forward-looking statements and prior

to making any investment decision. The forward-looking statements contained in this presentation speaks only as of the date hereof, December 7, 2011, and we do not undertake efforts to

revise those forward-looking statements to reflect events after that date.

Among the initiatives incorporated within Business Operations and Information Technology Transformation program, we are standardizing several core business and information technology

processes, primarily through the execution of Lean efficiency principles and increased automation. We are also creating a new technology platform, including moving many core software

applications to a private cloud. In addition, we are planning additional servicing and processing centers of excellence in globally distributed low-cost locations to improve the work allocation and

responsiveness of service demands and have also expanded our relationships with strategic information technology service providers to enhance efficiencies.

Overview

Overview

Key Messages

Focused on Solutions for Institutional Investors

Leading Global Market Share and Industry Recognition

Outperforming Key Competitors

Overview

Focused on Solutions for Institutional Investors

•

Fiduciary heritage since 1792

•

Core Business: Managing and Servicing Financial Assets

•

Operating-basis

revenue growth of 10% compounded annually

over the 10 years 2000-2010

•

AA-

senior debt rating (State Street Bank and Trust Company)

Driving Long-term Shareholder Value

Financial data presented on an operating basis. Operating-basis information is a non-GAAP presentation. For a description of operating-basis information and related

reconciliations to GAAP-basis information, see the Appendix. 2 12/31/00 – 12/31/10. Past performance is not a guarantee of future results.

Overview

Focused on Solutions for Institutional Investors

•

$21.5 trillion

in assets under custody

and administration

•

Largest provider of

–

Investment manager

operations outsourcing

–

Alternative asset servicing

–

Mutual fund custody and accounting

services in the U.S.

–

Securities lending

•

Trading relationships with 89 of the top 100

global investment managers

Asset Servicing –

87% of YTD Revenue

Asset Management –

13% of YTD Revenue

•

$1.9 trillion

in assets under management

•

No. 2 worldwide in institutional

asset management

•

Investment solutions across the risk /

return spectrum

•

Leader in passive, enhanced and ETFs

POWER OF THE COMBINED FRANCHISE

•

78 of Top 100 Clients Use Both Asset Servicing and Asset Management

•

These 78 Clients Account for about 35% of Total Management Fee Revenue (YTD 2011)

•

State

Street

Provides

Strong

Oversight,

Governance

and

Financial

Strength

9/30/11.

HFN.net

2010

Administrator

Survey;

ICFA

Alternative

Fund

Administration

Survey,

May

2011,

The

NASDAQ

Stock

Market,

Inc.

Data

Products,

10/1/11.

Based

company

filings,

9/30/11

September

30,

2011;

AUM

includes

SPDR

Gold

Fund

for

which

SSgA

not

the

investment

manager

but

acts as

distribution

agent.

12/31/10.

Alternative Assets Under

Administration as of 6/30/11

Source: Company reports. BNP and HSBC data as of 6/30/11.

Custody Assets Held by

Global Custodians as of 9/30/11

Overview

Leading Global Market Share and Industry Recognition

Source: ICFA Annual Fund Admin Survey 2011.

AUA, $B

AUA / AUC, $T

AUM, $B

Global Institutional

Assets Managed as of 12/31/10

Average Assets on Loan, $B

Global Securities

Lending as of 9/30/2011

Global ETF

Assets Managed as of 9/30/11

Overview

Leading Global Market Share and Industry Recognition

AUM, $B

Source: Company reports as of 9/30/11 except

BlackRock which is 12/31/10.

Source: Pensions and Investments (5/2011).

SSgA AUM as reported by State Street.

Source: ETF Landscape Report (9/2011).

SSgA AUM as reported by State Street.

400

300

200

100

368

250

221

104

100

3,000

2,500

2,000

1,500

1,000

500

2,556

2,010

1,042

1,017

1,014

1,005

600

500

400

300

200

100

548

247

152

Overview

Leading Global Market Share and Industry Recognition

Custodian of the Year

2011

European Pensions Awards

Outsourcing Provider,

Transfer Agent and Mutual

Fund Administrator of

the Year

International Custody and

Fund Administration

ETF Manager of the Year

Asia Asset Management

2011 Best of the Best Awards

No. 1 Global Custodian

for Institutional Investors

Global Custodian

2010 Global Custody Survey

No. 1 Overall Equity Lender

Global Investor / isf

2011 Equity Lending Survey

Best Liquidity Management

(Currenex)

Profit & Loss

2011 Readers’

Choice Digital

Markets Awards

Best in Securities Lending

The Asset

2011 Triple A Transaction

Banking Awards

No. 1 in the Americas

Global Investor / isf

2011

Global Custody Survey

World’s Best Bank –

Asset Management

Global Finance

2011 World’s Best Bank Awards

Overview

Outperforming

Key

Competitors¹

2011 YTD

STT

NTRS

Pre-tax margin

28.6%

26.2%

25.8%

Return on equity

10.0%

8.0%

9.1%

Net interest margin

1.56%

1.39%

1.26%

Tier 1 common

16.0%

12.5%

11.8%

Tier 1 common (under Basel III)

11.7%

6.5%

11.8%

1 All data as of 9/30/11. Each company’s operating/adjusted (non-GAAP) presentation may be calculated differently and therefore may not be comparable to other companies’

operating/adjusted (non-GAAP) presentation. Please review each company’s public filings and earnings reports for a description, to the extent contained therein, of their respective

operating/adjusted presentation. For STT, financial data is presented on an operating (non-GAAP) basis, and tier 1 common ratios include non-GAAP data in their calculation (in

addition to Basel III ratios being made based upon various estimates). For a description of this operating-basis presentation, as well as a description of referenced ratios and related

reconciliations, see the Appendix.

Total Returns Significantly Outperformed

Primary Peers and Broader Financials Index

Overview

Outperforming Key Competitors

Bank of New York Mellon Corp.

Northern Trust Corp.

S&P 500 / Financials

State Street Corp.

STT -13.3%

S & P Fin. -18.5%

NTRS -30.8%

BK -34.4%

Source: FactSet

Overview

Outperforming Key Competitors

Bank of New York Mellon Corp.

Northern Trust Corp.

S&P 500 / Financials

State Street Corp.

STT -3.8%

S & P Fin. 6.9%

NTRS -12.3%

BK -32.2%

Source: FactSet

Total Returns Significantly Outperformed Primary Peers

Business Environment

Business Environment

Global Headwinds

Higher Capital

Requirements

Rising Cost

of Compliance

and

Regulation

Constrained

Economic

Growth

Low Interest

Rates

Business Environment

Our Response –

Widening Our Lead

Optimizing

Capital in a

Regulated

Environment

Managing

Risk

Transforming

Operations

and IT

Driving

Growth in

the Core

Widening Our Lead

Widening Our Lead

Well Positioned Against Long-term Trends

Globalization

Retirement

Increased Complexity

Alpha / Beta Separation

Regulation and Transparency

Driving

Growth in

the Core

Widening Our Lead

Globalization

NORTH AMERICA

EMEA

ASIA PACIFIC

As of 9/30/11. Financial data is presented on an operating (non-GAAP) basis. For a description of this operating-basis presentation, and related reconciliations, see the Appendix.

Driving

Growth in

the Core

Spanning the Globe with Investment Servicing

and Investment Management

YTD

2011

$4,340B Revenues

17,676 Employees

YTD

2011

$2,339B Revenues

8,817 Employees

YTD

2011

$0.537B Revenues

3,192 Employees

Widening Our Lead

Globalization –

Expansion through Acquisitions

On an operating basis. Operating basis is a non-GAAP presentation. See Appendix for a description of operating-basis presentation.

Driving

Growth in

the Core

Intesa SanPaolo

Deutsche GSS

MIFA

BIAM

Achieved in Aggregate 90% Revenue Retention

All Were Accretive in First Year of Operation

Widening Our Lead

Globalization

79% of New Revenue Growth Comes From Existing Clients

9 months ended 9/30/11, compared to 9 months ended 9/30/10.

Average Number of Products Used

Average Length of Relationship

Top 100 Clients

14.1 Products

20.1 Years

Top 1,000 Clients

8.4 Products

11.1 Years

Driving

Growth in

the Core

Investment

Servicing

•

Positioned as market

leader in servicing

solutions for pension

funds

•

Advanced performance

and analytics capabilities

Investment

Management

•

Investment management

solutions for DB and DC

–

Portfolio Solutions

–

Target-date funds

–

Liability-driven

Investing

–

Alternative Strategies

to support allocations

to this asset class

Widening Our Lead

Retirement

Opportunity

•

44% of total assets in retirement plans

globally are now in Defined Contribution

(DC) plans, up from 35% in 2000

1,2

•

DC assets have grown at 7.5% annually

since 2000, approximately 2.5 times

faster than the rate of growth in DB

assets

1,2

•

Pension-plan allocation to alternative

assets has grown to 19% of total assets

from 7% over the last 10 years

1,2

As of 12/31/10. 2 Towers Watson, Global Pension Asset Study 2011, 2/2011.

Driving

Growth in

the Core

Widening Our Lead

Increased Complexity

Opportunity

•

Increased product sophistication driving

need for global solutions

•

Increased IT / Operational investment

requirements; market for middle-office

outsourcing set to grow in next three

years from about 20% to 35%

•

Increased regulatory requirements

Investment

Servicing

•

Largest middle office

administrator globally

with $7.9TN in AUA

•

Investment in end-to-

end solutions to support

emerging regulatory

changes in OTC

derivatives

Investment

Management

•

Providing strategic

multi-asset solutions

for clients

•

Providing strategic

component parts to

other asset managers to

meet their client needs

Driving

Growth in

the Core

BCG Global Asset Management and Building on Success, 2011; 2 As of 9/30/11.

Widening Our Lead

Investing for Growth –

Alpha / Beta Separation

•

Growth opportunities exist in both beta

and alternatives

•

ETF assets growing at 15% per annum

•

Hedge fund assets expected to grow

with a 12% CAGR from 2011-2014

•

Private equity market expected to grow

at 6% CAGR from 2011-2014

Opportunity

Investment

Servicing

•

No. 1 ETF servicer

•

No. 1 in alternative

investment servicing

Investment

Management

•

SPY and GLD No. 1 and

No. 2, respectively, of

world’s largest ETFs

•

No. 2 of global passive

management assets

•

Delivering alpha in

quantitative,

fundamental and

alternative strategies

BCG Global Asset Management Building on Success (2011). 2 STT estimates based on market size as of 10/2011. 3 HFN.net Q4 2010 HF Administrator Survey; ICFA

Alternative Fund Administration Survey, 5/2011. 4 Bloomberg,10/2011. 5 P & I, 5/2011.

Driving

Growth in

the Core

Goals

•

Position the company for accelerated growth

•

Achieve estimated annual pre-tax run-rate expense savings of

$575MN to $625MN by the end of 2014 for full effect in 2015

•

Achieve, by the end of 2015, a 400bp improvement in

operating-basis pre-tax margin, compared to 2010 operating-

basis pre-tax margin, assuming all else being

equal

Widening Our Lead

Program

Overview

1 Estimated annual pre-tax, run-rate expense savings and operating-basis pre-tax margin improvement relate only to the Business Operations and Information Technology

Transformation program; actual operating expenses and operating margin of the Company may increase or decrease due to other factors. 2 Includes operating-basis information.

Operating-basis information is a non-GAAP presentation. See Appendix for a description of operating-basis information.

Transforming

Operations

and IT

Widening Our Lead

Operations Plan

14 Core Business

Operations

Processes are

in Scope

2012 Milestones

•

Four key operations

transformation levers

–

Process

transformation

–

Automation

–

Consolidation

–

Workforce

optimization

•

Operations

transformation

portfolio includes

160+ initiatives

•

Initiatives have

been sequenced

into master plan

through 2014

•

Establish two additional

global Centers of

Excellence for a total of

seven overall

•

Achieve 20% targeted

automation benefits

•

Establish two new

low-cost locations

to balance our

global footprint

Transforming

Operations

and IT

Widening Our Lead

IT Plan

Industrial-strength

Application Development

Key Program Benefits

Proprietary Real-time

Information

•

Automation /

capacity on demand

•

Accelerated time

to market

•

Integrated security

environment

•

Real-time data

infrastructure

•

Advanced platform

for product

innovation

•

Strengthened

client service

Transforming

Operations

and IT

2012 Milestones

•

Scale cloud computing

platform to enable

major migrations in

2013 and 2014

•

Realize 20% of the

expected benefits from

our IT application

portfolio rationalization

•

Substantially complete

transition to previously

announced strategic

servicing relationships

Technology Transformation program; actual operating expenses of the Company may increase or decrease due to other factors.

Widening Our Lead

Estimated Annual, Pre-tax, Run-rate Expense Savings

$MN

2011

2012

2013

2014

2015

Business Operations Transformation

$150

$250

$370

$430

$440

Information Technology

Transformation

150

160

Net Benefits Before Non-recurring

Project-related Expenses

155

270

460

580

600

Less: Non-recurring

Project-related Expenses

100

Annual Pre-tax, Run-rate

Expense Savings

$80

$170

$390

$540

$600

Transforming

Operations

and IT

The full effect of the annual pre-tax, run-rate savings is not expected to be experienced until 2015. Chart data based on the approximate mid-point of the range of the estimated annual

pre-tax, run-rate expense savings of $575MN-$625MN at the end of 2014, for full effect in 2015; estimated savings for individual years may vary up or down based on the execution of

the Business Operations and Information Technology Transformation program. Annual pre-tax, run-rate expense savings relate only to the Business Operations and Information

Widening Our Lead

Strong Enterprise-wide Governance

Culture

Values

Alignment

Governance

Risk Management Objectives

Embedded into Business Unit

and Individual Goals

Overarching Structure

Sets Risk Appetite and

Risk Policies Globally

•

Dedicated Risk Teams in All Business and Geographies

•

Comprehensive Stress and Scenario Testing

•

Deep Expertise in Credit, Market and Operational Risk

•

Risk Exposures Monitored and Measured Globally

Execution

Managing

Risk

Widening Our Lead

Strong Ratios

State Street Corporation

“Well

Capitalized”

9/30/11

Actual under Basel I

9/30/11

Adjusted to Reflect

Basel

III

Proposal

Tier 1 leverage

5.0%

7.8%

6.0%

Tier 1 capital

6.0%

17.9%

12.8%

Tier 1 common ratio

----

16.0%

11.7%

Total capital

10.0%

19.5%

14.4%

Tangible

common

equity

----

7.0%

Optimizing

Capital in a

Regulated

Environment

Except as noted in note 4 below, minimum “Well Capitalized” as defined by Federal regulators under Basel I.

Minimum “Well Capitalized,” as defined by Federal regulators, applies to State Street Bank and Trust only and therefore stated only as a reference point.

The tier 1 common ratio is not required by GAAP or on a recurring basis by bank regulations. See Appendix for a description of this ratio and related reconciliations.

As defined by State Street. The Tangible Common Equity ratio is not required by GAAP or by bank regulations. See Appendix for a description of this ratio and related

reconciliations.

Calculated based on State Street’s estimates, based upon published statements of the Basel Committee and the Federal Reserve, of the effects of the requirements

under Basel III affecting capital. See Appendix for a description of the specified capital ratios and related reconciliations of these ratios to ratios calculated under presently

applicable requirements.

Widening Our Lead

Performance in 2011

Capital

Deployment to

Shareholders

•

Median payout ratio for those banks that participated in the

CCAR stress test and were able to increase dividends and

repurchase

was

58.6%

consensus

earnings

•

Median payout ratio for all banks that were allowed to return

capital in some form to shareholders was about 19.8% of

consensus

earnings

1 Percentages represent the payout ratios calculated on the March 1, 2011 consensus IBES estimates for 2011 operating-basis earnings. 2 Percentages represent the payout

ratios calculated on the March 1, 2011 consensus First Call estimates for 2011 operating-basis earnings.

Optimizing

Capital in a

Regulated

Environment

•

Increased

quarterly

dividend

$0.18

per

20%

consensus

earnings)

•

Board authorized a share repurchase of $675 million (~ 37% of consensus

earnings)

Widening Our Lead

Philosophy

Buybacks

•

Expect to request in January 2012 a share purchase plan in

keeping with the limits imposed by the Federal Reserve

Dividend

•

Expect to target a 20%-25% payout ratio

Acquisitions

•

Intend to be opportunistic; Pressure on European banks may

accelerate prospects

•

Rigorous financial analysis and hurdle rates must be achieved

Optimizing

Capital in a

Regulated

Environment

Committed to Returning Capital to Shareholders

Summary

Summary

No. 1 or No. 2 Position

in Key Growth Markets

Financial Results

Outperforming Peers

Most Diversified

Global Footprint

Strongest Capital of

Peer Group

Driving

Growth in

the Core

Transforming

Operations

and IT

Managing

Risk

Optimizing

Capital in a

Regulated

Environment

Driving Long-term Shareholder Value

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