State Street Reports Fourth-Quarter Earnings Per Share of $.57, Including a Net after-Tax Charge of $279 Million, or $.71 Per Share

State Street Corporation today announced 2007 fourth-quarter earnings per share of $0.57 on net income of $223 million, compared to earnings per share of $0.91 on net income of $309 million in the fourth quarter of 2006. Revenue in the fourth quarter is $2.479 billion compared to $1.622 billion in the fourth quarter of 2006. Return on shareholders’ equity is 7.7% in the fourth quarter of 2007 compared to 16.9% in the fourth quarter of 2006. Average shares outstanding for the fourth quarter of 2007 are 392 million shares. For the full year 2007, earnings of $3.45 per share on net income of $1.261 billion compares with $3.26 per share on income from continuing operations of $1.096 billion in 2006. Return on shareholders’ equity in 2007 is 13.4% compared with return on shareholders’ equity from continuing operations of 16.2% in 2006. Average shares for the full year 2007 are 365 million shares. Results presented on an "operating basis” for the fourth quarter of 2007 exclude a previously announced after-tax charge of $279 million ($467 million on a pre-tax operating basis) associated with the underperformance of certain active fixed-income strategies at State Street Global Advisors (SSgA) and $57 million, or $38 million of after-tax merger and integration costs related to the July 2, 2007, acquisition of Investors Financial Services Corp. ("Investors Financial”). Results presented on an "operating basis” for the fourth quarter of 2006 exclude an $18 million adjustment to reduce income-tax expense. Revenue for both quarters is presented on a fully taxable-equivalent basis. Full-year 2007 results presented on an "operating basis” exclude the $279 million after tax-charge associated with State Street Global Advisors and $198 million, or $129 million of after-tax merger and integration costs relating to the acquisition of Investors Financial. Full-year 2006 results presented on an "operating basis” exclude a $65 million adjustment to increase income-tax expense. Revenue for both years is presented on a fully tax-equivalent basis. Management presents results on an operating basis in order to provide financial information that is comparable from period to period, and to present comparable financial trends with respect to our ongoing business operations. Management believes such presentation facilitates an investor’s understanding and analysis of our underlying performance and trends in addition to financial information prepared in accordance with GAAP. The following financial information is presented on an operating basis. Earnings per share in the fourth quarter are $1.38 per share on net income of $540 million, up 60% from $0.86 per share in the fourth quarter of 2006. Revenue of $2.496 billion in the fourth quarter of 2007 is up 52.8% from $1.634 billion in the fourth quarter a year ago. Expenses of $1.649 billion in the fourth quarter of 2007 are up 40.0% from $1.178 billion in the year-ago quarter. For the fourth quarter of 2007, return on shareholders’ equity is 18.7%, compared to 15.9% for the fourth quarter of 2006. The following financial information is presented on an operating basis. Earnings for the full-year 2007 is $4.57 per share on net income of $1.669 billion, up 32% from $3.46 per share on income from continuing operations of $1.161 billion in 2006. Revenue in 2007 is up 32.1% to a record level of $8.394 billion from $6.356 billion in 2006. Expenses in 2007 of $5.768 billion increased 27.0% from $4.540 billion in 2006. Return on shareholders equity in 2007 is 17.7%, up from 17.1% in 2006. Commenting on the performance, Ronald E. Logue, State Street's chairman and chief executive officer, said, "Nearly every revenue item on our income statement increased in double digits this year, compared to 2006, resulting in 32% growth in earnings per share on an operating basis. While investment servicing and investment management fees were both strong, revenue from trading services and securities finance benefited from continuing market volatility, particularly in the fixed-income markets in the second half of 2007. The consolidation of Investors Financial continues on schedule, and the impact on our bottom line in 2007 was dilution of $.06 per share, a significant improvement from our original model of $0.14 per share dilutive. Our strategy of more actively managing the balance sheet and the growth of our non-US business contributed to an annual increase of 55% in fully taxable-equivalent net interest revenue. Net interest margin equaled 1.71% for 2007. Additionally, our non-U.S. revenue now represents approximately 41% of total revenue, up from 39% in 2006.” Logue added, "As we explained on our call earlier this month, we expect that by establishing the fourth-quarter reserve to address the legal exposure and other costs associated with the underperformance of certain active fixed-income strategies at State Street Global Advisors, we can address customer concerns and help to put the issue behind us, particularly given the current momentum in our business. Management fee revenue at SSgA grew 21% in 2007 compared to 2006, and SSgA continues to be a strong contributor to State Street’s results. Total assets under management as of December 31, 2007, grew 13% from the level at the end of 2006, and specifically SSgA’s fixed income assets increased 21% in the same period.” Logue concluded, "During 2008 we will build on the progress we made in 2007, particularly outside the U.S. We continue to target positive operating leverage on an annual basis. For 2008, due to the acquisition of Investors Financial on July 2, 2007, our goal for growth in revenue is 14% to 17%, up from our long-term goal of 8% to 12%. We expect earnings per share growth of 10% to 15% and return on equity of 14% to 17%, both on an operating basis. Our 2008 target is to achieve near the lower end of these ranges.” In reporting its financial results for the fourth quarter of 2007, State Street has prepared information in four categories: "Baseline” results are results on an operating basis excluding the "Investors Financial” results described below and are presented on a fully taxable-equivalent basis. "Investors Financial” results are the revenue and expenses, including financing costs and amortization of intangibles, attributable to the Investors Financial business acquired on July 2, 2007, but excluding merger and integration costs, all presented on a fully taxable-equivalent basis. Per-share amounts reflect the effect of the acquisition on outstanding shares. "Operating-basis” results are "reported” results excluding the charge recorded in the fourth quarter of 2007 and merger and integration costs. They are presented on a fully taxable-equivalent basis. "Reported” results are in accordance with U.S. generally accepted accounting principles (GAAP). Management believes that providing separate Investors Financial results and baseline financial information further assists investors and analysts in understanding the effect of that acquisition. $ in millions except per share data For the three months ended December 31, 2007     Baseline (a)   Investors Financial (b)     Operating (c)   Reported Fee Revenue $ 1,709 $ 201     1,910   1,910 All other revenue   546   40     586   569 Total revenue   2,255   241     2,496   2,479 Total expenses   1,482   167     1,649   2,173 Income taxes   279   28     307   83 Net income $ 494 $ 46   $ 540 $ 223 Diluted EPS $ 1.39 $ (.01 ) $ 1.38 $ .57 (a) represents State Street results on an "operating basis,” further adjusted to exclude the " Investors Financial” results described in the adjoining column, all presented on a fully taxable equivalent basis. (b) represents revenue and expenses, including financing costs and amortization of intangibles, attributable to the Investors Financial business acquired on July 2, 2007, but excluding merger and integration costs. Presented on a fully taxable-equivalent basis. Per-share amounts reflect the impact on outstanding shares from the issuance of approximately 61 million shares for the acquisition. (c) excludes the charge recorded in the fourth quarter of 2007 and merger and integration costs, and presented on a fully taxable-equivalent basis. FOURTH-QUARTER RESULTS VS. YEAR-AGO QUARTER Total revenue on a fully taxable-equivalent basis is $2.496 billion in the fourth quarter of 2007 is up from $1.634 billion, or 52.8%, from the fourth quarter of 2006. Expenses on an operating basis are $1.649 billion, up 40.0% compared with $1.178 billion in the fourth quarter of 2006. As a result, on an operating basis, State Street generated about 1280 basis points of positive operating leverage. Servicing fees are $967 million, up $269 million or 39%, from $698 million in the year-ago quarter. The increase is attributable to business from customers added from the Investors Financial acquisition, business from new and existing clients and higher average equity valuations. Total assets under custody at quarter end are $15.30 trillion, a record level, up 29%, compared with $11.85 trillion at the end of the year-ago quarter. Daily average values for the S&P 500 Index are up 8%, for the MSCI® EAFE IndexSM are up 16%, and for the Nasdaq are up 13% during the fourth quarter of 2007 from the year-ago quarter. Management fees, generated by State Street Global Advisors, are $297 million, up $44 million, or 17%, compared to $253 million in the year-ago quarter. The increase in management fees reflects new business from existing and new clients and an increase in average month-end equity valuations, offset partially by lower performance fees. Total assets under management at quarter end are $1.98 trillion, up 13%, compared to $1.75 trillion at the end of the year-ago quarter. Average month-end values compared to the fourth quarter of 2006, are up 7% for the S&P 500 Index and up 13% for the NASDAQ; average month-end values for the MSCI® EAFE IndexSM are up 15%. The total return of the Lehman US Aggregate bond index for the fourth quarter is 3.00%. Trading services revenue, which includes foreign exchange trading revenue and brokerage and other fee revenue, is up 73%, from $203 million to $352 million. The increase is driven by improved volumes and higher volatility in foreign exchange, as well as an increase in brokerage and other revenue principally due to the acquisition of Currenex in March, 2007. Securities finance revenue is $256 million in the quarter, compared to $90 million in the year-ago quarter, an increase of 184%. The increase primarily reflects improved spreads and increased demand for securities on loan as a result of turmoil in the fixed-income markets. Processing and other revenue is down 38%, or $23 million to $38 million primarily due to increased costs of funding for our asset-backed commercial paper. Fully taxable-equivalent net interest revenue is $573 million, up 75% from $328 million in last year’s fourth quarter. The increase is due to reinvestment of assets at higher rates and lower-cost funding, the impact of the Investors Financial acquisition, and favorable spreads and increased volumes of non-US deposits. The increase in expenses on an operating basis to $1.649 billion in the fourth quarter of 2007 from $1.178 billion in the fourth quarter of 2006 is primarily due to the inclusion of Investors Financial’s operating expenses for the second half of 2007. Baseline expenses increased 26%. Salaries and employee benefits expense on an operating basis increased $240 million to $934 million, attributable to additions to headcount from the Investors Financial acquisition. Transaction processing expense increased 52% to $184 million principally due to the acquisition. Also primarily as a result of the acquisition, information systems and communications expense increased 24% to $148 million, and occupancy expenses of $107 million in 2007 quarter compare to $94 million in the 2006 quarter. On an operating basis, other expenses increased 84%, or $126 million, to $276 million, primarily due to acquisition costs, fees, such as for professional services and recruiting, and securities processing costs. The effective tax rate was 27.1% in the fourth quarter of 2007 compared with 30.4% in the fourth quarter of 2006. We expect the rate for 2008 to be 34.5%. FOURTH-QUARTER RESULTS VS. THIRD QUARTER On an operating basis, fourth-quarter earnings are $1.38 per share as compared to third-quarter earnings of $1.15 per share, which excluded $91 million, or $0.24 per share of after-tax merger and integration costs. On an operating basis in both periods, earnings per share would have increased 20%. Total revenue on a fully tax-equivalent basis in the 2007 fourth quarter of $2.496 billion is up 10.6%, or $239 million compared to $2.257 billion in the third quarter. On an operating basis, expenses in the fourth quarter of 2007 are $1.649 billion up 6.5%, or $101 million, from third quarter expenses of $1.548 billion. Servicing fee revenue is up 3% due to business from new and existing customers and higher average equity valuations. Management fees are down 1% due to lower performance fees, offset partially by new business wins and higher equity valuations. Trading services revenue is up 10% to $352 million primarily due to higher volatility and increased volumes and higher volatility in FX. Securities finance revenue improved 55% to $256 million due to improved spreads. Processing fees and other revenue declined 38% to $38 million due to lower results from the structured products business and lower earnings from joint-venture equity investments. Fully taxable-equivalent net interest revenue increased 19% to $573 million due to reinvestment of assets at higher rates and a higher level of lower-cost funding and the impact of the Investors Financial acquisition. Salaries and employee benefits expense is up 2% on an operating basis due to higher headcount added to service new business. Occupancy expense was down 2% due to lower operating costs. On an operating basis, other expense increased 30%, or $63 million, to $276 million primarily due to acquisition costs, fees, such as for professional services and recruiting, and securities processing costs. FULL YEAR 2007 VS. 2006 Total revenue on a fully taxable-equivalent basis increased 32.1% from $6.356 billion to $8.394 billion. Servicing fees increased 24%, from $2.723 billion to $3.388 billion. Management fees increased 21%, from $943 million to $1.141 billion. Trading services revenue increased 34%, from $862 million to $1.152 billion and securities finance revenue increased 76%, from $386 million to $681 million. Processing fees and other revenue decreased 13%, to $237 million from $272 million. Fully taxable-equivalent net interest revenue increased 55%, from $1.155 billion to $1.788 billion. On an operating basis, expenses increased 27.0%, from $4.540 billion to $5.768 billion, excluding merger and integration costs and the impact of the charge. Operating expenses included an increase of 28% to $3.397 billion in salaries and employee benefits expense. Transaction processing expense increased 25% to $619 million and information systems and communications increased 9% to $546 million. Occupancy expense increased 9% to $408 million. Other expenses increased 54% to $798 million. ADDITIONAL INFORMATION All per share amounts represent diluted earnings per share based on average shares outstanding for the respective period reported. State Street expects to complete the previously announced $1 billion accelerated share repurchase by January 18, 2008. INVESTOR CONFERENCE CALL State Street will webcast an investor conference call today, Tuesday, January 15, 2008, at 9:30 a.m. EST, available at www.statestreet.com/stockholder. The conference call will also be available via telephone, at +1 719/457-2679 (confirmation code 4616472). Recorded replays of the conference call will be available on the web site, and by telephone at +1 402/220-4230, beginning at 2:00 PM today. The telephone replay will be available for approximately two weeks following the conference call. This press release and additional financial information is available on State Street’s website, at www.statestreet.com/stockholder, under "Financial Reports.” State Street Corporation (NYSE: STT) is the world's leading specialist in providing institutional investors with investment servicing, investment management and investment research and trading services. With $15.30 trillion in assets under custody and $1.98 trillion in assets under management at December 31, 2007, State Street operates in 26 countries and more than 100 geographic markets worldwide and employs 27,110 worldwide. For more information, visit State Street’s web site at www.statestreet.com or call 877/639-7788 [NEWS STT] toll-free in the United States and Canada, or +1 678/999-4577 outside those countries. FORWARD-LOOKING STATEMENTS This news announcement contains forward-looking statements as defined by United States securities laws, including statements about the financial outlook and business environment, exposure to claims and the adequacy of our reserve. 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 State Street's expectations or beliefs as of any date subsequent to the date of this release. Important factors that may affect future results and outcomes include: State Street's ability to integrate and convert acquisitions into its business, including the acquisition of Investors Financial Services Corp.; the level and volatility of interest rates, particularly in the U.S. and Europe; the performance and volatility of securities, currency and other markets in the U.S. and internationally; and economic conditions and monetary and other governmental actions designed to address those conditions; the liquidity of the US and European securities markets, particularly the markets for fixed-income securities, including asset-backed commercial paper; and the liquidity requirements of our customers; the credit quality and credit agency ratings 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; State Street's ability to attract non-interest bearing deposits and other low-cost funds; the results of litigation and similar disputes and the effect that any such results may have on SSgA’s reputation and its ability to attract and retain customers; the possibility that the ultimate costs of the legal exposure associated with SSgA’s actively managed fixed-income strategies may exceed or be below the level of the reserve, in view of the uncertainties of the timing and outcome of litigation, and the amounts involved; the possibility of further developments of the nature giving rise to the legal exposure associated with SSgA’s actively managed fixed-income and other investment strategies; the performance and demand for the investment products we offer; the competitive environment in which State Street operates; the enactment of legislation and changes in regulation and enforcement that impact State Street and its customers, as well as the effects of legal and regulatory proceedings, including litigation; State Street's ability to continue to grow revenue, control expenses and attract the capital necessary to achieve its business goals and comply with regulatory requirements; State Street's ability to control systemic and operating risks; trends in the globalization of investment activity and the growth on a worldwide basis in financial assets; trends in governmental and corporate pension plans and savings rates; changes in accounting standards and practices, including changes in the interpretation of existing standards, that impact State Street's consolidated financial statements; and changes in tax legislation and in the interpretation of existing tax laws by U.S. and non-U.S. tax authorities that impact 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 State Street's 2006 Annual Report on Form 10-K and its subsequent SEC filings. State Street encourages investors to read its 10-K, particularly the section on Risk Factors, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, January 15, 2008, and State Street will not undertake efforts to revise those forward-looking statements to reflect events after this date. STATE STREET CORPORATION Earnings Press Release Addendum     Financial Highlights December 31, 2007     Quarters Ended   % Change   Q4 2007 Q4 2007 (Dollars in millions, except per share amounts December 31, September 30, December 31, vs. vs. or where otherwise noted)   2007 (1)   2007 (1)   2006   Q3 2007   Q4 2006     Total Revenue $ 2,479 $ 2,240 $ 1,622 11 % 53 % Total Expenses (2) (3) 2,173 1,689 1,178 29 84 Net Income 223 358 309 (38) (28)   Diluted Earnings Per Share (4) $ .57 $ .91 $ .91 (37) (37)   Cash Dividends Declared Per Share $ .23 $ .22 $ .21 Closing Price Per Share of Common Stock (at quarter end) 81.20 68.16 67.44   Return on Equity 7.7 % 12.6 % 16.9 %   At Quarter End: Assets Under Custody (AUC) (in trillions) $ 15.30 $ 15.15 $ 11.85 Assets Under Management (AUM) (in trillions) 1.98 2.00 1.75   Financial Trends: Years Ended   % Change   2007 December 31, December 31, vs. (Dollars in millions, except per share amounts)   2007 (5)   2006   2006     Total Revenue $ 8,336 $ 6,311 32 % Total Expenses (2) (3) 6,433 4,540 42 Income Tax Expense 642 675 (5) Income from Continuing Operations 1,261 1,096 15 Income from Discontinued Operations - 10 Net Income 1,261 1,106   Diluted Earnings Per Share: From Continuing Operations $ 3.45 $ 3.26 6 From Discontinued Operations - .03 Net Income 3.45 3.29   Cash Dividends Declared Per Share .88 .80 10   Return on Equity from Continuing Operations 13.4 % 16.2 % Return on Equity 13.4 16.4   (1) Quarters ended December 31 and September 30, 2007 include financial results of Investors Financial, which State Street acquired on July 2, 2007. (2) Total expenses for the quarters ended December 31 and September 30, 2007 include merger and integration costs of $57 million and $141 million, respectively, or $38 million and $91 million after-tax, respectively, recorded in connection with the acquisition of Investors Financial. Total expenses for the year ended December 31, 2007 included merger and integration costs of $198 million, or $129 million after-tax. (3) Total expenses for the quarter and year ended December 31, 2007 include a net charge of $467 million, or $279 million after-tax, associated with certain active fixed-income strategies at State Street Global Advisors. (4) Diluted earnings per share for the quarters ended December 31 and September 30, 2007 reflect the issuance of 60.8 million shares on July 2, 2007 in connection with the completion of the acquisition of Investors Financial. (5) Financial results for the year ended December 31, 2007 include results of Investors Financial for the quarters ended September 30 and December 31, 2007. STATE STREET CORPORATION Earnings Press Release Addendum             SELECTED FINANCIAL INFORMATION Quarters and Years Ended December 31, 2007 and December 31, 2006   Quarters Ended Years Ended December 31, 2007 (1) December 31, 2006 % Change December 31, 2007 (2) December 31, 2006 % Change (Dollars in millions, except per share amounts)       Fee Revenue: Servicing fees $ 967 $ 698 39 % $ 3,388 $ 2,723 24 % Management fees 297 253 17 1,141 943 21 Trading services 352 203 73 1,152 862 34 Securities finance 256 90 184 681 386 76 Processing fees and other   38   61 (38)   237   272 (13) Total fee revenue 1,910 1,305 46 6,599 5,186 27   Net Interest Revenue: Interest revenue 1,454 1,226 19 5,212 4,324 21 Interest expense   898   910 (1)   3,482   3,214 8 Net interest revenue (3) 556 316 76 1,730 1,110 56 Provision for loan losses   -   -   -   - Net interest revenue after provision for loan losses 556 316 76 1,730 1,110 56   Gains on sales of available-for-sale investment securities, net   13   1   7   15 Total revenue 2,479 1,622 52.8 8,336 6,311 32.1   Operating Expenses: Salaries and employee benefits 793 694 14 3,256 2,652 23 Information systems and communications 148 119 24 546 501 9 Transaction processing services 184 121 52 619 496 25 Occupancy 107 94 14 408 373 9 Special charge 600 - - 600 - - Merger and integration costs 57 - - 198 - - Other   284   150 89   806   518 56 Total operating expenses   2,173   1,178 84.5   6,433   4,540 41.7 Income from continuing operations before income tax expense 306 444 (31) 1,903 1,771 7 Income tax expense from continuing operations   83   135   642   675 Income from continuing operations 223 309 (28) 1,261 1,096 15   Income from discontinued operations before income tax expense - - - 16 Income tax expense from discontinued operations   -   -   -   6 Income from discontinued operations   -   -   -   10 Net income $ 223 $ 309 $ 1,261 $ 1,106   Earnings Per Share From Continuing Operations: Basic $ .58 $ .93 (38) $ 3.50 $ 3.31 6 Diluted .57 .91 (37) 3.45 3.26 6   Earnings Per Share From Discontinued Operations: Basic $ - $ - $ - $ .03 Diluted - - - .03   Earnings Per Share: Basic $ .58 $ .93 $ 3.50 $ 3.34 Diluted .57 .91 3.45 3.29   Average Shares Outstanding (in thousands): Basic 385,200 331,421 360,675 331,350 Diluted 392,200 337,429 365,488 335,732   Consolidated Selected Financial Information presented above was prepared in accordance with accounting principles generally accepted in the United States.   (1) Quarter ended December 31, 2007 includes financial results of Investors Financial, which State Street acquired on July 2, 2007. (2) Year ended December 31, 2007 includes results of Investors Financial for the quarters ended September 30 and December 31, 2007. (3) Net interest revenue on a fully taxable-equivalent basis was $573 million and $328 million for the quarters ended December 31, 2007 and 2006, respectively, and $1.788 billion and $1.155 billion for the years ended December 31, 2007 and 2006, respectively. These amounts include taxable-equivalent adjustments of $17 million and $12 million for the quarters ended December 31, 2007 and 2006, respectively, and $58 million and $45 million for the year ended December 31, 2007 and 2006. STATE STREET CORPORATION Earnings Press Release Addendum       SELECTED FINANCIAL INFORMATION Quarters Ended December 31, 2007 and September 30, 2007     Quarters Ended (1) December 31, 2007 September 30, 2007 % Change (Dollars in millions, except per share amounts)             Fee Revenue: Servicing fees $ 967 $ 937 3 % Management fees 297 299 (1) Trading services 352 320 10 Securities finance 256 165 55 Processing fees and other   38   61 (38) Total fee revenue 1,910 1,782 7   Net Interest Revenue: Interest revenue 1,454 1,383 5 Interest expense   898   919 (2) Net interest revenue (2) 556 464 20 Provision for loan losses   -   - Net interest revenue after provision for loan losses 556 464 20   Gains (Losses) on sales of available-for-sale investment securities, net   13   (6) Total revenue 2,479 2,240 10.7 Operating Expenses: Salaries and employee benefits 793 916 (13) Information systems and communications 148 145 2 Transaction processing services 184 165 12 Occupancy 107 109 (2) Special charge 600 - - Merger and integration costs 57 141 (60) Other   284   213 33 Total operating expenses   2,173   1,689 28.7 Income before income tax expense 306 551 (44) Income tax expense   83   193 Net income $ 223 $ 358 (38)   Earnings Per Share: Basic $ .58 $ .92 (37) Diluted .57 .91 (37)   Average Shares Outstanding (in thousands): Basic 385,200 386,843 Diluted 392,200 392,150   Consolidated Selected Financial Information presented above was prepared in accordance with accounting principles generally accepted in the United States. (1) Quarters ended December 31 and September 30, 2007 include financial results of Investors Financial, which State Street acquired on July 2, 2007. (2) Net interest revenue on a fully taxable-equivalent basis was $573 million and $481 million for the quarters ended December 31 and September 30, 2007, respectively. These amounts include taxable-equivalent adjustments of $17 million. STATE STREET CORPORATION Earnings Press Release Addendum     SELECTED OPERATING-BASIS FINANCIAL INFORMATION Quarters and Years Ended December 31, 2007 and December 31, 2006   Quarters Ended (1) Years Ended (1) December 31, 2007 December 31, 2006 % Change December 31, 2007 December 31, 2006 % Change (Dollars in millions, except per share amounts)       Fee Revenue: Servicing fees $ 967 $ 698 39 % $ 3,388 $ 2,723 24 % Management fees 297 253 17 1,141 943 21 Trading services 352 203 73 1,152 862 34 Securities finance 256 90 184 681 386 76 Processing fees and other   38   61 (38)   237   272 (13) Total fee revenue 1,910 1,305 46 6,599 5,186 27   Net Interest Revenue: Interest revenue, operating basis 1,471 1,238 19 5,270 4,369 21 Interest expense   898   910 (1)   3,482   3,214 8 Net interest revenue, operating basis 573 328 75 1,788 1,155 55 Provision for loan losses   -   -   -   - Net interest revenue after provision for loan losses, operating basis 573 328 75 1,788 1,155 55   Gains on sales of available-for-sale investment securities, net   13   1   7   15 Total revenue, operating basis 2,496 1,634 52.8 8,394 6,356 32.1   Operating Expenses: Salaries and employee benefits, operating basis 934 694 35 3,397 2,652 28 Information systems and communications 148 119 24 546 501 9 Transaction processing services 184 121 52 619 496 25 Occupancy 107 94 14 408 373 9 Other, operating basis   276   150 84   798   518 54 Total operating expenses, operating basis   1,649   1,178 40.0   5,768   4,540 27.0 Income from continuing operations before income tax expense, operating basis 847 456 86 2,626 1,816 45 Income taxes from continuing operations, operating basis 290 153 899 610 Taxable-equivalent adjustment   17   12   58   45 Net income from continuing operations, operating basis $ 540 $ 291 86 $ 1,669 $ 1,161 44     Diluted earnings per share from continuing operations, operating basis $ 1.38 $ .86 60 $ 4.57 $ 3.46 32   Average diluted shares outstanding (in thousands) 392,200 337,429 365,488 335,732   Return on equity from continuing operations, operating basis 18.7 % 15.9 % 17.7 % 17.1 %     (1) Refer to the accompanying reconciliation of reported results to operating-basis results. STATE STREET CORPORATION Earnings Press Release Addendum   SELECTED OPERATING-BASIS FINANCIAL INFORMATION Quarters Ended December 31, 2007 and September 30, 2007     Quarters Ended   December 31, 2007 (1) September 30, 2007 % Change (Dollars in millions, except per share amounts)             Fee Revenue: Servicing fees $ 967 $ 937 3 % Management fees 297 299 (1) Trading services 352 320 10 Securities finance 256 165 55 Processing fees and other   38   61 (38) Total fee revenue 1,910 1,782 7   Net Interest Revenue: Interest revenue, operating basis 1,471 1,400 5 Interest expense   898   919 (2) Net interest revenue, operating basis 573 481 19 Provision for loan losses   -   - Net interest revenue after provision for loan losses, operating basis 573 481 19   Gains (Losses) on sales of available-for-sale investment securities, net   13   (6) Total revenue, operating basis 2,496 2,257 10.6 Operating Expenses: Salaries and employee benefits, operating basis 934 916 2 Information systems and communications 148 145 2 Transaction processing services 184 165 12 Occupancy 107 109 (2) Other, operating basis   276   213 30 Total operating expenses, operating basis   1,649   1,548 6.5 Income from continuing operations before income tax expense, operating basis 847 709 19 Income taxes from continuing operations 290 243 Taxable-equivalent adjustment   17   17 Net income from continuing operations, operating basis $ 540 $ 449 20     Diluted earnings per share from continuing operations, operating basis $ 1.38 $ 1.15 20   Average diluted shares outstanding (in thousands) 392,200 392,150   Return on equity from continuing operations, operating basis 18.7 % 15.8 %   (1) Refer to the accompanying reconciliation of reported results to operating-basis results. STATE STREET CORPORATION Earnings Press Release Addendum   RECONCILIATION OF REPORTED RESULTS TO OPERATING-BASIS RESULTS Quarter and Year Ended December 31, 2007     (Dollars in millions, except per share amounts) Quarter Ended December 31, 2007   Year Ended December 31, 2007       Reported Operating Reported Operating Results Adjust-ments Results Results Adjust-ments Results   Fee Revenue: Servicing fees $ 967 $ 967 $ 3,388 $ 3,388 Management fees 297 297 1,141 1,141 Trading services 352 352 1,152 1,152 Securities finance 256 256 681 681 Processing fees and other   38   38   237   237 Total fee revenue 1,910 1,910 6,599 6,599   Net Interest Revenue: Interest revenue 1,454 $ 17 (1) 1,471 5,212 $ 58 (1) 5,270 Interest expense   898   -   898   3,482   -   3,482 Net interest revenue 556 17 573 1,730 58 1,788 Provision for loan losses   -   -   -   -   -   - Net interest revenue after provision for loan losses 556 17 573 1,730 58 1,788   Gains on sales of available-for-sale investment securities, net 13   -   13   7   -   7 Total revenue 2,479 17 2,496 8,336 58 8,394   Operating Expenses: Salaries and employee benefits 793 141 (2) 934 3,256 141 (2) 3,397 Infor-mation systems and commun-ications 148 - 148 546 - 546 Trans-action processing services 184 - 184 619 - 619 Occupancy 107 - 107 408 - 408 Special charge 600 (600) (2) - 600 (600) (2) - Merger and integr-ation costs 57 (57) (3) - 198 (198) (3) - Other   284   (8) (2)   276   806   (8) (2) 798 Total operating expenses   2,173   (524)   1,649   6,433   (665)   5,768 Income from continuing operations before income taxes 306 541 847 1,903 723 2,626 Income taxes from continuing operations 83 207 290 642 257 899 Taxable-equivalent adjustment   -   17 (1)   17   -   58 (1) 58 Net income from continuing operations $ 223 $ 317 $ 540 $ 1,261 $ 408 $ 1,669   Diluted earnings per share from continuing operations $ .57 $ .81 $ 1.38 $ 3.45 $ 1.12 $ 4.57   Average diluted shares outstanding (in thousands) 392,200 392,200 392,200 365,488 365,488 365,488   Return on equity from continuing operations 7.7 % 11.0 % 18.7 % 13.4 % 4.3 % 17.7 %     Reported results reflect State Street's Consolidated Statement of Income prepared in accordance with accounting principles generally accepted in the United States. (1) Represents taxable-equivalent adjustment, which is not included in reported results. (2) Represents a net charge associated with certain active fixed-income strategies at State Street Global Advisors. (3) Represents merger and integration costs recorded in connection with the acquisition of Investors Financial, which are direct and incremental costs associated with the acquisition and do not include ongoing expenses of the combined organization. STATE STREET CORPORATION Earnings Press Release Addendum   RECONCILIATION OF REPORTED RESULTS TO OPERATING-BASIS RESULTS Quarter and Year Ended December 31, 2006     (Dollars in millions, except per share amounts) Quarter Ended December 31, 2006     Year Ended December 31, 2006         Reported Results Oper-ating Results Reported Results Adjust-ments Oper-ating Results Adjust-ments       Fee Revenue: Servicing fees $ 698 $ 698 $ 2,723 $ 2,723 Management fees 253 253 943 943 Trading services 203 203 862 862 Securities finance 90 90 386 386 Processing fees and other   61   61   272   272 Total fee revenue 1,305 1,305 5,186 5,186   Net Interest Revenue: Interest revenue 1,226 $ 12 (1) 1,238 4,324 $ 45 (1) 4,369 Interest expense   910   -   910   3,214   -   3,214 Net interest revenue 316 12 328 1,110 45 1,155 Provision for loan losses   -   -   -   -   -   - Net interest revenue after provision for loan losses 316 12 328 1,110 45 1,155   Gains on sales of available-for-sale inves-tment secur-ities, net 1   -   1   15   -   15 Total revenue 1,622 12 1,634 6,311 45 6,356   Operating Expenses: Salaries and employee benefits 694 - 694 2,652 - 2,652 Infor-mation systems and communi-cations 119 - 119 501 - 501 Trans-action proc-essing services 121 - 121 496 - 496 Occupancy 94 - 94 373 - 373 Other   150   -   150   518   -   518 Total operating expenses   1,178   -   1,178   4,540   -   4,540 Income from cont-inuing oper-ations before income taxes 444 12 456 1,771 45 1,816 Income taxes from cont-inuing oper-ations 135 18 (2) 153 675 (65) (2) 610 Taxable-equiv-alent adjus-tment   -   12 (1)   12   -   45 (1) 45 Net income from cont-inuing oper-ations $ 309 $ (18) $ 291 $ 1,096 $ 65 $ 1,161   Diluted earn-ings per share from cont-inuing oper-ations $ .91 $ (.05) $ .86 $ 3.26 $ .20 $ 3.46   Average dil-uted shares outst-anding (in thou-sands) 337,429 337,429 337,429 335,732 335,732 335,732   Return on equity from cont-inuing oper-ations 16.9 % (1.0) % 15.9 % 16.2 % .9 % 17.1 %     Reported results reflect State Street's Consolidated Statement of Income prepared in accordance with accounting principles generally accepted in the United States. (1) Represents taxable-equivalent adjustment, which is not included in reported results. (2) Represents tax-related adjustments primarily related to the impact of TIPRA and issues associated with leveraged lease transactions. STATE STREET CORPORATION Earnings Press Release Addendum     RECONCILIATION OF REPORTED RESULTS TO OPERATING-BASIS RESULTS Quarter Ended September 30, 2007                       (Dollars in millions, except per share amounts) Quarter Ended September 30, 2007       Reported Operating Results Adjustments   Results   Fee Revenue: Servicing fees $ 937 $ 937 Management fees 299 299 Trading services 320 320 Securities finance 165 165 Processing fees and other   61   61 Total fee revenue 1,782 1,782   Net Interest Revenue: Interest revenue 1,383 $ 17 (1) 1,400 Interest expense   919   -   919 Net interest revenue 464 17 481 Provision for loan losses   -   -   - Net interest revenue after provision for loan losses 464 17 481   Gains on sales of available-for-sale investment securities, net     (6)   -   (6) Total revenue 2,240 17 2,257   Operating Expenses: Salaries and employee benefits 916 - 916 Information systems and communications 145 - 145 Transaction processing services 165 - 165 Occupancy 109 - 109 Merger and integration costs 141 (141) (2) - Other   213   -   213 Total operating expenses   1,689   (141)   1,548 Income from continuing operations before income taxes 551 158 709 Income taxes from continuing operations 193 50 243 Taxable-equivalent adjustment   -   17 (1)   17 Net income from continuing operations $ 358 $ 91 $ 449   Diluted earnings per share from continuing operations $ .91 $ .24 $ 1.15   Average diluted shares outstanding (in thousands) 392,150 392,150 392,150   Return on equity from continuing operations 12.6 % 3.2 % 15.8 %     Reported results reflect State Street's Consolidated Statement of Income prepared in accordance with accounting principles generally accepted in the United States. (1) Represents taxable-equivalent adjustment, which is not included in reported results. (2) Represents merger and integration costs recorded in connection with the acquisition of Investors Financial, which are direct and incremental costs associated with the acquisition and do not include ongoing expenses of the combined organization. STATE STREET CORPORATION Press Release Addendum         CONSOLIDATED STATEMENT OF CONDITION                     December 31, September 30, December 31, (Dollars in millions, except per share amounts) 2007   2007   2006   Assets Cash and due from banks $ 4,733 $ 4,610 $ 2,368 Interest-bearing deposits with banks 5,579 6,559 5,236 Securities purchased under resale agreements 19,133 16,151 14,678 Federal funds sold 4,540 2,575 0 Trading account assets 589 1,305 785 Investment securities available for sale 70,326 72,789 60,445 Investment securities held to maturity 4,233 4,294 4,547 Loans and leases (net of allowance of $18) 15,784 11,292 8,928 Premises and equipment 1,894 1,824 1,560 Accrued income receivable 2,096 1,883 1,617 Goodwill 4,567 4,601 1,384 Other intangible assets 1,990 1,994 434 Other assets   7,079   10,011   5,371 Total assets $ 142,543 $ 139,888 $ 107,353 Liabilities Deposits: Noninterest-bearing $ 15,039 $ 13,779 $ 10,194 Interest-bearing -- U.S. 14,790 15,838 1,272 Interest-bearing -- Non-U.S.   65,960   63,384   54,180 Total deposits 95,789 93,001 65,646   Securities sold under repurchase agreements 14,646 14,008 19,147 Federal funds purchased 425 320 2,147 Other short-term borrowings 5,557 4,802 2,835 Accrued taxes and other expenses 4,392 3,953 3,143 Other liabilities 6,799 8,938 4,567 Long-term debt   3,636   3,616   2,616 Total liabilities 131,244 128,638 100,101   Shareholders' Equity Preferred stock, no par: authorized 3,500,000; issued none Common stock, $1 par: authorized 750,000,000 shares; issued 398,366,000, 398,370,000 and 337,126,000 shares 398 398 337 Surplus 4,630 4,616 399 Retained earnings 7,745 7,610 7,030 Accumulated other comprehensive loss (575) (369) (224) Treasury stock (at cost 12,082,000, 13,576,000 and 4,688,000 shares)   (899)   (1,005)   (290) Total shareholders' equity   11,299   11,250   7,252 Total liabilities and shareholders' equity $ 142,543 $ 139,888 $ 107,353