Slide 1: Fourth-Quarter and Full-Year 2014 Financial Highlights
LIMITED ACCESS State Street Corporation Fourth-Quarter and Full-Year 2014 Financial Highlights January 23, 2015 Exhibit 99.3
Slide 2: Forward-Looking Statements
2 This presentation includes certain highlights of, and also material supplemental to, State Street Corporation’s (State Street’s) news release announcing its fourth- quarter and full-year 2014 financial results. That news release contains a more detailed discussion of many of the matters described
Slide 3: Fourth-Quarter 2014 Key Messages
3 EPS: • GAAP-basis earnings per share, or EPS, of $1.24 decreased from $1.26 in 3Q14 and increased from $1.22 in 4Q13: – 4Q14 results included a $50 million pre-tax, or $40 million net after-tax ($0.10 per share), charge to increase our legal accrual associated with indirect foreign exchange matter
Slide 4: Expenses and Capital Key Messages
4 Expenses: • We continue to control expenses amidst regulatory compliance cost pressures • 4Q14 expenses included the following notable items: – $29 million in security processing costs – $17 million associated with our withdrawal from derivatives clearing and execution activities – $9 million impa
Slide 5: Summary of GAAP-Basis Financial Results for the Year Ended December 31, 2014
5 Summary of GAAP-Basis Financial Results for the Year Ended December 31, 2014 $ in millions, except per share data 2014 2013 % change Revenue 10,295$ 9,884$ 4.2% Expenses 7,762 7,192 7.9 Earnings per share (EPS) 4.69 4.62 1.5 Return on average common equity (ROE) 10.1% 10.5% Pre-tax operating margi
Slide 6: Summary of GAAP-Basis Financial Results for the Fourth Quarter of 2014
6 Summary of GAAP-Basis Financial Results for the Fourth Quarter of 2014 $ in millions, except per share data 4Q14 3Q14 4Q13 3Q14 4Q13 Revenue 2,630$ 2,582$ 2,464$ 1.9% 6.7% Expenses 1,992 1,892 1,846 5.3 7.9 EPS 1.24 1.26 1.22 (1.6) 1.6 ROE 10.4% 10.6% 10.9% Pre-tax operating margin 24.1 26.6 24.8
Slide 7: Fourth-Quarter 2014 GAAP-Basis Revenue
7 Fourth-Quarter 2014 GAAP-Basis Revenue nm – not meaningful. $ in millions 4Q14 3Q14 4Q13 Servicing fees 1,301$ (0.1)% 5.6% Management fees 299 (5.4) 3.1 Trading services revenue 293 5.4 24.2 Securities finance revenue 106 7.1 39.5 Processing fees and other revenue 57 235.3 26.7 Total fee revenue 2
Slide 8: Fourth-Quarter 2014 GAAP-Basis Expenses
8 Fourth-Quarter 2014 GAAP-Basis Expenses $ in millions 4Q14 3Q14 4Q13 Compensation and employee benefits 972$ 2.0% 2.9% Information systems and communications 246 1.7 7.9 Transaction processing services 201 1.0 10.4 Occupancy 113 (5.0) (8.9) Acquisition and restructuring costs 52 160.0 73.3 Other 4
Slide 9: Full-Year and Fourth-Quarter 2014 Operating-Basis Financial Highlights
9 Full-Year 2014 and Fourth-Quarter 2014 Operating-Basis (Non-GAAP) Financial Highlights1 • Full-Year 2014 (twelve months ended December 31, 2014) comparisons from same period in 2013: –EPS of $5.09 increased 12.1% –Total fee revenue of $8.32 billion increased 7.4% – Total asset servicing and asset
Slide 10: Summary of Operating-Basis Financial Results for the Year Ended December 31, 2014
10 Summary of Operating-Basis (Non-GAAP) Financial Results1 for the Year Ended December 31, 2014 1 Results presented on an operating basis, a non-GAAP presentation. Refer to the addendum linked to this presentation for explanations of our non-GAAP financial measures and for reconciliations of our op
Slide 11: Summary of Operating-Basis Financial Results for the Fourth Quarter of 2014
11 Summary of Operating-Basis (Non-GAAP) Financial Results1 for the Fourth Quarter of 2014 1 Results presented on an operating basis, a non-GAAP presentation. Refer to the addendum linked to this presentation for explanations of our non-GAAP financial measures and for reconciliations of our operatin
Slide 12: Operating-Basis Revenue
12 Operating-Basis (Non-GAAP) Revenue1 1 Results presented on an operating basis, a non-GAAP presentation, where applicable. Refer to the addendum linked to this presentation for explanations of our non-GAAP financial measures and for reconciliations of our operating-basis financial information. nm
Slide 13: Operating-Basis Expenses
13 Operating-Basis (Non-GAAP) Expenses1 Key Drivers Notable items in 4Q14: • The stronger U.S. dollar favorably affected 4Q14 expenses, relative to exchange rates in effect in 3Q14 and 4Q13 • $29 million in security processing costs within other expenses • $17 million associated with our withdrawal
Slide 14: Balance Sheet Highlights Fourth-Quarter 2014
14 Balance Sheet Highlights Fourth-Quarter 20141, 2 Investment portfolio • Size: $112 billion, a slight decrease from the end of 3Q14 • Credit profile: approximately 90% rated AAA/AA • Fixed-rate/floating-rate mix: 52% / 48% • Duration: 2.0 years • Unrealized after-tax mark-to-market (MTM) gain incr
Slide 15: Capital: Fourth-Quarter 2014 Highlights
15 Capital 1 Footnotes 1 through 5 provided on page 16. Fourth-Quarter 2014 Highlights • Maintained a strong capital position • In 4Q14, we purchased approximately 5.6 million shares of our common stock, at an average price of $73.71 and a total cost of approximately $410 million, under the March 20
Slide 16: Capital ratio footnotes
16 1 Unless otherwise specified, all capital ratios referenced on page 15 and elsewhere in this presentation refer to State Street Corporation, or State Street, and not State Street Bank and Trust Company, or State Street Bank. Refer to the addendum linked to this presentation for a further descript
Slide 17: 2015 Outlook: Strong growth in our fee revenue
17 • Continuing to focus on key priorities: – Delivering value-added services and solutions to clients – Investing in growth initiatives –Managing expenses – Returning capital to shareholders • Aiming for full-year 2015 operating-basis total fee revenue1 growth of 4%-7% compared to 2014: – Equity ma
Slide 18: 2015 Outlook: Operating-basis NIR likely to decline
18 2015 Outlook1: As illustrated below, operating-basis NIR1 likely to decline in 2015 from 2014 1Includes operating-basis (non-GAAP) financial information, where noted. Operating-basis financial targets are a non-GAAP presentation. Refer to the addendum linked to this presentation for explanations
Slide 19: 2015 Outlook: Will also focus on managing expenses
19 2015 Outlook1: Will also focus on managing expenses • Expense management remains a priority; while there continues to be upward pressure on regulatory compliance costs, our focus will be on: – Controlling expenses and driving further efficiencies – Expanding our capabilities to meet increasing re
Slide 20: 2015 Outlook: Returning capital to shareholders remains a priority
20 2015 Outlook: Returning capital to shareholders remains a priority • Continuing to execute on our capital plans: – Issued $750 million of preferred shares at 6% in 4Q14, with the first dividend to be paid in 1Q15: – Expect total dividends on all series of preferred shares outstanding at December
Slide 21: Appendix
21 APPENDIX A. Effective Tax Rate Calculations B. Investment Portfolio C. Non-GAAP Measures and Capital Ratios Pages 22 24-29 30
Slide 22: Effective Tax Rate Calculations
22 Effective Tax Rate Calculations • Beginning with the first quarter of 2014, we are presenting our operating-basis effective tax rate to reflect the tax-equivalent adjustments associated with our investments in tax-exempt securities low-income housing and alternative energy. • There is no effect o
Slide 23: B. Investment Portfolio
B STATE STREET. B. Investment Portfolio
Slide 24: Investment Portfolio as of December 31, 2014
24 Portfolio amounts are expressed at book value; book value includes the amortized cost of transferred securities at the time they were transferred. OECD=Organization for Economic Cooperation and Development FFELP=Federal Family Education Loan Program Government / Agency Structured Securities Unsec
Slide 25: Investment Portfolio key characteristics
25 • Assets selected using rigorous credit process • Diversified by asset class and geography • 90% rated AAA/AA • Unrealized after-tax mark-to-market (MTM) gain of $487 million 1 Portfolio amounts are expressed at book value; book value includes the amortized cost of transferred securities at the t
Slide 26: Investment Portfolio by ratings and book value
26 Ratings 1 Book Value ($B) Book Value (% Total) Unrealized After-tax MTM Gain / (Loss) ($M) 2 Investment UST / AGY AAA AA A BBB <BBB Not Rated Fixed Rate / Floating Rate Government/Agency securities 79% 12% 5% 4% — — — $19.7 17.6% ($34) 96% / 4% Asset-backed securities — 71% 21% 4% 1% 3% — 43.2 38
Slide 27: Asset-backed securities holdings
27 Ratings 1 Book Value ($B) Book Value (% Total) Unrealized After-tax MTM Gain / (Loss) ($M) Investment UST / AGY AAA AA A BBB <BBB Not Rated Student Loans — 37% 58% 5% — — — $14.3 33.1% ($12) Credit Cards — 100% — — — — — 5.3 12.3 (10) Auto/Equipment — 99% — 1% — — — 4.7 10.9 3 Non-US RMBS — 84% 5
Slide 28: Mortgage-backed Securities Holdings as of December 31, 2014
28 Ratings 1 Book Value ($B) Book Value (% Total) Unrealized After-tax MTM Gain / (Loss) ($M) Investment UST / AGY AAA AA A BBB <BBB Not Rated Agency MBS 100% — — — — — — $20.6 72.5% $41 Non-Agency MBS — 62% 7% 4% 8% 19% — 2.5 8.8 20 CMBS 2% 86% 7% 4% — 1% — 5.3 18.7 27 TOTAL MBS 73% 21% 2% 1% 1% 2%
Slide 29: Non-U.S. Investment Summary as of December 31, 2014
29 Non-U.S. Investments: Ratings Non-U.S. Investments: Asset Class 1. Sovereign debt is reflected in the government agency column 2. Japanese government bonds were downgraded to A1 from Aa3 by Moody’s on December 1, 2014 3. Country of collateral used except for corporates, where country of issuer is
Slide 30: C. Non-GAAP Measures and Capital Ratios
30 C. Non-GAAP Measures and Capital Ratios Refer to the addendum linked to this presentation for explanations of our non-GAAP financial measures and for reconciliations of our operating-basis financial information. To access the addendum go to www.statestreet.com/stockholder and click on “Filings &