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Item 2 — Management's Discussion and Analysis
State Street Corporation · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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GENERAL
State Street Corporation is one of the world’s leading providers of financial services to institutional investors, including investment servicing, markets and financing solutions and investment management. Our clients — asset managers and owners, insurance companies, wealth managers, official institutions, and central banks — rely on us to deliver solutions that support their business objectives across the investment life cycle.
State Street Corporation, referred to as the Parent Company, was organized in 1969 under the laws of the Commonwealth of Massachusetts, and is a bank holding company that has elected to be treated as a financial holding company under the Bank Holding Company Act of 1956. The Parent Company is a source of financial and managerial strength to our subsidiaries. Through our subsidiaries, including our principal banking subsidiary, State Street Bank and Trust Company, referred to as State Street Bank, we operate in more than 100 geographic markets worldwide, providing a broad range of financial products and services to institutional investors globally. As of June 30, 2026, we reported $57.86 trillion in AUC/A and $6.28 trillion in AUM.
We had consolidated total assets of $418.38 billion, consolidated total deposits of $319.55 billion, consolidated total shareholders' equity of $28.27 billion and approximately 51,000 employees, as of June 30, 2026.
Our operations are organized into two lines of business, Investment Servicing and Investment Management, which are defined based on products and services provided.
Additional information about our lines of business is provided in "Line of Business Information" in this Management's Discussion and Analysis and Note 17 to the consolidated financial statements in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (Form 10-Q).
Our corporate headquarters is located at One Congress Street, Boston, Massachusetts 02114 (telephone (617) 786-3000). For purposes of this Form 10-Q, unless the context requires otherwise, references to "State Street," "we," "us," "our" or similar terms mean State Street Corporation and its subsidiaries on a consolidated basis.
This Management's Discussion and Analysis is part of this Form 10-Q and updates the Management's Discussion and Analysis in our 2025
Annual Report on Form 10-K for the year ended December 31, 2025 previously filed with the SEC (2025 Form 10-K). The financial information contained in this Management's Discussion and Analysis and elsewhere in this Form 10-Q should be read in conjunction with the financial and other information contained in our 2025 Form 10-K. Certain previously reported amounts presented in this Form 10-Q have been reclassified to conform to current-period presentation.
We prepare our consolidated financial statements in conformity with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in its application of certain accounting policies that materially affect the reported amounts of assets, liabilities, equity, revenue and expenses.
The significant accounting policies that require us to make judgments, estimates and assumptions that are difficult, subjective or complex, about matters that are uncertain and may change in subsequent periods include:
•Recurring fair value measurements;
•Allowance for credit losses; and
•Contingencies.
These significant accounting policies require the most subjective or complex judgments, and underlying estimates and assumptions could be subject to revision as new information becomes available. For additional information about these significant accounting policies refer to “Significant Accounting Estimates” included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K. We did not change these significant accounting policies in the first six months of 2026.
Certain financial information provided in this Form 10-Q, including this Management's Discussion and Analysis, is presented using both a U.S. GAAP, or reported basis, and a non-GAAP basis, including certain non-GAAP measures used in the calculation of identified regulatory ratios. We measure and compare certain financial information on a non-GAAP basis, including information that management uses in evaluating our business and activities. Non-GAAP financial information should be considered in addition to, and not as a substitute for or as superior to, financial information prepared in conformity with U.S.
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GAAP. Any non-GAAP financial information presented in this Form 10-Q, including this Management’s Discussion and Analysis, is reconciled to its most directly comparable currently applicable regulatory ratio or U.S. GAAP-basis measure. As part of our non-GAAP-basis measures, we present a fully taxable-equivalent NII that reports non-taxable revenue, such as interest income associated with tax-exempt investment securities, on a fully taxable-equivalent basis, which we believe facilitates an investor's understanding and analysis of our underlying financial performance and trends.
We provide additional disclosures required by applicable bank regulatory standards, including supplemental qualitative and quantitative information with respect to regulatory capital (including market risk associated with our trading activities), the LCR and the NSFR, summary results of annual State Street-run stress tests which we conduct under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), and recovery and resolution plan disclosures. These additional disclosures are accessible on the "Filings & reports" and "Fixed income" tabs of our website at investors.statestreet.com.
We have included the website address of State Street (including investors.statestreet.com) and the SEC in this report as an inactive textual reference only. Information on those websites (or any other) is not incorporated by reference in this Form 10-Q.
We use acronyms and other defined terms for certain business terms and abbreviations, as defined in the acronyms list and glossary following the consolidated financial statements in this Form 10-Q.
Forward-Looking Statements
This Form 10-Q, as well as other reports and proxy materials submitted by us under the Securities Exchange Act of 1934, registration statements filed by us under the Securities Act of 1933, our annual report to shareholders and other public statements we may make, may contain statements (including statements in our Management's Discussion and Analysis included in such reports, as applicable) that are considered “forward-looking statements” within the meaning of U.S. securities laws, including statements about our goals and expectations regarding our business, financial and capital condition, results of operations, strategies, cost savings and transformation initiatives, investment portfolio performance, dividend and stock purchase programs, acquisitions, outcomes of legal proceedings, market growth, joint ventures and divestitures, client growth, new technologies, services and opportunities, sustainability and impact, human capital and climate, as well as industry, governmental, regulatory, economic and market trends, initiatives and
developments, the business environment and other matters that do not relate strictly to historical facts.
Terminology such as “expect,” “will,” “medium-term,” “outlook,” “target,” “opportunity,” “strategy,” “strategic,” “driver,” “priority,” “assumption,” “illustrative,” “framework,” “forecast,” “guidance,” “objective,” “believe,” “plan,” “anticipate,” “seek,” “may,” “trend,” “goal,” “estimate,” “intend,” “aim,” “outcome,” “future,” “pipeline,” and “trajectory,” or similar statements or variations of such terms, are intended to identify forward-looking statements, although not all forward-looking statements contain such terms.
Forward-looking statements are subject to various risks and uncertainties, which change over time, are based on management's expectations and assumptions at the time the statements are made and are not guarantees of future results. Management's expectations and assumptions, and the continued validity of the forward-looking statements, are subject to change due to a broad range of factors affecting the U.S. and global economies, regulatory environment and the equity, debt, currency and other financial markets, as well as factors specific to State Street and its subsidiaries, including State Street Bank. Factors that could cause changes in the expectations or assumptions on which forward-looking statements are based cannot be foreseen with certainty. Important factors that in the future could cause actual results to differ materially from those envisaged in forward-looking statements, and that in some cases have affected us in the past, include, but are not limited to:
Strategic Risks
•We are subject to intense competition, which could negatively affect our profitability;
•We are subject to significant pricing pressure and variability in our financial results and our AUC/A and AUM;
•Our development and completion of new products and services, including State Street Alpha® and those related to wealth servicing, alternative investment management or digital assets or incorporating artificial intelligence, may impose costs on us, involve dependencies on third parties and may expose us to increased risks;
•Acquisitions, strategic alliances, joint ventures and divestitures, and the integration, retention and development of the benefits of these transactions, pose risks for our business; and
•Competition for qualified members of our workforce is intense, and we may not be able
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to attract and retain the highly skilled people we need to support our business.
Financial Market Risks
•We could be adversely affected by political, geopolitical, economic and market conditions, including, for example, as a result of liquidity or capital deficiencies (actual or perceived) by other financial institutions and related market and government actions, changes in U.S. trade or other policies or those policies of other nations, the ongoing conflicts in Ukraine and in the Middle East, major political shifts domestically or internationally (including the potential for retaliatory actions by governments, market participants or clients based on diverging perspectives or otherwise), actions taken by central banks in an attempt to address prevailing economic conditions, changes in monetary policy or periods of significant volatility in the markets for equity, fixed income and other asset classes globally or within specific markets;
•Our investment securities portfolio, consolidated financial condition and consolidated results of operations could be adversely affected by changes in the financial markets, governmental action or monetary policy. For example, among other risks, changes in prevailing interest rates or market conditions have led, and were they to persist or occur in the future could further lead, to decreases in our NII or to portfolio management decisions resulting in reductions in our capital or liquidity ratios;
•Our business activities expose us to interest rate risk;
•We assume significant credit risk of counterparties, who may also have substantial financial dependencies on other financial institutions, and these credit exposures and concentrations could expose us to financial loss;
•Our fee revenue represents a significant portion of our revenue and is subject to and may decline based on, among other factors, market and currency declines, investment activities and preferences of our clients and their business mix, as well as the timing of new business onboarding;
•If we are unable to effectively manage our capital and liquidity, our financial condition, capital ratios, results of operations and business prospects could be adversely affected;
•Our return of capital to shareholders through common share repurchases and common stock dividends may be variable and is subject to various business and financial factors and regulatory requirements and approvals of our Board of Directors (the Board);
•We may need to raise additional capital or debt in the future, which may not be available to us or may only be available on unfavorable terms;
•Our calculations of risk exposures, total RWA and capital ratios depend on data inputs, formulae, models, correlations and assumptions that are subject to change, which could materially impact our risk exposures, our total RWA and our capital ratios from period to period; and
•If we experience a downgrade in our credit ratings, or an actual or perceived reduction in our financial strength, our borrowing and capital costs, liquidity and reputation could be adversely affected.
Compliance and Regulatory Risks
•Our business and capital-related activities, including common share repurchases, may be adversely affected by regulatory requirements and considerations, including capital, credit and liquidity;
•We face extensive and changing government regulation and supervision in the U.S. and non-U.S. jurisdictions in which we operate, which may increase our costs and compliance risks and may affect our business activities and strategies;
•Our businesses may be adversely affected by government enforcement and litigation;
•Our businesses may be adversely affected by increased and conflicting political, regulatory and client scrutiny of investment management, stewardship and sustainable investment strategies and services offered;
•Any misappropriation of the confidential information we possess could have an adverse impact on our business and could subject us to regulatory actions, litigation and other adverse effects;
•Changes in accounting standards may adversely affect our consolidated results of operations and financial condition;
•Changes in tax laws, rules or regulations, challenges to our tax positions and changes in the composition of our pre-tax earnings may increase our effective tax rate;
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•We could face liabilities for withholding and other non-income taxes, including in connection with our services to clients, as a result of tax authority examinations; and
•Our businesses may be negatively affected by adverse publicity or other reputational harm.
Operational, Cyber and Technology Risks
•Attacks or unauthorized access to our or our business partners' or clients' information technology systems or facilities, such as cyber-attacks or other disruptions to our or their operations, including attacks leveraging advanced or new artificial intelligence models that are continuously evolving and presenting heightened risks, could result in significant costs, reputational damage and impacts on our business activities;
•Our business may be negatively affected by risks associated with strategic initiatives we are undertaking to enhance the effectiveness, including the adoption or integration of new technologies such as artificial intelligence, and efficiency of our operations and of our cybersecurity and technology infrastructure or by our failure to meet the related, resiliency or other expectations of our clients and regulators, or as a result of a cyber-attack or similar vulnerability in our or business partners' infrastructure;
•Our risk management framework, models and processes may not be effective in identifying or mitigating risk and reducing the potential for related losses, and a failure or circumvention of our controls and procedures, or errors or delays in our operational and transaction processing, or those of third parties, could have an adverse effect on our business, financial condition, operating results and reputation;
•Shifting and maintaining operational activities to non-U.S. jurisdictions, changing our operating model, and outsourcing to, or insourcing from, third parties expose us to increased operational risk, geopolitical risk and reputational harm and may not result in expected cost savings or operational improvements;
•Long-term contracts and customizing service delivery for clients expose us to increased operational risk, pricing and performance risk;
•The quantitative models we use to manage our business may contain errors that could adversely impact our business, financial condition, operating results and regulatory
compliance, and lapses in disclosure controls and procedures or internal control over financial reporting could occur, any of which could result in material harm;
•We may not be able to protect our intellectual property or may infringe upon the rights of third parties;
•Our reputation and business prospects may be damaged if investors in the collective investment pools we sponsor or manage incur substantial losses in these investment pools or are restricted in redeeming their interests in these investment pools;
•The impacts of global regulatory requirements and expectations, shifting client preferences, and disclosure requirements related to climate risks and sustainability standards could adversely affect us; and
•We may incur losses or face negative impacts on our business as a result of unforeseen events, including terrorist attacks, geopolitical events, acute or chronic physical risk events, including natural disasters, pandemics, global conflicts, or a banking crisis, which may have a negative impact on our business and operations.
Actual outcomes and results may differ materially from what is expressed in our forward-looking statements and from our historical financial results due to the factors discussed in this section and elsewhere in this Form 10-Q or disclosed in our other SEC filings. Forward-looking statements in this Form 10-Q should not be relied on as representing our expectations or assumptions as of any time subsequent to the time this Form 10-Q is filed with the SEC. We undertake no obligation to revise our forward-looking statements after the time they are made. The factors discussed herein are not intended to be a complete statement of all risks and uncertainties that may affect our businesses. We cannot anticipate all developments that may adversely affect our business or operations or our consolidated results of operations, financial condition or cash flows.
Forward-looking statements should not be viewed as predictions and should not be the primary basis on which investors evaluate State Street. Any investor in State Street should consider all risks and uncertainties disclosed in our SEC filings, including our filings under the Securities Exchange Act of 1934, in particular our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K, and our registration statements filed under the Securities Act of 1933, all of which are accessible on the SEC's website at www.sec.gov or
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on the "Filings & reports" and "Fixed income" tabs of our website at investors.statestreet.com.
FINANCIAL RESULTS AND HIGHLIGHTS
Summary of Financial Results
TABLE 1: OVERVIEW OF FINANCIAL RESULTS
Three Months Ended June 30, % Change
(Dollars in millions, except per share amounts) 2026 2025
Total fee revenue $ 3,188 $ 2,719 17 %
Net interest income 860 729 18
Total revenue 4,048 3,448 17
Provision for credit losses — 30 nm
Total expenses 2,659 2,529 5
Income before income tax expense 1,389 889 56
Income tax expense 305 196 56
Net income $ 1,084 $ 693 56
Adjustments to net income:
Dividends on preferred stock(1) $ (58) $ (63) 8
Net income available to common shareholders $ 1,026 $ 630 63
Earnings per common share:
Basic $ 3.71 $ 2.20 69
Diluted 3.65 2.17 68
Average common shares outstanding (in thousands):
Basic 276,150 286,281 (4)
Diluted 281,062 290,490 (3)
Cash dividends declared per common share $ 0.84 $ 0.76 11
Return on average common equity 16.7 % 10.8 % 590 bps
Pre-tax margin 34.3 25.8 850
Six Months Ended June 30, % Change
(Dollars in millions, except per share amounts) 2026 2025
Total fee revenue $ 6,148 $ 5,289 16 %
Net interest income 1,695 1,443 17
Total other income 1 — nm
Total revenue 7,844 6,732 17
Provision for credit losses 16 42 (62)
Total expenses 5,470 4,979 10
Income before income tax expense 2,358 1,711 38
Income tax expense 510 374 36
Net income $ 1,848 $ 1,337 38
Adjustments to net income:
Dividends on preferred stock(1) $ (116) $ (109) (6)
Earnings allocated to participating securities(2) (1) (1) —
Net income available to common shareholders $ 1,731 $ 1,227 41
Earnings per common share:
Basic $ 6.24 $ 4.27 46
Diluted 6.14 4.21 46
Average common shares outstanding (in thousands):
Basic 277,286 287,415 (4)
Diluted 281,963 291,596 (3)
Cash dividends declared per common share $ 1.68 $ 1.52 11
Return on average common equity 14.2 % 10.7 % 350 bps
Pre-tax margin 30.1 25.4 470
(1) Additional information about our preferred stock dividends is provided in Note 12 to the consolidated financial statements in this Form 10-Q.
(2) Represents the portion of net income available to common equity allocated to participating securities, composed of unvested and fully vested supplemental executive retirement plans (SERP) shares and fully vested deferred director stock awards, which are equity-based awards that contain non-forfeitable rights to dividends, and are considered to participate with the common stock in undistributed earnings.
nm Not meaningful
The following section provides information related to significant events, as well as highlights of our consolidated financial results for the second quarter of 2026 presented in Table 1: Overview of Financial Results. More detailed information about our consolidated financial results, including the comparison of our financial results for the three and six months ended June 30, 2026 compared to the same periods of 2025, is provided under “Consolidated Results of Operations”, "Line of Business Information" and "Capital" sections which follow "Financial Results and Highlights", as well as in our consolidated financial statements in this Form 10-Q. In this Management’s Discussion and Analysis, where we describe the effects of changes in foreign currency translation, those effects are determined by applying applicable weighted average FX rates from the relevant 2025 period to the relevant 2026 period results.
Second Quarter of 2026 Performance Highlights
•Total revenue increased 17% in the second quarter of 2026, compared to the same period of 2025, driven by higher fee revenue and net interest income.
◦Total fee revenue increased 17% in the second quarter of 2026, compared to the same period of 2025, primarily reflecting higher management fees, servicing fees and foreign exchange trading services revenue.
◦NII increased 18% in the second quarter of 2026, compared to the same period of 2025, primarily driven by an increase of 17 bps in NIM.
•Total expenses increased 5% in the second quarter of 2026, compared to the same period of 2025, primarily reflecting higher revenue-related costs and continued strategic investments, partially offset by the absence of prior-year notable items. See “Notable Items” below.
•Pre-tax margin of 34.3% in the second quarter of 2026 increased from 25.8% in the same period of 2025, while return on equity of 16.7% in the second quarter of 2026 increased from 10.8% in the same period of 2025.
•Earnings per share (EPS) of $3.65 in the second quarter of 2026 increased 68% as compared to the same period of 2025, primarily driven by higher total revenue and growth in pre-tax margin.
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Notable Items
•There were no notable items in the second quarter of 2026.
•In the second quarter of 2025, notable items reduced income before income tax expense by $138 million, net, including a repositioning charge of $100 million, a client rescoping of $42 million, and other notable items of $(4) million. The client rescoping of $42 million included $24 million reflected as a reduction in software services revenue and $18 million reflected in information systems and communications expenses.
AUC/A and AUM
•AUC/A of $57.86 trillion as of June 30, 2026, increased 18% compared to June 30, 2025, primarily due to higher market levels, client flows and net new business. In the second quarter of 2026, newly announced investment servicing mandates totaled approximately $384 billion of AUC/A. We onboarded approximately $228 billion of AUC/A in the second quarter of 2026. Investment servicing assets remaining to be installed in future periods totaled approximately $2.93 trillion of AUC/A as of June 30, 2026.
•AUM of $6.28 trillion as of June 30, 2026, increased 23% compared to June 30, 2025, primarily due to higher market levels and net inflows.
Capital
•In the second quarter of 2026, we returned a total of $631 million to our shareholders in the form of common share repurchases and common stock dividends.
◦In the second quarter of 2026, we acquired an aggregate of 2.5 million shares of common stock at an average per share cost of $159.63 and an aggregate cost of $400 million. These purchases were all conducted under the share repurchase program approved by the Board.
◦We declared aggregate common stock dividends of $0.84 per share, totaling $231 million in the second quarter of 2026, compared to $0.76 per share, totaling $217 million in the same period of 2025, representing an increase of approximately 11% on a per share basis.
•In July 2026, we declared third quarter common stock dividends of $0.92 per share, representing a 10% increase on a per share
basis from dividends declared in the second quarter of 2026.
•Our standardized CET1 capital ratio decreased to 10.8% as of June 30, 2026, compared to 11.6% as of December 31, 2025, primarily due to a normalization in RWA from episodically low levels at December 31, 2025 and continued capital return, partially offset by capital generated from earnings. Our Tier 1 leverage ratio was 5.3% as of June 30, 2026, compared to 5.5% as of December 31, 2025, mainly driven by continued capital return and higher average balance sheet levels, partially offset by capital generated from earnings. Standardized capital ratios were binding for both periods.
CONSOLIDATED RESULTS OF OPERATIONS
This section discusses our consolidated results of operations for the three and six months ended June 30, 2026 compared to the same periods of 2025 and should be read in conjunction with the consolidated financial statements and accompanying notes to the consolidated financial statements in this Form 10-Q.
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Total Revenue
TABLE 2: TOTAL REVENUE
Three Months Ended June 30, % Change
(Dollars in millions) 2026 2025
Fee revenue:
Servicing fees $ 1,468 $ 1,304 13 %
Management fees(1) 772 600 29
Foreign exchange trading services(1) 494 393 26
Securities finance 150 126 19
Software services(1) 166 169 (2)
Other fee revenue(1) 138 127 9
Total fee revenue 3,188 2,719 17
Net interest income:
Interest income 2,843 3,055 (7)
Interest expense 1,983 2,326 (15)
Net interest income 860 729 18
Total revenue $ 4,048 $ 3,448 17
Six Months Ended June 30, % Change
(Dollars in millions) 2026 2025
Fee revenue:
Servicing fees $ 2,877 $ 2,579 12 %
Management fees(1) 1,496 1,187 26
Foreign exchange trading services(1) 929 730 27
Securities finance 266 240 11
Software services(1) 335 327 2
Other fee revenue(1) 245 226 8
Total fee revenue 6,148 5,289 16
Net interest income:
Interest income 5,494 5,977 (8)
Interest expense 3,799 4,534 (16)
Net interest income 1,695 1,443 17
Other income:
Gains (losses) from sales of available-for-sale securities, net 1 — nm
Total other income 1 — nm
Total revenue $ 7,844 $ 6,732 17
(1) In the first quarter of 2026, revenue related to distribution and marketing activities was reclassified from foreign exchange trading services to management fees. Additionally, lending-related and other fees, previously recognized within software and processing fees, was reclassified to other fee revenue, and the software and processing fees caption has been changed to software services. Prior-period amounts have been reclassified to conform to the current presentation. These reclassifications had no impact on total fee revenue, total revenue or net income, on either a consolidated or line of business basis.
nm Denotes not meaningful
Fee Revenue
Table 2: Total Revenue, provides the breakout of fee revenue for the three and six months ended June 30, 2026 and 2025. Servicing and management fees collectively made up approximately 70% of total fee revenue for both the three months ended June 30, 2026 and 2025, and 71% for both the six months ended June 30, 2026 and 2025.
Additional information about fee revenue is provided under "Line of Business Information" included in this Management's Discussion and Analysis.
Servicing Fee Revenue
Servicing fees, as presented in Table 2: Total Revenue, increased 13% and 12% in the three and
six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily reflecting higher average market levels, client activity and asset flows and net new business.
Servicing fees generated outside the United States were approximately 50% of total servicing fees in both the three and six months ended June 30, 2026, compared to approximately 49% and 48% in the same periods of 2025, respectively.
Servicing fee revenue comprises revenue from a range of services provided to our clients, including certain Alpha servicing mandates, consisting of core custody services, accounting, reporting and administration, which we refer to collectively as back office services and middle office services. The nature and mix of services provided and the asset classes for which the services are performed affect our servicing fees. The basis for fees will differ across regions and clients. Generally, our servicing fee revenues are affected by several factors, including changes in market valuations, client activity and asset flows, net new business and the manner in which we price our services. For servicing fees for which we have not yet issued an invoice to our clients as of period end, we include an estimate of the impact of changes in market valuations, client activity and flows, net new business and changes in pricing in our revenues.
Changes in Market Valuations
Our servicing fee revenue is impacted by both our levels and the geographic and product mix of our AUC/A. Changes in market valuations have an associated impact on the level of our AUC/A and servicing fee revenues, though the degree of impact will vary depending on asset types and classes, and geography of assets held within our clients’ portfolios. For certain asset classes where the valuation process is more complex, including alternative investments, or where our valuation is dependent on third party information, AUC/A is reported on a time lag, typically one-month. For those asset classes, which represent a significant portion of AUC/A, the impact of market levels on our reported AUC/A, and to a lesser extent servicing fee revenue, does not reflect current period-end market levels.
Client Activity and Asset Flows
Client activity and asset flows are impacted by the number of transactions we execute on behalf of our clients, including FX settlements, equity and derivative trades, and wire transfer activity, as well as actions by our clients to change the asset class in which their assets are invested. Our servicing fee revenues are impacted by a number of factors, including transaction volumes, asset levels and asset classes in which funds are invested, as well as industry trends associated with these client-related
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activities.
Net New Business
Servicing fee revenue associated with new investment servicing mandates is not reflected in our servicing fee revenue until the assets have been installed, and may vary between mandates based on the breadth of services provided, the time required to install the assets, and the types of assets installed. Our installation timeline in general can range from 6 to 36 months with the average installation timeline being approximately 9 to 12 months over the past two full fiscal years.
Investment servicing mandates newly announced in the second quarter of 2026 totaled approximately $384 billion of AUC/A. With respect to the current investment servicing mandates of approximately $2.93 trillion of AUC/A that are yet to be installed as of June 30, 2026, we expect the conversion will mostly occur over the coming 24 months, with approximately 65% expected to be installed in the remainder of 2026, with the balance expected to be installed largely throughout 2027 and 2028. The expected timing of these installations is subject to change due to a variety of factors, including adjusted implementation schedules agreed with clients, scope adjustments, and product and functionality changes.
Pricing
The industry in which we operate has historically faced pricing pressure, and our servicing fee revenues continue to be affected by such pressures today. Consequently, no assumption should be drawn as to future revenue run rate from announced servicing AUC/A wins, as the amount of revenue associated with AUC/A, once installed, can vary materially between mandates.
For additional information regarding servicing fee revenue, refer to “Total Revenue” included under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
TABLE 3: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY PRODUCT(1)
(In billions) June 30, 2026 December 31, 2025 June 30, 2025
Collective funds, including ETFs $ 20,055 $ 17,997 $ 16,728
Mutual funds 14,353 13,518 12,641
Pension products 11,219 10,452 9,679
Insurance and other products 12,231 11,833 9,952
Total $ 57,858 $ 53,800 $ 49,000
TABLE 4: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY ASSET CLASS(1)
(In billions) June 30, 2026 December 31, 2025 June 30, 2025
Equities $ 34,670 $ 31,879 $ 29,311
Fixed-income 14,160 13,830 12,122
Short-term and other investments(2) 9,028 8,091 7,567
Total $ 57,858 $ 53,800 $ 49,000
TABLE 5: ASSETS UNDER CUSTODY AND/OR ADMINISTRATION BY GEOGRAPHY(1)(3)
(In billions) June 30, 2026 December 31, 2025 June 30, 2025
Americas $ 40,040 $ 37,422 $ 35,028
Europe/Middle East/Africa 14,002 12,918 10,803
Asia/Pacific 3,816 3,460 3,169
Total $ 57,858 $ 53,800 $ 49,000
(1) Consistent with past practice, AUC/A values for certain asset classes are based on a lag, typically one-month.
(2) Short-term and other investments includes derivatives, cash and cash equivalents and other instruments.
(3) Geographic mix is generally based on the domicile of the entity servicing the funds and is not necessarily representative of the underlying asset mix.
Management Fee Revenue
Management fees increased 29% and 26% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily due to higher average market levels and net inflows.
Management fees generated outside the United States were approximately 23% of total management fees in both the three and six months ended June 30, 2026, compared to approximately 24% in the same periods of 2025.
Management fees generally are affected by our level of AUM, which we report based on month-end valuations. Management fees for certain components of managed assets, such as ETFs, mutual funds and Undertakings for Collective Investment in Transferable Securities, are affected by daily average valuations of AUM. Management fee revenue is more sensitive to market valuations than servicing fee revenue, as a higher proportion of the underlying services provided, and the associated management fees earned, are dependent on equity and fixed-income security valuations. Additional factors, such as the relative mix of assets managed, may have a significant effect on
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AND RESULTS OF OPERATIONS
our management fee revenue. While certain management fees are directly determined by the values of AUM and the investment strategies employed, management fees may reflect other factors, including performance fee arrangements, as well as our relationship pricing for clients.
For additional information regarding management fee revenue, refer to “Total Revenue” included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
TABLE 6: ASSETS UNDER MANAGEMENT BY ASSET CLASS(1)
(In billions) June 30, 2026 December 31, 2025 June 30, 2025
Equity $ 4,051 $ 3,589 $ 3,218
Fixed-income 776 734 700
Cash(2) 621 570 525
Multi-asset 567 501 449
Alternative investments(3) 263 271 225
Total $ 6,278 $ 5,665 $ 5,117
(1) Our AUM disclosures have been updated to more closely reflect the investment strategies and capabilities within the Investment Management business. AUM disclosures are now organized around index; active, alternatives and other strategies; and cash. We have retained the supplemental views of AUM, including, but not limited to, views by asset class and by geography.
(2) Includes both floating- and constant-net-asset-value portfolios held in commingled structures or separate accounts.
(3) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager for the SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust, but act as the marketing agent.
TABLE 7: GEOGRAPHIC MIX OF ASSETS UNDER MANAGEMENT(1)
(In billions) June 30, 2026 December 31, 2025 June 30, 2025
Americas $ 4,573 $ 4,155 $ 3,713
Europe/Middle East/Africa 956 841 771
Asia-Pacific 749 669 633
Total $ 6,278 $ 5,665 $ 5,117
(1) Geographic mix is based on client location or fund management location.
TABLE 8: ASSETS UNDER MANAGEMENT BY VEHICLE AND STRATEGY(1)
(In billions) June 30, 2026 December 31, 2025 June 30, 2025
By Vehicle:
ETF $ 2,204 $ 1,951 $ 1,690
Separately managed accounts 2,340 2,127 1,985
Other commingled funds 1,734 1,587 1,442
Total $ 6,278 $ 5,665 $ 5,117
By Strategy:
Index strategies and solutions:
ETFs $ 2,188 $ 1,936 $ 1,677
Other index 3,279 2,986 2,737
Total index strategies and solutions 5,467 4,922 4,414
Active, alternatives and other(2) 190 173 178
Cash(3) 621 570 525
Total $ 6,278 $ 5,665 $ 5,117
(1) Our AUM disclosures have been updated to more closely reflect the investment strategies and capabilities within the Investment Management business. AUM disclosures are now organized around index; active, alternatives and other strategies; and cash. We have retained the supplemental views of AUM, including, but not limited to, views by asset class and by geography.
(2) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager for the SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust, but act as the marketing agent.
(3) Includes both floating- and constant-net-asset-value portfolios held in commingled structures or separate accounts.
State Street Corporation | 12
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
TABLE 9: ACTIVITY IN ASSETS UNDER MANAGEMENT BY STRATEGY AND ASSET CLASS(1)
(In billions) Equity Fixed-Income Cash(2) Multi-Asset Alternative Investments(3) Total
Ending balance as of December 31, 2024 $ 3,007 $ 616 $ 518 $ 374 $ 200 $ 4,715
Net asset flows:
Index strategies and solutions:
ETFs (18) 9 — — 9 —
Other index (18) (7) — 13 — (12)
Total index strategies and solutions (36) 2 — 13 9 (12)
Active, alternatives and other (1) — — — (1) (2)
Cash — — 1 — — 1
Total flows, net (37) 2 1 13 8 (13)
Market appreciation/(depreciation) (84) 8 (2) (1) 14 (65)
Foreign exchange impact 15 7 1 4 1 28
Total market and foreign exchange impact (69) 15 (1) 3 15 (37)
Ending balance as of March 31, 2025 $ 2,901 $ 633 $ 518 $ 390 $ 223 $ 4,665
Net asset flows:
Index strategies and solutions:
ETFs 8 3 — — 4 15
Other index 9 49 — 24 (1) 81
Total index strategies and solutions 17 52 — 24 3 96
Active, alternatives and other (3) (1) — 1 (10) (13)
Cash — — (1) — — (1)
Total flows, net 14 51 (1) 25 (7) 82
Market appreciation/(depreciation) 273 7 6 27 5 318
Foreign exchange impact 30 9 2 7 4 52
Total market and foreign exchange impact 303 16 8 34 9 370
Ending balance as of June 30, 2025 $ 3,218 $ 700 $ 525 $ 449 $ 225 $ 5,117
Ending balance as of December 31, 2025 $ 3,589 $ 734 $ 570 $ 501 $ 271 $ 5,665
Net asset flows:
Index strategies and solutions:
ETFs 15 10 — — — 25
Other index (13) 18 — 11 (3) 13
Total index strategies and solutions 2 28 — 11 (3) 38
Active, alternatives and other — — — 1 2 3
Cash — — 8 — — 8
Total flows, net 2 28 8 12 (1) 49
Market appreciation/(depreciation) (94) (3) 3 (6) 14 (86)
Foreign exchange impact (1) (3) — (4) — (8)
Total market and foreign exchange impact (95) (6) 3 (10) 14 (94)
Ending balance as of March 31, 2026 $ 3,496 $ 756 $ 581 $ 503 $ 284 $ 5,620
Net asset flows:
Index strategies and solutions:
ETFs 67 3 — — (4) 66
Other index (5) 9 — 13 (2) 15
Total index strategies and solutions 62 12 — 13 (6) 81
Active, alternatives and other (2) — — — — (2)
Cash — — 35 — — 35
Total flows, net 60 12 35 13 (6) 114
Market appreciation/(depreciation) 499 11 5 51 (15) 551
Foreign exchange impact (4) (3) — — — (7)
Total market and foreign exchange impact 495 8 5 51 (15) 544
Ending balance as of June 30, 2026 $ 4,051 $ 776 $ 621 $ 567 $ 263 $ 6,278
(1) Our AUM disclosures have been updated to more closely reflect the investment strategies and capabilities within the Investment Management business. AUM disclosures are now organized around index; active, alternatives and other strategies; and cash. We have retained the supplemental views of AUM, including, but not limited to, views by asset class and by geography.
(2) Includes both floating and constant-net-asset-value portfolios held in commingled structures or separate accounts.
(3) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager for the SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust, but act as the marketing agent.
State Street Corporation | 13
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Foreign Exchange Trading Services
Foreign exchange trading services revenue, as presented in Table 2: Total Revenue, increased 26% and 27% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily due to higher client volumes.
Foreign exchange trading services revenue comprises revenue generated by FX trading and revenue generated by brokerage and other trading services, which made up 77% and 23%, respectively, of foreign exchange trading services revenue in the second quarter of 2026, compared to 73% and 27%, respectively, in the same period of 2025.
For additional information regarding FX trading services revenue, refer to “Total Revenue” included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
Securities Finance
Securities finance revenue, as presented in Table 2: Total Revenue, increased 19% and 11% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily due to higher client lending balances in both agency lending and prime services.
For additional information regarding securities finance revenue, refer to “Total Revenue” included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
Software Services
Software services revenue, as presented in Table 2: Total Revenue, decreased 2% in the three months ended June 30, 2026, compared to the same period of 2025, primarily due to lower on-premises renewals reflecting elevated renewal activity in the prior year period, partially offset by the absence of a prior-year notable item. Software services revenue increased by 2% in the six months ended June 30, 2026, compared to the same period of 2025, reflecting the absence of a prior-year notable item and higher software and data revenue, partially offset by lower on-premises renewals.
Software services revenue includes fees from software licensing and data maintenance and primarily includes revenue from CRD, Alpha Data Platform and Alpha Data Services.
For additional information regarding software services revenue, refer to "Software and Processing Fees" under “Total Revenue” included under Item 7,
Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
Other Fee Revenue
Other fee revenue includes lending-related and other fees, bank-owned life insurance income, income associated with equity investments and other market-related adjustments. Lending-related and other fees primarily consist of fee revenue associated with our subscription and fund finance, commercial loans, municipal finance, insurance and stable value wrap businesses.
Other fee revenue increased 9% and 8% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily due to higher FX and market-related adjustments, partially offset by lower fair value adjustments and equity investment income.
Net Interest Income
See Table 2: Total Revenue, for the breakout of interest income and interest expense for the three and six months ended June 30, 2026, compared to the same periods of 2025.
NII is defined as interest income earned on interest-earning assets less interest expense incurred on interest-bearing liabilities. Interest-earning assets, which principally consist of investment securities, interest-bearing deposits with banks, loans, resale agreements and other liquid assets, are financed primarily by client deposits, short-term borrowings and long-term debt.
NIM represents the relationship between annualized fully taxable-equivalent (FTE) NII and average total interest-earning assets for the period. It is calculated by dividing FTE NII by average interest-earning assets. Revenue that is exempt from income taxes, mainly earned from certain investment securities (state and political subdivisions), is adjusted to an FTE basis using the U.S. federal and state statutory income tax rates.
NII increased 18% and 17% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily driven by increases of 17 bps and 16 bps in NIM, respectively.
See Table 10: Average Balances and Interest Rates - Fully Taxable-Equivalent Basis, for the breakout of NII for the three and six months ended June 30, 2026, compared to the same periods of 2025.
State Street Corporation | 14
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
TABLE 10: AVERAGE BALANCES AND INTEREST RATES - FULLY TAXABLE-EQUIVALENT BASIS(1)
Three Months Ended June 30,
2026 2025
(Dollars in millions; fully taxable-equivalent basis) Average Balance Interest Revenue/Expense Rate Average Balance Interest Revenue/Expense Rate
Interest-bearing deposits with banks $ 103,683 $ 746 2.89 % $ 98,321 $ 792 3.23 %
Securities purchased under resale agreements(2) 8,129 151 7.43 9,169 179 7.83
Trading account assets 845 2 0.80 791 — 0.06
Investment securities:
Investment securities available-for-sale 72,810 739 4.06 67,718 753 4.45
Investment securities held-to-maturity 35,820 200 2.24 44,365 234 2.11
Total Investment securities 108,630 939 3.46 112,083 987 3.52
Loans(3) 50,081 580 4.64 45,277 574 5.08
Other interest-earning assets(4) 34,038 425 5.00 39,007 523 5.38
Average total interest-earning assets $ 305,406 $ 2,843 3.73 $ 304,648 $ 3,055 4.02
Interest-bearing deposits:
U.S. $ 161,741 $ 1,173 2.91 $ 159,770 $ 1,396 3.50
Non-U.S. 79,103 300 1.52 76,807 297 1.55
Total interest-bearing deposits(5)(6) 240,844 1,473 2.45 236,577 1,693 2.87
Securities sold under repurchase agreements 256 1 2.23 3,160 35 4.42
Other short-term borrowings 4,179 40 3.78 10,179 114 4.51
Long-term debt 25,912 296 4.57 25,864 322 4.98
Other interest-bearing liabilities(7) 5,383 173 12.90 3,543 162 18.35
Average total interest-bearing liabilities $ 276,574 $ 1,983 2.88 $ 279,323 $ 2,326 3.34
Interest rate spread 0.86 % 0.68 %
Net interest income, fully taxable-equivalent basis $ 860 $ 729
Net interest margin, fully taxable-equivalent basis 1.13 % 0.96 %
Tax-equivalent adjustment — —
Net interest income, GAAP basis $ 860 $ 729
Six Months Ended June 30,
2026 2025
(Dollars in millions; fully taxable-equivalent basis) Average Balance Interest Revenue/Expense Rate Average Balance Interest Revenue/Expense Rate
Interest-bearing deposits with banks $ 102,032 $ 1,442 2.85 % $ 95,565 $ 1,561 3.29 %
Securities purchased under resale agreements(2) 8,091 303 7.54 8,447 344 8.21
Trading account assets 841 3 0.76 773 — 0.11
Investment securities:
Investment securities available-for-sale 71,344 1,445 4.05 65,585 1,477 4.50
Investment securities held-to-maturity 36,553 408 2.23 45,497 475 2.09
Total Investment securities 107,897 1,853 3.43 111,082 1,952 3.52
Loans(3) 49,339 1,122 4.59 44,508 1,130 5.12
Other interest-earning assets(4) 31,094 771 5.00 36,748 990 5.43
Average total interest-earning assets $ 299,294 $ 5,494 3.70 $ 297,123 $ 5,977 4.06
Interest-bearing deposits:
U.S. $ 158,207 $ 2,283 2.91 % $ 157,130 $ 2,745 3.52 %
Non-U.S. 76,547 544 1.43 70,278 514 1.48
Total interest-bearing deposits(5)(6) 234,754 2,827 2.43 227,408 3,259 2.89
Securities sold under repurchase agreements 264 3 2.54 3,841 86 4.49
Other short-term borrowings 4,019 78 3.91 11,009 250 4.58
Long-term debt 25,586 582 4.55 24,809 619 4.99
Other interest-bearing liabilities(7) 4,849 309 12.86 4,503 320 14.37
Average total interest-bearing liabilities $ 269,472 $ 3,799 2.84 $ 271,570 $ 4,534 3.37
Interest rate spread 0.86 % 0.69 %
Net interest income, fully taxable-equivalent basis $ 1,695 $ 1,443
Net interest margin, fully taxable-equivalent basis 1.14 % 0.98 %
Tax-equivalent adjustment — —
Net interest income, GAAP basis $ 1,695 $ 1,443
(1) Rates earned/paid on interest-earning assets and interest-bearing liabilities include the impact of hedge activities associated with our asset and liability management activities where applicable.
(2) Reflects the impact of balance sheet netting under enforceable netting agreements of approximately $215.77 billion and $222.03 billion for the three and six months ended June 30, 2026, respectively, compared to $252.79 billion and $242.69 billion for the same periods of 2025. Excluding the impact of netting, the average interest rates would be approximately 0.27% for both the three and six months ended June 30, 2026, compared to 0.27% and 0.28% for the same periods of 2025.
(3) Average loans are presented on a gross basis. Average loans net of expected credit losses were approximately $49.92 billion and $49.17 billion for the three and six months ended June 30, 2026, respectively, compared to $45.11 billion and $44.34 billion for the same periods of 2025.
(4) Reflects the impact of balance sheet netting under enforceable netting agreements of approximately $13.45 billion and $12.19 billion for the three and six months ended June 30, 2026, respectively, compared to $9.54 billion and $9.41 billion for the same periods of 2025. Excluding the impact of netting, the average interest rates would be approximately 3.59% for both the three and six months ended June 30, 2026, compared to 4.33% for the same periods of 2025.
(5) Average rate includes the impact of FX swap costs of approximately $(4) million and $(33) million for the three and six months ended June 30, 2026, respectively, compared to $(42) million and $(125) million for the same periods of 2025. Average rates for total interest-bearing deposits excluding the impact of FX swap costs were 2.46% for both the three and six months ended June 30, 2026, compared to 2.94% and 3.00% for the same periods of 2025.
(6) Total deposits averaged $270.35 billion and $264.25 billion for the three and six months ended June 30, 2026, respectively, compared to $260.75 billion and $251.94 billion for the same periods of 2025.
(7) Reflects the impact of balance sheet netting under enforceable netting agreements of approximately $13.02 billion and $11.82 billion for the three and six months ended June 30, 2026, respectively, compared to $9.82 billion and $9.14 billion for the same periods of 2025. Excluding the impact of netting, the average interest rates would be approximately 3.77% and 3.74% for the three and six months ended June 30, 2026, respectively, compared to 4.87% and 4.74% for the same periods of 2025.
State Street Corporation | 15
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Changes in the components of interest-earning assets and interest-bearing liabilities are discussed in more detail below. Additional information about the components of interest income and interest expense is provided in Note 14 to the consolidated financial statements in this Form 10-Q.
Average total interest-earning assets were $305.41 billion and $299.29 billion in the three and six months ended June 30, 2026, respectively, compared to $304.65 billion and $297.12 billion in the same periods of 2025. The increase is primarily due to higher levels of client deposits, partially offset by lower wholesale funding.
Interest-bearing deposits with banks averaged $103.68 billion and $102.03 billion in the three and six months ended June 30, 2026, respectively, compared to $98.32 billion and $95.57 billion in the same periods of 2025. These deposits primarily reflect our maintenance of cash balances at the Federal Reserve, the ECB and other non-U.S. central banks. The higher levels of average cash balances reflect higher levels of client deposits.
Securities purchased under resale agreements is primarily composed of our FICC repo business and averaged $8.13 billion and $8.09 billion in the three and six months ended June 30, 2026, respectively, largely unchanged compared to $9.17 billion and $8.45 billion in the same periods of 2025. As a member of FICC, we may net securities sold under repurchase agreements against those purchased under resale agreements with counterparties that are also members of the clearing organization, when specific netting criteria are met. The impact of balance sheet netting declined to $215.77 billion and $222.03 billion on average in the three and six months ended June 30, 2026, respectively, compared to $252.79 billion and $242.69 billion in the same periods of 2025, due to lower gross FICC repo volumes.
Average investment securities decreased to $108.63 billion and $107.90 billion in the three and six months ended June 30, 2026, respectively, from $112.08 billion and $111.08 billion in the same periods of 2025, primarily driven by a decline in U.S. Treasuries, partially offset by growth in foreign sovereign bonds.
Average loans increased to $50.08 billion and $49.34 billion in the three and six months ended June 30, 2026, respectively, compared to $45.28 billion and $44.51 billion in the same periods of 2025. Average loans excluding overdrafts averaged $45.71 billion and $45.22 billion in the three and six months ended June 30, 2026, respectively, compared to $41.89 billion and $41.26 billion in the same periods of 2025, reflecting strategic loan growth in support of our core client franchise. The increases are primarily due to growth in subscription finance, CLOs and fund finance loans, partially offset by lower commercial and commercial real estate loans. Additional information is provided under "Loans" in "Financial Condition" in the Management's Discussion and Analysis and in Note 4 to the consolidated financial statements in this Form 10-Q.
Average other interest-earning assets, largely associated with our prime services business, decreased to $34.04 billion and $31.09 billion in the three and six months ended June 30, 2026, respectively, from $39.01 billion and $36.75 billion in the same periods of 2025, primarily driven by a decrease in the level of cash collateral posted. Other interest-earning assets primarily reflect prime services assets where cash has been posted to borrow securities from lenders, which are then lent by us, as principal, to borrowers. This cash includes both cash from borrowers and cash utilized from our balance sheet, and is presented on a net basis on the balance sheet where we have enforceable netting agreements. Non-interest-earning assets also include a portion of our prime services assets where we act as lender in a securities lending transaction and we receive securities as collateral that we are permitted to transfer or re-pledge. Combined with our prime services liabilities, revenue from these activities generates securities finance fee revenue as well as net interest income.
Average total interest-bearing deposits increased to $240.84 billion and $234.75 billion in the three and six months ended June 30, 2026, respectively, from $236.58 billion and $227.41 billion in the same periods of 2025. The increase was driven by our active client engagement to support our structural liquidity position and to support business growth on the asset side of the balance sheet. In addition, deposit growth was supported by market and geopolitical volatility and increases in assets under custody. Future interest-bearing deposit levels will be influenced by the underlying investment servicing business, client behavior, the mix of interest-bearing and non-interest-bearing deposits and market conditions, including the general levels of U.S. and non-U.S. interest rates.
Average other short-term borrowings decreased to $4.18 billion and $4.02 billion in the three and six
State Street Corporation | 16
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
months ended June 30, 2026, respectively, from $10.18 billion and $11.01 billion in the same periods of 2025, due to decreased wholesale funding. The decrease is driven by our response to higher sustained client deposit levels.
Average long-term debt was $25.91 billion and $25.59 billion in the three and six months ended June 30, 2026, respectively, compared to $25.86 billion and $24.81 billion in the same periods of 2025, supporting our businesses and structural liquidity position. These amounts reflect issuances, redemptions and maturities of senior and subordinated debt during the respective periods.
Average other interest-bearing liabilities, largely associated with our prime services business, were $5.38 billion and $4.85 billion in the three and six months ended June 30, 2026, respectively, compared to $3.54 billion and $4.50 billion in the same periods of 2025. The increase is primarily driven by cash received from our custody clients, which is presented on a net basis where we have enforceable netting agreements. Non-interest-bearing liabilities also include a portion of our prime services liabilities where client provided non-cash collateral has been received and we have rehypothecation rights. Securities received as collateral from our custody clients where we have no rehypothecation rights are used as a credit mitigant only and remain off balance sheet.
Based on market conditions and other factors, including regulatory standards, we continue to reinvest the majority of the proceeds from pay-downs and maturities of investment securities in highly-rated U.S. and non-U.S. securities, such as federal agency MBS, sovereign debt securities and U.S. Treasury and agency securities. The pace at which we reinvest, and the types of investment securities purchased, will depend on the impact of market conditions, the implementation of regulatory standards, including interpretation of those standards and other factors over time. We expect these factors and the levels of global interest rates to impact our reinvestment program and future levels of NII and NIM.
Provision for Credit Losses
There was no provision for credit losses in the three months ended June 30, 2026, compared to $30 million in the same period of 2025, primarily reflecting a reserve release associated with sales and repayments of commercial loans, largely offset by higher provisions for certain commercial real estate loans. Provision for credit losses was $16 million in the six months ended June 30, 2026, compared to $42 million in the same period of 2025, primarily reflecting provisions for certain commercial and commercial real estate loans and the evolving
macroeconomic environment, partially offset by a reserve release associated with sales and repayments of commercial loans.
Additional information is provided under “Loans” in "Financial Condition" in this Management's Discussion and Analysis and in Note 4 to the consolidated financial statements in this Form 10-Q.
Expenses
Table 11: Expenses, provides the breakout of expenses for the three and six months ended June 30, 2026, compared to the same periods of 2025. Total expenses increased 5% and 10% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily reflecting higher revenue-related costs and continued strategic investments. In the three-month period, these increases were partially offset by the absence of the prior-year notable items.
TABLE 11: EXPENSES
Three Months Ended June 30, % Change
(Dollars in millions) 2026 2025
Compensation and employee benefits $ 1,292 $ 1,280 1 %
Information systems and communications 589 523 13
Transaction processing services 280 260 8
Occupancy 96 105 (9)
Other:
Professional services 124 107 16
Other 278 254 9
Total other 402 361 11
Total expenses $ 2,659 $ 2,529 5
Number of employees at quarter-end 50,596 52,014 (3)
Six Months Ended June 30, % Change
(Dollars in millions) 2026 2025
Compensation and employee benefits $ 2,733 $ 2,542 8 %
Information systems and communications 1,226 1,020 20
Transaction processing services 563 518 9
Occupancy 197 208 (5)
Other:
Professional services 228 217 5
Other 523 474 10
Total other 751 691 9
Total expenses $ 5,470 $ 4,979 10
There were no notable items in the second quarter of 2026.
Notable items reflected in expenses in the second quarter of 2025 included:
•Repositioning charge of $100 million related to compensation and employee benefits primarily from workforce rationalization; and
•Client rescoping of $18 million was reflected in information systems and communications expenses.
State Street Corporation | 17
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Compensation and employee benefits expenses increased 1% and 8% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily due to higher performance-based incentive compensation, merit increases and employee benefit costs, partially offset by productivity savings, including lower headcount. In the three-month period, these increases were also partially offset by the absence of a prior-year notable item.
Total headcount decreased 3% as of June 30, 2026, compared to June 30, 2025, primarily driven by our continued efforts to simplify our operations through organizational design and technology and automation efforts.
Information systems and communications expenses increased 13% and 20% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, largely driven by volume-related costs, infrastructure investments and technology modernization and resiliency.
Transaction processing services expenses increased 8% and 9% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily due to higher revenue-related costs.
Occupancy expenses decreased 9% and 5% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily driven by real estate footprint optimization.
Other expenses increased 11% and 9% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily reflecting higher fund marketing costs and professional fees.
Repositioning Charges
In the first quarter of 2026, we recorded a repositioning charge of $89 million, including $79 million of compensation and employee benefits expenses related to workforce rationalization, $1 million of occupancy costs associated with real estate footprint optimization, and $9 million associated with operating model changes reflected in information systems and communications.
The following table presents aggregate activity for repositioning charges for the periods indicated:
TABLE 12: REPOSITIONING CHARGES
(In millions) Employee Related Costs Other Total
Accrual Balance at December 31, 2024 $ 96 $ — $ 96
Payments and other adjustments (14) — (14)
Accrual Balance at March 31, 2025 82 — 82
Accruals for repositioning charges 100 — 100
Payments and other adjustments (19) — (19)
Accrual Balance at June 30, 2025 $ 163 $ — $ 163
Accrual Balance at December 31, 2025 $ 208 $ — $ 208
Accruals for repositioning charges 79 10 89
Payments and other adjustments (30) (10) (40)
Accrual Balance at March 31, 2026 257 — 257
Payments and other adjustments (39) — (39)
Accrual Balance at June 30, 2026 $ 218 $ — $ 218
Income Tax Expense
Income tax expense was $305 million and $510 million in the three and six months ended June 30, 2026, respectively, compared to $196 million and $374 million in the same periods of 2025. Our effective tax rate of 21.9% and 21.6% in the three and six months ended June 30, 2026, respectively, decreased from 22.0% and 21.9% in the same periods of 2025. The decrease for the six-month period was primarily due to an increase in benefits attributable to stock-based compensation in 2026.
State Street Corporation | 18
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LINE OF BUSINESS INFORMATION
Our operations are organized into two lines of business: Investment Servicing and Investment Management, which are defined based on products and services provided. The results of operations for these lines of business are not necessarily comparable with those of other companies, including companies in the financial services industry.
Our Investment Servicing line of business provides a broad range of investment servicing and market and financing solutions to institutional clients, including mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, wealth managers, investment managers, foundations and endowments worldwide.
Through State Street Investment Services and State Street Markets, we offer a full range of back-, middle- and front-office solutions, including custody, accounting and fund administration services for traditional and alternative assets, as well as multi-asset class investments; record keeping, client reporting and investment book of record, transaction management, loans, cash, derivatives and collateral services; investor services operations outsourcing; performance, risk and compliance analytics; financial data management to support institutional investors; foreign exchange, brokerage and other trading services; securities finance, including prime services products; and deposit and short-term investment facilities.
Together with our back- and middle-office services, CRD’s front- and middle-office technology offerings form the foundation of State Street Alpha. Our State Street Alpha platform combines portfolio management, trading and execution, analytics and compliance tools, along with advanced data aggregation and integration with other industry platforms and providers.
Our Investment Management line of business provides a comprehensive range of investment management solutions and products for our clients through State Street Investment Management. Our investment management strategies and capabilities span across index strategies and solutions; active, alternatives and other solutions; and cash, delivered through products such as ETFs, custom indexed, actively managed funds and mandates.
For additional information about our two lines of business, as well as the revenues, expenses and capital allocation methodologies associated with them, refer to "Lines of Business" included under Item 1, Business, in our 2025 Form 10-K and Note 17 of the condensed notes to the consolidated financial statements in this Form 10-Q.
Investment Servicing
TABLE 13: INVESTMENT SERVICING LINE OF BUSINESS RESULTS
(Dollars in millions, except where otherwise noted) Three Months Ended June 30, % Change
2026 2025
Servicing fees $ 1,468 $ 1,304 13 %
Foreign exchange trading services 491 390 26
Securities finance 140 119 18
Software services 166 193 (14)
Other fee revenue 117 112 4
Total fee revenue 2,382 2,118 12
Net interest income 860 726 18
Total revenue 3,242 2,844 14
Provision for credit losses — 30 nm
Total expenses 2,162 1,995 8
Income before income tax expense $ 1,080 $ 819 32
Pre-tax margin 33.3 % 28.8 % 450 bps
Average assets (in billions) $ 362.8 $ 350.4 3.5
(Dollars in millions, except where otherwise noted) Six Months Ended June 30, % Change
2026 2025
Servicing fees $ 2,877 $ 2,579 12 %
Foreign exchange trading services 923 727 27
Securities finance 250 227 10
Software services 335 351 (5)
Other fee revenue 219 213 3
Total fee revenue 4,604 4,097 12
Net interest income 1,692 1,435 18
Total other income 1 — nm
Total revenue 6,297 5,532 14
Provision for credit losses 16 42 (62)
Total expenses 4,351 4,014 8
Income before income tax expense $ 1,930 $ 1,476 31
Pre-tax margin 30.6 % 26.7 % 390 bps
Average assets (in billions) $ 355.4 $ 342.1 3.9
nm Denotes not meaningful
Servicing Fees
Servicing fees, as presented in Table 13: Investment Servicing Line of Business Results, increased 13% and 12% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily reflecting higher average market levels, client activity and asset flows and net new business.
For additional information about servicing fees and the key drivers of our servicing fee revenue, refer to "Fee Revenue" in "Consolidated Results of Operations" included in this Management's Discussion and Analysis.
State Street Corporation | 19
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Expenses
Total expenses for Investment Servicing increased 8% in both the three and six months ended June 30, 2026, compared to the same periods of 2025, primarily reflecting higher revenue-related costs and continued strategic investments. Additional information about expenses is provided under "Expenses" in "Consolidated Results of Operations" included in this Management's Discussion and Analysis.
Investment Management
TABLE 14: INVESTMENT MANAGEMENT LINE OF BUSINESS RESULTS
(Dollars in millions, except where otherwise noted) Three Months Ended June 30, % Change
2026 2025
Management fees(1) $ 772 $ 600 29 %
Foreign exchange trading services 3 — nm
Securities finance 10 7 43
Other fee revenue(2) 21 15 40
Total fee revenue 806 622 30
Net interest income — 3 nm
Total revenue 806 625 29
Total expenses 497 417 19
Income before income tax expense $ 309 $ 208 49
Pre-tax margin 38.3 % 33.3 % 500 bps
Average assets (in billions) $ 4.0 $ 3.4 17.6
(Dollars in millions, except where otherwise noted) Six Months Ended June 30, % Change
2026 2025
Management fees(1) $ 1,496 $ 1,187 26 %
Foreign exchange trading services 6 — nm
Securities finance 16 13 23
Other fee revenue(2) 26 13 nm
Total fee revenue 1,544 1,213 27
Net interest income 3 8 (63)
Total revenue 1,547 1,221 27
Total expenses 989 848 17
Income before income tax expense $ 558 $ 373 50
Pre-tax margin 36.1 % 30.5 % 560 bps
Average assets (in billions) $ 3.9 $ 3.4 14.7
(1) Includes revenues from SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust AUM where we are not the investment manager but act as the marketing agent.
(2) Includes other revenue items that are primarily driven by equity market movements.
nm Denotes not meaningful
Investment Management total revenue increased 29% and 27% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025.
Management Fees
Management fees increased 29% and 26% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily due to higher average market levels and net inflows.
For additional information about the key drivers of our management fees revenue, refer to "Fee
Revenue" in "Consolidated Results of Operations" included in this Management's Discussion and Analysis.
Expenses
Total expenses for Investment Management increased 19% and 17% in the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily due to higher revenue-related expenses.
Additional information about expenses is provided under "Expenses" in "Consolidated Results of Operations" included in this Management's Discussion and Analysis.
For additional information about our two lines of business, as well as the revenues, expenses and capital allocation methodologies associated with them, refer to Note 17 to the consolidated financial statements in this Form 10-Q.
FINANCIAL CONDITION
The structure of our consolidated statement of condition is primarily driven by the liabilities generated by our Investment Servicing and Investment Management lines of business. Our clients' needs and our operating objectives determine the volume, mix and currency denomination of our assets and liabilities. As our clients execute their worldwide cash management and investment activities, they utilize deposits and short-term investments that constitute the majority of our liabilities. These liabilities are generally in the form of interest-bearing transaction account deposits, which are denominated in a variety of currencies; and non-interest-bearing demand deposits. Our interest-earning assets consist primarily of securities held in our AFS or HTM portfolios, loans and short-duration financial instruments, such as interest-bearing deposits with banks and securities purchased under resale agreements.
Additional information on our financial condition is presented in Table 10: Average Balances and Interest Rates - Fully Taxable-Equivalent Basis. We believe the average statement of condition is a better measure of the balance sheet trends as period-end balances can be impacted by the timing of client activities including deposits and withdrawals.
State Street Corporation | 20
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Investment Securities
TABLE 15: CARRYING VALUES OF INVESTMENT SECURITIES
(In millions) June 30, 2026 December 31, 2025
Available-for-sale:
U.S. Treasury and federal agencies:
Direct obligations $ 24,457 $ 23,260
Mortgage-backed securities(1) 16,957 15,586
Total U.S. Treasury and federal agencies 41,414 38,846
Non-U.S. debt securities:
Mortgage-backed securities 2,691 2,578
Asset-backed securities(2) 2,594 2,085
Non-U.S. sovereign, supranational and non-U.S. agency 19,639 17,731
Other(3) 2,762 2,826
Total non-U.S. debt securities 27,686 25,220
Asset-backed securities:
Student loans(4) 36 64
Collateralized loan obligations(5) 3,045 2,905
Non-agency CMBS and RMBS(6) — 3
Other 91 91
Total asset-backed securities 3,172 3,063
State and political subdivisions 25 25
Total available-for-sale securities(7) $ 72,297 $ 67,154
Held-to-maturity:
U.S. Treasury and federal agencies:
Direct obligations $ 275 $ 573
Mortgage-backed securities(8) 31,410 32,876
Total U.S. Treasury and federal agencies 31,685 33,449
Non-U.S. debt securities:
Non-U.S. sovereign, supranational and non-U.S. agency 1,579 2,461
Total non-U.S. debt securities 1,579 2,461
Asset-backed securities:
Student loans(4) 2,026 2,261
Total asset-backed securities 2,026 2,261
Total held-to-maturity securities(7) $ 35,290 $ 38,171
(1) As of June 30, 2026 and December 31, 2025, the total fair value included $2.33 billion and $2.81 billion, respectively, of agency CMBS and $14.62 billion and $12.78 billion, respectively, of agency MBS.
(2) As of June 30, 2026 and December 31, 2025, the fair value includes non-U.S. CLOs of $0.97 billion and $0.77 billion, respectively.
(3) As of June 30, 2026 and December 31, 2025, the fair value includes non-U.S. corporate bonds of $2.61 billion and $2.40 billion, respectively.
(4) Primarily comprises securities guaranteed by the federal government with respect to at least 97% of defaulted principal and accrued interest on the underlying loans.
(5) Excludes collateralized loan obligations in loan form. Refer to Note 4 to the consolidated financial statements in this Form 10-Q for additional information.
(6) Consists entirely of non-agency RMBS as of December 31, 2025.
(7) An immaterial amount of accrued interest related to HTM and AFS investment securities was excluded from the amortized cost basis for the periods ended June 30, 2026 and December 31, 2025.
(8) As of June 30, 2026 and December 31, 2025, the total amortized cost included $5.04 billion and $5.08 billion of agency CMBS, respectively.
Additional information about our investment securities portfolio is provided in Note 3 to the consolidated financial statements in this Form 10-Q.
We manage our investment securities portfolio by taking into consideration the interest rate and duration characteristics of our client liabilities along with the context of the overall structure of our consolidated statement of condition, and in consideration of the global interest rate environment. We consider a well-diversified, high-credit quality investment securities portfolio to be an important element in the management of our consolidated statement of condition.
Average duration of our investment securities portfolio, including the impact of hedges, was 2.0 years and 2.1 years as of June 30, 2026 and December 31, 2025, respectively.
Approximately 95% and 97% of the carrying value of the portfolio was rated “AA” or higher at June 30, 2026 and December 31, 2025, respectively, as follows:
TABLE 16: INVESTMENT PORTFOLIO BY EXTERNAL CREDIT RATING
June 30, 2026 December 31, 2025
AAA(1) 86 % 88 %
AA 9 9
A 4 3
Below BBB 1 —
100 % 100 %
(1) Includes U.S. Treasury and federal agency securities that are split-rated, “AAA” by Moody’s Investors Service and “AA+” by Standard & Poor’s and also includes Agency MBS securities which are not explicitly rated, but which have an explicit or assumed guarantee from the U.S. government.
The following table presents the diversification of the investment portfolio with respect to asset class composition as of both June 30, 2026 and December 31, 2025.
TABLE 17: INVESTMENT PORTFOLIO BY ASSET CLASS
June 30, 2026 December 31, 2025
U.S. Agency Mortgage-backed securities 38 % 39 %
U.S. Treasuries 23 23
Non-U.S. sovereign, supranational and non-U.S. agency 20 19
Asset-backed securities 10 9
Other credit 9 10
100 % 100 %
State Street Corporation | 21
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table presents the net unamortized purchase premiums or discounts and net premium amortization or discount accretion related to the investment portfolio for the periods indicated:
TABLE 18: INVESTMENT SECURITIES NET PREMIUM AMORTIZATION
Six Months Ended June 30,
2026 2025
(Dollars in millions) MBS Non-MBS Total(1) MBS Non- MBS Total(1)
Unamortized purchase premiums and (discounts) at period end $ 280 $ (328) $ (48) $ 333 $ (498) $ (165)
Net premium amortization (discount accretion) 27 (102) (75) 31 (273) (242)
(1) Totals exclude premiums or discounts created from the transfer of securities from AFS to HTM.
Non-U.S. Debt Securities
Approximately 27% and 26% of the aggregate carrying value of our investment securities portfolio was non-U.S. debt securities as of June 30, 2026 and December 31, 2025, respectively.
TABLE 19: NON-U.S. DEBT SECURITIES(1)
(In millions) June 30, 2026 December 31, 2025
Available-for-sale:
United Kingdom $ 3,062 $ 2,310
Canada 2,880 3,321
Australia 1,940 1,756
Germany 1,730 1,541
France 1,593 1,965
Netherlands 1,077 645
Spain 985 677
Japan 930 146
Austria 863 864
Finland 699 639
Ireland 369 16
Italy 343 350
Sweden 307 271
Korea 303 221
Hong Kong 301 264
Other(2) 10,304 10,234
Total $ 27,686 $ 25,220
Held-to-maturity:
Belgium $ 249 $ 290
Germany 226 230
France 140 155
Finland 140 143
Canada 116 117
Other(2) 708 1,526
Total $ 1,579 $ 2,461
(1) Geography is determined primarily based on the domicile of collateral or issuer.
(2) As of June 30, 2026, other non-U.S. investments include $9.49 billion of supranational bonds in AFS securities and $0.71 billion of supranational bonds in HTM securities.
Approximately 83% and 88% of the aggregate carrying value of these non-U.S. debt securities was
rated “AA” or higher as of June 30, 2026 and December 31, 2025, respectively. The majority of these securities comprised senior positions within the security structures; these positions have a level of protection provided through subordination and other forms of credit protection. As of June 30, 2026 and December 31, 2025, approximately 34% and 32%, respectively, of the aggregate carrying value of these non-U.S. debt securities was floating-rate.
As of June 30, 2026, our non-U.S. debt securities had an average market-to-book ratio of 99.9%, and an aggregate pre-tax net unrealized loss of $16 million, consisting of gross unrealized gains of $72 million and gross unrealized losses of $88 million. These unrealized amounts included:
•a pre-tax net unrealized gain of $9 million, consisting of gross unrealized gains of $71 million and gross unrealized losses of $62 million, associated with non-U.S. AFS debt securities; and
•a pre-tax net unrealized loss of $25 million, consisting of gross unrealized gains of $1 million and gross unrealized losses of $26 million, associated with non-U.S. HTM debt securities.
As of June 30, 2026, the underlying collateral for non-U.S. MBS and ABS primarily included mortgages in Australia, the U.K., the Netherlands and Italy. The securities listed under “Canada” were composed of Canadian government securities, corporate debt, covered bonds and non-U.S. agency securities. The securities listed under “France” were composed of sovereign bonds, corporate debt, covered bonds, ABS and non-U.S. agency securities. The securities listed under “Germany” were composed of non-U.S. agency securities, government bonds, ABS and corporate debt.
State Street Corporation | 22
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Contractual Maturities
TABLE 20: CONTRACTUAL MATURITIES AND YIELDS(1)
As of June 30, 2026 Under 1 Year 1 to 5 Years 6 to 10 Years Over 10 Years Total
(Dollars in millions) Amount Yield Amount Yield Amount Yield Amount Yield Amount
Available-for-sale(2):
U.S. Treasury and federal agencies:
Direct obligations $ 3,521 3.67 % $ 20,910 3.93 % $ 26 1.98 % $ — — % $ 24,457
Mortgage-backed securities 66 4.13 1,751 4.02 510 3.86 14,630 4.89 16,957
Total U.S. Treasury and federal agencies 3,587 22,661 536 14,630 41,414
Non-U.S. debt securities:
Mortgage-backed securities 166 4.09 372 3.88 14 5.34 2,139 4.21 2,691
Asset-backed securities 22 2.83 323 3.10 1,326 3.36 923 3.17 2,594
Non-U.S. sovereign, supranational and non-U.S. agency 3,464 2.77 15,777 3.48 398 4.10 — — 19,639
Other 760 4.48 1,902 4.62 100 4.61 — — 2,762
Total non-U.S. debt securities 4,412 18,374 1,838 3,062 27,686
Asset-backed securities:
Student loans — — — — — — 36 4.20 36
Collateralized loan obligations 102 4.92 — — 1,231 4.80 1,712 4.90 3,045
Other 91 4.51 — — — — — — 91
Total asset-backed securities 193 — 1,231 1,748 3,172
State and political subdivisions(3) 25 5.02 — — — — — — 25
Total $ 8,217 $ 41,035 $ 3,605 $ 19,440 $ 72,297
Held-to-maturity(2):
U.S. Treasury and federal agencies:
Direct obligations $ 244 0.67 % $ 25 1.78 % $ — — % $ 6 4.06 % $ 275
Mortgage-backed securities 279 2.56 4,102 1.59 1,601 1.69 25,428 2.36 31,410
Total U.S. Treasury and federal agencies 523 4,127 1,601 25,434 31,685
Non-U.S. debt securities:
Non-U.S. sovereign, supranational and non-U.S. agency 485 1.26 1,051 1.10 43 2.97 — — 1,579
Total non-U.S. debt securities 485 1,051 43 — 1,579
Asset-backed securities:
Student loans 68 4.25 483 4.69 358 4.67 1,117 4.24 2,026
Total asset-backed securities 68 483 358 1,117 2,026
Total $ 1,076 $ 5,661 $ 2,002 $ 26,551 $ 35,290
(1) Weighted-average yields are calculated based on the effective yield of each security owned at the end of the period, excluding the effect of related hedges, weighted based on the face value of each security.
(2) The maturities of MBS and ABS are based on expected principal payments.
(3) Yields were calculated on a FTE basis, using applicable statutory tax rates (21.0% as of June 30, 2026).
State Street Corporation | 23
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Loans
TABLE 21: LOANS
(In millions) June 30, 2026 December 31, 2025
Subscription finance $ 15,718 $ 13,138
Fund finance(1) 11,381 10,916
Collateralized loan obligations(2) 13,590 12,809
Commercial 1,599 2,851
Commercial real estate 2,291 2,471
Overdrafts 5,244 1,962
Other(3) 2,239 2,635
Total loans(4)(5) 52,062 46,782
Allowance for credit losses (161) (193)
Loans, net of allowance for credit losses $ 51,901 $ 46,589
(1) Fund finance loans primarily include loans to real money funds and business development companies of $8.93 billion and $1.53 billion, respectively, as of June 30, 2026, compared to $8.30 billion and $1.75 billion, respectively, as of December 31, 2025.
(2) CLOs include broadly syndicated and middle market CLO loans of $10.69 billion and $2.90 billion, respectively, as of June 30, 2026, compared to $10.30 billion and $2.51 billion, respectively, as of December 31, 2025.
(3) Includes securities finance loans and loans to municipalities of $2.15 billion and $0.09 billion, respectively, as of June 30, 2026, compared to $2.52 billion and $0.12 billion, respectively, as of December 31, 2025.
(4) Excluding overdrafts, floating rate loans and fixed rate loans totaled $44.49 billion and $2.33 billion, respectively, as of June 30, 2026. We have entered into interest rate swap agreements to hedge the forecasted cash flows associated with EURIBOR indexed floating-rate loans. Refer to Note 10 of the notes to consolidated financial statements in our 2025 Form 10-K for additional details.
(5) Non-U.S. loans totaled $21.82 billion and $18.78 billion as of June 30, 2026 and December 31, 2025, respectively.
We segregate our loans into two segments: commercial and financial, and commercial real estate. We further classify commercial and financial loans as subscription finance, fund finance loans, CLOs, commercial, overdrafts and other loans.
Total loans as of June 30, 2026 increased $5.28 billion, compared to December 31, 2025, primarily reflecting higher overdrafts, subscription finance loans and CLOs, partially offset by a decline in commercial loans.
As of June 30, 2026, the commercial real estate portfolio consists of, by asset class, approximately 43% multifamily residential, 39% office buildings and 18% other asset classes, and the portfolio does not have any construction exposure. Additionally, as of June 30, 2026, the commercial real estate loans are on properties located in multiple markets across the United States, with no significant concentrations (New York Metro is the largest concentration at approximately 17%). Despite not having a significant concentration in any one market, a material decline in real estate markets or economic conditions could negatively impact the value or performance of one or more individual properties, which could adversely impact timely loan repayment, which may result in additional provision for credit losses for certain commercial real estate loans. Were conditions, or our evaluation of conditions, in those or other markets to worsen during the remainder of 2026 or subsequent periods, we may increase our allowance for credit
losses during those periods.
For additional information about our loan segments, as well as their underlying collateral, refer to "Loans" included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K, as well as Note 4 to the consolidated financial statements in this Form 10-Q.
Allowance for Credit Losses
TABLE 22: ALLOWANCE FOR CREDIT LOSSES
Six Months Ended June 30,
(In millions) 2026 2025
Allowance for credit losses:
Beginning balance $ 203 $ 183
Provision for credit losses (funded commitments) 12 38
Provisions for credit losses (unfunded commitments) 4 3
Provisions for credit losses (other) — 1
Charge-offs (44) (33)
Ending balance $ 175 $ 192
In the six months ended June 30, 2026, the allowance for credit losses decreased $28 million, compared to December 31, 2025, primarily reflecting charge-offs of $44 million, largely related to the sale of certain commercial loans, partially offset by a provision for credit losses of $16 million. The provision primarily reflected provisions for certain commercial and commercial real estate loans and the evolving macroeconomic environment, partially offset by reserve releases associated with sales and repayments of commercial loans.
As of June 30, 2026, approximately $132 million of our allowance for credit losses was related to commercial real estate loans compared to $120 million as of December 31, 2025. In addition, $19 million and $69 million as of June 30, 2026 and December 31, 2025, respectively, was related to commercial loans. The remaining $24 million and $14 million as of June 30, 2026 and December 31, 2025, respectively, was related to other loans, off-balance sheet commitments, and other financial assets held at amortized cost, including investment securities. As of June 30, 2026 and December 31, 2025, the allowance for credit losses on loans represented 0.3% and 0.4% of total loans, respectively.
As our view on current and future economic conditions changes, our allowance for credit losses related to these loans may be impacted through a change to the provisions for credit losses, reflecting factors such as credit migration within our loan portfolio, as well as changes in management's economic outlook.
Additional information with respect to the allowance for credit losses is provided in Note 4 to the consolidated financial statements in this Form 10-Q.
State Street Corporation | 24
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Risk Management
In the normal course of our business activities, we are exposed to a variety of risks, some that are inherent in the financial services industry, and others that are more specific to our business activities. Our risk management framework focuses on material risks, which include the following:
•credit and counterparty risk;
•liquidity risk, including funding and management;
•operational risk;
•information technology risk and cybersecurity;
•resiliency risk;
•market risk associated with our trading activities;
•market risk associated with our non-trading activities, referred to as asset and liability management, consisting primarily of interest rate risk;
•model risk;
•strategic risk; and
•reputational, compliance, fiduciary and business conduct risk.
Many of these risks, as well as certain factors underlying each of them, could affect our businesses and our consolidated financial statements, and are discussed in detail in "Risk Factors" included under Item 1A, Risk Factors, in our 2025 Form 10-K.
For additional information about our risk management, including our risk appetite framework and risk governance committee structure, refer to "Risk Management" included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
Credit and Counterparty Risk Management
We define credit risk as the risk of financial loss if a counterparty, borrower or obligor, is either unable or unwilling to repay borrowings or settle contractual transactions in accordance with underlying terms. Credit risk may occur in our business activities through traditional lending such as loans and standby letters of credit; in our investment securities portfolio; in direct or indemnified agency trading activities, such as foreign exchange, principal securities lending and indemnified agency securities lending; in our treasury operations through deposit placements and other cash balances held with central banks or private sector institutions; and in our custody business through overdrafts. Credit risk is also incurred in our day-to-day settlement operations.
Allowance for Credit Losses
We record an allowance for credit losses related to certain on-balance sheet credit exposures, including our financial assets held at amortized cost, as well as certain off-balance sheet credit exposures, including unfunded commitments and letters of credit. Review and evaluation of the adequacy of the allowance for credit losses is ongoing throughout the year, but occurs at least quarterly, and is based, among other factors, on our evaluation of the level of risk in the portfolio and the estimated effects of our forecasts on our counterparties. We utilize multiple economic scenarios, consisting of a baseline, upside and downside scenarios, to develop our forecast of expected losses.
In the second quarter of 2026, the allowance reflected a reserve release associated with the sales and repayments of commercial loans, which were largely offset by higher provisions for certain commercial real estate loans. The allowance is inherently subject to uncertainties, including those inherent in our model and economic assumptions, and management may use qualitative adjustments. If future data and forecasts deviate relative to the forecasts utilized to determine our allowance for credit losses as of June 30, 2026, or if credit risk migration is higher or lower than forecasted for reasons independent of the economic forecast, our allowance for credit losses will also change.
Additional information about the allowance for credit losses is provided in Notes 3 and 4 to the consolidated financial statements in this Form 10-Q.
For additional information about our credit and counterparty risk management framework, including our core policies and principles, structure and organization, credit ratings, risk parameter estimates, credit risk mitigation, credit limits, reporting, monitoring and controls, refer to "Credit and Counterparty Risk Management" included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
Liquidity Risk Management
Our liquidity framework contemplates areas of potential risk to our liquidity based on our activities, size and other appropriate risk-related factors. In managing liquidity risk, we employ limits, maintain established metrics and early warning indicators and perform routine liquidity stress testing to identify potential liquidity needs. This process involves the evaluation of a combination of internal and external scenarios which assist us in measuring our liquidity position and in identifying potential increases in cash needs or decreases in available sources of cash, as well as the potential impairment of our ability to access the global capital markets.
State Street Corporation | 25
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
We manage our liquidity on a global, consolidated basis as well as on a stand-alone basis at the Parent Company and at certain branches and subsidiaries of State Street Bank. State Street Bank generally derives its liquidity from its customer deposit base, capital markets, wholesale funding and funding sources limited to banks, such as the federal funds market and the Federal Reserve's discount window. The Parent Company is managed to a more conservative liquidity profile, reflecting narrower market access. Additionally, the Parent Company typically holds, or has direct access to, primarily through a support agreement with SSIF, a direct subsidiary of the Parent Company, enough cash and equivalents intended to meet its current debt maturities and other cash needs, as well as those projected over the next 12-month period. Refer to our SPOE Strategy as discussed in “Recovery and Resolution Planning" included under Item 1, Business, in our 2025 Form 10-K. Absent financial distress at the Parent Company, the liquid assets available at SSIF continue to be available to the Parent Company. As of June 30, 2026, we and State Street Bank had approximately $3.95 billion of senior notes outstanding that will mature in the next 12 months.
As a G-SIB, our liquidity risk management activities are subject to heightened and evolving regulatory requirements, including interpretations of those requirements, under specific U.S. and international regulations and also resulting from published and unpublished guidance, supervisory activities, such as stress tests, resolution planning, examinations and other regulatory interactions. Satisfaction of these requirements could, in some cases, result in changes in the composition of our investment portfolio, reduced NII or NIM, a reduction in the level of certain business activities or modifications to the way in which we deliver our products and services. If we fail to meet regulatory requirements to the satisfaction of our regulators, we could receive negative regulatory stress test results, incur a resolution plan deficiency or determination of a non-credible resolution plan or otherwise receive an adverse regulatory finding. Failure to satisfy these regulatory requirements could have a materially adverse effect on our business, financial condition or results of operations.
The U.S. LCR rule (“LCR rule”) requires certain large U.S. banking organizations, such as us and our bank subsidiaries, to maintain an amount of HQLA that is sufficient to meet their estimated total net cash outflows over a prospective 30 calendar-day period of significant stress. The LCR is calculated by dividing HQLA by estimated net outflows over the stress period determined by standardized stress outflow and inflow rate assumptions prescribed in the LCR rule.
For the quarters ended June 30, 2026 and December 31, 2025, our average daily LCR was 107% and 106%, respectively. The average HQLA, post-prescribed haircuts was $111.55 billion for the quarter ended June 30, 2026 compared to $100.34 billion for the quarter ended December 31, 2025, primarily due to an increase in client deposits relative to the prior period.
In addition, the U.S. NSFR Disclosure Rule requires certain large U.S. banking organizations, such as us and our bank subsidiaries, to maintain minimum amounts of available stable funding to support their required stable funding over a one-year time horizon. The NSFR is calculated by dividing the amount of available stable funding by the amount of required stable funding as prescribed by the rule. The minimum NSFR requirement is 100%. As of June 30, 2026, our NSFR was above the 100% minimum NSFR requirement.
State Street Bank is also subject to minimum LCR and NSFR requirements. As of June 30, 2026, both the LCR and NSFR for State Street Bank exceeded the minimum requirements.
For additional information on our liquidity risk management, as well as liquidity metrics, refer to "Liquidity Risk Management" included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K. For additional information on our liquidity ratios, including LCR and NSFR, refer to "Liquidity Coverage Ratio and Net Stable Funding Ratio" included under Item 1, Business, in our 2025 Form 10-K.
Asset Liquidity
Central to the management of our liquidity is asset liquidity, which primarily consists of cash and securities.
We maintained average cash balances in excess of regulatory requirements governing deposits with the Federal Reserve, the ECB and other non-U.S. central banks of approximately $99.45 billion for the quarter ended June 30, 2026, compared to $91.35 billion for the quarter ended December 31, 2025. The higher levels of average cash balances with central banks is a result of an increase in client deposits.
Securities in our asset liquidity include securities pledged without corresponding advances from the Federal Reserve Bank of Boston, the FHLB, and other non-U.S. central banks. State Street Bank is a member of the FHLB. These arrangements allow for advances of liquidity in varying terms against high-quality collateral, which helps facilitate asset and liability management.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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Access to primary, intraday and contingent liquidity provided by these utilities is an important source of contingent liquidity with utilization subject to underlying conditions.
In addition to the investment securities included in our asset liquidity, we have other unencumbered investment securities and certain loans that we can pledge as collateral to access these various facilities. These additional assets are available sources of liquidity, although not as rapidly deployed as those already included in our asset liquidity.
The average fair value of total unencumbered securities was $86.87 billion for the quarter ended June 30, 2026, compared to $82.79 billion for the quarter ended December 31, 2025.
Uses of Liquidity
Significant uses of our liquidity could result from the following: withdrawals of client deposits; draw-downs by our custody clients of lines of credit; advances to clients to settle securities transactions; increases in our investment and loan portfolios; or other permitted purposes. Such circumstances would generally arise under stress conditions, such as a deterioration in credit ratings or significant changes in FX rates. A recurring use of our liquidity involves our deployment of HQLA from our investment portfolio to post collateral to financial institutions and central banks to support various business activities.
We had unfunded commitments to extend credit with gross contractual amounts totaling $35.96 billion and $35.70 billion and standby letters of credit totaling $0.46 billion and $0.57 billion as of June 30, 2026 and December 31, 2025, respectively. These amounts do not reflect the value of any collateral. As of June 30, 2026, approximately 69% of our unfunded commitments to extend credit and 19% of our standby letters of credit expire within one year. Since many of our commitments are expected to expire or renew without being drawn upon, the gross contractual amounts do not necessarily represent our future cash requirements.
Recovery and Resolution Planning
Under Section 165(d) of the Dodd-Frank Act, we are required to submit a resolution plan on a biennial basis jointly to the Federal Reserve and the FDIC (the Agencies). The purpose of our resolution plan is to describe our preferred resolution strategy and to demonstrate that we have the resources and capabilities to execute on that strategy in the event of major financial distress. Through resolution planning, we seek to maintain our role as a key service provider within the financial system, while minimizing risk to the financial system.
The Agencies' final rule from 2019 requires U.S. G-SIBs to file a full resolution plan and a targeted
resolution plan on an alternating basis in the relevant submission years. We submitted our targeted 165(d) resolution plan timely by July 1, 2025. Our next 165(d) resolution plan submission to the Agencies is a full resolution plan due by July 1, 2027.
State Street Bank is also required to submit to the FDIC a plan for resolution in the event of its failure, referred to as an IDI plan. The FDIC's rule on IDI plans was revised and became effective on October 1, 2024. In accordance with the revised rule and subsequent public guidance, we submitted our most recent IDI plan by July 1, 2026. Our next IDI plan submission is currently due by July 1, 2028, although such timing (and the timing for further IDI plan submissions) is subject to change as a result of a recently published notice of proposed rulemaking relating to IDI plan submissions.
Additionally, we are required to submit a recovery plan periodically to the Federal Reserve. This plan includes strategies designed to respond to stress factors at an early stage and stabilize and maintain operational continuity and market confidence.
For additional information about our recovery and resolution plan, refer to "Recovery and Resolution Planning" included under Item 1, Business, in our 2025 Form 10-K.
Funding
Deposits
We provide products and services including custody, accounting, administration, daily pricing, FX services, cash management, financial asset management, securities finance and investment advisory services. As a provider of these products and services, we generate client deposits, which have generally provided a stable and low-cost source of funds. As a global custodian, clients place deposits with our entities in various currencies. As of both June 30, 2026 and December 31, 2025, approximately 70% of our average total deposit balances were denominated in U.S. dollars, 15% in EUR, 5% in GBP and 10% in all other currencies.
Short-Term Funding
Our on-balance sheet liquid assets are also an integral component of our liquidity management strategy. These assets provide liquidity through maturities of the assets, but more importantly, they provide us with the ability to raise funds by pledging the securities as collateral for borrowings or through outright sales. In addition, our access to the global capital markets gives us the ability to source incremental funding from wholesale investors through relatively low-cost channels to further support business growth. As discussed earlier under “Asset Liquidity,” State Street Bank's membership in the
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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FHLB allows for advances of liquidity with varying terms against high-quality collateral. We had $3.50 billion of outstanding FHLB funding as of both June 30, 2026 and December 31, 2025. These outstanding borrowings have initial maturities of approximately 12 months and are recorded in other short-term borrowings in the consolidated statement of condition.
Short-term secured funding also comes in the form of securities lent or sold under agreements to repurchase. These transactions are short-term in nature, generally overnight and are collateralized by high-quality investment securities. These balances were $0.40 billion and $0.84 billion as of June 30, 2026 and December 31, 2025, respectively.
Long-Term Funding
We have the ability to issue debt and equity securities under our current universal shelf registration statement to meet current commitments and business needs.
On April 24, 2026, we issued $800 million aggregate principal amount of 4.558% fixed-to-floating rate senior notes due 2032, and $700 million aggregate principal amount of 5.094% fixed-to-floating rate senior notes due 2037.
On July 23, 2026, State Street Bank issued $750 million aggregate principal amount of 4.701% fixed-rate senior notes due 2029, and $500 million aggregate principal amount of 5.217% fixed-rate senior notes due 2034.
Agency Credit Ratings
Our ability to maintain consistent access to liquidity is fostered by the maintenance of high investment grade ratings as measured by major credit rating agencies. Factors essential to maintaining high credit ratings include:
•diverse and stable core earnings;
•relative market position;
•strong risk management;
•strong capital ratios;
•diverse liquidity sources, including the global capital markets and client deposits;
•strong liquidity monitoring procedures; and
•preparedness for current or future regulatory developments.
High ratings limit borrowing costs and enhance our liquidity by:
•providing confidence for unsecured funding and depositors;
•increasing the potential market for our debt and improving our ability to offer products;
•facilitating reduced collateral haircuts in secured lending transactions; and
•engaging in transactions in which clients value high credit ratings.
A downgrade or reduction in our credit ratings could have a material adverse effect on our liquidity by restricting our ability to access the capital markets, which could increase the related cost of funds. In turn, this could cause the sudden and large-scale withdrawal of unsecured deposits by our clients, which could lead to drawdowns of unfunded commitments to extend credit or trigger requirements under securities purchase commitments; or require additional collateral or force terminations of certain trading derivative contracts.
A majority of our derivative contracts have been entered into under bilateral agreements with counterparties who may require us to post collateral or terminate the transactions based on changes in our credit ratings. We assess the impact of these arrangements by determining the collateral that would be required assuming a downgrade by major rating agencies. The additional collateral or termination payments related to our net derivative liabilities under these arrangements that could have been called by counterparties in the event of a downgrade in our credit ratings below levels specified in the agreements is provided in Note 7 to the consolidated financial statements in this Form 10-Q. Other funding sources, such as secured financing transactions and other margin requirements, for which there are no explicit triggers, could also be adversely affected.
Operational Risk Management
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk but excludes strategic and reputation risk.
Volatility in the global equity and fixed income markets driven by recent policy developments and heightened geopolitical tensions (including changes in trade policy in the United States and other nations and the ongoing conflicts in Ukraine and in the Middle East) may result in stress on the operating environment, increase operational risk, and heighten information technology risk exposures, including cyber-threats. See also “Information Technology Risk Management” below.
For additional information about our operational risk framework, refer to "Operational Risk Management" included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
Information Technology Risk Management
We define information technology risk as the risk associated with the use, ownership, operation and adoption of information technology. Information
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
technology risk includes risks potentially triggered by non-compliance with regulatory obligations or expectations, information security or cyber incidents, internal control and process gaps, operational events and adoption of new business technologies.
The rapid advancement and increasing accessibility of frontier artificial intelligence models amplifies cybersecurity risks by enabling more sophisticated cyber-attacks, accelerating the discovery and exploitation of vulnerabilities, facilitating the creation of increasingly convincing social engineering and fraud schemes, and introducing novel security threats that could adversely affect our operations, customers, counterparties, reputation, financial condition, and results of operations.
For additional information about our information technology risk framework and associated risks, refer to "Information Technology Risk Management" included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K, and "Operational, Cyber and Technology Risks" included under Item 1A, Risk Factors, in our 2025 Form 10-K - "Any failures of or damage to, attack on or unauthorized access to our information technology systems or facilities or disruptions to our continuous operations, including the systems, facilities or operations of third parties with which we do business, such as resulting from cyber-attacks, could result in significant costs, and reputational damage and impact our ability to conduct our business activities."
Market Risk Management
Market risk is the risk of loss that could result from broad market movements, such as changes in the general level of interest rates, credit spreads, foreign exchange rates or commodity prices. We are exposed to market risk in both our trading and certain of our non-trading, or asset and liability management, activities.
Information about market risk associated with our trading activities is provided below under “Trading Activities.” Information about the market risk associated with our non-trading activities, which consists primarily of interest rate risk, is provided below under “Asset and Liability Management Activities.”
Trading Activities
In the conduct of our trading activities, we assume market risk, the level of which is a function of our overall risk appetite, business objectives and liquidity needs, our clients' requirements and market volatility and our execution against those factors.
As part of our trading activities, we assume positions in the foreign exchange and interest rate
markets by buying and selling cash instruments and entering into derivative instruments, including foreign exchange forward contracts, foreign exchange options and interest rate swaps, interest rate forward contracts and interest rate futures. As of June 30, 2026, the notional amount of these derivative contracts was $3.47 trillion, of which $3.38 trillion was composed of foreign exchange forward, swap and spot contracts. We seek to match positions closely with the objective of mitigating related currency and interest rate risk. All foreign exchange contracts are valued daily at current market rates.
For additional information about the market risk associated with our trading activities, refer to "Market Risk Management" included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
Value-at-Risk and Stressed VaR
We use a variety of risk measurement tools and methodologies, including VaR, which is an estimate of potential loss for a given period within a stated statistical confidence interval. We use a risk measurement methodology to measure trading-related VaR daily. We have adopted standards for measuring trading-related VaR, and we maintain regulatory capital for market risk associated with our trading activities in conformity with currently applicable bank regulatory market risk requirements. Our regulatory VaR-based measure is calculated based on historical volatilities of market risk factors during a two-year observation period calibrated to a one-tail, 99% confidence interval and a ten-business-day holding period.
We calculate a stressed VaR-based measure using the same model we use to calculate VaR, but with model inputs calibrated to historical data from a range of continuous 12-month periods that reflect significant financial stress. The stressed VaR model is designed to identify the second-worst outcome occurring in the worst continuous one-year rolling period since July 2007. This stressed VaR meets the regulatory requirement as the rolling ten-day period with an outcome that is worse than 99% of other outcomes during that 12-month period of financial stress. For each portfolio, the stress period is determined algorithmically by seeking the one-year time horizon that produces the largest ten-business-day VaR from within the available historical data. Our historical dataset encompasses multiple periods of significant market stress, including major global financial disruptions and episodes of heightened volatility across foreign exchange, credit, equity, and debt markets. As the historical data set used to determine the stress period expands over time, future market stress events will be incorporated.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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For additional information about our VaR measurement tools and methodologies, refer to "Value-at-Risk and Stressed VaR" included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
Stress Testing
We have a corporate-wide stress testing program in place that incorporates techniques to measure the potential loss we could suffer in a hypothetical scenario of adverse economic and financial conditions. We also monitor concentrations of risk such as concentration by branch, risk component, and currency pairs. We conduct stress testing on a daily basis based on selected historical stress events that are relevant to our positions in order to estimate the potential impact to our current portfolio should similar market conditions recur, and we also perform stress testing as part of the Dodd-Frank Act Stress Test (DFAST) process. Stress testing is conducted, analyzed and reported at the corporate, trading desk, division and risk-factor level (for example, exchange risk, interest rate risk and volatility risk).
Stress testing results and limits are actively monitored on a daily basis by Independent Risk Management (IRM) and reported to the Trading and Markets Risk Committee (TMRC). Limit breaches are addressed by IRM risk managers in conjunction with the business units, escalated as appropriate, and reviewed by the TMRC. In addition, we have established several action triggers that prompt review by management and the implementation of a remediation plan.
Validation and Back-Testing
We perform frequent back-testing to assess the accuracy of our VaR-based model in estimating loss at the stated confidence level. This back-testing involves the comparison of estimated VaR model outputs to daily, actual profit-and-loss (P&L) outcomes observed from daily market movements. We back-test our VaR model using “clean” P&L, which excludes non-trading revenue such as fees, commissions and NII, as well as estimated revenue from intraday trading.
Our VaR definition of trading losses excludes items that are not specific to the price movement of the trading assets and liabilities themselves, such as fees, commissions, changes to reserves and gains or losses from intraday activity.
We experienced one back-testing exception in the quarter ended June 30, 2026, compared to no back-testing exceptions in the quarters ended March 31, 2026 and June 30, 2025. At a 99% confidence interval, the statistical expectation for a VaR model is to witness one exception every hundred trading days (or two to three exceptions per year).
The following tables present VaR and stressed VaR associated with our trading activities for covered positions held during the quarters ended June 30, 2026, March 31, 2026 and June 30, 2025, respectively, as measured by our VaR methodology. Diversification effect in the tables below represents the difference between total VaR and the sum of the VaRs for each trading activity. This effect arises because the risks present in our trading activities are not perfectly correlated.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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TABLE 23: TEN-DAY VALUE-AT-RISK ASSOCIATED WITH TRADING ACTIVITIES FOR COVERED POSITIONS
Three Months Ended As of June 30, 2026 As of March 31, 2026 As of June 30, 2025
June 30, 2026 March 31, 2026 June 30, 2025
(In thousands) Avg. Max. Min. Avg. Max. Min. Avg. Max. Min. VaR VaR VaR
State Street Markets $ 8,315 $ 15,092 $ 4,753 $ 6,632 $ 16,230 $ 4,298 $ 6,256 $ 9,700 $ 4,100 $ 7,547 $ 6,359 $ 4,100
Global Treasury 3,777 6,127 3,415 4,198 11,574 3,476 2,688 5,416 571 3,539 3,543 3,448
Diversification (2,901) (5,080) (2,499) (2,787) (10,131) (3,198) (2,247) (5,387) (101) (3,201) (2,809) (2,577)
Total VaR $ 9,191 $ 16,139 $ 5,669 $ 8,043 $ 17,673 $ 4,576 $ 6,697 $ 9,729 $ 4,570 $ 7,885 $ 7,093 $ 4,971
TABLE 24: TEN-DAY STRESSED VALUE-AT-RISK ASSOCIATED WITH TRADING ACTIVITIES FOR COVERED POSITIONS
Three Months Ended As of June 30, 2026 As of March 31, 2026 As of June 30, 2025
June 30, 2026 March 31, 2026 June 30, 2025
(In thousands) Avg. Max. Min. Avg. Max. Min. Avg. Max. Min. VaR VaR VaR
State Street Markets $ 63,719 $ 81,151 $ 44,623 $ 49,344 $ 72,557 $ 28,139 $ 45,081 $ 94,077 $ 22,994 $ 63,811 $ 52,434 $ 38,163
Global Treasury 13,851 26,864 10,354 13,103 40,876 9,895 10,520 15,811 5,363 14,133 12,366 14,002
Diversification (12,773) (24,754) (10,825) (12,076) (41,824) (11,333) (9,857) (12,500) (7,081) (1,722) (14,241) (11,261)
Total Stressed VaR $ 64,797 $ 83,261 $ 44,152 $ 50,371 $ 71,609 $ 26,701 $ 45,744 $ 97,388 $ 21,276 $ 76,222 $ 50,559 $ 40,904
The three month average of our total stressed VaR-based measure was approximately $65 million for the quarter ended June 30, 2026, compared to an average of approximately $50 million for the quarter ended March 31, 2026 and $46 million for the quarter ended June 30, 2025. The increase in average total stressed VaR for the quarter ended June 30, 2026, compared to both of the quarters ended March 31, 2026 and June 30, 2025, was primarily attributed to interest rate risk, with a smaller variability observed in daily stressed VaR outcomes.
The VaR-based measures as presented in the preceding tables are primarily a reflection of the overall level of market volatility and our appetite for taking market risk in our trading activities.
We have in the past and may in the future modify and adjust our models and methodologies used to calculate VaR and stressed VaR, subject to regulatory review and approval, and any future modifications and adjustments may result in changes in our VaR-based and stressed VaR-based measures.
The following tables present the VaR and stressed-VaR associated with our trading activities attributable to foreign exchange risk, interest rate risk and volatility risk as of June 30, 2026, March 31, 2026 and June 30, 2025, respectively. Diversification effect in the tables below represents the difference between total VaR and the sum of the VaRs for each trading activity. This effect arises because the risks present in our trading activities are not perfectly correlated.
TABLE 25: TEN-DAY VaR ASSOCIATED WITH TRADING ACTIVITIES BY RISK FACTOR(1)
June 30, 2026 March 31, 2026 June 30, 2025
(In thousands) Foreign Exchange Risk Interest Rate Risk Volatility Risk Foreign Exchange Risk Interest Rate Risk Volatility Risk Foreign Exchange Risk Interest Rate Risk Volatility Risk
By component:
State Street Markets $ 6,130 $ 6,727 $ 573 $ 6,182 $ 4,416 $ 395 $ 2,230 $ 4,689 $ 345
Global Treasury 3,261 1,308 — 3,334 1,222 — 3,346 870 —
Diversification (1,152) (1,288) — (2,221) (1,343) — (2,737) (892) —
Total VaR $ 8,239 $ 6,747 $ 573 $ 7,295 $ 4,295 $ 395 $ 2,839 $ 4,667 $ 345
TABLE 26: TEN-DAY STRESSED VaR ASSOCIATED WITH TRADING ACTIVITIES BY RISK FACTOR(1)
June 30, 2026 March 31, 2026 June 30, 2025
(In thousands) Foreign Exchange Risk Interest Rate Risk Volatility Risk Foreign Exchange Risk Interest Rate Risk Volatility Risk Foreign Exchange Risk Interest Rate Risk Volatility Risk
By component:
State Street Markets $ 10,597 $ 95,816 $ 1,218 $ 6,998 $ 62,783 $ 739 $ 5,425 $ 38,025 $ 706
Global Treasury 14,643 6,181 — 12,780 3,593 — 13,969 4,158 —
Diversification (10,784) (8,754) — (10,480) (3,059) — (7,068) (3,789) —
Total Stressed VaR $ 14,456 $ 93,243 $ 1,218 $ 9,298 $ 63,317 $ 739 $ 12,326 $ 38,394 $ 706
(1) For purposes of risk attribution by component, foreign exchange refers only to the risk from market movements in period-end rates. Forwards, futures, options and swaps with maturities greater than period-end have embedded interest rate risk that is captured by the measures used for interest rate risk. Accordingly, the interest rate risk embedded in these foreign exchange instruments is included in the interest rate risk component.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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Asset and Liability Management Activities
The primary objective of asset and liability management is to provide sustainable NII under varying economic conditions, while protecting the economic value of the assets and liabilities carried on our consolidated statement of condition from the adverse effects of changes in interest rates. While many market factors affect the level of NII and the economic value of our assets and liabilities, one of the most significant factors is our exposure to movements in interest rates. Most of our NII is earned from the investment of client deposits generated by our businesses. We invest these client deposits in assets that conform generally to the liquidity characteristics of our balance sheet liabilities, as well as the currency composition of our significant non-U.S. dollar denominated client deposits.
We quantify NII sensitivity using an earnings simulation model that includes our expectations for new business growth, changes in balance sheet mix and investment portfolio positioning. This measure compares our baseline view of NII over a 12-month horizon, based on our internal forecast of interest rates, to a wide range of rate shocks. Our baseline view of NII is updated on a regular basis. Table 27, Key Interest Rates for Baseline Forecasts, presents the spot and 12-month forward rates used in our baseline forecasts at June 30, 2026 and 2025. Our baseline rate forecast as of June 30, 2026 was broadly consistent with market expectations for global central bank rate actions at that point in time.
TABLE 27: KEY INTEREST RATES FOR BASELINE FORECASTS
June 30, 2026 June 30, 2025
Fed Funds Target ECB Target(1) 10-Year Treasury Fed Funds Target ECB Target(1) 10-Year Treasury
Spot rates 3.75 % 2.25 % 4.47 % 4.50 % 2.00 % 4.23 %
12-month forward rates 3.75 2.50 4.61 3.75 1.75 4.53
(1) European Central Bank deposit facility rate.
In Table 28: Net Interest Income Sensitivity, we report the expected change in NII over the next 12 months from instantaneous 100 basis point shocks to various tenors on the yield curve relative to our baseline rate forecast, including the impacts from U.S. and non-U.S. rates. Each scenario assumes no management action is taken to mitigate the adverse effects of changes in interest rates on our financial performance. While investment securities balances and composition can fluctuate with the level of rates as prepayment assumptions change, for purposes of this analysis our deposit balances and mix are assumed to remain consistent with the baseline forecast. The results of these scenarios should not be extrapolated for other (e.g., more severe) shocks as the impact of interest rate shocks may not be linear. In lower rate scenarios, the full impact of the shock is realized for all currencies even if the result is negative interest rates.
TABLE 28: NET INTEREST INCOME SENSITIVITY
June 30, 2026 June 30, 2025
(In millions) U.S. Dollar All Other Currencies Total U.S. Dollar All Other Currencies Total
Rate change: Benefit (Exposure) Benefit (Exposure)
Parallel shifts:
+100 bps shock $ 78 $ 298 $ 376 $ 71 $ 267 $ 338
-100 bps shock (77) (291) (368) (69) (248) (317)
Steeper yield curve:
+100 bps shift in long-end rates(1) 15 15 30 15 14 29
-100 bps shift in short-end rates(1) (61) (276) (337) (53) (234) (287)
Flatter yield curve:
+100 bps shift in short-end rates(1) 60 283 343 54 253 307
-100 bps shift in long-end rates(1) (22) (15) (37) (19) (14) (33)
(1) The short-end is 0-3 months. The long-end is 5 years and above. Interim term points are interpolated.
Our overall balance sheet, including all currencies, continues to be asset sensitive with an NII benefit in higher rate scenarios and NII exposure in lower rate scenarios, primarily driven by our sensitivities on the short-end of the yield curve. Compared to June 30, 2025, our balance sheet's NII asset sensitivity has increased, primarily due to higher USD and non-USD client deposit balances and lower fixed-rate investment portfolio balances.
For additional information about our Asset and Liability Management Activities, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Risk Management”.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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Model Risk Management
The use of models is widespread throughout the financial services industry, with large and complex organizations relying on sophisticated models to support numerous aspects of their financial decision making. The models contemporaneously represent both a significant advancement in financial management and a source of risk. In large banking organizations like ours, model results influence business decisions, and model failure could have a harmful effect on our financial performance. As a result, the Model Risk Management Framework seeks to mitigate our model risk.
For additional information about our model risk management framework, including our governance and model validation, refer to "Model Risk Management" under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
Strategic Risk Management
We define strategic risk as the risk to current or projected financial condition and resilience arising from adverse business decisions, poor implementation of business decisions or lack of responsiveness to changes in the industry and operating environments. Strategic risks are influenced by changes in the competitive environment; decline in market performance or changes in our business activities; as well as by the potential secondary impacts of reputational risks, not already captured as market, interest rate, credit, operational, model or liquidity risks. We incorporate strategic risk into our assessment of our business plans and risk and capital management processes. Management of strategic risk is an integral component of all aspects of our business.
Strategic risk is managed with a long-term focus including through oversight of the strategic plan by executive management and the Board, as well as oversight for material transformation and change initiatives, including new business and product proposals. The potential impacts of strategic risk are difficult to quantify, but we assess these through the lens of historical earnings volatility, scenario analysis and stress-testing, and management judgment, among others. Management and control of strategic risks are generally the responsibility of the business units, with oversight from the control functions, as part of their overall strategic planning and internal risk management processes.
Capital
Managing our capital involves evaluating whether our actual and projected levels of capital are commensurate with our risk profile, are in compliance with all applicable regulatory requirements and are
sufficient to provide us with the financial flexibility to undertake future strategic business initiatives. We assess capital adequacy based on relevant regulatory capital requirements, as well as our own internal capital goals, targets and other relevant metrics.
Our designation as a G-SIB is based on a number of factors, as prescribed by banking regulators, and requires us to maintain an additional capital surcharge above the minimum capital ratios set forth in the Basel III final rule. As discussed below, following our adoption of the modified eSLR standards on January 1, 2026, we are subject to a 0.5% SLR buffer at both the holding company and at State Street Bank, in addition to the required minimum of 3.0% under the Basel III final rule. If we fail to exceed any regulatory buffer or surcharge, we will be subject to increased restrictions (depending upon the extent of the shortfall) regarding capital distributions and discretionary executive bonus payments.
Not all of our competitors have similarly been designated as systemically important nor are all of them subject to the same degree of regulation as a bank or financial holding company, and therefore some of our competitors may not be subject to the same capital, liquidity and other regulatory requirements.
For additional information about our capital, refer to "Capital" under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
Regulatory Capital
We and State Street Bank are subject to the U.S. Basel III framework. We are also subject to the final market risk capital rule issued by the U.S. Agencies.
The Basel III rule provides two frameworks for monitoring capital adequacy: the “standardized approach" and the “advanced approaches", applicable to advanced approaches banking organizations, like us. The standardized approach prescribes standardized calculations for credit risk RWA, including specified risk weights for on and certain off-balance sheet exposures. The advanced approaches consist of the Advanced Internal Ratings-Based Approach used for the calculation of credit risk RWA, and the Advanced Measurement Approach used for the calculation of operational risk RWA.
As required by the Dodd-Frank Act enacted in 2010, we and State Street Bank, as advanced approaches banking organizations, are subject to a "capital floor," also referred to as the Collins Amendment, in the assessment of our regulatory capital adequacy, such that our risk-based capital ratios for regulatory assessment purposes are the lower of each ratio calculated under the advanced
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
approaches and the standardized approach. Under the advanced approaches, we and State Street Bank are subject to a 2.5% CCB requirement, plus any applicable countercyclical capital buffer requirement, which is currently set at 0%. Under the standardized approach, State Street Bank is subject to the same CCB and countercyclical capital buffer requirements, but for State Street, the 2.5% CCB requirement is replaced by the SCB requirement according to the SCB final rule issued in 2020. In addition, State Street is subject to a G-SIB surcharge.
The SCB replaced, under the standardized approach, the CCB with a buffer calculated as the difference between the institution’s starting and lowest projected CET1 ratios under the DFAST severely adverse scenario plus planned common stock dividend payments (as a percentage of RWA) from the fourth through seventh quarter of the DFAST planning horizon. The SCB requirement can be no less than 2.5% of RWA. Breaching the SCB or other regulatory buffer or surcharge will limit a banking organization’s ability to make capital distributions and discretionary bonus payments to executive officers.
Our SCB requirement remains at 2.5% for the period from October 1, 2025, through September 30, 2026, based on the results of the 2025 supervisory stress test. Additionally, in February 2026 the Federal Reserve Board voted to maintain the current SCB requirements until September 30, 2027.
Our current G-SIB surcharge is 1.0% and based upon calculations using data as of December 31, 2025, our surcharge will remain at 1.0% through December 31, 2027.
Our minimum risk-based capital ratios as of January 1, 2026 include a CCB of 2.5% and a SCB of 2.5% for the advanced approaches and standardized approach, respectively, a G-SIB surcharge of 1.0%, and a countercyclical buffer of 0.0%. This results in minimum risk-based ratios of 8.0% for the common equity tier 1 (CET1) capital ratio, 9.5% for the tier 1 capital ratio, and 11.5% for the total capital ratio.
To maintain the status of the Parent Company as a financial holding company, we and our IDI subsidiaries are required, among other requirements, to be "well capitalized" as defined by Regulation Y and Regulation H.
The market risk capital rule requires us to use internal models to calculate daily measures of VaR, which reflect general market risk for certain of our trading positions defined by the rule as “covered positions,” as well as stressed-VaR measures to supplement the VaR measures. The rule also requires a public disclosure composed of qualitative and quantitative information about the market risk associated with our trading activities and our related VaR and stressed-VaR measures. The qualitative and
quantitative information required by the rule is provided under "Market Risk Management" included in this Management's Discussion and Analysis.
In April 2025, the Federal Reserve issued a proposed rule to reduce volatility in the SCB requirement, primarily through the averaging of the decline in a firm’s CET1 capital over a two-year horizon (current and prior year). The proposal would also extend the annual effective date of each firm’s SCB requirement by one quarter, from October 1 to January 1. The proposal was intended to be effective as of the 2025 stress testing cycle, but has yet to be finalized. We do not expect the proposal to materially impact our SCB requirement, which is currently at the 2.5% floor.
On November 25, 2025, the U.S. Agencies jointly adopted a final rule (eSLR Final Rule) amending the calibration of the eSLR for U.S. G-SIBs and their IDI subsidiaries. The final rule was effective April 1, 2026, with the option for firms to adopt the modified standards early, effective January 1, 2026. We adopted the modified standards effective January 1, 2026. The final rule replaces the prior eSLR buffer of 2% at the holding company and 3% at State Street Bank (for State Street Bank to be considered "well capitalized"), with an eSLR buffer for both bank holding companies and IDI subsidiaries calibrated at 50% of a G-SIB’s Method 1 capital surcharge, with the buffer for IDI subsidiaries capped at 1% (and no longer part of the definition of "well capitalized"). Conforming changes were also made to the TLAC and LTD requirements.
The eSLR Final Rule has not materially impacted our total leverage-based capital, which already benefits from the custody bank exemption for central bank placements in the SLR denominator pursuant to Section 402 of the Economic Growth Act (January 2020). Changes to the TLAC and LTD requirement have limited implications for us, and are not expected to change our management of TLAC or LTD.
State Street Corporation | 34
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
In March 2026, the U.S. Agencies issued two proposed rules to revise the U.S. regulatory capital framework for large banks. The first proposed rule would, among other things, remove the existing standardized and advanced approaches methodologies and replace them with a single expanded risk-based approach that includes new standardized calculations for credit risk, operational risk, market risk, and credit valuation adjustment risk (ERBA Proposal). The second proposed rule would, among other things, recalibrate the coefficients in the Method 2 G-SIB surcharge to reflect the economy and other recent changes in the financial system, adjust the weighting of the short-term wholesale funding systemic indicator, and "reduce cliff effects" of the G-SIB surcharge by replacing the existing 0.5% capital increments with increments of 0.1% (G-SIB Surcharge Proposal). The comment period for each proposal ended on June 18, 2026. Based on our preliminary assessment, we currently expect the proposed changes to be beneficial to our overall RWA; however, any estimate of the potential impact of the ERBA Proposal and the G-SIB Surcharge Proposal is subject to uncertainty, as actual results may differ materially from our preliminary estimates and by potential changes to each Proposal, when adopted in final form. In addition, anticipated results may be affected by a range of factors, including business performance, future capital actions, the results of future supervisory stress tests and supervisory interpretations (including changes in interpretations). No timeline for final implementation has been disclosed.
For additional information about our regulatory capital, refer to "Regulatory Capital" included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2025 Form 10-K.
The following table presents the regulatory capital structure and related regulatory capital ratios for us and State Street Bank as of the dates indicated. We are subject to the more stringent of the risk-based capital ratios calculated under the standardized approach and those calculated under the advanced approaches in the assessment of our capital adequacy under applicable bank regulatory standards.
State Street Corporation | 35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
TABLE 29: REGULATORY CAPITAL STRUCTURE AND RELATED REGULATORY CAPITAL RATIOS
State Street Corporation State Street Bank
(Dollars in millions) Basel III Advanced Approaches June 30, 2026 Basel III Standardized Approach June 30, 2026 Basel III Advanced Approaches December 31, 2025 Basel III Standardized Approach December 31, 2025 Basel III Advanced Approaches June 30, 2026 Basel III Standardized Approach June 30, 2026 Basel III Advanced Approaches December 31, 2025 Basel III Standardized Approach December 31, 2025
Common shareholders' equity:
Common stock and related surplus $ 11,214 $ 11,214 $ 11,209 $ 11,209 $ 13,333 $ 13,333 $ 13,333 $ 13,333
Retained earnings 32,660 32,660 31,392 31,392 16,773 16,773 16,401 16,401
Accumulated other comprehensive income (loss) (1,178) (1,178) (1,043) (1,043) (934) (934) (815) (815)
Treasury stock, at cost (17,987) (17,987) (17,276) (17,276) — — — —
Total 24,709 24,709 24,282 24,282 29,172 29,172 28,919 28,919
Regulatory capital adjustments:
Goodwill and other intangible assets, net of associated deferred tax liabilities (8,764) (8,764) (8,921) (8,921) (8,168) (8,168) (8,342) (8,342)
Other adjustments(1) (520) (520) (549) (549) (381) (381) (419) (419)
Common equity tier 1 capital 15,425 15,425 14,812 14,812 20,623 20,623 20,158 20,158
Preferred stock 3,559 3,559 3,559 3,559 — — — —
Tier 1 capital 18,984 18,984 18,371 18,371 20,623 20,623 20,158 20,158
Qualifying subordinated long-term debt 1,691 1,691 1,872 1,872 521 521 524 524
Adjusted allowance for credit losses 22 175 18 203 23 175 18 203
Total capital $ 20,697 $ 20,850 $ 20,261 $ 20,446 $ 21,167 $ 21,319 $ 20,700 $ 20,885
Risk-weighted assets:
Credit risk(2) $ 66,805 $ 140,668 $ 60,594 $ 125,138 $ 62,446 $ 137,393 $ 56,438 $ 121,747
Operational risk(3) 46,950 NA 51,638 NA 46,575 NA 50,025 NA
Market risk 2,738 2,738 2,125 2,125 2,738 2,738 2,125 2,125
Total risk-weighted assets $ 116,493 $ 143,406 $ 114,357 $ 127,263 $ 111,759 $ 140,131 $ 108,588 $ 123,872
Capital Ratios: 2026 Minimum Requirements Including Capital Conservation Buffer and G-SIB Surcharge(4) 2025 Minimum Requirements Including Capital Conservation Buffer and G-SIB Surcharge(4)
Common equity tier 1 capital 8.0 % 8.0 % 13.2 % 10.8 % 13.0 % 11.6 % 18.5 % 14.7 % 18.6 % 16.3 %
Tier 1 capital 9.5 9.5 16.3 13.2 16.1 14.4 18.5 14.7 18.6 16.3
Total capital 11.5 11.5 17.8 14.5 17.7 16.1 18.9 15.2 19.1 16.9
(1) Other adjustments within CET1 capital primarily include disallowed deferred tax assets, cash flow hedges that are not recognized at fair value on the balance sheet, and the overfunded portion of our defined benefit pension plan obligation net of associated deferred tax liabilities.
(2) Under the advanced approaches, credit risk RWA includes a CVA which reflects the risk of potential fair value adjustments for credit risk reflected in our valuation of over-the-counter derivative contracts. We used a simple CVA approach in conformity with the Basel III advanced approaches.
(3) Under the current advanced approaches rules and regulatory guidance concerning operational risk models, RWA attributable to operational risk can vary substantially from period-to-period, without direct correlation to the effects of a particular loss event on our results of operations and financial condition and impacting dates and periods that may differ from the dates and periods as of and during which the loss event is reflected in our financial statements, with the timing and categorization dependent on the processes for model updates and, if applicable, model revalidation and regulatory review and related supervisory processes. An individual loss event can have a significant effect on the output of our operational RWA under the advanced approaches depending on the severity of the loss event and its categorization among the seven Basel-defined UOMs.
(4) Minimum requirements include a CCB of 2.5% and a SCB of 2.5% for the advanced approaches and the standardized approach, respectively, a G-SIB surcharge of 1.0% and a countercyclical buffer of 0%. Our SCB requirement remains at 2.5% for the period from October 1, 2025, through September 30, 2026 based on the results of the 2025 supervisory stress test. Additionally, in February 2026 the Federal Reserve Board voted to maintain the current SCB requirements until September 30, 2027.
NA Not applicable
Our CET1 capital increased $0.61 billion as of June 30, 2026, compared to December 31, 2025, under both the advanced approaches and standardized approach, primarily due to net income, partially offset by common share repurchases and dividends declared.
Our Tier 1 capital increased $0.61 billion as of June 30, 2026, compared to December 31, 2025, under both the advanced approaches and standardized approach, due to the increase in CET1 capital.
Our Tier 2 capital decreased $0.18 billion and $0.21 billion as of June 30, 2026, compared to December 31, 2025, under the advanced approaches and standardized approach, respectively, primarily driven by the discounted capital as one of the subordinated debt instruments approaches maturity.
Total capital increased $0.44 billion and $0.40 billion as of June 30, 2026, compared to December 31, 2025, under the advanced approaches and standardized approach, respectively, primarily due to the increase in Tier 1 capital, partially offset by the decrease in Tier 2 capital.
State Street Corporation | 36
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The table below presents a roll-forward of CET1 capital, Tier 1 capital and total capital for the six months ended June 30, 2026 and for the year ended December 31, 2025.
TABLE 30: CAPITAL ROLL-FORWARD
(In millions) Basel III Advanced Approaches June 30, 2026 Basel III Standardized Approach June 30, 2026 Basel III Advanced Approaches December 31, 2025 Basel III Standardized Approach December 31, 2025
Common equity tier 1 capital:
Common equity tier 1 capital balance, beginning of period $ 14,812 $ 14,812 $ 13,799 $ 13,799
Net income 1,848 1,848 2,945 2,945
Changes in treasury stock, at cost (711) (711) (1,078) (1,078)
Dividends declared (580) (580) (1,135) (1,135)
Goodwill and other intangible assets, net of associated deferred tax liabilities 157 157 (601) (601)
Accumulated other comprehensive income (loss)(1) (135) (135) 1,057 1,057
Other adjustments(1) 34 34 (175) (175)
Changes in common equity tier 1 capital 613 613 1,013 1,013
Common equity tier 1 capital balance, end of period 15,425 15,425 14,812 14,812
Additional tier 1 capital:
Tier 1 capital balance, beginning of period 18,371 18,371 16,615 16,615
Changes in common equity tier 1 capital 613 613 1,013 1,013
Net issuance of preferred stock — — 743 743
Changes in tier 1 capital 613 613 1,756 1,756
Tier 1 capital balance, end of period 18,984 18,984 18,371 18,371
Tier 2 capital:
Tier 2 capital balance, beginning of period 1,890 2,075 1,861 2,044
Net issuance and changes in long-term debt qualifying as tier 2 capital (181) (181) 11 11
Changes in adjusted allowance for credit losses 4 (28) 18 20
Changes in tier 2 capital (177) (209) 29 31
Tier 2 capital balance, end of period 1,713 1,866 1,890 2,075
Total capital:
Total capital balance, beginning of period 20,261 20,446 18,476 18,659
Changes in tier 1 capital 613 613 1,756 1,756
Changes in tier 2 capital (177) (209) 29 31
Total capital balance, end of period $ 20,697 $ 20,850 $ 20,261 $ 20,446
(1) Accumulated other comprehensive income (loss) includes losses on cash flow hedges where the hedged exposures are not recognized at fair value on the balance sheet, which, under the Capital Rule, must be excluded from CET1 capital. This adjustment is captured in the Other Adjustments line.
The following table presents a roll-forward of the Basel III advanced and standardized approaches RWA for the six months ended June 30, 2026 and for the year ended December 31, 2025.
TABLE 31: ADVANCED & STANDARDIZED APPROACHES RISK-WEIGHTED ASSETS ROLL-FORWARD
(In millions) Basel III Advanced Approaches June 30, 2026 Basel III Advanced Approaches December 31, 2025 Basel III Standardized Approach June 30, 2026 Basel III Standardized Approach December 31, 2025
Total risk-weighted assets, beginning of period $ 114,357 $ 114,602 $ 127,263 $ 126,281
Changes in credit risk-weighted assets:
Net increase (decrease) in investment securities-wholesale (162) (234) (391) (10)
Net increase (decrease) in loans and overdrafts (1,231) (1,467) 3,168 1,008
Net increase (decrease) in securitization exposures 468 630 441 595
Net increase (decrease) in repo-style transaction exposures 1,585 324 (3,720) 4,302
Net increase (decrease) in over-the-counter derivatives exposures(1) 3,078 (1,731) 10,739 (7,660)
Net increase (decrease) in all other(2) 2,473 (180) 5,293 2,622
Net increase (decrease) in credit risk-weighted assets 6,211 (2,658) 15,530 857
Net increase (decrease) in market risk-weighted assets 613 125 613 125
Net increase (decrease) in operational risk-weighted assets (4,688) 2,288 NA NA
Total risk-weighted assets, end of period $ 116,493 $ 114,357 $ 143,406 $ 127,263
(1) Under the advanced approaches, includes CVA RWA.
(2) Includes assets not in a definable category, non-material portfolio, cleared transactions, other wholesale, cash and due from banks, interest-bearing deposits with banks, and equity exposures.
NA Not applicable
State Street Corporation | 37
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
As of June 30, 2026, total advanced approaches RWA increased $2.14 billion compared to December 31, 2025, mainly due to higher derivatives RWA driven by market volatility and higher other assets RWA, partially offset by lower operational risk RWA.
As of June 30, 2026, total standardized approach RWA increased $16.14 billion compared to December 31, 2025, mainly reflecting higher derivatives RWA driven by market volatility and higher other assets RWA.
The regulatory capital ratios as of June 30, 2026, presented in Table 29: Regulatory Capital Structure and Related Regulatory Capital Ratios, are calculated under the advanced approaches and standardized approach in conformity with the Basel III final rule. The advanced approaches-based ratios reflect calculations and determinations with respect to our capital and related matters as of June 30, 2026, based on our internal and external data, quantitative formulae, statistical models, historical correlations and assumptions, collectively referred to as “advanced systems,” in effect and used by us for those purposes as of the time we first reported such ratios in a quarterly report on Form 10-Q or an annual report on Form 10-K. Significant components of these advanced systems involve the exercise of judgment by us and our regulators, and our advanced systems may not, individually or collectively, precisely represent or calculate the scenarios, circumstances, outputs or other results for which they are designed or intended.
Our advanced systems are subject to update and periodic revalidation in response to changes in our business activities and our historical experiences, forces and events experienced by the market broadly or by individual financial institutions, changes in regulations and regulatory interpretations and other factors, and are also subject to continuing regulatory review and approval. For example, a significant operational loss experienced by another financial institution, even if we do not experience a related loss, could result in a material change in the output of our advanced systems and a corresponding material change in our risk exposures, our total RWA and our capital ratios compared to prior periods. An operational loss that we experience could also result in a material change in our capital requirements for operational risk under the advanced approaches, depending on the severity of the loss event, its characterization among the seven Basel-defined UOMs, and the stability of the distributional approach for a particular UOM, and without direct correlation to the effects of the loss event, or the timing of such effects, on our results of operations.
Due to the influence of changes in these advanced systems, whether resulting from changes in data inputs, regulation or regulatory supervision or interpretation, specific to us or market activities or experiences or other updates or factors, we expect that our advanced systems and our capital ratios calculated in conformity with the Basel III final rule will change and may be volatile over time, and that those latter changes or volatility could be material as calculated and measured from period to period. The full effects of the Basel III final rule on us and State Street Bank are therefore subject to further evaluation and also to further regulatory guidance, action or rule-making.
Tier 1 and Supplementary Leverage Ratios
We are subject to a minimum Tier 1 leverage ratio and a SLR. The Tier 1 leverage ratio is based on Tier 1 capital and adjusted quarterly average on-balance sheet assets. The SLR is based on total leverage exposure and includes certain off-balance sheet exposures not used in the calculation of the minimum Tier 1 leverage ratio.
We must maintain a minimum Tier 1 leverage ratio of 4%. Our Tier 1 leverage decreased to 5.3% as of June 30, 2026, compared to 5.5% as of December 31, 2025, mainly driven by continued capital return and higher average balance sheet levels, partially offset by capital generated from earnings.
As a U.S. G-SIB, we are subject to a minimum SLR of 3%, and are also subject to Enhanced Supplementary Leverage standards, including a buffer equal to 50% of our G-SIB method 1 capital surcharge at the holding company (in order to avoid limitations on distributions to shareholders and discretionary bonus payments) and, similarly, a buffer equal to 50% of our G-SIB’s method 1 capital surcharge, capped at 1%, at State Street Bank (in order to avoid limitations on distributions to shareholders and discretionary bonus payments). If we do not maintain the 0.5% buffer at the holding company or State Street Bank, limitations on these distributions and discretionary bonus payments would be increasingly stringent based upon the extent of the shortfall.
State Street Corporation | 38
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
TABLE 32: TIER 1 AND SUPPLEMENTARY LEVERAGE RATIOS
(Dollars in millions) June 30, 2026 December 31, 2025
State Street:
Tier 1 capital $ 18,984 $ 18,371
Average assets 366,821 342,448
Less: adjustments for deductions from tier 1 capital and other (9,284) (9,470)
Adjusted average assets for tier 1 leverage ratio 357,537 332,978
Additional SLR exposure 48,726 43,235
Adjustments for deductions of qualifying central bank deposits (99,667) (91,545)
Total assets for SLR $ 306,596 $ 284,668
Tier 1 leverage ratio(1) 5.3 % 5.5 %
Supplementary leverage ratio 6.2 6.5
State Street Bank(2):
Tier 1 capital $ 20,623 $ 20,158
Average assets 361,185 336,795
Less: adjustments for deductions from tier 1 capital and other (8,549) (8,761)
Adjusted average assets for tier 1 leverage ratio 352,636 328,034
Additional SLR exposure 49,090 43,346
Adjustments for deductions of qualifying central bank deposits (99,667) (91,545)
Total assets for SLR $ 302,059 $ 279,835
Tier 1 leverage ratio(1) 5.8 % 6.1 %
Supplementary leverage ratio 6.8 7.2
(1) Tier 1 leverage ratios were calculated in conformity with the Basel III final rule.
(2) The SLR rule requires that, as of January 1, 2026, (i) State Street Bank maintains an SLR of at least 3.5% and (ii) we maintain an SLR of at least 3.5% to avoid limitations on capital distributions and discretionary bonus payments. State Street Bank is also subject to a well capitalized Tier 1 leverage ratio requirement of 5.0%.
Total Loss-Absorbing Capacity
The Federal Reserve's final rule on TLAC, LTD and clean holding company requirements for U.S. domiciled G-SIBs, such as us, is intended to improve the resiliency and resolvability of certain U.S. banking organizations through enhanced prudential standards, and requires us, among other things, to comply with minimum requirements for external TLAC (combined eligible tier 1 regulatory capital and LTD) and LTD. Specifically, we must hold:
Amount equal to:
External TLAC Greater of:•21.5% of total RWA (18.0% minimum plus 2.5% plus a G-SIB surcharge calculated for these purposes under Method 1 of 1.0% plus any applicable countercyclical buffer, which is currently 0%); and •8.0% of total leverage exposure (7.5% minimum plus the eSLR buffer of 0.5%), as defined by the SLR final rule.
Qualifying external LTD Greater of:•7.0% of RWA (6.0% minimum plus a G-SIB surcharge calculated for these purposes under method 2 of 1.0%); and •3.0% of total leverage exposure (2.5% minimum plus the eSLR buffer of 0.5%), as defined by the SLR final rule.
The following table presents external TLAC and external LTD as of June 30, 2026:
TABLE 33: TOTAL LOSS-ABSORBING CAPACITY
As of June 30, 2026
(Dollars in millions) Actual Requirement
Total loss-absorbing capacity:
Risk-weighted assets $ 39,937 27.8 % $ 30,832 21.5 %
Total leverage exposure 39,937 13.0 % 24,528 8.0 %
Long-term debt:
Risk-weighted assets 18,403 12.8 % 10,038 7.0 %
Total leverage exposure 18,403 6.0 % 9,198 3.0 %
State Street Corporation | 39
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Capital Actions
Preferred Stock
The following table summarizes selected terms of each of the series of the preferred stock issued and outstanding as of June 30, 2026:
TABLE 34: PREFERRED STOCK ISSUED AND OUTSTANDING
Preferred Stock(1): Issuance Date Depositary Shares Issued Amount outstanding (In millions) Ownership Interest Per Depositary Share Liquidation Preference Per Share Liquidation Preference Per Depositary Share Per Annum Dividend Rate Dividend Payment Frequency Carrying Value as of June 30, 2026 (In millions) Redemption Date(2)
Series G April 2016 20,000,000 $ 500 1/4,000th 100,000 25 5.35%(3) Quarterly: March, June, September and December $ 493 March 15, 2026
Series I January 2024 1,500,000 1,500 1/100th 100,000 1,000 6.700% through March 14, 2029; resets March 15, 2029 and every subsequent five-year anniversary at the five-year U.S. Treasury rate plus 2.613% Quarterly: March, June, September and December 1,481 March 15, 2029
Series J July 2024 850,000 850 1/100th 100,000 1,000 6.700% through September 14, 2029; resets September 15, 2029 and every subsequent five-year anniversary at the five-year U.S. Treasury rate plus 2.628% Quarterly: March, June, September and December 842 September 15, 2029
Series K February 2025 750,000 750 1/100th 100,000 1,000 6.450% through September 14, 2030; resets September 15, 2030 and every subsequent five-year anniversary at the five-year U.S. Treasury rate plus 2.135% Quarterly: March, June, September and December 743 September 15, 2030
(1) The preferred stock and corresponding depositary shares may be redeemed at our option in whole, but not in part, prior to the redemption date upon the occurrence of a regulatory capital treatment event, as defined in the certificate of designation, at a redemption price equal to the liquidation price per share and liquidation price per depositary share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.
(2) On the redemption date, or any dividend payment date thereafter, the preferred stock and corresponding depositary shares may be redeemed by us, in whole or in part, at the liquidation price per share and liquidation price per depositary share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.
(3) The dividend rate for the floating rate period of the Series G preferred stock that began on March 15, 2026 and all subsequent floating rate periods will remain at the current fixed rate in accordance with the London Interbank Offered Rate (LIBOR) Act and the contractual terms of the Series G preferred stock.
State Street Corporation | 40
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table presents the dividends declared for each of the series of preferred stock issued and outstanding for the periods indicated:
TABLE 35: PREFERRED STOCK DIVIDENDS
Three Months Ended June 30,
2026 2025
(Dollars in millions, except per share amounts) Dividends Declared per Share Dividends Declared per Depositary Share Total Dividends Declared per Share Dividends Declared per Depositary Share Total
Preferred Stock:
Series G $ 1,367 $ 0.34 $ 7 $ 1,338 $ 0.33 $ 6
Series I 1,675 16.75 25 1,675 16.75 25
Series J 1,675 16.75 14 1,675 16.75 15
Series K 1,613 16.13 12 2,311 23.11 17
Total $ 58 $ 63
Six Months Ended June 30,
2026 2025
(Dollars in millions, except per share amounts) Dividends Declared per Share Dividends Declared per Depositary Share Total Dividends Declared per Share Dividends Declared per Depositary Share Total
Preferred Stock:
Series G $ 2,705 $ 0.68 $ 14 $ 2,675 $ 0.67 $ 13
Series I 3,350 33.50 50 3,350 33.50 50
Series J 3,350 33.50 28 3,350 33.50 29
Series K 3,225 32.25 24 2,311 23.11 17
Total $ 116 $ 109
In July 2026, we declared dividends on our series G, I, J and K preferred stock of approximately $1,367, $1,675, $1,675 and $1,613, respectively, per share, or approximately $0.34, $16.75, $16.75 and $16.13, respectively, per depositary share. These dividends total approximately $7 million, $25 million, $14 million and $12 million on our Series G, I, J and K preferred stock, respectively, which will be paid in September 2026.
Common Stock
On January 19, 2024, we announced a common share repurchase program, approved by the Board and superseding all prior programs, authorizing the purchase of up to $5.0 billion of our common stock beginning in the first quarter of 2024 (the 2024 Program). We repurchased $400 million of our common stock in the second quarter of 2026 and since its inception, we have repurchased an aggregate of $3.3 billion of our common stock under the 2024 Program through June 30, 2026. The program has no set expiration date.
The table below presents the activity under our common share repurchase program for the periods indicated:
TABLE 36: SHARES REPURCHASED
Three Months Ended June 30,
2026 2025
Shares Acquired (In millions) Average Cost per Share Total Acquired (In millions) Shares Acquired (In millions) Average Cost per Share Total Acquired (In millions)
2024 Program 2.5 $ 159.63 $ 400 3.5 $ 85.78 $ 300
Six Months Ended June 30,
2026 2025
Shares Acquired (In millions) Average Cost per Share Total Acquired (In millions) Shares Acquired (In millions) Average Cost per Share Total Acquired (In millions)
2024 Program 5.7 $ 140.80 $ 800 4.5 $ 88.87 $ 400
State Street Corporation | 41
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The table below presents the dividends declared on common stock for the periods indicated:
TABLE 37: COMMON STOCK DIVIDENDS
Three Months Ended June 30,
2026 2025
Dividends Declared per Share Total (In millions) Dividends Declared per Share Total (In millions)
Common Stock $ 0.84 $ 231 $ 0.76 $ 217
Six Months Ended June 30,
2026 2025
Dividends Declared per Share Total (In millions) Dividends Declared per Share Total (In millions)
Common Stock $ 1.68 $ 464 $ 1.52 $ 437
In July 2026, we declared a common stock dividend of $0.92 per share, payable on October 13, 2026, to shareholders of record on October 1, 2026.
Federal and state banking regulations place certain restrictions on dividends paid by subsidiary banks to the parent holding company. In addition, banking regulators have the authority to prohibit bank holding companies from paying dividends. For information concerning limitations on dividends from our subsidiary banks, refer to "Related Stockholder Matters" included under Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, and Note 15 of the notes to the consolidated financial statements in our 2025 Form 10-K. Our common stock and preferred stock dividends, including the declaration, timing and amount thereof, are subject to consideration and approval by the Board at the relevant times.
Stock purchases under our common share repurchase program may be made using various types of transactions, including open market purchases, accelerated share repurchases or other transactions off the market, and may be made under Rule 10b5-1 trading programs. The timing and amount of any stock purchases and the type of transaction may not be ratable over the duration of the program, may vary from reporting period to reporting period and will depend on several factors, including our capital position and our financial performance, investment opportunities, market conditions, the nature and timing of implementation of revisions to the Basel III framework and the amount of common stock issued as part of employee compensation programs. The common share repurchase program does not have specific price targets and may be suspended at any time.
OFF-BALANCE SHEET ARRANGEMENTS
On behalf of clients enrolled in our securities lending program, we lend securities to banks, broker/dealers and other institutions. In most circumstances, we indemnify our clients for the fair market value of those securities against a failure of the borrower to return such securities. Though these transactions are collateralized, the substantial volume of these activities necessitates detailed credit-based underwriting and monitoring processes. The aggregate amount of indemnified securities on loan totaled $395.86 billion and $371.97 billion as of June 30, 2026 and December 31, 2025, respectively. We require the borrower to provide collateral in an amount in excess of 100% of the fair market value of the securities borrowed. We hold the collateral received in connection with these securities lending services as agent, and the collateral is not recorded in our consolidated statement of condition. We revalue the securities on loan and the collateral daily to determine if additional collateral is necessary or if excess collateral is required to be returned to the borrower. We held, as agent, cash and securities totaling $418.63 billion and $393.58 billion as collateral for indemnified securities on loan as of June 30, 2026 and December 31, 2025, respectively.
The cash collateral held by us as agent is invested on behalf of our clients. In certain cases, the cash collateral is invested in third-party repurchase agreements, for which we indemnify the client against loss of the principal invested. We require the counterparty to the indemnified repurchase agreement to provide collateral in an amount in excess of 100% of the amount of the repurchase agreement. In our role as agent, the indemnified repurchase agreements and the related collateral held by us are not recorded in our consolidated statement of condition. Of the collateral of $418.63 billion and $393.58 billion, referenced above, $52.21 billion and $51.76 billion was invested in indemnified repurchase agreements as of June 30, 2026 and December 31, 2025, respectively. We or our agents held $56.31 billion and $55.94 billion as collateral for indemnified investments in repurchase agreements as of June 30, 2026 and December 31, 2025, respectively.
Additional information about our securities finance activities and other off-balance sheet arrangements is provided in Notes 7, 9 and 11 to the consolidated financial statements in this Form 10-Q.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RECENT ACCOUNTING DEVELOPMENTS
Information with respect to recent accounting developments is provided in Note 1 to the consolidated financial statements in this Form 10-Q.
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