Boston, MA ... July 19, 2005

State Street Corporation announced today second-quarter earnings per share of $0.66. This result is up 2% from $0.65 in last year’s second quarter, which included $0.03 per share for merger and integration costs associated with the acquisition of a substantial portion of Deutsche Bank’s Global Securities Services (GSS) business. Revenue of $1.36 billion in the second quarter of 2005 is up 6%, or $74 million, compared to $1.29 billion in the year-ago quarter. Total expenses in the second quarter of 2005 of $1.03 billion are up 8%, or $75 million, which includes $26 million for a previously announced subleasing agreement, compared to $953 million in the year-ago quarter. Net income is $220 million, the same as in the year-ago quarter. For the second quarter of 2005, return on stockholders’ equity is 14.4% compared to 14.9% in the second quarter of 2004.

Ronald E. Logue , State Street's chairman and chief executive officer, said, “We are pleased with the results of the quarter, which were driven by continued strong fee revenue growth in investment servicing and management. Excluding the impact of the sub-lease agreement, we achieved sequential-quarter positive operating leverage again this quarter, helped by our strong focus on expense control. We are also pleased with our progress in creating opportunities to more actively manage our balance sheet in the face of a challenging interest-rate environment.”

Looking forward, Logue concluded, “As in past years, we expect seasonal weakness in market-driven revenue in the third quarter, however, we are positioned to achieve our financial goals and continue to expect that our results will fall toward the lower end of the previously announced ranges.

SECOND QUARTER RESULTS VS. YEAR-AGO QUARTER
Servicing fees are up 8%, to $618 million from $570 million in last year’s second quarter. The increase is attributable to new business from existing and new clients in 2005 and higher equity market valuations. Total assets under custody are $9.6 trillion, up 5%, compared with $9.1 trillion in the year-ago quarter. Daily average values for the S&P 500 Index are up 5% from the second quarter of 2004; daily average values for the MSCI ® EAFE Index sm are up 13%. The average values for the NASDAQ are up about 1%.

Investment management fees, generated by State Street Global Advisors, are $173 million, up 13% from $153 million a year ago. Management fees reflect continued new business and an increase in average month-end equity valuations. Total assets under management are $1.4 trillion, up 12%, compared to $1.2 trillion the previous year.

Securities lending revenue is $113 million in the quarter, up 27% compared to $89 million in the year-ago quarter, reflecting improved spreads and an increase in demand. Both quarters’ results represent seasonally high activity.

Trading services revenue, which includes foreign exchange trading revenue and brokerage and other fees, is $169 million for the quarter, up 8% from $156 million a year ago. The increase was driven by strong transition management business.

Processing fees and other revenue decreased $7 million, or 9%, to $70 million primarily due to a decline in payments from Deutsche Bank in consideration of net interest revenue for assets that are in transition to the State Street balance sheet.

Net interest revenue on a fully taxable-equivalent basis is $228 million, a decrease of $10 million from $238 million a year ago. The reduction of net interest revenue is attributed to a flatter yield curve and narrower spreads, slightly offset by an increase in average balance sheet size.

Expenses increased from $953 million to $1.03 billion, up $75 million, or 8%. Salaries and benefits expenses are up 8% to $552 million, primarily due to the impact of merit adjustments and benefits expense. Expenses for information systems & communications declined $9 million, or 7%, to $121 million due to reductions related to the conversion of Deutsche Bank’s Global Securities Services business. The increase in expenses also includes higher transaction processing services, up 9% to $112 million, due to higher non-US volumes in the brokerage business. Occupancy expense increased 36%, or $30 million, to $114 million primarily due to the impact of the previously announced agreement to sub-lease several floors at the Corporation’s headquarters building. Due to this transaction, the Corporation recorded a pre-tax charge of $26 million, or $0.05 per share, in the second quarter. Other expenses rose 17%, or $19 million, to $129 million due to increases in professional services related to the planned expansion of the Treasury group function, as well as compliance, regulatory requirements, and growth initiatives.

The effective tax rate was 34.0% in both quarters.

State Street purchased approximately 2.2 million shares of its common stock during the second quarter at an average price of $46.36 per share. The remaining authorization to purchase shares is 12.8 million shares.

SECOND-QUARTER RESULTS VS. FIRST QUARTER
Second-quarter net income per share of $0.66 compares to net income per share of $0.67 in the first quarter. Total revenue in the second quarter of $1.36 billion is up 4.1% versus $1.31 billion in the first quarter. Total expenses, including $26 million for the sub-lease agreement, are $1.03 billion, up 6.4% versus $966 million in the first quarter. Excluding the impact of the sub-lease agreement, expenses rose 3.7%. Return on stockholders equity of 14.4% in the second quarter compares with 15.0% in the first quarter.

Servicing fees are up 3% to $618 million due to new business and management fees are down 2% to $173 million due a slight decline in equity valuations. Securities lending revenue increased 61%, from $70 million to $113 million, due to improved spreads and seasonally high volumes. Processing fees and other are down $14 million, or 17%, from $84 million to $70 million. Net interest revenue on a fully taxable-equivalent basis increased $5 million, or 2%, to $228 million, due to a slightly larger balance sheet, offset somewhat by a flatter yield curve.

Salaries and employee benefits total $552 million, an increase of $28 million, or 5%, from $524 million, due to the impact of slightly higher staff levels, benefit costs, and merit increases. Other expenses are up $13 million, or 11%, from $116 million to $129 million primarily due to costs associated with expansion of the Treasury group infrastructure, compliance and regulatory requirements, and growth initiatives. Occupancy expense increased to $114 million from $92 million due to the charge associated with the previously announced agreement to sub-lease several floors at the Corporation’s headquarters.

ADDITIONAL INFORMATION
All per share amounts represent diluted earnings per share.

INVESTOR CONFERENCE CALL
State Street will webcast an investor conference call today, Tuesday, July 19, 2005, at 9:30 a.m. edt, available at www.statestreet.com/stockholder. The conference call will also be available via telephone, at +1 719/457-2617 (confirmation code 815851). Recorded replays of the conference call will be available on the web site, and by telephone at +1 402/220-4230, beginning at 2:00 PM today. This press release and additional financial information is available on State Street’s website, at www.statestreet.com/stockholder, under “Financial Reports.”

State Street Corporation (NYSE: STT) is the world's leading specialist in providing institutional investors with investment servicing, investment management and investment research and trading. With $9.6 trillion in assets under custody and $1.4 trillion in assets under management, State Street operates in 25 countries and more than 100 geographic markets worldwide and employs 20,100 people worldwide. For more information, visit State Street’s web site at www.statestreet.com or call 877/639-7788 [NEWS STT] toll-free in the United States and Canada, or +1 202/266-3340 outside those countries.

This news announcement contains forward-looking statements as defined by United States securities laws, including statements about the financial outlook and business environment. Those statements are based on current expectations and involve a number of risks and uncertainties, including those related to the pace at which State Street adds new clients or at which existing clients use additional services, the value of global and regional financial markets, the pace of cross-border investment activity, changes in interest rates, the pace of worldwide economic growth and rates of inflation, the extent of volatility in currency markets, consolidations among clients and competitors, State Street’s business mix, the dynamics of markets State Street serves, and State Street’s success at integrating and converting acquisitions into its business. Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in State Street's 2004 annual report on Form 10-K and subsequent SEC filings. State Street encourages investors to read the Corporation's annual report, particularly the section on factors that may affect financial results, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, July 19, 2005, and the Corporation will not undertake efforts to revise those forward-looking statements to reflect events after this date.