Boston, MA ... October 16, 2007

State Street Corporation announced today third-quarter earnings per share of $0.91, an increase from $0.83 earnings per share in the third quarter of 2006. Earnings per share in the third quarter of 2007 include $141 million, or $0.24 per share, of merger and integration costs associated with the July 2, 2007, acquisition of Investors Financial Services Corp. (“Investors Financial”). On an operating basis, which excludes these costs, record earnings are $1.15 per share, up 39% from the third quarter of 2006.

Revenue of $2.240 billion in the third quarter of 2007 is up 48%, or $725 million, compared to $1.515 billion in the year-ago quarter. Total expenses in the third quarter of 2007 are $1.689 billion. Excluding merger and integration costs associated with the Investors Financial acquisition, expenses are $1.548 billion, up 42%, or $458 million, compared to $1.090 billion in the year-ago quarter. For the third quarter of 2007, return on shareholders’ equity is 12.6%, compared to 16.4% in the third quarter of 2006. The return on shareholders’ equity reflects the increase in shareholders’ equity due to the shares issued to shareholders of Investors Financial, net of shares repurchased in the quarter. Excluding the impact of the merger and integration costs, return on equity is 15.8%.

Ronald E. Logue , State Street's chairman and chief executive officer, said, “Our core revenue was strong across both investment servicing and investment management with significant new business from existing and new customers globally. On a year-over-year basis, excluding $221 million in revenue during the third quarter from the acquired Investors Financial business, revenue increased $512 million, or 34%. Servicing and management fees performed particularly well, up 34% (including Investors Financial) from last year’s third quarter. We won $825 billion of assets in new business in servicing and $26 billion of net new business in asset management. Net interest revenue, also including Investors Financial, is up $198 million, or 74%. Net interest margin is 1.73%. Excluding merger and integration costs associated with the acquisition, we achieved significant positive operating leverage compared both to the year-ago quarter and to the second quarter.”

Logue continued, “Both State Street and the acquired business from Investors Financial performed very well during the quarter. Due to the strong performance of Investors Financial, we now expect this year’s dilution from the acquisition to be approximately $0.06 per share, reduced by more than half from our original outlook, and modestly accretive in 2008. Our improved outlook is due to our success in retaining revenue, converting accounts, and reducing costs.”

Commenting on the impact of recent market activity affecting fixed-income investments, Logue added, “The fixed-income markets have experienced unprecedented disruption in this past quarter. We believe we are well positioned with both our portfolio and our asset-backed commercial paper conduits. While liquidity in the fixed income market remains challenging, our concentration in high-quality assets in our own portfolios as well as in the conduits, have limited the impact of this disruption on our business. We believe that we weathered the disruption in the fixed-income market well—without significantly affecting State Street’s results. We’re disappointed in the performance of a small number of fixed-income strategies at State Street Global Advisors which performed below our expectation.”

Looking forward, Logue concluded, “Through nine months we are performing near or above the top of our ranges for growth in earnings per share (10% - 15%), revenue (20% - 22%), and achievement of return on equity (14% - 17%), all on an operating basis, which excludes merger and integration costs in 2007 and tax adjustments in the second quarter of 2006. We now expect to exceed the top of the ranges for the year for all three goals, assuming markets remain relatively stable.”

In reporting its financial results for the third quarter of 2007, State Street has prepared information in four categories:

• “Baseline” results are operating results excluding the “Investors Financial contribution” and are presented on a fully taxable-equivalent basis.
• “Investors Financial” results are the revenue and expenses, including financing costs and amortization of intangibles, attributable to the Investors Financial business acquired on July 2, 2007. Per-share amounts reflect the effect of the acquisition on outstanding shares.
• “Operating” results are “reported” results excluding merger and integration costs. They are presented on a fully taxable-equivalent basis.
• “Reported” results are in accordance with U.S. generally accepted accounting principles (GAAP).

State Street believes that providing financial information in this format in addition to financial information prepared in accordance with GAAP, assists investors and others by providing them with financial trends of ongoing business activities on a comparable basis. Management believes that providing separate Investors Financial results and baseline financial information further assists investors and analysts in understanding the effect of that acquisition.

(a) represents State Street excluding Investors Financial contribution and related merger and integration costs; also presented on a fully taxable-equivalent basis.

(b) represents revenue and expenses, including financing costs and amortization of intangibles, attributable to the Investors Financial business acquired on July 2, 2007, but excluding merger and integration costs. Presented on a fully taxable equivalent basis . Per-share amounts reflect the impact on outstanding shares from the issuance of approximately 61 million shares for the acquisition.

(c) excludes merger and integration costs in 2007, presented on a fully taxable-equivalent basis.

THIRD-QUARTER RESULTS VS. YEAR-AGO QUARTER
Total revenue in the third quarter increased 47.9% to $2.2 billion, compared to last year’s third quarter and total operating expenses, excluding $141 million of merger and integration costs, grew 42.0% to $1.5 billion over the same period. As a result, excluding merger and integration costs, State Street generated about 580 basis points of positive operating leverage.

Servicing fees are up 37%, to $937 million from $685 million in last year’s third quarter. The increase is attributable to business from customers added from the Investors Financial acquisition , business from new and existing customers, and higher average equity market valuations. Total assets under custody are $15.1 trillion at September 30, 2007, up 34%, compared with $11.3 trillion at September 30, 2006. Daily average values for the S&P 500 Index are up 16%, for the MSCI ® EAFE Index sm are up 20%, and for the NASDAQ are up 22% during the third quarter of 2007 from the year-ago quarter.

Investment management fees, generated by State Street Global Advisors, are $299 million, up 26% from $238 million in last year’s third quarter. Management fees reflect continued new business and an increase in average month-end equity valuations, partially offset by lower performance fees. Total assets under management are $2.0 trillion at September 30, 2007, up 22%, compared to $1.6 trillion at September 30, 2006.

Trading services revenue, which includes foreign exchange trading revenue and brokerage and other fees is $320 million for the quarter, up 87% from $171 million a year ago. The increase is driven by improved volumes and higher FX volatility. Higher brokerage and other fee revenue is due to the impact of the Currenex acquisition, increased transition management, and strong trading volumes.

Securities finance revenue is $165 million in the quarter, up 90% compared to $87 million in the year-ago quarter, reflecting an improvement in spreads and an increase in volume due to disruption in the fixed income markets.

Processing fees and other revenue are down 6%, or $4 million, at $61 million, compared to $65 million a year ago, due to a reduction in the fee income from the asset- backed commercial paper program primarily due to disruption in the fixed-income markets as well as the consolidation of tax-exempt investments onto the balance sheet at the end of the third quarter of 2006, partially offset by revenue from the Investors Financial acquisition.

Net interest revenue on a fully taxable-equivalent basis is $481 million, an increase of $206 million, or 75% from $275 million a year ago. The increase in net interest revenue is due to a favorable mix of non-US deposits, the impact of the Investors Financial acquisition, and the improved yields from reinvested assets. Net interest margin increased to 1.73% from 1.22% a year ago.

Total expenses in the third quarter are $1.7 billion. Excluding merger and integration costs, total expenses in the third quarter of 2007 increased from $1.090 billion to $1.548 billion, up $458 million, or 42.0%, from the year-ago quarter primarily due to the inclusion of Investors Financial’s operating expenses as a result of the acquisition. Baseline expenses increased 26%, while the remainder of the increase was due to the acquired Investors Financial business. Salaries and benefits expenses are up 43% to $916 million, primarily attributable to additions to headcount resulting from the Investors Financial acquisition, incentive compensation due to improved year-to-date performance, and increases in benefits. The increase in expenses also includes higher transaction processing services, up 36% to $165 million, due to higher volumes. Expenses for information systems and communications increased $24 million, or 20%, to $145 million. Occupancy expense increased 20%, or $18 million, to $109 million due to costs associated with the acquired Investors Financial business. Other expenses are up 81% at $213 million due primarily to costs associated with the acquired Investors Financial business, as well as increased securities processing costs.

The effective tax rate for the quarter is 35.0% compared with 34.6% in the third quarter of last year.

RESULTS OF THE THIRD QUARTER OF 2007 VS. THE SECOND QUARTER OF 2007
Third-quarter earnings per share of $0.91 compares to earnings per share of $1.07 per share in the second quarter. Excluding merger and integration costs associated with the Investors Financial acquisition, earnings per share in the third quarter are $1.15 per share, up 7% from the second quarter of 2007. Total revenue in the third quarter of $2.240 billion is up $319 million, or 16.6% versus $1.921 billion in the second quarter. Excluding merger and integration costs, total expenses are $1.548 billion, up 14.0%, or $190 million, versus $1.358 billion in the second quarter. As a result, excluding merger and integration costs, State Street achieved 260 basis points in positive operating leverage, comparing the third quarter with the second quarter. For the third quarter of 2007, return on shareholders’ equity is 12.6% compared to 19.2% in the second quarter and is 15.8% excluding the impact of the merger and integration costs.

Servicing fees are up 22% at $937 million due to the impact of revenue from Investors Financial and new business. Management fees are up 5% to $299 million principally due to new business. Trading services revenue increased 23% to $320 million due to higher volatility and volumes in foreign exchange, as well as the impact of the Currenex acquisition and strong trading volumes. Securities finance revenue was up 2% at $165 million, due to the impact of revenue from the Investors Financial acquisition, offset partially by lower volumes and slightly lower spreads, compared to a seasonally high second quarter. Processing fees and other decreased 6% from $65 million to $61 million due primarily to the impact of lower revenue from the asset-backed commercial paper program, partially offset by the impact of the Investors Financial acquisition. Net interest revenue on a fully taxable-equivalent basis was up 21% at $481 million, compared to the second quarter, due primarily to the impact of the Investors Financial acquisition, the mix of non-U.S. deposits, and the re-investment of maturing securities at higher yields.

All expense categories increased compared to the second quarter primarily due to the impact of the Investors Financial acquisition. Salaries and employee benefits expense total $916 million, an increase of $108 million, or 13%, from $808 million, attributable primarily to headcount growth from Investors Financial and increases in incentive compensation. Transaction processing services expense increased $24 million, or 17%, to $165 million due to higher volumes. Due primarily to Investors Financial, information systems and communication expense was up 13%, or $17 million, to $145 million and occupancy expense was up 11%, or $11 million, to $109 million. Other expenses are up $30 million, or 16%, from $183 million to $213 million also due primarily to costs associated with the Investors Financial acquisition.

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

On July 2, 2007, the Corporation issued 60.8 million shares to former shareholders of Investors Financial. As previously disclosed, State Street entered into a $1 billion accelerated share repurchase of its common stock with an affiliate of Lehman Brothers Inc. To date, the Corporation has repurchased approximately 13.3 million shares and has 13.9 million shares of remaining capacity under its existing stock repurchase programs.

INVESTOR CONFERENCE CALL
State Street will webcast an investor conference call today, Tuesday, October 16, 2007, at 9:30 a.m. edt, available at www.statestreet.com/stockholder. The conference call will also be available via telephone, at +1 719/457-2727 (confirmation code 9741244). Recorded replays of the conference call will be available on the web site, and by telephone at +1 402/220-4230 (passcode 9741244), 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 provider of financial services to institutional investors, including investment servicing, investment management and investment research and trading. With $15.1 trillion in assets under custody and $2.0 trillion in assets under management, State Street operates in 26 countries and more than 100 geographic markets worldwide and employs 26,425 worldwide. For more information, visit State Street’s web site at www.statestreet.com or call 877/639-7788 [NEWS STT] toll-free in the United States and Canada, or +1 678/999/4577 outside those countries.

FORWARD-LOOKING STATEMENTS
This news announcement contains forward-looking statements as defined by United States securities laws, including statements about the recently completed acquisition of Investors Financial Services Corporation, as well as about our financial goals, the financial outlook and business environment. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing State Street’s expectations or beliefs as of any date subsequent to the date of this release.

Important factors that may affect future results and outcomes include:

• State Street’s ability to integrate and convert acquisitions into its business, including the acquisition of Investors Financial Services Corp.;
• the level and volatility of interest rates, particularly in the U.S. and Europe; the performance and volatility of securities, currency and other markets in the U.S. and internationally; economic conditions and monetary and other governmental actions designed to address those conditions;
• the liquidity of the US and European securities markets, particularly the markets for fixed income securities, including asset–backed commercial paper; and the liquidity requirements of our customers;
• State Street’s ability to attract non-interest bearing deposits and other low-cost funds;
• The performance and demand for the investment products we offer;
• the competitive environment in which State Street operates;
• the enactment of legislation and changes in regulation and enforcement that impact State Street and its customers;
• State Street’s ability to continue to grow revenue, control expenses and attract the capital necessary to achieve its business goals and comply with regulatory requirements;
• State Street’s ability to control systemic and operating risk;
• trends in the globalization of investment activity and the growth on a worldwide basis in financial assets;
• trends in governmental and corporate pension plans and savings rates;
• changes in accounting standards and practices, including changes in the interpretation of existing standards, that impact State Street’s consolidated financial statements;
• and changes in tax legislation and in the interpretation of existing tax laws by U.S. and non-U.S. tax authorities that impact the amount of taxes due.

Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in State Street's 2006 Annual Report on Form 10-K and its subsequent SEC filings. State Street encourages investors to read its 10-K, particularly the section on Risk Factors, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, October 16, 2007, and State Street will not undertake efforts to revise those forward-looking statements to reflect events after this date.