BOSTON - February 05, 2009

Unrealized Investment Portfolio Losses Improve by $730 Million After-Tax as of January 30, 2009, Compared to December 31, 2008

More Conservative First-Half Reinvestment Strategy Reduces 2009 Expectations

State Street Corporation today updated its full-year 2008 earnings to reflect the impact of a plan to further strengthen its tangible common equity ratio (TCE) in light of continued unprecedented market disruption. The 2008 results have been updated to reflect a $278 million pre-tax reduction in 2008 incentive compensation as part of a plan to improve TCE. In 2009, the plan to improve TCE includes reducing the Company's quarterly dividend on its common stock to $0.01 per share, a more conservative reinvestment plan affecting assets paying down and maturing in its investment portfolio, actions intended to increase organic capital growth, and a reduction in the size of the company's balance sheet.

For 2008, GAAP earnings per share of $4.30 are up from the previously announced $3.89 per share. Return on common shareholders' equity in 2008 is 14.8%, up from the previously announced 13.4%. For the fourth quarter of 2008, earnings are $0.54 per share, up from the previously announced $0.15 per share. Return on common shareholders' equity is 8.4% in the fourth quarter of 2008, up from the previously announced 2.3%. Operating expenses for full year and fourth quarter 2008, were $6.780 billion and $1.528 billion, respectively, down from the previously announced operating expenses for those periods of $7.058 billion and $1.806 billion, respectively. These expenses reflect the reduced compensation in each period. Revenue for the full year and fourth quarter 2008 of $10.693 billion and $2.673 billion, respectively, are unchanged from the amounts previously announced.

Commenting on the announcement, Ronald E. Logue, State Street's chairman and chief executive officer, said, "State Street has among the highest regulatory capital ratios in the industry; however, we are implementing a plan to alleviate investor concerns about our pro forma TCE ratio, if we were to consolidate the asset-backed commercial paper conduits that we administer. These are extraordinary times that require swift action. Given that we are asking our shareholders to make sacrifices through dividend reductions, we believe that we must also be willing to make our own sacrifices and therefore, we have eliminated the 2008 incentive compensation for the five named executive officers and reduced it by approximately 50% for the remainder of the company."

Logue added, "While our tangible common equity ratio will vary with the impact of the fixed-income markets on our investment portfolio and the conduit assets and our actual results, we currently anticipate that the steps we are announcing will result in a meaningful increase in our tangible common equity ratio during the first quarter and the full year. As of January 30, 2009, our unrealized after-tax loss on our investment portfolio has improved $730 million, from $6.3 billion at December 31, 2008 to $5.6 billion. Also, the unrealized loss in our conduit assets has improved modestly."

Logue concluded, "We are adjusting our outlook for 2009 based on several new factors: a more conservative reinvestment plan affecting assets paying down and maturing in our investment portfolio; we now expect the S & P 500 to average about 900 for the year down from our previous estimate of 1000; and we intend to further restrain expenses in 2009. As a result, we now expect our operating revenue to decline 8% to 12% from record levels in 2008; our operating earnings per share to decline 12% to 16% from the updated record level of $5.61 per share in 2008; and our return on common equity to approach the low end of our 14% to 17% long-term range. At our meeting with investors and analysts later today, we will provide further detail about our TCE improvement plan and our 2009 outlook."

Management presents results on an operating basis in order to provide financial information that is comparable from period to period and to present comparable financial trends with respect to our ongoing business operations. A full reconciliation of operating-basis results to U.S. generally accepted accounting principals (GAAP) is included in the addendum at the end of this press release. The following financial results are presented on an operating basis, and are updated from our previously announced operating results to reflect the effects of the reduced compensation in the full year and fourth quarter 2008 and to otherwise reflect the same adjustments between GAAP and operating, as were previously announced.

For 2008, updated operating-basis earnings per share of $5.61 are up from the previously announced $5.21 per share. Operating-basis return on common shareholders' equity is 19.3%, up from the previously announced 17.9%. In the fourth quarter of 2008, operating-basis earnings are $1.58 per share, up from the previously announced $1.18 per share. Operating-basis return on common shareholders' equity in the fourth quarter of 2008 is 24.3%, up from the previously announced 18.3%. As noted above, these results reflect the reduced salaries and employee benefits expense in each period. Operating-basis revenue for the full year and fourth quarter 2008 of $10.477 billion and $2.641 billion, respectively, are unchanged from the amounts previously announced.

The reduction in expenses results in an increase to State Street Corporation's Tier-1 capital ratio to 20.74% at December 31, 2008 from the previously announced 20.49% and an increase to the leverage ratio to 7.83% from the previously announced 7.74%. The TCE ratio at December 31, 2008, is 4.61%. The pro forma TCE ratio, including consolidation of all assets and liabilities of the State Street-administered asset-backed commercial paper conduits, was 1.19% as of December 31, 2008. Assuming market prices remain constant from January through the rest of 2009 and we execute on our plan, we expect TCE to be approximately 4.91% by the end of 2009.

ADDITIONAL INFORMATION

All per share amounts represent diluted earnings per common share based on average common shares outstanding for the respective period reported.

INVESTOR PRESENTATION

State Street will webcast a pre-recorded investor call today, Thursday, February 5, 2009, at 8:00 a.m. EST, available at www.statestreet.com/stockholder. The conference call will also be available via telephone, at +1 706/645-9291 (Conference ID# 84375390). The pre-recorded call will be available for two weeks. This press release and additional financial information are available on State Street's website, at www.statestreet.com/stockholder, under "Investor Information--Latest News," -Annual Reports and Financial Trends--Financial Trends" and "--Investor Events and Presentations."

In addition, State Street Corporation will webcast a presentation to investors and analysts by Ronald E. Logue, Chairman of the Board and Chief Executive Officer, Edward J. Resch, Executive Vice President and Chief Financial Officer, Joseph ("Jay") L. Hooley, President and Chief Operating Officer and Scott Powers, President and CEO, State Street Global Advisors on Thursday, February 5, 2009, at 12:30 p.m. EST. The presentation will be accessible, in listen-only mode, on State Street's investor relations home page, at www.statestreet.com/stockholder, and via telephone, at +1 ( 706 ) 679 - 5594 (Conference ID # 82862937). Recorded replays of the presentation will be available on the web site and by telephone +1 (706) 645-9291 (Conference ID # 82862937) beginning at 5:30 p.m. EST that day. The telephone replay will be available for approximately two weeks following the conference call. This press release, presentation materials to be referred to on today's webcast and additional financial information will be available prior to that webcast on State Street's website, at www.statestreet.com/stockholder, under "Investor Information--Latest News," -Annual Reports and Financial Trends--Financial Trends" and "--Investor Events and Presentations."

State Street Corporation (NYSE: STT) is the world's leading specialist in providing institutional investors with investment servicing, investment management and investment research and trading services. With $12.04 trillion in assets under custody and $1.44 trillion in assets under management at December 31, 2008, State Street operates in 27 countries and more than 100 geographic markets worldwide and employs 28,475 worldwide.

FORWARD-LOOKING STATEMENTS
This news announcement contains forward-looking statements as defined by United States securities laws, including statements about our goals and expectations regarding our business, financial condition, results of operations and strategies, the financial and market outlook, governmental and regulatory initiatives and developments and the 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 our expectations or beliefs as of any date subsequent to the date of this release.

Important factors that may affect future results and outcomes include:

• global financial market disruptions and the current, worldwide economic recession, and monetary and other governmental actions designed to address such disruptions and recession in the United States and internationally;
• the financial strength of the counterparties with which we or our clients do business and with which we have investment or financial exposure;
• the liquidity of the U.S. and international securities markets, particularly the markets for fixed-income securities, and the liquidity requirements of our customers;
• the credit quality and credit agency ratings of the securities in our investment securities portfolio, a deterioration or downgrade of which could lead to other-than-temporary impairment of the respective securities and the recognition of an impairment loss;
• the maintenance of credit agency ratings for our debt obligations as well as the level of credibility of credit agency ratings;
• the possibility that changes to accounting rules or in market conditions or asset performance may require any off-balance sheet activities, including the unconsolidated asset-backed commercial paper conduits we administer, to be consolidated into our financial statements, requiring the recognition of associated losses;
• the possibility of our customers incurring substantial losses in investment pools where we act as agent, and the possibility of further general reductions in the valuation of assets;
• our ability to attract deposits and other low-cost short-term funding;
• potential changes to the competitive environment, including changes due to the effects of consolidation, extensive and changing government regulation and perceptions of State Street as a suitable service provider or counterparty;
• the level and volatility of interest rates and the performance and volatility of securities, credit, currency and other markets in the United States and internationally;
• our ability to measure the fair value of securities in our investment securities portfolio and in the asset-backed commercial paper conduits we sponsor;
• the results of litigation and similar disputes and, in particular, the effect of current or potential litigation concerning SSgA's active fixed-income strategies, and the enactment of legislation and changes in regulation and enforcement that impact us and our customers, as well as the effects of legal and regulatory proceedings;
• adverse publicity or other reputational harm;
• our ability to pursue acquisitions, strategic alliances and divestures, finance future business acquisitions and obtain regulatory approvals and consents for acquisitions;
• the performance and demand for the products and services we offer, including the level and timing of withdrawals from our collective investment products;
• our ability to continue to grow revenue, attract highly skilled people, control expenses and attract the capital necessary to achieve our business goals and comply with regulatory requirements;
• our ability to control operating risks, information technology systems risks and outsourcing risks, the possibility of errors in the quantitative models we use to manage our business and the possibility that our controls will fail or be circumvented;
• the potential for new products and services to impose additional costs on us and expose us to increased operational risk, and our ability to protect our intellectual property rights;
• our ability to obtain quality and timely services from third parties with which we contract;
• changes in accounting standards and practices, including changes in the interpretation of existing standards, that impact our 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 our 2007 Annual Report on Form 10-K and our subsequent SEC filings, including, in particular, our Current Report on Form 8-K dated January 20, 2009. We encourage investors to read these filings, particularly the sections on Risk Factors, and our 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, February 5, 2009, and we do not undertake efforts to revise those forward-looking statements to reflect events after this date.

STATE STREET CORPORATION
Earnings Press Release Addendum
SELECTED CONSOLIDATED FINANCIAL INFORMATION
Quarters Ended December 31, 2008 and September 30, 2008
		Quarters Ended
		December 31,			September 30,
(Dollars in millions, except per share amounts)		2008			2008			% Change
Fee Revenue:
Servicing fees		$	842		$	966		(13)	%
Management fees			209			261		(20)
Trading services			418			363		15
Securities finance			329			246		34
Processing fees and other			83			63		32
Total fee revenue			1,881			1,899		(1)
Net Interest Revenue:
Interest revenue			1,427			1,027		39
Interest expense			584			502		16
Net interest revenue (1)			843			525		61
Provision for loan losses			-			-
Net interest revenue after provision for loan losses			843			525		61
Gains (Losses) related to investment securities, net			(51)			(3)
Gain on sale of CitiStreet interest, net of exit and other associated costs			-			350
Total revenue			2,673			2,771		(3.5)
Expenses:
Salaries and employee benefits			698			1,022		(32)
Information systems and communications			163			151		8
Transaction processing services			145			165		(12)
Occupancy			124			116		7
Provision for investment account infusion			450			-
Restructuring charges			306			-
Merger and integration costs			27			30		(10)
Other			398			441		(10)
Total expenses			2,311			1,925		20.1
Income before income tax expense			362			846		(57)
Income tax expense			106			369
Net income		$	256		$	477		(46)
Net income available to common shareholders		$	234		$	477		(51)
Earnings Per Common Share:
Basic		$	.55		$	1.11		(50)
Diluted			.54			1.09		(50)
Average Common Shares Outstanding (in thousands):
Basic			431,042			430,872
Diluted			431,902			435,030
Consolidated Selected Financial Information presented above was prepared in accordance with accounting principles generally accepted in the United States.
(1) Net interest revenue on a fully taxable-equivalent basis was $811 million and $640 million for the quarters ended December 31, 2008 and September 30, 2008, respectively. These amounts include taxable-equivalent adjustments of $28 million and $25 million.