Shareholders’ Equity

Preferred Stock:

In the three months ended March 31, 2014, we issued 30 million depositary shares, each representing a 1/4,000th ownership interest in a share of State Street’s fixed-to-floating-rate non-cumulative perpetual preferred stock, Series D, without par value, with a liquidation preference of $100,000 per share (equivalent to $25 per depositary share), which we refer to as our Series D preferred stock, in a public offering. The aggregate proceeds from the offering, net of underwriting discounts, commissions and other issuance costs, were approximately $742 million.

On March 15, 2024, or any dividend payment date thereafter, the Series D preferred stock and corresponding depositary shares may be redeemed by us, in whole or in part, at a redemption price equal to $100,000 per share (equivalent to $25 per depositary share) plus any declared and unpaid dividends, without accumulation of any undeclared dividends. The Series D preferred stock and corresponding depositary shares may be redeemed at our option in whole, but not in part, prior to March 15, 2024, upon the occurrence of a regulatory capital treatment event, as defined in the certificate of designation with respect to the Series D preferred stock, at a redemption price equal to $100,000 per share (equivalent to $25 per depositary share) plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

In the three months ended September 30, 2014, we declared a dividend on our Series D preferred stock of $1,475 per share, or approximately $0.37 per depositary share, totaling approximately $11 million. In the nine months ended September 30, 2014, we declared aggregate dividends on our Series D preferred stock, Series D, of $3,130 per share, or approximately $0.78 per depositary share, totaling approximately $23 million. We did not declare a dividend on our Series D preferred stock in the three months ended March 31, 2014.

In the three months ended September 30, 2014, we declared a dividend on our non-cumulative perpetual preferred stock, Series C (represented by depositary shares, each representing a 1/4,000th ownership interest in a share of State Street's non-cumulative perpetual preferred stock, Series C), referred to as our Series C preferred stock, of $1,313 per share, or approximately $0.33 per depositary share, totaling approximately $7 million. In the nine months ended September 30, 2014, we declared aggregate dividends on our Series C preferred stock of $3,939 per share, or approximately $0.99 per depositary share, totaling approximately $20 million. In the three months ended September 30, 2013, we declared a dividend on our Series C preferred stock of $1,313 per share, or approximately $0.33 per depositary share, totaling approximately $7 million. In the nine months ended September 30, 2013, we declared aggregate dividends on our Series C preferred stock of $3,939 per share, or approximately $0.98 per depositary share, totaling approximately $20 million.

Dividends on shares of both our Series C and Series D preferred stock are not mandatory and are not cumulative. If declared, dividends will be payable on the liquidation preference of $100,000 per share quarterly in arrears on March 15, June 15, September 15 or December 15 of each year at an annual rate of 5.25% and 5.90%, respectively. If we issue additional shares of our Series C or Series D preferred stock after the original issue date, dividend rights with respect to such shares will commence from the original issue date of such additional shares. Dividends on our Series C and Series D preferred stock will not be declared to the extent that such declaration would cause us to fail to comply with applicable laws and regulations, including applicable federal regulatory capital guidelines.

On September 15, 2017, or any dividend payment date thereafter, the Series C preferred stock and corresponding depositary shares may be redeemed by us, in whole or in part, at a redemption price equal to $100,000 per share (equivalent to $25 per depositary share) plus any declared and unpaid dividends, without accumulation of any undeclared dividends. The Series C preferred stock and corresponding depositary shares may be redeemed at our option, in whole or in part, prior to September 15, 2017, upon the occurrence of a regulatory capital treatment event, as defined in the certificate of designation with respect to the Series C preferred stock, at a redemption price equal to $100,000 per share (equivalent to $25 per depositary share) plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

Common Stock:

In March 2014, our Board of Directors approved a common stock purchase program authorizing the purchase of up to $1.70 billion of our common stock through March 31, 2015. In the three months ended September 30, 2014, we purchased approximately 5.8 million shares of our common stock under that program, at an average per-share cost of $70.61 and an aggregate cost of approximately $410 million.

In the nine months ended September 30, 2014, we purchased approximately 12.1 million shares of our common stock at an average per-share cost of $67.70 and an aggregate cost of approximately $820 million under that program, all in the three months ended June 30, 2014 and September 30, 2014. No shares were purchased under that program in the three months ended March 31, 2014.

In the three months ended March 31, 2014, we purchased approximately 6.1 million shares of our common stock at an average cost of $69.14 per share and an aggregate cost of approximately $420 million, under a previous program approved by the Board in March 2013. As of March 31, 2014, no shares remained available for purchase under the March 2013 program.

Under both programs, in the nine months ended September 30, 2014, we purchased in the aggregate approximately 18.2 million shares of our common stock at an average per-share cost of $68.18 and an aggregate cost of approximately $1.24 billion. Shares acquired under the March 2014 common stock purchase program which remained unissued as of September 30, 2014 were recorded as treasury stock in our consolidated statement of condition as of September 30, 2014.

In the three months ended September 30, 2014, we declared a quarterly common stock dividend of $0.30 per share, totaling approximately $126 million. In the three months ended September 30, 2013, we declared a quarterly common stock dividend of $0.26 per share, totaling approximately $115 million. In the nine months ended September 30, 2014, we declared aggregate common stock dividends of $0.86 per share, totaling approximately $366 million, compared to aggregate common stock dividends of $0.78 per share, totaling approximately $350 million, declared in the nine months ended September 30, 2013.

Accumulated Other Comprehensive Income (Loss):

The following table presents the after-tax components of AOCI as of the dates indicated:



(In millions)	September 30, 2014			December 31, 2013
Net unrealized gains on cash flow hedges	$	217		$	161
Net unrealized gains (losses) on available-for-sale securities portfolio	254			(56		)
Net unrealized gains (losses) related to reclassified available-for-sale securities	46			(72		)
Net unrealized gains (losses) on available-for-sale securities	300			(128		)
Net unrealized losses on available-for-sale securities designated in fair value hedges	(106		)	(97		)
Other-than-temporary impairment on available-for-sale securities related to factors other than credit	1			4
Net unrealized losses on hedges of net investments in non-U.S. subsidiaries	(14		)	(14		)
Other-than-temporary impairment on held-to-maturity securities related to factors other than credit	(31		)	(47		)
Net unrealized losses on retirement plans	(185		)	(203		)
Foreign currency translation	(289		)	229
Total	$	(107	)	$	(95	)

In the nine months ended September 30, 2014, we realized net gains of $15 million, or $9 million net of related taxes as presented in the tables that follow, from sales of available-for-sale securities. Unrealized pre-tax losses of $43 million were included in AOCI as of December 31, 2013, net of deferred tax benefits of $17 million, related to these sales. In the nine months ended September 30, 2013, we realized net gains of $11 million, or $7 million net of related taxes as presented in the tables that follow, from sales of available-for-sale securities. Unrealized pre-tax gains of $25 million were included in AOCI as of December 31, 2012, net of deferred taxes of $10 million, related to these sales.

The following tables present changes in AOCI by component, net of related taxes, for the periods indicated:



	Nine Months Ended September 30, 2014
(In millions)	Net Unrealized Gains (Losses) on Cash Flow Hedges		Net Unrealized Gains (Losses) on Available-for-Sale Securities			Net Unrealized Losses on Hedges of Net Investments in Non-U.S. Subsidiaries			Other-Than-Temporary Impairment on Held-to-Maturity Securities			Net Unrealized Losses on Retirement Plans			Foreign Currency Translation			Total
Beginning balance	$	161	$	(221	)	$	(14	)	$	(47	)	$	(203	)	$	229		$	(95	)
Other comprehensive income (loss) before reclassifications	54		425			—			15			(1		)	(518		)	(25		)
Amounts reclassified out of AOCI	2		(9		)	—			1			19			—			13
Other comprehensive income (loss)	56		416			—			16			18			(518		)	(12		)
Ending balance	$	217	$	195		$	(14	)	$	(31	)	$	(185	)	$	(289	)	$	(107	)



	Nine Months Ended September 30, 2013
(In millions)	Net Unrealized Gains (Losses) on Cash Flow Hedges		Net Unrealized Gains (Losses) on Available-for-Sale Securities			Net Unrealized Losses on Hedges of Net Investments in Non-U.S. Subsidiaries			Other-Than-Temporary Impairment on Held-to-Maturity Securities			Net Unrealized Losses on Retirement Plans			Foreign Currency Translation		Total
Beginning balance	$	69	$	519		$	(14	)	$	(65	)	$	(283	)	$	134	$	360
Other comprehensive income (loss) before reclassifications	59		(578		)	—			11			(6		)	22		(492		)
Amounts reclassified out of AOCI	2		(3		)	—			3			15			1		18
Other comprehensive income (loss)	61		(581		)	—			14			9			23		(474		)
Ending balance	$	130	$	(62	)	$	(14	)	$	(51	)	$	(274	)	$	157	$	(114	)

The following tables present after-tax reclassifications out of AOCI for the periods indicated:



	Three Months Ended September 30,
	2014		2013
(In millions)	Amounts Reclassified out of AOCI					Affected Line Item in Consolidated Statement of Income
Cash flow hedges:
Interest-rate contracts	$	1	$	—		Net interest revenue
Available-for-sale securities:
Net realized gains from sales of available-for-sale securities, net of related taxes of ($2)	—		(4		)	Net gains (losses) from sales of available-for-sale securities
Held-to-maturity securities:
Other-than-temporary impairment on held-to-maturity securities related to factors other than credit, net of related tax benefits of $1	—		1			Losses reclassified (from) to other comprehensive income
Retirement plans:
Amortization of actuarial losses, net of related tax benefits of $3 and $3, respectively	2		5			Compensation and employee benefits expenses
Total reclassifications out of AOCI	$	3	$	2



	Nine Months Ended September 30,
	2014			2013
(In millions)	Amounts Reclassified out of AOCI						Affected Line Item in Consolidated Statement of Income
Cash flow hedges:
Interest-rate contracts, net of related tax benefit of $1 and $1, respectively	$	2		$	2		Net interest revenue
Available-for-sale securities:
Net realized gains from sales of available-for-sale securities, net of related taxes of ($6) and ($4), respectively	(9		)	(7		)	Net gains (losses) from sales of available-for-sale securities
Other-than-temporary impairment on available-for-sale securities related to factors other than credit, net of related tax benefit of $2	—			4			Losses reclassified (from) to other comprehensive income
Held-to-maturity securities:
Other-than-temporary impairment on held-to-maturity securities related to factors other than credit, net of related tax benefit of $3 for 2013	1			3			Losses reclassified (from) to other comprehensive income
Retirement plans:
Amortization of actuarial losses, net of related taxes of ($2) and tax benefits of $9, respectively	19			15			Compensation and employee benefits expenses
Foreign currency translation:
Sales of non-U.S. entities, net of related taxes of ($1)	—			1			Processing fees and other revenue
Total reclassifications out of AOCI	$	13		$	18