Regulatory Capital

6 Months Ended

Jun. 30, 2021

Banking and Thrift, Other Disclosures [Abstract]

Regulatory Capital

Regulatory Capital

For additional information on our regulatory capital, including the regulatory capital requirements administered by federal banking agencies, and to which we are subject, refer to page 174 in Note 16 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2020 Form 10-K.

As of June 30, 2021, we and State Street Bank exceeded all regulatory capital adequacy requirements to which we were subject to. As of June 30, 2021, State Street Bank was categorized as “well capitalized” under the applicable regulatory capital adequacy framework, and exceeded all “well capitalized” ratio guidelines to which it was subject. Management believes that no conditions or events have occurred since June 30, 2021 that have changed the capital categorization of State Street Bank.

The following table presents the regulatory capital structure, total RWA, related regulatory capital ratios and the minimum required regulatory capital ratios for us and State Street Bank as of the dates indicated.

					State Street Corporation												State Street Bank
(Dollars in millions)					Basel III Advanced Approaches June 30, 2021			Basel III Standardized Approach June 30, 2021			Basel III Advanced Approaches December 31, 2020			Basel III Standardized Approach December 31, 2020			Basel III Advanced Approaches June 30, 2021			Basel III Standardized Approach June 30, 2021			Basel III Advanced Approaches December 31, 2020			Basel III Standardized Approach December 31, 2020
Common shareholders' equity:
Common stock and related surplus					$	10,750		$	10,750		$	10,709		$	10,709		$	12,893		$	12,893		$	12,893		$	12,893
Retained earnings					24,300			24,300			23,442			23,442			14,229			14,229			12,939			12,939
Accumulated other comprehensive income (loss)					(422)			(422)			187			187			(227)			(227)			371			371
Treasury stock, at cost					(11,437)			(11,437)			(10,609)			(10,609)			—			—			—			—
Total					23,191			23,191			23,729			23,729			26,895			26,895			26,203			26,203
Regulatory capital adjustments:
Goodwill and other intangible assets, net of associated deferred tax liabilities					(9,070)			(9,070)			(9,019)			(9,019)			(8,798)			(8,798)			(8,745)			(8,745)
Other adjustments(1)					(430)			(430)			(333)			(333)			(244)			(244)			(152)			(152)
Common equity tier 1 capital					13,691			13,691			14,377			14,377			17,853			17,853			17,306			17,306
Preferred stock					1,976			1,976			2,471			2,471			—			—			—			—
Tier 1 capital					15,667			15,667			16,848			16,848			17,853			17,853			17,306			17,306
Qualifying subordinated long-term debt					1,592			1,592			961			961			756			756			966			966
Allowance for credit losses					—			120			1			148			—			120			10			148
Total capital					$	17,259		$	17,379		$	17,810		$	17,957		$	18,609		$	18,729		$	18,282		$	18,420
Risk-weighted assets:
Credit risk(2)					$	69,357		$	119,659		$	63,367		$	114,892		$	62,321		$	116,435		$	58,960		$	110,797
Operational risk(3)					44,838			NA			44,150			NA			43,413			NA			43,663			NA
Market risk					2,263			2,263			2,188			2,188			2,263			2,263			2,188			2,188
Total risk-weighted assets					$	116,458		$	121,922		$	109,705		$	117,080		$	107,997		$	118,698		$	104,811		$	112,985
Adjusted quarterly average assets					$	298,682		$	298,682		$	263,490		$	263,490		$	295,431		$	295,431		$	260,489		$	260,489
Capital Ratios:	2021 Minimum Requirements(4)		2020 Minimum Requirements(4)
Common equity tier 1 capital	8.0	%	8.0	%	11.8		%	11.2		%	13.1		%	12.3		%	16.5		%	15.0		%	16.5		%	15.3		%
Tier 1 capital	9.5		9.5		13.5			12.9			15.4			14.4			16.5			15.0			16.5			15.3
Total capital	11.5		11.5		14.8			14.3			16.2			15.3			17.2			15.8			17.4			16.3
Tier 1 leverage(5)	4.0		4.0		5.2			5.2			6.4			6.4			6.0			6.0			6.6			6.6

(1) Other adjustments within CET1 capital primarily include the overfunded portion of our defined benefit pension plan obligation net of associated deferred tax liabilities, disallowed deferred tax assets, and other required credit risk based deductions.

(2) Includes a CVA which reflects the risk of potential fair value adjustments for credit risk reflected in our valuation of OTC 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%.
(5) State Street Bank is required to maintain a minimum Tier 1 leverage ratio of 5.0% as it is the insured depository institution subsidiary of State Street Corporation, a U.S. G-SIB.
NA Not applicable