State Street(STT) - 2025 Q4 - Annual Report

Financial Performance - As of December 31, 2025, the company reported $53.80 trillion in Assets Under Custody/Administration (AUC/A) and $5.67 trillion in Assets Under Management (AUM) [26] - The consolidated total assets were $366.05 billion, with total deposits of $274.35 billion and total shareholders' equity of $27.84 billion [26] - State Street Investment Management had approximately $5.67 trillion in assets under management (AUM) as of December 31, 2025 [41] - The company’s fee revenue is a significant portion of total revenue and may decline due to market conditions and client preferences [21] - The company may need to raise additional capital or debt in the future, which may not be available on favorable terms [22] - State Street's investment securities portfolio and financial condition could be adversely affected by changes in financial markets and interest rates [21] Competition and Market Environment - The company is subject to intense competition, which could negatively affect profitability and financial results [17] - The company faces competitive pressures from a wide range of financial institutions, including custodial banks and investment management firms, as it navigates a rapidly evolving market [43] - The company faces increasing competition from a broad range of financial institutions and technology companies as markets evolve [43] - Significant pricing pressure and variability in financial results are anticipated, particularly in AUC/A and AUM [17] Employee and Operational Insights - The company had approximately 52,000 employees as of December 31, 2025 [26] - The employee population decreased by approximately 2% to around 52,000 employees as of December 31, 2025, primarily due to operational simplification efforts [54] - Approximately 77% of State Street's employees are located outside the United States [54] - State Street's human capital strategy emphasizes employee development and retention, with a focus on creating an inclusive culture that drives productivity and innovation [48] - The company aims to implement efficiencies through organization design and technology, contributing to its operational simplification efforts [54] Regulatory Environment - The company is subject to extensive regulation as a Global Systemically Important Bank (G-SIB), which impacts its operational flexibility compared to some competitors [47] - The company is subject to extensive regulation and supervision, with ongoing changes expected in regulatory requirements and interpretations [58] - Regulatory compliance costs have increased due to heightened expectations from U.S. and international regulators regarding capital and liquidity management [104] - The Dodd-Frank Act mandates that bank holding companies act as a source of financial strength for their banking subsidiaries, impacting resource allocation decisions [151] Risk Management - The company faces risks associated with acquisitions, strategic alliances, and the integration of these transactions [17] - State Street's risk management framework may face challenges in effectively identifying and mitigating risks, which could adversely affect its financial condition and operational results [1] - The execution of an SPOE Strategy may result in holders of unsecured debt of the Parent Company absorbing losses in a resolution scenario [123] Technology and Innovation - The company is focused on enhancing operational efficiency through the adoption of new technologies, including artificial intelligence, to improve service delivery and risk management [1] - The development of new products and services, including those related to artificial intelligence, may impose costs and increase risks [17] - State Street aims to expand its digital asset solutions, providing end-to-end capabilities across the asset servicing lifecycle on a secure platform with blockchain connectivity [39] Economic and Financial Conditions - Economic policies of the U.S. government, particularly those of the Federal Reserve, directly influence interest rates and overall credit conditions, impacting State Street's operating environment [160] - The financial services industry is facing increased regulatory scrutiny regarding cybersecurity and data privacy, with significant fines and litigation risks for noncompliance [154]