Good morning, and welcome to State Street Corporation's 2026 Annual Meeting of Shareholders. I'm Rick Hanson, State Street's Chief Governance Officer. I will begin our meeting by covering a few formalities. Today's meeting is being conducted virtually, is copyrighted, and all rights are reserved. The meeting may not be recorded for rebroadcast or distribution in whole or in part without the express written authorization of State Street. In addition, the presentations and potentially the responses to questions or comments at the meeting may contain forward-looking statements. I remind you that actual results may differ materially from those statements due to a variety of important factors, such as those factors referenced during the meeting and in our SEC filings, including the risk factors in our Form 10-K. Our forward-looking statements speak only as of today, and we disclaim any obligation to update them, even if our views change.
Further, some financial results referenced during the meeting may be presented on a basis that excludes or adjusts one or more items from GAAP. Reconciliations of those non-GAAP measures to the most directly comparable GAAP or regulatory measure can be found within our fourth quarter 2025 or first quarter 2026 earnings release addendum, which can be located on our investor relations website at investors.statestreet.com. Thank you for your attention to these items. I am pleased now to introduce State Street's General Counsel and Corporate Secretary, Mark Shelton.
Hello, I'm Mark Shelton. Thank you for joining us today. Our Chairman, Ronald O'Hanley, has asked me to call to order State Street Corporation's 2026 Annual Meeting of Shareholders, and I am doing so now. I note that we have represented in person or by proxy more than a majority of our outstanding shares of common stock at this meeting. A quorum is therefore present, the details of which we will walk through later in the meeting. To start, I'd like to make some introductions. Ron O'Hanley is present and will shortly provide a review of corporate developments and lead us through the voting portion of the meeting. In addition to Ron, let me introduce the other members of our Board participating in the meeting. Sara Mathew, our Independent Lead Director.
Marie Chandoha, Donna DeMaio, Amelia Fawcett, Bill Freda, Susan Gordon, Patricia Halliday, Bill Meaney, Sean O'Sullivan, Julio Portalatin, Brian Porter, and John Rhea. Also participating are our Chief Financial Officer, John Woods, and our Chief Operating Officer, Mostapha Tahiri, as well as other members of our management team. Shannon Stanley, Assistant Secretary, will be coordinating shareholder-submitted questions. Please note that today's meeting guidelines can be found through the virtual meeting portal. As noted in the meeting guidelines, only shareholders may submit questions or comments or may vote at the meeting. In the event of a technology failure that prevents us from continuing, we will keep the line open and attempt to rectify the issue with the intention to resume as soon as practicable. Please remain logged in if you would like to continue your participation through the remainder of the meeting.
If we encounter technological difficulties preventing the meeting from continuing, whether or not this is expressed, please note that a notice of the meeting has been properly served, a quorum is present, and all proposals will be deemed properly presented and the meeting will be adjourned. Questions or comments are welcome. There will be two forums for these: one prior to when the polls close for questions or comments regarding specific voting matters, and another general question and answer session after the formal part of the meeting. Please submit questions or comments through the virtual meeting portal at any time during the meeting. We ask that each shareholder provide his or her name, if an individual, and both his or her name and affiliation, if an institutional shareholder.
Please also note, questions or comments for the formal part of the meeting regarding specific voting items must be pertinent to matters properly brought before the meeting. To ensure that everyone has an opportunity, shareholders are limited to 1 question or comment for each voting matter and 1 during the general question and answer period. When submitting a question or comment for a voting matter, please identify the matter to which your question pertains. Questions and comments may be summarized or consolidated with others and, if appropriate, will be addressed time permitting. Each should be briefly stated and limited to the character restrictions in the question box on the portal. These guidelines are administered at the chairman's or his designee's discretion. Depending on time, the number of pending questions or comments, and other factors, we may permit additional appropriate questions or comments.
If you have voted your shares prior to the start of the annual meeting, your vote has been received and there is no need to vote those shares during the annual meeting, unless you wish to revoke or change your vote. If you wish to vote through the voting portal, you may do so by clicking on the voting button on the virtual meeting portal and following the instructions. At the Chairman's request, I now declare the polls open. Let me now introduce our Chairman, Ron O'Hanley.
Thank you, Mark, and welcome fellow shareholders to our annual meeting. 2025 was another successful year for State Street, enabling us to enter 2026 with continued momentum underpinned by a strategy delivering meaningful value for our clients, shareholders and employees, and strong financial results and shareholder returns.
Our strong financial performance in 2025 underscores the progress we've made in recent years to broaden our capabilities and strengthen our client value proposition. These actions have reinforced our role as a trusted, essential partner to our clients and enabled us to compete from a position of strength. These results also highlight the effectiveness of our strategy, the rigor of our execution, and our focus on delivering sustainable shareholder returns. This foundation positioned us well in a dynamic but constructive market environment and allowed us to deliver another year of accelerating financial performance, which I will turn to next. Excluding notable items, EPS was $10.30, or up 19% year-over-year, supported by strong revenue growth and improved margins. For 2025, we delivered solid positive operating leverage, expanded pre-tax margin by more than 150 basis points, and achieved return on tangible common equity of 20%, excluding notable items.
Notably, 2025 marked our second consecutive year of positive operating leverage and pre-tax margin expansion. Across the franchise, we continued to strategically position State Street for both near-term and long-term growth. Last year, we made solid progress against a number of important strategic milestones. As a result, we are well-positioned to advance the firm's next phase of repeatable growth, supported by capabilities that consistently differentiate how we operate and how we deliver for clients. Within investment services, which surpassed $50 trillion in AUCA for the first time in 2025, we are drawing on our heritage of technology-driven innovation by delivering next-generation tools, digital platforms, and client solutions aimed at helping our clients succeed in a constantly evolving market while pivoting State Street to faster-growing market segments.
For example, in the digital assets ecosystem, State Street's objective is to be the bridge between traditional and digital finance and the connection point among digital asset platforms. In 2025, we further advanced our digital asset platform, which is now live. The platform enables the tokenization of assets, funds, and cash for institutional investors, unlocking new efficiencies, improving liquidity, and creating opportunities for growth. The wealth services market also presents a highly attractive opportunity for growth. In 2025, we strategically advanced our capabilities in the space through a partnership and minority investment in Apex Fintech Solutions. Through this partnership, State Street will deliver a differentiated, fully digital, globally scalable custody and clearing solution and experience for wealth advisors and self-directed wealth platforms as well as their clients around the world, enabling us to capitalize on new opportunities and significantly strengthen our market position.
Across alternative servicing, we continue to see compelling long-term growth potential as the segment matures, with clients leveraging State Street to bring innovative solutions to market. Turning to our investment management business, over the past several years, we have innovated at pace with a clear focus on expanding both our client solutions and our distribution capabilities. Those actions are delivering results. In 2025, State Street Investment Management generated record annual fee revenue. Net consistent organic growth drove period-end AUM to a record $5.7 trillion, achieved just two quarters after surpassing the $5 trillion mark for the first time, supported by a third consecutive year of net new asset growth above 3%. These outcomes reflect both our ongoing ability to innovate and the strategic growth initiatives we executed during the year.
In 2025 alone, we launched a record 134 new products across the platform, broadening our capabilities and delivering greater value for clients, an effort further strengthened by partnerships with leading firms across the industry, including Apollo, Bridgewater Associates, and Blackstone. Within our State Street markets franchise, client activity is driven not only by periods of market volatility, but also by consistently strong client engagement. We are realizing the benefits of our strategic focus in recent years on building client volumes and market share. For example, in 2025, we achieved record client volumes in FX trading. As clients increasingly relied on our expertise and execution capabilities, we delivered strong performance across the markets franchise, with full-year fee revenue growing 15% year-over-year in both FX trading services and securities finance. The sustained momentum reflects the depth of our client relationships and the underlying strength of our markets platform.
That strength was also recognized externally, as State Street earned eight category wins in Euromoney's FX Awards in 2025, doubling our achievements from the prior year. While we see broad revenue growth opportunities across the franchise, we remain equally focused on unlocking value from the next phase of our operating model transformation. This includes embedding AI-enabled capabilities and agentics across the firm, developing more agile ways of working, and continuing to modernize our technology, always with a strong focus on operational excellence and disciplined execution. Through our agentic platform and AI foundry, we are scaling AI in high-impact areas to improve efficiency, accelerate execution, and enhance decision-making. Together, these efforts strengthen our core platforms, deepen client partnerships, and position us well for the next phase of industry evolution. Importantly, our ambitious transformation agenda is backed by a proven track record of delivering meaningful cost savings.
For example, in 2025, we achieved our full-year productivity savings target of $500 million or 5.5 percentage points of our underlying cost base. Over the past five years, we have generated nearly $2 billion in cumulative productivity and other savings, including significant recurring cost benefits. This has enabled us to reinvest aggressively in the business, serving our clients and supporting revenue growth, positive operating leverage, and demonstrated returns for shareholders. Turning to our solid financial position, our strong balance sheet enabled us to return more than $2.1 billion of capital to shareholders in 2025 for common share repurchases and dividends. During the year, we were pleased to announce an 11% increase in State Street's quarterly common stock dividend to $0.84 per share. Next, let me spend a moment on the impact we make as an organization. Our people are at the core of our success.
Their expertise, integrity, and commitment earn client trust, drive performance, and bring our culture to life, a culture focused on delivering for our clients, shareholders, and one another. This foundation enables us to attract, develop, and retain exceptional talent and remains a critical advantage as our business evolves. We invest in our employees through continuous learning, skill-based development, and broad access to career resources, equipping them to grow as professionals and leaders in a changing industry. We also recognize our responsibility to the communities we serve. In 2025, State Street Foundation invested nearly $27 million, primarily supporting education and workforce readiness, complemented by more than 136,000 volunteer hours contributed by our employees. To conclude, 2025 was a year of meaningful strategic and performance progress for State Street, reinforcing the strength of our strategy while enabling us to carry clear momentum into 2026.
Our continued improvement in 2025 is supported by tangible proof points, including stronger financial performance, heightened innovation, expanded product capabilities across our franchise, and continued technology-led transformation of our operating model. We are focused on the growth opportunities ahead, optimistic about 2026 and beyond, and confident in what we will achieve next as a firm. Our One State Street approach, connecting capabilities to unlock the full value of our franchise for clients, has delivered clear results and holds even greater potential. Across investment services in areas such as digital assets, wealth services, and alternatives, as well as for our investment management and markets businesses, we are taking ambitious steps to support long-term value creation for our clients and shareholders. Advancing AI-powered transformation, enhancing how we operate and serve clients, and embedding agentics and other AI-enabled capabilities more deeply across the organization will remain foundational to that success.
We thank you for your continued partnership and trust. Let's now move to the matters presented for voting by shareholders. As Mark indicated earlier, I will take questions and comments specific to the voting matters before the polls close. After the adjournment of the formal part of the meeting, I will take general questions and comments about our company. Chris Woods of American Election Services is serving as Inspector of Elections for the purpose of determining the shares represented at the meeting and by proxy, and the validity of the proxies and ballots, and counting all votes and ballots. Will the Inspector of Elections please confirm the quorum?
Mr. Chairman, there are represented in person or by proxy at this meeting at least 86% of the total outstanding shares. Therefore, a quorum is present.
Thank you. I confirm the meeting is properly convened. The notice of meeting sets forth four specific voting items, each of which is described in the proxy statement. I will present these items before the meeting in the order that they appear in the proxy statement. If you have a question about a proposal, please note the proposal matter when submitting a question. First item is the election of 13 director nominees.
Mr. Chairman, we have received no questions on this matter.
The board of directors represents a vote for each of the nominees for director. The second item is the approval of an advisory proposal on executive compensation.
Mr. Chairman, we have received no questions on this matter.
The board of directors recommends a vote in favor of this matter.
The third item is the ratification of the selection of Ernst & Young as our independent auditors for the year ending December 31st, 2026. Representatives of Ernst & Young, Jeremy Zuidema and Jen Jackson, are both in attendance. They have indicated that they do not wish to make a statement at this meeting.
Mr. Chairman, we have received no questions on this matter.
The board of directors represents a vote in favor of this matter. The fourth item is a shareholder proposal requesting adoption of a policy and amendment to the bylaws requiring the chair of the board be an independent member of the board in the next CEO transition. We have been advised that the shareholder proponent, Friends Fiduciary Corporation, has pre-recorded a message. Operator, please play the message.
Good morning, fellow shareholders and members of the board. My name is Amy Carr. I am the Senior Shareholder Advocate at Friends Fiduciary Corporation. We invest on behalf of Quaker faith communities, schools, and organizations across the country, and we are long-term shareholders of State Street. I hereby move item 4, the shareholder proposal, requesting the State Street board adopt a policy to require the chair of the board of directors, whenever possible, be an independent member of the board. This policy will be phased in for the next CEO transition, and compliance is waived if no independent director is available and willing to serve as chair. As a Quaker faith-based investment firm and long-term investor, we value prudent governance structures and best practice in board-level governance that supports fiduciary duty and protects sustained shareholder value.
State Street is an internationally recognized financial leader whose CEO also holds the position of the chair of the board of directors. We, like other long-term shareholders, seek best practice to ensure effective board oversight, including a separate and independent board chair. Investors have increasingly shown support for a leadership structure with separate chair and CEO positions. A proposal with the same ask was filed last year and received significant support with over 25% of State Street investors voting in favor of the proposal. There is also a distinct trend towards support for this structure by investors since 2013, and a majority of S&P 500 companies have moved away from this combined role. Effective governance requires accountability. The CEO, as an employee, should be held accountable by the board. Holding both roles simultaneously gives the CEO unnecessary additional power and can weaken the board's authority, compromising its oversight.
There has also been increased scrutiny of State Street for their management and decision-making around systemic issues such as climate change and diversity. Some European clients have pulled their funds from State Street, increasing pressure on company management and requiring increased focus from State Street's CEO. Separating the chair and CEO roles will allow the CEO and management more time to focus on the task of running the business in light of challenges like these, which demand focused attention from State Street's CEO and management. We urge shareholders to vote for this proposal. Thank you.
Thank you for the presentation.
Mr. Chairman, we've received no questions on this matter.
The board of directors recommends a vote against this matter. With no further questions on the voting matters, the voting polls will now close. Will the Inspector of Elections please report upon the matters presented for voting at the meeting?
Mr. Chairman, this is a preliminary report. The shareholders have voted to elect each of the 13 nominees for director. Each director received at least 94.6% of the votes cast. The shareholders have voted to approve a non-binding advisory proposal on executive compensation with a vote of approximately 93.2% of the votes cast. The shareholders have voted to ratify the selection of Ernst & Young LLP as State Street's independent registered public accounting firm for the year ending December 31st, 2026, with a vote of approximately 91.9% of the votes cast. Finally, the shareholders have voted against the adoption of a policy and amendment to the bylaws requiring the chair of the board to be an independent member of the board in the next CEO transition with a vote of approximately 77% of the votes cast against.
Final vote tallies will be filed with the SEC in a Form 8-K within four business days of this meeting. I hereby adjourn the formal part of the meeting. I will now take any additional questions from shareholders. Mr. Chairman, we have received no questions. Well, our discussion period is concluded. Thank you to our shareholders for your continued support of the board, and I thank you again for participating in our 2026 annual meeting.
The meeting has now concluded. Thank you for joining, and have a pleasant day.