Andy Cecere, Chairman, President and Chief Executive Officer

Fellow shareholders:

As a leadership team at U.S. Bancorp, we are proud of our position in the industry. We are one of the largest banks in the United States with global reach through our trust and payments businesses.

We have a diverse mix of profitable businesses. We have a strong culture, an efficient operating platform and healthy customer loyalty scores. We are committed to our communities and being a socially responsible corporate citizen. We are a Fortune® Most Admired Company, one of the Ethisphere® World’s Most Ethical Companies®, among Forbes® best banks in America and recognized in the DiversityInc® Top 50 for our focus on diversity, equity and inclusion. Our financial results continue to lead the industry; at the end of 2019 on a full-year basis, we were among the best in class in return on assets, return on equity and efficiency. We are also one of the highest-rated banks in the world.

It is clear we are doing well, and we are committed to building on this position of strength. Our focus as we face 2020 is how to retain those attributes and use them as differentiators while recognizing that they, alone, are insufficient in a changing world.

We’re taking what makes us great and using that position of strength and our strategy to shape our future.

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The evidence of that evolution is all around us. Customer expectations and behaviors are shifting, and how they interact with us is being driven by experiences they have in industries outside our own. The face of retail banking is changing, with a greater focus on digital capabilities and modified footprints; geography is no longer a barrier to forming a relationship. In fact, about 70 percent of all banking transactions now happen digitally – often on devices that did not exist 10 years ago. Further advancements in technology and innovation will only elevate that statistic. As a result, we are actively investing in digital capabilities and real-time payments, and leveraging artificial intelligence, machine learning and data analytics to enhance our ability to serve.

These trends have led to an emergence of non-traditional competition. Companies that have not historically been in banking are entering financial services typically through money movement or payments activities, and they are creating alternatives that are pushing us to innovate and adapt as the industry evolves.

Industry consolidation has also continued, and a decade after the financial crisis, we saw the first large merger of equals in 2019. Sometimes overlooked, however, is the shift in merger and acquisition activity away from solely geographic plays. Now, more than ever, the emphasis is on partnerships and finding ways to acquire capabilities banks traditionally have not had to meet the changing demands of consumers.

Our success is long-established and we’re securing the capabilities we need to execute on our strategy to deliver today and in the future.

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We are addressing these realities via our approach to our long-term strategy. We are leveraging our strengths (our financial and risk disciplines, culture, commitment to the community and dedication to customers) and transforming to grow. We understand that what made us successful in the past will not necessarily enable us to succeed in the years to come – and that while we want to excel in the short term, we are playing the long game.

For the past year, we have focused our energy on defending our core, by modernizing our approaches in the consumer, wealth and commercial spaces and leveraging our scale as a global company to digitally transform our offerings. We have invested significantly in our payments business, knowing that the future of banking is deeply rooted in revolutionizing money movement today.

We worked to embed additional strategic focus in our organization, taking a more holistic look at our entire operation and using our strategy to advise how we allocate capital and give top-down financial guidance. We exited non-core businesses, and we continued to enhance our risk management processes to ensure sustainability and build nimble but clear discipline in more agile areas of our company.

We also focused on balance: making decisions that allowed us to optimize our business while freeing up capital to reinvest in important areas. We are looking at all our consumer markets, for instance, and determining what mix of physical and digital assets we need to serve customers, while reconsidering what a branch should look like, how big it should be, and how it should be staffed.

Make no mistake: there is a role for branches in today’s banking world, but they have a different function, expectation and experience to offer.

Executing our strategy will deliver new digital products and features to our customers at the speed and quality they expect. We’re investing now to support growth.

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Along those lines, we began looking at expansion beyond our existing footprint through a branch lite strategy that emphasizes digital enablement and brand impact as cornerstones of the customer relationship. In October, we opened our first retail branch under this new approach in Charlotte, North Carolina because of the large employee and customer base we already had in-market. We will expand in Charlotte and bring this format to other cities that meet our strategic objectives as we refine the model.

Among the more significant achievements in the past year has been our approach to digital. We created a new Chief Digital Office to oversee our transformation. This team has introduced us to terms like “above the glass” and “below the glass,” developed a successful test-and-learn model and pushed us to innovate more rapidly than we ever have before. More than 215 banking activities can now be done on a do-it-yourself basis through our digital consumer app, and we are focused on providing as much opportunity as customers want for these accommodations as their expectations continue to change. We believe we can both strengthen relationships and deliver products and services more effectively by enhancing our digital capabilities.

We took strategic approaches to evolve our operations more broadly, as well. We are now employing an agile methodology that allows us to responsibly but quickly move from concept to reality for products and services, as well as modeling experiences. With our “Experience Studios,” as we call them, we can create – from a customer’s point of view and with their involvement – things that used to take years to build in just a matter of weeks. Through this methodology, which is common in the technology space, we have created and launched an entirely re-concepted and redesigned mobile app, a new instant decisioning process for mortgage, a solution for quicker small business lending, and more.

At the same time, we are bringing new focus and attention to our culture and talent processes and experiences, investing in our human resources function and shifting investment to digital workforce management, programs to attract and retain the talent of the future, and more deliberate culture development and championship. We are preparing our team for the roles we will need, including the introduction of upskilling and reskilling opportunities that help people gain new skills as their jobs evolve or train for roles that have yet to be created. Ultimately, our work is all about people, and we will need to blend the best of what our employees can do with the best of what our technology can deliver to serve customers.

Moving forward, we will place a concerted focus on what the future of U.S. Bancorp looks like, how the enterprise strategy is directly aligned with and incorporated into our business line strategies, and how we can leverage economies of size and scale to accelerate our growth.

Through all of this, we are building on the trust that has been placed in us, and we are successfully executing our company strategy that will position us for future success. We will offer a great place to work to our employees, provide unmatched experience to our customers, develop strong partnerships with our communities, and create value for our shareholders.

It is our privilege to share our success with you.


Andy Cecere
Chairman, President and Chief Executive Officer
U.S. Bancorp
February 20, 2020

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