Shareholder letter

Fellow shareholders:

For the past several years, we focused our time and attention on addressing the opportunities and challenges created by the unprecedented pace of change and disruption occurring in our industry. Changing consumer behaviors, expectations and preferences caused us to rethink everything we do. New and evolving competition prompted us to pursue partnerships and drive for growth and scale with renewed urgency. What’s more, the need to integrate advancing technology, build relationships, and empower our culture to continue to meet the wants and needs of customers pushed us to be more agile and innovative.

As a result, we are more digitally enabled, resilient and focused than ever before.

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That groundwork was essential as we entered 2020, which was a year unlike any other. It began with words like “opportunity” and “momentum.” We were focused on executing a solid, well-constructed plan and continuing to deliver on our longstanding tradition of excellence. We had all the right elements to succeed: dedicated leaders, a capable team, a strong culture, loyal customers, diverse businesses, and a solid financial foundation.

That foundation enabled us to continue to execute on our long-term strategy even as the words “unprecedented” and “uncertain times” entered the mainstream. A global pandemic turned economic tailwinds into headwinds. Starting in the second quarter of the year, gross domestic product collapsed at an historic rate and partially rebounded, unemployment rose, consumer spending dropped significantly, and the industry booked near-record loan-loss provisions.

The value of our diversified business model was evident during this time. We reported record revenues in 2020 despite a challenging interest rate environment that pressured net interest income, and even though we saw a significant drop in consumer spending activity. Similarly, although our payments business was affected by reduced consumer spending in some of the hardest-hit categories like airlines, travel and hospitality, we had exceptionally strong results in mortgage banking and commercial products to help offset the impact.

$23.3 Brecord annual net revenue

We are proud of our response to the pandemic and the related economic situation. We kept people healthy and safe while managing our business well, and we helped our customers navigate the pandemic by providing access to capital, assisting them as they secured Paycheck Protection Program (PPP) loans or modifying loan terms. We developed new muscle around being flexible, adaptable and agile — and the way we were able to approach this moment in history says a lot about our company, our culture and our team. We emerged stronger together, and I am grateful to our employees for their flexibility and resilience.

This past year also brought about a recommitment to diversity, equity and inclusion, as the call for a renewed focus on social justice hit home in Minneapolis, our headquarters market. The tragic death of George Floyd and the civil unrest that followed changed the conversation. In the weeks after these events, we made multimillion dollar commitments to address economic and racial inequities, pledged to double our partnerships with Black-owned suppliers in 12 months, and announced our intention to not only remain in the communities that were hardest hit by the unrest but to rebuild in areas where our branches were damaged or destroyed. We also stepped up our efforts internally to attract, retain and promote people of color to leadership roles, increase awareness of racial issues, and encourage community involvement in measurable ways. Addressing these challenging issues will take every one of us, and we are invested in that shared future.

It is safe to say that expectations have changed, whether they are focused on corporate social responsibility or how people want to do business with the companies with whom they interact.

$7.5 BPPP loans processed

The good news is we are ready. The steps we took during the past three years positioned us well for what became inevitable as economies shut down. Our digital capabilities enabled us to convert face-to-face interactions to online or virtual ones. Our workplace collaboration efforts allowed us to maintain business continuity. Our money movement solutions met the need as cash transactions slowed. Our agile transformation made it possible for us to develop just-in-time products and services that would have taken years to develop before.

In fact, approximately three-quarters of our customers are digitally active across our mobile and online channels today. About 56 percent of our loan sales and roughly 77 percent of our transactions now take place in a digital way. We believe our opportunity lies in the successful combination of people and technology to serve our customers. The changes we are making within our branch network reflect this reality. We still see considerable traffic in our branches, proving they are important — however, the future branch will have a different footprint and more of an emphasis on advice and counsel.

Moving forward, we will continue to invest in our digital platforms, offering customers do-it-yourself (DIY) and do-it-together (DIT) solutions to meet their needs. We will continue to leverage our payments ecosystem, and we will deliver products and services with a focus on the unique needs of individual customer segments. We will emphasize speed, convenience and simplicity, and we will responsibly leverage data and analytics to be able to be there in the moments that matter most for our customers. Our focus is on meeting them when, where and how they want, which enables us to create value and drive sustainable growth.

CDP A ListTop 5%of global companies assessed for climate change action

We anticipate many of the changes we have seen as a result of the pandemic and upheaval of 2020 will continue as a new normal. We expect work will look different. There will be more industry disruption. Banking will be accessed in more customer-driven ways through the channels customers prefer, and digital will be more important. Relationships will be core to success, and the companies who thrive will be the ones — like us — that move quickly, strategically and responsibly toward the future.

Although the year brought uncertainty and change, we are proud of our efforts and believe we are on a course for an even stronger future. We remain a World’s Most Ethical Company and one of the highest-rated banks in the world. Our balance sheet is healthy and strong, and our leaders are dedicated to helping our customers succeed, today and in the years to come.

Of course, all of this is possible because of our employees — who are second to none in their commitment, dedication and professionalism. To all my fellow U.S. Bankers, I say, simply: “Thanks for all you do.”


Andy Cecere

Chairman, President and Chief Executive Officer
U.S. Bancorp
February 23, 2021

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