2017 Annual Report

Fellow
shareholders:

I am pleased to report that U.S. Bancorp delivered an industry-leading financial performance in 2017 and is well-positioned for long-term growth. The macro-economic and regulatory environments remain favorable for financial institutions, and we have considerable optimism for what we can accomplish in 2018 and beyond. Our optimism is grounded in our conviction that we are operating from a position of strength.

A message
from our CEO
Andy Cecere, President and CEO

In a world that is changing faster than ever, one thing at U.S. Bancorp is unchanged: everything we do is centered on building trust with our shareholders, customers, communities and employees — every day.

Trust in our financial performance. Trust in our acceleration toward being a digital-focused bank, ready to serve all our customers where, when and how they want to be served. Trust in our commitment to strengthen communities. And, trust in our people to do the right thing as they make secure financial futures possible.

We believe that a relationship with U.S. Bancorp – built on trust – is a key differentiator in our ability to create long-term value.

Building your trust every day: Value creation

U.S. Bancorp is as focused as ever on long-term value creation for our shareholders, particularly as the headwinds that have confronted financial institutions for the past 10 years subside.

In 2017, we again delivered record net income, revenue and earnings per diluted share. In addition, we maintained industry-leading positions in our key performance metrics of return on average assets, return on average common equity and efficiency ratio. Our financial discipline enabled us to have some of the best credit ratings among the world’s banking institutions. Our strong financial performance allowed us to return 77 percent of our earnings to shareholders and resulted in a 7 percent dividend increase.

We remain committed to our long-standing capital distribution formula of returning 60 to 80 percent of earnings to shareholders and reinvesting the rest in future growth. In the hyper-competitive marketplace facing banks, we must balance capital return with investments in growth and innovation.

77%
of earnings returned
to shareholders
1.39% ROA
13.8% ROCE

Building your trust every day: Growth and innovation

Growth and innovation are two of the most important words for banks in 2018.

Over my 32 years in banking, I believe more has changed in the last two years than in the first 30. And, the pace of change is accelerating every year. Our systematic evolution is directly correlated to the customer-first revolution sweeping all industries.

This dynamic environment presents an attractive growth opportunity and is the primary reason we are investing more than ever in strategic initiatives that transform how we serve our customers — both businesses and individuals.

In 2017, we made real-time person-to-person payments easier and safer by expanding the Zelle® platform. In partnership with The Clearing House, we were the first bank to facilitate real-time business-to-business payments and we will extend that platform to our commercial customers. We introduced the U.S. Bank Loan PortalSM, which simplifies the mortgage process for home buyers. We also deepened our utilization of augmented intelligence and machine learning to make banking tasks even easier.

Our heritage of innovation is why Bank Innovation recognizes our leadership as some of the most innovative in the industry. This year, we will make additional capital investments in projects that enhance our customers’ experiences and position the company for long-term growth.

Our commitment to growth and innovation spans the entire enterprise as we deliver customer solutions to the marketplace from a One U.S. Bank perspective. More than ever, we are approaching our customers with a unified portfolio of products, advice and services, which allows us to deliver the whole bank to customers.

Building your trust every day: Community Possible

The power of One U.S. Bank is also evident in our commitment to corporate social responsibility. It is important to everyone at the bank that we strengthen our communities with our time and financial resources.

In addition to record financial results in 2017, we had record results in our commitment to strengthening our communities. Through our Community Possible platform, which focuses on charitable programs and activities that support Work, Home and Play initiatives, we contributed $58.4 million and volunteered 188,000 hours.

The return on investment in the families and children who benefit from our efforts will span generations. Whether we are delivering financial education to students or examining ways to invest in environmentally responsible business practices, we want to lead the way as a corporate citizen.

Investing our hearts and minds to power human potential is at the core of our culture of ethics and integrity.

In 2017,
we gave:
$58.4
million
188,000 volunteer hours

Building your trust every day: Culture of ethics and integrity

74,000 employees
wordwide

Building trust with our stakeholders starts and ends with our people.

Our Board and management team set the standard for our 74,000 employees around the world, who make a difference in the lives of our customers and communities every day. Everyone is intensely focused on meeting our customers’ financial needs and objectives as we operate in a culture rooted in ethics and integrity.

Our culture is why, for the 11th year, the Ponemon Institute named U.S. Bank the Most Trusted Company for Retail Banking. For the 10th year, U.S. Bank received a perfect score in the Corporate Equality Index and was named a Best Place to Work by the Human Rights Campaign Foundation. For the eighth year, Fortune named U.S. Bank the number one superregional bank. And, for the fourth year (including 2018), the Ethisphere Institute named U.S. Bank to its World’s Most Ethical Companies list.

employees
wordwide 74,000

We are proud of these honors and recognitions because they reflect our collective spirit, our dedication and our passion for building your trust every day.

Building your trust every day

On a personal note, I am honored to be named U.S. Bancorp’s next Chairman. Having partnered with Richard Davis for more than 11 years, I feel well-prepared to assume this new responsibility and lead the company into its next generation of banking excellence.

I am also grateful for the support of our exceptional Board, the leadership from our experienced management team and the hard work of our bankers.

We will continue to deliver an industry-leading financial performance — and we will do it with ethics and integrity — as the most trusted choice for all our stakeholders.

Every single day.

Sincerely,

Andy Cecere
President and Chief Executive Officer
U.S. Bancorp
February 22, 2018


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