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CEO Letter

The intersection of strength and potential

FELLOW SHAREHOLDERS,

I am very proud of the exceptional financial performance that U.S. Bancorp delivered for its shareholders in 2014 — one of the strongest in the financial services category. I also am proud to announce that U.S. Bancorp has been honored as a 2015 World’s Most Ethical Company® by the Ethisphere Institute, an independent center of research promoting best practices in corporate ethics and governance — a distinct recognition for a large U.S. banking company.

A strong financial performance and a strong commitment to ethical leadership and corporate behavior are the cornerstone of the U.S. Bancorp culture and purpose. Our financial performance and commitment to integrity are rooted deeply in our core values:

  • We do the right thing
  • We power potential
  • We stay a step ahead
  • We draw strength from diversity
  • We put people first

We are proud to be bankers and to have the privilege to be trusted partners for our customers and communities.

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Power of Potential: The Intersection of People and Potential

At U.S. Bancorp, we stand at the intersection of people and potential every day. Potential for greatness exists everywhere, in every business, and in every person. As our customers begin to look toward the future with a more optimistic lens, they expect their U.S. Bancorp partners to provide trusted guidance for their emerging opportunities.

U.S. Bancorp employees serve as catalysts for our customers to reach their full potential. In 2014, thanks to the hard work and dedication of our engaged 67,000 global employees, U.S. Bancorp delivered record net income, maintained a firm grip on our industry-leading performance measures, returned 72 percent of our earnings to shareholders and preserved the best debt ratings in the banking industry.

Throughout the year, U.S. Bancorp stood at the intersection of people and potential by helping individuals build financially secure futures; small business owners turn dreams into neon OPEN signs; commercial enterprises convert visions into progress; merchants engage in safe and secure commerce; pre- and post-retirees achieve their retirement goals and objectives; and communities turn possibilities into promises.

Power of Potential: Value Creation

Value creation for our customers and shareholders is our highest priority. U.S. Bancorp’s 2014 financial highlights include record net income of $5.9 billion or $3.08 per diluted common share. Our Return on Average Assets (ROA) of 1.54 percent, our Return on Average Common Equity (ROE) of 14.7 percent and our Efficiency Ratio of 53.2 percent were once again among the best in the banking industry. In addition, we returned a significant percentage of our earnings to our shareholders through dividends and buybacks.

Our consistently solid financial performance is the result of adhering closely to our business fundamentals: managing our capital prudently — we increased our dividend by 6.5 percent; encouraging innovation — we invested millions in new secure payment technologies; engaging employees — top quarter engagement scores; investing in initiatives that generate steady, long-term growth — reinvested 28 percent of earnings in growth opportunities; controlling expenses — industry-leading efficiency ratio; and expanding customer relationships — we fortified our presence in Chicago with a net addition of 84 Charter One branches.

Because of our disciplined and prudent approach to managing the enterprise, U.S. Bancorp delivered a total shareholder return of 13.8 percent in 2014 — significantly higher than our primary banking index — even in a challenging operating environment for banks.

Power of Potential: Our Diverse Customers and Business Profile

At U.S. Bancorp, we understand that the best way to create value for our shareholders is to provide our customers with a complete array of banking products and services that address their distinct financial objectives, in any economic environment. The diversification of U.S. Bancorp’s business profile continues to be one of our most significant strategic advantages. We balance our revenue generation between margin and fee businesses, and we leverage our competitive strengths in our chosen market segments.

With Consumer and Small Business Banking; Wholesale Banking and Commercial Real Estate; Wealth Management and Securities Services; and Payment Services, we are in precisely the markets where we compete the best, and we are confident this mix of businesses has us well positioned for the future. We operate in many different market segments, spanning individual, commercial and institutional customers, and we have established the size and scale to leverage our strengths and protect our advantage from new entries into our core businesses, such as Payment Services and Corporate Trust.

Power of Potential: Our Communities

In addition to our exceptional financial performance, U.S. Bancorp serves as a catalyst for our communities to reach their greatest goals. We have been helping communities achieve their visions and dreams for more than 150 years. For instance, in 2014:

  • We invested and loaned $4.0 billion to invigorate and strengthen communities through U.S. Bancorp Community Development Corporation and our U.S. Bank community development lending group
  • We introduced educational tools and resources to enhance financial literacy
  • We donated homes to wounded soldiers
  • We volunteered in excess of 370,000 hours
  • We served on charitable and community boards and committees

We continued to operate as one of the most compassionate and community-centric banks in the industry. Thanks to our committed employees — they provide their time, talent and financial resources to support these goals.

Power of Potential: Our People Pursuing Our Vision for the Future

U.S. Bancorp is well positioned for growth as the economic environment shows signs of improvement, and our customers look for a strong and stable banking partner to help them achieve their distinct financial goals and objectives. Our team of U.S. Bancorp employees sees enormous potential in every customer with whom we are privileged to work.

At U.S. Bancorp, we will continue to stand at the intersection of people and potential every day as we pursue our collective vision for the future.

Sincerely,

Richard K. Davis
Chairman, President and Chief Executive Officer, U.S. Bancorp
February 27, 2015

Richard K. Davis, Chairman, President and CEO, U.S. Bancorp quote: “We are proud to be bankers and to have the privilege to be trusted partners for our customers and communities.”
“We are proud to be bankers and to have the privilege to be trusted partners for our customers and communities.”
House image, Richard K. Davis, Chairman, President and CEO, U.S. Bancorp quote: “Throughout the year, U.S. Bancorp stood at the intersection of people and potential by helping individuals build financially secure futures.”
“Throughout the year, U.S. Bancorp stood at the intersection of people and potential by helping individuals build financially secure futures.”
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