☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE ACT OF 1934 |
Delaware | 41-0255900 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading symbols | Name of each exchange on which registered | ||
Common Stock, $.01 par value per share | USB | New York Stock Exchange | ||
Depositary Shares (each representing 1/100th interest in a share of Series A Non-Cumulative Perpetual Preferred Stock, par value $1.00) | USB PrA | New York Stock Exchange | ||
Depositary Shares (each representing 1/1,000th interest in a share of Series B Non-Cumulative Perpetual Preferred Stock, par value $1.00) | USB PrH | New York Stock Exchange | ||
Depositary Shares (each representing 1/1,000th interest in a share of Series K Non-Cumulative Perpetual Preferred Stock, par value $1.00) | USB PrP | New York Stock Exchange | ||
Depositary Shares (each representing 1/1,000th interest in a share of Series L Non-Cumulative Perpetual Preferred Stock, par value $1.00) | USB PrQ | New York Stock Exchange | ||
Depositary Shares (each representing 1/1,000th interest in a share of Series M Non-Cumulative Perpetual Preferred Stock, par value $1.00) | USB PrR | New York Stock Exchange | ||
Depositary Shares (each representing 1/1,000th interest in a share of Series O Non-Cumulative Perpetual Preferred Stock, par value $1.00) | USB PrS | New York Stock Exchange | ||
0.850% Medium-Term Notes, Series X (Senior), due June 7, 2024 | USB/24B | New York Stock Exchange |
Large accelerated filer | ☑ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company ☐ |
Class | Outstanding at January 31, | |
Common Stock, $.01 par value per share | ||
Auditor Firm Id: 42 | Auditor Name: Ernst & Young LLP | Auditor Location: Minneapolis, Minnesota |
Document | Parts Into Which Incorporated | |||
1. | Portions of the Annual Report to Shareholders for the Fiscal Year Ended December 31, | Parts I and II | ||
2. | Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held April | Part III |
PART I
Item 1. | Business |
Forward-Looking Statements
THE FOLLOWING INFORMATION APPEARS IN ACCORDANCE WITH THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This report contains forward-looking statements about U.S. Bancorp (“U.S. Bancorp” or the “Company”). Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, future economic conditions and the anticipated future revenue, expenses, financial condition, asset quality, capital and expensesliquidity levels, plans, prospects and the future plans and prospectsoperations of U.S. Bancorp. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “hopes,” “estimates,” “projects,” “forecasts,” “intends,” “plans,” “goals,” “believes,” “continue” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.”
Forward-looking statements involve inherent risks and uncertainties including the following risks and uncertainties and the risks and uncertainties more fully discussed under “Risk Factors” in the 2021 Annual Report, whichthat could cause actual results to differ materially from those anticipated. The
Deterioration in general business and economic conditions or turbulence in domestic or global financial markets, which could adversely affect U.S. Bancorp’s revenues and the values of its assets and liabilities, reduce the availability of funding to certain financial institutions, lead to a tightening of credit, and increase stock price volatility. In addition, changesvolatility;
Changes to statutes, regulations, or regulatory policies or practices, could affect U.S. Bancorp in substantialincluding capital and unpredictable ways.liquidity requirements, and the enforcement and interpretation of such laws and regulations, and U.S. Bancorp’s results could also be adversely affectedability to address or satisfy those requirements and other requirements or conditions imposed by changesregulatory entities;
Changes in interest rates; increases
Increases in unemployment rates; deterioration
Deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value
Risks related to originating and selling mortgages, including repurchase and indemnity demands, and related to U.S. Bancorp’s role as a loan servicer;
Impacts of its investment securities; legalcurrent, pending or future litigation and regulatory developments; litigation; increasedgovernmental proceedings;
• | Increased competition from both banks andnon-banks; |
Effects of climate change; changeschange and related physical and transition risks;
Changes in customer behavior and preferences; breachespreferences and the ability to implement technological changes to respond to customer needs and meet competitive demands;
Breaches in data security;
Failures or disruptions in or breaches of U.S. Bancorp’s operational or security including as a resultsystems or infrastructure, or those of work-from-home arrangements; failuresthird parties;
Failures to safeguard personal information; effects
• | Impacts of pandemics, including the COVID-19 pandemic, natural disasters, terrorist activities, civil unrest, international hostilities and geopolitical events; |
Impacts of supply chain disruptions, rising inflation, slower growth or a recession;
Failure to execute on strategic or operational plans;
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Effects of mergers and acquisitions and related integration; effects
Effects of critical accounting policies and judgments;
Effects of changes in or interpretations of tax laws and management’sregulations;
Management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputation risk. risk; and
The risks and uncertainties more fully discussed in the section entitled “Risk Factors” of the 2022 Annual Report.
In addition, U.S. Bancorp’s proposed acquisition of MUFG Union Bank, N.A. (“MUB”) presents risks and uncertainties, including, among others;others: the risk that the cost savings, any revenue synergies and other anticipated benefits of the proposed acquisition may not be realized or may take longer than anticipated to be realized; the risk that U.S. Bancorp’s business could be disrupted as a result of the announcement and pendency of the proposed acquisition and diversion of management’s attention from ongoing business operations and opportunities; the possibility that the proposed acquisition,combination of MUB with U.S. Bancorp, including the integration of MUFG Union Bank,MUB, may be more costly or difficult to complete than anticipated; delays in closing the proposed acquisition; and the failure of required government approvals to be obtainedanticipated or any other closing conditions in the definitive purchase agreement to be satisfied.
In addition, factors other than these risks also could adversely affect U.S. Bancorp’s results, and the reader should not consider these risks to be a complete set of all potential risks or uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.
General Business Description
U.S. Bancorp is a financial services holding company headquartered in Minneapolis, Minnesota, serving millions of local, national and global customers. U.S. Bancorp is registered as a bank holding company under the Bank Holding Company Act of 1956 (the “BHC Act”), and has elected to be treated as a financial holding company under the BHC Act. U.S. BancorpThe Company provides a full range of financial services, including lending and depository services, cash management, capital markets, and trust and investment management services. It also engages in credit card services, merchant and ATM processing, mortgage banking, insurance, brokerage and leasing.
U.S. Bancorp’s banking subsidiary,subsidiaries, U.S. Bank National Association is(“USBNA”) and MUB, are engaged in the general banking business, principally in domestic markets. U.S. Bank National Association, with $465markets, and hold all of the Company’s consolidated deposits of $525.0 billion in deposits at December 31, 2021, provides2022. USBNA and MUB provide a wide range of products and services to individuals, businesses, institutional organizations, governmental entities and other financial institutions. Commercial and consumer lending services are principally offered to customers within the Company’s domestic markets, to domestic customers with foreign operations and to large national customers operating in specific industries targeted by the Company, such as healthcare, utilities, oil and gas, and state and municipal government. Lending services include traditional credit products as well as credit card services, lease financing and import/export trade, asset-backed lending, agricultural finance and other products. Depository services include checking accounts, savings accounts and time certificate contracts. Ancillary services such as capital markets, treasury management and receivable
Other U.S. Bancorp
Banking and investment services are provided through a network of 2,2302,494 banking offices as of December 31, 2021,2022, principally operating in the Midwest and West regions of the United States, throughon-line
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services, over mobile devices and through other distribution channels. The Company operates a network of 4,0594,505 ATMs as of December 31, 2021,2022, and provides
MUFG Union Bank Acquisition
On December 1, 2022, the Company has continued and accelerated the development of digital-based products and services, as well as reduced the number of higher-cost physical branches.
Business Segments
The Company’s major lines of business are Corporate and Commercial Banking, Consumer and Business Banking, Wealth Management and Investment Services, Payment Services, and Treasury and Corporate Support.
Corporate and Commercial Banking
Consumer and Business Banking
Wealth Management and Investment Services
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custody and fund servicing through four businesses: Wealth Management, Global Corporate Trust & Custody, U.S. Bancorp Asset Management, and Fund Services. Wealth Management and Investment Services contributed $837 million,$1.3 billion, or 10.522.6 percent, of the Company’s net income in 2021, a decrease2022, an increase of $104$471 million (11.1(55.9 percent) compared with 2020.
Payment Services
Treasury and Corporate Support
Additional information regarding the Company’s business segments can be found on pages 56 to 6059 of the Company’s 20212022 Annual Report under the heading “Line of Business Financial Review,” which is incorporated herein by reference.
Human Capital
The Company’s success depends, in large part, on its ability to attract, develop and retain skilled employees. The Company recognizes that supporting, engaging and continuously upskilling its workforce is key to meeting evolving corporate and customer needs. To further those efforts, the Company is dedicated to fostering a diverse, equitable and inclusive work environment; supporting employees’ professional development; and providing pay that is competitive and fair, as well as other benefits and programs that promote wellness,wellness; and supporting employees’ professional development through programs that promote engagement, learning and productivity. As of December 31, 2021,2022, the Company employed a total of 68,796 full-time equivalent employees.
Diversity, Equity and Inclusion
To help create and sustain an inclusive workforce, the Company also sponsors ten Business Resource Groups (“BRGs”), including Asian heritage, Black Hispanicheritage, Nosotros Latinos, Indigenous Peoples, U.S. Bank women, Spectrum LGBTQ, Proud to Serve: Military and Native American heritage, women, LGBTQ, militaryVeterans, European Inclusion, and disabledDisability employee groups, with chapters across the Company whereCompany. These BRGs enable employees from a wide variety of backgrounds, identities and perspectives to connect in ways that empower them to contribute, innovate and grow. Through these BRGs, employees can come together to discuss topics of interest to them, develop professional skills and build overall employee engagement, helping to create and sustain an inclusive workforce that drives business growth and propels accountability for diversity and inclusion at all levels within the Company.
These programs, practices and policies are part of the Company’s strategy to have an ethnically and gender diverse employee base. As of December 31, 2021,2022, of the Company’s employees in the United States, 57
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58% percent were women and 3336% percent were people of color. The Company also has focused on increasing the diversity of its senior management team. As of December 31, 2021, 322022, 33% percent of the Company’s employees at the executive and senior management level in the United States were women and 1618% percent were people of color. In addition, as of December 31, 2021,2022, of the Company’s 13 directors, 6 were women and 4 were people of color. The Company’s goaldiversity percentages noted above do not include employees from the MUB acquisition who joined the Company on December 1, 2022, as the data regarding MUB employees is to ensurebeing verified as part of the acquisition integration process. All diversity and inclusion accountabilityinformation is consistent acrossbased on information self-disclosed by the organization. To ensure accountability, the Company’s chief executive officer (“CEO”) chairs the Company’s Diversity, Equity and Inclusion Committee, with the Company’s Chief Diversity Officer reporting directlyemployee or director to the CEOCompany. To provide transparency on progress relating to its commitment to seek and serving as a member ofpromote diverse talent, the Managing Committee.
Equitable and Competitive Compensation, Health
The Company also added two new Company holidays: Juneteenthprovides its employees with comprehensive benefits programs, including competitive healthcare, retirement, leave, recognition, wellness, disability, life insurance, time-off, flexible work, and My Holiday. Theeducational assistance programs, based on the Company’s recognition of Juneteenth as a holiday reflectsthat such benefits are important to attract and retain employees. In 2022 the historical importance of Juneteenth and alignment with a diverse and inclusive culture. My Holiday is a personal day that every employee can take duringCompany enhanced the course of the year to celebrate a day of significance to each employee, such as religious holidays, day of cultural significance, or other personally significant day. The Company also increased its parental leave, program to 10 weeksfertility, and part-time employee benefits to further support its employee base. In addition to its competitive 401(k) matching program, the Company maintains an active cash balance pension program for its U.S. employees, including newly hired employees.
The Company continues to support flexible work programs with remote, hybrid and their families.
Employee Engagement and Retention
As part of its talent strategy, the Company strives to the Company’ssupport continuous employee learning and development. The Company provides a number of talent development offerings for employees it launched two new effortsto improve skills that are critical in 2021,the current and future working environment and empowers employees to discover ways to
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thrive and grow their careers, which aligns with the Company’s Employment Value Proposition. For example, the Company’s learning programs include the Digital Academy and the People Leader Center, which focus on digital skill development and core leadership skill development, respectively, both of whichrespectively. The Company also introduced enhanced cultural sensitivity and customer interaction training in 2022 for its frontline employees that focuses on building skills to serve all our customers with excellence. In addition, every employee is automatically included in the Company’s Development Network that provides all employees with opportunities to network, learn, develop leadership skills and contribute to the Company believes are critical in the current and future working environment. Enhancing successionits communities. Succession planning and talent development processes remainsremain a top priority for the Company.
Human Capital Governance The Company’s Board of Directors oversees the Company’s human capital management. The Board’s Compensation and Human Resources Committee discharges the Board’s oversight responsibilities relating to the current environment with remote, hybridCompany’s compensation programs and in-person work arrangements, providing additional optionalityemployee benefit plans, overseeing the Company’s human capital strategy and flexibility for most employees. Most oftalent management program and employee diversity, equity and inclusion initiatives. The Board’s Public Responsibility Committee also oversees the Company’s
Competition
The financial services industry is highly competitive. The Company competes with other commercial banks, savings and loan associations, mutual savings banks, finance companies, mortgage banking companies, credit unions, investment companies, credit card companies and a variety of other financial services, advisory and technology companies. The financial services industry continues to undergo rapid technological change with frequent introductions of new technology-driven products and services, including innovative ways that customers can make payments or manage their accounts, such as through the use of mobile payments, digital wallets or digital currencies. In recent years, competition has increased from institutions not subject to the same regulatory restrictions as domestic banks and bank holding companies, including by financial technology companies, or “fintechs,” which may offer bank-like products or services that compete directly with the Company’s products and services. Competition is based on a number of factors, including, among others, customer service, quality and range of products and services offered, price, reputation, interest rates on loans and deposits, lending limits and customer convenience, including the ability to address customer needs by using technology to provide products and services that customers want to adopt. The Company’s ability to continue to compete effectively also depends in large part on its ability to attract new employees and retain and motivate existing employees, while managing compensation and other costs. For additional information relating to how the Company attracts and retains employees, see “Human Capital” above.
Information Security
Information security, including cybersecurity, is a high priority for the Company. Recent highly publicized events have highlighted the importance of cybersecurity, including cyberattacks against financial institutions, governmental agencies and other organizations that resulted in the compromise of personal and/or confidential information, the theft or destruction of corporate information, and demands for ransom payments to release corporate information encrypted by
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resources to implement technologies and various response and recovery plans and procedures as part of its information security program. For additional information on cybersecurity risks the Company faces, refer to the section entitled “Risk Factors” on pages 137140 to 150155 of the 20212022 Annual Report.
Government Policies
The operations of the Company’s various businesses are affected by federal and state laws and legislative changes and by policies of various regulatory authorities of the numerous states in which they operate, the United States and foreign governments. These laws, rules and policies include, for example, statutory maximum legal lending rates, domestic monetary policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve”), United States fiscal policy, international currency regulations and monetary policies and capital adequacy and liquidity constraints imposed by bank regulatory agencies.
Supervision and Regulation
U.S. Bancorp and its subsidiaries are subject to the extensive regulatory framework applicable to bank holding companies (“BHCs”) and their subsidiaries. This regulatory framework is intended primarily for the
This section summarizes certain provisions of the principal laws and regulations applicable to the Company and its subsidiaries. The descriptions are not intended to be complete and are qualified in their entirety by reference to the full text of the statutes and regulations described below.
General
Supervision and regulation by the responsible regulatory agencies generally include comprehensive annual reviews of all major aspects of the Company’s, USBNA’s and U.S. Bank National Association’sMUB’s business and condition, regular
Banking and other financial services statutes, regulations and policies are continually under review by the United States Congress, state legislatures and federal and state regulatory agencies. In addition to laws and regulations, state and federal bank regulatory agencies may issue policy statements, interpretive letters and similar written guidance applicable to the Company and its subsidiaries. Any change in the statutes, regulations or regulatory policies applicable to the Company, including changes in their interpretation or implementation, could have a material effect on its business or organization.
As a BHC with over $250$100 billion in total consolidated assets, the Company is subject to the Dodd-Frank Act’s enhanced prudential standards, as modified byapplied to “Category III” institutions under the federal banking regulators’ 2019 rules that tailor how enhanced prudential standards apply to large U.S. banking organizations (the “Tailoring Rules”). The rules applicableTailoring Rules also apply certain enhanced prudential standards to the Companyour subsidiary depository institutions, USBNA and U.S. Bank National Association areMUB, as described in more detail below.
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In connection with the Company’s acquisition of MUB, the Company committed (the “Federal Reserve Commitments”) to submit to the Federal Reserve quarterly implementation plans for complying with requirements applicable to “Category II” institutions (i.e., institutions with $700 billion or more in total assets or $75 billion or more in cross-jurisdictional activities). The Company also committed to meet requirements applicable to Category II institutions by the earlier of (i) the date required under the Tailoring Rules; and (ii) December 31, 2024, if the Federal Reserve notifies the Company by January 1, 2024, that the Company must comply with such rules. As a Category III institution, the Company must conduct a company-run stress test every two years, and the Company is subject to reduced Liquidity Coverage Ratio (“LCR”) and Net Stable Funding Ratio (“NSFR”) requirements that are calibrated at 85 percent of the full requirements. Refer to “Stress Testing” and “Basel III Liquidity Requirements” below. If the Company becomes subject to requirements applicable to Category II institutions, in addition to the items discussed below, the Company will be required to conduct company-run stress tests on an annual basis and will become subject to the full LCR and NSFR requirements. In addition, as a Category II institution, the Company would be an “advanced approaches” banking organization under the Federal Reserve’s current capital rules, which would, among other things, introduce significant additional complexity in the methodologies used to calculate the Company’s risk-weighted assets for purposes of determining the Company’s regulatory capital ratios.
Supervisory Ratings
BHC Activities
If an FHC or a depository institution controlled by an FHC ceases to be well-capitalized or well-managed, the Federal Reserve may impose corrective capital and managerial requirements on the FHC and may place
The Federal Reserve also requires BHCs to meet certain applicable capital and management standards. Failure by the Company to meet these standards could limit the Company from engaging in any new activity or acquiring other companies without the prior approval of the Federal Reserve.
Permissible Business Activities
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activities that the Federal Reserve determines upon application to be complementary to a financial activity and that do not pose a safety and soundness risk.
The Company generally is not required to obtain Federal Reserve approval to acquire a company engaged in activities that are financial in nature or incidental to activities that are financial in nature, as long as the Company meets the capital, managerial and CRA requirements to qualify as an FHC. However, the Company is required to receive approval for an acquisition in which the total consolidated assets to be acquired exceed $10 billion. FHCs are also required to obtain the approval of the Federal Reserve before they may acquire more than five percent of the voting shares or substantially all of the assets of an unaffiliated BHC, bank or savings association. In addition, banks must receive approval before they may acquire, merge with, acquire substantially all of the assets of or assume any deposits of a bank or savings association and may be required to receive approval for acquisitions of other companies.
Interstate Banking
Regulatory Approval for Acquisitions
In July 2021, the current United States presidential administration issued an executive order on competition, which included provisions relating to bank mergers. These provisions encourage the Department of Justice and
Source of Strength
Cross Guaranty Provisions The cross guaranty provisions in the Federal Deposit Insurance Act require each insured depository institution owned by the same BHC to be financially responsible for the failure or resolution costs of any affiliated insured institution. Generally, the amount of the cross guaranty liability is equal to the estimated loss to the DIF for the resolution of the affiliated institution(s) in default. The FDIC’s claim under the cross guaranty provision is superior to claims of shareholders of the insured depository institution or its BHC and to most claims arising out of obligations or liabilities owed to affiliates of the institution, but is subordinate to
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claims of depositors, secured creditors and holders of subordinated debt (other than affiliates) of the commonly controlled insured depository institution. The FDIC may decline to enforce the cross guaranty provision if it determines that a waiver is in the best interest of the DIF.
OCC Heightened Standards
Enhanced Prudential Standards
Dividend Restrictions
The OCC, the Federal Reserve and the FDIC also have authority to prohibit or limit the payment of dividends by the banking organizations they supervise (including the Company, USBNA and U.S. Bank National Association),MUB) if, in the banking regulator’s opinion, payment of a dividend would constitute an unsafe or unsound practice in light of the financial condition of the banking organization.
In addition, the Federal Reserve’s final rule implementing the stress capital buffer (“SCB”) provides that a BHC must receive prior approval for any dividend, stock repurchase or other capital distribution, other than a capital distribution on a newly issued capital instrument, if the BHC is required to resubmit its capital plan. The rule also provides that a BHC must resubmit its capital plan if, among other things, the BHC determines there has been or will be a material change in the BHC’s risk profile, financial condition, or corporate structure since the BHC last submitted its capital plan.
Capital Requirements
Under the Tailoring Rules, the Company, USBNA and U.S. Bank National AssociationMUB are each currently subject to “Category III” standards, and are “standardized approach” banking organizations that are subject to rules that provide for simplified capital requirements relating to the threshold deductions for mortgage servicing assets, deferred tax assets arising from temporary differences that a banking organization could not realize through net operating loss carry backs, and investments in the capital of unconsolidated financial institutions, as well as the inclusion of minority interests in regulatory capital. Substantial growthGrowth in total consolidated assets (including assets obtained in acquisitions) or cross-jurisdictional activity (as defined in the Tailoring Rules) or action by the Federal Reserve in connection with the Federal Reserve Commitments could affect the Company’s continued classification as a “Category III” institution, which could result in the Company and its insured depository institution subsidiaries becoming “advanced approaches” banking organizations, a requirement to recognize elements of accumulated other comprehensive income in regulatory capital, as well as other more stringent capital, liquidity, and other regulatory requirements.
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Under the United States Basel
Banking organizations that fail to meet the effective minimum ratios will be subject to constraints on capital distributions, including dividends and share repurchases, and certain discretionary executive compensation, with the severity of the constraints depending on the extent of the shortfall and “eligible retained income” (defined as the greater of (i) net income for the four preceding quarters, net of distributions and associated tax effects not reflected in net income; and (ii) the average of all net income over the preceding four quarters).
United States banking organizations are also subject to a minimum tier 1 leverage ratio of 4.0 percent. As a Category III banking organization, the Company is also subject to a minimum Supplementary Leverage Ratio (“SLR”) of 3.0 percent that takes into account both
In December 2017, the Basel Committee finalized a package of revisions to the Basel III framework. The changes are meant to improve the calculation of risk-weighted assets (including by recalibrating risk weights and introducing new capital requirements for certain “unconditionally cancellable commitments,” including unused lines of credit) and improve the comparability of capital ratios by (i) enhancing the robustness and risk sensitivity of the standardized approaches for credit risk, credit valuation adjustment (“CVA”) risk and operational risk; (ii) constraining the use of the internal model approaches, by placing limits on certain inputs used to calculate capital requirements under the internal ratings-based (“IRB”) approach for credit risk and by removing the use of the internal model approaches for CVA risk and for operational risk; (iii) introducing a leverage ratio buffer to further limit the leverage of global systemically important banks
In 2020, the United States federal banking agencies adopted a rule that allowed banking organizations, including the Company and U.S. Bank National Association,USBNA, to elect to delay temporarily the estimated effects of adopting the current expected credit loss accounting standard (“CECL”) on regulatory capital until January 2022 and subsequently to phase in the effects through January 2025. Through the 20212022 stress test cycle, the Federal Reserve has not yet incorporated CECL into the calculation of the allowance for credit losses in supervisory stress tests. For further discussion of CECL, see Notes 1 and 6 of the Notes to Consolidated Financial Statements in the 20212022 Annual Report. The Company and U.S. Bank National AssociationUSBNA elected to delay and subsequently phase in the regulatory capital impact of CECL in accordance with this rule.
For additional information regarding the Company’s regulatory capital, see “Capital Management” in the 20212022 Annual Report.
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Comprehensive Capital Analysis and Review
Stress Testing
Under the OCC’s rules, national banks with assets in excess of $250 billion, including U.S. Bank National Association,USBNA, are required to submit
Basel III Liquidity Requirements
Prompt Corrective Action
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the appropriate federal banking regulator under the “prompt corrective action” rules generally depend upon an institution’s classification within five capital categories. An institution that fails to remain well-capitalized becomes subject to a series of restrictions that increase in severity as its capital condition weakens. Such restrictions may include a prohibition on capital distributions, restrictions on asset growth or restrictions on the ability to receive regulatory approval of applications. The FDICIA also provides for enhanced supervisory authority over undercapitalized institutions, including authority for the appointment of a conservator or receiver for the institution.
Prompt corrective action regulations apply only to banks and not to BHCs such as the Company. However, the Federal Reserve is authorized to take appropriate action at the BHC level, based on the undercapitalized status of the BHC’s subsidiary banking institutions. In certain instances, relating to an undercapitalized bank, the BHC would be required to guarantee the performance of the undercapitalized subsidiary’s capital restoration plan and could be liable for civil money damages for failure to fulfill those guarantee commitments.
Deposit Insurance
In addition, large insured depository institutions, including U.S. Bank National Association,USBNA, are subject to enhanced deposit account recordkeeping and related information technology system requirements meant to facilitate prompt payment of insured deposits if such an institution were to fail.
In October 2022, the FDIC finalized a rule to increase the initial base deposit insurance assessment rate schedules for all insured depository institutions by two basis points, beginning with the first quarterly assessment period of 2023. The increased assessment rate is intended to improve the likelihood that the DIF reserve ratio would reach the required minimum of 1.35 percent by the statutory deadline of September 30, 2028.
Depositor Preference
Orderly Liquidation Authority
Resolution Plans
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targeted and full submissions). In December 2020, the Federal Reserve and the FDIC released targeted plan guidance and directed large foreign and domestic banks to file resolution plans including core elements of a firm’s resolution strategy as well as how each firm has integrated changes to and lessons learned from its response to
In September 2022, the Federal Reserve and the FDIC announced the development of new resolution plan guidance for Category II and Category III banking organizations but that agencies will seek and consider public comment prior to finalizing the guidance. The Company expects to be subject to the final guidance. In addition, U.S. Bank National Association isUSBNA and MUB are required to file periodically a separate resolution planplans with the FDIC that should enable the FDIC, as receiver, to resolve theeach institution under applicable receivership provisions of the Federal Deposit Insurance Act in a manner that ensures that depositors receive access to their insured deposits within one business day of the institution’s failure, maximizes the net present value return from the sale or disposition of its assets and minimizes the amount of any loss to the institution’s creditors. In June 2021, the FDIC issued a Statement on Resolution Plans for Insured Depository Institutions (the “FDIC Statement”). Among other things, the FDIC Statement establishesestablished a three-year filing cycle for banks with $100 billion or more in total assets and providesprovided details regarding the content that filers will be expected to prepare. TheUnder this filing cycle, USBNA and MUB each submitted its most recent resolution plan to the FDIC Statement also divides covered insured depository institutions (“IDIs”) into two groups for purposesin November 2022.
In addition, in connection with the approval by the OCC of the timingmerger of resolution plan submissions, withMUB into USBNA, USBNA committed (the “OCC Commitments”) to the first group consistingOCC that it would (i) develop a list of IDIs for which the parent is not a United States
Recovery Plans
Transactions with Affiliates
Anti-Money Laundering and Sanctions
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“BSA”), the Money Laundering Control Act, the USA PATRIOT Act (collectively, “AML laws”), and implementing regulations for the International Emergency Economic Powers Act and the Trading with the Enemy Act, as administered by the United States Treasury Department’s Office of Foreign Assets Control (“sanctions laws”).
As implemented by federal banking and securities regulators and the Department of the Treasury, AML laws obligate depository institutions and broker-dealers to verify their customers’ identity, verify the identity of beneficial owners of legal entity customers, conduct customer due diligence, report on suspicious activity, file
In January 2021, the Anti-Money Laundering Act of 2020 (“AMLA”), which amends the BSA, was enacted. Among other things, the AMLA codifiescodified a risk-based approach to anti-money laundering compliance for financial institutions; requiresrequired the development of standards by the U.S. Department of the Treasury for evaluating technology and internal processes for BSA compliance; and expandsexpanded enforcement- and investigation-related authority, including a significant expansion in the available sanctions for certain BSA violations. Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance.
Community Reinvestment Act
In December 2021,May 2022, the OCC, issued a final rule (the “2021 CRA Rule”) to rescindtogether with the OCC’s May 2020 CRA rule (the “2020 CRA Rule”), which created a new CRA framework, and replace it with rules based on the 1995 CRA rules, as revised, that were issued jointly by the OCC, Federal Reserve and FDIC. BecauseFDIC, issued a joint notice of proposed rulemaking to modernize the CRA regulatory framework. The proposed rule is intended, among other things, to adapt to changes in the banking industry, including the expanded role of mobile and online banking, and to tailor performance standards to account for differences in bank size and business models. The proposed rule would adjust CRA evaluations based on bank size and type, with many aspects of the 2020proposed changes applying only to banks with over $2 billion in assets and several applying only to banks with over $10 billion in assets, such as USBNA and MUB. The effects of the proposed CRA Rule had not yet been implementedrules on USBNA and becauseMUB will depend on the final form of certain transition provisions in the 2021 CRA Rule, the Company does not expect the 2021 CRA Rule to have a significant effect on U.S. Bank National Association.
Regulation of Brokerage, Investment Advisory and Insurance Activities
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activities are subject to regulations of the SEC, the Financial Industry Regulatory Authority and other authorities, including state regulators. These regulations generally cover licensing of securities personnel, interactions with customers and counterparties, trading operations, customer suitability and communications. Securities regulators impose capital requirements on the Company’s broker-dealer entities and periodically review their sales practice and financial operations. In addition, the Company’s broker-dealer entities are members of the Securities Investor Protection Corporation, which oversees the liquidation of member broker-dealers that close when the broker-dealer is bankrupt or in financial trouble and imposes membership fee assessments and other reporting requirements on the broker-dealer entities.
The operations of the First American family of funds, the Company’s proprietary money market fund complex, also are subject to regulation by the SEC, including rules requiring a floating net asset value for institutional prime and
The Company’s operations in the areas of insurance brokerage and reinsurance of credit life insurance are subject to regulation and supervision by various state insurance regulatory authorities, including the licensing of insurance brokers and agents.
Regulation of Derivatives and the Swaps Marketplace
In addition, the OCC’s rules concerning swap margin and capital requirements for swap dealers regulated by the OCC were fully
The Volcker Rule
Privacy and Cybersecurity
Data privacy and data protection are areas of increasing state legislative focus, and several U.S. states have recently enacted comprehensive consumer privacy laws that impose compliance obligations with respect to personal information. For example, the Company is subject to the California Consumer Protection Act of 2018
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and its implementing regulations (collectively, the “CCPA”). The CCPA gives consumers several rights with respect to their personal information, including the right to request disclosure of(i) know the information that has been collected about them and whether that information has been sold or shared with others, the right toothers; (ii) request deletion of their personal information (subject to certain exceptions), the right to; (iii) opt out of the sale of the consumer’stheir personal information,information; and the right(iv) not to be discriminated against for exercising these rights. The CCPA contains several exemptions to the CCPA’s requirements, including an exemption applicable tofor personal information that is collected, processed, sold or disclosed pursuantsubject to the GLBA. The CCPA also provides residents of California (regardless of whether their information is covered under the GLBA exemption) with a limited private right of action, including the right to seek statutory damages, against businesses that fail to implement and maintain reasonable security procedures and practices and the failure results in the unauthorized access and exfiltration, theft, or disclosure of certain types of the California residents’ personal information, including the right to seek statutory damages.information. In November 2020, voters in the State of California approved the California Privacy Rights Act (“CPRA”), a ballot measure that amends and supplements the CCPA by, among other things, expanding certain rights relating to personal information and its use, collection, and disclosure by covered businesses and expanding coveragebusinesses. While the CPRA’s substantive amendments to include employees, job applicants and business contacts who are residents
Like other lenders, U.S. Bank National AssociationUSBNA, MUB and other subsidiaries of the Company use credit bureau dataconsumer reports in their underwriting activities. Use of such datainformation is regulated under the Fair Credit Reporting Act (“FCRA”), and the FCRA also regulates reporting information to credit bureaus,consumer reporting agencies, prescreening individuals for credit offers, sharing of credit dataconsumer reports between affiliates, and using affiliate credit data for marketing purposes. Similar state laws may impose additional requirements on the Company and its subsidiaries.
The federal banking regulators, as well as the SEC, CFPB, CFTC, and related self-regulatory organizations, regularly issue guidance on cybersecurity that is intended to enhance cyber risk management among financial institutions. A financial institution’s management is expectedrequired to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the institution’s operations after a cyber-attack.cybersecurity incident. A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations if the institution or its critical service providers fall victim toexperience a cyber-attack.
In November 2021, the United States federal bank regulatory agencies adopted a rule regarding notification requirements for banking organizations related to significant computer security incidents. Under the final rule, which was effective April 1, 2022, a BHC, such as the Company, and a national bank, such as U.S. Bank National Association, areUSBNA or MUB, is required to notify the Federal Reserve or OCC, respectively, within 36 hours of incidentsa computer security incident that haveresults in actual harm to the confidentiality, integrity or availability of an information system or the information that the system processes, stores or transmits, which has materially disrupted or degraded, or areis reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector. Similarly, the Office of the Superintendent of Financial Institutions in Canada requires Federally Regulated Financial Institutions to report qualifying technology and cybersecurity incidents under the provisions of the August 13, 2021 Technology and Cyber Security Incident Reporting Advisory.
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Consumer Protection
USBNA, MUB and itstheir respective subsidiaries are subject to supervision and regulation by the CFPB with respect to federal consumer laws. The CFPB has undertaken numerous rule-making and other initiatives, including launching an initiative to reduce the amounts and types of fees financial institutions may charge, including by recently proposing a rule that would significantly reduce the permissible amount of credit card late fees, issuing informal guidance and taking enforcement actions against certain financial institutions. The CFPB’s rulemaking, examination and enforcement authority has affected and will continue to impactaffect financial institutions that provide consumer financial products and services, including the Company, U.S. Bank National Association,USBNA, MUB and the Company’s other subsidiaries. These regulatory activities may limit the types of financial services and products the Company may offer, which in turn may reduce the Company’s revenues.
LIBOR Act In March 2022, the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) was enacted. The LIBOR Act provides a uniform approach for replacing LIBOR as a reference interest rate in certain LIBOR-linked contracts for a time when LIBOR is no longer published or is no longer representative. The LIBOR Act covers contracts that either do not include effective fallback provisions, for example, because they have no provisions for a replacement benchmark or provisions based on prior LIBOR values or dealer polls, or permit a party to select a replacement benchmark in its discretion. Under the LIBOR Act, references to the most common tenors of LIBOR in these contracts will be replaced as a matter of law, without the need to be amended by the parties, to instead reference a benchmark interest rate identified in Federal Reserve regulations that is based on the secured overnight funding rate (“SOFR”). In December 2022, the Federal Reserve issued final regulations to implement the LIBOR Act. The Federal Reserve’s final rule identified benchmark replacements, based on SOFR, for various types of contracts subject to the LIBOR Act. The Company continues to evaluate the effect of the LIBOR Act and its implementing regulations on the Company’s LIBOR-linked contracts. See the section entitled “LIBOR Transition” of the Company’s 2022 Annual Report for additional information regarding the Company’s efforts to transition away from LIBOR.
Executive and Incentive Compensation Guidelines adopted by the federal banking agencies prohibit excessive compensation as an unsafe and unsound practice and describe compensation as “excessive” when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal stockholder. The Federal Reserve has issued comprehensive guidance on incentive compensation policies (the “Incentive Compensation Guidance”) intended to ensure that the incentive compensation policies of banking organizations do not undermine safety and soundness organizations by encouraging excessive risk-taking. The Incentive Compensation Guidance is based upon the key principles that a banking organization’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage risks; (ii) be compatible with effective internal controls and risk management; and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors. The Incentive Compensation Guidance states that enforcement actions may be taken against a banking organization if its incentive compensation arrangements or related risk-management control or governance processes pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.
During 2016, the federal bank regulatory agencies and the SEC proposed revised rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion of total assets. These proposed rules have not been finalized.
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In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including the New York Stock Exchange (the “NYSE”), to implement listing standards that require all listed companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding a required accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period. The excess compensation would be based on the amount the executive officer would have received had the incentive-based compensation been determined using the restated financial statements. The final rule requires the exchanges to propose conforming listing standards by February 26, 2023, and requires the standards to become effective no later than November 23, 2023. Each listed issuer, including the Company, would then be required to adopt a clawback policy within 60 days after its exchange’s listing standard has become effective.
Other Supervision and Regulation
Capital Covenants
The Company has entered into several transactions involving the issuance of capital securities (“Capital Securities”) by certain Delaware statutory trusts formed by the Company (the “Trusts”), the issuance by the Company of preferred stock (“Preferred Stock”) or the issuance by an indirecta subsidiary of U.S. Bank National AssociationUSBNA of preferred stock exchangeable for the Company’s Preferred Stock under certain circumstances (“Exchangeable Preferred Stock”). Simultaneously with the closing of certain of those transactions, the Company entered into a replacement capital covenant, as amended from time to time (as amended, each, a “Replacement Capital Covenant” and collectively, the “Replacement Capital Covenants”) for the benefit of persons that buy, hold or sell a specified series of long-term indebtedness of the Company or U.S. Bank National AssociationUSBNA (the “Covered Debt”). Each of the Replacement Capital Covenants provides that neither the Company nor any of its subsidiaries (including any of the Trusts) will repay, redeem or purchase any of the Preferred Stock, Exchangeable Preferred Stock or the Capital Securities and the securities held by the Trust (the “Other Securities”), as applicable, on or before the date specified in the applicable Replacement Capital Covenant, unless the Company has received proceeds from the sale of qualifying securities that (a) have equity-like characteristics that are the same as, or more equity-like than, the applicable characteristics of the Preferred Stock, the Exchangeable Preferred Stock, the Capital Securities or Other Securities, as applicable, at the time of repayment, redemption or purchase, and (b) the Company has obtained the prior approval of the Federal Reserve, if such approval is then required by the Federal Reserve or, in the case of the Exchangeable Preferred Stock, the approval of the OCC.
The Company will provide a copy of any Replacement Capital Covenant to a holder of the relevant Covered Debt. For copies of any of these documents, holders should write to Investor Relations, U.S. Bancorp, 800 Nicollet Mall, Minneapolis, Minnesota 55402, or call
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The following table identifies the closing date for each transaction, issuer, series of Capital Securities, Preferred Stock or Exchangeable Preferred Stock issued in the relevant transaction, Other Securities, if any, and applicable Covered Debt as of February 22, 2022,27, 2023, for those securities that remain outstanding.
Closing Date | Issuer | Capital Securities or Preferred Stock | Other Securities | Covered Debt | ||||
3/17/06 | USB Capital IX and U.S. Bancorp | USB Capital IX’s $675,378,000 of 6.189% Fixed-to-Floating | U.S. Bancorp’s Series A Non-Cumulative Perpetual Preferred Stock | U.S. Bancorp’s 7.50% Subordinated Debentures due 2026 (CUSIP No. 911596AL8) | ||||
3/27/06 | U.S. Bancorp | U.S. Bancorp’s 40,000,000 Depositary Shares ($25 per Depositary Share) each representing a 1/1000 th interest in a share of Series BNon-Cumulative Perpetual Preferred Stock | Not Applicable | U.S. Bancorp’s 7.50% Subordinated Debentures due 2026 (CUSIP No. 911596AL8) | ||||
12/22/06 | USB Realty Corp. (a) and U.S. Bancorp | USB Realty Corp.’s 4,500 shares of Fixed-to-Floating-Rate Non-Cumulative Perpetual Series A Preferred Stock exchangeable for shares of U.S. Bancorp’s Series CNon-Cumulative Perpetual Preferred Stock(b) | Not Applicable | U.S. Bancorp’s 7.50% Subordinated Debentures due 2026 (CUSIP No. 911596AL8) |
(a) | USB Realty Corp. is |
(b) | Under certain circumstances, upon the direction of the OCC, each share of USB Realty Corp.’s Series A Preferred Stock will be automatically exchanged for one share of U.S. Bancorp’s Series C |
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Available Information
U.S. Bancorp’s internet website can be found at www.usbank.com. U.S. Bancorp makes available free of charge on its website, by clicking on “About us” and then clicking on “Investor relations,” its annual reports on Form
Additional Information
Additional information in response to this Item 1 can be found in the 20212022 Annual Report on pages 56 to 6059 under the heading “Line of Business Financial Review.” That information is incorporated into this report by reference.
Item 1A. | Risk Factors |
Information in response to this Item 1A can be found in the 20212022 Annual Report on pages 137140 to 150155 under the heading “Risk Factors.” That information is incorporated into this report by reference.
Item 1B. | Unresolved Staff Comments |
None.
Item 2. | Properties |
U.S. Bancorp and its significant subsidiaries occupy headquarter offices under a long-term lease in Minneapolis, Minnesota. The Company also leases 7 freestanding operations centers in Cincinnati, Denver, Milwaukee, Minneapolis, Overland Park,Chicago, Portland and St. Paul. The Company owns 98 principal operations centers in Cincinnati, Coeur d’Alene, Fargo, Milwaukee, Olathe, Owensboro, Portland, St. Louis and St. Paul. At December 31, 2021,2022, the Company’s subsidiaries owned and operated a total of 1,2441,274 facilities and leased an additional 1,4981,717 facilities. The Company believes its current facilities are adequate to meet its needs. Additional information with respect to the Company’s premises and equipment is presented in Note 9 of the Notes to Consolidated Financial Statements included in the 20212022 Annual Report. That information is incorporated into this report by reference.
Item 3. | Legal Proceedings |
Information in response to this Item 3 can be found in Note 23 of the Notes to Consolidated Financial Statements included in the 20212022 Annual Report.Report under the heading, “Litigation and Regulatory Matters.” That information is incorporated into this report by reference.
Item 4. | Mine Safety Disclosures |
Not Applicable.
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PART II
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
The Company announced on December 22, 2020 that its Board of Directors had approved an authorization to repurchase $3.0 billion of its common stock beginning January 1, 2021, and repurchased $1.5 billion of its common stock during the first six months of 2021 under this program. The Company suspended all common stock repurchases at the beginning of the third quarter of 2021, except for those done exclusively in connection with its stock-based compensation programs, due to its recently announced pending acquisition of MUFG Union Bank’s core regional banking franchise.MUB. The Company does not expect to commence repurchasing its common stock again until after its common equity tier 1 capital ratio approximates 9.0 percent, at which time the second half of 2022, or after the acquisition closes in orderCompany will assess its capital position relative to buildexisting and proposed regulatory capital prior to the acquisition.requirements. The following table provides a detailed analysis of all shares repurchased by the Company or any affiliated purchaser during the fourth quarter of 2021:
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (In Millions) | ||||||||||||
October 1-31 | 155,223 | (a) | $ | 60.61 | 5,223 | $ | 1,462 | |||||||||
November 1-30 | 66,654 | (b) | 57.46 | 6,654 | 1,462 | |||||||||||
December 1-31 | 395,604 | (c) | 57.11 | 305,604 | 1,444 | |||||||||||
Total | 617,481 | (d) | $ | 58.03 | 317,481 | $ | 1,444 | |||||||||
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (In Millions) | ||||||||||||
October 1-31 | 130,208 | (a) | $ | 42.71 | 10,208 | $ | 1,389 | |||||||||
November 1-30 | 37,105 | (b) | 43.00 | 7,105 | 1,388 | |||||||||||
December 1-31 | 294,684 | 43.30 | 294,684 | 1,376 | ||||||||||||
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Total | 461,997 | (c) | $ | 43.10 | 311,997 | $ | 1,376 | |||||||||
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(a) | Includes |
(b) | Includes |
(c) | Includes |
Additional Information
Additional information in response to this Item 5 can be found in the 20212022 Annual Report on page 136139 under the heading “U.S. Bancorp Supplemental Financial Data (Unaudited)” and in Item 12 of this report, under the heading “Equity Compensation Plan Information.” That information is incorporated into this report and this Item by reference.
Item 6. | [Reserved] |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Information in response to this Item 7 can be found in the 20212022 Annual Report on pages 22 to 6059 under the heading “Management’s Discussion and Analysis.” That information is incorporated into this report by reference.
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Information in response to this Item 7A can be found in the 20212022 Annual Report on pages 35 to 56 under the heading “Corporate Risk Profile.” That information is incorporated into this report by reference.
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Item 8. | Financial Statements and Supplementary Data |
Information in response to this Item 8 can be found in the 20212022 Annual Report on pages 65 to 136139 under the headings “Report of Management,” “Report of Independent Registered Public Accounting Firm,” “Report of Independent Registered Public Accounting Firm,” “U.S. Bancorp Consolidated Balance Sheet,” “U.S. Bancorp Consolidated Statement of Income,” “U.S. Bancorp Consolidated Statement of Comprehensive Income,” “U.S. Bancorp Consolidated Statement of Shareholders’ Equity,” “U.S. Bancorp Consolidated Statement of Cash Flows,” “Notes to Consolidated Financial Statements,” “U.S. Bancorp Consolidated Daily Average Balance Sheet and Related Yields and Rates (Unaudited)” and “U.S. Bancorp Supplemental Financial Data (Unaudited)”. That information is incorporated into this report by reference.
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
None.
Item 9A. | Controls and Procedures |
Information in response to this Item 9A can be found in the 20212022 Annual Report on page 64 under the heading “Controls and Procedures” and on pages 65 and 6869 under the headings “Report of Management” and “Report of Independent Registered Public Accounting Firm.” That information is incorporated into this report by reference.
Item 9B. | Other Information |
None.
Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
Not Applicable.
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PART III
Item 10. | Directors, Executive Officers and Corporate Governance |
Code of Ethics and Business Conduct
The Company has adopted a Code of Ethics and Business Conduct that applies to its principal executive officer, principal financial officer and principal accounting officer. The Company’s Code of Ethics and Business Conduct can be found at www.usbank.com by clicking on “About us” and then clicking on “Investor relations” and then clicking on “Corporate Governance” and then clicking on “Governance documents” and then clicking on “Code of Ethics” and then clicking on “Code of Ethics and Business Conduct.” The Company intends to satisfy the disclosure requirements under Item 5.05 of Form
Information About the Company’s Managing Committee
Andrew Cecere
Mr. Cecere is Chairman, President and Chief Executive Officer of U.S. Bancorp. Mr. Cecere, 61,62, has served as President of U.S. Bancorp since January 2016, Chief Executive Officer since April 2017 and Chairman since April 2018. He also served as Vice Chairman and Chief Operating Officer from January 2015 to January 2016 and was U.S. Bancorp’s Vice Chairman and Chief Financial Officer from February 2007 until January 2015. Until that time, he served as Vice Chairman, Wealth Management and Investment Services, of U.S. Bancorp since the merger of Firstar Corporation and U.S. Bancorp in February 2001. Previously, he had served as an executive officer of the former U.S. Bancorp, including as Chief Financial Officer from May 2000 through February 2001.
Souheil S. Badran
Mr. Badran is Senior Executive Vice President and Chief Operations Officer of U.S. Bancorp. Mr. Badran, 58, has served in this position since joining U.S. Bancorp in December 2022. From January 2019 until November 2022, he served as Executive Vice President and Chief Operating Officer at Northwestern Mutual, having also served as Chief Innovation Officer from January 2019 until September 2019. Previously Mr. Badran served as President of Alibaba’s Alipay business in the Americas from August 2016 until August 2018. From 2015 to 2016, Mr. Badran served as CEO at Edo Interactive, and from 2011 to 2015, he served as Senior Vice President and General Manager at Digital River.
Elcio R.T. Barcelos
Mr. Barcelos is Senior Executive Vice President and Chief Human Resources Officer of U.S. Bancorp. Mr. Barcelos, 51,52, has served in this position since joining U.S. Bancorp in September 2020. From April 2018 until August 2020, he served as Senior Vice President and Chief People and Places Officer of the Federal National Mortgage Association (Fannie Mae), having served as Senior Vice President, Human Resources of the DXC Technology Company from April 2017 to March 2018. Previously, Mr. Barcelos served as Senior Vice President and Head of Human Resources for the Enterprise Services business of Hewlett Packard Enterprise Company from June 2015 to April 2017, and in other human resources senior leadership positions at Hewlett-Packard Company and Hewlett Packard Enterprise Company from July 2009 to June 2015. He previously served in various leadership roles at Wells Fargo and Bank of America.
(1) | This section includes the biographies of the members of the Managing Committee of U.S. Bancorp. Each member of the Managing Committee, except for Gregory G. Cunningham, Venkatachari Dilip and Dominic V. Venturo, is deemed to be an executive officer of U.S. Bancorp. |
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James L. Chosy
Mr. Chosy is Senior Executive Vice President and General Counsel of U.S. Bancorp. Mr. Chosy, 58,59, has served in this position since March 2013. He also served as Corporate Secretary of U.S. Bancorp from March 2013 until April 2016. From 2001 to 2013, he served as the General Counsel and Secretary of Piper Jaffray Companies. From 1995 to 2001, Mr. Chosy was Vice President and Associate General Counsel of U.S. Bancorp, having also served as Assistant Secretary of U.S. Bancorp from 1995 through 2000 and as Secretary from 2000 until 2001.
Gregory G. Cunningham
Mr. Cunningham is Senior Executive Vice President and Chief Diversity Officer of U.S. Bancorp. Mr. Cunningham, 58,59, has served in this position since July 2020. From July 2019 until July 2020, he served as
Vankatachari Dilip
Mr. Dilip is Executive Vice President and Global Chief Information and Technology Officer of U.S. Bancorp. Mr. Dilip, 63, has served in this position since September 2018, when he joined U.S. Bancorp. From May 2014 until July 2017, he served as Vice President at McKinsey Digital where he helped banks accelerate their digital transformation. From April 2009 to September 2013, he served as CEO at Compass Labs leading an innovative marketing analytics company. From March 2006 until April 2008, he served as Director of Products at Google where he led product teams for mobile ads and Google Checkout. From March 2004 until March 2006, he served as Vice President of PayPal/eBay and on the Board of PayPal Europe, where he was responsible for Payments Services, Risk and Fraud Management. Previously, Mr. Dilip co-founded and led startup companies CashEdge and CommerceSoft from 1996 until 2003.
Terrance R. Dolan
Mr. Dolan is Vice Chair and Chief Financial Officer of U.S. Bancorp. Mr. Dolan, 60,61, has served in this position since August 2016. From July 2010 to July 2016, he served as Vice Chair, Wealth Management and Investment Services, of U.S. Bancorp. From September 1998 to July 2010, Mr. Dolan served as U.S. Bancorp’s Controller. He additionally held the title of Executive Vice President from January 2002 until June 2010 and Senior Vice President from September 1998 until January 2002.
Gunjan Kedia
Ms. Kedia is Vice Chair, Wealth Management and Investment Services, of U.S. Bancorp. Ms. Kedia, 51,52, has served in this position since joining U.S. Bancorp in December 2016. From October 2008 until May 2016, she served as Executive Vice President of State Street Corporation where she led the core investment servicing business in North and South America and served as a member of State Street’s management committee, its senior most strategy and policy committee. Previously, Ms. Kedia was an Executive Vice President of global product management at Bank of New York Mellon from 2004 to 2008 and a Partner and associate at McKinsey from 1996 to 2004.
James B. Kelligrew
Mr. Kelligrew is Vice Chair, Corporate and Commercial Banking, of U.S. Bancorp. Mr. Kelligrew, 56,57, has served in this position since January 2016. From March 2014 until December 2015, he served as Executive Vice
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President, Fixed Income and Capital Markets, of U.S. Bancorp, having served as Executive Vice President, Credit Fixed Income, of U.S. Bancorp from May 2009 to March 2014. Prior to that time, he held various leadership positions with Wells Fargo Securities from 2003 to 2009.
Shailesh M. Kotwal
Mr. Kotwal is Vice Chair, Payment Services, of U.S. Bancorp. Mr. Kotwal, 57,58, has served in this position since joining U.S. Bancorp in March 2015. From July 2008 until May 2014, he served as Executive Vice President of TD Bank Group with responsibility for retail banking products and services and as Chair of its enterprise payments council. From 2006 until 2008, he served as President, International, of eFunds Corporation. Previously, Mr. Kotwal served in various leadership roles at American Express Company from 1989 until 2006, including responsibility for operations in North and South America, Europe and the Asia-Pacific regions.
Katherine B. Quinn
Ms. Quinn is Vice Chair and Chief Administrative Officer of U.S. Bancorp. Ms. Quinn, 57,58, has served in this position since April 2017. From September 2013 to April 2017, she served as Executive Vice President and Chief Strategy and Reputation Officer of U.S. Bancorp and has served on U.S. Bancorp’s Managing Committee since January 2015. From September 2010 until January 2013, she served as Chief Marketing Officer of WellPoint, Inc. (now known as Anthem, Inc.), having served as Head of Corporate Marketing of WellPoint from July 2005 until September 2010.
Jodi L. Richard
Ms. Richard is Vice Chair and Chief Risk Officer of U.S. Bancorp. Ms. Richard, 53,54, has served in this position since October 2018. She served as Executive Vice President and Chief Operational Risk Officer of U.S.
Mark G. Runkel
Mr. Runkel is Senior Executive Vice President and Chief Transformation Officer of U.S. Bancorp. Mr. Runkel, 45,46, has served in this position since August 2021. From December 2013 to August 2021, he served as Senior Executive Vice President and Chief Credit Officer. From February 2011 until December 2013, he served as Senior Vice President and Credit Risk Group Manager of U.S. Bancorp Retail and Payment Services Credit Risk Management, having served as Senior Vice President and Risk Manager of U.S. Bancorp Retail and Small Business Credit Risk Management from June 2009 until February 2011. From March 2005 until May 2009, he served as Vice President and Risk Manager of U.S. Bancorp.
Dominic V. Venturo
Mr. Venturo is Senior Executive Vice President and Chief Digital Officer of U.S. Bancorp. Mr. Venturo, 55,56, has served in this position since July 2020. From January 2015 until July 2020, he served as Executive Vice President and Chief Innovation Officer of U.S. Bancorp, having served as Senior Vice President and Chief Innovation Officer of U.S. Bancorp Payment Services from January 2010 until January 2015. From January 2007 to December 2009, Mr. Venturo served as Senior Vice President and Chief Innovation Officer of U.S. Bancorp Retail Payment Solutions. Prior to that time, he served as Senior Vice President and held product management positions in various U.S. Bancorp Payment Services business lines from December 1998 to December 2006.
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Jeffry H. von Gillern
Mr. von Gillern is Vice Chair, Technology and Operations Services, of U.S. Bancorp. Mr. von Gillern, 56,57, has served in this position since July 2010. From April 2001, when he joined U.S. Bancorp, until July 2010, Mr. von Gillern served as Executive Vice President of U.S. Bancorp, additionally serving as Chief Information Officer from July 2007 until July 2010.
Timothy A. Welsh
Mr. Welsh is Vice Chair, Consumer and Business Banking, of U.S. Bancorp. Mr. Welsh, 56,57, has served in this position since March 2019. Prior to that, he served as Vice Chair, Consumer Banking Sales and Support since joining U.S. Bancorp in July 2017. From July 2006 until June 2017, he served as a Senior Partner at McKinsey & Company where he specialized in financial services and the consumer experience. Previously, Mr. Welsh served as a Partner at McKinsey from 1999 to 2006.
Additional Information
Additional information in response to this Item 10 can be found in the Proxy Statement under the headings “Proposal. 1 — Election of Directors,” “Corporate Governance — Committee Responsibilities” and “Corporate Governance — Committee Member Qualifications.” That information is incorporated into this report by reference.
Item 11. | Executive Compensation |
Information required to be furnished in response to this Item 11 can be found in the Proxy Statement under the headings “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Corporate Governance – Compensation Committee Interlocks and Insider Participation,” “Executive Compensation” and “Director Compensation.” That information is incorporated into this report by reference.
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Equity Compensation Plan Information
The following table summarizes information regarding the Company’s equity compensation plans in effect as of December 31, 2021:
Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in the First Column) | |||||||||
Equity Compensation Plans Approved by Security Holders | 24,064,520 | (3) | ||||||||||
Stock Options | 3,890,131 | (1) | $ | 42.58 | ||||||||
Restricted Stock Units and Performance-Based Restricted Stock Units | 6,865,705 | (2) | - | |||||||||
Equity Compensation Plans Not Approved by Security Holders | 376,367 | (4) | - | - | ||||||||
Total | 11,132,203 | 24,064,520 |
Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in the First Column) | |||||||||
Equity Compensation Plans Approved by Security Holders | 20,299,639 | (3) | ||||||||||
Stock Options | 3,253,090 | (1) | $ | 44.42 | ||||||||
Restricted Stock Units and Performance-Based Restricted Stock Units | 6,952,232 | (2) | - | |||||||||
Equity Compensation Plans Not Approved by Security Holders | 372,941 | (4) | - | - | ||||||||
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Total | 10,578,263 | 20,299,639 |
(1) | Includes shares of the Company’s common stock underlying stock options granted under the U.S. Bancorp 2015 Stock Incentive Plan (the “2015 Plan”) and the U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan (the “2007 Plan”). |
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(2) | Includes shares of the Company’s common stock underlying performance-based restricted stock units (awarded to the members of the Company’s Managing Committee and settled in shares of the Company’s common stock on a one-for-one |
(3) | The |
(4) | These shares of the Company’s common stock are issuable pursuant to various current and former deferred compensation plans of U.S. Bancorp and its predecessor entities. No exercise price is paid when shares are issued pursuant to the deferred compensation plans. |
The deferred compensation plans allow
The 376,367372,941 shares included in the table assume that participants in the plans whose deferred compensation had been deemed to be invested in the Company’s common stock had elected to receive all of that deferred compensation in shares of the Company’s common stock on December 31, 2021.2022. The U.S. Bank Executive Employees Deferred Compensation Plan (2005 Statement) and the U.S. Bank Outside Directors Deferred Compensation Plan (2005 Statement) are the Company’s only deferred compensation plans under which compensation may currently be deferred.
Additional Information
Additional information in response to this Item 12 can be found in the Proxy Statement under the heading “Security Ownership of Certain Beneficial Owners and Management.” That information is incorporated into this report by reference.
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
Information in response to this Item 13 can be found in the Proxy Statement under the headings “Corporate Governance — Director Independence,” “Corporate Governance — Committee Member Qualifications” and “Certain Relationships and Related Transactions.” That information is incorporated into this report by reference.
Item 14. | Principal Accounting Fees and Services |
Information in response to this Item 14 can be found in the Proxy Statement under the headings “Audit Committee Report and Payment of Fees to Auditor — Fees to Independent Auditor” and “Audit Committee Report and Payment of Fees to Auditor — Administration of Engagement of Independent Auditor.” That information is incorporated into this report by reference.
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PART IV
Item 15. | Exhibits and Financial Statement Schedules |
List of documents filed as part of this report
1. Financial Statements
Report of Management
Report of Independent Registered Public Accounting Firm on the Financial Statements
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
U.S. Bancorp Consolidated Balance Sheet as of December 31, 20212022 and 20202021
U.S. Bancorp Consolidated Statement of Income for each of the three years in the period ended December 31, 20212022
U.S. Bancorp Consolidated Statement of Comprehensive Income for each of the three years in the period ended December 31, 20212022
U.S. Bancorp Consolidated Statement of Shareholders’ Equity for each of the three years in the period ended December 31, 20212022
U.S. Bancorp Consolidated Statement of Cash Flows for each of the three years in the period ended December 31, 20212022
Notes to Consolidated Financial Statements
U.S. Bancorp Consolidated Daily Average Balance Sheet and Related Yields and Rates (Unaudited)
U.S. Bancorp Supplemental Financial Data (Unaudited)
2. Financial Statement Schedules
All financial statement schedules for the Company have been included in the consolidated financial statements or the related footnotes, or are either inapplicable or not required.
3. Exhibits
Shareholders may obtain a copy of any of the exhibits to this report upon payment of a fee covering the Company’s reasonable expenses in furnishing the exhibits. You can request exhibits by writing to Investor Relations, U.S. Bancorp, 800 Nicollet Mall, Minneapolis, Minnesota 55402.
(1) | Share Purchase Agreement, dated as of September 21, 2021. Filed as Exhibit 2.1 to Form 8-K filed on September 24, 2021. * | |
(1)2.2 | Amendment No. 1 to the Share Purchase Agreement, dated as of May 10, 2022. Filed as Exhibit 2.1 to Form 10-Q for the quarterly period ended June 30, 2022. * | |
(1)3.1 | Restated Certificate of | |
(1) | Amended and Restated Bylaws. Filed as Exhibit 3.1 to Form 8-K filed on April 20, 2021. | |
4.1 | Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, copies of instruments defining the rights of holders of long-term debt are not filed. U.S. Bancorp agrees to furnish a copy thereof to the SEC upon request. | |
4.2 | Description of U.S. Bancorp’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. |
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(1) | Exhibit has been previously filed with the SEC and is incorporated herein as an exhibit by reference to the prior filing. |
(2) | Management contracts or compensatory plans or arrangements. |
(3) | Certain appendices have been omitted. The Company will furnish copies of any such appendix to the U.S. Securities and Exchange Commission upon its request. |
* | The schedules and similar attachments to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to provide a copy of the omitted schedules and similar attachments on a supplemental basis to the U.S. Securities and Exchange Commission or its staff, if requested. |
Item 16. | Form |
Not applicable.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on February 22, 2022,27, 2023, on its behalf by the undersigned, thereunto duly authorized.
U.S. BANCORP | ||
By | /s/ A NDREW CECERE | |
Andrew Cecere | ||
Chairman, President and Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 22, 2022,27, 2023, by the following persons on behalf of the registrant and in the capacities indicated.
Signature and Title |
/s/ A NDREW CECERE |
Andrew Cecere, |
Chairman, President and Chief Executive Officer, Director (principal executive officer) |
/s/ T ERRANCE R. DOLAN |
Terrance R. Dolan, |
Vice Chair and Chief Financial Officer (principal financial officer) |
/s/ L ISA R. STARK |
Lisa R. Stark, |
Executive Vice President and Controller (principal accounting officer) |
W ARNER L. BAXTER * |
Warner L. Baxter, Director |
D OROTHY J. BRIDGES * |
Dorothy J. Bridges, Director |
E LIZABETH L. BUSE * |
Elizabeth L. Buse, Director |
ALAN B. COLBERG* |
Alan B. Colberg, Director |
K IMBERLY |
Kimberly |
KIMBERLY J. H |
Kimberly J. Harris, Director |
ROLAND A. HERNANDEZ* |
Roland A. Hernandez, Director |
OLIVIA F. KIRTLEY* |
Olivia F. Kirtley, Director |
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Signature and Title |
RICHARD P. MCK |
Richard P. McKenney, Director |
YUSUF I. M |
Yusuf I. Mehdi, Director |
LORETTA E. REYNOLDS* |
Loretta E. Reynolds, Director |
J OHN P. WIEHOFF * |
John P. Wiehoff, Director |
S COTT W. WINE * |
Scott W. Wine, Director |
* | Andrew Cecere, by signing his name hereto, does hereby sign this document on behalf of each of the above named directors of the registrant pursuant to powers of attorney duly executed by such persons. |
Dated: February 22, 2022
By: | /s/ A NDREW CECERE | |
Andrew Cecere | ||
Attorney-In-Fact |
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