Exhibit 13
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE
U.S. Bank 401(k) Savings Plan
Years Ended December 31, 2014 and 2013
With Report of Independent Registered Public Accounting Firm
U.S. Bank 401(k) Savings Plan
Financial Statements and Supplemental Schedule
Years Ended December 31, 2014 and 2013
Contents
| | | | |
Report of Independent Registered Public Accounting Firm | | | 1 | |
| |
Financial Statements | | | | |
| |
Statement of Net Assets Available for Benefits | | | 2 | |
Statement of Changes in Net Assets Available for Benefits | | | 3 | |
Notes to Financial Statements | | | 4 | |
| |
Supplemental Schedule | | | | |
| |
Schedule H, Line 4i – Schedule of Assets (Held at End of Year) | | | 18 | |
Report of Independent Registered Public Accounting Firm
The Benefits Administration Committee
U.S. Bancorp
Participants of U.S. Bank 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits of the U.S. Bank 401(k) Savings Plan as of December 31, 2014 and 2013, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the U.S. Bank 401(k) Savings Plan at December 31, 2014 and 2013, and the changes in its net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.
The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2014, has been subjected to audit procedures performed in conjunction with the audit of U.S. Bank 401(k) Savings Plan’s financial statements. The information in the supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.
| | |
| Minneapolis, Minnesota | | /s/ Ernst & Young LLP |
June 24, 2015 | | |
1
U.S. Bank 401(k) Savings Plan
Statement of Net Assets Available for Benefits
| | | | | | | | |
| | | December 31, | |
| | | 2014 | | | 2013 | |
Assets | | | | | | | | |
Investments, at fair value | | $ | 5,024,337,327 | | | $ | 4,647,341,633 | |
Accrued income | | | 7,412,887 | | | | 7,709,650 | |
Employer contribution receivable | | | 122,676,096 | | | | 119,739,632 | |
Receivable for securities sold but not yet settled | | | 1,145,901 | | | | 984,875 | |
Notes receivable from participants | | | 113,339,935 | | | | 103,189,960 | |
| | | | | | | | |
Total assets | | | 5,268,912,146 | | | | 4,878,965,750 | |
| | |
Liabilities | | | | | | | | |
Accrued expenses | | | 701,774 | | | | 561,564 | |
Payable for securities purchased but not yet settled | | | 652,400 | | | | 1,505,095 | |
| | | | | | | | |
Total liabilities | | | 1,354,174 | | | | 2,066,659 | |
| | | | | | | | |
Net assets available for benefits, at fair value | | | 5,267,557,972 | | | | 4,876,899,091 | |
Adjustment from fair value to contract value for fully benefit-responsive investment contracts | | | (4,588,189 | ) | | | (448,754 | ) |
| | | | | | | | |
Net assets available for benefits | | $ | 5,262,969,783 | | | $ | 4,876,450,337 | |
| | | | | | | | |
See Notes to Financial Statements.
2
U.S. Bank 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
| | | | | | | | |
| | | Year Ended December 31, | |
| | | 2014 | | | 2013 | |
Additions | | | | | | | | |
Investment income: | | | | | | | | |
Net appreciation in fair value of investments | | $ | 329,427,363 | | | $ | 813,219,188 | |
Interest and dividend income | | | 61,405,801 | | | | 58,550,833 | |
| | | | | | | | |
| | | 390,833,164 | | | | 871,770,021 | |
Interest income on notes receivable from participants | | | 4,622,094 | | | | 4,068,833 | |
| | |
Contributions: | | | | | | | | |
Participants | | | 279,462,376 | | | | 266,885,636 | |
Employer | | | 122,675,804 | | | | 119,745,056 | |
| | | | | | | | |
| | | 402,138,180 | | | | 386,630,692 | |
| | |
Transfer from plan of acquired company | | | — | | | | 13,113,086 | |
| | | | | | | | |
Total additions | | | 797,593,438 | | | | 1,275,582,632 | |
| | |
Deductions | | | | | | | | |
Benefits paid to participants and transfers out | | | 404,738,021 | | | | 357,659,556 | |
Administrative expenses | | | 6,335,971 | | | | 5,826,021 | |
| | | | | | | | |
Total deductions | | | 411,073,992 | | | | 363,485,577 | |
| | | | | | | | |
Net increase | | | 386,519,446 | | | | 912,097,055 | |
| | |
Net assets available for benefits at beginning of year | | | 4,876,450,337 | | | | 3,964,353,282 | |
| | | | | | | | |
Net assets available for benefits at end of year | | $ | 5,262,969,783 | | | $ | 4,876,450,337 | |
| | | | | | | | |
See Notes to Financial Statements.
3
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements
December 31, 2014
1. Description of the Plan
The following description of the U.S. Bank 401(k) Savings Plan (the Plan) provides only general information. Participants should refer to the Plan’s Summary Plan Description (the “SPD”) for a more complete description of the Plan’s provisions. The SPD can be reviewed by visiting the U.S. Bank Retirement Program website at www.yourbenefitsresources.com/usbank.
Administration and Participation
The Plan is a defined contribution retirement plan covering substantially all employees of U.S. Bancorp (Plan Sponsor) and its subsidiaries (the Company). Employees are eligible to participate in the Plan on their hire date so long as they are a regular, permanent employee working in an eligible position. Eligible employees are automatically enrolled in the Plan with a before-tax salary deferral of 2% of eligible compensation, unless the employee elects otherwise.
Each participant’s account is credited with applicable participant contributions, rollovers, employer contributions, and an allocation of the earnings (losses) of the investment funds in which the participant has elected to invest. Earnings (losses) allocations are based upon the participant account balance, as defined in the plan document. In addition, applicable participant distributions and loans as well as an allocation of administrative expenses are charged to each participant’s account. Participants may invest their account balance in one or more of a variety of investment funds and are immediately 100% vested in their entire account balance.
The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the Internal Revenue Code (the Code).
Contributions
Prior to August 16, 2013, the Plan permitted only before-tax elective contributions up to a maximum of 75% of a participant’s eligible compensation, up to the Internal Revenue Service (“IRS”) limit. Effective August 16, 2013, plan participants have the option to elect to have their contributions deducted from their paycheck on a before-tax and/or after-tax basis (as Roth contributions). The combined total of before-tax and Roth contributions may not exceed 75% of eligible compensation, up to the IRS limit. Participants age 50 and older whose elective contributions have reached the IRS limit are permitted under the Plan to make catch-up contributions up to the IRS catch-up contribution limit. Effective August 16, 2013, catch-up contributions can also be made on a before-tax and/or after-tax basis. All participant contributions are deposited in the Plan semimonthly.
4
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
The Company makes a matching contribution equal to 100% of each participant’s contribution up to 4% of the participants’ annual eligible compensation. A participant becomes eligible for an employer matching contribution on the first day of the month following completion of one full year of service in which the participant has worked at least 1,000 hours. The employer matching contribution is deposited in the Plan annually and is initially invested in eligible participants’ accounts based on their future contribution investment elections. Participants can subsequently change how their matching contributions are invested at any time. The employer contribution receivable represents the Company’s matching contribution for 2014, which was deposited in the Plan in January 2015.
Benefits Paid to Participants
The forms of distribution offered by the Plan are a partial or total lump sum payment.
Participant Loans
The Plan contains provisions allowing participants to borrow from their accounts. Participants may have only two loans outstanding at a time. The minimum loan is $1,000 and the maximum is the lesser of 50% of the participant’s account balance or $50,000 minus the participant’s highest outstanding loan balance during the past 12 months. The loans bear interest at 1% above the prime interest rate at the date of issuance as determined monthly by the plan administrator. Principal and interest is paid ratably through semi-monthly payroll deductions. If a participant terminates employment with the Company, the loan is due within 90 days of the date of termination. If the loan is not repaid by the last day of the quarter following the quarter in which it was due, it will be treated as a distribution to the participant. A participant may elect to continue to make loan payments on a monthly basis after their employment terminates to avoid having their loan treated as a distribution.
Plan Investments
The Plan includes an employee stock ownership plan (“ESOP”) fund. All participant and employer matching contributions credited to a participant’s account that are invested in qualifying employer securities are invested in the ESOP fund. The primary purpose of the ESOP fund is to benefit participants and beneficiaries by obtaining and retaining for them a position of equity ownership in the Company. Dividends paid on qualifying employer securities held in the ESOP are either reinvested in the ESOP or paid directly to the participant, at their election.
5
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Plan Transfer
The Company acquired Syncada, LLC in September 2013. The Syncada 401(k) Savings Plan was terminated as of October 1, 2013. Effective November 29, 2013, the account balances of the acquired employees employed by the Company, with total assets of $13,113,086, were transferred into the Plan. The net assets transferred to the Plan are reflected on the statement of changes in net assets available for benefits as a transfer from plan of acquired company.
Plan Termination
Although it has not expressed any intention to do so, the Company has the right to suspend or terminate the Plan at any time by action of its Board of Directors subject to the provisions of ERISA. In the event of a termination of the Plan, all participant account balances remain fully vested and are eligible for distribution.
2. Significant Accounting Policies
Accounting Method
The financial statements of the Plan are prepared using the accrual method of accounting under U.S. generally accepted accounting principles.
Investment Valuation and Income Recognition
Investments are stated at fair value. See Note 5 for a discussion of fair value measurements.
Per applicable authoritative accounting guidance, investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan.
Purchases and sales of securities are recorded on a trade-date basis. If a trade is open at the end of the year, a receivable for securities sold but not yet settled or a payable for securities purchased but not yet settled is reflected in the statement of net assets available for benefits. Dividends are recorded on the ex-dividend date.
6
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Brokers’ commissions and other expenses incurred upon the purchase of corporate stock are included in the cost of the corporate stock. Brokers’ commissions and other expenses incurred upon the sale of corporate stock are reflected as a reduction in the proceeds from the sale.
The change from the beginning to the end of the year in the difference between current value and the cost of investments is reflected in the statement of changes in net assets available for benefits as net appreciation or depreciation in fair value of investments.
The net gain (loss) on sales of investments is the difference between the proceeds received and the average cost of investments sold and is also reflected in the statement of changes in net assets available for benefits in net appreciation or depreciation in fair value of investments.
Notes Receivable From Participants
Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. Related fees are paid by participants who borrow from their accounts. If a participant ceases to make loan payments and the Plan Sponsor deems the loan to be a distribution, the participant loan balance is reduced, and a benefit payment is recorded. Accordingly, no allowance for credit losses has been recorded as of December 31, 2014 or 2013.
Administrative Expenses
Recordkeeping, investment management, trust, consulting, audit, and other administrative fees are paid by the Plan and are recorded as administrative expenses as incurred.
Payment of Benefits
Benefit payments are recorded when paid.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.
7
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Risks and Uncertainties
The Plan’s investments are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the values of investments, it is at least reasonably possible that changes in risks in the near term would materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits and the statement of changes in net assets available for benefits.
3. Stable Value Fund
The Plan offers a stable value investment option, the U.S. Bank Stable Value Fund (the Fund). The Plan’s investment advisory agreement with its third party investment manager specifies the type and percentage of underlying investments that are appropriate for the Fund. The Fund invests in fully-benefit responsive investment contracts, including synthetic guaranteed investment contracts (“GIC”) and a separate account GIC issued by insurance companies and consists of insurance contracts and wrapper contracts, and short-term investments.
The synthetic GICs consist of two parts: an underlying investment owned directly by the Plan and a wrapper contract purchased from an insurance company. The wrapper contract guarantees full payment of principal and interest. The wrapper contract amortizes realized and unrealized gains and losses on the underlying fixed income investments, typically over the duration of the investments, through adjustments to the future interest crediting rate. These investments are credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The insurance company guarantees that all qualified participant withdrawals will be at contract value. The interest crediting rates on these investments are reset at least quarterly and will never be less than zero percent.
The separate account GIC is an investment in a segregated account of assets maintained by an insurance company for the benefit of the investors. The total return of the segregated account assets supports the separate account GIC return. The interest crediting rate on this investment is reset at least quarterly and will never be less than zero percent.
Gains and losses in the fair value of the underlying investments, relative to the wrapper contract value, are represented on the statement of net assets available for benefits as “adjustment from fair value to contract value for fully benefit-responsive investment contracts”. If the adjustment is positive, this means the wrapper contracts’ values are greater than the fair value of the underlying investments. If the adjustment is negative, this means the wrapper contracts’ values are less than the fair value of the underlying investments.
8
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
3. Stable Value Fund (continued)
The statement of net assets available for benefits is prepared on a basis that reflects income credited to participants in the Plan and realized and unrealized gains and losses on the underlying investments.
The average yield earned on the stable value investment option, based on actual earnings, was 1.58% as of December 31, 2014, and 1.60% as of December 31, 2013. The average yield earned on the stable value investment option, based on the interest rate credited to participants, was 1.65% as of December 31, 2014, and 1.51% as of December 31, 2013.
Certain events may limit the ability of the Plan to transact at contract value with the issuer. Such events include:
| | • | | Material amendments to plan documents or the Plan’s administration |
| | • | | Changes to the participating Plan’s competing investment options, including the elimination of equity wash provisions |
| | • | | Complete or partial termination of the Plan, including merger with another plan |
| | • | | The failure of the Plan to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA |
| | • | | Bankruptcy of the Plan Sponsor or other plan sponsor event that causes a significant withdrawal from the Plan |
| | • | | Any change in law, regulation, ruling, administrative or judicial position, or accounting requirement applicable to the Plan |
| | • | | The delivery of any communication to plan participants designed to influence a participant not to invest in the investment option |
At this time, the Plan Sponsor does not believe that the occurrence of any such market value event that would limit the Plan’s ability to transact at contract value with participants is probable.
9
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
3. Stable Value Fund (continued)
The Fund owns units of the Wells Fargo Short Term Investment Fund S and Wells Fargo Stable Value Fund G, both of which serve as the Fund’s short-term liquidity vehicle.
The following table represents a listing of the underlying GICs held by the Plan and a reconciliation from fair value to contract value at December 31:
| | | | | | | | | | | | | | | | | | | | | | |
Issuer | | Moody’s/
S&P
Ratings | | Yield | | | Fair Value | | | Wrapper
Contract
Fair Value | | | Adjustment to
Contract Value | | | Contract Value | |
2014 | | | | | | | | | | | | | | | | | | | | | | |
American General Life Insurance Company
Contract Number 1650008 | | A2/A+ | | | 1.54 | % | | $ | 84,191,849 | | | $ | — | | | $ | (343,801 | ) | | $ | 83,848,048 | |
Metropolitan Life Insurance Company
Contract Number 32372 | | Aa3/AA- | | | 2.25 | % | | | 84,311,664 | | | | 88,287 | | | | (2,120,933 | ) | | | 82,279,018 | |
Prudential Life Insurance Company
Contract Number GA-62309 | | A1/AA- | | | 1.49 | % | | | 93,917,699 | | | | — | | | | (284,949 | ) | | | 93,632,750 | |
Voya Retirement Insurance and Annuity Co Contract Number 60305 | | A3/A- | | | 2.06 | % | | | 84,673,207 | | | | — | | | | (1,127,503 | ) | | | 83,545,704 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | $ | 347,094,419 | | | $ | 88,287 | | | $ | (3,877,186 | ) | | $ | 343,305,520 | |
| | | | | | | | | | | | | | | | | | | | | | |
2013 | | | | | | | | | | | | | | | | | | | | | | |
American General Life Insurance Company
Contract Number 1650008 | | A2/A+ | | | 1.18 | % | | $ | 63,691,628 | | | $ | — | | | $ | 55,415 | | | $ | 63,747,043 | |
ING Life Insurance and Annuity Company
Contract Number 60305 | | A3/A- | | | 2.32 | % | | | 81,657,820 | | | | — | | | | 58,225 | | | | 81,716,045 | |
Metropolitan Life Insurance Company
Contract Number 32372 | | Aa3/AA- | | | 2.17 | % | | | 80,693,854 | | | | 64,423 | | | | (235,549 | ) | | | 80,522,728 | |
Prudential Life Insurance Company
Contract Number GA-62309 | | A1/AA- | | | 1.32 | % | | | 90,240,682 | | | | — | | | | 222,784 | | | | 90,463,466 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | $ | 316,283,984 | | | $ | 64,423 | | | $ | 100,875 | | | $ | 316,449,282 | |
| | | | | | | | | | | | | | | | | | | | | | |
10
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
4. Investments
For the years ended December 31, 2014 and 2013, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in fair value as follows:
| | | | | | | | |
| | | Year Ended December 31, | |
| | | 2014 | | | 2013 | |
Mutual funds | | $ | 55,823,310 | | | $ | 158,694,863 | |
Corporate stock | | | 147,591,466 | | | | 306,485,241 | |
Collective investment funds, 103-12 investment entity and pooled separate account | | | 126,010,234 | | | | 348,036,793 | |
Life insurance policies | | | 2,353 | | | | 2,291 | |
| | | | | | | | |
| | $ | 329,427,363 | | | $ | 813,219,188 | |
| | | | | | | | |
The fair values of individual investments that represent 5% or more of the Plan’s net assets are as follows:
| | | | | | | | |
| | | December 31, | |
| | | 2014 | | | 2013 | |
U.S. Bancorp common stock | | $ | 1,360,017,314 | | | $ | 1,354,201,455 | |
Vanguard Institutional Index Fund | | | 499,754,412 | | | | 405,969,467 | |
5. Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value measurement reflects all of the assumptions that market participants would use in pricing the asset, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset or liability and the risk of nonperformance.
11
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
5. Fair Value Measurements (continued)
The Plan groups its assets measured at fair value into a three-level hierarchy for valuation techniques used to measure assets at fair value. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are:
| | • | | Level 1 – Quoted prices in active markets for identical assets. Level 1 includes mutual funds and corporate stocks. |
| | • | | Level 2 – Observable inputs other than Level 1 prices, such as quoted market prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets. Level 2 includes collective investment funds, a 103-12 investment entity, a pooled separate account and life insurance policies. |
| | • | | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. The Plan had no Level 3 investments during 2014 or 2013. |
If the Plan were to change its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy based on the new inputs used. The Plan would recognize these transfers at the end of the reporting period in which the transfers occurred. During the years ended December 31, 2014 and 2013, there were no transfers of financial assets or financial liabilities between the hierarchy levels.
12
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
5. Fair Value Measurements (continued)
The following section is a description of the valuation techniques and inputs used by the Plan to measure each major class of assets at fair value. During 2014 and 2013, there were no changes to the valuation techniques used by the Plan to measure fair value. There were no unfunded commitments related to these investments for the years ended December 31, 2014 and 2013.
Mutual funds: Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open-ended mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily net asset value (“NAV”) and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.
Corporate stocks: Valued at the last reported sales price of the year in the national security exchange in which the individual securities are traded.
Collective investment funds: Valued using the NAV provided by the trustee of the fund. The NAV is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities.
103-12 investment entity (an investment entity that holds the assets of two or more plans which are not members of a related group or employee benefit plan): Valued using the NAV provided by the trustee of the fund. The NAV is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities.
Pooled separate account: Valued using the NAV provided by the custodian of the fund. The NAV is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities.
Life insurance policies: Valued at cash surrender value per insurance company at year-end.
13
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
5. Fair Value Measurements (continued)
As required by applicable authoritative accounting guidance, the level in the fair value hierarchy within which the fair value measurement of the asset in its entirety is classified is based on the lowest-level input that is significant to the fair value measurement in its entirety.
The following table summarizes the Plan’s investment assets measured at fair value at December 31:
| | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Total | |
2014 | | | | | | | | | | | | |
Mutual funds: | | | | | | | | | | | | |
Domestic equity | | $ | 86,423,018 | | | $ | — | | | $ | 86,423,018 | |
International equity | | | 43,898,391 | | | | — | | | | 43,898,391 | |
Index(a) | | | 919,808,160 | | | | — | | | | 919,808,160 | |
Fixed income | | | 205,011,366 | | | | — | | | | 205,011,366 | |
Money market | | | 6,194,129 | | | | — | | | | 6,194,129 | |
| | | | | | | | | | | | |
| | | 1,261,335,064 | | | | — | | | | 1,261,335,064 | |
Corporate stocks: | | | | | | | | | | | | |
Domestic large cap | | | 1,360,017,314 | | | | — | | | | 1,360,017,314 | |
Domestic small cap | | | 5,188,715 | | | | — | | | | 5,188,715 | |
| | | | | | | | | | | | |
| | | 1,365,206,029 | | | | — | | | | 1,365,206,029 | |
Collective investment funds: | | | | | | | | | | | | |
Domestic equity(b) | | | — | | | | 648,511,210 | | | | 648,511,210 | |
International equity(c) | | | — | | | | 41,959,411 | | | | 41,959,411 | |
Target retirement date(d) | | | — | | | | 1,258,318,823 | | | | 1,258,318,823 | |
Fixed income(e) | | | — | | | | 320,759,364 | | | | 320,759,364 | |
| | | | | | | | | | | | |
| | | — | | | | 2,269,548,808 | | | | 2,269,848,808 | |
103-12 investment entity: | | | | | | | | | | | | |
International equity(c) | | | — | | | | 43,835,605 | | | | 43,835,605 | |
Pooled separate account: | | | | | | | | | | | | |
Fixed income(e) | | | — | | | | 84,399,951 | | | | 84,399,951 | |
Life insurance policy | | | | | | | 11,870 | | | | 11,870 | |
| | | | | | | | | | | | |
Total | | $ | 2,626,541,093 | | | $ | 2,397,796,234 | | | $ | 5,024,337,327 | |
| | | | | | | | | | | | |
14
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
5. Fair Value Measurements (continued)
| | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Total | |
2013 | | | | | | | | | | | | |
Mutual funds: | | | | | | | | | | | | |
Domestic equity | | $ | 92,754,139 | | | $ | — | | | $ | 92,754,139 | |
International equity | | | 83,379,919 | | | | — | | | | 83,379,919 | |
Index(a) | | | 723,661,524 | | | | — | | | | 723,661,524 | |
Fixed income | | | 212,519,969 | | | | — | | | | 212,519,969 | |
Money market | | | 6,202,130 | | | | — | | | | 6,202,130 | |
| | | | | | | | | | | | |
| | | 1,118,517,681 | | | | — | | | | 1,118,517,681 | |
Corporate stocks: | | | | | | | | | | | | |
Domestic large cap | | | 1,354,201,455 | | | | — | | | | 1,354,201,455 | |
Domestic small cap | | | 4,148,162 | | | | — | | | | 4,148,162 | |
| | | | | | | | | | | | |
| | | 1,358,349,617 | | | | — | | | | 1,358,349,617 | |
Collective investment funds: | | | | | | | | | | | | |
Domestic equity(b) | | | — | | | | 672,315,695 | | | | 672,315,695 | |
International equity(c) | | | — | | | | 42,638,560 | | | | 42,638,560 | |
Target retirement date(d) | | | — | | | | 1,042,195,996 | | | | 1,042,195,996 | |
Fixed income(e) | | | — | | | | 332,513,229 | | | | 332,513,229 | |
| | | | | | | | | | | | |
| | | — | | | | 2,089,663,480 | | | | 2,089,663,480 | |
Pooled separate account: | | | | | | | | | | | | |
Fixed income(e) | | | — | | | | 80,758,277 | | | | 80,758,277 | |
Life insurance policies | | | — | | | | 52,578 | | | | 52,578 | |
| | | | | | | | | | | | |
Total | | $ | 2,476,867,298 | | | $ | 2,170,474,335 | | | $ | 4,647,341,633 | |
| | | | | | | | | | | | |
| (a) | This category includes U.S. and non-U.S. equity funds and a U.S. bond fund. |
| (b) | This category includes investments in equity securities of U.S. companies with an objective to achieve a return higher than the S&P 500 Index, for the large cap investments, and the Russell 2500 Index, for the small and mid cap investments. There are currently no redemption restrictions on these investments. |
| (c) | This category includes investments in large cap equity securities of non-U.S. companies primarily located in developed countries, with an objective to achieve a return higher than the MSCI EAFE Index. There are currently no significant redemption restrictions on these investments. |
15
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
5. Fair Value Measurements (continued)
| (d) | This category includes investments in highly diversified funds designed to remain appropriate for investors in terms of risk throughout a variety of life circumstances. These collective investment funds share the common goal of first growing and then later preserving principal and contain a mix of U.S. and non-U.S. equity securities, U.S. and non-U.S.-issued bonds, and cash. There are currently no redemption restrictions on these investments. |
| (e) | This category includes funds designed to protect capital with low-risk investments and includes cash, bank notes, corporate notes, government bills, various short-term debt instruments and fully benefit-responsive investment contracts. There are currently no redemption restrictions on these investments, except for one of the investments, for which the Plan is required to provide a one-year redemption notice to liquidate its entire share in the fund. Certain investments’ fair value differs from the contract value. As previously discussed in Note 3, contract value is the relevant measurement attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. |
6. Reconciliation of Financial Statements to the Form 5500
The following is a reconciliation of net assets available for benefits per the financial statements to Form 5500:
| | | | | | | | |
| | | December 31 | |
| | | 2014 | | | 2013 | |
Net assets available for benefits per the financial statements | | $ | 5,262,969,783 | | | $ | 4,876,450,337 | |
Adjustment from fair value to contract value for fully benefit-responsive investment contracts | | | 4,588,189 | | | | 448,754 | |
| | | | | | | | |
Net assets available for benefits per Form 5500 | | $ | 5,267,557,972 | | | $ | 4,876,899,091 | |
| | | | | | | | |
16
U.S. Bank 401(k) Savings Plan
Notes to Financial Statements (continued)
7. Transactions With Parties in Interest
The Plan allows for transactions with certain parties who may perform services or have fiduciary responsibilities to the Plan. Parties in interest include the Company and U.S. Bank National Association (the Trustee). Transactions involving funds administered by the Trustee are considered party-in-interest transactions. These transactions, based on customary and reasonable rates, are not, however, considered prohibited transactions under 29 CFR 408(b) of the ERISA regulations.
The Plan invests in the common stock of the Company. At December 31, 2014 and 2013, the Plan held 30,256,225 and 33,519,838 shares, respectively, of U.S. Bancorp common stock. During the years ended December 31, 2014 and 2013, the Plan recorded dividend income from U.S. Bancorp common stock of $30,388,046 and $31,753,797, respectively.
The Plan also invests in a money market mutual fund of First American Funds, Inc., which is managed by the Company.
8. Tax Status
The Plan has received a determination letter from the IRS dated September 16, 2013, stating that the Plan is qualified under Section 401(a) of the Code and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax-exempt.
Accounting principles generally accepted in the United States require plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The Plan Sponsor has analyzed the tax positions taken by the Plan and has concluded that as of December 31, 2014, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Sponsor believes it is no longer subject to income tax examinations for years prior to 2011.
17
Supplemental Schedule
U.S. Bank 401(k) Savings Plan
EIN #41-0255900 Plan #004
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2014
| | | | | | | | | | |
Identity of Issuer, Borrower, Lessor, or Similar Party | | Description of Investment, Including Maturity Date, Rate of Interest, Par, or Maturity Value | | Current Value | |
| | | |
Mutual funds | | | | | | | | | | |
Cramer Rosenthal McGlynn, LLC | | | 5,807,998 | | | shares of Small/Mid Cap Value Fund | | $ | 86,423,018 | |
Dodge & Cox | | | 1,042,470 | | | shares of International Stock Fund | | | 43,898,391 | |
First American Funds, Inc(1) | | | 6,194,129 | | | shares of Prime Obligations Fund | | | 6,194,129 | |
Metropolitan West Asset Management, LLC | | | 19,942,740 | | | shares of Total Return Bond Fund | | | 205,011,366 | |
Vanguard | | | 7,306,806 | | | shares of Developed Markets Index Fund | | | 139,194,657 | |
| | | 1,172,695 | | | shares of Extended Market Index Fund | | | 192,744,173 | |
| | | 2,648,688 | | | shares of Institutional Index Fund | | | 499,754,412 | |
| | | 8,106,248 | | | shares of Total Bond Market Index Fund | | | 88,114,918 | |
| | | | | | | | | | |
Total mutual funds | | | | | | | | | 1,261,335,064 | |
| | | |
Corporate stock | | | | | | | | | | |
U.S. Bancorp(1) | | | 30,256,225 | | | shares of common stock | | | 1,360,017,314 | |
Piper Jaffray Companies | | | 89,322 | | | shares of common stock | | | 5,188,715 | |
| | | | | | | | | | |
Total corporate stock | | | | | | | | | 1,365,206,029 | |
| | | |
Collective investment funds | | | | | | | | | | |
American Century Investments | | | 3,047,161 | | | units of Non U.S. Growth Equity Fund | | | 41,959,411 | |
The Boston Co Asset Management, LLC | | | 5,383,831 | | | units of EB US Small-Mid Cap Value Equity Fund | | | 87,110,386 | |
Columbia Management Investment Advisors, LLC | | | 12,603,610 | | | units of Trust Focused Large Cap Growth Fund | | | 140,278,177 | |
NWQ Investment Management Co, LLC | | | 4,026,478 | | | units of Large Cap Value Fund | | | 116,204,161 | |
Principal Global Investors | | | 439,861 | | | units of Small Mid Cap Growth Equity Fund | | | 79,168,818 | |
Rainier Investment Management, Inc | | | 8,495,003 | | | units of Large Cap Equity Fund | | | 138,213,692 | |
Vanguard | | | 418,683 | | | units of Target Retirement 2010 Trust Plus | | | 16,265,832 | |
| | | 2,766,866 | | | units of Target Retirement 2015 Trust Plus | | | 113,247,815 | |
| | | 5,084,132 | | | units of Target Retirement 2020 Trust Plus | | | 216,126,451 | |
| | | 5,159,979 | | | units of Target Retirement 2025 Trust Plus | | | 225,233,064 | |
| | | 4,073,413 | | | units of Target Retirement 2030 Trust Plus | | | 182,692,565 | |
| | | 3,428,619 | | | units of Target Retirement 2035 Trust Plus | | | 157,785,054 | |
| | | 2,702,548 | | | units of Target Retirement 2040 Trust Plus | | | 126,263,061 | |
| | | 2,368,121 | | | units of Target Retirement 2045 Trust Plus | | | 110,662,296 | |
| | | 1,430,122 | | | units of Target Retirement 2050 Trust Plus | | | 66,901,124 | |
| | | 469,310 | | | units of Target Retirement 2055 Trust Plus | | | 21,940,249 | |
| | | 252,001 | | | units of Target Retirement 2060 Trust Plus | | | 7,086,267 | |
| | | 381,694 | | | units of Target Retirement Income Trust Plus | | | 14,115,045 | |
Wells Fargo Bank, N.A. | | | 13,151,644 | | | units of Fixed Income Fund F(2) | | | 177,685,281 | |
Wells Fargo Bank, N.A. | | | 7,151,048 | | | units of Fixed Income Fund L(2) | | | 85,097,474 | |
Wells Fargo Bank, N.A. | | | 6,479,649 | | | units of Short Term Investment Fund S(2) | | | 6,479,649 | |
Wells Fargo Bank, N.A. | | | 982,658 | | | units of Stable Return Fund G(2) | | | 51,496,960 | |
William Blair & Company, LLC | | | 5,285,989 | | | units of Small Cap Growth Fund | | | 87,535,976 | |
| | | | | | | | | | |
Total collective investment funds | | | | | | | | | 2,269,548,808 | |
| | | |
103-12 investment entity | | | | | | | | | | |
Vontobel Asset Management, Inc | | | 4,010,577 | | | units of International Equity Fund | | | 43,835,605 | |
18
U.S. Bank 401(k) Savings Plan
EIN #41-0255900 Plan #004
Schedule H, Line 4i – Schedule of Assets (Held at End of Year) (continued)
| | | | | | | | | | |
Identity of Issuer, Borrower, Lessor, or Similar Party | | Description of Investment, Including Maturity Date, Rate of Interest, Par, or Maturity Value | | Current Value | |
| | | |
Pooled separate account | | | | | | | | | | |
Metropolitan Life Insurance Company | | | 695,355 | | | units of Metlife Separate Account #613(2) | | | 84,399,951 | |
| | | |
Life insurance policy | | | | | | | | | | |
New England Mutual Life Insurance Co | | | 1 | | | policy | | | 11,870 | |
| | | | | | | | | | |
Total Investments | | | | | | | | | 5,024,337,327 | |
| | | |
Participant loans (1) | | | | | | Principal loan amount, interest rates ranging from 4.25% to 10.50% with varied maturities from January 15, 2015 to January 30, 2030 | | | 113,339,935 | |
| | | | | | | | | | |
| | | |
Total Assets | | | | | | | | $ | 5,137,677,262 | |
| | | | | | | | | | |
| (1) | Denotes party in interest to the Plan. |
| (2) | Investment held by the U.S. Bank Stable Value Fund. |
19
