U.S. Bancorp(USB) - 2023 Q4 - Annual Report

PART I Item 1. Business U.S. Bancorp is a financial services holding company offering diverse services, with its primary subsidiary USBNA holding $512.3 billion in deposits and operating across 26 states - U.S. Bancorp is a financial services holding company providing a full range of services, including lending, deposits, cash management, capital markets, and trust and investment management. It also engages in credit card services, merchant and ATM processing, mortgage banking, insurance, brokerage, and leasing[9] - USBNA, the banking subsidiary, held $512.3 billion in consolidated deposits as of December 31, 2023, and operated through a network of 2,274 banking offices and 4,524 ATMs across 26 states[9] - On December 1, 2022, the Company acquired MUFG Union Bank, N.A. (MUB) for $5.5 billion in cash and approximately 44 million shares of common stock. The acquisition included an additional $3.5 billion in MUB cash, with a remaining repayment obligation to MUFG of $2.6 billion after a debt/equity conversion on August 3, 2023. MUB was merged into USBNA on May 26, 2023, and its financial results are fully reflected in the Company's 2023 results[10][11] Business Segment Net Income (2023 vs. 2022): | Segment | 2023 Net Income (Billions) | Change vs. 2022 (Millions) | Change vs. 2022 (%) | | :---------------------------------------------- | :------------------------- | :------------------------- | :------------------ | | Wealth, Corporate, Commercial and Institutional Banking | $3.6 | +$202 | +6.0% | | Consumer and Business Banking | $2.2 | +$378 | +20.6% | | Payment Services | $1.2 | -$150 | -11.2% | | Treasury and Corporate Support | -$1.5 (net loss) | -$826 | N/A | - The Company employed 75,465 employees globally as of December 31, 2023. In the U.S., 57% of employees were women and 39% were people of color. At executive and senior management levels, 34% were women and 21% were people of color. The 2023 pay equity review showed women were paid >99% of male counterparts and people of color >99% of white counterparts, considering comparable jobs, experience, and location[13][14] - The Company is a bank holding company (BHC) and financial holding company (FHC), currently subject to 'Category III' enhanced prudential standards. On October 16, 2023, the Federal Reserve granted relief from commitments to comply with 'Category II' institution requirements by December 31, 2024, allowing the Company to remain under Category III standards until asset/activity thresholds are met[9][19] - As of December 31, 2023, the Company exceeded all minimum regulatory capital ratios (CET1, Tier 1, Total Capital, Tier 1 Leverage, and Supplementary Leverage Ratio). The Stress Capital Buffer (SCB) applicable to the Company is 2.5%[21] - In the fourth quarter of 2023, the Company recognized an additional noninterest expense of $734 million for the FDIC special assessment, intended to recover losses to the Deposit Insurance Fund (DIF) from other banking institution failures[24] Forward-Looking Statements The report contains forward-looking statements about future economic conditions, financial performance, and operational plans, subject to inherent risks - The report contains forward-looking statements regarding future economic conditions, revenue, expenses, financial condition, asset quality, capital and liquidity levels, plans, prospects, and operations of U.S. Bancorp[6] - Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially, including deterioration in economic conditions, financial market turbulence, regulatory changes, interest rate fluctuations, credit quality deterioration, and impacts from litigation, competition, climate change, and data security breaches[6][7] - Risks related to the MUFG Union Bank acquisition include the potential for anticipated revenue synergies and other benefits not being realized or taking longer than expected[8] General Business Description U.S. Bancorp is a Minneapolis-based financial services holding company offering diverse services through its primary banking subsidiary - U.S. Bancorp is a financial services holding company headquartered in Minneapolis, Minnesota, registered as a bank holding company and elected as a financial holding company[9] - The Company provides a full range of financial services, including lending, depository, cash management, capital markets, trust and investment management, credit card services, merchant and ATM processing, mortgage banking, insurance, brokerage, and leasing[9] - USBNA, the primary banking subsidiary, held $512.3 billion in consolidated deposits as of December 31, 2023, and serves individuals, businesses, institutional organizations, and governmental entities through 2,274 banking offices and 4,524 ATMs across 26 states[9] MUFG Union Bank Acquisition U.S. Bancorp acquired MUFG Union Bank in December 2022 for $5.5 billion cash and stock, with full integration in 2023 - On December 1, 2022, U.S. Bancorp acquired MUFG Union Bank, N.A.'s core regional banking franchise for $5.5 billion in cash and approximately 44 million shares of the Company's common stock[10] - The Company received an additional $3.5 billion in MUB cash, which is required to be repaid to MUFG by the fifth anniversary of the acquisition[10][11] - On August 3, 2023, a debt/equity conversion with MUFG resulted in the repayment of $936 million of debt through the issuance of 24 million shares of common stock, leaving a remaining repayment obligation of $2.6 billion[11] - MUB was merged into USBNA on May 26, 2023, and the Company's 2023 financial results fully reflect the acquired business[11] Business Segments The Company operates through four segments: Wealth, Corporate, Commercial and Institutional Banking; Consumer and Business Banking; Payment Services; and Treasury and Corporate Support - The Company's major lines of business include Wealth, Corporate, Commercial and Institutional Banking; Consumer and Business Banking; Payment Services; and Treasury and Corporate Support[12] 2023 Net Income Contribution by Business Segment (vs. 2022): | Segment | 2023 Net Income | Change vs. 2022 | | :---------------------------------------------- | :---------------- | :---------------- | | Wealth, Corporate, Commercial and Institutional Banking | $3.6 billion | +$202 million (6.0%) | | Consumer and Business Banking | $2.2 billion | +$378 million (20.6%) | | Payment Services | $1.2 billion | -$150 million (11.2%) | | Treasury and Corporate Support | -$1.5 billion (net loss) | -$826 million | Wealth, Corporate, Commercial and Institutional Banking This segment provides core banking, specialized lending, transaction processing, capital markets, asset management, and brokerage services to diverse clients - This segment provides core banking, specialized lending, transaction and payment processing, capital markets, asset management, and brokerage and investment services to wealth, middle market, large corporate, government, and institutional clients[12] Consumer and Business Banking This segment delivers consumer and small business banking, and consumer lending through various channels including banking offices, online, and mobile - This segment includes consumer banking, small business banking, and consumer lending, delivered through various channels such as banking offices, telephone, online, mobile, and intermediary relationships[12] Payment Services This segment covers consumer and business credit cards, stored-value cards, debit cards, corporate and government cards, and merchant processing - This segment encompasses consumer and business credit cards, stored-value cards, debit cards, corporate, government and purchasing card services, and merchant processing[12] Treasury and Corporate Support This segment manages the Company's investment portfolios, funding, capital, interest rate risk, unallocated taxes, and residual corporate expenses - This segment includes the Company's investment portfolios, funding, capital management, interest rate risk management, unallocated income taxes, and residual corporate expenses[12] Human Capital The Company focuses on attracting, developing, and retaining skilled employees, fostering diversity, equitable compensation, engagement, and governance - The Company's success relies on attracting, developing, and retaining skilled employees, fostering a diverse, equitable, and inclusive work environment, providing competitive pay and benefits, and supporting professional development[13] - As of December 31, 2023, the Company employed 75,465 individuals globally[13] - In 2023, employees completed over 3 million hours of training through enterprise learning programs[14] Diversity, Equity and Inclusion The Company aims to increase representation of women and people of color at all leadership levels through expanded talent pipelines and inclusive hiring - The Company aims to increase representation of women at leadership levels and people of color at all levels, including executive and senior management, through expanded talent pipelines and inclusive hiring practices[13] - As of December 31, 2023, U.S. employees were 57% women and 39% people of color. At executive and senior management levels, 34% were women and 21% were people of color. The Board of Directors included 5 women and 4 people of color out of 13 directors[14] - Business Resource Groups (BRGs) are sponsored to foster an inclusive workforce, enabling employees from diverse backgrounds to connect, develop skills, and build engagement[13][14] Equitable and Competitive Compensation, Health & Wellness Programs The Company provides competitive compensation and benefits, prioritizing pay equity and offering comprehensive health, retirement, and flexible work programs - The Company focuses on competitive compensation and benefits, conducting periodic peer and benchmarking reviews. It prioritizes pay equity, with processes to address gender and racial disparities[14] - In the 2023 review (excluding MUB acquisition employees), U.S. women employees were paid >99% of male counterparts, and people of color were paid >99% of white counterparts, considering comparable jobs, experience, and location[14] - Comprehensive benefits include healthcare, retirement (401(k) match and cash balance pension), leave, wellness, and flexible work programs to attract and retain talent[14] Employee Engagement and Retention The Company monitors employee engagement through a listening program and provides talent development opportunities to enhance skills and career growth - The Company monitors employee engagement through a listening program to inform human capital strategies and decisions[14] - Talent development opportunities, such as Digital and Leadership Academies and cultural sensitivity training, are provided to enhance skills and support career growth[14] Human Capital Governance The Board of Directors, through its Compensation and Human Resources Committee, oversees human capital management, including compensation, benefits, talent, and DEI initiatives - The Board of Directors oversees human capital management through its Compensation and Human Resources Committee, which covers compensation, benefits, talent management, and DEI initiatives[14] - The Chief Human Resources Officer reports regularly to the Compensation and Human Resources Committee, and the Chief Diversity Officer reports directly to the CEO to promote accountability for DEI efforts[15] Competition The financial services industry is highly competitive, facing rivals from traditional banks, fintech companies, and other financial institutions - The financial services industry is highly competitive, with competition from commercial banks, savings and loan associations, finance companies, credit unions, investment companies, credit card companies, and financial technology (fintech) companies[16] - Competition is based on factors such as customer service, product quality and range, price, reputation, interest rates, lending limits, and customer convenience, including the adoption of new technology-driven products and services[16] Government Policies The Company's operations are influenced by federal and state laws, legislative changes, and policies from various regulatory authorities - The Company's operations are affected by federal and state laws, legislative changes, and policies of various regulatory authorities, including statutory lending rates, domestic monetary policies of the Federal Reserve, U.S. fiscal policy, international currency regulations, and capital adequacy and liquidity constraints[17] Supervision and Regulation U.S. Bancorp and its subsidiaries are subject to extensive regulatory oversight by federal agencies, ensuring protection for depositors, consumers, and financial stability - U.S. Bancorp and its subsidiaries are subject to extensive regulatory oversight primarily by the Federal Reserve, OCC, FDIC, CFPB, SEC, and CFTC, intended for the protection of depositors, the deposit insurance fund, consumers, and financial system stability[18] - The Company is currently classified as a 'Category III' institution under the Tailoring Rules, but growth in assets or cross-jurisdictional activity could lead to reclassification as a 'Category II' institution, triggering more stringent capital, liquidity, and other regulatory requirements[19][21] - The Company and USBNA are subject to Basel III-based capital rules, including minimum CET1, Tier 1, and Total Capital ratios, as well as a Stress Capital Buffer (SCB) of 2.5% as of December 31, 2023. They also adhere to minimum Tier 1 Leverage and Supplementary Leverage Ratios[21] - In July 2023, U.S. federal bank regulatory authorities proposed the 'Basel III Endgame' rule, which is expected to result in increased regulatory capital requirements for the Company, including the potential inclusion of accumulated other comprehensive income (AOCI) in regulatory capital[21] - The Company and USBNA are subject to Basel III liquidity requirements, including a minimum Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR), calibrated at 85% of full requirements as Category III banking organizations[23] - In August 2023, a proposed rule was issued requiring Category III U.S. BHCs and their large insured depository institutions to maintain minimum levels of outstanding long-term debt, which is expected to require the Company and USBNA to maintain substantially more long-term debt[23][24] - The FDIC finalized a rule in November 2023 to impose a special assessment to recover losses to the Deposit Insurance Fund (DIF) from 2023 bank failures, resulting in a $734 million noninterest expense for the Company in Q4 2023[24] - USBNA received an 'Outstanding' CRA rating in its most recent examination. A final rule to modernize the CRA regulatory framework was issued in October 2023, with most provisions becoming applicable on January 1, 2026[26] - The Company is subject to extensive privacy and data protection laws, including GLBA, CCPA, and GDPR, requiring robust information security programs and compliance with data sharing and access regulations. A significant overhaul of the FCRA is expected in H1 2024[28][29] - The SEC adopted a final rule in October 2022, effective October 2, 2023, requiring listed companies to adopt clawback policies for incentive-based compensation earned by executive officers during the three fiscal years preceding a required accounting restatement[29][30] General U.S. Bancorp is regulated by the Federal Reserve, while USBNA is primarily regulated by the OCC, FDIC, and other agencies, subject to enhanced prudential standards - U.S. Bancorp is regulated by the Federal Reserve, while USBNA is primarily regulated by the OCC, FDIC, Federal Reserve, CFPB, SEC, and CFTC[18] - Regulatory supervision includes annual reviews, on-site examinations, reporting requirements, and limitations on investments and activities. Agencies can impose corrective actions if practices are deemed unsafe or unsound[18] - As a BHC with over $100 billion in assets, the Company is subject to Dodd-Frank Act's enhanced prudential standards, applied as a 'Category III' institution under the Tailoring Rules[19] Supervisory Ratings Federal banking regulators assign supervisory ratings to the Company and USBNA, with a downgrade potentially limiting acquisitions and increasing scrutiny - Federal banking regulators assign supervisory ratings to the Company (under the Large Financial Institution Rating System) and USBNA (under the CAMELS rating system) following examinations[19] - A downgrade in ratings could limit acquisitions, require new regulatory approvals, affect deposit insurance rates, limit funding access, and increase regulatory scrutiny[19] BHC Activities As a Financial Holding Company (FHC), U.S. Bancorp can engage in a broader range of financial activities, but failure to meet capital standards can lead to restrictions - As a Financial Holding Company (FHC), U.S. Bancorp can engage in a broader range of financial activities and affiliate with financial companies[19] - Failure to remain well-capitalized or well-managed as an FHC can lead to corrective capital and managerial requirements, limitations on business activities, and potential divestiture of depository institution subsidiaries[19] Permissible Business Activities FHCs can engage in 'financial in nature' activities, including securities underwriting and asset management, with Federal Reserve approval generally not required for acquisitions under $10 billion - FHCs can engage in activities 'financial in nature' or incidental/complementary to financial activities, including securities underwriting, asset management, insurance, and merchant banking[19] - Federal Reserve approval is generally not required for acquisitions of companies engaged in financial activities if FHC capital, managerial, and CRA requirements are met, unless total consolidated assets to be acquired exceed $10 billion[19][20] Interstate Banking Bank Holding Companies can acquire banks in other states, subject to state-specific operating periods and limitations on deposit market share - BHCs can acquire banks in other states, subject to state-specific operating periods and limitations on deposit market share (10% nationwide or 30% in-state for initial entry)[20] Regulatory Approval for Acquisitions Federal bank regulators consider competition, financial condition, management, community needs, AML effectiveness, and systemic risk when approving bank acquisitions - Federal bank regulators consider factors like competition, financial condition, management competence, community needs (CRA compliance), anti-money laundering effectiveness, and systemic risk when approving bank acquisitions[20] Source of Strength The Company is required to act as a source of strength for USBNA, committing capital and financial resources during distress, with capital loans subordinate to deposits - The Company is required to act as a source of strength for USBNA, committing capital and financial resources to support it during financial distress, with capital loans being subordinate to deposits and other debts[20] OCC Heightened Standards USBNA is subject to the OCC's heightened standards for large national banks, which establish minimum standards for risk governance frameworks - USBNA is subject to the OCC's heightened standards for large national banks, which establish minimum standards for risk governance frameworks[20] Enhanced Prudential Standards As a large bank holding company, U.S. Bancorp is subject to Dodd-Frank Act's enhanced prudential standards, including capital, liquidity, risk management, and stress tests - As a large bank holding company, U.S. Bancorp is subject to enhanced prudential standards under the Dodd-Frank Act, including enhanced risk-based capital and leverage, liquidity, risk management, resolution plan, single-counterparty credit limits, and stress tests[20] Dividend Restrictions Federal law limits dividends paid by national banks like USBNA based on net income, and regulators can prohibit or limit dividends if deemed unsafe - Federal law limits dividends paid by national banks like USBNA based on net income. Regulators can prohibit or limit dividends if they deem it an unsafe or unsound practice[20] - The Federal Reserve's Stress Capital Buffer (SCB) rule requires prior approval for capital distributions if a BHC must resubmit its capital plan, for instance, due to a material change in risk profile[20] Capital Requirements The Company and USBNA are subject to Basel III-based capital rules, including minimum CET1 (4.5%), Tier 1 (6.0%), and Total Capital (8.0%) ratios, all exceeded as of December 31, 2023 - The Company and USBNA are subject to Basel III-based capital rules, including minimum CET1 (4.5%), Tier 1 (6.0%), and Total Capital (8.0%) ratios, all of which were exceeded as of December 31, 2023[20][21] - The Company is subject to a 2.5% Stress Capital Buffer (SCB) as of December 31, 2023, and a potential countercyclical capital buffer[21] - Minimum Tier 1 leverage ratio is 4.0%, and Supplementary Leverage Ratio (SLR) is 3.0% for Category III institutions, both of which the Company exceeded at December 31, 2023[21] - The proposed 'Basel III Endgame' rule, with a July 1, 2025 effective date and three-year transition, is expected to increase regulatory capital requirements for the Company, including the recognition of AOCI in regulatory capital[21] Comprehensive Capital Analysis and Review The Company submits an annual capital plan to the Federal Reserve as part of the CCAR process, evaluating capital distributions under expected and stressful conditions - The Company submits an annual capital plan to the Federal Reserve as part of the CCAR process, which evaluates capital distributions under expected and stressful conditions[23] Stress Testing As a Category III BHC, the Company conducts annual internal and biennial company-run stress tests, and is subject to annual supervisory stress tests by the Federal Reserve - As a Category III BHC, the Company conducts annual internal stress tests and biennial company-run stress tests, and is subject to annual supervisory stress tests by the Federal Reserve[23] - USBNA, as a national bank with over $250 billion in assets, is required to submit company-run stress test results to the OCC[23] Basel III Liquidity Requirements The Company and USBNA are subject to minimum Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) requirements, calibrated at 85% for Category III institutions - The Company and USBNA are subject to minimum Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) requirements, calibrated at 85% of full requirements as Category III banking organizations[23] - Reclassification to a 'Category II' institution would subject the Company to full (100%) LCR and NSFR requirements, along with daily liquidity reporting[23] Prompt Corrective Action FDICIA provides a framework for federal banking regulators to take 'prompt corrective action' for undercapitalized FDIC-insured depository institutions, with increasing restrictions as capital weakens - FDICIA provides a framework for federal banking regulators to take 'prompt corrective action' for FDIC-insured depository institutions that do not meet capital adequacy standards, with increasing restrictions as capital weakens[23] - While prompt corrective action applies to banks, the Federal Reserve can take action at the BHC level based on the undercapitalized status of its subsidiary banking institutions, potentially requiring the BHC to guarantee capital restoration plans[23] Long-Term Debt Requirements A proposed rule would require Category III U.S. BHCs and their large insured depository institutions to maintain minimum levels of outstanding long-term debt, phased in over three years - A proposed rule in August 2023 would require Category III U.S. BHCs and their large insured depository institutions (like the Company and USBNA) to maintain minimum levels of outstanding long-term debt[23] - The requirement would be phased in over three years and is expected to necessitate the Company and USBNA to maintain substantially more long-term debt than currently held[24] Deposit Insurance Deposits at USBNA are insured up to $250,000 per depositor by the DIF, funded through risk-based assessments, with a $734 million special assessment in Q4 2023 - Deposits at USBNA are insured up to $250,000 per depositor by the DIF, which is funded through risk-based assessments on insured depository institutions[24] - The FDIC increased initial base deposit insurance assessment rates by two basis points starting Q1 2023 and imposed a special assessment in November 2023 to recover losses from 2023 bank failures, resulting in a $734 million noninterest expense for the Company in Q4 2023[24] Depositor Preference In liquidation, claims of a receiver for administrative expenses and domestic deposit liabilities have priority over other unsecured creditors - In the event of an insured depository institution's liquidation, claims of a receiver for administrative expenses and domestic deposit liabilities have priority over other unsecured creditors, including holders of publicly issued debt and non-domestic depositors[24] Orderly Liquidation Authority Upon a BHC's insolvency, the FDIC may be appointed as conservator or receiver under the Dodd-Frank Act's Orderly Liquidation Authority, with broad powers - Upon a BHC's insolvency, the FDIC may be appointed as conservator or receiver under the Dodd-Frank Act's Orderly Liquidation Authority, with broad powers to transfer assets or liabilities without creditor approval[24] Resolution Plans The Company and USBNA are required to submit periodic resolution plans to federal regulators for rapid and orderly resolution during financial distress - The Company is required to submit periodic resolution plans to the Federal Reserve and FDIC for rapid and orderly resolution during financial distress, with the next full plan due in July 2024[24] - USBNA is also required to file separate resolution plans with the FDIC, with its most recent plan submitted in November 2022. A proposed rule in August 2023 would require biennial resolution plans for institutions with $100 billion or more in assets, starting in 2025[25] - In connection with the MUB acquisition, USBNA committed to the OCC to develop a list of business lines/portfolios that could be quickly sold in stress events and prepare a plan for such separability[25] Recovery Plans USBNA maintains a recovery plan, approved in December 2023, which includes triggers for severe stress, credible options to restore financial strength, and escalation procedures - USBNA, as an insured national bank with over $250 billion in assets, maintains a recovery plan approved in December 2023, which includes triggers for severe stress, credible options to restore financial strength, and escalation procedures[25] Transactions with Affiliates USBNA and its subsidiaries are subject to quantitative and qualitative limits on transactions with the Company or its non-bank affiliates under federal regulations - USBNA and its subsidiaries are subject to quantitative and qualitative limits on credit extensions, asset purchases, and other transactions with the Company or its non-bank affiliates under the Federal Reserve Act and Regulation W[25] Anti-Money Laundering and Sanctions The Company is subject to federal AML and sanctions laws, requiring customer identity verification, suspicious activity reporting, and restrictions on sanctioned entities - The Company is subject to federal Anti-Money Laundering (AML) laws (BSA, Money Laundering Control Act, USA PATRIOT Act) and sanctions laws (OFAC), requiring customer identity verification, suspicious activity reporting, and restrictions on transactions with sanctioned entities[25] - The Anti-Money Laundering Act of 2020 (AMLA) codified a risk-based approach to AML compliance, expanded enforcement authority, and identified priorities including corruption, cybercrime, and terrorist financing[25][26] Community Reinvestment Act USBNA is subject to the CRA, obligating it to meet community credit needs, including low- and moderate-income neighborhoods, and received an 'Outstanding' rating - USBNA is subject to the CRA, obligating it to help meet the credit needs of its communities, including low- and moderate-income neighborhoods. USBNA received an 'Outstanding' CRA rating in its most recent examination (2016-2020)[26] - A final rule to modernize the CRA regulatory framework was issued in October 2023, effective April 1, 2024, with most provisions applicable January 1, 2026, introducing changes to assessment areas, evaluation frameworks, and community development definitions[26] Regulation of Brokerage, Investment Advisory and Insurance Activities The Company's securities activities are regulated by the SEC, FINRA, and state authorities, while insurance activities are subject to state insurance regulators - The Company's securities activities are regulated by the SEC, FINRA, and state authorities, covering licensing, customer interactions, trading, underwriting, suitability, recordkeeping, and reporting[26] - The First American family of funds is regulated by the SEC, with amendments finalized in July 2023 increasing liquidity requirements and mandating liquidity fees for institutional prime and tax-exempt money market funds during stress[26] - Insurance brokerage and reinsurance activities are subject to state insurance regulatory authorities[26] Regulation of Derivatives and the Swaps Marketplace USBNA, as a CFTC registered swap dealer, is subject to Dodd-Frank Act rules for the swaps marketplace, including central clearing and capital and margin requirements - USBNA, as a CFTC registered swap dealer, is subject to Dodd-Frank Act rules for the swaps marketplace, including registration, business conduct standards, recordkeeping, central clearing, and capital and margin requirements[28] - OCC rules mandate the exchange of initial and variation margin for non-cleared swaps between swap entities and certain counterparties[28] The Volcker Rule The Volcker Rule prohibits banking entities, including the Company and its affiliates, from engaging in proprietary trading and certain interests in hedge or private equity funds - The Volcker Rule (Section 13 of the BHC Act) prohibits banking entities, including the Company, USBNA, and their affiliates, from engaging in proprietary trading and certain interests in hedge funds or private equity funds[28] Privacy and Data Protection The Company is subject to extensive consumer privacy and data protection laws, including GLBA, CCPA, and GDPR, with a significant FCRA overhaul expected in H1 2024 - The Company is subject to extensive consumer privacy and data protection laws, including GLBA, which requires disclosure of privacy policies and opt-out options for sharing nonpublic personal information[28] - State laws like the California Consumer Protection Act (CCPA) and the EU's GDPR impose compliance obligations and increased penalties for non-compliance, requiring operational adjustments[28] - The CFPB proposed a rule in October 2023 requiring financial institutions like USBNA to provide consumers and authorized third parties electronic access to personal financial data, prohibiting fees for such access[28] - The Fair Credit Reporting Act (FCRA) regulates the use and reporting of consumer credit information, with a significant overhaul expected in the first half of 2024[28][29] Consumer Protection USBNA's retail banking activities are subject to federal and state consumer protection laws, with the CFPB supervising compliance and undertaking rulemaking and enforcement actions - USBNA's retail banking activities are subject to federal and state consumer protection laws requiring disclosures, providing consumer rights, prohibiting discrimination, and regulating credit report information and privacy[29] - The CFPB supervises USBNA's compliance with federal consumer laws, undertaking rulemaking and enforcement actions that may limit financial services and products offered, potentially reducing revenues[29] Executive and Incentive Compensation Federal banking agencies prohibit excessive compensation and issue guidance on incentive compensation policies, with the SEC requiring clawback policies for executive officers - Federal banking agencies prohibit excessive compensation and issue guidance on incentive compensation policies to prevent excessive risk-taking and ensure alignment with internal controls and strong corporate governance[29] - The SEC adopted a final rule in October 2022, effective October 2, 2023, requiring listed companies to adopt clawback policies for incentive-based compensation earned by executive officers during the three fiscal years preceding a required accounting restatement[29][30] Climate-Related Financial Risk Management Federal banking agencies issued principles in October 2023 for managing climate-related financial risks, applicable to banking organizations with over $100 billion in assets - In October 2023, federal banking agencies issued principles for managing climate-related financial risks, applicable to banking organizations with over $100 billion in assets, including the Company and USBNA[30] - These principles provide a framework for identifying, measuring, monitoring, and mitigating physical and transition risks associated with climate change across various risk categories[30] Other Supervision and Regulation As a public company listed on the NYSE, the Company is subject to the requirements of the Securities Act of 1933, the Securities Exchange Act of 1934, and SEC rules - As a public company listed on the NYSE, the Company is subject to the requirements of the Securities Act of 1933, the Securities Exchange Act of 1934, and SEC rules and regulations[30] Capital Covenants The Company has Replacement Capital Covenants restricting repayment or redemption of certain preferred stock or capital securities unless specific conditions are met - The Company has entered into Replacement Capital Covenants for the benefit of holders of specified long-term indebtedness, restricting the repayment, redemption, or purchase of Preferred Stock, Exchangeable Preferred Stock, or Capital Securities[31] - Such actions are prohibited unless the Company receives proceeds from the sale of qualifying securities with equivalent or more equity-like characteristics and obtains prior approval from the Federal Reserve or OCC, if required[31] Outstanding Capital Securities, Preferred Stock, or Exchangeable Preferred Stock (as of Feb 20, 2024): | Closing Date | Issuer | Capital Securities, Preferred Stock or Exchangeable 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 Rate Normal Income Trust Securities | 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 interest in a share of Series B Non-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. and U.S. Bancorp (a) | USB Realty Corp.'s 4,500 shares of Fixed-to-Floating-Rate Exchangeable Non-Cumulative Perpetual Series A Preferred Stock exchangeable for shares of U.S. Bancorp's Series C Non-Cumulative Perpetual Preferred Stock (b) | Not Applicable | U.S. Bancorp's 7.50% Subordinated Debentures due 2026 (CUSIP No. 911596AL8) | Available Information U.S. Bancorp makes its annual, quarterly, and current reports, along with amendments, available free of charge on its investor relations website - U.S. Bancorp makes its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments available free of charge on its website under 'Investor relations' -> 'SEC & Other Filings'[34] Additional Information Additional information for Item 1 is incorporated by reference from pages 56 to 58 of the 2023 Annual Report under the heading 'Line of Business Financial Review' - Additional information for Item 1 is incorporated by reference from pages 56 to 58 of the 2023 Annual Report under the heading 'Line of Business Financial Review'[36] Item 1A. Risk Factors Information regarding risk factors is incorporated by reference from pages 140 to 155 of the 2023 Annual Report under the heading 'Risk Factors' - Information in response to this Item 1A can be found in the 2023 Annual Report on pages 140 to 155 under the heading 'Risk Factors'[37] Item 1B. Unresolved Staff Comments There are no unresolved staff comments to report - No unresolved staff comments[38] Item 1C. Cybersecurity U.S. Bancorp's cybersecurity program, aligned with NIST CSF and PCI DSS, is overseen by the Board and management, identifying no material cyber risks as of December 31, 2023 - The Company's cybersecurity risk program is integrated into its overall risk governance and oversight structures through a 'three lines of defense' model, involving Information Security Services (first line), Cybersecurity Risk Oversight (second line), and internal audit (third line)[39] - The program aligns with industry-accepted information security practices such as the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) and Payment Card Industry Data Security Standards (PCI DSS)[39] - The Board of Directors, through its Risk Management Committee and Cybersecurity and Technology Subcommittee, provides primary oversight for cybersecurity risk, receiving quarterly reports and an annual report from the CISO[39][40] - Key management personnel responsible for cybersecurity risk include Timothy J. Held (CISO), Jodi L. Richard (Vice Chair and Chief Risk Officer), and Venkatachari Dilip (Senior Executive Vice President and Chief Information and Technology Officer)[40] - The Company maintains a third-party risk management program to oversee and identify cybersecurity risks related to third-party service providers, including due diligence and contractual assurances[39] - As of December 31, 2023, the Company has not identified any specific risks from cybersecurity threats that have materially affected, or are reasonably likely to affect, its business strategy, results of operations, or financial condition, other than general operational risks[41] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities U.S. Bancorp suspended common stock repurchases in Q3 2021 due to the MUB acquisition; $1.314 billion remained under the program as of December 31, 2023 - The Company's Board of Directors approved a $3.0 billion common stock repurchase authorization on December 22, 2020, effective January 1, 2021[44] - Common stock repurchases were suspended at the beginning of Q3 2021, except for those related to stock-based compensation programs, due to the acquisition of MUFG Union Bank, N.A. (MUB)[44] - Future share repurchases will be evaluated in connection with potential capital requirements arising from proposed regulatory capital rules and the related landscape[44] Issuer Purchases of Equity Securities (Q4 2023): | 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 | 273,451 (a) | $36.08 | 13,451 | $1,330 | | November 1-30 | 4,183 | $37.20 | 4,183 | $1,330 | | December 1-31 | 359,226 | $45.31 | 359,226 | $1,314 | | Total | 636,860 (a) | $41.29 | 376,860 | $1,314 | (a) Includes 260,000 shares purchased by USBNA as trustee of the U.S. Bank 401(k) Savings Plan. Additional Information Additional information for Item 5 is incorporated by reference from page 139 of the 2023 Annual Report under the heading 'U.S. Bancorp Supplemental Financial Data (Unaudited)' - Additional information for Item 5 is incorporated by reference from page 139 of the 2023 Annual Report under the heading 'U.S. Bancorp Supplemental Financial Data (Unaudited)'[46] Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Information for this item is incorporated by reference from pages 22 to 58 of the 2023 Annual Report under the heading 'Management's Discussion and Analysis' - Information in response to this Item 7 can be found in the 2023 Annual Report on pages 22 to 58 under the heading 'Management's Discussion and Analysis'[47] Item 7A. Quantitative and Qualitative Disclosures About Market Risk Information regarding quantitative and qualitative disclosures about market risk is incorporated by reference from pages 35 to 55 of the 2023 Annual Report - Information in response to this Item 7A can be found in the 2023 Annual Report on pages 35 to 55 under the heading 'Corporate Risk Profile'[48] Item 8. Financial Statements and Supplementary Data Financial statements and supplementary data are incorporated by reference from the 2023 Annual Report, including a correction of a transposition error in Note 22 - Information in response to this Item 8 can be found in the 2023 Annual Report on pages 64 to 139, including the Consolidated Balance Sheet, Statement of Income, Statement of Comprehensive Income, Statement of Shareholders' Equity, Statement of Cash Flows, and Notes to Consolidated Financial Statements[49] - The consolidated financial statements include a correction of a transposition error in Note 22 regarding the previously reported December 31, 2022, carrying amount of loans, which had no other impact on the consolidated financial statements[49] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There are no changes in or disagreements with accountants on accounting and financial disclosure to report - No changes in and disagreements with accountants on accounting and financial disclosure[50] Item 9A. Controls and Procedures Information regarding controls and procedures is incorporated by reference from pages 63 to 65 of the 2023 Annual Report under relevant headings - Information in response to this Item 9A can be found in the 2023 Annual Report on page 63 under 'Controls and Procedures' and on pages 64 and 65 under 'Report of Management' and 'Report of Independent Registered Public Accounting Firm'[51] Item 9B. Other Information There is no other information to report under this item - No other information[51] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the Company - Not Applicable[51] PART III Item 10. Directors, Executive Officers and Corporate Governance U.S. Bancorp maintains a Code of Ethics and Business Conduct, detailing the Company's Managing Committee members and their roles - 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, with disclosures of amendments or waivers posted on its website[53] - The Managing Committee includes Andrew Cecere (Chairman, President, and CEO), John C. Stern (Chief Financial Officer), Jodi L. Richard (Chief Risk Officer), Venkatachari Dilip (Chief Information and Technology Officer), and other key executives leading various business and functional areas[54][60][66][69] Code of Ethics and Business Conduct The Company's Code of Ethics and Business Conduct applies to its principal executive, financial, and accounting officers, with amendments or waivers disclosed on its website - The Company's Code of Ethics and Business Conduct applies to its principal executive, financial, and accounting officers and is available on its website[53] - Amendments to, or waivers from, certain provisions of the Code of Ethics and Business Conduct will be disclosed on the Company's website[53] Information About the Company's Managing Committee This section provides biographies of the Company's Managing Committee members, including key executive leadership roles - Andrew Cecere serves as Chairman, President, and Chief Executive Officer of U.S. Bancorp since April 2018[54] - John C. Stern is the Senior Executive Vice President and Chief Financial Officer since September 2023[69] - Jodi L. Richard is the Vice Chair and Chief Risk Officer since October 2018[66] - Venkatachari Dilip is the Senior Executive Vice President and Chief Information and Technology Officer since September 2018[60] - Other key members include Souheil S. Badran (Chief Operations Officer), Elcio R.T. Barcelos (Chief Human Resources Officer), James L. Chosy (General Counsel), Gregory G. Cunningham (Chief Diversity Officer), Terrance R. Dolan (Chief Administration Officer), Revathi N. Dominski (Chief Social Responsibility Officer), Gunjan Kedia (Vice Chair, Wealth, Corporate, Commercial and Institutional Banking), Shailesh M. Kotwal (Vice Chair, Payment Services), Stephen L. Philipson (Head of Global Markets and Specialized Finance), Mark G. Runkel (Chief Transformation Officer), Dominic V. Venturo (Chief Digital Officer), and Timothy A. Welsh (Vice Chair, Consumer and Business Banking)[55][56][57][58][61][62][63][64][65][68][70][71] Additional Information Additional information for Item 10 is incorporated by reference from the Proxy Statement under headings such as 'Proposal 1 — Election of directors' and 'Corporate governance' - Additional information for Item 10 is incorporated by reference from the Proxy Statement under headings such as 'Proposal 1 — Election of directors', 'Other matters — Delinquent Section 16(a) reports', and 'Corporate governance — Committee responsibilities'[72] Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the Proxy Statement under various headings, including 'Compensation discussion and analysis' - Information required for Item 11 is incorporated by reference from 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'[73] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the Proxy Statement - Information in response to this Item 12 can be found in the Proxy Statement under the headings 'Equity compensation plan information' and 'Security ownership of certain beneficial owners and management'[74] Item 13. Certain Relationships and Related Transactions, and Director Independence Information regarding certain relationships and related transactions, as well as director independence, is incorporated by reference from the Proxy Statement - 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'[76] Item 14. Principal Accountant Fees and Services Information concerning principal accountant fees and services is incorporated by reference from the Proxy Statement - 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'[77] PART IV Item 15. Exhibits and Financial Statement Schedules This section lists the financial statements, confirms all schedules are included or inapplicable, and provides a comprehensive list of exhibits - The report includes the U.S. Bancorp Consolidated Balance Sheet, Statement of Income, Statement of Comprehensive Income, Statement of Shareholders' Equity, and Statement of Cash Flows as of and for the period ended December 31, 2023, along with Notes to Consolidated Financial Statements[79] - All financial statement schedules for the Company have been included in the consolidated financial statements or related footnotes, or are inapplicable/not required[80] - Exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, Description of Securities, Amended and Restated Registration Rights Agreement, various stock incentive plans (2001, 2007, 2015), executive and outside directors deferred compensation plans, and certifications (CEO, CFO, Sarbanes-Oxley Act)[81][82][83][84][85] - Shareholders can obtain copies of exhibits upon payment of a fee[81] Financial Statements The financial statements filed include the Report of Management, Independent Registered Public Accounting Firm reports, and consolidated financial statements for the period ended December 31, 2023 - The financial statements filed as part of this report include the Report of Management, Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting, Report of Independent Registered Public Accounting Firm on the Financial Statements, and the consolidated financial statements (Balance Sheet, Income, Comprehensive Income, Shareholders' Equity, Cash Flows) for the period ended December 31, 2023[79] Financial Statement Schedules All financial statement schedules for the Company have been included in the consolidated financial statements or their related footnotes, or are inapplicable or not required - All financial statement schedules for the Company have been included in the consolidated financial statements or their related footnotes, or are either inapplicable or not required[80] Exhibits Key exhibits include organizational documents, registration rights agreements, stock incentive plans, deferred compensation plans, and certifications from the CEO and CFO - Key exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, Description of U.S. Bancorp's Securities, and the Amended and Restated Registration Rights Agreement[81][82] - Various stock incentive plans (2001, 2007, 2015) and executive/outside directors deferred compensation plans are listed as exhibits[82][83][84] - Certifications from the Chief Executive Officer and Chief Financial Officer (pursuant to Rule 13a-14(a) and 18 U.S.C. section 1350) and the U.S. Bancorp Incentive-Based Compensation Recovery Policy are included[85] Item 16. Form 10-K Summary This item is not applicable to the Company - Not applicable[87]