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Form 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from (not applicable)

Commission file number: 1-6880

U.S. Bancorp

(Exact name of registrant as specified in its charter)

Delaware

41-0255900

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

800 Nicollet Mall, Minneapolis, Minnesota 55402

(Address of principal executive offices) (Zip Code)

(651) 466-3000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
Common Stock, $.01 par value per share		New York Stock Exchange
Depositary Shares (each representing 1/100th interest in a share of Series A Non-Cumulative Perpetual Preferred Stock, par value $1.00)		New York Stock Exchange
Depositary Shares (each representing 1/1,000th interest in a share of Series B Non-Cumulative Perpetual Preferred Stock, par value $1.00)		New York Stock Exchange
Depositary Shares (each representing 1/1,000th interest in a share of Series F Non-Cumulative Perpetual Preferred Stock, par value $1.00)		New York Stock Exchange
Depositary Shares (each representing 1/1,000th interest in a share of Series H Non-Cumulative Perpetual Preferred Stock, par value $1.00)		New York Stock Exchange
0.850% Medium-Term Notes, Series X (Senior), due June 7, 2024		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☑

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

As of June 30, 2017, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $87.2 billion based on the closing sale price as reported on the New York Stock Exchange.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.



Class		Outstanding at January 31, 2018
Common Stock, $.01 par value per share		1,651,901,674

DOCUMENTS INCORPORATED BY REFERENCE


Document		Parts Into Which Incorporated
1.	Portions of the Annual Report to Shareholders for the Fiscal Year Ended December 31, 2017 (the “2017 Annual Report”)	Parts I and II
2.	Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held April 17, 2018 (the “Proxy Statement”)	Part III

PART I

Item 1.

Business

Forward-Looking Statements

THE FOLLOWING INFORMATION APPEARS IN ACCORDANCE WITH THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This report contains forward-looking statements about U.S. Bancorp (“U.S. Bancorp” or the “Company”). Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of U.S. Bancorp. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. A reversal or slowing of the current economic recovery or another severe contraction could adversely affect U.S. Bancorp’s revenues and the values of its assets and liabilities. Global financial markets could experience a recurrence of significant turbulence, which could reduce the availability of funding to certain financial institutions and lead to a tightening of credit, a reduction of business activity, and increased market volatility. Stress in the commercial real estate markets, as well as a downturn in the residential real estate markets could cause credit losses and deterioration in asset values. In addition, changes to statutes, regulations, or regulatory policies or practices could affect U.S. Bancorp in substantial and unpredictable ways. U.S. Bancorp’s results could also be adversely affected by deterioration in general business and economic conditions; changes in interest rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of securities held in its investment securities portfolio; legal and regulatory developments; litigation; increased competition from both banks and non-banks; changes in customer behavior and preferences; breaches in data security; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputational risk.

For discussion of these and other risks that may cause actual results to differ from expectations, refer to the sections entitled “Corporate Risk Profile” on pages 38 to 60 and “Risk Factors” on pages 146 to 156 of the 2017 Annual Report. However, factors other than these also could adversely affect U.S. Bancorp’s results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.

General Business Description

U.S. Bancorp is a multi-state financial services holding company headquartered in Minneapolis, Minnesota. U.S. Bancorp was incorporated in Delaware in 1929 and operates as a financial holding company and a bank holding company under the Bank Holding Company Act of 1956. U.S. Bancorp provides a full range of financial services, including lending and depository services, cash management, capital markets, and trust and investment management services. It also engages in credit card services, merchant and ATM processing, mortgage banking, insurance, brokerage and leasing.

U.S. Bancorp’s banking subsidiary, U.S. Bank National Association, is engaged in the general banking business, principally in domestic markets. U.S. Bank National Association, with $357 billion in deposits at December 31, 2017, provides a wide range of products and services to individuals, businesses, institutional organizations, governmental entities and other financial institutions. Commercial and consumer lending services are principally offered to customers within the Company’s domestic markets, to domestic customers with foreign operations and to large national customers operating in specific industries targeted by the Company. Lending services include traditional credit products as well as credit card services, lease financing and import/export trade, asset-backed lending, agricultural finance and other products. Depository services include checking

accounts, savings accounts and time certificate contracts. Ancillary services such as capital markets, treasury management and receivable lock-box collection are provided to corporate customers. U.S. Bancorp’s bank and trust subsidiaries provide a full range of asset management and fiduciary services for individuals, estates, foundations, business corporations and charitable organizations.

Other U.S. Bancorp non-banking subsidiaries offer investment and insurance products to the Company’s customers principally within its markets, and fund administration services to a broad range of mutual and other funds.

Banking and investment services are provided through a network of 3,067 banking offices principally operating in the Midwest and West regions of the United States, through on-line services and over mobile devices. The Company operates a network of 4,771 ATMs and provides 24-hour, seven day a week telephone customer service. Mortgage banking services are provided through banking offices and loan production offices throughout the Company’s markets. Lending products may be originated through banking offices, indirect correspondents, brokers or other lending sources. The Company is also one of the largest providers of corporate and purchasing card services and corporate trust services in the United States. A wholly-owned subsidiary, Elavon, Inc. (“Elavon”), provides merchant processing services directly to merchants and through a network of banking affiliations. Wholly-owned subsidiaries, and affiliates of Elavon, provide similar merchant services in Canada, Mexico and segments of Europe. The Company also provides corporate trust and fund administration services in Europe. These foreign operations are not significant to the Company.

On a full-time equivalent basis, as of December 31, 2017, U.S. Bancorp employed 72,402 people.

Competition

The commercial banking business is highly competitive. The Company competes with other commercial banks, savings and loan associations, mutual savings banks, finance companies, mortgage banking companies, credit unions, investment companies, credit card companies and a variety of other financial services, advisory and technology companies. In recent years, competition has increased from institutions not subject to the same regulatory restrictions as domestic banks and bank holding companies. Competition is based on a number of factors, including, among others, customer service, quality and range of products and services offered, price, reputation, interest rates on loans and deposits, lending limits and customer convenience. The Company’s ability to continue to compete effectively also depends in large part on its ability to attract new employees and retain and motivate existing employees, while managing compensation and other costs.

Government Policies

The operations of the Company’s various businesses are affected by federal and state legislative changes and by policies of various regulatory authorities, including the statutes, and the rules and policies of regulatory authorities, of the numerous states in which they operate, the United States and foreign governments. These policies include, for example, statutory maximum legal lending rates, domestic monetary policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve”), United States fiscal policy, international currency regulations and monetary policies and capital adequacy and liquidity constraints imposed by bank regulatory agencies.

Supervision and Regulation

U.S. Bancorp and its subsidiaries are subject to the extensive regulatory framework applicable to bank holding companies and their subsidiaries. This regulatory framework is intended primarily for the protection of depositors, the deposit insurance fund of the Federal Deposit Insurance Corporation (the “FDIC”), consumers, the stability of the financial system in the United States, and the health of the national economy, and not for investors in bank holding companies such as the Company.

This section summarizes certain provisions of the principal laws and regulations applicable to the Company and its subsidiaries. The descriptions are not intended to be complete and are qualified in their entirety by reference to the full text of the statutes and regulations described below.

General As a bank holding company, the Company is subject to regulation under the Bank Holding Company Act (the “BHC Act”) and to inspection, examination and supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). U.S. Bank National Association and its subsidiaries, are subject to regulation and examination primarily by the Office of the Comptroller of the Currency (the “OCC”) and also by the FDIC, the Federal Reserve, the Consumer Financial Protection Bureau (the “CFPB”), the Securities and Exchange Commission (the “SEC”) and the Commodities Futures Trading Commission (the “CFTC”) in certain areas.

Supervision and regulation by the responsible regulatory agency generally include comprehensive annual reviews of all major aspects of a bank’s business and condition, and imposition of periodic reporting requirements and limitations on investments and certain types of activities. U.S. Bank National Association, the Company and the Company’s non-bank affiliates must undergo regular on-site examinations by the appropriate regulatory agency, which examine for adherence to a range of legal and regulatory compliance responsibilities. If they deem the Company to be operating in a manner that is inconsistent with safe and sound banking practices, the applicable regulatory agencies can require the entry into informal or formal supervisory agreements, including board resolutions, memoranda of understanding, written agreements and consent or cease and desist orders, pursuant to which the Company would be required to take identified corrective actions to address cited concerns and to refrain from taking certain actions.

Dodd-Frank Act Substantial changes to the regulation of bank holding companies and their subsidiaries have occurred as a result of the enactment in 2010 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Changes in applicable law or regulation, and in their application by regulatory agencies, have had and will continue to have a material effect on the business and results of the Company and its subsidiaries.

The Dodd-Frank Act significantly changed the regulatory framework for financial services companies, and since its enactment has required significant rulemaking and numerous studies and reports. Among other things, it created a new Financial Stability Oversight Council (the “Council”) with broad authority to make recommendations covering enhanced prudential standards and more stringent supervision for large bank holding companies and certain non-bank financial services companies. The Dodd-Frank Act significantly reduced interchange fees on debit card transactions, changed the preemption of state laws applicable to national banks, increased the regulation of consumer mortgage banking and made numerous other changes, some of which are discussed below.

In addition to the Dodd-Frank Act, other legislative and regulatory proposals affecting banks have been made in recent years both domestically and internationally. Among other things, these proposals include significant additional capital and liquidity requirements and limitations on the size or types of activity in which banks may engage.

Bank Holding Company Activities The Company elected to become a financial holding company as of March 13, 2000, pursuant to the provisions of the Gramm-Leach-Bliley Act (the “GLBA”). Under the GLBA, qualifying bank holding companies may engage in, and affiliate with financial companies engaging in, a broader range of activities than would otherwise be permitted for a bank holding company. Under the GLBA’s system of functional regulation, the Federal Reserve acts as an umbrella regulator for the Company, and certain of the Company’s subsidiaries are regulated directly by additional agencies based on the particular activities of those subsidiaries.

If a financial holding company or a depository institution controlled by a financial holding company ceases to meet certain capital or management standards, the Federal Reserve may impose corrective capital and

managerial requirements on the financial holding company, and may place limitations on its ability to conduct all of the business activities that financial holding companies are generally permitted to conduct. See “Permissible Business Activities” below. If the failure to meet these standards persists, a financial holding company may be required to divest its depository institution subsidiaries, or cease all activities other than those activities that may be conducted by bank holding companies that are not financial holding companies. In addition, the Federal Reserve requires bank holding companies to meet certain applicable capital and management standards. Failure by the Company to meet these standards could limit the Company from engaging in any new activity or acquiring other companies without the prior approval of the Federal Reserve.

Source of Strength The Dodd-Frank Act codified existing Federal Reserve policy requiring the Company to act as a source of financial strength to U.S. Bank National Association, and to commit resources to support this subsidiary in circumstances where it might not otherwise do so. However, because the GLBA provides for functional regulation of financial holding company activities by various regulators, the GLBA prohibits the Federal Reserve from requiring payment by a holding company to a depository institution if the functional regulator of the depository institution objects to the payment. In those cases, the Federal Reserve could instead require the divestiture of the depository institution and impose operating restrictions pending the divestiture. As a result of the Dodd-Frank Act, non-bank subsidiaries of a holding company that engage in activities permissible for an insured depository institution must be examined and regulated in a manner that is at least as stringent as if the activities were conducted by the lead depository institution of the holding company.

OCC Heightened Standards The OCC has issued guidelines establishing heightened standards for large national banks such as U.S. Bank National Association. The guidelines establish minimum standards for the design and implementation of a risk governance framework for banks. The OCC may take action against institutions that fail to meet these standards.

Permissible Business Activities As a financial holding company, the Company may affiliate with securities firms and insurance companies and engage in other activities that are financial in nature or incidental or complementary to activities that are financial in nature. “Financial in nature” activities include the following: securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking; and activities that the Federal Reserve, in consultation with the Secretary of the United States Treasury, determines to be financial in nature or incidental to such financial activity. “Complementary activities” are activities that the Federal Reserve determines upon application to be complementary to a financial activity and that do not pose a safety and soundness risk.

The Company generally is not required to obtain Federal Reserve approval to acquire a company (other than a bank holding company, bank or savings association) engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve. However, the Dodd-Frank Act added a provision requiring approval if the total consolidated assets to be acquired exceed $10 billion. Financial holding companies are also required to obtain the approval of the Federal Reserve before they may acquire more than five percent of the voting shares or substantially all of the assets of an unaffiliated bank holding company, bank or savings association.

Interstate Banking Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “Riegle-Neal Act”), a bank holding company may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time (not to exceed five years). Also, such an acquisition is not permitted if the bank holding company controls, prior to or following the proposed acquisition, more than 10 percent of the total amount of deposits of insured depository institutions nationwide, or, if the acquisition is the bank holding company’s initial entry into the state, more than 30 percent of the deposits of insured depository institutions in the state (or any lesser or greater amount set by the state).

The Riegle-Neal Act also authorizes banks to merge across state lines to create interstate branches. Under the Dodd-Frank Act, banks are permitted to establish new branches in another state to the same extent as banks chartered in that state.

Regulatory Approval for Acquisitions In determining whether to approve a proposed bank acquisition, federal bank regulators will consider a number of factors, including the following: the effect of the acquisition on competition, financial condition and future prospects (including current and projected capital ratios and levels); the competence, experience and integrity of management and its record of compliance with laws and regulations; the convenience and needs of the communities to be served (including the acquiring institution’s record of compliance under the Community Reinvestment Act (“CRA”)); the effectiveness of the acquiring institution in combating money laundering activities; and the extent to which the transaction would result in greater or more concentrated risks to the stability of the United States banking or financial system. In addition, under the Dodd-Frank Act, approval of interstate transactions requires that the acquiror satisfy regulatory standards for well-capitalized and well-managed institutions.

Enhanced Prudential Standards The Company is subject to a final rule issued by the Federal Reserve relating to enhanced prudential standards required under the Dodd-Frank Act for bank holding companies with over $50 billion in consolidated assets. The prudential standards include enhanced risk-based capital and leverage requirements, enhanced liquidity requirements, enhanced risk management and risk committee requirements, a requirement to submit a resolution plan, single-counterparty credit limits and stress tests. The rule incorporates the requirement that the Federal Reserve conduct annual supervisory capital adequacy stress tests of covered companies under baseline, adverse and severely adverse scenarios, and requires covered companies to conduct their own capital adequacy stress tests. The rule provides for notification to a covered company as to which the Council has determined to impose a debt-to-equity ratio of no more than 15-to-1, based upon the determination by the Council that (a) such company poses a grave threat to the financial stability of the United States and (b) the imposition of such a requirement is necessary to mitigate the risk that the company poses to the financial stability of the United States.

Dividend Restrictions The Company is a legal entity separate and distinct from its subsidiaries. Typically, the majority of the Company’s operating funds are received in the form of dividends paid to the Company by U.S. Bank National Association. Federal law imposes limitations on the payment of dividends by national banks.

In general, dividends payable by U.S. Bank National Association and the Company’s trust bank subsidiaries, as national banking associations, are limited by rules that compare dividends to net income for periods defined by regulation.

The OCC, the Federal Reserve and the FDIC also have authority to prohibit or limit the payment of dividends by the banking organizations they supervise (including the Company and U.S. Bank National Association), if, in the banking regulator’s opinion, payment of a dividend would constitute an unsafe or unsound practice in light of the financial condition of the banking organization. Subject to exceptions for well-capitalized and well-managed holding companies, Federal Reserve regulations also require approval of holding company purchases and redemptions of its securities if the gross consideration paid exceeds 10 percent of consolidated net worth for any 12-month period.

In addition, Federal Reserve policy on the payment of dividends, stock redemptions and stock repurchases requires that bank holding companies consult with and inform the Federal Reserve in advance of doing any of the following: declaring and paying dividends that could raise safety and soundness concerns (i.e. declaring and paying dividends that exceed earnings for the period for which dividends are being paid); redeeming or repurchasing capital instruments when experiencing financial weakness; and redeeming or repurchasing common stock and perpetual preferred stock, if the result will be a net reduction in the amount of such capital instruments outstanding for the quarter in which the reduction occurs.

In 2010, the Federal Reserve issued an addendum to its policy on dividends, stock redemptions and stock repurchases that is specifically applicable to the 19 largest bank holding companies (including the Company) that are covered by the Supervisory Capital Assessment Program. The addendum provides for Federal Reserve review of dividend increases, implementation of capital repurchase programs and other capital repurchases or redemptions.

The supervisory stress tests of the Company conducted by the Federal Reserve as part of its annual Comprehensive Capital Analysis and Review (“CCAR”) process also affect the ability of the Company to pay dividends and make other forms of capital distribution. See “Comprehensive Capital Analysis and Review” and “Stress Testing” below.

Capital Requirements The Company is subject to regulatory capital requirements established by the Federal Reserve, and U.S. Bank National Association is subject to substantially similar rules established by the OCC. These requirements have changed significantly as a result of standards established by the Basel Committee on Banking Supervision (the “Basel Committee”), an international organization that has the goal of creating standards for banking regulation, and the implementation of these standards and of relevant provisions of the Dodd-Frank Act by banking regulators in the United States. Minimum regulatory capital levels will significantly increase as these requirements are implemented and phased in.

Prior to 2014, regulatory capital requirements effective for the Company followed the 1988 capital accord of the Basel Committee known as Basel I. In implementing Basel I, federal banking regulators adopted risk-based capital and leverage rules that require the capital-to-assets ratios of financial institutions to meet certain minimum standards. The risk-based capital ratio is calculated by allocating assets and specified off-balance sheet financial instruments into risk-weighted categories (with higher levels of capital being required for the categories perceived as representing greater risk), and is used to determine the amount of a financial institution’s total risk-weighted assets (“RWAs”). Under the rules, capital is divided into multiple tiers: common equity tier 1 capital, additional tier 1 capital and tier 2 capital. The amount of tier 2 capital may not exceed the amount of tier 1 capital. Total capital is the sum of tier 1 capital and tier 2 capital. The federal banking regulators also have established minimum leverage ratio guidelines. The leverage ratio is defined as tier 1 capital divided by adjusted average total on-balance sheet assets.

The Federal Reserve and the OCC finalized a rule in 2007 adopting international guidelines established by the Basel Committee known as Basel II. The Basel II framework consists of three pillars: (a) capital adequacy; (b) supervisory review (including the computation of capital and internal assessment processes); and (c) market discipline (including increased disclosure requirements).

In December 2010, the Basel Committee issued a new set of international standards for determining regulatory capital known as Basel III. Federal banking regulators published the United States Basel III final rule in July 2013 to implement many aspects of these international standards as well as certain provisions of the Dodd-Frank Act. The United States Basel III final rule focuses regulatory capital on common equity tier 1 capital, introduces new regulatory adjustments and deductions from capital, narrows the eligibility criteria for regulatory capital instruments and makes other changes to the Basel I and Basel II frameworks. Specifically, Basel III includes two comprehensive methodologies for calculating risk-weighted assets: a general standardized approach and more risk-sensitive advanced approaches, with the Company’s capital adequacy being evaluated against the Basel III methodology that is most restrictive. The Federal Reserve approved a final rule, effective April 1, 2014, revising the market risk capital rule, which addresses the market risk of significant trading activities, so that it conforms to the Basel III capital framework.

Beginning January 1, 2014, the regulatory capital requirements for the Company follow Basel III, subject to certain transition provisions from Basel I over the following four years to full implementation by January 1, 2018. Under the United States Basel III final rule, the Company is subject to a minimum common equity tier 1 capital ratio (common equity tier 1 capital to RWA) of 4.5 percent, a minimum tier 1 capital ratio of 6.0 percent and a minimum total capital ratio of 8.0 percent on a fully phased-in basis. In addition, the final rule provides that certain new items be deducted from common equity tier 1 capital and certain Basel I deductions be modified. The Company is also subject to a 2.5 percent common equity tier 1 capital conservation buffer and, if deployed, up to a 2.5 percent common equity tier 1 countercyclical buffer on a fully phased-in basis by 2019. United States banking organizations are subject to a minimum leverage ratio of 4.0 percent. The final rule also subjects banking organizations calculating their capital requirements using advanced approaches, including the Company,

to a minimum Basel III supplementary leverage ratio of 3.0 percent that takes into account both on-balance sheet and certain off-balance sheet exposures.

The United States banking regulators also published final regulations in June 2011 implementing Section 171 of the Dodd-Frank Act, commonly known as the Collins Amendment, which requires that certain institutions supervised by the Federal Reserve, including the Company, be subject to minimum capital requirements that are not less than the generally applicable risk-based capital requirements. Prior to 2015, this minimum “capital floor” was based on Basel I. On January 1, 2015, the United States Basel III final rule replaced the Basel I-based “capital floor” with a standardized approach that, among other things, modifies the existing risk weights for certain types of asset classes. The “capital floor” applies to the calculation of both minimum risk-based capital requirements as well as the capital conservation buffer and, if deployed, the countercyclical capital buffer.

In September 2014, United States banking regulators approved a final rule that enhanced the regulatory Supplementary Leverage Ratio (“SLR”) requirement for banks calculating capital adequacy using advanced approaches under Basel III. The SLR is defined as tier 1 capital divided by total leverage exposure, which includes both on- and off-balance sheet exposures. The Company began calculating and reporting its SLR beginning in the first quarter of 2015, however it became subject to the minimum SLR requirement on January 1, 2018. At December 31, 2017, the Company exceeded the applicable minimum SLR requirement.

In December 2017, the Basel Committee finalized a package of revisions to the Basel III framework, unofficially known as Basel IV. The changes are meant to improve the calculation of risk-weighted assets and improve the comparability of capital ratios by (a) enhancing the robustness and risk sensitivity of the standardized approaches for credit risk, credit valuation adjustment (“CVA”) risk and operational risk; (b) constraining the use of the internal model approaches, by placing limits on certain inputs used to calculate capital requirements under the internal ratings-based (“IRB”) approach for credit risk and by removing the use of the internal model approaches for CVA risk and for operational risk; (c) introducing a leverage ratio buffer to further limit the leverage of global systemically important banks (“G-SIB”s); and (d) replacing the existing Basel II output floor with a more robust risk-sensitive floor based on the Committee’s revised Basel III standardized approaches. January 1, 2022 is the implementation date for the revised standardized approach for credit risk and leverage ratio as well as the IRB, CVA, operational risk, and market risk frameworks. The output floor will be subject to a transitional period beginning in January 1, 2022, with full implementation by January 1, 2027. Federal banking regulators are expected to undertake one or more rulemakings in future years to implement these revisions in the United States.

For additional information regarding the Company’s regulatory capital, see “Capital Management” in the 2017 Annual Report.

Comprehensive Capital Analysis and Review The Federal Reserve’s Capital Plans rule requires large bank holding companies with assets in excess of $50 billion to submit capital plans to the Federal Reserve on an annual basis and to obtain approval from the Federal Reserve for capital distributions proposed in the capital plan. These capital plans consist of a number of mandatory elements, including an assessment of a company’s sources and uses of capital over a nine-quarter planning horizon assuming both expected and stressful conditions; a detailed description of a company’s process for assessing capital adequacy; a demonstration of a company’s ability to maintain capital above each minimum regulatory capital ratio and above a tier 1 common ratio of 5.0 percent under expected and stressful conditions; and a demonstration of a company’s ability to achieve, readily and without difficulty, the minimum capital ratios and capital buffers under the Basel III framework as it comes into effect in the United States.

The Federal Reserve has issued a final rule specifying how large bank holding companies, including the Company, should incorporate the United States Basel III capital standards into their capital plans. Among other things, the final rule requires large bank holding companies to project both their common equity tier 1 capital

ratio using the methodology under existing capital guidelines and their common equity tier 1 capital ratio under the United States Basel III capital standards, as such standards phase in over the nine-quarter planning horizon.

The Company will submit its 2018 capital plan to the Federal Reserve by April 5, 2018, in accordance with instructions from the Federal Reserve. Applicable stress testing rules require the Federal Reserve to publish the results of its assessment of the Company’s capital plan, including its planned capital distributions, no later than June 30, 2018.

Stress Testing The Federal Reserve’s CCAR framework and the Dodd-Frank Act stress testing framework require large bank holding companies such as the Company to conduct company-run stress tests and subject them to supervisory stress tests conducted by the Federal Reserve. Among other things, the company-run stress tests employ stress scenarios developed by the Company as well as stress scenarios provided by the Federal Reserve and incorporate the Dodd-Frank Act capital actions, which are intended to normalize capital distributions across large United States bank holding companies. The Federal Reserve conducts CCAR and Dodd-Frank supervisory stress tests employing its adverse and severely adverse stress scenarios and internal supervisory models. The Federal Reserve’s CCAR and Dodd-Frank Act supervisory stress tests incorporate the Company’s planned capital actions and the Dodd-Frank Act capital actions, respectively. The Federal Reserve and the Company are required to publish the results of the annual supervisory and annual company-run stress tests, respectively, no later than June 30 of each year. In addition, all large bank holding companies are required to submit a mid-cycle company-run stress test employing stress scenarios developed by the Company. The results of this stress test must be submitted to the Federal Reserve for review in early October of each year. The Company is required to publish its results of this stress test no later than the end of November of each year. The Federal Reserve currently publishes summaries of supervisory stress test results for each large bank holding company under both the adverse and severely adverse stress scenarios developed by the Federal Reserve.

National banks with assets in excess of $50 billion are required to submit annual company-run stress test results to the OCC concurrently with their parent bank holding company’s CCAR submission to the Federal Reserve. The stress test is based on the OCC’s stress scenarios (which are typically the same as the Federal Reserve’s stress scenarios) and capital actions that are appropriate for the economic conditions assumed in each scenario. U.S. Bank National Association will submit its stress test in accordance with regulatory requirements by April 5, 2018. The Company is required to publish the results of this stress test no later than June 30, 2018.

Basel III Liquidity Requirements In 2009, the Basel Committee proposed two minimum standards for limiting liquidity risk: the Liquidity Coverage Ratio (“LCR”) and the Net Stable Funding Ratio (“NSFR”). The LCR is designed to ensure that bank holding companies have sufficient high-quality liquid assets to survive a significant liquidity stress event lasting for 30 calendar days. The NSFR is designed to promote stable, longer-term funding of assets and business activities over a one-year time horizon.

The federal banking regulators have jointly issued a final rule that implements the LCR in the United States. The rule applies the LCR standards to bank holding companies and their domestic bank subsidiaries calculating their capital requirements using advanced approaches, including the Company and U.S. Bank National Association. The LCR standards in the rule differ in certain respects from the Basel Committee’s version of the LCR, including a narrower definition of high-quality liquid assets, different prescribed cash inflow and outflow assumptions for certain types of instruments and transactions, a different methodology for calculating the LCR and a shorter phase-in schedule that ended on December 31, 2016. In June 2016, the federal banking regulators proposed a rule to implement a NSFR requirement in the United States that would apply to the Company and U.S. Bank National Association, consistent with the Basel Committee NSFR standard finalized in October 2014. The Basel Committee contemplated that the NSFR, including any revisions, would be implemented as a minimum standard by January 1, 2018. Federal banking regulators continue to work on finalizing a rule to implement the NSFR standards in the United States.

Recovery Plans In September 2016, the OCC finalized a rule that establishes enforceable guidelines for recovery planning by insured national banks, insured federal savings associations, and insured federal branches

of foreign banks with average total consolidated assets of $50 billion or more, which includes U.S. Bank National Association. The guidelines provide that a covered bank should develop and maintain a recovery plan that is appropriate for its individual risk profile, size, activities, and complexity, including the complexity of its organizational and legal entity structure. The guidelines state that a recovery plan should (a) establish triggers, which are quantitative or qualitative indicators of the risk or existence of severe stress that should always be escalated to management or the board of directors, as appropriate, for purposes of initiating a response; (b) identify a wide range of credible options that a covered bank could undertake to restore financial and operational strength and viability; and (c) address escalation procedures, management reports, and communication procedures. The board of U.S. Bank National Association approved a recovery plan pursuant to these guidelines in December 2017.

Supervisory Ratings Federal banking regulators regularly examine the Company to evaluate its financial condition and monitor its compliance with laws and regulatory policies. Key products of such exams are supervisory ratings of the Company’s overall condition, commonly referred to as the CAMELS rating for U.S. Bank National Association (which reflects the OCC’s evaluation of certain components of the bank’s condition) and the RFI/C(D) rating for U.S. Bancorp (which reflects the Federal Reserve’s evaluation of certain components of the holding company’s condition). These ratings are considered to be confidential supervisory information and disclosure to third parties is not allowed without permission of the issuing regulator. Violations of laws and regulations or deemed deficiencies in risk management practices may be incorporated into these supervisory ratings. A downgrade in these ratings could limit the Company’s ability to pursue acquisitions or conduct other expansionary activities for a period of time, require new or additional regulatory approvals before engaging in certain other business activities or investments, affect U.S. Bank National Association’s deposit insurance assessment rate, and impose additional recordkeeping and corporate governance requirements, as well as generally increase regulatory scrutiny of the Company. In August 2017, the Federal Reserve proposed a new supervisory rating system that would govern the Federal Reserve’s supervision of all bank holding companies with total consolidated assets of $50 billion or more and United States intermediate holding companies of foreign banking organizations, as well as certain savings and loan holding companies with assets of $50 billion or more. Under the proposal, ratings would be assigned for each of three component categories: (a) Capital Planning and Positions, (b) Liquidity Risk Management and Positions, and (c) Governance and Controls. However, no composite rating would be assigned, and this proposal is still under consideration.

In August 2017, the Federal Reserve also issued proposed guidance with respect to its expectations regarding the supervisory role of boards of directors of large financial institutions. In addition, in January 2018, the Federal Reserve made a proposal relating to the supervisory responsibilities of members of senior and business line management for risk management and controls at large financial institutions. Both of these proposals are meant to set regulatory expectations for the “Governance and Controls” component of the new rating system that has been proposed by the Federal Reserve.

Federal Deposit Insurance Corporation Improvement Act The Federal Deposit Insurance Corporation Improvement Act of 1991 (the “FDICIA”) provides a framework for regulation of depository institutions and their affiliates (including parent holding companies) by federal banking regulators. As part of that framework, the FDICIA requires the relevant federal banking regulator to take “prompt corrective action” with respect to a depository institution if that institution does not meet certain capital adequacy standards.

Supervisory actions by the appropriate federal banking regulator under the “prompt corrective action” rules generally depend upon an institution’s classification within five capital categories. The United States Basel III final rule revises the capital ratio thresholds in the prompt corrective action framework to reflect the new Basel III capital ratios. This aspect of the United States Basel III rule became effective on January 1, 2015. The regulations apply only to banks and not to bank holding companies such as the Company; however, subject to limitations that may be imposed pursuant to the GLBA, the Federal Reserve is authorized to take appropriate action at the holding company level, based on the undercapitalized status of the holding company’s subsidiary banking institutions. In certain instances relating to an undercapitalized banking institution, the bank holding

company would be required to guarantee the performance of the undercapitalized subsidiary’s capital restoration plan and could be liable for civil money damages for failure to fulfill those guarantee commitments.

Deposit Insurance Under current FDIC regulations, each depository institution is assigned to a risk category based on capital and supervisory measures. A depository institution is assessed premiums by the FDIC based on its risk category and the amount of deposits held. In 2009, the FDIC revised the method for calculating the assessment rate for depository institutions by introducing several adjustments to an institution’s initial base assessment rate. The Dodd-Frank Act altered the assessment base for deposit insurance assessments from a deposit to an asset base, and seeks to fund part of the cost of the Dodd-Frank Act by increasing the reserve ratio of the deposit insurance fund to 1.35 percent of estimated insured deposits. The Dodd-Frank Act also requires that FDIC assessments be set in a manner that offsets the cost of the assessment increases for institutions with consolidated assets of less than $10 billion. This provision effectively places the increased assessment costs on larger financial institutions such as the Company.

The Dodd-Frank Act also permanently increased deposit insurance coverage from $100,000 per account ownership type to $250,000. In February 2011, the FDIC adopted a final rule implementing the Dodd-Frank Act provisions, which provides for use of a risk scorecard to determine deposit premiums. The effect of the rule was to increase the FDIC premiums paid by U.S. Bank National Association. In 2014, the FDIC adopted a final rule revising its deposit insurance assessment system to reflect changes in the regulatory capital rules that became effective in 2015, with additional revisions to become effective in 2018. The rule (a) revises the ratios and ratio thresholds relating to capital evaluations; (b) revises the assessment base calculation for custodial banks; and (c) requires that all highly complex institutions measure counterparty exposure for assessment purposes using the Basel III standardized approach in the regulatory capital rules.

In March 2016, in order to bring the reserve ratio of the deposit insurance fund to 1.35 percent, the FDIC finalized a surcharge on the quarterly assessments of insured depository institutions with total consolidated assets of $10 billion or more. The surcharges were first imposed in the third quarter of 2016, the calendar quarter after the reserve ratio of the deposit insurance fund first reached or exceeded 1.15 percent. The surcharge imposed on each insured depository institution equals an annual rate of 4.5 basis points applied to the institution’s assessment base (with certain adjustments). The FDIC expects that these surcharges should be sufficient to raise the reserve ratio to 1.35 percent in approximately eight quarters (i.e., before the end of 2018). If, contrary to the FDIC’s expectations, the reserve ratio does not reach 1.35 percent by December 31, 2018, the FDIC plans to impose a shortfall assessment on insured depository institutions with total consolidated assets of $10 billion or more on March 31, 2019.

Powers of the FDIC Upon Insolvency of an Insured Institution If the FDIC is appointed the conservator or receiver of an insured depository institution upon its insolvency or in certain other events, the FDIC has the power to (a) transfer any of the depository institution’s assets and liabilities to a new obligor without the approval of the depository institution’s creditors; (b) enforce the terms of the depository institution’s contracts pursuant to their terms; or (c) repudiate or disaffirm any contracts (if the FDIC determines that performance of the contract is burdensome and that the repudiation or disaffirmation is necessary to promote the orderly administration of the depository institution). These provisions would be applicable to obligations and liabilities of the Company’s insured depository institution subsidiary, U.S. Bank National Association.

Depositor Preference Under federal law, in the event of the liquidation or other resolution of an insured depository institution, the claims of a receiver of the institution for administrative expense and the claims of holders of domestic deposit liabilities (including the FDIC, as subrogee of the depositors) have priority over the claims of other unsecured creditors of the institution, including holders of publicly issued senior or subordinated debt and depositors in non-domestic offices. As a result, those debtholders and depositors would be treated differently from, and could receive, if anything, substantially less than, the depositors in domestic offices of the depository institution.

Orderly Liquidation Authority The Dodd-Frank Act created a new framework for the orderly liquidation of a covered financial company by the FDIC as receiver. A covered financial company is a financial company (including a bank holding company, but not an insured depository institution), in situations where the Secretary of the Treasury determines (upon the written recommendation of the FDIC and the Federal Reserve and after consultation with the President of the United States) that the conditions set forth in the Dodd-Frank Act regarding the potential impact on financial stability of the financial company’s failure have been met. The rule sets forth a comprehensive method for the receivership of a covered financial company. The Company is a financial company and, therefore, is potentially subject to the orderly liquidation authority of the FDIC.

Resolution Plans The Federal Reserve and the FDIC have adopted a rule to implement the requirements of the Dodd-Frank Act regarding annual resolution plans for bank holding companies with assets of $50 billion or more (so-called “Living Wills”). The rule requires each covered company to produce a contingency resolution plan for the rapid and orderly resolution of the company in the event of material financial distress or failure. Resolution plans must include information regarding the manner and extent to which any insured depository institution affiliated with the company is adequately protected from risks arising from the activities of any non-bank subsidiaries of the company; full descriptions of ownership structure, assets, liabilities and contractual obligations of the company; identification of the cross-guarantees tied to different securities; identification of major counterparties; a process for determining to whom the collateral of the company is pledged; and any other information that the Federal Reserve and the FDIC jointly require by rule or order. Plans must analyze baseline, adverse, and severely adverse economic condition impacts. Plans must demonstrate, in the event of material financial distress or failure of the covered company, a reorganization or liquidation of the covered company under the federal bankruptcy code that could be accomplished within a reasonable period of time and in a manner that substantially mitigates the risk that the failure of the covered company would have serious adverse effects on financial stability in the United States. Covered companies and their subsidiaries are subject to more stringent capital, leverage and liquidity requirements or restrictions on growth, activities or operations if they fail to file an acceptable plan (i.e., the plan is determined to not be credible and deficiencies are not cured in a timely manner). Plans must typically be updated annually.

The FDIC has also adopted regulations under its own authority requiring an insured depository institution with $50 billion or more in total assets to submit periodically to the FDIC a contingency plan for the resolution of such institution in the event of its failure. The rule requires a covered depository institution to submit a resolution plan that should enable the FDIC, as receiver, to resolve the institution under applicable receivership provisions of the Federal Deposit Insurance Act in a manner that ensures that depositors receive access to their insured deposits within one business day of the institution’s failure, maximizes the net present value return from the sale or disposition of its assets and minimizes the amount of any loss to be realized by the institution’s creditors.

The Company filed its Dodd-Frank Act resolution plan in December 2017, and will periodically revise its resolution plans as required under each rule.

Liability of Commonly Controlled Institutions An FDIC-insured depository institution can be held liable for any loss incurred or expected to be incurred by the FDIC in connection with another FDIC-insured institution under common control with that institution being “in default” or “in danger of default” (commonly referred to as “cross-guarantee” liability). An FDIC claim for cross-guarantee liability against a depository institution is generally superior in right of payment to claims of the holding company and its affiliates against the depository institution.

Transactions with Affiliates There are various legal restrictions on the extent to which the Company and its non-bank subsidiaries may borrow or otherwise engage in certain types of transactions with U.S. Bank National Association. Under the Federal Reserve Act and Regulation W, U.S. Bank National Association (and its subsidiaries) is subject to quantitative and qualitative limits on extensions of credit, purchases of assets, and certain other transactions involving its non-bank affiliates. Additionally, transactions between U.S. Bank National Association and its non-bank affiliates are required to be on arm’s length terms and must be consistent with standards of safety and soundness.

Anti-Money Laundering and Sanctions The Company is subject to several federal laws that are designed to combat money laundering and terrorist financing, and to restrict transactions with persons, companies, or foreign governments sanctioned by United States authorities. This category of laws includes the Bank Secrecy Act (the “BSA”), the Money Laundering Control Act, the USA PATRIOT Act (collectively, “AML laws”), and implementing regulations for the International Emergency Economic Powers Act and the Trading with the Enemy Act, as administered by the United States Treasury Department’s Office of Foreign Assets Control (“sanctions laws”).

As implemented by federal banking and securities regulators and the Department of the Treasury, AML laws obligate depository institutions and broker-dealers to verify their customers’ identity, conduct customer due diligence, report on suspicious activity, file reports of transactions in currency, and conduct enhanced due diligence on certain accounts. Sanctions laws prohibit persons of the United States from engaging in any transaction with a restricted person or restricted country. Depository institutions and broker-dealers are required by their respective federal regulators to maintain policies and procedures in order to ensure compliance with the above obligations. Federal regulators regularly examine BSA/Anti-Money Laundering (“AML”) and sanctions compliance programs to ensure their adequacy and effectiveness, and the frequency and extent of such examinations and the remedial actions resulting therefrom have been increasing.

Non-compliance with sanctions laws and/or AML laws or failure to maintain an adequate BSA/AML compliance program can lead to significant monetary penalties and reputational damage, and federal regulators evaluate the effectiveness of an applicant in combating money laundering when determining whether to approve a proposed bank merger, acquisition, restructuring, or other expansionary activity. There have been a number of significant enforcement actions against banks, broker-dealers and non-bank financial institutions with respect to sanctions laws and AML laws and some have resulted in substantial penalties, including against the Company and U.S. Bank National Association. See Note 22 of the Notes to Consolidated Financial Statements in the 2017 Annual Report.

Community Reinvestment Act U.S. Bank National Association is subject to the provisions of the CRA. Under the terms of the CRA, banks have a continuing and affirmative obligation, consistent with safe and sound operation, to help meet the credit needs of their communities, including providing credit to individuals residing in low-income and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions, and does not limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community in a manner consistent with the CRA.

The OCC regularly assesses U.S. Bank National Association on its record in meeting the credit needs of the community served by that institution, including low-income and moderate-income neighborhoods. The assessment also is considered when the Federal Reserve or OCC reviews applications by banking institutions to acquire, merge or consolidate with another banking institution or its holding company, to establish a new branch office that will accept deposits, or to relocate an office. In the case of a bank holding company applying for approval to acquire a bank or other bank holding company, the Federal Reserve will assess the records of each subsidiary depository institution of the applicant bank holding company, and those records may be the basis for denying the application.

U.S. Bank National Association received a “Satisfactory” CRA rating in its most recent examination, covering the period from January 1, 2009 through December 31, 2011. The OCC has commenced it most recent CRA exam in 2017, the results of which will be made public upon completion.

Regulation of Brokerage, Investment Advisory and Insurance Activities The Company conducts securities underwriting, dealing and brokerage activities in the United States through U.S. Bancorp Investments, Inc.

(“USBII”) and other subsidiaries. These activities are subject to regulations of the SEC, the Financial Industry Regulatory Authority and other authorities, including state regulators. These regulations generally cover licensing of securities personnel, interactions with customers, trading operations and periodic examinations.

Securities regulators impose capital requirements on USBII and monitor its financial operations with periodic financial reviews. In addition, USBII is a member of the Securities Investor Protection Corporation, which oversees the liquidation of member broker-dealers that close when the broker-dealer is bankrupt or in financial trouble and imposes reporting requirements and assessments on USBII.

The operations of the First American family of funds, the Company’s proprietary money market fund complex, also are subject to regulation by the SEC. In July 2014, the SEC finalized rules regarding money market fund reform. The final rules require a floating net asset value for institutional prime and tax-free money market funds. The rules also give the board of directors of the money market funds the ability to limit redemptions during periods of stress (allowing for the use of liquidity fees and redemption gates during such times). Other changes include tightened diversification requirements and enhanced disclosure requirements.

The Company’s operations in the areas of insurance brokerage and reinsurance of credit life insurance are subject to regulation and supervision by various state insurance regulatory authorities, including the licensing of insurance brokers and agents.

Regulation of Derivatives and the Swaps Marketplace Under the Dodd-Frank Act, the CFTC has issued and will continue to issue additional rules regarding the regulation of the swaps marketplace and over-the-counter derivatives. The rules require swap dealers and major swap participants to register with the CFTC and require them to meet robust business conduct standards to lower risk and promote market integrity, to meet certain recordkeeping and reporting requirements so that regulators can better monitor the markets, and to be subject to certain capital and margin requirements. U.S. Bank National Association is a registered swap dealer.

In addition, the Federal Reserve, the OCC, the FDIC, the Federal Housing Finance Agency, and the Farm Credit Administration have finalized a rule concerning swap margin and capital requirements. The rule incorporates many aspects of the international framework for margin requirements for non-centrally cleared derivatives issued in September 2013 by the Basel Committee and the Board of the International Organization of Securities Commissions. The final rule mandates the exchange of initial and variation margin for non-cleared swaps and non-cleared security-based swaps between swap entities regulated by the five agencies and certain counterparties. The amount of margin will vary based on the relative risk of the non-cleared swap or non-cleared security-based swap. The final rule phased in the variation margin requirements between September 1, 2016, and March 1, 2017. The initial margin requirements will phase in over four years, beginning on September 1, 2016. Additionally, the agencies have issued a final rule relating to the rule’s exemption from margin requirements for certain non-cleared swaps and non-cleared security-based swaps used for hedging purposes by commercial end-users and certain other counterparties.

Other swaps’ requirements have been modified by legislation. Section 716 of the Dodd-Frank Act required covered United States banks acting as dealers in commodity swaps, equity swaps and certain credit default swaps to “push out” such activities and conduct them through one or more non-bank affiliates. The Consolidated and Further Continuing Appropriations Act of 2015 narrowed the push-out requirements in Section 716 to only “structured finance swaps.”

The Volcker Rule In December 2013, the SEC, the CFTC, the Federal Reserve, the OCC and the FDIC jointly issued a final rule to implement the so-called “Volcker Rule” under the Dodd-Frank Act. The Volcker Rule prohibits banking entities from engaging in proprietary trading, and prohibits certain interests in, or relationships with, hedge funds or private equity funds. The final rule also requires annual attestation by a banking entity’s Chief Executive Officer that the banking entity has in place processes to establish, maintain, enforce, review, test and modify a compliance program established in a manner reasonably designed to achieve

compliance with the final rule. The final rule became effective on April 1, 2014, and applies to the Company, U.S. Bank National Association and their affiliates. The Company has a Volcker compliance program in place that covers all of its subsidiaries and affiliates, including U.S. Bank National Association.

Financial Privacy Under the requirements imposed by the GLBA, the Company and its subsidiaries are required periodically to disclose to their retail customers the Company’s policies and practices with respect to the sharing of nonpublic customer information with its affiliates and others, and the confidentiality and security of that information. Under the GLBA, retail customers also must be given the opportunity to “opt out” of information-sharing arrangements with non-affiliates, subject to certain exceptions set forth in the GLBA.

Consumer Protection Regulation Retail banking activities are subject to a variety of statutes and regulations designed to protect consumers, including laws related to fair lending and the prohibition of unfair, deceptive, or abusive acts or practices in connection with the offer, sale, or provision of consumer financial products and services. These laws and regulations include the Truth-in-Lending, Truth-in-Savings, Home Mortgage Disclosure, Equal Credit Opportunity, Fair Credit Reporting, Fair Debt Collection Practices, Real Estate Settlement Procedures, Electronic Funds Transfer, Right to Financial Privacy and Servicemembers Civil Relief Acts. Interest and other charges collected or contracted for by banks are subject to state usury laws and federal laws concerning interest rates.

Consumer Financial Protection Bureau U.S. Bank National Association and its subsidiaries are subject to supervision and regulation by the CFPB with respect to federal consumer laws, including many of the laws and regulations described above. The CFPB has undertaken numerous rule-making and other initiatives, including issuing informal guidance and taking enforcement actions against certain financial institutions. The CFPB’s rulemaking, examination and enforcement authority has affected and will continue to impact financial institutions involved in the provision of consumer financial products and services, including the Company, U.S. Bank National Association, and the Company’s other subsidiaries. These regulatory activities may limit the types of financial services and products the Company may offer, which in turn may reduce the Company’s revenues.

Other Supervision and Regulation The Company is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), both as administered by the SEC, by virtue of the Company’s status as a public company. As a listed company on the New York Stock Exchange (the “NYSE”), the Company is subject to the rules of the NYSE for listed companies.

Website Access to SEC Reports

U.S. Bancorp’s internet website can be found at usbank.com. U.S. Bancorp makes available free of charge on its website its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Exchange Act, as well as all other reports filed by U.S. Bancorp with the SEC as soon as reasonably practicable after electronically filed with, or furnished to, the SEC.

Additional Information

Additional information in response to this Item 1 can be found in the 2017 Annual Report on pages 61 to 65 under the heading “Line of Business Financial Review.” That information is incorporated into this report by reference.

Item 1A.

Risk Factors

Information in response to this Item 1A can be found in the 2017 Annual Report on pages 146 to 156 under the heading “Risk Factors.” That information is incorporated into this report by reference.

Item 1B.

Unresolved Staff Comments

None.

Item 2.

Properties

U.S. Bancorp and its significant subsidiaries occupy headquarter offices under a long-term lease in Minneapolis, Minnesota. The Company also leases ten freestanding operations centers in Cincinnati, Denver, Milwaukee, Minneapolis, Overland Park, Portland and St. Paul. The Company owns 11 principal operations centers in Cincinnati, Coeur d’Alene, Fargo, Milwaukee, Olathe, Owensboro, Portland, St. Louis and St. Paul. At December 31, 2017, the Company’s subsidiaries owned and operated a total of 1,507 facilities and leased an additional 1,946 facilities. The Company believes its current facilities are adequate to meet its needs. Additional information with respect to the Company’s premises and equipment is presented in Note 8 of the Notes to Consolidated Financial Statements included in the 2017 Annual Report. That information is incorporated into this report by reference.

Item 3.

Legal Proceedings

Information in response to this Item 3 can be found in Note 22 of the Notes to Consolidated Financial Statements included in the 2017 Annual Report. That information is incorporated into this report by reference.

Item 4.

Mine Safety Disclosures

Not Applicable.

Capital Covenants

The Company has entered into several transactions involving the issuance of capital securities (“Capital Securities”) by certain Delaware statutory trusts formed by the Company (the “Trusts”), the issuance by the Company of preferred stock (“Preferred Stock”) or the issuance by an indirect subsidiary of U.S. Bank National Association of preferred stock exchangeable for the Company’s Preferred Stock under certain circumstances (“Exchangeable Preferred Stock”). Simultaneously with the closing of certain of those transactions, the Company entered into a replacement capital covenant, as amended from time to time (as amended, each, a “Replacement Capital Covenant” and collectively, the “Replacement Capital Covenants”) for the benefit of persons that buy, hold or sell a specified series of long-term indebtedness of the Company or U.S. Bank National Association (the “Covered Debt”). Each of the Replacement Capital Covenants provides that neither the Company nor any of its subsidiaries (including any of the Trusts) will repay, redeem or purchase any of the Preferred Stock, Exchangeable Preferred Stock or the Capital Securities and the securities held by the Trust (the “Other Securities”), as applicable, on or before the date specified in the applicable Replacement Capital Covenant, unless the Company has received proceeds from the sale of qualifying securities that (a) have equity-like characteristics that are the same as, or more equity-like than, the applicable characteristics of the Preferred Stock, the Exchangeable Preferred Stock, the Capital Securities or Other Securities, as applicable, at the time of repayment, redemption or purchase, and (b) the Company has obtained the prior approval of the Federal Reserve, if such approval is then required by the Federal Reserve or, in the case of the Exchangeable Preferred Stock, the approval of the OCC.

The Company will provide a copy of any Replacement Capital Covenant to a holder of the relevant Covered Debt. For copies of any of these documents, holders should write to Investor Relations, U.S. Bancorp, 800 Nicollet Mall, Minneapolis, Minnesota 55402, or call (866) 775-9668.

The following table identifies the closing date for each transaction, issuer, series of Capital Securities, Preferred Stock or Exchangeable Preferred Stock issued in the relevant transaction, Other Securities, if any, and applicable Covered Debt as of February 22, 2018, for those securities that remain outstanding.


Closing Date	Issuer	Capital Securities or Preferred Stock	Other Securities	Covered Debt
3/17/06	USB Capital IX and U.S. Bancorp	USB Capital IX’s $675,378,000 of 6.189% Fixed-to-Floating 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^thinterest 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^(a) and U.S. Bancorp	USB Realty Corp.’s 5,000 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)

(a)

USB Realty Corp. is an indirect subsidiary of U.S. Bank National Association.

(b)

Under certain circumstances, upon the direction of the OCC, each share of USB Realty Corp.’s Series A Preferred Stock will be automatically exchanged for one share of U.S. Bancorp’s Series C Non-cumulative Perpetual Preferred Stock.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

On June 28, 2017, the Company announced its Board of Directors had approved an authorization to repurchase up to $2.6 billion of its common stock, from July 1, 2017 through June 30, 2018. Except as otherwise indicated in the table below, all shares repurchased during the fourth quarter of 2017 were repurchased under this authorization. The following table provides a detailed analysis of all shares repurchased by the Company or any affiliated purchaser during the fourth quarter of 2017:


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		7,547,234	^(a)	$	54.22		7,497,234	$	1,528
November 1-30		4,678,378	^(b)		54.46		4,628,378		1,276
December 1-31		157,093			54.16		157,093		1,268

Total		12,382,705	^(c)	$	54.31		12,282,705	$	1,268

(a)

Includes 50,000 shares of common stock purchased, at an average price per share of $53.43, in open-market transactions by U.S. Bank National Association, the Company’s banking subsidiary, in its capacity as trustee of the Company’s Employee Retirement Savings Plan.

(b)

Includes 50,000 shares of common stock purchased, at an average price per share of $51.76, in open-market transactions by U.S. Bank National Association in its capacity as trustee of the Company’s Employee Retirement Savings Plan

(c)

Includes 100,000 shares of common stock purchased, at an average price per share of $52.60, in open-market transactions by U.S. Bank National Association in its capacity as trustee of the Company’s Employee Retirement Savings Plan

Additional Information

Additional information in response to this Item 5 can be found in the 2017 Annual Report on page 143 under the heading “U.S. Bancorp Supplemental Financial Data (Unaudited).” That information is incorporated into this report by reference.

Item 6.

Selected Financial Data

Information in response to this Item 6 can be found in the 2017 Annual Report on page 23 under the heading “Table 1 — Selected Financial Data.” That information is incorporated into this report by reference.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information in response to this Item 7 can be found in the 2017 Annual Report on pages 22 to 71 under the heading “Management’s Discussion and Analysis.” That information is incorporated into this report by reference.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Information in response to this Item 7A can be found in the 2017 Annual Report on pages 38 to 60 under the heading “Corporate Risk Profile.” That information is incorporated into this report by reference.

Item 8.

Financial Statements and Supplementary Data

Information in response to this Item 8 can be found in the 2017 Annual Report on pages 72 to 145 under the headings “Report of Management,” “Report of Independent Registered Public Accounting Firm,” “Report of Independent Registered Public Accounting Firm,” “U.S. Bancorp Consolidated Balance Sheet,” “U.S. Bancorp Consolidated Statement of Income,” “U.S. Bancorp Consolidated Statement of Comprehensive Income,” “U.S. Bancorp Consolidated Statement of Shareholders’ Equity,” “U.S. Bancorp Consolidated Statement of Cash Flows,” “Notes to Consolidated Financial Statements,” “U.S. Bancorp Consolidated Balance Sheet — Five Year Summary (Unaudited),” “U.S. Bancorp Consolidated Statement of Income — Five Year Summary (Unaudited),” “U.S. Bancorp Quarterly Consolidated Financial Data (Unaudited),” “U.S. Bancorp Supplemental Financial Data (Unaudited)” and “U.S. Bancorp Consolidated Daily Average Balance Sheet and Related Yields and Rates (Unaudited)”. That information is incorporated into this report by reference.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

Information in response to this Item 9A can be found in the 2017 Annual Report on page 71 under the heading “Controls and Procedures” and on pages 72 and 74 under the headings “Report of Management” and “Report of Independent Registered Public Accounting Firm.” That information is incorporated into this report by reference.

Item 9B.

Other Information

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

Code of Ethics and Business Conduct

The Company has adopted a Code of Ethics and Business Conduct that applies to its principal executive officer, principal financial officer and principal accounting officer. The Company’s Code of Ethics and Business Conduct can be found at www.usbank.com by clicking on “About Us” and then clicking on “Investor Relations” and then clicking on “Corporate Governance” and then clicking on “Code of Ethics.” The Company intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, certain provisions of the Code of Ethics and Business Conduct that apply to its principal executive officer, principal financial officer and principal accounting officer by posting such information on its website, at the address and location specified above.

Executive Officers of the Registrant

Andrew Cecere

Mr. Cecere is President and Chief Executive Officer of U.S. Bancorp. Mr. Cecere, 57, has served as President of U.S. Bancorp since January 2016 and Chief Executive Officer since April 2017. He also served as Vice Chairman and Chief Operating Officer from January 2015 to January 2016 and was U.S. Bancorp’s Vice Chairman and Chief Financial Officer from February 2007 until January 2015. Until that time, he served as Vice Chairman, Wealth Management and Investment Services of U.S. Bancorp since the merger of Firstar Corporation and U.S. Bancorp in February 2001. Previously, he had served as an executive officer of the former U.S. Bancorp, including as Chief Financial Officer from May 2000 through February 2001.

Jennie P. Carlson

Ms. Carlson is Executive Vice President and Chief Human Resources Officer of U.S. Bancorp. Ms. Carlson, 57, has served in this position since January 2002. Until that time, she served as Executive Vice President, Deputy General Counsel and Corporate Secretary of U.S. Bancorp since the merger of Firstar Corporation and U.S. Bancorp in February 2001. From 1995 until the merger, she was General Counsel and Secretary of Firstar Corporation and Star Banc Corporation.

James L. Chosy

Mr. Chosy is Executive Vice President and General Counsel of U.S. Bancorp. Mr. Chosy, 54, has served in this position since March 2013. He also served as Corporate Secretary of U.S, Bancorp from March 2013 until April 2016. From 2001 to 2013, he served as the General Counsel and Secretary of Piper Jaffray Companies. From 1995 to 2001, Mr. Chosy was Vice President and Associate General Counsel of U.S. Bancorp, having also served as Assistant Secretary of U.S. Bancorp from 1995 through 2000 and as Secretary from 2000 until 2001.

Terrance R. Dolan

Mr. Dolan is Vice Chairman and Chief Financial Officer of U.S. Bancorp. Mr. Dolan, 56, has served in this position since August 2016. From July 2010 to July 2016, he served as Vice Chairman, Wealth Management and Investment Services, of U.S. Bancorp. From September 1998 to July 2010, Mr. Dolan served as U.S. Bancorp’s Controller. He additionally held the title of Executive Vice President from January 2002 until June 2010 and Senior Vice President from September 1998 until January 2002.

John R. Elmore

Mr. Elmore is Vice Chairman, Community Banking and Branch Delivery, of U.S. Bancorp. Mr. Elmore, 61, has served in this position since March 2013. From 1999 to 2013, he served as Executive Vice President, Community Banking, of U.S. Bancorp and its predecessor company, Firstar Corporation.

Leslie V. Godridge

Ms. Godridge is Vice Chairman, Corporate and Commercial Banking, of U.S. Bancorp. Ms. Godridge, 62, has served in this position since January 2016. From February 2013 until December 2015, she served as Executive Vice President, National Corporate Specialized Industries and Global Treasury Management, of U.S. Bancorp. From February 2007, when she joined U.S. Bancorp, until January 2013, Ms. Godridge served as Executive Vice President, National Corporate and Institutional Banking, of U.S. Bancorp. Prior to that time, she served as Senior Executive Vice President and a member of the Executive Committee at The Bank of New York, where she was head of BNY Asset Management, Private Banking, Consumer Banking and Regional Commercial Banking from 2004 to 2006.

Gunjan Kedia

Ms. Kedia is Vice Chairman, Wealth Management and Investment Services, of U.S. Bancorp. Ms. Kedia, 47, has served in this position since joining U.S. Bancorp in December 2016. From October 2008 until May 2016, she served as Executive Vice President of State Street Corporation where she led the core investment servicing business in North and South America and served as a member of State Street’s management committee, its senior most strategy and policy committee. Previously, Ms. Kedia was an Executive Vice President of global product management at Bank of New York Mellon from 2004 to 2008.

James B. Kelligrew

Mr. Kelligrew is Vice Chairman, Corporate and Commercial Banking, of U.S. Bancorp. Mr. Kelligrew, 52, has served in this position since January 2016. From March 2014 until December 2015, he served as Executive Vice President, Fixed Income and Capital Markets, of U.S. Bancorp, having served as Executive Vice President, Credit Fixed Income, of U.S. Bancorp from May 2009 to March 2014. Prior to that time, he held various leadership positions with Wells Fargo Securities from 2003 to 2009, and with Bank of America Securities from 1993 to 2003.

Shailesh M. Kotwal

Mr. Kotwal is Vice Chairman, Payment Services, of U.S. Bancorp. Mr. Kotwal, 53, has served in this position since joining U.S. Bancorp in March 2015. From July 2008 until May 2014, he served as Executive Vice President of TD Bank Group with responsibility for retail banking products and services and as Chair of its enterprise payments council. From 2006 until 2008, he served as President, International, of eFunds Corporation. Previously, Mr. Kotwal served in various leadership roles at American Express Company from 1989 until 2006, including responsibility for operations in North and South America, Europe and the Asia-Pacific regions.

P.W. Parker

Mr. Parker is Vice Chairman and Chief Risk Officer of U.S. Bancorp. Mr. Parker, 61, has served in this position since December 2013. From October 2007 until December 2013 he served as Executive Vice President and Chief Credit Officer of U.S. Bancorp. From March 2005 until October 2007, he served as Executive Vice President of Credit Portfolio Management of U.S. Bancorp, having served as Senior Vice President of Credit Portfolio Management of U.S. Bancorp since January 2002.

Katherine B. Quinn

Ms. Quinn is Vice Chairman and Chief Administration Officer of U.S. Bancorp. Ms. Quinn, 53, has served in this position since April 2017. From September 2013 to April 2017, she served as Executive Vice President and Chief Strategy and Reputation Officer of U.S. Bancorp and has served on U.S. Bancorp’s Managing Committee since January 2015. From September 2010 until January 2013, she served as Chief Marketing Officer

of WellPoint, Inc. (now known as Anthem, Inc.), having served as Head of Corporate Marketing of WellPoint from July 2005 until September 2010. Prior to that time, she served as Chief Marketing and Strategy Officer at The Hartford from 2003 until 2005.

Mark G. Runkel

Mr. Runkel is Executive Vice President and Chief Credit Officer of U.S. Bancorp. Mr. Runkel, 41, has served in this position since December 2013. From February 2011 until December 2013, he served as Senior Vice President and Credit Risk Group Manager of U.S. Bancorp Retail and Payment Services Credit Risk Management, having served as Senior Vice President and Risk Manager of U.S. Bancorp Retail and Small Business Credit Risk Management from June 2009 until February 2011. From March 2005 until May 2009, he served as Vice President and Risk Manager of U.S. Bancorp.

Jeffry H. von Gillern

Mr. von Gillern is Vice Chairman, Technology and Operations Services, of U.S. Bancorp. Mr. von Gillern, 52, has served in this position since July 2010. From April 2001, when he joined U.S. Bancorp, until July 2010, Mr. von Gillern served as Executive Vice President of U.S. Bancorp, additionally serving as Chief Information Officer from July 2007 until July 2010.

Timothy A. Welsh

Mr. Welsh is Vice Chairman, Consumer Banking Sales and Support, of U.S. Bancorp. Mr. Welsh, 52, has served in this position since joining U.S. Bancorp in July 2017. From July 2006 until June 2017, he served as a Senior Partner at McKinsey & Company where he specialized in financial services and the consumer experience. Previously, Mr. Welsh served as a Partner at McKinsey & Company from 1999 to 2006.

Additional Information

Additional information in response to this Item 10 can be found in the Proxy Statement under the headings “Other Matters — Section 16(a) Beneficial Ownership Reporting Compliance,” “Proposal 1 —Election of Directors,” “Corporate Governance — Committee Responsibilities” and “Corporate Governance — Committee Member Qualifications.” That information is incorporated into this report by reference.

Item 11.

Executive Compensation

Information in response to this Item 11 can be found in the Proxy Statement under the headings “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Executive Compensation” and “Director Compensation.” That information is incorporated into this report by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

The following table summarizes information regarding the Company’s equity compensation plans in effect as of December 31, 2017:


Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights			Weighted-average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in the First Column)
Equity compensation plans approved by security holders							37,178,340	⁽³⁾
Stock Options		12,530,847	⁽¹⁾	$	32.28
Restricted Stock Units and Performance-Based Restricted Stock Units		7,518,298	⁽²⁾		-

Equity compensation plans not approved by security holders⁽⁴⁾		496,578			-		-

Total		20,545,723					37,178,340

(1)

Includes shares underlying stock options under the U.S. Bancorp 2015 Stock Incentive Plan (the “2015 Plan”), the U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan (the “2007 Plan”) and the U.S. Bancorp 2001 Stock Incentive Plan (the “2001 Plan”). Excludes 137,620 shares, with a weighted-average exercise price of $19.86, underlying outstanding warrants assumed in connection with acquisitions by the Company.

(2)

Includes shares underlying performance-based restricted stock units (awarded to the members of the Company’s Managing Committee and settled in shares of the Company’s common stock on a one-for-one basis) and restricted stock units (settled in shares of the Company’s common stock on a one-for-one basis) under the 2015 Plan, the 2007 Plan and the 2001 Plan. No exercise price is paid upon vesting, and thus, no exercise price is included in the table.

Includes an aggregate upward adjustment of 71,343 units subsequent to December 31, 2017, made to performance-based restricted stock units granted in 2017, to reflect the difference between (a) the number of units earned based on actual 2017 Company performance compared to absolute and relative targets set forth in each recipient’s award agreement and (b) the target number of units granted to Managing Committee members in February 2017.

(3)

The 37,178,340 shares available for future issuance are reserved under the 2015 Plan. Future awards under the 2015 Plan may be made in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, stock awards, or other stock-based awards.

(4)

These shares of common stock are issuable pursuant to various current and former deferred compensation plans of U.S. Bancorp and its predecessor entities. No exercise price is paid when shares are issued pursuant to the deferred compensation plans.

The deferred compensation plans allow non-employee directors and members of senior management to defer all or part of their compensation until the earlier of retirement or termination of employment. The deferred compensation is deemed to be invested in one of several investment alternatives at the option of the participant, including shares of U.S. Bancorp common stock. Deferred compensation deemed to be invested in U.S. Bancorp stock will be received in the form of shares of U.S. Bancorp common stock at the time of distribution, unless the Company chooses cash payment.

The 496,578 shares included in the table assume that participants in the plans whose deferred compensation had been deemed to be invested in U.S. Bancorp common stock had elected to receive all of that deferred compensation in shares of U.S. Bancorp common stock on December 31, 2017. The U.S. Bank Executive Employees Deferred Compensation Plan (2005 Statement) and the U.S. Bank Outside Directors Deferred Compensation Plan (2005 Statement) are the Company’s only deferred compensation plans under which compensation may currently be deferred.

Additional Information

Additional information in response to this Item 12 can be found in the Proxy Statement under the heading “Security Ownership of Certain Beneficial Owners and Management.” That information is incorporated into this report by reference.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

Information in response to this Item 13 can be found in the Proxy Statement under the headings “Corporate Governance — Director Independence,” “Corporate Governance — Committee Member Qualifications” and “Certain Relationships and Related Transactions.” That information is incorporated into this report by reference.

Item 14.

Principal Accounting Fees and Services

Information in response to this Item 14 can be found in the Proxy Statement under the headings “Audit Committee Report and Payment of Fees to Auditor — Fees to Independent Auditor” and “Audit Committee Report and Payment of Fees to Auditor — Administration of Engagement of Independent Auditor.” That information is incorporated into this report by reference.

PART IV

Item 15.

Exhibits, Financial Statement Schedules

List of documents filed as part of this report

1. Financial Statements

•

Report of Management

•

Report of Independent Registered Public Accounting Firm on the Financial Statements

•

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

•

U.S. Bancorp Consolidated Balance Sheet as of December 31, 2017 and 2016

•

U.S. Bancorp Consolidated Statement of Income for each of the three years in the period ended December 31, 2017

•

U.S. Bancorp Consolidated Statement of Comprehensive Income for each of the three years in the period ended December 31, 2017

•

U.S. Bancorp Consolidated Statement of Shareholders’ Equity for each of the three years in the period ended December 31, 2017

•

U.S. Bancorp Consolidated Statement of Cash Flows for each of the three years in the period ended December 31, 2017

•

Notes to Consolidated Financial Statements

•

U.S. Bancorp Consolidated Balance Sheet — Five Year Summary (Unaudited)

•

U.S. Bancorp Consolidated Statement of Income — Five Year Summary (Unaudited)

•

U.S. Bancorp Quarterly Consolidated Financial Data (Unaudited)

•

U.S. Bancorp Supplemental Financial Data (Unaudited)

•

U.S. Bancorp Consolidated Daily Average Balance Sheet and Related Yields and Rates (Unaudited)

2. Financial Statement Schedules

All financial statement schedules for the Company have been included in the consolidated financial statements or the related footnotes, or are either inapplicable or not required.

3. Exhibits

Shareholders may obtain a copy of any of the exhibits to this report upon payment of a fee covering the Company’s reasonable expenses in furnishing the exhibits. You can request exhibits by writing to Investor Relations, U.S. Bancorp, 800 Nicollet Mall, Minneapolis, Minnesota 55402.


Exhibit Number		Description

⁽¹⁾3.1		Restated Certificate of Incorporation. Filed as Exhibit 3.2 to Form 8-K filed on April 20, 2017.

⁽¹⁾3.2		Amended and Restated Bylaws. Filed as Exhibit 3.1 to Form 8-K filed on January 20, 2016.

4.1		[Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, copies of instruments defining the rights of holders of long-term debt are not filed. U.S. Bancorp agrees to furnish a copy thereof to the SEC upon request.]


Exhibit Number		Description

⁽¹⁾⁽²⁾10.1(a)		U.S. Bancorp 2001 Stock Incentive Plan. Filed as Exhibit 10.1 to Form 10-K for the year ended December 31, 2001.

⁽¹⁾⁽²⁾10.1(b)		Amendment No. 1 to U.S. Bancorp 2001 Stock Incentive Plan. Filed as Exhibit 10.2 to Form 10-K for the year ended December 31, 2002.

⁽¹⁾⁽²⁾10.2		U.S. Bancorp 2006 Executive Incentive Plan. Filed as Exhibit 10.1 to Form 8-K filed on April 21, 2006.

⁽¹⁾⁽²⁾10.3		U.S. Bancorp Executive Deferral Plan, as amended. Filed as Exhibit 10.7 to Form 10-K for the year ended December 31, 1999.

⁽¹⁾⁽²⁾10.4		Summary of Nonqualified Supplemental Executive Retirement Plan, as amended, of the former U.S. Bancorp. Filed as Exhibit 10.4 to Form 10-K for the year ended December 31, 2001.

⁽¹⁾⁽²⁾10.5(a)		U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.16 to Form 10-K for the year ended December 31, 2002.

⁽¹⁾⁽²⁾10.5(b)		First, Second and Third Amendments of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.17 to Form 10-K for the year ended December 31, 2003.

⁽¹⁾⁽²⁾10.5(c)		Fourth Amendment of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.1 to Form 8-K filed on December 23, 2004.

⁽¹⁾⁽²⁾10.5(d)		Fifth Amendment of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.2 to Form 10-Q for the quarterly period ended March 31, 2005.

⁽¹⁾⁽²⁾10.5(e)		Sixth Amendment of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.1 to Form 8-K filed on October 20, 2005.

⁽¹⁾⁽²⁾10.5(f)		Seventh Amendment of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.1(g) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.5(g)		Eighth Amendment of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.1(h) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.5(h)		Ninth Amendment of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.1(i) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.5(i)		Tenth Amendment of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.1(j) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.5(j)		Eleventh Amendment of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.11(k) to Form 10-K for the year ended December 31, 2009.

⁽¹⁾⁽²⁾10.5(k)		Twelfth Amendment of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.11(l) to Form 10-K for the year ended December 31, 2010.

⁽¹⁾⁽²⁾10.5(l)		Thirteenth Amendment of U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as Exhibit 10.6(l) to Form 10-K for the year ended December 31, 2013.

⁽¹⁾⁽²⁾10.6(a)		U.S. Bancorp Executive Employees Deferred Compensation Plan. Filed as Exhibit 10.18 to Form 10-K for the year ended December 31, 2003.

⁽¹⁾⁽²⁾10.6(b)		2011 Amendment of U.S. Bancorp Executive Employees Deferred Compensation Plan. Filed as Exhibit 10.9(b) to Form 10-K for the year ended December 31, 2011.

⁽¹⁾⁽²⁾10.7(a)		U.S. Bancorp 2005 Executive Employees Deferred Compensation Plan. Filed as Exhibit 10.2 to Form 8-K filed on December 21, 2005.


Exhibit Number		Description

⁽¹⁾⁽²⁾10.7(b)		First Amendment of U.S. Bancorp 2005 Executive Employees Deferred Compensation Plan effective as of January 31, 2009. Filed as Exhibit 10.2(b) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.7(c)		Second Amendment of U.S. Bancorp 2005 Executive Employees Deferred Compensation Plan effective as of January 1, 2010. Filed as Exhibit 10.13(c) to Form 10-K for the year ended December 31, 2010.

⁽¹⁾⁽²⁾10.7(d)		Third Amendment of U.S. Bancorp 2005 Executive Employees Deferred Compensation Plan. Filed as Exhibit 10.10(d) to Form 10-K for the year ended December 31, 2011.

⁽¹⁾⁽²⁾10.8(a)		U.S. Bancorp Outside Directors Deferred Compensation Plan. Filed as Exhibit 10.19 to Form 10-K for the year ended December 31, 2003.

⁽¹⁾⁽²⁾10.8(b)		2011 Amendment of U.S. Bancorp Outside Directors Deferred Compensation Plan. Filed as Exhibit 10.11(b) to Form 10-K for the year ended December 31, 2011.

⁽¹⁾⁽²⁾10.9(a)		U.S. Bancorp 2005 Outside Directors Deferred Compensation Plan. Filed as Exhibit 10.1 to Form 8-K filed on December 21, 2005.

⁽¹⁾⁽²⁾10.9(b)		First Amendment of U.S. Bancorp 2005 Outside Directors Deferred Compensation Plan effective as of January 31, 2009. Filed as Exhibit 10.3(b) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.9(c)		Second Amendment of U.S. Bancorp 2005 Outside Directors Deferred Compensation Plan. Filed as Exhibit 10.12(c) to Form 10-K for the year ended December 31, 2011.

⁽¹⁾⁽²⁾10.10(a)		Form of Director Restricted Stock Unit Award Agreement under U.S. Bancorp 2001 Stock Incentive Plan. Filed as Exhibit 10.5 to Form 10-Q for the quarterly period ended September 30, 2004.

⁽¹⁾⁽²⁾10.10(b)		Form of Amendment to Director Restricted Stock Unit Award Agreements under U.S. Bancorp 2001 Stock Incentive Plan dated as of December 31, 2008. Filed as Exhibit 10.5(b) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.11		U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.1 to Form 8-K filed on April 20, 2010.

⁽¹⁾⁽²⁾10.12		Form of 2007 Non-Qualified Stock Option Agreement for Executive Officers under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.2 to Form 8-K filed on April 18, 2007.

⁽¹⁾⁽²⁾10.13		Form of Non-Qualified Stock Option Agreement for Executive Officers under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan to be used after December 31, 2008. Filed as Exhibit 10.8(a) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.14		Form of Non-Qualified Stock Option Agreement for Executive Officers (as approved January 16, 2012) under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.2 to Form 8-K filed on January 18, 2012.

⁽¹⁾⁽²⁾10.15		Form of Non-Qualified Stock Option Agreement for Executive Officers (as approved November 14, 2012) under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.2 to Form 8-K filed on November 19, 2012.

⁽¹⁾⁽²⁾10.16		Form of Non-Qualified Stock Option Agreement for Executive Officers (as approved December 9, 2013) under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.2 to Form 8-K filed on December 13, 2013.


Exhibit Number		Description

⁽¹⁾⁽²⁾10.17		Form of Non-Qualified Stock Option Agreement for Executive Officers under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan to be used after December 31, 2014. Filed as Exhibit 10.2 to Form 8-K filed on December 31, 2014.

⁽¹⁾⁽²⁾10.18		Form of Restricted Stock Award Agreement for Executive Officers under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan to be used after December 31, 2008. Filed as Exhibit 10.9(a) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.19		Form of Restricted Stock Award Agreement under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.1 to Form 10-Q filed for the quarterly period ended September 30, 2012.

⁽¹⁾⁽²⁾10.20		Form of Restricted Stock Unit Award Agreement under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan to be used after December 31, 2013. Filed as Exhibit 10.27 to Form 10-K for the year ended December 31, 2013.

⁽¹⁾⁽²⁾10.21		Form of Restricted Stock Unit Award Agreement for Executive Officers under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan to be used after December 31, 2008. Filed as Exhibit 10.10(a) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.22		Form of Performance Restricted Stock Unit Award Agreement for Executive Officers under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan to be used after December 31, 2008. Filed as Exhibit 10.1 to Form 8-K filed on March 6, 2009.

⁽¹⁾⁽²⁾10.23		Form of Performance Restricted Stock Unit Award Agreement for Executive Officers (as approved February 14, 2011) under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.1 to Form 8-K filed on February 16, 2011.

⁽¹⁾⁽²⁾10.24		Form of Performance Restricted Stock Unit Award Agreement for Executive Officers (as approved January 16, 2012) under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.1 to Form 8-K filed on January 18, 2012.

⁽¹⁾⁽²⁾10.25		Form of Performance Restricted Stock Unit Award Agreement for Executive Officers (as approved November 14, 2012) under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.1 to Form 8-K filed on November 19, 2012.

⁽¹⁾⁽²⁾10.26		Form of Performance Restricted Stock Unit Award Agreement for Executive Officers (as approved December 9, 2013) under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.1 to Form 8-K filed on December 13, 2013.

⁽¹⁾⁽²⁾10.27		Form of Performance Restricted Stock Unit Award Agreement for Executive Officers under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan to be used after December 31, 2014. Filed as Exhibit 10.1 to Form 8-K filed on December 31, 2014.

⁽¹⁾⁽²⁾10.28		Form of 2007 Restricted Stock Unit Award Agreement for Non-Employee Directors under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.1 to Form 10-Q/A for the quarterly period ended September 30, 2007.

⁽¹⁾⁽²⁾10.29		Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan to be used after December 31, 2008. Filed as Exhibit 10.11(a) to Form 8-K filed on January 7, 2009.

⁽¹⁾⁽²⁾10.30		Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan to be used after December 31, 2013. Filed as Exhibit 10.37 to Form 10-K for the year ended December 31, 2013.

⁽¹⁾⁽²⁾10.31		U.S. Bancorp 2015 Stock Incentive Plan. Filed as Exhibit 10.1 to Form 8-K filed on April 23, 2015.


Exhibit Number		Description

⁽¹⁾⁽²⁾10.32		Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under U.S. Bancorp 2015 Stock Incentive Plan (in use for grants made through 2016). Filed as Exhibit 10.2 to Form 8-K filed on April 23, 2015.

⁽¹⁾⁽²⁾10.33		Form of Performance Restricted Stock Unit Award Agreement for Executive Officers under U.S. Bancorp 2015 Stock Incentive Plan (in use for grants made through 2016). Filed as Exhibit 10.3 to Form 8-K filed on April 23, 2015.

⁽¹⁾⁽²⁾10.34		Form of Stock Option Award Agreement for Executive Officers under U.S. Bancorp 2015 Stock Incentive Plan (in use for grants made through 2016). Filed as Exhibit 10.4 to Form 8-K filed on April 23, 2015.

⁽¹⁾⁽²⁾10.35		Form of Restricted Stock Unit Agreement used for December 2016 grant to Gunjan Kedia under U.S. Bancorp 2015 Stock Incentive Plan. Filed as Exhibit 10.41 to Form 10-K for the year ended December 31, 2016.

⁽¹⁾⁽²⁾10.36		Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under U.S. Bancorp 2015 Stock Incentive Plan (used for grants made after January 1, 2017). Filed as Exhibit 10.42 to Form 10-K for the year ended December 31, 2016.

⁽¹⁾⁽²⁾10.37		Form of Performance Restricted Stock Unit Award Agreement for Executive Officers under U.S. Bancorp 2015 Stock Incentive Plan (used for grants made during 2017). Filed as Exhibit 10.43 to Form 10-K for the year ended December 31, 2016.

⁽¹⁾⁽²⁾10.38		Form of Stock Option Award Agreement for Executive Officers under U.S. Bancorp 2015 Stock Incentive Plan (used for grants made during 2017). Filed as Exhibit 10.44 to Form 10-K for the year ended December 31, 2016.

⁽²⁾10.39		Form of Performance Restricted Stock Unit Award Agreement for Executive Officers under U.S. Bancorp 2015 Stock Incentive Plan (used for grants made after January 1, 2018).

⁽²⁾10.40		Form of Restricted Stock Unit Award Agreement for Executive Officers under U.S. Bancorp 2015 Stock Incentive Plan (used for grants made after January 1, 2018).

⁽¹⁾10.41		Deferred Prosecution Agreement, dated February 13, 2018, between U.S. Bancorp and the United States Attorney’s Office for the Southern District of New York. Filed as Exhibit 10.1 to Form 8-K filed on February 15, 2018.

⁽¹⁾10.42		Consent Order and Stipulation and Consent to the Issuance of an Order for a Civil Money Penalty, dated February 13, 2018, between U.S. Bank and the Office of the Comptroller of the Currency. Filed as Exhibit 10.2 to Form 8-K filed on February 15, 2018.

⁽¹⁾10.43		Stipulation and Order of Settlement and Dismissal, dated February 15, between U.S. Bank and the Financial Crimes Enforcement Network. Filed as Exhibit 10.3 to Form 8-K filed on February 15, 2018.

⁽¹⁾10.44		Order to Cease and Desist and Order of Assessment of a Civil Money Penalty Issued Upon Consent Pursuant to the Federal Deposit Insurance Act, Amended, dated February 14, among U.S. Bancorp, USB Americas Holding Company and the Board of Governors of the Federal Reserve System. Filed as Exhibit 10.4 to Form 8-K filed on February 15, 2018.

12		Statement re: Computation of Ratio of Earnings to Fixed Charges.

13		2017 Annual Report, pages 21 through 159.

21		Subsidiaries of the Registrant.

23		Consent of Ernst & Young LLP.

24		Power of Attorney.

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.


Exhibit Number		Description

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

101		Financial statements from the Annual Report on Form 10-K of the Company for the year ended December 31, 2017, formatted in Extensible Business Reporting Language: (i) the Consolidated Balance Sheet, (ii) the Consolidated Statement of Income, (iii) the Consolidated Statement of Comprehensive Income, (iv) the Consolidated Statement of Shareholders’ Equity, (v) the Consolidated Statement of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

(1)

Exhibit has been previously filed with the SEC and is incorporated herein as an exhibit by reference to the prior filing.

(2)

Management contracts or compensatory plans or arrangements.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on February 22, 2018, on its behalf by the undersigned, thereunto duly authorized.


U.S. BANCORP

By		/s/ ANDREW CECERE
		Andrew Cecere
		President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 22, 2018, by the following persons on behalf of the registrant and in the capacities indicated.

Signature and Title

/s/ ANDREW CECERE

Andrew Cecere,

Director, President and Chief Executive Officer

(principal executive officer)

/s/ TERRANCE R. DOLAN

Terrance R. Dolan,

Vice Chairman and Chief Financial Officer

(principal financial officer)

/s/ CRAIG E. GIFFORD

Craig E. Gifford,

Executive Vice President and Controller

(principal accounting officer)

RICHARD K. DAVIS*

Richard K. Davis, Director

DOUGLAS M. BAKER, JR.*

Douglas M. Baker, Jr., Director

WARNER L. BAXTER*

Warner L. Baxter, Director

MARC N. CASPER*

Mark N. Casper, Director

ARTHUR D. COLLINS, JR.*

Arthur D. Collins, Jr., Director

KIMBERLY J. HARRIS*

Kimberly J. Harris, Director

ROLAND A. HERNANDEZ*

Roland A. Hernandez, Director

Signature and Title

DOREEN WOO HO*

Doreen Woo Ho, Director

OLIVIA F. KIRTLEY*

Olivia F. Kirtley, Director

KAREN S. LYNCH*

Karen S. Lynch, Director

RICHARD P. MCKENNEY*

Richard P. McKenney, Director

DAVID B. O’MALEY*

David B. O’Maley, Director

O’DELL M. OWENS, M.D., M.P.H.*

O’Dell M. Owens, M.D., M.P.H., Director

CRAIG D. SCHNUCK*

Craig D. Schnuck, Director

SCOTT W. WINE*

Scott W. Wine, Director

*	Andrew Cecere, by signing his name hereto, does hereby sign this document on behalf of each of the above named directors of the registrant pursuant to powers of attorney duly executed by such persons.

Dated: February 22, 2018


By:		/s/ ANDREW CECERE
		Andrew Cecere
		Attorney-In-Fact
		President and Chief Executive Officer

EX-10.39

Exhibit 10.39

NOTE: This Performance Restricted Stock Unit Award Agreement is applicable to performance restricted stock unit awards made to members of the Managing Committee (“Participants”) of U.S. Bancorp (the “Company”) on and after January 1, 2018. These performance restricted stock unit awards have the terms and conditions set forth in (a) each Participant’s grant detail (the “Grant Detail”), which can be accessed on the Fidelity Website at www.netbenefits.com (or the website of any other stock plan administrator selected by the Company in the future), and (b) the form of Exhibit A hereto (which will be completed to include all information called for therein) (the “Completed Exhibit A”) provided to such Participant as soon as administratively feasible following the date on which the award is made. The Grant Detail may be viewed at any time on this Website, and the Grant Detail may also be printed out. In addition to the individual terms and conditions set forth in the Grant Detail and the Completed Exhibit A, each performance restricted stock unit award will have the terms and conditions set forth in the form of Performance Restricted Stock Unit Award Agreement below. As a condition of each performance restricted stock unit award, Participant accepts the terms and conditions of the Performance Restricted Stock Unit Award Agreement, the Grant Detail and the Completed Exhibit A.

U.S. BANCORP

PERFORMANCE RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS AGREEMENT, together with the Grant Detail and the Completed Exhibit A which are incorporated herein by reference (collectively, the “Agreement”), sets forth the terms and conditions of a performance restricted stock unit award representing the right to receive shares of common stock of the Company, par value $0.01 per share (the “Common Stock”). The grant of this performance restricted stock unit award is made pursuant to the Company’s 2015 Stock Incentive Plan, which was approved by shareholders on April 21, 2015 (the “Plan”) and is subject to its terms. Capitalized terms that are not defined in the Agreement shall have the meaning ascribed to such terms in the Plan.

The Company and Participant agree as follows:

1. Award

Subject to the terms and conditions of the Plan and the Agreement, the Company grants to Participant a performance restricted stock unit award entitling Participant to the number of performance restricted stock units (the “Units”) equal to the “Target Award Number” set forth in Participant’s Grant Detail (such number of units, the “Target Award Number”). The Target Award Number shall be adjusted upward or downward as provided in the Completed Exhibit A. The number of Units that Participant will receive under the Agreement, after giving effect to such adjustment, is referred to herein as the “Final Award Number.” Each Unit represents the right to receive one share of Common Stock, subject to the vesting requirements and distribution provisions of the Agreement and the terms of the Plan. The shares of Common Stock distributable to Participant with respect to the Units granted hereunder are referred to as the “Shares.” Participant’s Grant Detail sets forth the date of grant of this award (the “Grant Date”). The Completed Exhibit A sets forth (a) the performance period over which the Final Award Number will be determined (the “Performance Period”), and (b) the date on which the Final Award Number will be determined (the “Determination Date”).

2. Vesting; Forfeiture

(a) Time-Based Vesting Conditions. Subject to the terms and conditions of the Agreement, if the Participant remains continuously employed by the Company or an Affiliate of the Company through the Vesting Date as set forth in the Participant’s Grant Detail at the time of grant (the “Scheduled Vesting Date”), the number of Units equal to the Final Award Number shall become vested on the Scheduled Vesting Date. and will be settled and Shares delivered in accordance with Section 3(a), provided that Participant has at all times since the Grant Date complied with the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant. Except as otherwise provided in the Agreement, if Participant ceases to be an employee of the Company and its Affiliates prior to the Scheduled Vesting Date, all Units that have not become vested previously shall be immediately and irrevocably forfeited.

(b) Continued Vesting Upon Separation From Service Due to Retirement. Notwithstanding Section 2(a), if Participant has a Separation From Service (as defined in Section 10) with the Company or any Affiliate by reason Retirement (as defined in Section 10), prior to the Scheduled Vesting Date, and provided such Separation From Service is not a Qualifying Termination, the Units shall not be forfeited, but rather, the Participant’s Target Award Number will be adjusted by pro-rating as follows. The Participant’s Target Award Number will be adjusted by dividing the number of days during the Performance Period prior to Participant’s Separation From Service by the total number of days in the Performance Period. The resulting number will be the Participant’s “Pro-rated Target Award Number”. Following the end of the Performance Period, Participant’s Pro-rated Target Award Number will be adjusted upward or downward as provided in the Completed Exhibit A to determine Participant’s Final Award Number. Subject to the terms of the Agreement, including Section 2(f) hereof, and provided that Participant has at all times since the Grant Date complied with the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant, the number of Units equal to the Final Award will be settled and Shares delivered in accordance with Section 3(a).

(c) Continued Vesting Following Death or Disability. If Participant ceases to be an employee by reason of death, or if Participant has a Separation From Service by reason of Disability (as defined in Section 10) prior to the Scheduled Vesting Date, then the Units shall not be forfeited. Rather, the Target Award Number will be eligible to become vested following the end of the Performance Period, subject to adjustment upward or downward as provided in the Completed Exhibit A to determine Participant’s Final Award Number. Subject to the terms of the Agreement, including Section 2(f) hereof, and provided the Participant has at all times since the Grant Date complied with the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant, the number of Units equal to the Final Award will be settled and Shares delivered in accordance with Section 3(a).

(d) Continued Vesting Following a Qualifying Termination. Notwithstanding the vesting provisions contained in Section 2(a) and 2(b) above, but subject to the other terms and conditions of the Agreement, if Participant experiences a Qualifying Termination (as defined in Section 10) prior to the Scheduled Vesting Date, then the Units shall not be forfeited, but rather the Target Award Number will be eligible to become vested following the end of the Performance Period, subject to adjustment upward or downward as provided in the Completed Exhibit A to determine Participant’s Final Award Number. Subject to the terms of the Agreement, including Section 2(f) hereof, and provided the Participant has at all times since the Grant Date complied with the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant, the number of Units equal to the Final Award will be settled and Shares delivered in accordance with Section 3(b). Notwithstanding the foregoing, if in connection with a Change in Control the Units are adjusted, or units in the acquiring or surviving entity are substituted for the Units, or the Plan is terminated, in each case as permitted under the Plan and in accordance with Section 409A, then the terms of such adjustment, substitution or plan termination will govern the treatment of the Units.

(e) Forfeiture on Termination of Employment for Cause and on Breach of Confidentiality Agreement. If Participant violates the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant, all Units that have not been settled (and Shares delivered) previously shall be immediately and irrevocably forfeited. If Participant’s employment with the Company is terminated for Cause, all Units that have not been settled (and Shares delivered) previously shall be immediately and irrevocably forfeited. Upon forfeiture, Participant shall have no rights relating to the forfeited Units (including, without limitation, any rights to receive a distribution of Shares with respect to the Units and the right to receive Dividend Equivalents).

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(f) Special Risk-Related Cancellation Provisions. Notwithstanding any other provision of the Agreement, if at any time subsequent to the Grant Date the Committee determines, in its sole discretion, that Participant has (i) failed to comply with Company policies and procedures, including the Code of Ethics and Business Conduct, (ii) violated any law or regulation, (iii) engaged in negligent or willful misconduct, or (iv) engaged in activity resulting in a significant or material control deficiency under the Sarbanes-Oxley Act of 2002, and such failure, violation, misconduct or activity (A) demonstrates an Inadequate Sensitivity (as defined below) to the inherent risks of Participant’s business line or functional area, and (B) results in, or is reasonably likely to result in, a material adverse impact (whether financial or reputational) on the Company or Participant’s business line or functional area, all or part of the Units granted under the Agreement that have not been settled (and Shares delivered) at the time of such determination may be cancelled, and, if so cancelled, Participant will have no rights with respect to the Units. “Inadequate Sensitivity” means Participant has engaged in imprudent activities that subject the Company to risk outcomes in future periods, including risks that may not be apparent at the time the activities are undertaken.

3. Distribution of Shares with Respect to Units

Subject to the terms of the Agreement, following the vesting of Units and following the payment of any applicable withholding taxes pursuant to Section 7 hereof, the Company shall cause to be issued and delivered to Participant (including through book entry) Shares registered in the name of Participant or in the name of Participant’s legal representatives, beneficiaries or heirs, as the case may be, as follows:

(a) General Rule. As soon as administratively feasible following the Scheduled Vesting Date (but in no event later than December 31^st of the year in which such Scheduled Vesting Date occurs), all Shares issuable pursuant to Units that become vested in accordance with Sections 2(a) through 2(c) hereof shall be distributed to Participant, or in the event of Participant’s death, to the representatives of Participant or to any Person to whom the Units have been transferred by will or the applicable laws of descent and distribution.

(b) Qualifying Termination Distributions. Except as otherwise provided in this Section 3(b), as soon as administratively feasible following the Scheduled Vesting Date (but in no event later than December 31^st of the year in which such Scheduled Vesting Date occurs), all Shares issuable pursuant to Units that become vested in accordance with Sections 2(d) hereof shall be distributed to Participant, or in the event of Participant’s death, to the representatives of Participant or to any Person to whom the Units have been transferred by will or the applicable laws of descent and distribution. Notwithstanding the foregoing, if in connection with a Change in Control the Units are adjusted, or units in the acquiring or surviving entity are substituted for the Units, or the Plan is terminated, in each case as permitted under the Plan and in accordance with Section 409A, then the terms of such adjustment, substitution or plan termination will govern the treatment of the Units, including the time and manner of settlement of the Units.

In the event that the number of Shares distributable pursuant to this Section 3 is a number that is not a whole number, then the number of Shares distributed shall be rounded down to the nearest whole number.

4. Rights as Shareholder; Dividend Equivalents

Prior to the distribution of Shares with respect to Units pursuant to Section 3 above, Participant shall not have ownership or rights of ownership of any Shares underlying the Units; provided, however, that Participant shall be entitled to accrue cash Dividend Equivalents on outstanding Units (i.e. Units that have not been forfeited or settled), whether vested or unvested, if cash dividends on the Common Stock are declared by the Board on or after the Grant Date. Prior to the Determination Date, Participant will accrue cash Dividend Equivalents on Units equal to the Target Award Number. Specifically, when cash dividends are paid with respect to a share of outstanding Common Stock, an amount of cash per Unit equal to the cash dividend paid with respect to a share of outstanding Common Stock will be accrued with respect to each Unit in Participant’s Target Award Number. On the Determination Date, the dollar amount of Participant’s cumulative accrued Dividend Equivalents as of the Determination Date will be multiplied by Participant’s Target Award Number Percentage to determine the amount of cash Dividend Equivalents that will be paid to Participant. Dividend Equivalents will be paid in cash on the date on which the underlying Units giving rise to the Dividend Equivalents are settled and paid out. The Dividend Equivalents shall be treated as earnings on, and as a separate amount from, the Units for purposes of Section 409A of the Code.

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5. Restriction on Transfer

Except for transfers by will or the applicable laws of descent and distribution, the Units cannot be sold, assigned, transferred, gifted, pledged, or in any manner encumbered, alienated, attached or disposed of, and any purported sale, assignment, transfer, gift, pledge, alienation, attachment or encumbrance shall be void and unenforceable against the Company. No such attempt to transfer the Units, whether voluntary or involuntary, by operation of law or otherwise (except by will or laws of descent and distribution), shall vest the purported transferee with any interest or right in or with respect to the Units or the Shares issuable with respect to the Units.

6. Securities Law Compliance

The delivery of all or any of the Shares in accordance with this Award shall be effective only at such time that the issuance of such Shares will not violate any state or federal securities or other laws. The Company is under no obligation to effect any registration of the Shares under the Securities Act of 1933 or to effect any state registration or qualification of the Shares. The Company may, in its sole discretion, delay the delivery of the Shares or place restrictive legends on such Shares in order to ensure that the issuance of any Shares will be in compliance with federal or state securities laws and the rules of the New York Stock Exchange or any other exchange upon which the Company’s Common Stock is traded.

7. Income Tax Withholding

In order to comply with all applicable federal, state, local and foreign income and payroll tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable withholding, income or other taxes, which are the sole and absolute responsibility of Participant, are withheld or collected from Participant. Without limiting the foregoing, the Company may, but is not obligated to, permit or require the satisfaction of tax withholding obligations through net Share settlement at the time of delivery of Shares (i.e. the Company withholds a portion of the Shares otherwise to be delivered with a Fair Market Value, as such term is defined in the Plan, equal to the amount of such taxes, but only to the extent necessary to satisfy certain statutory withholding requirements to avoid adverse accounting treatment under ASC 718) or through an open market sale of Shares otherwise to be delivered, in each case pursuant to such rules and procedures as may be established by the Company.

8. Miscellaneous

(a) The Agreement is issued pursuant to the Plan and is subject to its terms. The Plan is available for inspection during business hours at the principal office of the Company. In addition, the Plan may be viewed on the Fidelity Website at www.netbenefits.com (or the website of any other stock plan administrator selected by the Company in the future).

(b) The Agreement shall not confer on Participant any right with respect to continuance of employment with the Company or any Affiliate, nor will it interfere in any way with the right of the Company or any Affiliate to terminate such employment at any time.

(c) Participant acknowledges that the grant, vesting or any payment with respect to this Award, and the sale or other taxable disposition of the Shares issued with respect to the Units hereunder may have tax consequences pursuant to the Code or under local, state or international tax laws. It is intended that the Award shall comply with Section 409A of the Code, and the provisions of the Agreement and the Plan shall be construed and administered accordingly. Any amendment or modification of the Award (to the extent permitted under the terms of the Plan), will be undertaken in a manner intended to comply with Section 409A, to the extent applicable. Notwithstanding the foregoing, there is no guaranty or assurance as to the tax treatment of the Award. Participant acknowledges that Participant is relying solely and exclusively on Participant’s own professional tax and investment advisors with respect to any and all such matters (and is not relying, in any manner, on the Company or any of its employees or representatives). Participant understands and agrees that any and all tax consequences resulting from the Award and its grant, vesting, amendment, or any payment with respect thereto, and the sale or other taxable disposition of the Shares acquired pursuant to the Award, is solely and exclusively the responsibility of Participant without any expectation or understanding that the Company or any of its employees or representatives will pay or reimburse Participant for such taxes or other items.

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9. Venue

Any claim or action brought with respect to this Award shall be brought in a federal or state court located in Minneapolis, Minnesota.

10. Definitions

For purposes of the Agreement, the following terms shall have the definitions as set forth below:

(a) “Change in Control” shall have the meaning ascribed to it in the Plan, but only if the event or circumstances constituting such change in control also constitute a change in ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, within the meaning of Section 409A of the Code.

(b) “Disability” means leaving active employment and qualifying for and receiving disability benefits under the Company’s long-term disability programs as in effect from time to time.

(A) Participant’s Separation From Service with the Company and its Affiliates as a result of the Company’s termination of Participant’s employment for any reason other than Cause within 12 months following a Change in Control, provided that such a termination will not be a Qualifying Termination if: i) the Company has notified the Participant in writing more than 30 days prior to the Announcement Date that Participant’s employment is not expected to continue for more than 12 months following the date of such notification, and Participant’s employment is in fact terminated within such 12 month period; or ii) Participant has announced in writing, prior to the date the Company provides a Notice of Termination to Participant, that Participant intends to terminate his or her employment; or

(B) Participant’s Separation From Service with the Company and its Affiliates (other than as a result of Participant’s termination of employment by the Company for Cause) within 12 months following a Change in Control, if, at the time of such Separation From Service, Participant is age 55 or older and has had 10 or more years of employment with the Company or its Affiliates following such Participant’s most recent date of hire by the Company or its Affiliates.

For purposes of this definition, the term Company shall be deemed to include any Person that has assumed this Award (or provided a substitute award to Participant) in connection with a Change in Control.

(d) “Retirement” means a Separation From Service with the Company and its affiliates (other than for Cause) by a Participant who is age 55 or older and has had 10 or more years of employment with the Company or its Affiliates following such Participant’s most recent date of hire by the Company or its Affiliates.

(e) “Separation From Service” means a Participant’s separation from service with the Company and its affiliates, as determined under Treasury Regulation section 1.409A-1(h)(1), provided, that the term “affiliate” shall mean a business entity which is affiliated in ownership with the Company and that is treated as a single employer under the rules of section 414(b) and (c) of the Code (applying the eighty percent common ownership standard).

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EXHIBIT A

PERFORMANCE RESTRICTED STOCK UNIT AWARD AGREEMENT

This Exhibit A to the Performance Restricted Stock Unit Award Agreement sets forth the manner in which the Final Award Number will be determined for each Participant.

Definitions

Capitalized terms used but not defined herein shall have the same meanings assigned to them in the Plan, the Performance Restricted Stock Unit Award Agreement and Participant’s Grant Detail. The following terms used in the text of this Exhibit A and in the ROE Performance Matrix shall have the meanings set forth below:

“Company ROE Maximum” means ____%.

“Company ROE Minimum” means ____%.

“Company ROE Result” means the ROE achieved by the Company during the Performance Period.

“Company ROE Target” means ____%.

“Determination Date” means the date on which the Final Award Number is determined, which date shall not be later than 45 days after the last day of the Performance Period.

“Final Award Number” means the “Final Award Number” determined in accordance with this Exhibit A.

“Peer Group Companies” means the following companies: ____________________________________.

“Peer Group ROE Ranking Maximum” means the ____ percentile.

“Peer Group ROE Ranking Minimum” means the ____ percentile.

“Peer Group ROE Ranking Target” means the ____ percentile.

“Peer Group ROE” means the ROE achieved by the Peer Group Companies during the Performance Period.

“Peer Group ROE Ranking” means the percentile rank of the Company ROE Result relative to Peer Group ROE.

“Performance Period” means the period commencing on January 1, 20__ and ending December 31, 20__.

“ROE” means (a) net income applicable to the common shareholders of a company during the Performance Period, divided by (b) that company’s average common shareholders’ equity during the Performance Period.

“ROE Performance Matrix” means the ROE Performance Matrix set forth in this Exhibit A.

“Target Award Number” means the “Target Award Number” set forth in a Participant’s Grant Detail.

“Target Award Number Percentage” means the “Target Award Number Percentage” determined in accordance with the ROE Performance Matrix and the related rules set forth in this Exhibit A.

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Determination of Final Award Number

Each Participant has been granted a number of Units equal to the Target Award Number. The Target Award Number will be adjusted upward or downward depending on (a) whether the Company ROE Result is greater or less than the Company ROE Target, and (b) the Peer Group ROE Ranking. The Final Award Number for each Participant will be determined by multiplying (i) the Target Award Number Percentage by (ii) the Target Award Number. The Target Award Number Percentage will be determined in accordance with the following ROE Performance Matrix and the related rules below:

ROE PERFORMANCE MATRIX


Company ROE Result (Vertical Axis)		Target Award Number Percentage
	Company ROE Maximum (__%) or more		75	%		125	%		150	%
	Company ROE Target (___%)		50	%		100	%		125	%
	Company ROE Minimum (___%) or less (but greater than zero)		25	%		50	%		75	%
	Company ROE is 0% or less		0	%		0	%		0	%

		Peer Group ROE Ranking Minimum or below			Peer Group ROE Ranking Target			Peer Group ROE Ranking Maximum or above
			Peer Group ROE Ranking (Horizontal Axis)

In determining the Target Award Number Percentage in accordance with the ROE Performance Matrix, the following rules will apply:

•

If the Company ROE Result is greater than the Company ROE Minimum and less than the Company ROE Target, the Target Award Number Percentage on the vertical axis will be determined by interpolation of the Company ROE Result between the Company ROE Minimum and the Company ROE Target.

•

If the Company ROE Result is greater than the Company ROE Target and less than the Company ROE Maximum, the Target Award Number Percentage on the vertical axis will be determined by interpolation of the Company ROE Result between the Company ROE Target and the Company ROE Maximum.

•

If the Peer Group ROE Ranking is greater than the Peer Group ROE Ranking Minimum and less than the Peer Group ROE Ranking Target, the Target Award Number Percentage on the horizontal axis will be determined by interpolation of the Peer Group ROE Ranking between the Peer Group ROE Minimum and the Peer Group ROE Target.

•

If the Peer Group ROE Ranking is greater than the Peer ROE Group Ranking Target and less than the Peer Group ROE Ranking Maximum, the Target Award Number Percentage on the horizontal axis will be determined by interpolation of the Peer Group ROE Ranking between the Peer Group ROE Target and the Peer Group ROE Maximum.

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•

After the Target Award Number Percentage on each of the vertical axis and horizontal axis has been determined, the actual Target Award Number Percentage will be determined by interpolation of the data points (i.e., the percentages) set forth in the ROE Performance Matrix.

•

In no event shall the Target Award Number Percentage be greater than 150.0%.

The Final Award Number for each Participant shall be determined by the Committee on the Determination Date. The Grant Detail of each Participant shall be amended to reflect the Final Award Number as soon as administratively feasible after the Final Award Number for such Participant is determined.

Committee Determinations

The Committee shall make all determinations necessary to arrive at the Final Award Number for each Participant. The Committee shall determine the Company ROE Result by reference to the Company’s audited financial statements as of and for the year ending on the last day of the Performance Period. The Committee shall determine the Peer Group ROE Ranking by reference to publicly available financial information regarding the Peer Companies. Any determination by the Committee pursuant to this Exhibit A will be binding upon each Participant and the Company.

No Fractional Units

In the event the Final Award Number is a number of Units that is not a whole number, then the Final Award Number shall be rounded down to the nearest whole number.

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EX-10.40

Exhibit 10.40

NOTE: This Restricted Stock Unit Award Agreement is applicable to restricted stock unit awards made to members of the Managing Committee (“Participants”) of U.S. Bancorp (the “Company”) on and after January 1, 2018. These restricted stock unit awards have the terms and conditions set forth in each Participant’s grant detail (the “Grant Detail”), which can be accessed on the Fidelity Website at www.netbenefits.com (or the website of any other stock plan administrator selected by the Company in the future).. The Grant Detail may be viewed at any time on this Website, and the Grant Detail may also be printed out. In addition to the individual terms and conditions set forth in the Grant Detail, each restricted stock unit award will have the terms and conditions set forth in the form of Restricted Stock Unit Award Agreement below. As a condition of each restricted stock unit award, Participant accepts the terms and conditions of the Restricted Stock Unit Award Agreement and the Grant Detail.

U.S. BANCORP

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS AGREEMENT, together with the Grant Detail which is incorporated herein by reference (collectively, the “Agreement”), sets forth the terms and conditions of a restricted stock unit award representing the right to receive shares of common stock of the Company, par value $0.01 per share (the “Common Stock”). The grant of this restricted stock unit award is made pursuant to the Company’s 2015 Stock Incentive Plan, which was approved by shareholders on April 21, 2015 (the “Plan”) and is subject to its terms. Capitalized terms that are not defined in the Agreement shall have the meaning ascribed to such terms in the Plan.

The Company and Participant agree as follows:

1. Award

Subject to the terms and conditions of the Plan and the Agreement, the Company grants to Participant an RSU Award entitling the Participant to the number of restricted stock units (the “Units”) set forth in Participant’s Grant Detail. Each Unit represents the right to receive one share of Common Stock, subject to the vesting requirements and distribution provisions of the Agreement and the terms of the Plan. The shares of Common Stock distributable to Participant with respect to the Units granted hereunder are referred to as the “Shares.” Participant’s Grant Detail sets forth the date of grant of this award (the “Grant Date”).

2. Vesting; Forfeiture

(a) Time-Based Vesting Conditions. Subject to the terms and conditions of the Agreement, the Units shall vest in installments on the date or dates set forth in the Participant’s Grant Detail at the time of grant (each such date, a “Scheduled Vesting Date”) and will be settled and Shares delivered in accordance with Section 3(a), if: (i) Participant remains continuously employed by the Company or an Affiliate of the Company until the applicable Scheduled Vesting Date; and (ii) Participant has at all times since the Grant Date complied with the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant. Except as otherwise provided in the Agreement, if Participant ceases to be an employee of the Company or any Affiliate prior to an applicable Scheduled Vesting Date, all Units that have not become vested previously in accordance with the Grant Detail shall be immediately and irrevocably forfeited.

(b) Continued Vesting Upon Separation From Service Due to Retirement or Disability. Notwithstanding Section 2(a), if Participant has a Separation From Service (as defined in Section 10) with the Company or any Affiliate by reason of Disability (as defined in Section 10) or Retirement (as defined in Section 10), the Units shall not be forfeited. Rather the Units shall continue to vest on the Scheduled Vesting Dates in accordance with Participant’s Grant Detail, subject to the terms of the Agreement, including Section 2(f) hereof, as though such Separation From Service had never occurred, and will be settled and Shares delivered in accordance with Section 3(c) provided that Participant has at all times since the Grant Date complied with the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant.

(c) Acceleration of Vesting upon Death. If Participant ceases to be an employee by reason of death, or if Participant dies after a Separation From Service with the Company or an Affiliate due to Disability or Retirement but prior to any Scheduled Vesting Date, and Participant has at all times since the Grant Date complied with the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant, then the Units will become vested as of the date of death and will be settled and Shares delivered in accordance with Section 3(d).

(d) Acceleration of Vesting Upon Qualifying Termination. Notwithstanding the vesting provisions contained in Sections 2(a) and 2(b) above, but subject to the other terms and conditions of the Agreement, if Participant has been continuously employed by the Company or any Affiliate until the date such Participant experiences a Qualifying Termination (as defined in Section 10) that occurs prior to a Scheduled Vesting Date, and provided that Participant has at all times since the Grant Date complied with the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant, then, immediately upon such Qualifying Termination, the Units shall become vested and will be settled and Shares delivered in accordance with Section 3(b).

3. Distribution of Shares with Respect to Units

Subject to the terms of the Agreement including the restrictions in this Section 3, following the vesting of Units and following the payment of any applicable withholding taxes pursuant to Section 7 hereof, the Company shall cause to be issued and delivered to Participant (including through book entry) Shares registered in the name of Participant or in the name of Participant’s legal representatives, beneficiaries or heirs, as the case may be, as follows:

(a) Scheduled Vesting Date Distributions. As soon as administratively feasible following each Scheduled Vesting Date (but in no event later than December 31^st of the year in which such Scheduled Vesting Date occurs), all Shares issuable pursuant to Units that become vested pursuant to Sections 2(a) (and with respect to which Shares have not been distributed previously) shall be distributed to Participant, or in the event of Participant’s death, to the representatives of Participant or to any Person to whom the Units have been transferred by will or the applicable laws of descent and distribution.

-2-

(b) Qualifying Termination Distributions. As soon as administratively feasible following a Separation From Service in connection with a Qualifying Termination (and in any case no later than 60 days following such Separation From Service except as otherwise provided in this Section 3(b)), all Shares issuable pursuant to Units that become vested as a result of such Qualifying Termination (and with respect to which Shares have not been distributed previously) shall be distributed to Participant. Notwithstanding the foregoing, any Shares issuable to a Specified Employee (as defined in Section 10) as a result of a Separation From Service in connection with a Qualifying Termination will not be delivered to such Specified Employee until the date that is six months and one day after the date of the Separation From Service.

(c) Distributions Following Retirement or Disability. If a Participant has a Separation From Service with the Company or its Affiliates due to Retirement or Disability (so long as such Separation From Service is not in connection with a Qualifying Termination), the distribution of Shares with respect to Units will not be accelerated, and Shares will be distributed as soon as administratively feasible following the applicable Scheduled Vesting Dates (but in no event later than December 31^st of the year in which such Scheduled Vesting Date occurs).

(d) Distributions Following Death. As soon as administratively feasible following the death of a Participant (but in no event later than 90 days following such death) all Shares issuable pursuant to Units that become vested pursuant to Section 2(c) (and with respect to which Shares have not been distributed previously) shall be distributed to Participant.

4. Rights as Shareholder; Dividend Equivalents

Prior to the distribution of Shares with respect to Units pursuant to Section 3 above, Participant shall not have ownership or rights of ownership of any Shares underlying the Units; provided, however, that Participant shall be entitled to receive cash Dividend Equivalents on outstanding Units (i.e. Units that have not been forfeited or settled), whether vested or unvested, if cash dividends on the Common Stock are declared by the Board on or after the Grant Date. Such Dividend Equivalents will be in an amount of cash per Unit equal to the cash dividend paid with respect to a share of outstanding Common Stock. The Dividend Equivalents shall be treated as earnings on, and as a separate amount from, the Units for purposes of Section 409A of the Code and will be paid out on the same payment dates as dividends are paid to holders of the Common Stock. Dividend Equivalents paid with respect to dividends declared before the delivery of the Shares underlying the Units will be treated as compensation income for tax purposes and will be subject to income and payroll tax withholding by the Company.

5. Restriction on Transfer

6. Securities Law Compliance

-3-

7. Income Tax Withholding

8. Miscellaneous

9. Venue

Any claim or action brought with respect to this Award shall be brought in a federal or state court located in Minneapolis, Minnesota.

10. Definitions

For purposes of the Agreement, the following terms shall have the definitions as set forth below:

(b) “Disability” means leaving active employment and qualifying for and receiving disability benefits under the Company’s long-term disability programs as in effect from time to time.

-4-

(B) Participant’s Separation From Service with the Company and its Affiliates as a result of Disability within 12 months following a Change in Control; or

(C) Participant’s Separation From Service with the Company and its Affiliates (other than as a result of Participant’s termination of employment by the Company for Cause) within 12 months following a Change in Control, if, at the time of such Separation From Service, Participant is age 55 or older and has had 10 or more years of employment with the Company or its Affiliates following such Participant’s most recent date of hire by the Company or its Affiliates.

(f) “Specified Employee” shall mean any Participant who is a specified employee for purposes of section 1.409A-1(i) of the U.S. Treasury Regulations, determined in accordance with the rules set forth in the separate document entitled “U.S. Bank Specified Employee Determination.”

-5-

EX-12

EXHIBIT 12

Computation of Ratio of Earnings to Fixed Charges


Year Ended December 31 (Dollars in Millions)	2017		2016		2015		2014		2013
Earnings
1. Net income attributable to U.S. Bancorp	$	6,218	$	5,888	$	5,879	$	5,851	$	5,836
2. Applicable income taxes, including expense related to unrecognized tax positions		1,264		2,161		2,097		2,087		2,032

3. Net income attributable to U.S. Bancorp before income taxes (1 + 2)	$	7,482	$	8,049	$	7,976	$	7,938	$	7,868

4. Fixed charges:
a. Interest expense excluding interest on deposits*	$	1,103	$	1,017	$	944	$	988	$	1,120
b. Portion of rents representative of interest and amortization of debt expense		113		109		109		112		108

c. Fixed charges excluding interest on deposits (4a + 4b)		1,216		1,126		1,053		1,100		1,228
d. Interest on deposits		1,041		622		457		465		561

e. Fixed charges including interest on deposits (4c + 4d)	$	2,257	$	1,748	$	1,510	$	1,565	$	1,789

5. Amortization of interest capitalized	$	—	$	—	$	—	$	—	$	—
6. Earnings excluding interest on deposits (3 + 4c + 5)		8,698		9,175		9,029		9,038		9,096
7. Earnings including interest on deposits (3 + 4e + 5)		9,739		9,797		9,486		9,503		9,657
8. Fixed charges excluding interest on deposits (4c)		1,216		1,126		1,053		1,100		1,228
9. Fixed charges including interest on deposits (4e)		2,257		1,748		1,510		1,565		1,789
Ratio of Earnings to Fixed Charges
10. Excluding interest on deposits (line 6/line 8)		7.15		8.15		8.57		8.22		7.41
11. Including interest on deposits (line 7/line 9)		4.32		5.60		6.28		6.07		5.40

*	Excludes interest expense related to unrecognized tax positions

Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends


Year Ended December 31 (Dollars in Millions)	2017		2016		2015		2014		2013
Earnings
1. Net income attributable to U.S. Bancorp	$	6,218	$	5,888	$	5,879	$	5,851	$	5,836
2. Applicable income taxes, including expense related to unrecognized tax positions		1,264		2,161		2,097		2,087		2,032

3. Net income attributable to U.S. Bancorp before income taxes (1 + 2)	$	7,482	$	8,049	$	7,976	$	7,938	$	7,868

4. Fixed charges:
a. Interest expense excluding interest on deposits*	$	1,103	$	1,017	$	944	$	988	$	1,120
b. Portion of rents representative of interest and amortization of debt expense		113		109		109		112		108

c. Fixed charges excluding interest on deposits (4a + 4b)		1,216		1,126		1,053		1,100		1,228
d. Interest on deposits		1,041		622		457		465		561

e. Fixed charges including interest on deposits (4c + 4d)	$	2,257	$	1,748	$	1,510	$	1,565	$	1,789

5. Amortization of interest capitalized	$	—	$	—	$	—	$	—	$	—
6. Preferred stock dividends		267		281		247		243		250
7. Earnings excluding interest on deposits (3 + 4c + 5)		8,698		9,175		9,029		9,038		9,096
8. Earnings including interest on deposits (3 + 4e + 5)		9,739		9,797		9,486		9,503		9,657
9. Fixed charges excluding interest on deposits, and preferred stock dividends (4c+6)		1,483		1,407		1,300		1,343		1,478
10. Fixed charges including interest on deposits, and preferred stock dividends (4e+6)		2,524		2,029		1,757		1,808		2,039
Ratio of Earnings to Fixed Charges and Preferred Dividends
11. Excluding interest on deposits (line 7/line 9)		5.87		6.52		6.95		6.73		6.15
12. Including interest on deposits (line 8/line 10)		3.86		4.83		5.40		5.26		4.74

*	Excludes interest expense related to unrecognized tax positions

EX-13

EXHIBIT 13

The following pages discuss in detail the financial results we achieved in 2017 — results that reflect how we’re building your trust.

Financial Table of Contents

22	Management’s Discussion and Analysis

Overview

Statement of Income Analysis

Balance Sheet Analysis

Corporate Risk Profile

Overview

Credit Risk Management

Residual Value Risk Management

Operational Risk Management

Compliance Risk Management

Interest Rate Risk Management

Market Risk Management

Liquidity Risk Management

Capital Management

Fourth Quarter Summary

Line of Business Financial Review

Non-GAAP Financial Measures

Accounting Changes

Critical Accounting Policies

Controls and Procedures

72	Reports of Management and Independent Accountants

75	Consolidated Financial Statements and Notes

140

Five-Year Consolidated Financial Statements

142

Quarterly Consolidated Financial Data

143

Supplemental Financial Data

146

Company Information

157

Executive Officers

159

Directors

The following information appears in accordance with the Private Securities Litigation Reform Act of 1995:

This report contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of U.S. Bancorp. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. A reversal or slowing of the current economic recovery or another severe contraction could adversely affect U.S. Bancorp’s revenues and the values of its assets and liabilities. Global financial markets could experience a recurrence of significant turbulence, which could reduce the availability of funding to certain financial institutions and lead to a tightening of credit, a reduction of business activity, and increased market volatility. Stress in the commercial real estate markets, as well as a downturn in the residential real estate markets could cause credit losses and deterioration in asset values. In addition, changes to statutes, regulations, or regulatory policies or practices could affect U.S. Bancorp in substantial and unpredictable ways. U.S. Bancorp’s results could also be adversely affected by deterioration in general business and economic conditions; changes in interest rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of securities held in its investment securities portfolio; legal and regulatory developments; litigation; increased competition from both banks and non-banks; changes in customer behavior and preferences; breaches in data security; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputational risk.

Additional factors could cause actual results to differ from expectations, including the risks discussed in the “Corporate Risk Profile” section on pages 38–60 and the “Risk Factors” section on pages 146–156 of this report. However, factors other than these also could adversely affect U.S. Bancorp’s results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. Forward- looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.

Management’s Discussion and Analysis

Overview

U.S. Bancorp and its subsidiaries (the “Company”) delivered record financial performance in 2017. In a year where the economy expanded at a moderate rate and the labor market continued to strengthen, the Company had record net revenue, net income and diluted earnings per share, while investing in technology and innovation to drive growth and improve efficiencies in the future.

The Company earned $6.2 billion in 2017, an increase of 5.6 percent over 2016, principally due to total net revenue growth. Net interest income increased as a result of the impact of rising interest rates and loan growth, while noninterest income increased due to higher payment services revenue, trust and investment management fees and treasury management fees. The Company’s return on average assets and return on average common equity were 1.39 percent and 13.8 percent, respectively.

The Company remains deeply committed to value creation for shareholders, and during the third quarter of 2017, increased its dividend rate per common share by 7.1 percent. Overall, the Company returned 77 percent of its earnings to common shareholders through dividends and common share repurchases. This result was accomplished by generating steady growth in commercial and consumer lending and total deposits, by building momentum in its core business, particularly within Wealth Management and Investment Services and Payment Services, and by maintaining a very strong capital base.

The Company’s common equity tier 1 to risk-weighted assets ratio using the Basel III standardized approach and Basel III advanced approaches, as if fully implemented, were 9.1 percent and 11.6 percent, respectively, at December 31, 2017 — each above the Company’s targeted ratio of 8.5 percent and well above the minimum ratio of 7.0 percent required when fully implemented. In addition, refer to Table 23 for a summary of the statutory capital ratios in effect for the Company at December 31, 2017 and 2016. Further, credit rating organizations rate the Company’s debt among the highest of any bank in the world. This comparative financial strength provides the Company with favorable funding costs, strong liquidity and the ability to attract new customers.

In 2017, average loans and deposits increased $8.7 billion (3.3 percent) and $20.7 billion (6.6 percent), respectively, over

2016, reflecting growth from new and existing customers. Loan growth included increases in commercial loans, residential mortgages, credit card loans and other retail loans. These increases were partially offset by a decline in commercial real estate loans, due to disciplined underwriting and customers paying down balances, and loans covered by loss sharing agreements with the Federal Deposit Insurance Corporation (“FDIC”) (“covered” loans), which is a run-off portfolio. Deposit growth included increases in noninterest-bearing, total savings and time deposits.

The Company’s provision for credit losses increased $66 million (5.0 percent) in 2017, compared with 2016. Net charge-offs increased $61 million (4.8 percent) in 2017, compared with 2016, primarily due to higher credit card and other retail loan net charge-offs, partially offset by lower net charge-offs related to residential mortgages and commercial loan recoveries. The provision for credit losses was $60 million higher than net charge-offs in 2017, compared with $55 million higher than net charge-offs in 2016. The increase in the allowance for credit losses during 2017 reflected loan portfolio growth, along with the maturing of vintages within the credit card portfolio and exposures related to 2017 weather events, partially offset by improvements in the energy and residential mortgage portfolios.

The Company’s strong revenue base and financial discipline position it well for growth in 2018. The Company generated record revenue in 2017 and is operating from a position of strength as it enters 2018. The Company experienced total loan growth, deposit growth, net interest income growth, and noninterest income growth in 2017. In addition, its capital position remained strong. The economic environment is favorable and tax reform legislation enacted in late 2017 has provided the Company an opportunity to accelerate investment in its businesses, employees and communities, while at the same time enhancing shareholder value. With the ongoing benefit provided by a lower corporate tax rate, the Company plans to increase its investments in technology and innovation, with a focus on enhancing the customer experience and improving operational efficiency that drives long-term growth and creates value for shareholders.

TABLE 1

Selected Financial Data


Year Ended December 31 (Dollars and Shares in Millions, Except Per Share Data)	2017			2016			2015			2014			2013
Condensed Income Statement
Net interest income	$	12,241		$	11,528		$	11,001		$	10,775		$	10,604
Taxable-equivalent adjustment^(a)		205			203			213			222			224

Net interest income (taxable-equivalent basis)^(b)		12,446			11,731			11,214			10,997			10,828
Noninterest income		9,554			9,555			9,092			9,161			8,765
Securities gains (losses), net		57			22			–			3			9

Total net revenue		22,057			21,308			20,306			20,161			19,602
Noninterest expense		12,945			11,676			10,931			10,715			10,274
Provision for credit losses		1,390			1,324			1,132			1,229			1,340

Income before taxes		7,722			8,308			8,243			8,217			7,988
Income taxes and taxable-equivalent adjustment		1,469			2,364			2,310			2,309			2,256

Net income		6,253			5,944			5,933			5,908			5,732
Net (income) loss attributable to noncontrolling interests		(35	)		(56	)		(54	)		(57	)		104

Net income attributable to U.S. Bancorp	$	6,218		$	5,888		$	5,879		$	5,851		$	5,836

Net income applicable to U.S. Bancorp common shareholders	$	5,913		$	5,589		$	5,608		$	5,583		$	5,552

Per Common Share
Earnings per share	$	3.53		$	3.25		$	3.18		$	3.10		$	3.02
Diluted earnings per share		3.51			3.24			3.16			3.08			3.00
Dividends declared per share		1.160			1.070			1.010			.965			.885
Book value per share^(c)		26.34			24.63			23.28			21.68			19.92
Market value per share		53.58			51.37			42.67			44.95			40.40
Average common shares outstanding		1,677			1,718			1,764			1,803			1,839
Average diluted common shares outstanding		1,683			1,724			1,772			1,813			1,849
Financial Ratios
Return on average assets		1.39	%		1.36	%		1.44	%		1.54	%		1.65	%
Return on average common equity		13.8			13.4			14.0			14.7			15.8
Net interest margin (taxable-equivalent basis)^(a)		3.06			3.01			3.05			3.23			3.44
Efficiency ratio^(b)		58.8			54.9			53.8			53.2			52.4
Net charge-offs as a percent of average loans outstanding		.48			.47			.47			.55			.64
Average Balances
Loans	$	276,537		$	267,811		$	250,459		$	241,692		$	227,474
Loans held for sale		3,574			4,181			5,784			3,148			5,723
Investment securities^(d)		111,820			107,922			103,161			90,327			75,046
Earning assets		406,421			389,877			367,445			340,994			315,139
Assets		448,582			433,313			408,865			380,004			352,680
Noninterest-bearing deposits		81,933			81,176			79,203			73,455			69,020
Deposits		333,514			312,810			287,151			266,640			250,457
Short-term borrowings		15,022			19,906			27,960			30,252			27,683
Long-term debt		35,601			36,220			33,566			26,535			21,280
Total U.S. Bancorp shareholders’ equity		48,466			47,339			44,813			42,837			39,917
Period End Balances
Loans	$	280,432		$	273,207		$	260,849		$	247,851		$	235,235
Investment securities		112,499			109,275			105,587			101,043			79,855
Assets		462,040			445,964			421,853			402,529			364,021
Deposits		347,215			334,590			300,400			282,733			262,123
Long-term debt		32,259			33,323			32,078			32,260			20,049
Total U.S. Bancorp shareholders’ equity		49,040			47,298			46,131			43,479			41,113
Asset Quality
Nonperforming assets	$	1,200		$	1,603		$	1,523		$	1,808		$	2,037
Allowance for credit losses		4,417			4,357			4,306			4,375			4,537
Allowance for credit losses as a percentage of period-end loans		1.58	%		1.59	%		1.65	%		1.77	%		1.93	%
Capital Ratios
Common equity tier 1 capital^(e)		9.3	%		9.4	%		9.6	%		9.7	%		9.4	%^(b)
Tier 1 capital^(e)		10.8			11.0			11.3			11.3			11.2
Total risk-based capital^(e)		12.9			13.2			13.3			13.6			13.2
Leverage^(e)		8.9			9.0			9.5			9.3			9.6
Common equity tier 1 capital to risk-weighted assets for the Basel III transitional advanced approaches		12.0			12.2			12.5			12.4
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach^(b)		9.1			9.1			9.1			9.0			8.8
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced approaches^(b)		11.6			11.7			11.9			11.8
Tangible common equity to tangible assets^(b)		7.6			7.5			7.6			7.5			7.7
Tangible common equity to risk-weighted assets^(b)		9.4			9.2			9.2			9.3			9.1

(a)

Utilizes a tax rate of 35 percent, for the periods presented, for those assets and liabilities whose income or expense is not included for federal income tax purposes.

(b)

See Non-GAAP Financial Measures beginning on page 66.

(c)

Calculated as U.S. Bancorp common shareholders’ equity divided by common shares outstanding at end of the period.

(d)

Excludes unrealized gains and losses on available-for-sale investment securities and any premiums or discounts recorded related to the transfer of investment securities at fair value from available-for-sale to held-to-maturity.

(e)

December 31, 2017, 2016, 2015 and 2014, calculated under the Basel III transitional standardized approach; December 31, 2013 calculated under Basel I.

Earnings Summary The Company reported net income attributable to U.S. Bancorp of $6.2 billion in 2017, or $3.51 per diluted common share, compared with $5.9 billion, or $3.24 per diluted common share, in 2016. Return on average assets and return on average common equity were 1.39 percent and 13.8 percent, respectively, in 2017, compared with 1.36 percent and 13.4 percent, respectively, in 2016. The results for 2017 included a benefit of $910 million related to the estimated impact of the Tax Cuts and Job Act (“tax reform”) enacted by Congress in late 2017 on the Company’s tax related assets and liabilities, partially offset by a $608 million increase in reserves for regulatory and legal matters, as well as $152 million, net of tax, of expenses related to a charitable contribution to the U.S. Bank Foundation and a special bonus awarded to certain eligible employees. Combined, these notable items increased 2017 diluted earnings per common share by $0.09.

Total net revenue for 2017 was $749 million (3.5 percent) higher than 2016, reflecting a 6.2 percent increase in net interest income (6.1 percent on a taxable-equivalent basis), and a 0.4 percent increase in noninterest income. The increase in net interest income from the prior year was mainly a result of the impact of rising interest rates and loan growth. The increase in noninterest income was primarily driven by higher payment services revenue, trust and investment management fees, and treasury management fees, partially offset by lower mortgage banking revenue and lower equity investment income.

Noninterest expense in 2017 was $1.3 billion (10.9 percent) higher than 2016, reflecting business growth, incremental costs related to compliance programs, investments in the business and the 2017 charitable contribution, special bonus and increase in reserves for regulatory and legal matters. Compensation expense increased primarily due to the impact of hiring to support business growth and compliance programs, merit increases, higher variable compensation and the 2017 special bonus awarded to eligible employees. Marketing expense increased due to higher charitable contributions, while other expense was higher due to an increase in reserves related to regulatory and legal matters, as well as the impact of an FDIC insurance surcharge which began in late 2016.

Statement of Income Analysis

Net Interest Income Net interest income, on a taxable-equivalent basis, was $12.4 billion in 2017, compared with $11.7 billion in 2016 and $11.2 billion in 2015. The $715 million (6.1 percent) increase in net interest income, on a taxable-equivalent basis, in 2017 compared with 2016, was principally driven by the impact of rising interest rates and loan growth. Average earning assets were $16.5 billion (4.2 percent) higher in 2017, compared with 2016, driven by increases in loans, other earning assets and investment securities. The net interest margin, on a taxable-equivalent basis, in 2017 was 3.06 percent, compared with 3.01 percent in 2016 and 3.05 percent in 2015. The increase in the net interest margin in 2017, compared with 2016, was principally due to higher interest rates and changes in the loan portfolio mix, partially offset by rising funding costs and higher cash balances. Refer to the “Interest Rate Risk Management” section for further information on the sensitivity of the Company’s net interest income to changes in interest rates.

Average total loans were $276.5 billion in 2017, compared with $267.8 billion in 2016. The $8.7 billion (3.3 percent) increase was driven by growth in commercial loans, residential mortgages, credit card loans and other retail loans, partially offset by decreases in commercial real estate and covered loans. Average commercial loans increased $3.9 billion (4.2 percent) driven by higher demand for loans from new and existing customers. The $3.1 billion (5.6 percent) increase in residential mortgages reflected origination activity. Average credit card balances increased $416 million (2.0 percent) due to customer growth. The $3.1 billion (5.9 percent) increase in average other retail loans was primarily due to higher auto, installment and retail leasing loans, partially offset by decreases in home equity loans and continued runoff of student loan balances. Average commercial real estate loans decreased $963 million (2.2 percent) in 2017, compared with 2016, primarily the result of disciplined underwriting of construction and development loans, and customers paying down balances by accessing the capital markets. Average covered loans decreased $776 million (18.4 percent), the result of portfolio run-off.

TABLE 2

Analysis of Net Interest Income^(a)


Year Ended December 31 (Dollars in Millions)	2017			2016			2015			2017 v 2016			2016 v 2015
Components of Net Interest Income
Income on earning assets (taxable-equivalent basis)	$	14,598		$	13,375		$	12,619		$	1,223		$	756
Expense on interest-bearing liabilities (taxable-equivalent basis)		2,152			1,644			1,405			508			239
Net interest income (taxable-equivalent basis)^(b)	$	12,446		$	11,731		$	11,214		$	715		$	517
Net interest income, as reported	$	12,241		$	11,528		$	11,001		$	713		$	527
Average Yields and Rates Paid
Earning assets yield (taxable-equivalent basis)		3.59	%		3.43	%		3.43	%		.16	%		–	%
Rate paid on interest-bearing liabilities (taxable-equivalent basis)		.71			.57			.52			.14			.05
Gross interest margin (taxable-equivalent basis)		2.88	%		2.86	%		2.91	%		.02	%		(.05	)%
Net interest margin (taxable-equivalent basis)		3.06	%		3.01	%		3.05	%		.05	%		(.04	)%
Average Balances
Investment securities^(c)	$	111,820		$	107,922		$	103,161		$	3,898		$	4,761
Loans		276,537			267,811			250,459			8,726			17,352
Earning assets		406,421			389,877			367,445			16,544			22,432
Interest-bearing liabilities		302,204			287,760			269,474			14,444			18,286

(a)

Interest and rates are presented on a fully taxable-equivalent basis utilizing a tax rate of 35 percent for the periods presented.

(b)

See Non-GAAP Financial Measures beginning on page 66.

(c)

Average investment securities in 2017 were $3.9 billion (3.6 percent) higher than 2016, primarily due to purchases of U.S. Treasury and U.S. government mortgage-backed securities, net of prepayments and maturities, in support of liquidity management requirements.

Average total deposits for 2017 were $20.7 billion (6.6 percent) higher than 2016. Average noninterest-bearing deposits for 2017 were $757 million (0.9 percent) higher than the prior year, reflecting increases in Wealth Management and Investment Services, and Consumer and Business Banking balances, offset by a decrease in Corporate and Commercial Banking balances. Average total savings deposits for 2017 were $19.2 billion (9.7 percent) higher than 2016, a result of growth across all business lines. Average time deposits for 2017 were $751 million (2.3 percent) higher than 2016. Changes in time deposits are largely related to those deposits managed as an alternative to other funding sources such as wholesale borrowing, based largely on relative pricing and liquidity characteristics.

The $517 million (4.6 percent) increase in net interest income, on a taxable-equivalent basis, in 2016 compared with 2015, was principally driven by loan growth partially offset by a lower net interest margin. Average earning assets were $22.4 billion (6.1 percent) higher in 2016, compared with 2015, driven by increases in loans and in investment securities. The decrease in the net interest margin was principally due to lower yields on purchased securities, lower reinvestment rates on maturing securities and maintaining higher cash balances.

Average total loans increased $17.3 billion (6.9 percent) in 2016, compared with 2015, driven by growth in commercial, commercial real estate, residential mortgage, credit card and other retail loans, partially offset by a decrease in covered loans. Average commercial and commercial real estate loans increased $8.0 billion (9.5 percent) and $625 million (1.5 percent), respectively, driven by higher demand for loans from new and existing customers. The $3.8 billion (7.4 percent) increase in residential mortgages reflected higher origination activity, including strong refinancing activities, in 2016 compared with 2015. Average credit card balances increased $2.4 billion (13.5 percent) in 2016, compared with 2015, due to customer growth, including a portfolio acquisition in late 2015 which increased average 2016 credit card balances by $1.6 billion. The $3.3 billion (6.6 percent) increase in average other retail loans was primarily due to higher auto and installment loans, student loans, and home equity and second mortgage loan balances. Average covered loans decreased $759 million (15.2 percent) in 2016, compared with 2015, the result of portfolio run-off.

Average investment securities in 2016 were $4.8 billion (4.6 percent) higher than 2015, primarily due to purchases of U.S. Treasury and U.S. government mortgage-backed securities, net of prepayments and maturities, in support of liquidity management.

TABLE 3

Net Interest Income — Changes Due to Rate and Volume^(a)


	2017 v 2016									2016 v 2015
Year Ended December 31 (Dollars in Millions)	Volume			Yield/Rate			Total			Volume			Yield/Rate			Total
Increase (decrease) in

Interest Income
Investment securities	$	79		$	68		$	147		$	98		$	(37	)	$	61
Loans held for sale		(22	)		12			(10	)		(57	)		5			(52	)
Loans
Commercial		109			426			535			216			99			315
Commercial real estate		(38	)		128			90			24			24			48
Residential mortgages		115			(5	)		110			146			(42	)		104
Credit card		45			115			160			265			3			268
Other retail		125			33			158			134			(40	)		94
Total loans, excluding covered loans		356			697			1,053			785			44			829
Covered loans		(37	)		12			(25	)		(41	)		(30	)		(71	)
Total loans		319			709			1,028			744			14			758
Other earning assets		57			1			58			32			(43	)		(11	)
Total earning assets		433			790			1,223			817			(61	)		756

Interest Expense
Interest-bearing deposits
Interest checking		4			38			42			3			9			12
Money market savings		36			259			295			41			116			157
Savings accounts		3			(5	)		(2	)		4			(10	)		(6	)
Time deposits		5			79			84			(14	)		16			2
Total interest-bearing deposits		48			371			419			34			131			165
Short-term borrowings		(65	)		124			59			(72	)		91			19
Long-term debt		(13	)		43			30			55			–			55
Total interest-bearing liabilities		(30	)		538			508			17			222			239
Increase (decrease) in net interest income	$	463		$	252		$	715		$	800		$	(283	)	$	517

(a)

This table shows the components of the change in net interest income by volume and rate on a taxable-equivalent basis utilizing a tax rate of 35 percent for the periods presented. This table does not take into account the level of noninterest-bearing funding, nor does it fully reflect changes in the mix of assets and liabilities. The change in interest not solely due to changes in volume or rates has been allocated on a pro-rata basis to volume and yield/rate.

Average total deposits for 2016 were $25.7 billion (8.9 percent) higher than 2015. Average noninterest-bearing deposits for 2016 were $2.0 billion (2.5 percent) higher than the prior year, mainly in Consumer and Business Banking and Corporate and Commercial Banking. Average total savings deposits for 2016 were $26.2 billion (15.2 percent) higher than 2015, reflecting growth in Corporate and Commercial Banking, Consumer and Business Banking, and Wealth Management and Investment Services balances. Average time deposits which are managed based largely on relative pricing and liquidity characteristics, decreased $2.6 billion (7.2 percent) in 2016, compared with 2015.

Provision for Credit Losses The provision for credit losses reflects changes in the size and credit quality of the entire portfolio of loans. The Company maintains an allowance for credit losses considered appropriate by management for probable and estimable incurred losses, based on factors discussed in the “Analysis and Determination of Allowance for Credit Losses” section.

In 2017, the provision for credit losses was $1.4 billion, compared with $1.3 billion and $1.1 billion in 2016 and 2015, respectively. The provision for credit losses was higher than net charge-offs by $60 million in 2017, higher than net charge-offs by $55 million in 2016 and lower than net charge-offs by $40 million in 2015. The increase in the allowance for credit losses during 2017 reflected loan portfolio growth, the maturity of vintages within the credit card portfolio and exposures related to 2017 weather events, partially offset by improvements in the energy and residential mortgage portfolios. Nonperforming assets decreased $403 million (25.1 percent) from December 31, 2016 to December 31, 2017, primarily driven by improvements in commercial loans, residential mortgages and other real estate owned (“OREO”), partially offset by an increase in nonperforming commercial real estate loans. Net charge-offs increased $61 million (4.8 percent) in 2017 from 2016 primarily due to higher credit card and other retail loan net charge-offs, partially offset by lower net charge-offs related to residential mortgages and commercial loan recoveries.

The increase in the allowance for credit losses during 2016 was driven by loan portfolio growth and stress in the energy portfolio, partially offset by improvements in residential mortgage and home equity loans and lines. Nonperforming assets increased $80 million (5.3 percent) from December 31, 2015 to December 31, 2016, primarily driven by an increase in nonperforming commercial loans within the energy portfolio, partially offset by improvements in the Company’s residential portfolio due to improving economic conditions. Net charge-offs increased $97 million (8.3 percent) in 2016 from 2015 primarily due to higher commercial loan net charge-offs and lower commercial real estate loan recoveries, partially offset by lower charge-offs related to residential mortgages and home equity loans.

Refer to “Corporate Risk Profile” for further information on the provision for credit losses, net charge-offs, nonperforming assets and other factors considered by the Company in assessing the credit quality of the loan portfolio and establishing the allowance for credit losses.

Noninterest Income Noninterest income in 2017 was $9.6 billion, compared with $9.6 billion in 2016 and $9.1 billion in 2015. The $34 million (0.4 percent) increase in 2017 over 2016 was primarily due to increases in payment services revenue, trust and investment management fees, and treasury management fees, as well as higher gains on sales of investment securities, partially offset by decreases in mortgage banking revenue and other noninterest income. Payment services revenue was higher in 2017, compared with 2016, due to a 6.4 percent increase in credit and debit card revenue and a 5.8 percent increase in corporate payment products revenue, both driven by higher sales volumes. Trust and investment management fees were 6.7 percent higher due to favorable market conditions, and net asset and account growth, while treasury management fees increased 6.0 percent due to higher transaction volume. Mortgage banking revenue decreased 14.8 percent in 2017, compared with 2016, primarily due to lower origination and sales volumes from home refinancing activities which were higher in the prior year, and lower margins on mortgage loan sales. Other revenue was 13.4 percent lower in 2017 compared with 2016, primarily due to lower equity investment income, which was higher in 2016 due to the sale of the Company’s membership in Visa Europe Limited (“Visa Europe”) to Visa Inc. during that year.

TABLE 4

Noninterest Income


Year Ended December 31 (Dollars in Millions)	2017		2016		2015		2017 v 2016			2016 v 2015
Credit and debit card revenue	$	1,252	$	1,177	$	1,070		6.4	%		10.0	%
Corporate payment products revenue		753		712		708		5.8			.6
Merchant processing services		1,590		1,592		1,547		(.1	)		2.9
ATM processing services		362		338		318		7.1			6.3
Trust and investment management fees		1,522		1,427		1,321		6.7			8.0
Deposit service charges		751		725		702		3.6			3.3
Treasury management fees		618		583		561		6.0			3.9
Commercial products revenue		849		871		867		(2.5	)		.5
Mortgage banking revenue		834		979		906		(14.8	)		8.1
Investment products fees		163		158		185		3.2			(14.6	)
Securities gains (losses), net		57		22		–		*			*
Other		860		993		907		(13.4	)		9.5
Total noninterest income	$	9,611	$	9,577	$	9,092		.4	%		5.3	%

*	Not meaningful.

The $485 million (5.3 percent) increase in 2016 over 2015 was primarily due to higher payment services revenue, trust and investment management fees, and mortgage banking revenue, as well as the impact of the Visa Europe sale. Credit and debit card revenue increased 10.0 percent in 2016 compared with 2015, reflecting higher transaction volumes including the impact of acquired portfolios. Merchant processing services revenue was 2.9 percent higher as a result of an increase in product fees and higher transaction volumes. Trust and investment management fees increased 8.0 percent in 2016, compared with 2015, reflecting lower money market fee waivers, along with account growth, an increase in assets under management and improved market conditions. Mortgage banking revenue increased 8.1 percent in 2016 over 2015, driven by higher origination and sales volumes. In addition, other revenue was 9.5 percent higher in 2016 compared with 2015, reflecting the 2016 Visa Europe sale and the impact of a 2015 student loan market valuation adjustment, partially offset by lower equity investment income and a 2015 gain recorded on the sale of a deposit portfolio.

Noninterest Expense Noninterest expense in 2017 was $12.9 billion, compared with $11.7 billion in 2016 and $10.9 billion in 2015. The Company’s efficiency ratio was 58.8 percent in 2017, compared with 54.9 percent in 2016 and 53.8 percent in 2015. The $1.3 billion (10.9 percent) increase in noninterest expense in 2017 over 2016 was primarily due to higher compensation expense, marketing and business development expense and other expense, partially offset by lower professional services expense. Compensation expense increased 10.2 percent in 2017 over 2016, principally due to the impact of hiring to support business growth and compliance programs, merit increases, higher variable compensation related to business production and the 2017 special bonus awarded to eligible employees. Employee benefits expense was 6.0 percent higher primarily driven by increased medical costs. Marketing and business development expense was higher 24.6 percent, primarily due to an increase in charitable contributions to the U.S.

Bank Foundation. Other expense increased 29.5 percent in 2017, compared with 2016, primarily due to the impact of the increase in reserves related to legal and regulatory matters recorded during 2017 and the FDIC insurance surcharge which began in late 2016. During 2017, the Company recorded a $608 million accrual for regulatory and legal matters related to Bank Secrecy Act/anti-money laundering compliance program adequacy and investigations by the United States Attorney’s Office in Manhattan into that program and U.S. Bank National Association’s legacy relationship with a payday lending business associated with a former customer. Offsetting these increases was a decrease in professional services expense of 16.5 percent, primarily due to fewer consulting services as compliance programs near maturity.

The $745 million (6.8 percent) increase in noninterest expense in 2016 over 2015 was primarily due to higher compensation costs, professional services, marketing and business development, technology and communications, and other noninterest expenses, partially offset by lower employee benefits expense. Compensation expense increased 8.3 percent in 2016 over 2015, principally due to the impact of hiring to support business growth and compliance programs, merit increases, and higher variable compensation. Professional services expense increased 18.7 percent primarily due to compliance programs and implementation costs of capital investments to support business growth. Marketing and business development expense increased 20.5 percent in 2016 over 2015, resulting from the support of new business development and an increase in charitable contributions to the U.S. Bank Foundation. Technology and communications expense increased 7.7 percent primarily due to capital investments and costs related to acquired portfolios. Further, other noninterest expense increased 8.6 percent in 2016 over 2015, reflecting the impact of the FDIC surcharge, which began in late 2016, and higher accruals related to regulatory and legal matters. Offsetting these increases was a 4.1 percent decrease in employee benefits expense mainly due to lower pension costs.

TABLE 5

Noninterest Expense


Year Ended December 31 (Dollars in Millions)	2017			2016			2015			2017 v 2016			2016 v 2015
Compensation	$	5,746		$	5,212		$	4,812			10.2	%		8.3	%
Employee benefits		1,186			1,119			1,167			6.0			(4.1	)
Net occupancy and equipment		1,019			988			991			3.1			(.3	)
Professional services		419			502			423			(16.5	)		18.7
Marketing and business development		542			435			361			24.6			20.5
Technology and communications		977			955			887			2.3			7.7
Postage, printing and supplies		323			311			297			3.9			4.7
Other intangibles		175			179			174			(2.2	)		2.9
Other		2,558			1,975			1,819			29.5			8.6
Total noninterest expense	$	12,945		$	11,676		$	10,931			10.9	%		6.8	%
Efficiency ratio^(a)		58.8	%		54.9	%		53.8	%

(a)

See Non-GAAP Financial Measures beginning on page 66.

Pension Plans Because of the long-term nature of pension plans, the related accounting is complex and can be impacted by several factors, including investment funding policies, accounting methods and actuarial assumptions.

The Company’s pension accounting reflects the long-term nature of the benefit obligations and the investment horizon of plan assets. Amounts recorded in the financial statements reflect actuarial assumptions about participant benefits and plan asset returns. Changes in actuarial assumptions and differences in actual plan experience, compared with actuarial assumptions, are deferred and recognized in expense in future periods. Differences related to participant benefits are recognized in expense over the future service period of the employees. Differences related to the expected return on plan assets are included in expense over a period of approximately 15 years.

Pension expense is expected to decrease by $57 million in 2018 primarily due to expected earnings on higher plan assets due to Company contributions in 2017, partially offset by a lower discount rate. Because of the complexity of forecasting pension plan activities, the accounting methods utilized for pension plans, the Company’s ability to respond to factors affecting the plans and the hypothetical nature of actuarial assumptions, the actual pension expense decrease may differ from the expected amount. Additionally, as a result of new pension accounting guidance effective January 1, 2018, non-service cost components will be reclassified to other noninterest expense. The combination of the decreased pension expense and the adoption of the new standard will result in an increase in 2018 employee benefits expense of $13 million and a decrease in other noninterest expense of $70 million, compared with 2017.

Refer to Note 16 of the Notes to the Consolidated Financial Statements for further information on the Company’s pension plan funding practices, investment policies and asset allocation strategies, and accounting policies for pension plans.

The following table shows an analysis of hypothetical changes in the discount rate and long-term rate of return (“LTROR”):


Discount Rate (Dollars in Millions)	Down 100 Basis Points			Up 100 Basis Points
Incremental benefit (expense)	$	(112	)	$	98
Percent of 2017 net income		(1.35	)%		1.18	%
LTROR (Dollars in Millions)	Down 100 Basis Points			Up 100 Basis Points
Incremental benefit (expense)	$	(52	)	$	52
Percent of 2017 net income		(.62	)%		.62	%

Income Tax Expense In late 2017, tax reform legislation was enacted that, among other provisions, reduced the federal statutory rate for corporations from 35 percent to 21 percent effective in 2018. In accordance with generally accepted accounting principles (“GAAP”), the Company revalued its deferred tax assets and liabilities at December 31, 2017, resulting in an estimated net tax benefit of $910 million, which the Company recorded in 2017. The 2017 provision for income taxes, reflecting this benefit, was $1.3 billion (an effective rate of 16.8 percent), compared with a provision for income taxes of

$2.2 billion (an effective rate of 26.7 percent) in 2016 and $2.1 billion (an effective rate of 26.1 percent) in 2015.

For further information on income taxes, refer to Note 18 of the Notes to Consolidated Financial Statements.

Balance Sheet Analysis

Average earning assets were $406.4 billion in 2017, compared with $389.9 billion in 2016. The increase in average earning assets of $16.5 billion (4.2 percent) was primarily due to increases in loans of $8.7 billion (3.3 percent), other earning assets of $4.5 billion (45.4 percent) and investment securities of $3.9 billion (3.6 percent).

For average balance information, refer to Consolidated Daily Average Balance Sheet and Related Yields and Rates on pages 144 and 145.

Loans The Company’s loan portfolio was $280.4 billion at December 31, 2017, compared with $273.2 billion at December 31, 2016, an increase of $7.2 billion (2.6 percent). The increase was driven by increases in commercial loans of $4.2 billion (4.5 percent), other retail loans of $3.5 billion (6.4 percent), residential mortgages of $2.5 billion (4.4 percent) and credit card loans of $431 million (2.0 percent), partially offset by a decrease in commercial real estate loans of $2.6 billion (6.1 percent) and covered loans of $715 million (18.6 percent). Table 6 provides a summary of the loan distribution by product type, while Table 12 provides a summary of the selected loan maturity distribution by loan category. Average total loans increased $8.7 billion (3.3 percent) in 2017, compared with 2016. The increase was due to growth in most loan portfolio classes in 2017.

Commercial Commercial loans, including lease financing, increased $4.2 billion (4.5 percent) at December 31, 2017, compared with December 31, 2016. Average commercial loans increased $3.9 billion (4.2 percent) in 2017, compared with 2016. The growth was primarily driven by higher demand from new and existing customers. Table 7 provides a summary of commercial loans by industry and geographical locations.

Commercial Real Estate The Company’s portfolio of commercial real estate loans, which includes commercial mortgages and construction and development loans, decreased $2.6 billion (6.1 percent) at December 31, 2017, compared with December 31, 2016, primarily the result of disciplined underwriting of construction and development loans and customers paying down balances by accessing the capital markets for funding. Average commercial real estate loans decreased $963 million (2.2 percent) in 2017, compared with 2016. Table 8 provides a summary of commercial real estate loans by property type and geographical location.

The Company reclassifies construction loans to the commercial mortgage category if permanent financing is provided by the Company. In 2017, approximately $521 million of construction loans were reclassified to the commercial mortgage category. At December 31, 2017 and 2016, $161 million and

TABLE 6

Loan Portfolio Distribution


	2017					2016					2015					2014					2013
At December 31 (Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total			Amount		Percent of Total			Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	91,958		32.8	%	$	87,928		32.2	%	$	83,116		31.9	%	$	74,996		30.2	%	$	64,762		27.5	%
Lease financing		5,603		2.0			5,458		2.0			5,286		2.0			5,381		2.2			5,271		2.3
Total commercial		97,561		34.8			93,386		34.2			88,402		33.9			80,377		32.4			70,033		29.8

Commercial Real Estate
Commercial mortgages		29,367		10.5			31,592		11.6			31,773		12.2			33,360		13.5			32,183		13.7
Construction and development		11,096		4.0			11,506		4.2			10,364		3.9			9,435		3.8			7,702		3.3
Total commercial real estate		40,463		14.5			43,098		15.8			42,137		16.1			42,795		17.3			39,885		17.0

Residential Mortgages
Residential mortgages		46,685		16.6			43,632		16.0			40,425		15.5			38,598		15.6			37,545		15.9
Home equity loans, first liens		13,098		4.7			13,642		5.0			13,071		5.0			13,021		5.2			13,611		5.8
Total residential mortgages		59,783		21.3			57,274		21.0			53,496		20.5			51,619		20.8			51,156		21.7
Credit Card		22,180		7.9			21,749		7.9			21,012		8.1			18,515		7.5			18,021		7.7

Other Retail
Retail leasing		7,988		2.8			6,316		2.3			5,232		2.0			5,871		2.4			5,929		2.5
Home equity and second mortgages		16,327		5.8			16,369		6.0			16,384		6.3			15,916		6.4			15,442		6.6
Revolving credit		3,183		1.1			3,282		1.2			3,354		1.3			3,309		1.3			3,276		1.4
Installment		8,989		3.2			8,087		3.0			7,030		2.7			6,242		2.5			5,709		2.4
Automobile		18,934		6.8			17,571		6.4			16,587		6.3			14,822		6.0			13,743		5.8
Student		1,903		.7			2,239		.8			2,619		1.0			3,104		1.3			3,579		1.5
Total other retail		57,324		20.4			53,864		19.7			51,206		19.6			49,264		19.9			47,678		20.2
Total loans, excluding covered loans		277,311		98.9			269,371		98.6			256,253		98.2			242,570		97.9			226,773		96.4
Covered Loans		3,121		1.1			3,836		1.4			4,596		1.8			5,281		2.1			8,462		3.6
Total loans	$	280,432		100.0	%	$	273,207		100.0	%	$	260,849		100.0	%	$	247,851		100.0	%	$	235,235		100.0	%

$146 million, respectively, of tax-exempt industrial development loans were secured by real estate. The Company’s commercial mortgage and construction and development loans had unfunded commitments of $10.1 billion and $10.7 billion at December 31, 2017 and 2016, respectively.

The Company also finances the operations of real estate developers and other entities with operations related to real

estate. These loans are not secured directly by real estate but are subject to terms and conditions similar to commercial loans. These loans were included in the commercial loan category and totaled $7.0 billion and $6.4 billion at December 31, 2017 and 2016, respectively.

TABLE 7

Commercial Loans by Industry Group and Geography


	2017					2016
At December 31 (Dollars in Millions)	Loans		Percent			Loans		Percent
Industry Group
Manufacturing	$	14,710		15.1	%	$	13,779		14.8	%
Real estate, rental and leasing		12,461		12.8			10,553		11.3
Retail trade		8,952		9.2			7,573		8.1
Finance and insurance		8,639		8.8			8,728		9.3
Wholesale trade		7,383		7.6			7,552		8.1
Healthcare and social assistance		6,517		6.7			6,345		6.8
Public administration		5,116		5.2			4,546		4.9
Arts, entertainment and recreation		3,853		3.9			3,340		3.6
Professional, scientific and technical services		3,499		3.6			3,744		4.0
Educational services		3,414		3.5			3,167		3.4
Information		3,403		3.5			3,597		3.8
Transport and storage		3,198		3.3			3,561		3.8
Utilities		1,933		2.0			1,747		1.9
Other services		1,698		1.7			1,625		1.7
Mining		1,590		1.6			1,645		1.8
Agriculture, forestry, fishing and hunting		1,429		1.5			1,449		1.5
Other		9,766		10.0			10,435		11.2
Total	$	97,561		100.0	%	$	93,386		100.0	%
Geography
California	$	14,086		14.4	%	$	12,677		13.6	%
Colorado		3,979		4.1			4,362		4.7
Illinois		5,245		5.4			4,636		5.0
Minnesota		7,406		7.6			7,093		7.6
Missouri		3,525		3.6			3,536		3.8
Ohio		4,330		4.5			4,270		4.6
Oregon		2,044		2.1			2,090		2.2
Washington		3,699		3.8			3,447		3.7
Wisconsin		3,539		3.6			3,512		3.8
Iowa, Kansas, Nebraska, North Dakota, South Dakota		4,806		4.9			4,900		5.2
Arkansas, Indiana, Kentucky, Tennessee		5,206		5.3			5,168		5.5
Idaho, Montana, Wyoming		1,225		1.3			1,251		1.3
Arizona, Nevada, New Mexico, Utah		3,836		3.9			3,487		3.7
Total banking region		62,926		64.5			60,429		64.7
Florida, Michigan, New York, Pennsylvania, Texas		16,408		16.8			15,467		16.6
All other states		18,227		18.7			17,490		18.7
Total outside Company’s banking region		34,635		35.5			32,957		35.3
Total	$	97,561		100.0	%	$	93,386		100.0	%

Residential Mortgages Residential mortgages held in the loan portfolio at December 31, 2017, increased $2.5 billion (4.4 percent) over December 31, 2016, as origination activity more than offset the effect of customers paying down balances during 2017. Average residential mortgages increased $3.1 billion (5.6 percent) in 2017, compared with 2016. Residential mortgages originated and placed in the Company’s loan portfolio include well-secured jumbo mortgages and branch-originated first lien home equity loans to borrowers with high credit quality.

Credit Card Total credit card loans increased $431 million (2.0 percent) at December 31, 2017, compared with December 31, 2016, reflecting new and existing customer growth during the year. Average credit card balances increased $416 million (2.0 percent) in 2017, compared with 2016.

TABLE 8

Commercial Real Estate Loans by Property Type and Geography


	2017					2016
At December 31 (Dollars in Millions)	Loans		Percent			Loans		Percent
Property Type
Business owner occupied	$	10,205		25.2	%	$	10,899		25.3	%
Commercial property
Industrial		1,580		3.9			1,631		3.8
Office		5,023		12.4			5,536		12.8
Retail		4,502		11.1			4,997		11.6
Other commercial		3,757		9.3			4,064		9.4
Multi-family		8,922		22.0			9,607		22.3
Hotel/motel		3,719		9.2			3,791		8.8
Residential homebuilders		2,489		6.2			2,311		5.4
Healthcare facilities		266		.7			262		.6
Total	$	40,463		100.0	%	$	43,098		100.0	%
Geography
California	$	9,558		23.6	%	$	10,734		24.9	%
Colorado		1,764		4.4			1,819		4.2
Illinois		1,605		4.0			1,678		3.9
Minnesota		2,031		5.0			2,177		5.0
Missouri		1,359		3.3			1,372		3.2
Ohio		1,445		3.6			1,462		3.4
Oregon		1,847		4.6			2,094		4.9
Washington		3,499		8.6			3,435		8.0
Wisconsin		2,036		5.0			2,161		5.0
Iowa, Kansas, Nebraska, North Dakota, South Dakota		2,210		5.5			2,312		5.4
Arkansas, Indiana, Kentucky, Tennessee		1,889		4.7			1,810		4.2
Idaho, Montana, Wyoming		1,163		2.9			1,271		2.9
Arizona, Nevada, New Mexico, Utah		3,134		7.7			3,257		7.6
Total banking region		33,540		82.9			35,582		82.6
Florida, Michigan, New York, Pennsylvania, Texas		3,688		9.1			3,829		8.9
All other states		3,235		8.0			3,687		8.5
Total outside Company’s banking region		6,923		17.1			7,516		17.4
Total	$	40,463		100.0	%	$	43,098		100.0	%

Other Retail Total other retail loans, which include retail leasing, home equity and second mortgages and other retail loans, increased $3.5 billion (6.4 percent) at December 31, 2017, compared with December 31, 2016, reflecting higher retail leasing loans, auto loans and installment loans, partially offset by lower student loans, home equity loans and revolving credit balances. Average other retail loans increased $3.1 billion (5.9 percent) in 2017, compared with 2016. The increase was primarily due to higher auto, installment and retail leasing loans, partially offset by decreases in student loans and home equity loans. Of the total residential mortgages, credit card and other

retail loans outstanding at December 31, 2017, approximately 72.7 percent were to customers located in the Company’s primary banking region compared with 73.3 percent at December 31, 2016. Tables 9, 10 and 11 provide a geographic summary of residential mortgages, credit card loans and other retail loans outstanding, respectively, as of December 31, 2017 and 2016. The collateral for $2.2 billion of residential mortgages and other retail loans included in covered loans at December 31, 2017 was in California, compared with $2.6 billion at December 31, 2016.

TABLE 9

Residential Mortgages by Geography


	2017					2016
At December 31 (Dollars in Millions)	Loans		Percent			Loans		Percent
California	$	16,914		28.3	%	$	15,115		26.4	%
Colorado		3,380		5.7			3,219		5.6
Illinois		3,109		5.2			3,071		5.4
Minnesota		4,247		7.1			4,200		7.3
Missouri		1,748		2.9			1,834		3.2
Ohio		2,145		3.6			2,230		3.9
Oregon		2,413		4.0			2,292		4.0
Washington		3,403		5.7			3,277		5.7
Wisconsin		1,526		2.5			1,546		2.7
Iowa, Kansas, Nebraska, North Dakota, South Dakota		2,086		3.5			2,146		3.8
Arkansas, Indiana, Kentucky, Tennessee		3,166		5.3			3,220		5.6
Idaho, Montana, Wyoming		1,294		2.2			1,276		2.2
Arizona, Nevada, New Mexico, Utah		4,489		7.5			4,203		7.4
Total banking region		49,920		83.5			47,629		83.2
Florida, Michigan, New York, Pennsylvania, Texas		4,448		7.4			4,191		7.3
All other states		5,415		9.1			5,454		9.5
Total outside Company’s banking region		9,863		16.5			9,645		16.8
Total	$	59,783		100.0	%	$	57,274		100.0	%

TABLE 10

Credit Card Loans by Geography


	2017					2016
At December 31 (Dollars in Millions)	Loans		Percent			Loans		Percent
California	$	2,245		10.1	%	$	2,188		10.1	%
Colorado		772		3.5			761		3.5
Illinois		1,089		4.9			1,072		4.9
Minnesota		1,271		5.7			1,287		5.9
Missouri		725		3.3			717		3.3
Ohio		1,185		5.4			1,179		5.4
Oregon		666		3.0			657		3.0
Washington		857		3.9			860		4.0
Wisconsin		990		4.5			1,007		4.6
Iowa, Kansas, Nebraska, North Dakota, South Dakota		1,048		4.7			1,036		4.8
Arkansas, Indiana, Kentucky, Tennessee		1,603		7.2			1,580		7.3
Idaho, Montana, Wyoming		376		1.7			376		1.7
Arizona, Nevada, New Mexico, Utah		1,092		4.9			1,044		4.8
Total banking region		13,919		62.8			13,764		63.3
Florida, Michigan, New York, Pennsylvania, Texas		4,193		18.9			4,076		18.7
All other states		4,068		18.3			3,909		18.0
Total outside Company’s banking region		8,261		37.2			7,985		36.7
Total	$	22,180		100.0	%	$	21,749		100.0	%

TABLE 11

Other Retail Loans by Geography


	2017					2016
At December 31 (Dollars in Millions)	Loans		Percent			Loans		Percent
California	$	9,119		15.9	%	$	8,468		15.7	%
Colorado		2,144		3.8			2,058		3.8
Illinois		3,193		5.6			3,111		5.8
Minnesota		3,619		6.3			3,537		6.6
Missouri		2,142		3.7			2,171		4.0
Ohio		2,800		4.9			2,764		5.1
Oregon		1,545		2.7			1,555		2.9
Washington		1,735		3.0			1,696		3.1
Wisconsin		1,562		2.7			1,565		2.9
Iowa, Kansas, Nebraska, North Dakota, South Dakota		2,534		4.4			2,355		4.4
Arkansas, Indiana, Kentucky, Tennessee		3,108		5.4			3,001		5.6
Idaho, Montana, Wyoming		1,033		1.8			978		1.8
Arizona, Nevada, New Mexico, Utah		2,958		5.2			2,772		5.2
Total banking region		37,492		65.4			36,031		66.9
Florida, Michigan, New York, Pennsylvania, Texas		11,547		20.1			9,807		18.2
All other states		8,285		14.5			8,026		14.9
Total outside Company’s banking region		19,832		34.6			17,833		33.1
Total	$	57,324		100.0	%	$	53,864		100.0	%

The Company generally retains portfolio loans through maturity; however, the Company’s intent may change over time based upon various factors such as ongoing asset/liability management activities, assessment of product profitability, credit risk, liquidity needs, and capital implications. If the Company’s intent or ability to hold an existing portfolio loan changes, it is transferred to loans held for sale.

Loans Held for Sale Loans held for sale, consisting primarily of residential mortgages to be sold in the secondary market, were

$3.6 billion at December 31, 2017, compared with $4.8 billion at December 31, 2016. The decrease in loans held for sale was principally due to a lower level of mortgage loan closings in late 2017, compared with the same period of 2016. Almost all of the residential mortgage loans the Company originates or purchases for sale follow guidelines that allow the loans to be sold into existing, highly liquid secondary markets; in particular in government agency transactions and to government sponsored enterprises (“GSEs”).

TABLE 12

Selected Loan Maturity Distribution


At December 31, 2017 (Dollars in Millions)	One Year or Less		Over One Through Five Years		Over Five Years		Total
Commercial	$	34,858	$	57,132	$	5,571	$	97,561
Commercial real estate		11,402		22,117		6,944		40,463
Residential mortgages		2,578		8,670		48,535		59,783
Credit card		22,180		–		–		22,180
Other retail		10,529		32,285		14,510		57,324
Covered loans		373		470		2,278		3,121
Total loans	$	81,920	$	120,674	$	77,838	$	280,432
Total of loans due after one year with
Predetermined interest rates							$	91,962
Floating interest rates							$	106,550

Investment Securities The Company uses its investment securities portfolio to manage interest rate risk, provide liquidity (including the ability to meet regulatory requirements), generate interest and dividend income, and as collateral for public deposits and wholesale funding sources. While the Company intends to hold its investment securities indefinitely, it may sell available-for-sale securities in response to structural changes in the balance sheet and related interest rate risk and to meet liquidity requirements, among other factors.

Investment securities totaled $112.5 billion at December 31, 2017, compared with $109.3 billion at December 31, 2016. The $3.2 billion (3.0 percent) increase reflected $3.1 billion of net investment purchases and a $121 million favorable change in net unrealized gains (losses) on available-for-sale investment securities.

Average investment securities were $111.8 billion in 2017, compared with $107.9 billion in 2016. The weighted-average yield of the available-for-sale portfolio was 2.25 percent at December 31, 2017, compared with 2.06 percent at December 31, 2016. The weighted-average maturity of the available-for-sale portfolio was 5.1 years at both December 31, 2017 and 2016. The weighted-average yield of the held-to-maturity portfolio was 2.14 percent at December 31, 2017, compared with 1.93 percent at December 31, 2016. The weighted-average maturity of the held-to-maturity portfolio was 4.7 years at December 31, 2017, compared with 4.6 years at December 31, 2016. Investment securities by type are shown in Table 13.

The Company’s available-for-sale securities are carried at fair value with changes in fair value reflected in other comprehensive income (loss) unless a security is deemed to be other-than-temporarily impaired. At December 31, 2017, the Company’s net unrealized losses on available-for-sale securities were $580 million, compared with $701 million at December 31, 2016. The favorable change in net unrealized gains (losses) was primarily due to increases in the fair value of state and political securities as a result of changes in interest rates. Gross unrealized losses on available-for-sale securities totaled $888 million at December 31, 2017, compared with $1.0 billion at December 31, 2016. The Company conducts a regular assessment of its investment portfolio to determine whether any securities are other-than-temporarily impaired. When assessing unrealized losses for other-than-temporary impairment, the Company considers the nature of the investment, the financial condition of the issuer, the extent and duration of unrealized losses, expected cash flows of underlying assets and market conditions. At December 31, 2017, the Company had no plans to sell securities with unrealized losses, and believes it is more likely than not that it would not be required to sell such securities before recovery of their amortized cost.

Refer to Notes 4 and 21 in the Notes to Consolidated Financial Statements for further information on investment securities.

TABLE 13

Investment Securities


	Available-for-Sale									Held-to-Maturity
At December 31, 2017 (Dollars in Millions)	Amortized Cost		Fair Value		Weighted- Average Maturity in Years		Weighted- Average Yield^(e)			Amortized Cost		Fair Value		Weighted- Average Maturity in Years		Weighted- Average Yield^(e)
U.S. Treasury and Agencies
Maturing in one year or less	$	4,985	$	4,965		.5		.85	%	$	–	$	–		–		–	%
Maturing after one year through five years		16,683		16,465		3.4		1.67			1,794		1,776		3.5		1.81
Maturing after five years through ten years		1,918		1,871		5.7		1.84			3,387		3,290		6.1		1.80
Maturing after ten years		–		–		–		–			–		–		–		–
Total	$	23,586	$	23,301		3.0		1.51	%	$	5,181	$	5,066		5.2		1.80	%
Mortgage-Backed Securities^(a)
Maturing in one year or less	$	79	$	80		.5		4.33	%	$	85	$	85		.5		2.99	%
Maturing after one year through five years		17,637		17,424		4.4		2.08			23,307		22,968		3.8		2.10
Maturing after five years through ten years		18,391		18,179		5.9		2.22			15,497		15,305		5.7		2.31
Maturing after ten years		2,349		2,354		12.8		2.47			261		261		12.3		2.37
Total	$	38,456	$	38,037		5.6		2.18	%	$	39,150	$	38,619		4.6		2.19	%
Asset-Backed Securities^(a)
Maturing in one year or less	$	–	$	–		–		–	%	$	–	$	1		.4		2.12	%
Maturing after one year through five years		328		332		3.7		3.00			4		4		3.2		2.28
Maturing after five years through ten years		85		87		5.0		3.23			2		3		5.6		2.25
Maturing after ten years		–		–		–		–			–		4		16.3		2.06
Total	$	413	$	419		4.0		3.04	%	$	6	$	12		4.1		2.27	%
Obligations of State and Political Subdivisions^(b)(c)
Maturing in one year or less	$	183	$	184		.2		7.40	%	$	–	$	–		–		–	%
Maturing after one year through five years		662		688		3.2		5.93			1		1		3.7		7.82
Maturing after five years through ten years		4,428		4,532		8.7		5.33			5		6		8.2		2.53
Maturing after ten years		967		954		19.8		5.02			–		–		–		–
Total	$	6,240	$	6,358		9.6		5.41	%	$	6	$	7		7.6		3.24	%
Other Debt Securities
Maturing in one year or less	$	–	$	–		–		–	%	$	–	$	–		–		–	%
Maturing after one year through five years		–		–		–		–			19		19		2.5		2.26
Maturing after five years through ten years		–		–		–		–			–		–		–		–
Maturing after ten years		–		–		–		–			–		–		–		–
Total	$	–	$	–		–		–	%	$	19	$	19		2.5		2.26	%
Other Investments	$	22	$	22		–		.01	%	$	–	$	–		–		–	%
Total investment securities^(d)	$	68,717