Hello, and thank you for joining us for U.S. Bancorp's 2026 Annual Meeting of Shareholders. I'm Gunjan Kedia, CEO of U.S. Bancorp. I'm joined today by Kathryn Purdom, our Deputy General Counsel and Corporate Secretary, who will serve as secretary for the meeting, and John Stern, our CFO. Also in attendance today are members of our board of directors and managing committee, and Grant Haines from Ernst & Young LLP and U.S. Bancorp's independent auditor. I will now call the meeting to order. Today marks my one-year anniversary of assuming my role as CEO. It's been a true privilege to lead this exceptional company, and I thank you for your support and your investment in us. Our first order of business today is shareholder voting, which Kathryn will lead us through in a couple of minutes.
John and I will provide this year's management report, and we will have a formal question and answer session at the end of our time together. If you have questions during the meeting today, you may ask them via this website if you have logged into the meeting as a shareholder using your control number. All you need to do is type your question in the box at the bottom of the screen. You may add them at any time, and we will respond to them along with any pre-submitted questions before we close. Now, let me invite Kathryn to begin with the formal business of the meeting.
Thank you, Gunjan. Before we move forward, I would like to remind everyone that any forward-looking statements made during today's call are subject to risk and uncertainty. Factors that could materially change our current forward-looking assumptions are described on this slide and in our Form 10-K and other reports filed with the SEC. With that, let's proceed. I have received an affidavit of mailing from Broadridge Financial Solutions, which states that the notice of meeting and the accompanying proxy materials and annual report were mailed or made available on or about March 10th, 2026, to shareholders of record on February 24th, 2026, the record date for shareholders entitled to notice of and to vote at this meeting, which is in accordance with our company's bylaws.
Our inspector of election, a representative from Broadridge Financial Solutions, is present by phone at this meeting and has reported that we have received proxies representing a substantial majority of our outstanding voting stock. Therefore, a quorum is present for the meeting. The matters requiring a vote by the shareholders are discussed in the proxy statement. The polls for shareholder voting on all matters are now open at 11:02 A.M. Central Time on April 21st, 2026. If there are any shareholders who have not voted and want to vote or who want to revoke a proxy previously given and change their vote, please do so now using the Vote Here button on your screen. If you have previously voted by proxy, you do not need to vote today unless you wish to change your vote.
Proxies already returned by shareholders will remain valid and will be voted as directed at the annual meeting unless revoked. The three proposals being voted upon today are shown on your screen. The first proposal is the election of 12 directors whose names and qualifications are listed in the proxy statement. Each of our directors has been nominated to serve as a director of the company for a one-year term ending at the annual meeting in 2027. The second proposal is the advisory approval of the compensation of our executives, as described in the proxy statement. The third proposal is ratification of the selection of Ernst & Young LLP as the independent registered public accounting firm for the company for the fiscal year ending December 31st, 2026.
If you are voting today and have not yet voted electronically, please do so now by clicking on the Vote Here button on your screen. You will only be able to vote at this time if you have logged into this meeting as a shareholder using your 16-digit control number. I will pause here to allow shareholders to vote. It is 11:04 A.M., and the polls for voting on the matters before this meeting are now closed. The company has already received proxies sufficient to elect 12 director nominees, give advisory approval of the compensation of our executives as disclosed in our proxy statement, and ratify the appointment of the independent registered public accounting firm for 2026. The final voting results will be published in a Form 8-K report, which we will file with the SEC within four business days.
The results will also be available from our investor relations department. There being no other business to attend to, I declare the business portion of the 2026 Annual Meeting of Shareholders concluded. Gunjan, back to you.
Thank you, Kathryn. We are delighted to turn our attention now to talking about our company and our progress in 2025. I would like to begin by thanking our board of directors for their stewardship and guidance. Our directors are in attendance for today's meeting and have been strong advisors to me and our management team during the past year. They represent a diverse cross-section of industry and experience, and they continue to engage thoughtfully and provide critical challenges needed on the most important issues facing the company. I look forward to working with them in my expanded capacity as chairman of the board as we move forward. On behalf of the board and the entire U.S. Bank team, let me acknowledge the considerable contributions Andy Cecere has made to our organization as his time with our company comes to an end at the conclusion of today's meeting.
Andy spent more than 40 years with the company and left an indelible mark on U.S. Bancorp. For the past year, he has served as our Executive Chairman of the board, and I have appreciated his leadership and support. We wish him all the very best as he moves into his next journey. I also want to extend my appreciation to our Managing Committee. These leaders are shaping our strategy, driving execution, and ensuring our teams are engaged and delivering value to our company and to our shareholders. I very much appreciate their leadership and their connections. This slide captures our purpose, our vision, and values. The Managing Committee and I are deeply mindful of these words that unify us as a culture at all of U.S. Bank. Our purpose and core values are not new, but the definitions continue to inspire us and guide our decisions.
Our vision statement was refreshed in 2025. Quite simply, we aspire to deliver lasting value to our clients through uniquely connected solutions that deliver exceptional results and enduring stewardship. I'm pleased to say we have made important steps towards achieving that vision last year. Today, we are truly an exceptional banking franchise and the fifth largest commercial bank in the United States. Our three major business lines serve approximately 15 million clients through our branches, our client centers, and digitally. We are ranked 105th among the Fortune 500 with a portfolio of strong fee-oriented businesses that complement our core banking capabilities. Last year, we defined three strategic priorities to meet and exceed our medium-term financial targets that we established at our Investor Day in 2024. Our first priority was organic growth by deepening our client relationships, introducing new product capabilities, and expanding our reach to new areas and customer segments.
Our second priority was expense management through four signature programs, including automation, real estate optimization, organizational simplicity, and location optimization. Our third priority was payments transformation to embed these capabilities across all our products. We have executed with urgency on these priorities and are pleased to note that by the third quarter of 2025, we were operating within our target ranges. We are proud of our financial results we have delivered, and John will provide a more detailed report on these matters in a few minutes. Our success is possible because of the intense focus we place on our clients. We think of them in three major groups, consumers, businesses, and institutional clients. They are the center of everything we do and at the heart of every decision we make and the products or services we offer. Throughout the year, we made strides in each of these areas.
Our branches are the face of our bank to many consumers, even those who are heavily digitally engaged. Our approach to branches has evolved from being primarily service centers to places where clients come for advice across all our products, such as banking, loans, wealth, and mortgages. We invest nearly $200 million every year to refresh the branch formats to our new strategy and open new branches to expand our reach. On this page, you can see some of the results we achieved last year. One big strategic theme last year was interconnectedness. We launched the Bank Smartly product suite, which allows you to earn rewards on your credit card based on your banking and wealth relationships. We saw great progress and uptake of this offering last year, and we will continue to extend our advantage in 2026 and beyond.
Our innovative products and solutions are driving up our client satisfaction. For instance, as you can see on this page, we climbed to second place last year in the JD Power U.S. National Banking Satisfaction Study, which helped highlight our progress in several key areas, including digital channels, account offerings, and service delivery. We were proud of this honor. Small businesses make up 40% of the GDP of the country and drive almost half of all employment. This is a strategically important segment for us. Our strategy for interconnectedness also extends to this segment. Throughout 2025, we made gains by connecting banking, payments, and software solutions to address core needs of this segment. We also worked to simplify and streamline processes to ensure it is as easy as possible to do business with us. On this page, we present the impacts of our multi-year payments investments.
Today, payments is often the first and the most frequent product used by clients, especially younger generations. In 2025, we introduced a suite of new products that appeal to transactors and borrowers across multiple customer segments. Our investments have materially improved the digital experiences for our clients. Let us now look at our final customer segment, our institutional clients. Our strategy here focused on deepening our relationships with clients by building expertise in vertical segments like Healthcare and Private Credit. We also enhanced our product suite, especially in capital markets, treasury management, and payments. Unlike our branch business, we operate in a fully national way with this segment, and we have established several client centers in new markets to deliver these services to new geographies. Along with these strategies, we also are growing our franchise through strategic bolt-on acquisitions.
Early in 2026, we were very pleased to announce our proposed acquisition of BTIG, which we expect to close in the second quarter of 2026. This transaction will create a more holistic capital markets offering and expand our industry reach. Today, the banking industry is facing significant transformative trends with substantial potential impacts from AI and digital assets. In 2025, we announced dedicated teams to leverage the potential of these new technologies to serve our clients better and to drive productivity. Although the full impact of work is still unfolding, we are building the product capabilities, the operational and risk management frameworks, and the industry partnerships to emerge as leaders in this space. Another clear way we are positioning ourselves for the future is through our work to elevate our brand profile.
Our sponsorship of a Fire Aid benefit concert, our promotional relationship with Netflix, and in-film sponsorship of the movie "Happy Gilmore 2" are some examples of our efforts. We announced an exciting partnership with the NFL earlier this month, becoming a new official bank and wealth management sponsor. These activities, and more, are helping us derive greater value from our wonderful brand investments and increase our influence with key opinion leaders and with people who are considering a relationship with our company. We are committed to strengthen our investment in communities, building on a long history and significant efforts in 2025. Last year alone, we set record growth for U.S. Small Business Administration lending and had a record year with Impact Finance, supporting clients and communities through tax credit investments, syndications, and lending solutions.
We were recognized with a partnership award for our work supporting financial literacy education efforts, and we have reached 99% of our community benefits plan target for 2027. There is more we can do here, and we are eager to see where 2026 takes us. All these efforts, and many more, are due to the dedication and engagement of a wonderful team of almost 70,000 colleagues. We are as committed to investing in them as they are to delivering for you. During the past year, we have updated technology experiences and enhanced workspaces to ensure our teams have a welcoming and conducive environment for collaboration and getting the job done. We have elevated our focus on career pathing and support through programs like our company-wide development week.
We have worked hard to make a large company feel like home, highlighting every day what it feels like to live life at U.S. Bank. I'm truly honored to serve with these talented people, and we will continue to bring forward our best for you. With that, let me invite John to present our financial results.
Thank you, Gunjan. I'll start with a brief overview of our financial performance for 2025. We delivered strong results with improvement across all key metrics, driven by continued new business momentum and disciplined execution. Earnings per share growth was also strong, reflected by broad-based fee revenue momentum with meaningful positive operating leverage and improved efficiency from disciplined execution across both revenue and expense initiatives. We returned $3.7 billion of capital to shareholders while continuing to build capital organically. Importantly, we are operating within all of our medium-term target ranges, reinforcing confidence in the consistency and durability of our operating model. Our results were built by a strong foundation, one underscored by disciplined risk management, balance sheet strength, and earnings generation across market cycles. We are proud to say our capital levels remain strong with a CET1 ratio of 10.8%, supported by enhanced earnings generation.
Liquidity also remains a clear strength, providing flexibility to support clients and navigate challenging environments. Credit performance continues to reflect prudent portfolio construction and stable loss behavior. This foundation allows us to balance growth, investment, and capital return while remaining highly disciplined. Our commitment to principled execution carried us forward last year. For instance, disciplined expense management was a meaningful contributor to positive operating leverage in 2025. Our four signature productivity programs delivered nine quarters of largely stable adjusted expenses. These initiatives generated sustainable productivity and will remain foundational disciplines going forward. As we look ahead, we expect revenue growth will be the primary driver of operating leverage, supported by our continued investment in the ongoing deployment of AI and other automation tools to improve efficiency. Our diversified revenue mix also remains a core differentiator, with fee income representing approximately 42% of total net revenue.
Fee revenue grew 6.7% year-over-year, driven by strength across our payments franchise, trust and investment management, capital markets, and Impact Finance. Our interconnected suite of products helped to deepen client relationships and drive organic growth. In 2026, our focus is continued execution, including capturing revenue synergies from the BTIG acquisition that Gunjan mentioned earlier, and expanding growth in the small business segment. Lastly, our payments business remains a strategic long-term priority for the company. As Gunjan noted earlier, payments products are typically where clients have the first and most frequent interaction with our brand, making it a critical area to attract, retain, and grow our customer base. Although we are still early in our payments transformation, we are seeing good momentum across merchant processing and card revenues.
As we move through 2026, our focus will be on accelerating the payments transformation, scaling our small business card and merchant solutions, and integrating partnership opportunities like the Amazon Small Business Card portfolio. These efforts ultimately support deeper client relationships and sustainable fee growth over time. As you can see, we had a strong year, and we are pleased with the momentum we built. We are operating within all our medium-term targets, and we remain diligent in achieving consistent and sustainable execution. Our focus is still on consistent growth, expense control, risk discipline, and effective balance sheet management. With a differentiated business mix and clear priorities, we are well positioned to strengthen performance over time and deliver industry-leading returns to you, our valued shareholders. Gunjan, back to you.
Thank you, John. As I conclude today, let me simply say thank you on behalf of our U.S. Bank team. Our entire team is grateful for your support and engagement. We are aligned in our dedication to delivering strong results. We appreciate and value your trust and investment in us, and we will never settle or be done in our pursuit of excellence. As I mentioned at the top of the call, we are now ready to take your questions. Any questions we received on the annual meeting platform prior to the meeting will be addressed first. You also may ask your questions now via the box at the bottom of your screen if you have your shareholder control number, which was provided with your proxy materials.
Under the rules of conduct for the meeting, we may group similar questions together and will address each topic only once so we can get to as many different topics as possible. We will address questions of broad interest to our shareholders at this meeting. If you have questions related to your employment at U.S. Bancorp or a particular customer concern, please direct your questions to your manager, HR talent consultant, or usbankcommunications@usbank.com so we can address them. Questions related to personal concerns that were submitted prior to the meeting have been or will be addressed personally. The question and answer session will end no later than noon Central. Let me take our first question. It's what opportunities to grow the business does management see in the rest of 2026? Thank you. We appreciate your question.
We covered this in our prepared remarks, and to reiterate our approach, we are focused on three priorities. The first is organic growth, including deepening relationships, introducing new products, and expanding our reach. The second is disciplined expense management and delivering positive operating leverage while continuing to invest in our business. Finally, we remain focused on the transformation of our payments business and continue to see revenue growth consistently strengthening across all segments. Thank you for your question. The next question, I will invite our CFO, John Stern, to answer. John.
Sure. Thank you, Gunjan. The question is, I'm reading a lot about Private Credit. How big of a problem is it? Do shareholders at U.S. Bank need to be concerned if these loans start going bad? To answer that, I'd say that we partner with Private Credit in our investment services business as a service provider, and we provide credit through our structured credit lending products in Global Capital Markets, as well as our institutional client group. We do not have any direct lending credit products. We do not anticipate a large downturn in Private Credit, but if one were to occur, we would obviously be insulated as our credit products and structural protections that we have sit in our senior positions, and these facilities have meaningful credit enhancements and structural features that help protect our positions.
In our investment services businesses, we do not take credit risk, but instead are a service provider in areas like alternative funds in our Global Fund Services business, as well as CLO servicing within Global Corporate Trust.
Thank you, John. The third question, how does U.S. Bank see the economy? As we look ahead, the macroeconomic backdrop remains constructive, although we acknowledge that there has been some softening of sentiment in the last quarter. When we look at facts, consumer spend, core loan demand, and credit delinquency trends are all indicating relative stability. Thank you for your question. The next question I'm going to invite our CFO, John, to address. John.
Sure. The question is, are you seeing any upward trend in consumer credit losses? We're not seeing an upward trend in credit losses within the consumer area. The consumer remains resilient. Sentiment has softened, but spending and credit behaviors remain stable, supported by low delinquencies and meaningful balance sheet buffers.
Thank you. There are no more questions. As we close today, I want to thank you for being a U.S. Bancorp shareholder. We are truly very, very proud of our business, and we are proud of our ability to create value for you. The business of this meeting is concluded, and the meeting is now adjourned. Thank you for attending. Have a great day.