10-KPeriod: FY2004

US BANCORP \DE\ Annual Report, Year Ended Dec 31, 2004

Filed February 28, 2005For Securities:USBUSB-PHUSB-PPUSB-PRUSB-PQUSB-PSUSB-PA

Summary

U.S. Bancorp (USB) reported a strong financial performance for the year ended December 31, 2004, with net income reaching a record $4.2 billion, a 13% increase in diluted earnings per share, and industry-leading returns on assets (2.17%) and equity (21.4%). The company experienced significant credit quality improvements, with a notable decrease in credit losses and nonperforming assets. Revenue growth was driven by fee-based services, particularly in payment processing, while net interest income showed modest growth. The company continued its strategic investments in technology and branch expansion, with a focus on enhancing customer service and driving future growth. U.S. Bancorp also demonstrated a strong commitment to shareholder returns, repurchasing 93.8 million shares and increasing its cash dividend by 25% year-over-year.

Key Highlights

  • 1Achieved record net income of $4.2 billion.
  • 2Diluted earnings per share increased by 13% to $2.18.
  • 3Generated industry-leading returns on average assets (2.17%) and average equity (21.4%).
  • 4Significantly improved credit quality with a 34.8% decline in nonperforming assets.
  • 5Experienced strong fee-based revenue growth of 11.0%, led by payment processing services.
  • 6Returned 109% of earnings to shareholders through dividends and share repurchases.
  • 7Successfully executed a 25% increase in the quarterly cash dividend.

Frequently Asked Questions

Revenue growth was primarily driven by a strong performance in fee-based revenue categories, particularly in payment processing services, which saw an 11.0% increase. Net interest income also contributed, albeit with modest growth.

U.S. Bancorp focused on improving credit quality throughout 2004. This resulted in a 34.8% decrease in nonperforming assets and a significant reduction in the provision for credit losses. Net charge-offs decreased to 0.63% of average loans outstanding from 1.06% in the prior year, indicating a healthier loan portfolio.

The company maintains a disciplined approach to acquisitions, focusing only on those that will enhance revenue growth, create operating scale, build more profitable business lines, or strengthen critical competitive advantages. Their successful expansion in the payments business, including European operations, is highlighted as an example of this strategy.

U.S. Bancorp returned over 100% of its earnings to shareholders in 2004. This was achieved through significant share repurchases (93.8 million shares) and a substantial increase in its cash dividend by 25% year-over-year.