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U.S. Bancorp Reports Record Net Income for the Third Quarter of 2005

MINNEAPOLIS, Oct 18, 2005 (BUSINESS WIRE) -- U.S. Bancorp (NYSE:USB):

EARNINGS SUMMARY                                               Table 1
----------------------------------------------------------------------
($ in millions, except per-share data)

                                  Percent Percent
                                   Change Change
               3Q     2Q     3Q   3Q05 vs 3Q05 vs  YTD    YTD  Percent
              2005   2005   2004    2Q05   3Q04   2005   2004  Change
             ---------------------------------------------------------


Net income   $1,154 $1,121 $1,066     2.9    8.3 $3,346 $3,111    7.6
Earnings per
 share
 (diluted)     0.62   0.60   0.56     3.3   10.7   1.80   1.62   11.1

Return on
 average
 assets (%)    2.23   2.23   2.21                  2.22   2.18
Return on
 average
 equity (%)    22.8   22.7   21.9                  22.5   21.5
Efficiency
 ratio (%)     43.8   48.3   47.2                  44.6   44.2
Tangible
 efficiency
 ratio (%)(a)  40.0   42.8   40.6                  40.8   40.1

Dividends
 declared per
 share        $0.30  $0.30  $0.24      --   25.0  $0.90  $0.72   25.0
Book value
 per share
 (period-end) 10.93  10.88  10.48     0.5    4.3
Net interest
 margin (%)    3.95   3.99   4.22                  4.00   4.26

(a) Computed as noninterest expense divided by the sum of net interest
 income on a taxable-equivalent basis and noninterest income excluding
 securities gains (losses), net and intangible amortization.

U.S. Bancorp (NYSE:USB) today reported net income of $1,154 million for the third quarter of 2005, compared with $1,066 million for the third quarter of 2004. Net income of $.62 per diluted share in the third quarter of 2005 was higher than the same period of 2004 by $.06 (10.7 percent). Return on average assets and return on average equity were 2.23 percent and 22.8 percent, respectively, for the third quarter of 2005, compared with returns of 2.21 percent and 21.9 percent, respectively, for the third quarter of 2004.

U.S. Bancorp Chairman and Chief Executive Officer Jerry A. Grundhofer said, "Our third quarter results were solid. Once again, we achieved record profitability, with earnings per diluted share increasing by 10.7 percent over the third quarter of 2004. We maintained our industry leading performance metrics of 2.23 percent return on assets and 22.8 percent return on equity and created positive operating leverage over the same quarter of 2004 and the second quarter of 2005. In today's economic environment the low cost provider has a distinct advantage and we certainly demonstrated that we have that advantage in our industry with a tangible efficiency ratio of 40 percent in the third quarter. Finally, we returned 87 percent of our earnings in the quarter to our shareholders through dividends and share buybacks.

"Average loans outstanding in the third quarter rose by a healthy 10.1 percent year-over-year and at an annualized growth rate of 12.4 percent over the second quarter of 2005. Net interest income increased slightly over the same quarter of 2004, despite a decline in the net interest margin. Net interest income increased at an annualized rate of 6.8 percent over the second quarter of 2005. Our fee-based businesses continued to grow, increasing by 9.7 percent over the third quarter of 2004. Fee income growth was led by our payment services-related businesses and deposit service charges, which grew year-over-year by 15.6 percent and 18.3 percent, respectively.

"Credit quality remained stable again this quarter with total net charge-offs at just .46 percent of total average loans. In addition, nonperforming assets at the end of the quarter remained steady at $613 million. This is a direct result of our continuing commitment to reduce the overall risk profile of our Company.

"We are delivering on our promise to maintain industry leading returns, while producing stable, high-quality revenue and earnings. We will continue to invest in distribution and scale to provide future growth opportunities, while striving to continuously improve our customer service. Further, since we began the current buyback program in the fourth quarter of 2003, we have returned 102 percent of our earnings to our shareholders, and we expect to continue to return a minimum of 80 percent going forward."

The Company's results for the third quarter of 2005 improved over the same period of 2004, as net income rose by $88 million (8.3 percent), primarily due to growth in fee-based products and services and reduced credit costs. During the third quarter of 2005, the Company recognized $3 million of reparation in its mortgage servicing rights ("MSR") asset, compared with an $87 million impairment charge in the third quarter of 2004, due to changing longer-term interest rates. Total net revenue on a taxable-equivalent basis for the third quarter of 2005 was $61 million (1.8 percent) higher than the third quarter of 2004, primarily reflecting 9.7 percent growth in fee-based revenue across the majority of fee categories and expansion in payment processing businesses. This was partially offset by an $87 million unfavorable variance in securities gains (losses) due to gains recognized in the third quarter of 2004.

Total noninterest expense in the third quarter of 2005 was $45 million (3.0 percent) lower than the third quarter of 2004, primarily reflecting the $90 million favorable change in the valuation of mortgage servicing rights, offset somewhat by incremental costs related to expanding the payment processing businesses and investments in in-store branches, affordable housing projects and other business initiatives.

Provision for credit losses for the third quarter of 2005 was $145 million, a decrease of $21 million (12.7 percent) from the third quarter of 2004. The decrease in the provision for credit losses year-over-year reflected a decrease in total net charge-offs. Net charge-offs in the third quarter of 2005 were $156 million, compared with the second quarter of 2005 net charge-offs of $144 million and the third quarter of 2004 net charge-offs of $166 million. Net charge-offs in the third quarter of 2005 included a $12 million charge-off of a leveraged lease of a single airline entering bankruptcy during the quarter. This airline exposure was specifically considered in the Company's allowance for credit losses in prior periods and reflects the continuing weakness in the airline and transportation industries. Total nonperforming assets were $613 million at September 30, 2005, relatively flat compared with $610 million at June 30, 2005, and a $192 million (23.9 percent) decline compared with $805 million at September 30, 2004. The ratio of the allowance for credit losses to nonperforming loans was 438 percent at September 30, 2005, compared with 441 percent at June 30, 2005, and 337 percent at September 30, 2004.

INCOME STATEMENT HIGHLIGHTS                                    Table 2
----------------------------------------------------------------------
(Taxable-equivalent basis, $ in millions, except per-share data)

                                  Percent Percent
                                   Change Change
               3Q     2Q     3Q   3Q05 vs 3Q05 vs  YTD    YTD  Percent
              2005   2005   2004    2Q05   3Q04   2005   2004  Change
             ---------------------------------------------------------

Net interest
 income      $1,791 $1,761 $1,782     1.7    0.5 $5,303 $5,340   (0.7)
Noninterest
 income       1,576  1,541  1,524     2.3    3.4  4,499  4,084   10.2
             ---------------------               --------------
  Total net
   revenue    3,367  3,302  3,306     2.0    1.8  9,802  9,424    4.0
Noninterest
 expense      1,473  1,595  1,518    (7.6)  (3.0) 4,399  4,206    4.6
             ---------------------               --------------
Income before
 provision
 and income
 taxes        1,894  1,707  1,788    11.0    5.9  5,403  5,218    3.5
Provision for
 credit
 losses         145    144    166     0.7  (12.7)   461    605  (23.8)
             ---------------------               --------------
Income before
 income taxes 1,749  1,563  1,622    11.9    7.8  4,942  4,613    7.1
Taxable-
 equivalent
 adjustment       9      7      7    28.6   28.6     23     21    9.5
Applicable
 income taxes   586    435    549    34.7    6.7  1,573  1,481    6.2
             ---------------------               --------------
Net income   $1,154 $1,121 $1,066     2.9    8.3 $3,346 $3,111    7.6
             ---------------------               --------------

Diluted
 earnings per
 share        $0.62  $0.60  $0.56     3.3   10.7  $1.80  $1.62   11.1
             ---------------------               --------------

Net Interest Income

Third quarter net interest income on a taxable-equivalent basis was $1,791 million, compared with $1,782 million recorded in the third quarter of 2004. Average earning assets for the period increased over the third quarter of 2004 by $12.3 billion (7.3 percent), primarily driven by a $4.2 billion (28.6 percent) increase in residential mortgages, a $3.9 billion (10.0 percent) increase in total commercial loans and a $3.3 billion (7.8 percent) increase in total retail loans. The positive impact to net interest income from the growth in earning assets was offset somewhat by a lower net interest margin. The net interest margin in the third quarter of 2005 was 3.95 percent, compared with 4.22 percent in the third quarter of 2004. The decline in the net interest margin reflected the current lending environment, asset/liability management decisions and the impact of changes in the yield curve from a year ago. Since the third quarter of 2004, credit spreads have tightened by approximately 19 basis points across most lending products due to competitive pricing, growth in corporate payment card balances and a change in mix due to growth in lower-spread, fixed-rate credit products. The net interest margin also declined due to funding incremental growth with higher cost wholesale funding and asset/liability decisions designed to minimize the Company's rate sensitivity position, including a 55 percent reduction in the net receive fixed swap position since September 30, 2004. Increases in the margin benefit of deposits and net free funds helped to partially offset these factors.

Net interest income in the third quarter of 2005 was higher than the second quarter of 2005 by $30 million (1.7 percent). Average earning assets grew quarter-over-quarter by $3.7 billion (2.1 percent). Growth in most loan categories drove the increase in average earning assets over the prior quarter. The positive impact to net interest income from the growth in earning assets and day basis was partially offset by a lower net interest margin. The net interest margin in the third quarter of 2005 was 4 basis points lower than the net interest margin of 3.99 percent recorded in the second quarter of 2005. The decline in the net interest margin from the second quarter of 2005 reflected tighter credit spreads (3 basis points) due to increased competition, in addition to growth in corporate payment card balances and changes in loan mix. Higher short-term rates and funding a higher percentage of earning asset growth with wholesale funding also contributed to the margin reduction. This was partially offset by the higher margin benefit of deposits and net free funds and loan fees.

NET INTEREST INCOME                                            Table 3
----------------------------------------------------------------------
(Taxable-equivalent basis; $ in millions)
                                                        Change Change
                                 3Q      2Q      3Q    3Q05 vs 3Q05 vs
                                2005    2005    2004     2Q05   3Q04
                               ---------------------------------------
Components of net interest
 income
 Income on earning assets       $2,727  $2,572  $2,310    $155   $417
 Expense on interest-bearing
  liabilities                      936     811     528     125    408
                               ---------------------------------------
Net interest income             $1,791  $1,761  $1,782     $30     $9
                               ---------------------------------------

Average yields and rates paid
 Earning assets yield             6.01%   5.83%   5.47%   0.18%  0.54%
 Rate paid on interest-bearing
  liabilities                     2.49    2.23    1.55    0.26   0.94
                               ---------------------------------------
Gross interest margin             3.52%   3.60%   3.92% (0.08%)(0.40%)
                               ---------------------------------------
Net interest margin               3.95%   3.99%   4.22% (0.04%)(0.27%)
                               ---------------------------------------

Average balances
 Investment securities         $41,782 $42,341 $42,502   $(559) $(720)
 Loans                         135,283 131,275 122,906   4,008 12,377
 Earning assets                180,452 176,730 168,187   3,722 12,265
 Interest-bearing liabilities  149,431 146,070 136,106   3,361 13,325
 Net free funds(a)              31,021  30,660  32,081     361 (1,060)

(a) Represents noninterest-bearing deposits, allowance for loan
 losses, unrealized gain (loss) on available-for-sale securities, non-
 earning assets, other noninterest-bearing liabilities and equity.


NET INTEREST INCOME
----------------------------------------------------------------------
(Taxable-equivalent basis; $ in millions)

                                                 YTD     YTD   Percent
                                                2005    2004   Change
                                               -----------------------
Components of net interest income
 Income on earning assets                       $7,741  $6,818   $923
 Expense on interest-bearing liabilities         2,438   1,478    960
                                               -----------------------
Net interest income                             $5,303  $5,340   $(37)
                                               -----------------------

Average yields and rates paid
 Earning assets yield                             5.85%   5.44%  0.41%
 Rate paid on interest-bearing liabilities        2.23    1.46   0.77
                                               -----------------------
Gross interest margin                             3.62%   3.98%(0.36%)
                                               -----------------------
Net interest margin                               4.00%   4.26%(0.26%)
                                               -----------------------

Average balances
 Investment securities                         $42,308 $43,243  $(935)
 Loans                                         131,432 120,966 10,466
 Earning assets                                176,851 167,182  9,669
 Interest-bearing liabilities                  145,878 135,300 10,578
 Net free funds(a)                              30,973  31,882   (909)

(a) Represents noninterest-bearing deposits, allowance for loan
 losses, unrealized gain (loss) on available-for-sale securities, non-
 earning assets, other noninterest-bearing liabilities and equity.



AVERAGE LOANS                                                  Table 4
----------------------------------------------------------------------
($ in millions)                                        Percent Percent
                                                        Change Change
                               3Q       2Q       3Q    3Q05 vs 3Q05 vs
                              2005     2005     2004     2Q05   3Q04
                            ------------------------------------------

Commercial                   $38,343  $37,595  $34,457     2.0   11.3
Lease financing                4,908    4,922    4,860    (0.3)   1.0
                            ---------------------------
  Total commercial            43,251   42,517   39,317     1.7   10.0

Commercial mortgages          20,341   20,156   20,231     0.9    0.5
Construction and development   7,852    7,426    6,963     5.7   12.8
                            ---------------------------
  Total commercial real
   estate                     28,193   27,582   27,194     2.2    3.7

Residential mortgages         18,741   17,198   14,569     9.0   28.6

Credit card                    6,684    6,527    6,145     2.4    8.8
Retail leasing                 7,467    7,314    6,842     2.1    9.1
Home equity and second
 mortgages                    14,984   15,003   14,288    (0.1)   4.9
Other retail                  15,963   15,134   14,551     5.5    9.7
                            ---------------------------
  Total retail                45,098   43,978   41,826     2.5    7.8
                            ---------------------------

Total loans                 $135,283 $131,275 $122,906     3.1   10.1
                            ---------------------------


AVERAGE LOANS
----------------------------------------------------------------------
($ in millions)

                                                YTD      YTD   Percent
                                               2005     2004   Change
                                             -------------------------

Commercial                                    $37,348  $34,191    9.2
Lease financing                                 4,915    4,869    0.9
                                             ------------------
  Total commercial                             42,263   39,060    8.2

Commercial mortgages                           20,255   20,420   (0.8)
Construction and development                    7,507    6,720   11.7
                                             ------------------
  Total commercial real estate                 27,762   27,140    2.3

Residential mortgages                          17,266   14,079   22.6

Credit card                                     6,544    6,005    9.0
Retail leasing                                  7,328    6,507   12.6
Home equity and second mortgages               14,944   13,815    8.2
Other retail                                   15,325   14,360    6.7
                                             ------------------
  Total retail                                 44,141   40,687    8.5
                                             ------------------

Total loans                                  $131,432 $120,966    8.7
                                             ------------------

Average loans for the third quarter of 2005 were $12.4 billion (10.1 percent) higher than the third quarter of 2004, driven by growth in average residential mortgages of $4.2 billion (28.6 percent) total commercial loans of $3.9 billion (10.0 percent) and total retail loans of $3.3 billion (7.8 percent). Total commercial real estate loans also increased year-over-year by $1.0 billion (3.7 percent). Average loans for the third quarter of 2005 were higher than the second quarter of 2005 by $4.0 billion (3.1 percent), reflecting growth in substantially all loan categories.

Average investment securities in the third quarter of 2005 were $720 million (1.7 percent) lower than in the third quarter of 2004. Investment securities at September 30, 2005, were $1.9 billion higher than at September 30, 2004, but $783 million lower than the balance at June 30, 2005. The changes in the balance of the investment securities portfolio from a year ago principally reflected the net impact of repositioning the investment portfolio during 2004 as part of asset/liability risk management decisions to acquire variable-rate and shorter-term fixed-rate securities to minimize the Company's rate sensitivity position. The decline from second quarter of 2005 primarily represented maturities and prepayments with the proceeds being utilized to partially fund loan growth. During the third quarter of 2005, the Company maintained a mix of approximately 41 percent variable-rate securities.

AVERAGE DEPOSITS                                               Table 5
----------------------------------------------------------------------
($ in millions)                                        Percent Percent
                                                        Change Change
                               3Q       2Q       3Q    3Q05 vs 3Q05 vs
                              2005     2005     2004     2Q05   3Q04
                            ------------------------------------------

Noninterest-bearing deposits $29,434  $29,148  $29,791     1.0   (1.2)
Interest-bearing deposits
  Interest checking           22,508   23,024   20,413    (2.2)  10.3
  Money market accounts       28,740   29,563   31,854    (2.8)  (9.8)
  Savings accounts             5,777    5,886    5,854    (1.9)  (1.3)
                            ---------------------------
   Savings products           57,025   58,473   58,121    (2.5)  (1.9)

  Time certificates of
   deposit less than
   $100,000                   13,263   13,152   12,869     0.8    3.1
  Time deposits greater than
   $100,000                   21,262   20,459   14,535     3.9   46.3
                            ---------------------------
    Total interest-bearing
     deposits                 91,550   92,084   85,525    (0.6)   7.0
                            ---------------------------
Total deposits              $120,984 $121,232 $115,316    (0.2)   4.9
                            ---------------------------


AVERAGE DEPOSITS
----------------------------------------------------------------------
($ in millions)

                                                YTD      YTD   Percent
                                               2005     2004   Change
                                             -------------------------

Noninterest-bearing deposits                  $29,003  $29,807   (2.7)
Interest-bearing deposits
  Interest checking                            22,891   20,699   10.6
  Money market accounts                        29,517   33,492  (11.9)
  Savings accounts                              5,876    5,896   (0.3)
                                             ------------------
   Savings products                            58,284   60,087   (3.0)

  Time certificates of deposit less than
   $100,000                                    13,132   13,168   (0.3)
  Time deposits greater than $100,000          20,133   13,085   53.9
                                             ------------------
    Total interest-bearing deposits            91,549   86,340    6.0
                                             ------------------
Total deposits                               $120,552 $116,147    3.8
                                             ------------------

Average noninterest-bearing deposits for the third quarter of 2005 were lower than the third quarter of 2004 by $357 million (1.2 percent). The year-over-year change in the average balance of noninterest-bearing deposits was impacted by product changes in the Consumer Banking business line. In late 2004, the Company migrated approximately $1.3 billion of noninterest-bearing deposit balances to interest checking accounts as an enhancement to its Silver Elite Checking product. Average branch-based noninterest-bearing deposits in the third quarter of 2005, excluding the migration of certain high-value customers to Silver Elite Checking, were higher by approximately $120 million (1.0 percent) over the same quarter of 2004, as net new checking accounts continue to grow. Average noninterest-bearing deposits in other areas, including commercial banking and Private Client, Trust and Asset Management, also increased year-over-year. These favorable variances were offset somewhat by expected declines in average noninterest-bearing deposits in corporate banking as these customers utilize their excess liquidity.

Average total savings products declined year-over-year by $1.1 billion (1.9 percent), due to reductions in average money market account balances and savings accounts, partially offset by higher interest checking balances. Average branch-based interest checking deposits increased by $2.3 billion (15.2 percent) over the same quarter of 2004 due to strong new account growth, as well as the $1.3 billion migration of the Silver Elite Checking product. This positive variance in branch-based interest checking account deposits was partially offset by reductions in other areas, principally corporate banking. Average money market account balances declined by $3.1 billion (9.8 percent) year-over-year, with the largest decline in the branches. The overall decrease in average money market account balances year-over-year was the result of the Company's deposit pricing decisions. A portion of the money market balances have migrated to time deposits greater than $100,000 as rates increased on the time deposit products.

Average time certificates of deposit less than $100,000 were higher in the third quarter of 2005 than the third quarter of 2004 by $394 million (3.1 percent). The Company experienced year-over-year growth in average time deposits greater than $100,000 of $6.7 billion (46.3 percent), most notably in corporate banking, as customers migrated balances to higher rate deposits.

Average noninterest-bearing deposits for the third quarter of 2005 were $286 million (1.0 percent) higher than the second quarter of 2005. Average savings products declined by $1.4 billion (2.5 percent) in the current quarter from the second quarter of 2005. Average interest checking deposits declined $516 million (2.2 percent) primarily due to lower balances from corporate banking customers. Average money market account balances declined by $823 million (2.8 percent) reflecting customers' preference for higher yielding products. Time certificates of deposit less than $100,000 increased modestly from the second quarter of 2005, while time deposits greater than $100,000 rose by $803 million (3.9 percent), primarily due to the migration of corporate banking customer balances to these products.

NONINTEREST INCOME                                             Table 6
----------------------------------------------------------------------
($ in millions)                   Percent Percent
                                   Change Change
               3Q     2Q     3Q   3Q05 vs 3Q05 vs  YTD    YTD  Percent
              2005   2005   2004    2Q05   3Q04   2005   2004  Change
             ---------------------------------------------------------

Credit and
 debit card
 revenue       $185   $177   $164     4.5   12.8   $516   $465   11.0
Corporate
 payment
 products
 revenue        135    120    108    12.5   25.0    362    306   18.3
ATM
 processing
 services        64     57     45    12.3   42.2    168    132   27.3
Merchant
 processing
 services       200    198    188     1.0    6.4    576    494   16.6
Trust and
 investment
 management
 fees           251    253    240    (0.8)   4.6    751    740    1.5
Deposit
 service
 charges        246    234    208     5.1   18.3    690    595   16.0
Treasury
 management
 fees           109    117    118    (6.8)  (7.6)   333    357   (6.7)
Commercial
 products
 revenue        103    100    106     3.0   (2.8)   299    324   (7.7)
Mortgage
 banking
 revenue        111    110     97     0.9   14.4    323    301    7.3
Investment
 products
 fees and
 commissions     37     39     37    (5.1)    --    115    119   (3.4)
Securities
 gains
 (losses), net    1      1     88      --  (98.9)   (57)   (84)  32.1
Other           134    135    125    (0.7)   7.2    423    335   26.3
             ---------------------               --------------

Total
 noninterest
 income      $1,576 $1,541 $1,524     2.3    3.4 $4,499 $4,084   10.2
             ---------------------               --------------

Noninterest Income

Third quarter noninterest income was $1,576 million, an increase of $52 million (3.4 percent) from the same quarter of 2004, and $35 million (2.3 percent) higher than the second quarter of 2005. The increase in noninterest income over the third quarter of 2004 was driven by favorable variances in the majority of fee income categories, partially offset by an $87 million reduction in securities gains (losses). Credit and debit card revenue and corporate payment products revenue were both higher in the third quarter of 2005 than the third quarter of 2004 by $21 million and $27 million, or 12.8 percent and 25.0 percent, respectively. The growth in credit and debit card revenue was driven by higher transaction volumes and rate changes. The corporate payment products revenue growth reflected growth in sales, card usage, rate changes and the recent acquisition of a small fleet card business. ATM processing services revenue was higher by $19 million (42.2 percent) in the third quarter of 2005 than the same quarter of the prior year, primarily due to the expansion of the ATM business in May of 2005. Merchant processing services revenue was higher in the third quarter of 2005 than the same quarter of 2004 by $12 million (6.4 percent), reflecting an increase in sales volume, new business and higher equipment fees. Trust and investment management fees were higher by $11 million (4.6 percent) year-over-year, primarily due to improved equity market conditions and account growth. Deposit service charges were higher year-over-year by $38 million (18.3 percent) due to account growth and transaction-related fees. Mortgage banking revenue was higher in the third quarter of 2005 than the same quarter of 2004 by $14 million (14.4 percent), due to higher production volumes and increased servicing income. Other income was higher by $9 million (7.2 percent), primarily due to higher income from equity and other insurance investments relative to the same quarter of 2004. Partially offsetting these positive variances, year-over-year, were reductions in treasury management fees and commercial products revenue, which declined by $9 million (7.6 percent) and $3 million (2.8 percent), respectively. The decrease in treasury management fees was primarily due to higher earnings credit on customers' compensating balances relative to a year ago, reflecting rising interest rates. Commercial products revenue declined due to reductions in loan fees and international product revenue.

Noninterest income was higher in the third quarter of 2005 than the second quarter of 2005 by $35 million (2.3 percent), due to increases in a majority of the fee income categories. Credit and debit card revenue and corporate payment products revenue rose by $8 million (4.5 percent) and $15 million (12.5 percent), respectively, reflecting higher sales volumes. ATM processing services revenue increased by $7 million (12.3 percent) primarily due to the acquisition of a processing business in the second quarter of 2005. Deposit service charges were higher by $12 million (5.1 percent) in the third quarter of 2005 compared with the second quarter of 2005, reflecting higher transaction-related fees and net new account growth. Offsetting these favorable variances was a decrease in treasury management fees from the second quarter of 2005. The $8 million (6.8 percent) decline in treasury management fees reflected seasonal tax-related processing revenue in the second quarter of 2005.

NONINTEREST EXPENSE                                            Table 7
----------------------------------------------------------------------
($ in millions)                   Percent Percent
                                   Change Change
               3Q     2Q     3Q   3Q05 vs 3Q05 vs  YTD    YTD  Percent
               2005   2005   2004   2Q05   3Q04    2005   2004 Change
             ---------------------------------------------------------

Compensation   $603   $612   $564    (1.5)   6.9 $1,782 $1,673    6.5
Employee
 benefits       106    108    100    (1.9)   6.0    330    291   13.4
Net occupancy
 and
 equipment      162    159    159     1.9    1.9    475    468    1.5
Professional
 services        44     39     37    12.8   18.9    119    104   14.4
Marketing and
 business
 development     61     67     61    (9.0)    --    171    145   17.9
Technology
 and
 communications 118    113    110     4.4    7.3    337    314    7.3
Postage,
 printing and
 supplies        64     63     61     1.6    4.9    190    183    3.8
Other
 intangibles    125    181    210   (30.9) (40.5)   377    389   (3.1)
Debt
 prepayment      --     54      5      nm     nm     54     42   28.6
Other           190    199    211    (4.5) (10.0)   564    597   (5.5)
             ---------------------               --------------

Total
 noninterest
 expense     $1,473 $1,595 $1,518    (7.6)  (3.0)$4,399 $4,206    4.6
             ---------------------               --------------

Noninterest Expense

Third quarter noninterest expense totaled $1,473 million, a decrease of $45 million (3.0 percent) from the same quarter of 2004 and a $122 million (7.6 percent) decrease from the second quarter of 2005. The decrease in expense year-over-year was primarily driven by the $90 million favorable change in the valuation of mortgage servicing rights. Compensation expense was higher year-over-year by $39 million (6.9 percent), principally due to business expansion, including in-store branches, the Company's payment processing businesses, and other growth initiatives. Employee benefits increased year-over-year by $6 million (6.0 percent), primarily as a result of higher payroll taxes. Professional services expense increased $7 million (18.9 percent) due to increases in legal, and other professional services related to business initiatives, technology development, and the integration of specific payment processing businesses. Technology and communications expense rose by $8 million (7.3 percent), reflecting technology investments that increased software expense, in addition to outside data processing expense. Other expense declined in the third quarter from the same quarter of 2004 by $21 million (10.0 percent), primarily due to lower litigation costs, operating losses and business integration costs related to payment processing businesses relative to a year ago.

Noninterest expense in the third quarter of 2005 was lower than the second quarter of 2005 by $122 million (7.6 percent). The decrease in noninterest expense in the third quarter of 2005 from the second quarter of 2005 was primarily driven by a $56 million favorable change in the MSR valuation quarter-over-quarter, as well as a $54 million charge taken in connection with the Company's tender offer for certain debt securities in the second quarter of 2005. In addition, compensation expense was lower than the second quarter of 2005 by $9 million (1.5 percent), primarily due to lower incentives and stock-based compensation costs. Marketing and business development expense declined $6 million (9.0 percent) reflecting the timing of marketing programs and a decline in charitable contributions. Other expense declined in the third quarter from the second quarter of 2005 by $9 million (4.5 percent), primarily due to a reduction in write-downs associated with certain co-branding and lease arrangements recorded in the second quarter of 2005. Partially offsetting these favorable changes in noninterest expense were higher occupancy costs, professional services expense and technology costs. Professional services expense increased by $5 million (12.8 percent) as compared to the second quarter of 2005 due to integration and other business initiatives. Technology and communications expense rose by $5 million (4.4 percent) relative to the prior quarter primarily due to processing costs associated with recent acquisitions and business investments.

ALLOWANCE FOR CREDIT LOSSES                                    Table 8
----------------------------------------------------------------------
($ in millions)                      3Q     2Q     1Q     4Q     3Q
                                    2005   2005   2005   2004   2004
                                   -----------------------------------

Balance, beginning of period       $2,269 $2,269 $2,269 $2,370 $2,370

Net charge-offs
    Commercial                          7      9     14      8      2
    Lease financing                    16      6     13     10     19
                                   -----------------------------------
         Total commercial              23     15     27     18     21
    Commercial mortgages                2      1      4      9      3
    Construction and development       (2)    (3)     2      1      3
                                   -----------------------------------
        Total commercial real
         estate                        --     (2)     6     10      6

    Residential mortgages               9      8      9      8      7

    Credit card                        63     64     65     61     65
    Retail leasing                      5      5      8      9      9
    Home equity and second
     mortgages                         14     16     17     18     18
    Other retail                       42     38     40     39     40
                                   -----------------------------------
         Total retail                 124    123    130    127    132
                                   -----------------------------------
            Total net charge-offs     156    144    172    163    166
Provision for credit losses           145    144    172     64    166
Acquisitions and other changes         --     --     --     (2)    --
                                   -----------------------------------
Balance, end of period             $2,258 $2,269 $2,269 $2,269 $2,370
                                   -----------------------------------

Components
   Allowance for loan losses       $2,055 $2,082 $2,082 $2,080 $2,184
   Liability for unfunded credit
    commitments                       203    187    187    189    186
                                   -----------------------------------
            Total allowance for
             credit losses         $2,258 $2,269 $2,269 $2,269 $2,370
                                   -----------------------------------

Gross charge-offs                    $229   $222   $231   $235   $260
Gross recoveries                      $73    $78    $59    $72    $94

Net charge-offs to average loans(%)  0.46   0.44   0.55   0.52   0.54

Allowance as a percentage of:
   Period-end loans                  1.65   1.70   1.76   1.80   1.90
   Nonperforming loans                438    441    404    355    337
   Nonperforming assets               368    372    341    303    294

Credit Quality

The allowance for credit losses was $2,258 million at September 30, 2005, compared with $2,269 million at June 30, 2005, and $2,370 million at September 30, 2004. The ratio of the allowance for credit losses to period-end loans was 1.65 percent at September 30, 2005, compared with 1.70 percent at June 30, 2005, and 1.90 percent at September 30, 2004. The ratio of the allowance for credit losses to nonperforming loans was 438 percent at September 30, 2005, compared with 441 percent at June 30, 2005, and 337 percent at September 30, 2004. Total net charge-offs in the third quarter of 2005 were $156 million, compared with the second quarter of 2005 net charge-offs of $144 million and the third quarter of 2004 net charge-offs of $166 million.

Commercial and commercial real estate loan net charge-offs were $23 million for the third quarter of 2005, or .13 percent of average loans outstanding, compared with $13 million, or .07 percent of average loans outstanding, in the second quarter of 2005 and $27 million, or .16 percent of average loans outstanding, in the third quarter of 2004. The increase in net charge-offs reflected a $12 million charge-off of a leveraged lease of a single airline entering bankruptcy during the quarter.

Retail loan net charge-offs of $124 million in the third quarter of 2005 were virtually flat as compared to the $123 million in the second quarter of 2005 and $8 million (6.1 percent) lower than the third quarter of 2004. Retail loan net charge-offs as a percent of average loans outstanding were 1.09 percent in the third quarter of 2005, compared with 1.12 percent and 1.26 percent in the second quarter of 2005 and third quarter of 2004, respectively. Lower levels of retail loan net charge-offs principally reflected the Company's ongoing improvement in collection efforts and risk management.

CREDIT RATIOS                                                  Table 9
----------------------------------------------------------------------
(Percent)                            3Q     2Q     1Q     4Q     3Q
                                    2005   2005   2005   2004   2004
                                   -----------------------------------
Net charge-offs ratios(a)
   Commercial                        0.07   0.10   0.16   0.09   0.02
   Lease financing                   1.29   0.49   1.07   0.82   1.56
      Total commercial               0.21   0.14   0.27   0.18   0.21

   Commercial mortgages              0.04   0.02   0.08   0.18   0.06
   Construction and development     (0.10) (0.16)  0.11   0.05   0.17
      Total commercial real estate     --  (0.03)  0.09   0.14   0.09

   Residential mortgages             0.19   0.19   0.23   0.21   0.19

   Credit card                       3.74   3.93   4.11   3.82   4.21
   Retail leasing                    0.27   0.27   0.45   0.51   0.52
   Home equity and second mortgages  0.37   0.43   0.46   0.49   0.50
   Other retail                      1.04   1.01   1.09   1.06   1.09
      Total retail                   1.09   1.12   1.22   1.18   1.26

Total net charge-offs                0.46   0.44   0.55   0.52   0.54

Delinquent loan ratios - 90 days or more past due excluding
 nonperforming loans(b)
   Commercial                        0.04   0.05   0.06   0.05   0.05
   Commercial real estate            0.01   0.01   0.02     --   0.01
   Residential mortgages             0.30   0.32   0.41   0.46   0.46
   Retail                            0.41   0.40   0.43   0.47   0.47
Total loans                          0.19   0.19   0.22   0.23   0.23

Delinquent loan ratios - 90 days or more past due including
 nonperforming loans(b)
   Commercial                        0.74   0.74   0.84   0.99   1.14
   Commercial real estate            0.57   0.59   0.68   0.73   0.75
   Residential mortgages             0.53   0.55   0.66   0.74   0.77
   Retail                            0.43   0.43   0.47   0.51   0.51
Total loans                          0.57   0.58   0.66   0.74   0.80

(a) annualized and calculated on average loan balances
(b) ratios are expressed as a percent of ending loan balances
----------------------------------------------------------------------



ASSET QUALITY                                                 Table 10
----------------------------------------------------------------------
($ in millions)
                               Sep 30  Jun 30  Mar 31  Dec 31  Sep 30
                                2005    2005    2005    2004    2004
                              ----------------------------------------
Nonperforming loans
   Commercial                    $265    $238    $254    $289    $348
   Lease financing                 35      60      70      91      91
                              ----------------------------------------
      Total commercial            300     298     324     380     439
   Commercial mortgages           144     140     159     175     166
   Construction and
    development                    16      21      21      25      35
                              ----------------------------------------
      Commercial real estate      160     161     180     200     201
   Residential mortgages           44      42      41      43      46
   Retail                          12      13      16      17      17
                              ----------------------------------------
Total nonperforming loans         516     514     561     640     703

Other real estate                  68      68      66      72      69
Other nonperforming assets         29      28      38      36      33
                              ----------------------------------------

Total nonperforming assets(a)    $613    $610    $665    $748    $805
                              ----------------------------------------

Accruing loans 90 days or more
 past due                        $265    $258    $285    $294    $292
                              ----------------------------------------

Nonperforming assets to loans
   plus ORE (%)                  0.45    0.46    0.52    0.59    0.64

(a) does not include accruing loans 90 days or more past due
----------------------------------------------------------------------

Nonperforming assets at September 30, 2005, totaled $613 million, compared with $610 million at June 30, 2005, and $805 million at September 30, 2004. The ratio of nonperforming assets to loans and other real estate was .45 percent at September 30, 2005, compared with .46 percent at June 30, 2005, and .64 percent at September 30, 2004.

CAPITAL POSITION                                             Table 11
----------------------------------------------------------------------
($ in millions)           Sep 30   Jun 30   Mar 31   Dec 31   Sep 30
                           2005     2005     2005     2004     2004
                         --------------------------------------------

Total shareholders'
 equity                  $19,864  $19,901  $19,208  $19,539  $19,600
Tier 1 capital            15,180   14,564   14,943   14,720   14,589
Total risk-based capital  23,283   22,362   23,099   23,352   21,428

Common equity to assets      9.6 %    9.8 %    9.7 %   10.0 %   10.2 %
Tangible common equity to
 assets                      6.2      6.1      6.2      6.4      6.4
Tier 1 capital ratio         8.4      8.1      8.6      8.6      8.7
Total risk-based capital
 ratio                      12.8     12.5     13.3     13.1     12.7
Leverage ratio               7.7      7.5      7.9      7.9      7.9

Total shareholders' equity was $19.9 billion at September 30, 2005, compared with $19.6 billion at September 30, 2004. The increase was the result of corporate earnings offset by share buybacks and dividends.

Tangible common equity to assets was 6.2 percent at September 30, 2005, compared with 6.1 percent at June 30, 2005, and 6.4 percent at September 30, 2004. The Tier 1 capital ratio was 8.4 percent at September 30, 2005, compared with 8.1 percent at June 30, 2005, and 8.7 percent at September 30, 2004. The total risk-based capital ratio was 12.8 percent at September 30, 2005, compared with 12.5 percent at June 30, 2005, and 12.7 percent at September 30, 2004. The leverage ratio was 7.7 percent at September 30, 2005, compared with 7.5 percent at June 30, 2005, and 7.9 percent at September 30, 2004. All regulatory ratios continue to be in excess of stated "well capitalized" requirements.

COMMON SHARES                                                 Table 12
----------------------------------------------------------------------
(Millions)                      3Q      2Q      1Q       4Q      3Q
                               2005    2005     2005    2004    2004
                             -----------------------------------------

Beginning shares outstanding   1,829   1,842    1,858   1,871   1,884

Shares issued for stock
 option and stock purchase
  plans, acquisitions and
   other corporate purposes        5       4        4       7       6
Shares repurchased               (16)    (17)     (20)    (20)    (19)
                             -----------------------------------------
Ending shares outstanding      1,818   1,829    1,842   1,858   1,871
                             -----------------------------------------

On December 21, 2004, the Board of Directors of U.S. Bancorp approved an authorization to repurchase up to 150 million shares of outstanding common stock during the following 24 months. This repurchase program replaced the Company's previous program. During the third quarter of 2005, the Company repurchased 16 million shares of common stock. As of September 30, 2005, there were approximately 92 million shares remaining to be repurchased under the current authorization.

LINE OF BUSINESS FINANCIAL PERFORMANCE(a)                    Table 13
----------------------------------------------------------------------
($ in millions)
                                    Net Income        Percent Change
                               --------------------- -----------------
                                 3Q     2Q     3Q    3Q05 vs  3Q05 vs
Business Line                   2005   2005   2004     2Q05    3Q04
                               ---------------------------------------

Wholesale Banking                $259   $266   $249     (2.6)     4.0
Consumer Banking                  473    454    384      4.2     23.2

Private Client, Trust and Asset
 Management                       123    117     96      5.1     28.1
Payment Services                  207    182    165     13.7     25.5
Treasury and Corporate Support     92    102    172     (9.8)   (46.5)
                               ---------------------

Consolidated Company           $1,154 $1,121 $1,066      2.9      8.3
                               ---------------------
(a)  preliminary data
----------------------------------------------------------------------


LINE OF BUSINESS FINANCIAL PERFORMANCE(a)
----------------------------------------------------------------------
($ in millions)
                                                             3Q 2005
                                     YTD     YTD   Percent  Earnings
Business Line                       2005    2004    Change Composition
                                   -----------------------------------

Wholesale Banking                     $781    $716     9.1        22 %
Consumer Banking                     1,333   1,085    22.9        41

Private Client, Trust and Asset
 Management                            352     292    20.5        11
Payment Services                       554     475    16.6        18
Treasury and Corporate Support         326     543   (40.0)        8
                                   ----------------        ----------

Consolidated Company                $3,346  $3,111     7.6       100 %
                                   ----------------        ----------

(a)  preliminary data
----------------------------------------------------------------------

Lines of Business

Within the Company, financial performance is measured by major lines of business, which include Wholesale Banking, Consumer Banking, Private Client, Trust and Asset Management, Payment Services, and Treasury and Corporate Support. These operating segments are components of the Company about which financial information is available and is evaluated regularly in deciding how to allocate resources and assess performance. Noninterest expenses incurred by centrally managed operations or business lines that directly support another business line's operations are charged to the applicable business line based on its utilization of those services primarily measured by the volume of customer activities, number of employees or other relevant factors. These allocated expenses are reported as net shared services expense within noninterest expense. Designations, assignments and allocations change from time to time as management systems are enhanced, methods of evaluating performance or product lines change or business segments are realigned to better respond to our diverse customer base. During 2005, certain organization and methodology changes were made and, accordingly, prior period results have been restated and presented on a comparable basis.

Wholesale Banking offers lending, depository, treasury management and other financial services to middle market, large corporate and public sector clients. Wholesale Banking contributed $259 million of the Company's net income in the third quarter of 2005, a 4.0 percent increase over the same period of 2004 and a 2.6 percent decrease from the second quarter of 2005. The increase in Wholesale Banking's third quarter 2005 contribution over the same quarter of 2004 was primarily the result of favorable variances in total net revenue (3.2 percent) and total noninterest expense (1.9 percent). Partly offsetting these positive variances was a reduction in net recoveries (66.7 percent) reflected in the provision for credit losses. The favorable variance in total net revenue year-over-year was primarily the result of growth in net interest income (5.9 percent), as the business line's noninterest income declined slightly. The increase in net interest income was driven by growth in average loans and deposits outstanding and wider deposit spreads, partially offset by tighter credit spreads. Total noninterest income declined $4 million year-over-year, as a decline in treasury management fees (6.1 percent) was somewhat offset by higher commercial products revenue and other revenue relative to the third quarter of 2004. The decrease in treasury management fees was primarily due to higher earnings credit on customers' compensating balances relative to a year ago, reflecting rising interest rates. Wholesale Banking's favorable variance in total noninterest expense year-over-year was the result of lower net shared services and other noninterest expense, partially offset by an increase in compensation and employee benefits. Net recoveries of $4 million in the current quarter, compared with net recoveries of $12 million in the third quarter of 2004, drove the unfavorable variance in the provision for credit losses year-over-year. The decrease in Wholesale Banking's contribution to net income in the third quarter of 2005 from the second quarter of 2005 was the result of unfavorable variances in total net revenue (1.1 percent) and the provision for credit losses, partially offset by a decrease in total noninterest expense (3.8 percent). Total net revenue was lower on a linked quarter basis primarily due to tightening credit spreads, partially offset by the benefit from wider deposit spreads. The decrease in noninterest income on a linked quarter basis was primarily due to a decrease in treasury management fees (8.3 percent), which reflected seasonal tax-related processing revenue in the second quarter of 2005, and a decline in income related to equity investments. The decrease in total noninterest expense was principally due to lower net shared services expense related to transaction volumes for the seasonal tax receipt processing activities and other expense. Net recoveries of $4 million in the third quarter of 2005, compared with net recoveries of $16 million in the second quarter of 2005, drove the unfavorable variance in the provision for credit losses quarter-over-quarter.

Consumer Banking delivers products and services through banking offices, telephone servicing and sales, on-line services, direct mail and ATMs. It encompasses community banking, metropolitan banking, in-store banking, small business banking, including lending guaranteed by the Small Business Administration, small-ticket leasing, consumer lending, mortgage banking, consumer finance, workplace banking, student banking, 24-hour banking, and investment product and insurance sales. Consumer Banking contributed $473 million of the Company's net income in the third quarter of 2005, a 23.2 percent increase over the same period of 2004 and a 4.2 percent increase over the prior quarter. The favorable increase year-over-year was the result of higher total net revenue (10.4 percent) and lower provision for credit losses (18.2 percent), partially offset by an increase in total noninterest expense (3.0 percent). Total net revenue was higher than the same quarter of 2004 due to increases in both net interest income (9.8 percent) and noninterest income (11.5 percent). Net interest income was higher year-over-year due to wider deposit spreads. Net interest income generated by growth in average loan balances was substantially offset by lower spreads on those assets given the competitive lending environment. Noninterest income improved in the third quarter of 2005 over the same period of 2004, principally due to growth in deposit service charges (18.4 percent) and mortgage banking revenue (14.3 percent). Total noninterest expense in the third quarter of 2005 was higher than the same quarter of 2004, primarily due to an increase in compensation and employee benefits (6.5 percent), the result of the Company's in-store branch expansion, other hiring initiatives and production-based incentives. A year-over-year reduction in net charge-offs (18.2 percent) drove the positive variance in the business line's provision for credit losses.

The increase in Consumer Banking's contribution in the third quarter of 2005 over the prior quarter was the net result of favorable variances in total net revenue (3.0 percent), partly offset by an increase in total noninterest expense (1.5 percent) and provision for credit losses (5.9 percent). Net interest income was higher quarter-over-quarter largely due to increases in average loans outstanding and deposit spreads relative to the prior quarter, which were partly offset by lower credit spreads. Noninterest income was higher (4.6 percent) than the prior quarter primarily due to growth in deposit service charges and other revenue. The unfavorable variance in total noninterest expense quarter-over-quarter was driven by an increase in marketing and business development expense. A 5.9 percent increase in net charge-offs quarter-over-quarter drove the unfavorable variance in the provision for credit losses.

Private Client, Trust and Asset Management provides trust, private banking, financial advisory, investment management and mutual fund servicing through five businesses: Private Client Group, Corporate Trust, Asset Management, Institutional Trust and Custody and Fund Services. Private Client, Trust and Asset Management contributed $123 million of the Company's net income in the third quarter of 2005, 28.1 percent higher than the same period of 2004 and 5.1 percent higher than the prior quarter of 2005. The increase in the business line's contribution in the third quarter of 2005 over the same quarter of 2004 was the result of favorable variances in total net revenue (11.9 percent). Total noninterest expense remained relatively flat year-over-year. Net interest income was favorably impacted year-over-year by wider deposit spreads and growth in deposit balances. Noninterest income increased by 7.0 percent from the same quarter of 2004, primarily due to improved equity market conditions and account growth. The business line's contribution in the third quarter of 2005 increased 5.1 percent as compared with the prior quarter, with total net revenue slightly higher (1.6 percent) and total noninterest expense and provision for credit losses remaining relatively flat.

Payment Services includes consumer and business credit cards, debit cards, corporate and purchasing card services, consumer lines of credit, ATM processing and merchant processing. Payment Services contributed $207 million of the Company's net income in the third quarter of 2005, a 25.5 percent increase over the same period of 2004 and a 13.7 percent increase over the second quarter of 2005. The increase in Payment Services' contribution in the third quarter of 2005 over the same period of 2004 was the result of higher total net revenue (14.8 percent) and a slightly lower provision for credit losses (2.2 percent), partially offset by an increase in total noninterest expense (11.0 percent). The increase in total net revenue year-over-year was due to growth in total noninterest income (16.3 percent) and net interest income (9.6 percent), reflecting growth in higher yielding retail loan balances, offset by increases in corporate card balances and rebates. The increase in noninterest income was principally the result of growth in credit and debit card revenue (13.5 percent), corporate payment products revenue (25.0 percent), ATM processing services revenue (63.3 percent) and merchant processing services revenue (6.4 percent). All categories benefited from higher transaction volumes, rate changes and business expansion initiatives. The growth in total noninterest expense year-over-year primarily reflected an increase in processing expense related to the business line's revenue growth, including costs associated with smaller Payment Services acquisitions. The increase in Payment Services' contribution in the third quarter of 2005 over the prior quarter was primarily due to seasonally strong growth in total net revenue (7.4 percent), and lower provision for credit losses (4.3 percent), partly offset by higher total noninterest expense (5.0 percent). Net interest income increased 13.8 percent quarter-over-quarter, and fee-based revenue rose by 5.9 percent due to seasonally higher retail and corporate credit card sales volumes, ATM processing services revenue and merchant processing fees. The unfavorable variance in total noninterest expense from the prior quarter was primarily due to personnel and other costs to support ongoing business expansion and marketing programs.

Treasury and Corporate Support includes the Company's investment portfolios, funding, capital management and asset securitization activities, interest rate risk management, the net effect of transfer pricing related to average balances and the residual aggregate of those expenses associated with corporate activities that are managed on a consolidated basis. In addition, changes in MSR valuations primarily due to interest rates are managed at a corporate level and, as such, reported within this business unit. Operational expenses incurred by Treasury and Corporate Support on behalf of the other business lines are allocated back to the appropriate business unit, primarily based on customer transaction volume and account activities, deposit balances and employee levels and are identified as net shared services expense. Treasury and Corporate Support recorded net income of $92 million in the third quarter of 2005, compared with net income of $172 million in the third quarter of 2004 and $102 million in the second quarter of 2005. The change in net income in the current quarter from the same quarter of 2004 was the net result of the unfavorable change in net interest income (60.5 percent) reflecting the Company's asset/liability management decisions, including higher-cost fixed funding and repositioning of the Company for changes in the interest rate environment, and the $86 million unfavorable change in net securities gains (losses), partially offset by favorable variances in the MSR valuation ($90 million) and debt prepayment expense ($5 million). Net income in the third quarter of 2005 was lower than net income in the second quarter of 2005, the result of the $94 million tax benefit realized in the second quarter of 2005, offset by a favorable MSR valuation ($56 million) and the second quarter of 2005 debt prepayment expense ($54 million). Total net interest income declined quarter-over-quarter, primarily due to the continuing asset/liability management decisions of the Company.

Additional schedules containing more detailed information about the Company's business line results are available on the web at usbank.com or by calling Investor Relations at 612-303-0781.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER, JERRY A. GRUNDHOFER, AND VICE CHAIRMAN AND CHIEF FINANCIAL OFFICER, DAVID M. MOFFETT, WILL REVIEW THE FINANCIAL RESULTS IN A PRE-RECORDED CALL ON TUESDAY, OCTOBER 18, 2005. The call will be available by telephone or on the internet. The pre-recorded call will be available from approximately 7:00 a.m. (CDT) on Tuesday, October 18th through Tuesday, October 25th at 11:00 p.m. (CDT). To access the recorded call, please dial 800-938-1601. Participants calling from outside the United States, please call 402-220-1546. Find the recorded call via the internet at usbank.com.

Minneapolis-based U.S. Bancorp ("USB"), with $207 billion in assets, is the 6th largest financial holding company in the United States. The Company operates 2,396 banking offices and 4,986 ATMs, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. U.S. Bancorp is the parent company of U.S. Bank. Visit U.S. Bancorp on the web at usbank.com.

Forward-Looking Statements

This press release contains forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. These statements often include the words "may," "could," "would," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook" or similar expressions. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future prospects of the Company. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including the following, in addition to those contained in the Company's reports on file with the SEC: (i) general economic or industry conditions could be less favorable than expected, resulting in a deterioration in credit quality, a change in the allowance for credit losses, or a reduced demand for credit or fee-based products and services; (ii) changes in the domestic interest rate environment could reduce net interest income and could increase credit losses; (iii) inflation, changes in securities market conditions and monetary fluctuations could adversely affect the value or credit quality of the Company's assets, or the availability and terms of funding necessary to meet the Company's liquidity needs; (iv) changes in the extensive laws, regulations and policies governing financial services companies could alter the Company's business environment or affect operations; (v) the potential need to adapt to industry changes in information technology systems, on which the Company is highly dependent, could present operational issues or require significant capital spending; (vi) competitive pressures could intensify and affect the Company's profitability, including as a result of continued industry consolidation, the increased availability of financial services from non-banks, technological developments, or bank regulatory reform; (vii) changes in consumer spending and savings habits could adversely affect the Company's results of operations; (viii) changes in the financial performance and condition of the Company's borrowers could negatively affect repayment of such borrowers' loans; (ix) acquisitions may not produce revenue enhancements or cost savings at levels or within time frames originally anticipated, or may result in unforeseen integration difficulties; (x) capital investments in the Company's businesses may not produce expected growth in earnings anticipated at the time of the expenditure; and (xi) acts or threats of terrorism, and/or political and military actions taken by the U.S. or other governments in response to acts or threats of terrorism or otherwise could adversely affect general economic or industry conditions. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events.

U.S. Bancorp
Consolidated Statement of Income

(Dollars and Shares in Millions,  Except Per Share Data)

                                 Three Months Ended  Nine Months Ended
                                    September 30,      September 30,
                                 -------------------------------------
(Unaudited)                         2005      2004     2005     2004
----------------------------------------------------------------------
Interest Income
Loans                               $2,167   $1,803   $6,105   $5,290
Loans held for sale                     30       21       75       68
Investment securities                  492      453    1,454    1,366
Other interest income                   29       26       84       73
                                 -------------------------------------
        Total interest income        2,718    2,303    7,718    6,797
Interest Expense
Deposits                               414      222    1,083      654
Short-term borrowings                  205       74      460      183
Long-term debt                         317      232      895      641
                                 -------------------------------------
        Total interest expense         936      528    2,438    1,478
                                 -------------------------------------
Net interest income                  1,782    1,775    5,280    5,319
Provision for credit losses            145      166      461      605
                                 -------------------------------------
Net interest income after
 provision for credit losses         1,637    1,609    4,819    4,714
Noninterest Income
Credit and debit card revenue          185      164      516      465
Corporate payment products
 revenue                               135      108      362      306
ATM processing services                 64       45      168      132
Merchant processing services           200      188      576      494
Trust and investment management
 fees                                  251      240      751      740
Deposit service charges                246      208      690      595
Treasury management fees               109      118      333      357
Commercial products revenue            103      106      299      324
Mortgage banking revenue               111       97      323      301
Investment products fees and
 commissions                            37       37      115      119
Securities gains (losses), net           1       88      (57)     (84)
Other                                  134      125      423      335
                                 -------------------------------------
        Total noninterest income     1,576    1,524    4,499    4,084
Noninterest Expense
Compensation                           603      564    1,782    1,673
Employee benefits                      106      100      330      291
Net occupancy and equipment            162      159      475      468
Professional services                   44       37      119      104
Marketing and business
 development                            61       61      171      145
Technology and communications          118      110      337      314
Postage, printing and supplies          64       61      190      183
Other intangibles                      125      210      377      389
Debt prepayment                         --        5       54       42
Other                                  190      211      564      597
                                 -------------------------------------
        Total noninterest expense    1,473    1,518    4,399    4,206
                                 -------------------------------------
Income before income taxes           1,740    1,615    4,919    4,592
Applicable income taxes                586      549    1,573    1,481
                                 -------------------------------------
Net income                          $1,154   $1,066   $3,346   $3,111
                                 -------------------------------------

Earnings per share                    $.63     $.57    $1.82    $1.64
Diluted earnings per share            $.62     $.56    $1.80    $1.62
Dividends declared per share          $.30     $.24     $.90     $.72
Average common shares outstanding    1,823    1,877    1,836    1,895
Average diluted common shares
 outstanding                         1,849    1,904    1,862    1,919
----------------------------------------------------------------------



U.S. Bancorp
Consolidated Ending Balance Sheet

                              September 30, December 31, September 30,
(Dollars in Millions)             2005          2004         2004
----------------------------------------------------------------------
Assets                         (Unaudited)                (Unaudited)
Cash and due from banks              $6,918       $6,336       $6,969
Investment securities
    Held-to-maturity                    114          127          120
    Available-for-sale               41,402       41,354       39,534
Loans held for sale                   1,695        1,439        1,372
Loans
    Commercial                       43,237       40,173       40,151
    Commercial real estate           28,521       27,585       27,414
    Residential mortgages            19,469       15,367       14,741
    Retail                           45,400       43,190       42,520
                              ----------------------------------------
        Total loans                 136,627      126,315      124,826
            Less allowance for
             loan losses             (2,055)      (2,080)      (2,184)
                              ----------------------------------------
            Net loans               134,572      124,235      122,642
Premises and equipment                1,850        1,890        1,894
Customers' liability on
 acceptances                             85           95          146
Goodwill                              6,372        6,241        6,226
Other intangible assets               2,586        2,387        2,419
Other assets                         11,301       11,000       11,522
                              ----------------------------------------
            Total assets           $206,895     $195,104     $192,844
                              ----------------------------------------

Liabilities and Shareholders'
 Equity
Deposits
    Noninterest-bearing             $30,871      $30,756      $31,585
    Interest-bearing                 69,478       71,936       70,011
    Time deposits greater than
     $100,000                        20,446       18,049       13,971
                              ----------------------------------------
        Total deposits              120,795      120,741      115,567
Short-term borrowings                23,061       13,084       12,648
Long-term debt                       36,257       34,739       38,004
Acceptances outstanding                  85           95          146
Other liabilities                     6,833        6,906        6,879
                              ----------------------------------------
        Total liabilities           187,031      175,565      173,244
Shareholders' equity
    Common stock                         20           20           20
    Capital surplus                   5,913        5,902        5,868
    Retained earnings                18,457       16,758       16,260
    Less treasury stock              (4,318)      (3,125)      (2,710)
    Other comprehensive income         (208)         (16)         162
                              ----------------------------------------
        Total shareholders'
         equity                      19,864       19,539       19,600
                              ----------------------------------------
        Total liabilities and
         shareholders' equity      $206,895     $195,104     $192,844
----------------------------------------------------------------------

SOURCE: U.S. Bancorp

U.S. Bancorp
Media Relations - Steve Dale, 612-303-0784
Investor Relations - Judith T. Murphy, 612-303-0783

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding U.S. Bancorp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.



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