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U.S. Bancorp Reports Record Net Income for the First Quarter of 2006

MINNEAPOLIS--(BUSINESS WIRE)--April 18, 2006--U.S. Bancorp (NYSE:USB):

EARNINGS SUMMARY                                               Table 1
----------------------------------------------------------------------
($ in millions, except per-share data)                Percent Percent
                                                      Change  Change
                                   1Q     4Q     1Q   1Q06 vs 1Q06 vs
                                  2006   2005   2005  4Q05    1Q05
                                 -------------------------------------


Net income                       $1,153 $1,143 $1,071     0.9     7.7
Earnings per share (diluted)       0.63   0.62   0.57     1.6    10.5

Return on average assets (%)       2.23   2.18   2.21
Return on average common equity
 (%)                               23.3   22.6   21.9
Efficiency ratio (%)               44.9   43.3   41.7
Tangible efficiency ratio (%)(a)   42.4   40.9   39.5

Dividends declared per common
 share                            $0.33  $0.33  $0.30      --    10.0
Book value per common share
 (period-end)                     10.80  11.07  10.43    (2.4)    3.5
Net interest margin (%)            3.80   3.88   4.08

(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 $1,153 million for the first quarter of 2006, compared with $1,071 million for the first quarter of 2005. Net income of $.63 per diluted share in the first quarter of 2006 was higher than the same period of 2005 by 10.5 percent, or $.06 per diluted share. Return on average assets and return on average common equity were 2.23 percent and 23.3 percent, respectively, for the first quarter of 2006, compared with returns of 2.21 percent and 21.9 percent, respectively, for the first quarter of 2005.

U.S. Bancorp Chairman and Chief Executive Officer Jerry A. Grundhofer said, "Our Company's first quarter results included a number of highlights. We, once again, achieved industry-leading performance metrics of return on assets of 2.23 percent and return on average common equity of 23.3 percent. In fact, the return on average common equity, along with earnings of 63 cents per diluted share, were record highs for our Company. Further, we returned 158 percent of our earnings to our shareholders through dividends and share buybacks, while exceeding our capital targets for the quarter.

"Year-over-year, this quarter's results were driven by very good growth in our fee-based businesses, as well as lower credit costs. Fees, driven by payments, trust and investment management and retail banking, grew year-over-year by 12 percent. This increase represented both strong organic growth and the benefit of recent acquisitions in the payments and trust and investment management business lines. Fee-based revenue growth was solid year-over-year and, as you know, our first quarter is seasonally the weakest.

"We achieved good quality loan growth again this quarter, although competitive pricing and mix did have an impact on our net interest margin. The net interest margin declined 28 basis points from the first quarter of last year, 20 basis points of which were due to pricing and growth in lower spread assets. At this point it appears as though credit spreads have stabilized. Going forward we will continue to focus on high quality credits which carry the opportunity to cross-sell our great fee-based products.

"Credit quality was outstanding this quarter. I am very proud of the improvements we have seen over the past few years in the Company's overall asset quality. We have worked hard to reduce the overall risk profile of the Company and we are seeing the results. We will continue to focus on growing a high-quality loan portfolio that will minimize the volatility of our credit costs now and in the future.

"Finally, I am proud to announce that April marks the 10-year anniversary of the U.S. Bank Five Star Service Guarantee. Over that ten year period we have used both internal and external measurement tools to track and monitor our success in delivering five star service to our customers, and I am very pleased with the results and how we compare to our major competitors. Our focus on customer service is paying off, and I want to take this opportunity to thank every employee for their dedication to serving their customers and representing our brand so well.

"We will continue to leverage our balanced business mix, advantaged scale, reduced risk profile, low-cost leadership and dedication to customer service to produce high quality earnings for our shareholders."

The Company's results for the first quarter of 2006 improved over the same period of 2005, as net income increased by $82 million (7.7 percent), primarily due to growth in a majority of fee-based products and lower provision for credit losses due to strong credit quality and the near-term favorable impact of bankruptcy legislation enacted in the fourth quarter of 2005. In addition, results for the first quarter of 2006 were impacted by a few notable items. First, mortgage banking revenue and noninterest expense were impacted by the Company's adoption of Statement of Financial Accounting Standards No. 156 "Accounting for Servicing of Financial Assets" ("SFAS 156"). This statement, issued by the Financial Accounting Standards Board on March 17, 2006, allowed for the adoption of the fair value method of accounting for servicing assets, including mortgage servicing rights ("MSR"). SFAS 156 is effective as of the beginning of any fiscal year after September 15, 2006, with early adoption permitted as of January 1, 2006. The Company elected to retroactively adopt the standard effective January 1, 2006, for its residential mortgage servicing rights resulting in a reduction in mortgage banking revenue of approximately $64 million. This revenue reduction consisted of several components including losses on principal-only securities reclassified as trading securities, a hedging/MSR valuation mismatch due to the timing of the issuance of SFAS 156, and the effect of repayments on the valuation of servicing rights that was previously recognized as part of MSR amortization. This impact to mortgage banking revenue was offset somewhat by changes in noninterest expense resulting in a favorable net effect of $24 million from eliminating mortgage servicing rights amortization and reparation under the new standard. Secondly, during the first quarter, the Company identified certain interest rate swaps that did not qualify for hedge accounting. As a result, the value of these derivatives was recorded as a $44 million trading gain in other noninterest income. Finally, during the first quarter of 2006, the Company implemented Statement of Financial Accounting Standards No. 123R, "Share-Based Payment" ("SFAS 123R"), a revision of an earlier stock-based compensation standard. As a result, the Company recognized $13 million of incremental stock-based compensation expense due to certain provisions that require immediate expense recognition of the value of stock awards to employees that meet retiree status, despite their continued active employment service.

Total net revenue on a taxable-equivalent basis for the first quarter of 2006 was $206 million (6.6 percent) higher than the first quarter of 2005, primarily reflecting a 16.8 percent increase in noninterest income partially offset by a 1.5 percent decline in net interest income. Noninterest income growth was due to 12.0 percent growth in fee-based revenue across the majority of fee categories driven by organic growth, the expansion in trust and payment processing businesses and the recognition of the derivatives gain, partially offset by the impact of adopting SFAS 156. In addition, there was a favorable change due to $59 million in securities losses in the first quarter of 2005. Total noninterest expense in the first quarter of 2006 was $169 million (12.7 percent) higher than the first quarter of 2005, primarily reflecting operating expenses and business integration costs principally associated with the trust and payment processing businesses, increased pension costs and higher amortization for investments in tax-advantaged projects from a year ago.

Provision for credit losses for the first quarter of 2006 was $115 million, a decrease of $57 million from the first quarter of 2005. The decrease in the provision for credit losses year-over-year primarily reflected strong credit quality and the near-term favorable impact of changes in bankruptcy law in the fourth quarter of 2005. Net charge-offs in the first quarter of 2006 were $115 million, compared with the fourth quarter of 2005 net charge-offs of $213 million and the first quarter of 2005 net charge-offs of $172 million. Net charge-offs in the fourth quarter of 2005 included approximately $56 million of additional bankruptcy related charge-offs and $8 million of charge-offs related to a policy change to shorten the timeframe for charging off overdrawn deposit accounts in accordance with regulatory guidance. Total nonperforming assets were $619 million at March 31, 2006, compared with $644 million at December 31, 2005, and $665 million at March 31, 2005. The ratio of the allowance for credit losses to nonperforming loans was 432 percent at March 31, 2006, compared with 414 percent at December 31, 2005, and 404 percent at March 31, 2005.

INCOME STATEMENT HIGHLIGHTS                                    Table 2
----------------------------------------------------------------------
(Taxable-equivalent basis, $ in
 millions, except per-share data)                     Percent Percent
                                                      Change  Change
                                 1Q      4Q      1Q   1Q06 vs 1Q06 vs
                                2006    2005    2005  4Q05    1Q05
                               ---------------------------------------

Net interest income            $1,725  $1,785  $1,751    (3.4)   (1.5)
Noninterest income              1,614   1,546   1,382     4.4    16.8
                               -----------------------
  Total net revenue             3,339   3,331   3,133     0.2     6.6
Noninterest expense             1,500   1,464   1,331     2.5    12.7
                               -----------------------
Income before provision and
 income taxes                   1,839   1,867   1,802    (1.5)    2.1
Provision for credit losses       115     205     172   (43.9)  (33.1)
                               -----------------------
Income before income taxes      1,724   1,662   1,630     3.7     5.8
Taxable-equivalent adjustment      10      10       7      --    42.9
Applicable income taxes           561     509     552    10.2     1.6
                               -----------------------
Net income                     $1,153  $1,143  $1,071     0.9     7.7
                               -----------------------

Diluted earnings per share      $0.63   $0.62   $0.57     1.6    10.5
                               -----------------------

Net Interest Income

First quarter net interest income on a taxable-equivalent basis was $1,725 million, compared with $1,751 million recorded in the first quarter of 2005. Average earning assets for the period increased over the first quarter of 2005 by $9.8 billion (5.7 percent), primarily driven by a $5.2 billion (32.6 percent) increase in residential mortgages, a $2.9 billion (7.1 percent) increase in total commercial loans, a $2.5 billion (5.8 percent) increase in total retail loans and a $1.1 billion (4.0 percent) increase in total commercial real estate loans. This was partially offset by a $3.1 billion (7.3 percent) decrease in investment securities. The positive impact to net interest income from the growth in earning assets was more than offset by a lower net interest margin. The net interest margin in the first quarter of 2006 was 3.80 percent, compared with 4.08 percent in the first quarter of 2005. The decline in the net interest margin reflected the competitive lending environment during 2005, asset/liability management decisions and the impact of changes in the yield curve from a year ago. Since the first quarter of 2005, credit spreads have tightened by approximately 20 basis points across most lending products due to competitive pricing 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 asset growth with higher cost wholesale funding, share repurchases and asset/liability decisions designed to minimize the Company's rate sensitivity position, including a 46.5 percent reduction in the net receive fixed swap position since March 31, 2005. An increase in the margin benefit of net free funds and loan fees partially offset these factors.

Net interest income in the first quarter of 2006 was lower than the fourth quarter of 2005 by $60 million (3.4 percent). While the Company experienced modest loan growth in most loan categories, growth in lower-spread residential mortgages and fixed-rate retail products drove more than 60 percent of the $1.3 billion increase in average loans from the prior quarter. The increase in average loans was offset by a $1.8 billion decline in average investment securities. The net interest margin of 3.80 percent in the first quarter of 2006 was 8 basis points lower than the net interest margin of 3.88 percent in the fourth quarter of 2005. The decline in the net interest margin from the fourth quarter of 2005 reflected the mix of loan growth toward fixed-rate products, higher short-term rates and funding a higher percentage of earning assets with wholesale funding. During the first quarter of 2006, credit spreads narrowed 3 basis points compared with the fourth quarter of 2005.

NET INTEREST INCOME                                            Table 3
----------------------------------------------------------------------
(Taxable-equivalent basis;
$ in millions)
                                                     Change   Change
                             1Q      4Q       1Q     1Q06 vs  1Q06 vs
                            2006    2005     2005    4Q05     1Q05
                          --------------------------------------------
Components of net interest
 income
  Income on earning assets $2,903   $2,843   $2,442      $60     $461
  Expense on interest-
   bearing liabilities      1,178    1,058      691      120      487
                          --------------------------------------------
Net interest income        $1,725   $1,785   $1,751     $(60)    $(26)
                          --------------------------------------------

Average yields and rates
 paid
  Earning assets yield       6.40%    6.18%    5.69%    0.22%    0.71%
  Rate paid on interest-
   bearing liabilities       3.10     2.77     1.97     0.33     1.13
                          --------------------------------------------
Gross interest margin        3.30%    3.41%    3.72%  (0.11%)  (0.42%)
                          --------------------------------------------
Net interest margin          3.80%    3.88%    4.08%  (0.08%)  (0.28%)
                          --------------------------------------------

Average balances
  Investment securities   $39,680  $41,494  $42,813  $(1,814) $(3,133)
  Loans                   139,379  138,069  127,654    1,310   11,725
  Earning assets          183,101  183,095  173,294        6    9,807
  Interest-bearing
   liabilities            153,911  151,500  142,052    2,411   11,859
  Net free funds(a)        29,190   31,595   31,242   (2,405)  (2,052)

(a) Represents noninterest-bearing deposits, allowance for loan
    losses, unrealized gain (loss) on available-for-sale securities,
    non-earnings assets, other noninterest-bearing liabilities and
    equity.
AVERAGE LOANS                                                  Table 4
----------------------------------------------------------------------
($ in millions)                                       Percent  Percent
                                                      Change   Change
                              1Q       4Q       1Q    1Q06 vs  1Q06 vs
                             2006     2005     2005   4Q05     1Q05
                           -------------------------------------------

Commercial                  $38,847  $38,816  $36,083      0.1    7.7
Lease financing               5,078    4,948    4,914      2.6    3.3
                           ---------------------------
      Total commercial       43,925   43,764   40,997      0.4    7.1

Commercial mortgages         20,269   20,307   20,268     (0.2)    --
Construction and
 development                  8,347    8,256    7,236      1.1   15.4
                           ---------------------------
      Total commercial real
       estate                28,616   28,563   27,504      0.2    4.0

Residential mortgages        20,987   20,319   15,827      3.3   32.6

Credit card                   7,120    6,825    6,417      4.3   11.0
Retail leasing                7,250    7,403    7,198     (2.1)   0.7
Home equity and second
 mortgages                   14,935   14,946   14,844     (0.1)   0.6
Other retail                 16,546   16,249   14,867      1.8   11.3
                           ---------------------------
      Total retail           45,851   45,423   43,326      0.9    5.8
                           ---------------------------

Total loans                $139,379 $138,069 $127,654      0.9    9.2
                           ---------------------------

Average loans for the first quarter of 2006 were $11.7 billion (9.2 percent) higher than the first quarter of 2005, driven by growth in average residential mortgages of $5.2 billion (32.6 percent), total commercial loans of $2.9 billion (7.1 percent) and total retail loans of $2.5 billion (5.8 percent). Total commercial real estate loans also increased year-over-year by $1.1 billion (4.0 percent). Average loans for the first quarter of 2006 were higher than the fourth quarter of 2005 by $1.3 billion (.9 percent), reflecting growth in the majority of loan categories.

Average investment securities in the first quarter of 2006 were $3.1 billion (7.3 percent) lower than in the first quarter of 2005. The change in the balance of the investment securities portfolio from a year ago principally reflected asset/liability risk management decisions to minimize the Company's rate sensitivity position given the changing rate environment and mix of loan growth. Additionally, the Company reclassified approximately $460 million of principal-only securities to its trading account effective as of January 1, 2006, in connection with the adoption of SFAS 156. During the first quarter of 2006, the Company maintained a mix of approximately 41 percent variable-rate securities.

AVERAGE DEPOSITS                                               Table 5
----------------------------------------------------------------------
($ in millions)                                        Percent Percent
                                                       Change  Change
                               1Q       4Q       1Q    1Q06 vs 1Q06 vs
                              2006     2005     2005   4Q05    1Q05
                            ------------------------------------------

Noninterest-bearing deposits $28,837  $29,898  $28,417    (3.5)   1.5
Interest-bearing deposits
    Interest checking         23,141   22,473   23,146     3.0     --
    Money market savings      27,378   28,710   30,264    (4.6)  (9.5)
    Savings accounts           5,689    5,648    5,968     0.7   (4.7)
                            ---------------------------
       Savings deposits       56,208   56,831   59,378    (1.1)  (5.3)
    Time certificates of
     deposit less than
     $100,000                 13,505   13,397   12,978     0.8    4.1
    Time deposits greater
     than $100,000            21,613   22,205   18,650    (2.7)  15.9
                            ---------------------------
            Total interest-
             bearing
             deposits         91,326   92,433   91,006    (1.2)   0.4
                            ---------------------------
Total deposits              $120,163 $122,331 $119,423    (1.8)   0.6
                            ---------------------------

Average noninterest-bearing deposits for the first quarter of 2006 increased $420 million (1.5 percent) compared with the first quarter of 2005 primarily reflecting growth in business demand account balances within most lines of business.

Average total savings deposits declined year-over-year by $3.2 billion (5.3 percent) due to reductions in average money market savings and savings accounts. Average money market savings balances declined by $2.9 billion (9.5 percent) year-over-year, primarily due to a decline in balances within the branches. This was partially offset by increases in corporate trust and government banking balances. The overall decrease in average money market savings balances year-over-year was primarily the result of the Company's deposit pricing decisions for money market products in relation to other fixed-rate deposit products offered. A portion of branch based money market savings accounts have migrated to fixed-rate time certificates, while larger customer money market savings accounts 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 first quarter of 2006 than the first quarter of 2005 by $527 million (4.1 percent). The Company experienced year-over-year growth in average time deposits greater than $100,000 of $3.0 billion (15.9 percent). This growth was broad-based across most areas of the bank including; government banking, commercial and branch banking, private client and corporate trust, as customers migrated balances to higher rate deposits.

Average noninterest-bearing deposits for the first quarter of 2006 were $1.1 billion (3.5 percent) lower than the fourth quarter of 2005, primarily due to seasonally lower corporate trust, consumer, mortgage banking and title company balances. Average savings deposits declined by $623 million (1.1 percent) in the current quarter from the fourth quarter of 2005. Time certificates of deposit less than $100,000 increased modestly from the fourth quarter of 2005, while time deposits greater than $100,000 declined by $592 million (2.7 percent).

NONINTEREST INCOME                                             Table 6
----------------------------------------------------------------------
($ in millions)                                     Percent   Percent
                                                    Change    Change
                               1Q     4Q     1Q     1Q06 vs   1Q06 vs
                              2006   2005   2005    4Q05      1Q05
                             -----------------------------------------

Credit and debit card revenue  $182   $197   $154      (7.6)     18.2
Corporate payment products
 revenue                        127    126    107       0.8      18.7
ATM processing services          59     61     47      (3.3)     25.5
Merchant processing services    213    194    178       9.8      19.7
Trust and investment
 management fees                297    258    247      15.1      20.2
Deposit service charges         232    238    210      (2.5)     10.5
Treasury management fees        107    104    107       2.9        --
Commercial products revenue     104    101     96       3.0       8.3
Mortgage banking revenue         24    109    102     (78.0)    (76.5)
Investment products fees and
 commissions                     38     37     39       2.7      (2.6)
Securities gains (losses),
 net                             --    (49)   (59)       nm        nm
Other                           231    170    154      35.9      50.0
                             ---------------------

Total noninterest income     $1,614 $1,546 $1,382       4.4      16.8
                             ---------------------

Noninterest Income

First quarter noninterest income was $1,614 million, an increase of $232 million (16.8 percent) from the same quarter of 2005 and $68 million (4.4 percent) higher than the fourth quarter of 2005. The increase in noninterest income over the first quarter of 2005 was driven by favorable variances in the majority of fee income categories, an increase of $59 million due to net securities losses in the prior year and the recognition of $44 million in trading gains related to interest rate swaps, partially offset by the reduction in mortgage banking revenue. Credit and debit card revenue and corporate payment products revenue were both higher in the first quarter of 2006 than the first quarter of 2005 by $28 million and $20 million, or 18.2 percent and 18.7 percent, respectively. The growth in credit and debit card revenue was primarily driven by higher transaction volumes. The corporate payment products revenue growth reflected growth in sales and card usage, and the acquisition of a small fleet card business. ATM processing services revenue was higher by $12 million (25.5 percent) in the first quarter of 2006 than the same quarter of the prior year, primarily due to the acquisition of an ATM business in May of 2005. Merchant processing services revenue was higher in the first quarter of 2006 than the same quarter of 2005 by $35 million (19.7 percent), reflecting an increase in sales volume driven by new business growth and acquisitions and higher equipment fees. Trust and investment management fees increased by $50 million (20.2 percent) year-over-year, primarily due to improved equity market conditions, account growth and the acquisition of the corporate and institutional trust business of Wachovia Corporation. Deposit service charges grew year-over-year by $22 million (10.5 percent) due to increased transaction-related fees. Other income was higher by $77 million (50.0 percent) as compared to 2005, primarily due to the gain on interest rate swaps that did not qualify as hedges ($44 million), improving end-of-term retail lease residual values, higher student loan sales gains and the receipt of a favorable settlement within the merchant processing business. These favorable changes in fee-based revenue were offset by the decline in mortgage banking revenue, principally driven by the adoption of the fair value method of accounting for mortgage servicing rights ($64 million) and lower gains from the sale of mortgage loan production.

Noninterest income was higher in the first quarter of 2006 than the fourth quarter of 2005 by $68 million (4.4 percent). This reflected a $49 million increase due to net securities losses in the fourth quarter of 2005, business acquisitions and the net decrease in noninterest income of $20 million from the derivatives and adopting SFAS 156. Merchant processing services revenue increased by $19 million (9.8 percent), due primarily to recent business acquisitions. Trust and investment management fees increased during the first quarter of 2006 by $39 million (15.1 percent) due to core account growth and the Wachovia corporate and institutional trust acquisition. In addition, other revenue increased principally due to the interest rate swap gains, increased levels of student loan sales gains and the favorable settlement within the merchant processing business. These gains were offset by an $85 million (78.0 percent) reduction in mortgage banking revenue primarily due to the adoption of the fair value method of accounting for mortgage servicing rights and lower mortgage loan production. Credit and debit card revenue and deposit service charges decreased by $15 million (7.6 percent) and $6 million (2.5 percent) respectively, reflecting seasonally lower consumer post-holiday spending and lower transaction-related fees from the fourth quarter of 2005.

NONINTEREST EXPENSE                                            Table 7
----------------------------------------------------------------------
($ in millions)                                       Percent  Percent
                                                      Change   Change
                                  1Q     4Q      1Q   1Q06 vs  1Q06 vs
                                 2006   2005    2005  4Q05     1Q05
                               ---------------------------------------

Compensation                      $633   $601    $567      5.3   11.6
Employee benefits                  133    101     116     31.7   14.7
Net occupancy and equipment        165    166     154     (0.6)   7.1
Professional services               35     47      36    (25.5)  (2.8)
Marketing and business
 development                        40     64      43    (37.5)  (7.0)
Technology and communications      117    129     106     (9.3)  10.4
Postage, printing and supplies      66     65      63      1.5    4.8
Other intangibles                   85     81      71      4.9   19.7
Other                              226    210     175      7.6   29.1
                               -----------------------

Total noninterest expense       $1,500 $1,464  $1,331      2.5   12.7
                               -----------------------

Noninterest Expense

First quarter noninterest expense totaled $1,500 million, an increase of $169 million (12.7 percent) from the same quarter of 2005 and a $36 million (2.5 percent) increase from the fourth quarter of 2005. The increases from a year ago and the fourth quarter of 2005 reflected the impact of business acquisitions and related integration costs and the adoption of the new accounting standards. Compensation expense was higher year-over-year by $66 million (11.6 percent), principally due to business expansion, including the Company's payment processing businesses, the corporate and institutional trust business of Wachovia Corporation and other growth initiatives and the adoption of SFAS 123R. Employee benefits increased year-over-year by $17 million (14.7 percent), primarily as a result of higher pension costs, payroll taxes and 401(k) costs. Net occupancy and equipment increased in the first quarter of 2006 from the same quarter of 2005 by $11 million (7.1 percent) primarily due to business expansion. Technology and communications expense rose by $11 million (10.4 percent) due to increased software expense and higher outside data processing expense principally associated with expanding a prepaid gift card program. Intangible expense increased year-over-year by $14 million (19.7 percent) primarily due to business expansion in the payment processing and trust businesses. The impact of eliminating amortization of mortgage servicing rights was more than offset by MSR reparation of $54 million recognized in the first quarter of 2005. Other expense increased in the first quarter of 2006 from the same quarter of 2005 by $51 million (29.1 percent), primarily due to the increased investments in tax-advantaged projects relative to a year ago, increased fraud losses and business integration costs.

Noninterest expense in the first quarter of 2006 was higher than the fourth quarter of 2005 by $36 million (2.5 percent). The increase in noninterest expense in the first quarter of 2006 from the fourth quarter of 2005 was primarily due to a $32 million increase in compensation expense due to business expansion and other initiatives and an increase in benefits expense primarily related to pension costs and seasonally higher payroll taxes and other benefits. In addition, other expense increased during the quarter due to a reduction in the Company's merchant airline exposure recognized in the fourth quarter of 2005 and an increase in business integration costs, partially offset by a decline in the amortization related to tax-advantaged projects. Offsetting these unfavorable changes were lower costs due to marketing and business development and professional services, primarily due to the timing of business initiatives. Additionally, technology and communications expense decreased by $12 million (9.3 percent), quarter-over-quarter, primarily due to seasonally lower processing costs for the prepaid gift card program and favorable volume-based expense credits that occur seasonally in the first quarter of 2006.

Provision for Income Taxes

The provision for income taxes for the first quarter of 2006 resulted in an effective tax rate of 32.7 percent compared with an effective tax rate of 34.0 percent in the first quarter of 2005 and an effective tax rate of 30.8 percent in fourth quarter of 2005. The decline in the effective rate from the first quarter of 2005 is primarily due to higher tax exempt income and tax credit investments. The increase in the effective rate from the fourth quarter of 2005 reflected the timing of tax-advantaged investments in the fourth quarter of 2005.

ALLOWANCE FOR CREDIT LOSSES                                    Table 8
----------------------------------------------------------------------
($ in millions)                      1Q     4Q     3Q     2Q     1Q
                                    2006   2005   2005   2005   2005
                                   -----------------------------------

Balance, beginning of period       $2,251 $2,258 $2,269 $2,269 $2,269

Net charge-offs
    Commercial                          5     15      7      9     14
    Lease financing                     7      7     16      6     13
                                   -----------------------------------
         Total commercial              12     22     23     15     27
    Commercial mortgages                2     (1)     2      1      4
    Construction and development       --     --     (2)    (3)     2
                                   -----------------------------------
        Total commercial real
         estate                         2     (1)    --     (2)     6

    Residential mortgages               7     10      9      8      9

    Credit card                        46     86     63     64     65
    Retail leasing                      4      8      5      5      8
    Home equity and second
     mortgages                         12     21     14     16     17
    Other retail                       32     67     42     38     40
                                   -----------------------------------
         Total retail                  94    182    124    123    130
                                   -----------------------------------
            Total net charge-offs     115    213    156    144    172
Provision for credit losses           115    205    145    144    172
Acquisitions and other changes         --      1     --     --     --
                                   -----------------------------------
Balance, end of period             $2,251 $2,251 $2,258 $2,269 $2,269
                                   -----------------------------------

Components
   Allowance for loan losses       $2,035 $2,041 $2,055 $2,082 $2,082
   Liability for unfunded credit
    commitments                       216    210    203    187    187
                                   -----------------------------------
            Total allowance for
             credit losses         $2,251 $2,251 $2,258 $2,269 $2,269
                                   -----------------------------------

Gross charge-offs                    $175   $267   $229   $222   $231
Gross recoveries                      $60    $54    $73    $78    $59

Net charge-offs to average loans
 (%)                                 0.33   0.61   0.46   0.44   0.55

Allowance as a percentage of
   Period-end loans                  1.62   1.63   1.65   1.70   1.76
   Nonperforming loans                432    414    413    441    404
   Nonperforming assets               364    350    351    372    341

Credit Quality

The allowance for credit losses was $2,251 million at March 31, 2006, and at December 31, 2005, compared with $2,269 million at March 31, 2005. The ratio of the allowance for credit losses to period-end loans was 1.62 percent at March 31, 2006, compared with 1.63 percent at December 31, 2005, and 1.76 percent at March 31, 2005. The ratio of the allowance for credit losses to nonperforming loans was 432 percent at March 31, 2006, compared with 414 percent at December 31, 2005, and 404 percent at March 31, 2005. Total net charge-offs in the first quarter of 2006 were $115 million, compared with the fourth quarter of 2005 net charge-offs of $213 million and the first quarter of 2005 net charge-offs of $172 million. The decrease in total net charge-offs was principally due to the impact of changes in bankruptcy legislation that went into effect during the fourth quarter of 2005.

Retail loan net charge-offs were $94 million in the first quarter of 2006 compared with $182 million in the fourth quarter of 2005 and $130 million in the first quarter of 2005. The decrease in retail loan net charge-offs reflected additional charge-offs in the fourth quarter of 2005 related to the new bankruptcy legislation. Retail loan net charge-offs as a percent of average loans outstanding were .83 percent in the first quarter of 2006, compared with 1.59 percent and 1.22 percent in the fourth quarter of 2005 and first quarter of 2005, respectively. The Company anticipates that bankruptcy charge-offs will return to more normal levels in future quarters.

Commercial and commercial real estate loan net charge-offs were $14 million for the first quarter of 2006, or .08 percent of average loans outstanding, compared with $21 million, or .12 percent of average loans outstanding, in the fourth quarter of 2005 and $33 million, or .20 percent of average loans outstanding, in the first quarter of 2005.

CREDIT RATIOS                                                  Table 9
----------------------------------------------------------------------
(Percent)                               1Q     4Q    3Q    2Q    1Q
                                       2006   2005  2005  2005  2005
                                      --------------------------------
Net charge-offs ratios(a)
   Commercial                           0.05  0.15  0.07  0.10   0.16
   Lease financing                      0.56  0.56  1.29  0.49   1.07
      Total commercial                  0.11  0.20  0.21  0.14   0.27

   Commercial mortgages                 0.04 (0.02) 0.04  0.02   0.08
   Construction and development           --    -- (0.10)(0.16)  0.11
      Total commercial real estate      0.03 (0.01)   -- (0.03)  0.09

   Residential mortgages                0.14  0.20  0.19  0.19   0.23

   Credit card                          2.62  5.00  3.74  3.93   4.11
   Retail leasing                       0.22  0.43  0.27  0.27   0.45
   Home equity and second mortgages     0.33  0.56  0.37  0.43   0.46
   Other retail                         0.78  1.64  1.04  1.01   1.09
      Total retail                      0.83  1.59  1.09  1.12   1.22

Total net charge-offs                   0.33  0.61  0.46  0.44   0.55

Delinquent loan ratios - 90 days or more past due excluding
 nonperforming loans(b)
   Commercial                           0.05  0.05  0.04  0.05   0.06
   Commercial real estate                 --    --  0.01  0.01   0.02
   Residential mortgages                0.31  0.32  0.30  0.32   0.41
   Retail                               0.36  0.36  0.36  0.40   0.43
Total loans                             0.18  0.18  0.18  0.19   0.22

Delinquent loan ratios - 90 days or more past due including
 nonperforming loans(b)
   Commercial                           0.64  0.69  0.74  0.74   0.84
   Commercial real estate               0.51  0.55  0.57  0.59   0.68
   Residential mortgages                0.53  0.55  0.53  0.55   0.66
   Retail                               0.52  0.50  0.45  0.43   0.47
Total loans                             0.56  0.58  0.58  0.58   0.66

(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)
                                  Mar 31  Dec 31  Sep 30 Jun 30 Mar 31
                                   2006    2005    2005   2005   2005
                                  ------------------------------------
Nonperforming loans
   Commercial                       $219    $231    $265   $238  $254
   Lease financing                    41      42      35     60    70
                                  ------------------------------------
      Total commercial               260     273     300    298   324
   Commercial mortgages              123     134     144    140   159
   Construction and development       23      23      16     21    21
                                  ------------------------------------
      Total commercial real estate   146     157     160    161   180
   Residential mortgages              45      48      44     42    41
   Retail                             70      66      43     13    16
                                  ------------------------------------
Total nonperforming loans            521     544     547    514   561

Other real estate                     71      71      68     68    66
Other nonperforming assets            27      29      29     28    38
                                  ------------------------------------

Total nonperforming assets(a)       $619    $644    $644   $610  $665
                                  ------------------------------------

Accruing loans 90 days or more
 past due                           $251    $253    $242   $258  $285
                                  ------------------------------------

Restructured loans that continue
    to accrue interest              $371    $315    $301   $274  $145
                                  ------------------------------------

Nonperforming assets to loans
   plus ORE (%)                     0.45    0.47    0.47   0.46  0.52

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

Nonperforming assets at March 31, 2006, totaled $619 million, compared with $644 million at December 31, 2005, and $665 million at March 31, 2005. The ratio of nonperforming assets to loans and other real estate was .45 percent at March 31, 2006, compared with .47 percent at December 31, 2005, and .52 percent at March 31, 2005. Restructured loans that continue to accrue interest have increased from the first and fourth quarters of 2005, reflecting the impact of implementing higher minimum balance payment requirements for credit card customers in response to industry guidance issued by the banking regulatory agencies.

CAPITAL POSITION                                              Table 11
----------------------------------------------------------------------
($ in millions)           Mar 31   Dec 31   Sep 30   Jun 30   Mar 31
                           2006     2005     2005     2005     2005
                         --------------------------------------------

Total shareholders'
 equity                  $20,256  $20,086  $19,864  $19,901  $19,208
Tier 1 capital            16,478   15,145   15,180   14,564   14,943
Total risk-based capital  24,328   23,056   23,283   22,362   23,099

Common equity to assets      9.2 %    9.6 %    9.6 %    9.8 %    9.7 %
Tangible common equity to
 assets                      5.4      5.9      6.2      6.1      6.2
Tier 1 capital ratio         8.9      8.2      8.4      8.1      8.6
Total risk-based capital
 ratio                      13.1     12.5     12.8     12.5     13.3
Leverage ratio               8.2      7.6      7.7      7.5      7.9

Total shareholders' equity was $20.3 billion at March 31, 2006, compared with $19.2 billion at March 31, 2005. The increase was the result of corporate earnings and the issuance of $1.0 billion of non-cumulative, perpetual preferred stock on March 27, 2006, offset by share buybacks and dividends.

Tangible common equity to assets was 5.4 percent at March 31, 2006, compared with 5.9 percent at December 31, 2005, and 6.2 percent at March 31, 2005. The Tier 1 capital ratio was 8.9 percent at March 31, 2006, compared with 8.2 percent at December 31, 2005, and 8.6 percent at March 31, 2005. The total risk-based capital ratio was 13.1 percent at March 31, 2006, compared with 12.5 percent at December 31, 2005, and 13.3 percent at March 31, 2005. The leverage ratio was 8.2 percent at March 31, 2006, compared with 7.6 percent at December 31, 2005, and 7.9 percent at March 31, 2005. All regulatory ratios continue to be in excess of stated "well capitalized" requirements.

COMMON SHARES                                                 Table 12
----------------------------------------------------------------------
(Millions)                                1Q    4Q    3Q    2Q    1Q
                                         2006  2005  2005  2005  2005
                                        ------------------------------

Beginning shares outstanding            1,815 1,818 1,829 1,842 1,858

Shares issued for stock option and stock
 purchase plans, acquisitions and other
 corporate purposes                         9     6     4     4     5
Shares repurchased                        (41)   (9)  (15)  (17)  (21)
                                        ------------------------------
Ending shares outstanding               1,783 1,815 1,818 1,829 1,842
                                        ------------------------------

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. During the first quarter of 2006, the Company repurchased 41 million shares of common stock. As of March 31, 2006, there were approximately 43 million shares remaining to be repurchased under the current authorization.

LINE OF BUSINESS FINANCIAL PERFORMANCE(a)                     Table 13
----------------------------------------------------------------------
($ in millions)
                           Net Income       Percent Change
                      --------------------- ---------------   1Q06
                        1Q     4Q     1Q    1Q06 vs 1Q06 vs Earnings
Business Line          2006   2005   2005     4Q05   1Q05  Composition
                      ------------------------------------------------

Wholesale Banking       $279   $282   $253     (1.1)  10.3        24 %
Consumer Banking         448    458    414     (2.2)   8.2        39
Private Client, Trust
  and Asset Management   134    128    109      4.7   22.9        11
Payment Services         226    169    169     33.7   33.7        20
Treasury and Corporate
 Support                  66    106    126    (37.7) (47.6)        6
                      ---------------------                ----------

Consolidated Company  $1,153 $1,143 $1,071      0.9    7.7       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 2006, 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 $279 million of the Company's net income in the first quarter of 2006, a 10.3 percent increase over the same period of 2005 and a 1.1 percent decrease from the fourth quarter of 2005. The increase in Wholesale Banking's first quarter 2006 contribution over the same quarter of 2005 was the result of favorable variances in total net revenue (4.0 percent) and the provision for credit losses. The favorable variance in total net revenue year-over-year was the result of growth in net interest income (5.9 percent), while the business line's total noninterest income remained relatively flat during the first quarter of 2006. Increases in commercial lease and foreign exchange trading revenue were offset by an unfavorable variance in equity investment revenue. The increase in net interest income was driven primarily by loan growth and the margin benefit of deposits partially offset by tighter credit spreads. The lower provision for credit losses reflected strong economic conditions resulting in an increase in net recoveries of $17 million compared with a year ago.

The decrease in Wholesale Banking's contribution to net income in the first quarter of 2006 from the fourth quarter of 2005 was the result of an unfavorable variance in total net revenue (3.0 percent) partially offset by lower total noninterest expense (3.9 percent) and provision for credit losses. Total net revenue was lower on a linked quarter basis with decreases in both net interest income (2.1 percent) and noninterest income (4.6 percent). The unfavorable variance in net interest income was primarily due to seasonally lower deposit balances partially offset by the benefit from wider deposit spreads. The decrease in noninterest income on a linked quarter basis was primarily due to decreases in capital markets revenue, commercial lease revenue and income related to equity investments, partially offset by an increase in treasury management fees. Net recoveries of $14 million in the first quarter of 2006, compared with net recoveries of $7 million in the fourth quarter of 2005, drove the favorable 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 $448 million of the Company's net income in the first quarter of 2006, an 8.2 percent increase over the same period of 2005 and a 2.2 percent decrease from the prior quarter. The favorable increase year-over-year was the result of higher total net revenue (1.0 percent), a reduction in total noninterest expense (4.0 percent) and lower provision for credit losses (13.8 percent). Total net revenue was higher than the same quarter of 2005 due to growth in net interest income (4.2 percent), partially offset by a reduction in noninterest income (5.6 percent). Net interest income was higher year-over-year primarily due to growth in average loan balances of 12.3 percent and the margin benefit of deposits, somewhat offset by lower spreads on those assets given the competitive lending environment. Noninterest income decreased in the first quarter of 2006 over the same period of 2005, principally due to a reduction in mortgage banking revenue of $64 million due to adopting fair value accounting for mortgage servicing rights as of January 1, 2006, and lower mortgage loan production given rising interest rates. The business line generated strong growth from a year ago in deposit service charges (10.5 percent) and other revenue (56.6 percent). The increase in other revenue included higher gains from the sales of student loans and improving end-of-term retail lease residual values. Total noninterest expense in the first quarter of 2006 was lower compared with the same quarter of 2005, due to the elimination of MSR amortization under SFAS 156 which resulted in a decrease in other intangible expense of nearly $50 million. This favorable variance was partially offset by an increase in compensation and employee benefits (2.9 percent) and in net shared services expense (6.7 percent) based on transaction volumes. An $11 million year-over-year decrease in net charge-offs (13.8 percent) drove the favorable variance in the business line's provision for credit losses.

The decrease in Consumer Banking's contribution in the first quarter of 2006 from the fourth quarter of 2005 was the result of an unfavorable variance in total net revenue (6.5 percent) partially offset by lower total noninterest expense (8.6 percent) and provision for credit losses (24.2 percent). The decline in total net revenue was due primarily to a decline in total noninterest income (15.3 percent) which reflected the impact of adopting SFAS 156 on mortgage banking revenue and seasonally lower deposit service fees, partially offset by higher gains from the sales of student loans. Noninterest expense was also impacted by the adoption of SFAS 156, as amortization of servicing rights was nearly $50 million lower on a linked quarter basis. In addition, there were favorable variances in travel and entertainment, other loan expense and marketing and business development expense due to seasonality and the timing of business initiatives. These expense reductions were partially offset by increased net shared services expense from the fourth quarter of 2005. The decrease in the provision for credit losses was due to a $22 million decrease in net charge-offs, primarily related to the impact of new bankruptcy legislation in the fourth quarter of 2005.

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, FAF Advisors, Institutional Trust and Custody and Fund Services. Private Client, Trust and Asset Management contributed $134 million of the Company's net income in the first quarter of 2006, 22.9 percent higher than the same period of 2005 and 4.7 percent higher than the fourth quarter of 2005. The increase in the business line's contribution in the first quarter of 2006 over the same quarter of 2005 was the result of a favorable variance in total net revenue (22.4 percent) partially offset by an increase in total noninterest expense (22.8 percent). Net interest income was favorably impacted year-over-year by wider deposit spreads and growth in deposit balances. Noninterest income increased by 21.3 percent from the same quarter of 2005, primarily due to the acquisition of the corporate and institutional trust business of Wachovia Corporation, core account growth and improved equity market conditions. The increase in total noninterest expense was primarily due to the acquisition. The increase in the business line's contribution in the first quarter of 2006, as compared with the fourth quarter of 2005, was due to similar factors causing favorable total net revenue growth (11.9 percent) partially offset by an increase in total noninterest expense (22.8 percent).

Payment Services includes consumer and business credit cards, stored-value cards, debit cards, corporate and purchasing card services, consumer lines of credit, ATM processing and merchant processing. Payment Services contributed $226 million of the Company's net income in the first quarter of 2006, a 33.7 percent increase from the same period of 2005 and from the fourth quarter of 2005. The increase in Payment Services' contribution in the first quarter of 2006 from the same period of 2005 was the result of higher total net revenue (19.0 percent) and a $29 million favorable variance in the provision for credit losses (32.6 percent), partially offset by an increase in total noninterest expense (21.2 percent). The increase in total net revenue year-over-year was due to growth in total noninterest income (21.4 percent) and net interest income (11.0 percent), reflecting growth in higher yielding retail loan balances, offset by increases in noninterest-bearing corporate card balances and rebates. All categories benefited from higher transaction volumes, rate changes and business expansion initiatives. In addition, noninterest income benefited from a favorable settlement within the merchant processing business. The growth in total noninterest expense year-over-year primarily reflected new business initiatives, including costs associated with acquisitions and other business growth initiatives. The $29 million decrease in the provision for credit losses was driven by lower net charge-offs, year-over-year, reflecting the near-term impact of changes in bankruptcy legislation in the fourth quarter of 2005.

The increase in Payment Services' contribution in the first quarter of 2006 from the fourth quarter of 2005 was due to improved noninterest income (3.0 percent), lower provision for credit losses (48.7 percent) driven by bankruptcy-related net charge-offs in fourth quarter 2005 and favorable total noninterest expense (4.0 percent). The increase in noninterest income was primarily due to recent merchant processing business acquisitions. The decrease in total noninterest expense from the linked quarter, included a $19 million write-off of a prepaid rewards program associated with a co-branding relationship in the fourth quarter of 2005, seasonally lower costs associated with the prepaid gift card program and the timing of 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, prior to the adoption of SFAS 156, changes in MSR valuations due to interest rate changes were 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 $66 million in the first quarter of 2006, compared with net income of $126 million in the first quarter of 2005 and $106 million in the fourth quarter of 2005. The decrease in net income in the current quarter from the first quarter of 2005 was caused by an unfavorable change in net interest income ($131 million) reflecting the impact of a flatter yield curve and asset/liability management decisions during the year, including issuing higher cost wholesale funding and repositioning of the Company's balance sheet during 2005 for changes in the interest rate environment, and higher compensation costs related to incentives and the adoption of SFAS 123R. The adverse impact of net interest income and compensation expense was offset somewhat by growth in noninterest income resulting from the gain on derivatives that did not qualify as hedges. In addition, lower income tax expense, year-over-year, for this line of business reflected the benefit of higher levels of tax-exempt income from securities and insurance products as well as incremental tax credits from tax-advantaged investments. Net income in the first quarter of 2006 was lower than net income in the fourth quarter of 2005 due to lower net interest income ($38 million) driven by the flatter yield curve and funding earning asset growth with wholesale funding, higher compensation costs and other noninterest expenses. Additionally, income tax expense in the fourth quarter of 2005 included higher levels of tax credits due to the timing of investments in tax-advantaged projects.

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, APRIL 18, 2006. 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, April 18th through Tuesday, April 25th at 11:00 p.m. (CDT). To access the recorded call, please dial 800-839-5484. Participants calling from outside the United States, please call 402-220-1522. Find the recorded call via the internet at usbank.com.

Minneapolis-based U.S. Bancorp ("USB"), with $210 billion in assets, is the 6th largest financial holding company in the United States. The Company operates 2,430 banking offices and 4,941 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

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

This press release contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. 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 plans and 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: (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 further reduce net interest income; (iii) changes in the extensive laws, regulations and policies governing financial services companies could alter the Company's business environment or affect operations; (iv) competitive pressures could further 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 requiring additional capital expenditure, or bank regulatory reform; (v) changes in consumer spending and savings habits could adversely affect the Company's results of operations. For other factors that cause actual results to differ from expectations, refer to our most recent Annual Report on Form 10-K on file with the SEC, for example the sections entitled "Risk Factors" and "Corporate Risk Profile." 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
                                                   Three Months Ended
(Dollars and Shares in Millions, Except Per Share       March 31,
 Data)                                             -------------------
(Unaudited)                                             2006     2005
----------------------------------------------------------------------
Interest Income
Loans                                                 $2,332   $1,911
Loans held for sale                                       26       21
Investment securities                                    490      476
Other interest income                                     43       27
                                                   -------------------
        Total interest income                          2,891    2,435
Interest Expense
Deposits                                                 503      308
Short-term borrowings                                    270      112
Long-term debt                                           403      271
                                                   -------------------
        Total interest expense                         1,176      691
                                                   -------------------
Net interest income                                    1,715    1,744
Provision for credit losses                              115      172
                                                   -------------------
Net interest income after provision for credit
 losses                                                1,600    1,572
Noninterest Income
Credit and debit card revenue                            182      154
Corporate payment products revenue                       127      107
ATM processing services                                   59       47
Merchant processing services                             213      178
Trust and investment management fees                     297      247
Deposit service charges                                  232      210
Treasury management fees                                 107      107
Commercial products revenue                              104       96
Mortgage banking revenue                                  24      102
Investment products fees and commissions                  38       39
Securities gains (losses), net                            --      (59)
Other                                                    231      154
                                                   -------------------
        Total noninterest income                       1,614    1,382
Noninterest Expense
Compensation                                             633      567
Employee benefits                                        133      116
Net occupancy and equipment                              165      154
Professional services                                     35       36
Marketing and business development                        40       43
Technology and communications                            117      106
Postage, printing and supplies                            66       63
Other intangibles                                         85       71
Other                                                    226      175
                                                   -------------------
        Total noninterest expense                      1,500    1,331
                                                   -------------------
Income before income taxes                             1,714    1,623
Applicable income taxes                                  561      552
                                                   -------------------
Net income                                            $1,153   $1,071
                                                   -------------------

Earnings per share                                      $.64     $.58
Diluted earnings per share                              $.63     $.57
Dividends declared per share                            $.33     $.30
Average common shares outstanding                      1,801    1,852
Average diluted common shares outstanding              1,826    1,880
----------------------------------------------------------------------
U.S. Bancorp
Consolidated Ending Balance Sheet

                                     March 31, December 31,  March 31,
(Dollars in Millions)                    2006         2005       2005
----------------------------------------------------------------------
Assets                             (Unaudited)             (Unaudited)
Cash and due from banks                $7,050       $8,004     $5,881
Investment securities
    Held-to-maturity                      110          109        121
    Available-for-sale                 39,286       39,659     42,982
Loans held for sale                     2,053        1,686      1,635
Loans
    Commercial                         43,844       42,942     41,540
    Commercial real estate             28,782       28,463     27,363
    Residential mortgages              20,656       20,730     16,572
    Retail                             45,500       45,671     43,430
                                   -----------------------------------
        Total loans                   138,782      137,806    128,905
            Less allowance for loan
             losses                    (2,035)      (2,041)    (2,082)
                                   -----------------------------------
            Net loans                 136,747      135,765    126,823
Premises and equipment                  1,817        1,841      1,877
Goodwill                                7,267        7,005      6,277
Other intangible assets                 3,128        2,874      2,533
Other assets                           12,449       12,522     10,337
                                   -----------------------------------
            Total assets             $209,907     $209,465   $198,466
                                   -----------------------------------

Liabilities and Shareholders'
 Equity
Deposits
    Noninterest-bearing               $29,384      $32,214    $28,880
    Interest-bearing                   69,995       70,024     71,751
    Time deposits greater than
     $100,000                          22,365       22,471     19,087
                                   -----------------------------------
        Total deposits                121,744      124,709    119,718
Short-term borrowings                  20,651       20,200     14,273
Long-term debt                         39,327       37,069     38,071
Other liabilities                       7,929        7,401      7,196
                                   -----------------------------------
        Total liabilities             189,651      189,379    179,258
Shareholders' equity
    Preferred stock                     1,000           --         --
    Common stock                           20           20         20
    Capital surplus                     5,819        5,907      5,889
    Retained earnings                  19,568       19,001     17,276
    Less treasury stock                (5,394)      (4,413)    (3,590)
    Other comprehensive income           (757)        (429)      (387)
                                   -----------------------------------
        Total shareholders' equity     20,256       20,086     19,208
                                   -----------------------------------
        Total liabilities and
         shareholders' equity        $209,907     $209,465   $198,466
----------------------------------------------------------------------

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

SOURCE: U.S. Bancorp

"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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