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

MINNEAPOLIS--(BUSINESS WIRE)--Oct. 17, 2006--U.S. Bancorp (NYSE:USB):

                                                               Table 1
EARNINGS SUMMARY
----------------------------------------------------------------------
($ in millions, except per-share data)
                                  Percent Percent
                                   Change  Change
                 3Q     2Q     3Q 3Q06 vs 3Q06 vs   YTD    YTD Percent
               2006   2006   2005    2Q06    3Q05  2006   2005  Change
             ---------------------------------------------------------

Net income   $1,203 $1,201 $1,154     .2     4.2 $3,557 $3,346    6.3
Diluted
 earnings per
 common share   .66    .66    .62     --     6.5   1.95   1.80    8.3

Return on
 average
 assets (%)    2.23   2.27   2.23                  2.24   2.22
Return on
 average
 common
 equity (%)    23.6   24.3   22.8                  23.7   22.5
Net interest
 margin (%)    3.56   3.68   3.95                  3.68   4.00
Efficiency
 ratio (%)     45.0   44.4   43.8                  44.7   44.6
Tangible
 efficiency
 ratio (%)(a)  42.4   41.8   40.0                  42.2   40.8

Dividends
 declared per
 common share  $.33   $.33   $.30     --    10.0   $.99   $.90   10.0
Book value
 per common
 share
 (period-end) 11.30  10.89  10.93    3.8     3.4

(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 $1,203 million for the third quarter of 2006, compared with $1,154 million for the third quarter of 2005. Net income of $.66 per diluted common share in the third quarter of 2006 was higher than the same period of 2005 by 6.5 percent, or $.04 per diluted common share. Return on average assets and return on average common equity were 2.23 percent and 23.6 percent, respectively, for the third quarter of 2006, compared with returns of 2.23 percent and 22.8 percent, respectively, for the third quarter of 2005.

U.S. Bancorp Chairman and Chief Executive Officer Jerry A. Grundhofer said, "The Company's third quarter results included excellent growth in fee revenue, exceptional credit quality and good expense control. Once again, we achieved industry-leading profitability metrics with a return on average assets of 2.23 percent and a return on average common equity of 23.6 percent. Further, in August, the Company's board of directors authorized a new 150 million share repurchase program, enabling us to buyback approximately 30 million shares in the third quarter. The result of this buyback, along with our regular quarterly dividend, represented a return of earnings to shareholders of 128 percent.

"Fee revenue experienced double-digit growth year-over-year, led by our payments and fiduciary businesses. In fact, fee income was, once again, over 50 percent of total net revenue in the third quarter. This growth in fee revenue helped to mitigate the impact of the decrease in net interest income, as pressure from competitive pricing and growth in lower-spread, fixed-rate assets reduced the quarter's net interest margin to 3.56 percent. On a positive note, although the net interest margin declined on a linked quarter basis, it does appear to have stabilized over the past few months. Consequently, assuming the Fed has stopped raising rates, we should begin to see some improvement in net interest income in the fourth quarter. This is an important inflection point for our Company, as a stable and increasing net interest margin, coupled with growth in earning assets, will lead to growth in net interest income - growth we have not experienced since the third quarter of 2005.

"Our third quarter results demonstrated our disciplined approach to expense, as the increase year-over-year of 4.4 percent was primarily the result of expenses related to recent acquisitions and business development efforts. Expense discipline does not mean that we don't spend appropriately or invest in our Company. It simply means that we manage our business - spending and investing when and where it makes the most sense for the Company. This discipline has enabled us to become a low cost producer, and that allows us to compete very effectively during the most challenging of times.

"Credit quality was excellent this quarter, the result of our continued efforts to reduce the risk profile of the Company and maintain a high quality credit portfolio. This is the time in the cycle when it is tempting to compromise on terms in order to maximize growth. We are not willing to make that compromise. We believe this approach best serves our customers and shareholders now and in the future.

"The U.S. Bank Five Star Service Guarantee has now been a part of this Company for over 10 years. We strongly believe that in a commodity business such as ours, customer service is what will differentiate us from our competitors over time. We have tracked our performance for many years in order to monitor our success. Feedback from both external and internal surveys indicates that we are exceeding expectations and are amongst the best in our peer group. Customer service will continue to be a priority for this Company. Our current success is the direct result of our employees' dedication to serving their customers and representing our brand.

"I am very proud of what we have accomplished over the past three quarters, particularly given the economic and interest rate challenges that our industry has had to face this year. We have expanded our distribution, invested in attractive fee-based payments and fiduciary businesses, maintained exceptional credit quality, sustained our disciplined approach to expense, provided peer-leading customer service and returned over 120 percent of our capital to shareholders in the form of dividends and buybacks. Our strategy is working, and I am confident that this Company will continue to provide the products, services and results that our customers, communities, employees and shareholders expect and deserve."

The Company's results for the third quarter of 2006 improved over the same period of 2005, as net income increased by $49 million (4.2 percent), primarily due to strong growth in fee-based revenues and the benefit of a lower effective tax rate from a year ago. This was offset somewhat by lower net interest income and the additional operating costs of acquired businesses. Total net revenue on a taxable-equivalent basis for the third quarter of 2006 was $3,421 million, $54 million (1.6 percent) higher than the third quarter of 2005, primarily reflecting a 10.9 percent increase in noninterest income partially offset by a 6.6 percent decline in net interest income. Noninterest income growth was driven by organic business growth and expansion in trust and payment processing businesses, partially offset by lower mortgage banking revenue principally due to the impact of adopting Statement of Financial Accounting Standards No. 156, "Accounting for Servicing of Financial Assets" ("SFAS 156") in the first quarter of 2006. Total noninterest expense in the third quarter of 2006 was $1,538 million, $65 million (4.4 percent) higher than the third quarter of 2005, primarily reflecting incremental operating and business integration costs principally associated with recent acquisitions, increased pension costs and higher expenses related to investments in tax-advantaged projects from a year ago. This was partially offset by lower intangible expense due to the adoption of SFAS 156.

Provision for credit losses for the third quarter of 2006 was $135 million, a decrease of $10 million from the third 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 third quarter of 2006 were $135 million, compared with the second quarter of 2006 net charge-offs of $125 million and the third quarter of 2005 net charge-offs of $156 million. Total nonperforming assets were $575 million at September 30, 2006, compared with $550 million at June 30, 2006, and $644 million at September 30, 2005. The ratio of the allowance for credit losses to nonperforming loans was 476 percent at September 30, 2006, compared with 500 percent at June 30, 2006, and 413 percent at September 30, 2005.

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

                                  Percent Percent
                                   Change  Change
                 3Q     2Q     3Q 3Q06 vs 3Q06 vs   YTD    YTD Percent
               2006   2006   2005    2Q06    3Q05  2006   2005  Change
             ---------------------------------------------------------

Net interest
 income      $1,673 $1,697 $1,791   (1.4)   (6.6)$5,095 $5,303   (3.9)
Noninterest
 income       1,748  1,755  1,576    (.4)   10.9  5,117  4,499   13.7
             ---------------------               --------------
   Total net
    revenue   3,421  3,452  3,367    (.9)    1.6 10,212  9,802    4.2
Noninterest
 expense      1,538  1,530  1,473     .5     4.4  4,568  4,399    3.8
             ---------------------               --------------
Income before
 provision
 and taxes    1,883  1,922  1,894   (2.0)    (.6) 5,644  5,403    4.5
Provision for
 credit
 losses         135    125    145    8.0    (6.9)   375    461  (18.7)
             ---------------------               --------------
Income before
 taxes        1,748  1,797  1,749   (2.7)    (.1) 5,269  4,942    6.6
Taxable-
 equivalent
 adjustment      13     11      9   18.2    44.4     34     23   47.8
Applicable
 income taxes   532    585    586   (9.1)   (9.2) 1,678  1,573    6.7
             ---------------------               --------------
Net income   $1,203 $1,201 $1,154     .2     4.2 $3,557 $3,346    6.3
             ---------------------               --------------
Net income
 applicable
 to common
 equity      $1,187 $1,184 $1,154     .3     2.9 $3,524 $3,346    5.3
             ---------------------               --------------

Diluted
 earnings per
 common share  $.66   $.66   $.62     --     6.5  $1.95  $1.80    8.3
             ---------------------               --------------

Net Interest Income

Third quarter net interest income on a taxable-equivalent basis was $1,673 million, compared with $1,791 million recorded in the third quarter of 2005. Average earning assets for the period increased over the third quarter of 2005 by $6.7 billion (3.7 percent), primarily driven by an increase in total average loans. This was partially offset by a $2.0 billion (4.7 percent) decrease in average 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 third quarter of 2006 was 3.56 percent, compared with 3.95 percent in the third quarter of 2005. The decline in the net interest margin reflected the competitive lending environment, asset/liability management decisions and the impact of changes in the yield curve from a year ago. Since the third quarter of 2005, credit spreads have tightened by approximately 24 basis points across most lending products due to competitive pricing and a change in mix reflecting growth in lower-spread, fixed-rate credit products and noninterest-bearing corporate and purchasing card balances. 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. An increase in the margin benefit of net free funds and loan fees partially offset these factors.

Net interest income in the third quarter of 2006 was lower than the second quarter of 2006 by $24 million (1.4 percent). The net interest margin of 3.56 percent in the third quarter of 2006 was 12 basis points lower than the net interest margin of 3.68 percent in the second quarter of 2006. The decline in the net interest margin from the second quarter of 2006 was due to continued tightening of credit spreads (4 basis points), including the impact of growth in noninterest-bearing corporate and purchasing card balances, incrementally funding growth in earning assets with wholesale funding and the ongoing impact of the flat yield curve.

Beginning in the third quarter, the Federal Reserve Bank paused from its policies of increasing interest rates and tightening the money supply. If the Federal Reserve Bank leaves rates unchanged, the Company expects net interest margin to stabilize in the fourth quarter as the cost of funding the balance sheet levels off and the yield on earning assets continues to rise through re-pricing and incremental growth.

                                                               Table 3
NET INTEREST INCOME
----------------------------------------------------------------------
(Taxable-equivalent basis; $ in millions)
                                                       Change  Change
                                   3Q      2Q      3Q 3Q06 vs 3Q06 vs
                                 2006    2006    2005    2Q06    3Q05
                             -----------------------------------------
Components of net interest
 income
  Income on earning assets    $3,175  $3,037  $2,727    $138    $448
  Expense on interest-bearing
   liabilities                 1,502   1,340     936     162     566
                             -----------------------------------------
Net interest income           $1,673  $1,697  $1,791    $(24)  $(118)
                             -----------------------------------------

Average yields and rates paid
  Earning assets yield          6.74%   6.58%   6.01%    .16%    .73%
  Rate paid on interest-
   bearing liabilities          3.79    3.45    2.49     .34    1.30
                             -----------------------------------------
Gross interest margin           2.95%   3.13%   3.52%  (.18)%  (.57)%
                             -----------------------------------------
Net interest margin             3.56%   3.68%   3.95%  (.12)%  (.39)%
                             -----------------------------------------

Average balances
  Investment securities      $39,806 $40,087 $41,782   $(281)$(1,976)
  Loans                      142,894 140,863 135,283   2,031   7,611
  Earning assets             187,190 184,890 180,452   2,300   6,738
  Interest-bearing
   liabilities               157,248 155,755 149,431   1,493   7,817
  Net free funds (a)          29,942  29,135  31,021     807  (1,079)

(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.

                                                               Table 3
NET INTEREST INCOME
----------------------------------------------------------------------
(Taxable-equivalent basis; $ in millions)

                                                   YTD     YTD
                                                  2006    2005  Change
                                            --------------------------
Components of net interest income
  Income on earning assets                     $9,115  $7,741  $1,374
  Expense on interest-bearing liabilities       4,020   2,438   1,582
                                            --------------------------
Net interest income                            $5,095  $5,303   $(208)
                                            --------------------------

Average yields and rates paid
  Earning assets yield                           6.58%   5.85%    .73%
  Rate paid on interest-bearing liabilities      3.45    2.23    1.22
                                            --------------------------
Gross interest margin                            3.13%   3.62%  (.49)%
                                            --------------------------
Net interest margin                              3.68%   4.00%  (.32)%
                                            --------------------------

Average balances
  Investment securities                       $39,858 $42,308 $(2,450)
  Loans                                       141,059 131,432   9,627
  Earning assets                              185,075 176,851   8,224
  Interest-bearing liabilities                155,650 145,878   9,772
  Net free funds (a)                           29,425  30,973  (1,548)

(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.
                                                               Table 4
AVERAGE LOANS
----------------------------------------------------------------------
($ in millions)
                                                     Percent  Percent
                                                      Change   Change
                               3Q       2Q       3Q  3Q06 vs  3Q06 vs
                             2006     2006     2005     2Q06     3Q05
                        ----------------------------------------------

Commercial               $40,781  $39,871  $38,343      2.3      6.4
Lease financing            5,287    5,199    4,908      1.7      7.7
                        ---------------------------
   Total commercial       46,068   45,070   43,251      2.2      6.5

Commercial mortgages      19,941   20,195   20,341     (1.3)    (2.0)
Construction and
 development               8,760    8,600    7,852      1.9     11.6
                        ---------------------------
   Total commercial real
    estate                28,701   28,795   28,193      (.3)     1.8

Residential mortgages     21,118   20,868   18,741      1.2     12.7

Credit card                7,800    7,360    6,684      6.0     16.7
Retail leasing             7,069    7,115    7,467      (.6)    (5.3)
Home equity and second
 mortgages                15,166   15,035   14,984       .9      1.2
Other retail              16,972   16,620   15,963      2.1      6.3
                        ---------------------------
   Total retail           47,007   46,130   45,098      1.9      4.2
                        ---------------------------

Total loans             $142,894 $140,863 $135,283      1.4      5.6
                        ---------------------------

                                                               Table 4
AVERAGE LOANS
----------------------------------------------------------------------
($ in millions)


                                                YTD       YTD  Percent
                                               2006      2005   Change
                                         -----------------------------

Commercial                                 $39,840   $37,348      6.7
Lease financing                              5,189     4,915      5.6
                                         --------------------
   Total commercial                         45,029    42,263      6.5

Commercial mortgages                        20,133    20,255      (.6)
Construction and development                 8,571     7,507     14.2
                                         --------------------
   Total commercial real estate             28,704    27,762      3.4

Residential mortgages                       20,992    17,266     21.6

Credit card                                  7,429     6,544     13.5
Retail leasing                               7,144     7,328     (2.5)
Home equity and second mortgages            15,047    14,944       .7
Other retail                                16,714    15,325      9.1
                                         --------------------
   Total retail                             46,334    44,141      5.0
                                         --------------------

Total loans                               $141,059  $131,432      7.3
                                         --------------------

Average loans for the third quarter of 2006 were $7.6 billion (5.6 percent) higher than the third quarter of 2005, driven by growth in average total commercial loans of $2.8 billion (6.5 percent), residential mortgages of $2.4 billion (12.7 percent) and total retail loans of $1.9 billion (4.2 percent). Average loans for the third quarter of 2006 were higher than the second quarter of 2006 by $2.0 billion (1.4 percent), reflecting growth in total commercial and total retail loans. Residential mortgages and total commercial real estate loans remained relatively flat in the third quarter of 2006 compared with the second quarter of 2006. During the first quarter of 2006, the Company began selling an increased proportion of its residential mortgage loan production and anticipates that balances will remain essentially flat.

Average investment securities in the third quarter of 2006 were $2.0 billion (4.7 percent) lower than in the third quarter of 2005. The change in the balance of the investment securities portfolio from a year ago principally reflected asset/liability management decisions to reduce the focus on residential mortgage assets 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 as of January 1, 2006, in connection with the adoption of SFAS 156.

                                                               Table 5
AVERAGE DEPOSITS
----------------------------------------------------------------------
($ in millions)
                                                      Percent Percent
                                                       Change  Change
                                 3Q       2Q       3Q 3Q06 vs 3Q06 vs
                               2006     2006     2005    2Q06    3Q05
                          --------------------------------------------

Noninterest-bearing
 deposits                  $28,220  $28,949  $29,434    (2.5)   (4.1)
Interest-bearing deposits
  Interest checking         23,595   23,333   22,508     1.1     4.8
  Money market savings      26,116   26,981   28,740    (3.2)   (9.1)
  Savings accounts           5,598    5,720    5,777    (2.1)   (3.1)
                          ---------------------------
   Total of savings
    deposits                55,309   56,034   57,025    (1.3)   (3.0)
  Time certificates of
   deposit less than
   $100,000                 13,867   13,689   13,263     1.3     4.6
  Time deposits greater
   than $100,000            22,579   22,561   21,262      .1     6.2
                          ---------------------------
     Total interest-
      bearing deposits      91,755   92,284   91,550     (.6)     .2
                          ---------------------------
Total deposits            $119,975 $121,233 $120,984    (1.0)    (.8)
                          ---------------------------

                                                               Table 5
AVERAGE DEPOSITS
----------------------------------------------------------------------
($ in millions)


                                                 YTD      YTD  Percent
                                                2006     2005   Change
                                          ----------------------------

Noninterest-bearing deposits                $28,666  $29,003     (1.2)
Interest-bearing deposits
  Interest checking                          23,358   22,891      2.0
  Money market savings                       26,820   29,517     (9.1)
  Savings accounts                            5,669    5,876     (3.5)
                                          -------------------
   Total of savings deposits                 55,847   58,284     (4.2)
  Time certificates of deposit less than
   $100,000                                  13,688   13,132      4.2
  Time deposits greater than $100,000        22,255   20,133     10.5
                                          -------------------
     Total interest-bearing deposits         91,790   91,549       .3
                                          -------------------
Total deposits                             $120,456 $120,552      (.1)
                                          -------------------

Average noninterest-bearing deposits for the third quarter of 2006 decreased $1.2 billion (4.1 percent) compared with the third quarter of 2005 reflecting a decline in business demand deposits as these customers reduce excess liquidity to fund business growth. The change also reflects a migration of customers to interest-bearing products given rising interest rates.

Average total savings deposits declined year-over-year by $1.7 billion (3.0 percent) due to reductions in average money market savings and savings accounts, partially offset by an increase in interest checking balances. Average money market savings balances declined by $2.6 billion (9.1 percent) year-over-year, primarily due to a decline in balances within the branches. This was partially offset by increases in broker dealer and corporate trust 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 to take advantage of higher interest rates for these products.

Average time certificates of deposit less than $100,000 were higher in the third quarter of 2006 than the third quarter of 2005 by $604 million (4.6 percent). Additionally, the Company experienced year-over-year growth in average consumer-based time deposits greater than $100,000 of $1.2 billion (34.9 percent) due to customer migration of deposit balances. Other time deposits greater than $100,000 were essentially unchanged from a year ago.

Average noninterest-bearing deposits for the third quarter of 2006 decreased $729 million (2.5 percent) compared with the second quarter of 2006 reflecting seasonally higher second quarter demand deposit balances. Total savings deposits declined $725 million (1.3 percent) from the second quarter of 2006 partially offset by a modest increase in fixed-rate time certificates and time deposits greater than $100,000.

                                                               Table 6
NONINTEREST INCOME
----------------------------------------------------------------------
($ in millions)                   Percent Percent
                                   Change  Change
                 3Q     2Q     3Q 3Q06 vs 3Q06 vs   YTD    YTD Percent
               2006   2006   2005    2Q06    3Q05  2006   2005  Change
             ---------------------------------------------------------

Credit and
 debit card
 revenue       $206   $202   $185    2.0    11.4   $590   $516   14.3
Corporate
 payment
 products
 revenue        150    139    135    7.9    11.1    416    362   14.9
ATM
 processing
 services        63     61     64    3.3    (1.6)   183    168    8.9
Merchant
 processing
 services       253    253    200     --    26.5    719    576   24.8
Trust and
 investment
 management
 fees           305    314    251   (2.9)   21.5    916    751   22.0
Deposit
 service
 charges        268    264    246    1.5     8.9    764    690   10.7
Treasury
 management
 fees           111    116    109   (4.3)    1.8    334    333     .3
Commercial
 products
 revenue        100    107    103   (6.5)   (2.9)   311    299    4.0
Mortgage
 banking
 revenue         68     75    111   (9.3)  (38.7)   167    323  (48.3)
Investment
 products
 fees and
 commissions     34     42     37  (19.0)   (8.1)   114    115    (.9)
Securities
 gains
 (losses),
 net             --      3      1     nm      nm      3    (57)    nm
Other           190    179    134    6.1    41.8    600    423   41.8
             ---------------------               --------------

Total
 noninterest
 income      $1,748 $1,755 $1,576    (.4)   10.9 $5,117 $4,499   13.7
             ---------------------               --------------

Noninterest Income

Third quarter noninterest income was $1,748 million, an increase of $172 million (10.9 percent) from the same quarter of 2005 and $7 million (.4 percent) lower than the second quarter of 2006. The increase in noninterest income over the third quarter of 2005 was driven by favorable variances in the majority of fee income categories. Strong growth in fee-based revenue was partially offset by the accounting impact of SFAS 156 on mortgage banking revenue.

Credit and debit card revenue and corporate payment products revenue were both higher in the third quarter of 2006 than the third quarter of 2005 by $21 million and $15 million, or 11.4 percent and 11.1 percent, respectively. The strong growth in credit and debit card revenue was primarily driven by higher customer transaction volumes. The corporate payment products revenue growth reflected organic growth in sales volumes and card usage and acquired business expansion. Merchant processing services revenue was higher in the third quarter of 2006 than the same quarter a year ago by $53 million (26.5 percent), reflecting an increase in sales volume driven by acquisitions, higher same store sales, rates and equipment fees. Trust and investment management fees increased by $54 million (21.5 percent) year-over-year, due to the acquisition of the corporate and institutional trust business of a large national bank, account growth and favorable equity market conditions. Deposit service charges grew year-over-year by $22 million (8.9 percent) due to increased transaction-related fees and the impact of net new checking accounts. Other income was higher by $56 million (41.8 percent) as compared with the third quarter of 2005, primarily due to a $32 million gain on the sale of equity interests in a card association and an increase in other equity investment revenue. These favorable changes in fee-based revenue were partially offset by the decline in mortgage banking revenue of $43 million (38.7 percent), principally driven by the adoption of the fair value method of accounting for mortgage servicing rights.

Noninterest income was slighter lower ($7 million or .4 percent) in the third quarter of 2006 compared with the second quarter of 2006. This reflected seasonally lower trust and investment management fees, treasury management fees and investment products fees and commissions of $9 million (2.9 percent), $5 million (4.3 percent) and $8 million (19.0 percent) respectively. Mortgage banking revenue was lower than the second quarter of 2006 by $7 million (9.3 percent) primarily due to lower production gains due to the current interest rate environment. In addition, commercial products revenue was lower in the third quarter of 2006 by $7 million (6.5 percent) primarily due to lower commercial leasing revenue. These decreases were partially offset by increases in credit and debit card revenue of $4 million (2.0 percent) corporate payment products revenue of $11 million (7.9 percent) and deposit services charges of $4 million (1.5 percent) primarily due to higher transaction volume. Other revenue increased $11 million (6.1 percent) in the third quarter of 2006 primarily due to increased equity investment revenue.

                                                               Table 7
NONINTEREST EXPENSE
----------------------------------------------------------------------
($ in millions)
                                                      Percent Percent
                                                       Change  Change
                                    3Q      2Q     3Q 3Q06 vs 3Q06 vs
                                  2006    2006   2005    2Q06    3Q05
                              ----------------------------------------

Compensation                     $632    $627   $603      .8     4.8
Employee benefits                 123     123    106      --    16.0
Net occupancy and equipment       168     161    162     4.3     3.7
Professional services              54      41     44    31.7    22.7
Marketing and business
 development                       58      58     61      --    (4.9)
Technology and communications     128     127    118      .8     8.5
Postage, printing and supplies     66      66     64      --     3.1
Other intangibles                  89      89    125      --   (28.8)
Debt prepayment                    --      11     --       nm      nm
Other                             220     227    190    (3.1)   15.8
                              -----------------------

Total noninterest expense      $1,538  $1,530 $1,473      .5     4.4
                              -----------------------

                                                               Table 7
NONINTEREST EXPENSE
----------------------------------------------------------------------
($ in millions)


                                                   YTD     YTD Percent
                                                  2006    2005  Change
                                             -------------------------

Compensation                                   $1,892  $1,782     6.2
Employee benefits                                 379     330    14.8
Net occupancy and equipment                       494     475     4.0
Professional services                             130     119     9.2
Marketing and business development                156     171    (8.8)
Technology and communications                     372     337    10.4
Postage, printing and supplies                    198     190     4.2
Other intangibles                                 263     377   (30.2)
Debt prepayment                                    11      54   (79.6)
Other                                             673     564    19.3
                                             -----------------

Total noninterest expense                      $4,568  $4,399     3.8
                                             -----------------

Noninterest Expense

Third quarter noninterest expense totaled $1,538 million, an increase of $65 million (4.4 percent) from the same quarter of 2005 and $8 million (.5 percent) from the second quarter of 2006. Compensation expense was higher year-over-year by $29 million (4.8 percent) primarily due to the corporate and institutional trust and payments processing acquisitions and other growth initiatives. Benefits expense increased from the third quarter of 2005 primarily due to higher pension costs from a year ago. Professional services expense increased by $10 million (22.7 percent) due primarily to business development initiatives. Technology and communications expense rose by $10 million (8.5 percent) due to higher outside data processing expense principally associated with expanding a prepaid gift card program and the corporate and institutional trust acquisition. Other expense increased in the third quarter of 2006 from the same quarter of 2005 by $30 million (15.8 percent) primarily due to increased investments in tax-advantaged projects relative to a year ago and business integration costs. Offsetting these expense increases was a year-over-year decline in other intangible expense of $36 million (28.8 percent), reflecting the elimination of mortgage servicing rights amortization and impairment due to the adoption of SFAS 156.

Noninterest expense in the third quarter of 2006 was higher than the second quarter of 2006 by $8 million (.5 percent). The increase in noninterest expense in the third quarter of 2006 from the second quarter of 2006 was primarily due to operating costs from acquired businesses and other business development initiatives. Partially offsetting these increases was a decline of $11 million due to debt prepayment expense recorded in the second quarter of 2006.

Provision for Income Taxes

The provision for income taxes for the third quarter of 2006 declined to an effective tax rate of 30.7 percent compared with an effective tax rate of 33.7 percent in the third quarter of 2005 and an effective tax rate of 32.8 percent in second quarter of 2006. The decrease in the effective rate reflected an expected increase in income tax credits from tax-advantaged investments through the remainder of the year.

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

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

Net charge-offs
  Commercial                           18     13      5     15      7
  Lease financing                       3      7      7      7     16
                                   -----------------------------------
     Total commercial                  21     20     12     22     23
  Commercial mortgages                 --     (1)     2     (1)     2
  Construction and development         --      1     --     --     (2)
                                   -----------------------------------
    Total commercial real estate       --     --      2     (1)    --

  Residential mortgages                11     11      7     10      9

  Credit card                          56     50     46     86     63
  Retail leasing                        4      2      4      8      5
  Home equity and second mortgages     12     13     12     21     14
  Other retail                         31     29     32     67     42
                                   -----------------------------------
     Total retail                     103     94     94    182    124
                                   -----------------------------------
      Total net charge-offs           135    125    115    213    156
Provision for credit losses           135    125    115    205    145
Acquisitions and other changes          5     --     --      1     --
                                   -----------------------------------
Balance, end of period             $2,256 $2,251 $2,251 $2,251 $2,258
                                   -----------------------------------

Components
 Allowance for loan losses         $2,034 $2,039 $2,035 $2,041 $2,055
 Liability for unfunded credit
  commitments                         222    212    216    210    203
                                   -----------------------------------
      Total allowance for credit
       losses                      $2,256 $2,251 $2,251 $2,251 $2,258
                                   -----------------------------------

Gross charge-offs                    $195   $176   $175   $267   $229
Gross recoveries                      $60    $51    $60    $54    $73

Allowance as a percentage of
 Period-end loans                    1.56   1.59   1.62   1.63   1.65
 Nonperforming loans                  476    500    432    414    413
 Nonperforming assets                 392    409    364    350    351

Credit Quality

The allowance for credit losses was $2,256 million at September 30, 2006, compared with $2,251 million at June 30, 2006, and $2,258 million at September 30, 2005. The ratio of the allowance for credit losses to period-end loans was 1.56 percent at September 30, 2006, compared with 1.59 percent at June 30, 2006, and 1.65 percent at September 30, 2005. The ratio of the allowance for credit losses to nonperforming loans was 476 percent at September 30, 2006, compared with 500 percent at June 30, 2006, and 413 percent at September 30, 2005. Total net charge-offs in the third quarter of 2006 were $135 million, compared with the second quarter of 2006 net charge-offs of $125 million and the third quarter of 2005 net charge-offs of $156 million. The year-over-year 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.

Commercial and commercial real estate loan net charge-offs remained relatively flat at $21 million in the third quarter of 2006 (.11 percent of average loans outstanding) compared with $20 million (.11 percent of average loans outstanding) in the second quarter of 2006 and $23 million (.13 percent of average loans outstanding) in the third quarter of 2005. The Company expects commercial net charge-offs to increase somewhat over the next several quarters, in part due to the timing and extent of commercial loan recoveries.

Retail loan net charge-offs were $103 million in the third quarter of 2006 compared with $94 million in the second quarter of 2006 and $124 million in the third quarter of 2005. Retail loan net charge-offs increased as compared with the second quarter of 2006, despite retail recoveries being higher than expected in the current quarter, and declined from the third quarter of 2005, reflecting the impact of the bankruptcy legislation change that occurred in the fourth quarter of 2005. Retail loan net charge-offs as a percent of average loans outstanding were .87 percent in the third quarter of 2006, compared with .82 percent and 1.09 percent in the second quarter of 2006 and third quarter of 2005, respectively. The increase reflects a higher level of bankruptcy-related charge-offs relative to the first and second quarters of 2006. The Company anticipates that bankruptcy charge-offs will continue to increase to more normalized levels during the next several quarters.

                                                               Table 9
CREDIT RATIOS
----------------------------------------------------------------------
(Percent)                                      3Q   2Q   1Q   4Q   3Q
                                             2006 2006 2006 2005 2005
                                             -------------------------
Net charge-offs ratios (a)
   Commercial                                 .18  .13  .05  .15  .07
   Lease financing                            .23  .54  .56  .56 1.29
      Total commercial                        .18  .18  .11  .20  .21

   Commercial mortgages                        -- (.02) .04 (.02) .04
   Construction and development                --  .05   --   -- (.10)
      Total commercial real estate             --   --  .03 (.01)  --

   Residential mortgages                      .21  .21  .14  .20  .19

   Credit card                               2.85 2.72 2.62 5.00 3.74
   Retail leasing                             .22  .11  .22  .43  .27
   Home equity and second mortgages           .31  .35  .33  .56  .37
   Other retail                               .72  .70  .78 1.64 1.04
      Total retail                            .87  .82  .83 1.59 1.09

Total net charge-offs                         .37  .36  .33  .61  .46

Delinquent loan ratios - 90 days or more past due excluding
 nonperforming loans(b)
   Commercial                                 .06  .05  .05  .05  .04
   Commercial real estate                     .01   --   --   --  .01
   Residential mortgages                      .36  .30  .31  .32  .30
   Retail                                     .40  .38  .36  .36  .36
Total loans                                   .20  .19  .18  .18  .18

Delinquent loan ratios - 90 days or more past due including
 nonperforming loans(b)
   Commercial                                 .55  .58  .64  .69  .74
   Commercial real estate                     .54  .40  .51  .55  .57
   Residential mortgages                      .53  .49  .53  .55  .53
   Retail                                     .51  .50  .52  .50  .45
Total loans                                   .53  .51  .56  .58  .58


(a) annualized and calculated on average loan balances
(b) ratios are expressed as a percent of ending loan balances
                                                              Table 10
ASSET QUALITY
----------------------------------------------------------------------
($ in millions)
                                    Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
                                     2006   2006   2006   2005   2005
                                    ----------------------------------
Nonperforming loans
   Commercial                        $192   $203   $219   $231   $265
   Lease financing                     39     38     41     42     35
                                    ----------------------------------
      Total commercial                231    241    260    273    300
   Commercial mortgages               114     88    123    134    144
   Construction and development        40     25     23     23     16
                                    ----------------------------------
      Total commercial real estate    154    113    146    157    160
   Residential mortgages               36     39     45     48     44
   Retail                              53     57     70     66     43
                                    ----------------------------------
Total nonperforming loans             474    450    521    544    547

Other real estate                      79     77     71     71     68
Other nonperforming assets             22     23     27     29     29
                                    ----------------------------------

Total nonperforming assets(a)        $575   $550   $619   $644   $644
                                    ----------------------------------

Accruing loans 90 days or more past
 due                                 $295   $264   $251   $253   $242
                                    ----------------------------------

Restructured loans that continue
 to accrue interest                  $369   $370   $371   $315   $301
                                    ----------------------------------

Nonperforming assets to loans
   plus ORE (%)                       .40    .39    .45    .47    .47

(a) does not include accruing loans 90 days or more past due or
 restructured loans that continue to accrue interest

Nonperforming assets at September 30, 2006, totaled $575 million, compared with $550 million at June 30, 2006, and $644 million at September 30, 2005. The ratio of nonperforming assets to loans and other real estate was .40 percent at September 30, 2006, .39 percent at June 30, 2006, and .47 percent at September 30, 2005. Restructured loans that continue to accrue interest have increased from the third quarter 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.

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

Total shareholders'
 equity                  $20,926  $20,415  $20,256  $20,086  $19,864
Tier 1 capital            17,042   16,841   16,478   15,145   15,180
Total risk-based capital  25,011   24,893   24,328   23,056   23,283

Tier 1 capital ratio         8.8 %    8.9 %    8.9 %    8.2 %    8.4 %
Total risk-based capital
 ratio                      13.0     13.1     13.1     12.5     12.8
Leverage ratio               8.3      8.2      8.2      7.6      7.7
Common equity to assets      9.2      9.1      9.2      9.6      9.6
Tangible common equity to
 assets                      5.4      5.6      5.4      5.9      6.2

Total shareholders' equity was $20.9 billion at September 30, 2006, compared with $19.9 billion at September 30, 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, partially offset by share buybacks and dividends.

The Tier 1 capital ratio was 8.8 percent at September 30, 2006, compared with 8.9 percent at June 30, 2006, and 8.4 percent at September 30, 2005. The total risk-based capital ratio was 13.0 percent at September 30, 2006, compared with 13.1 percent at June 30, 2006, and 12.8 percent at September 30, 2005. The leverage ratio was 8.3 percent at September 30, 2006, compared with 8.2 percent at June 30, 2006, and 7.7 percent at September 30, 2005. Tangible common equity to assets was 5.4 percent at September 30, 2006, compared with 5.6 percent at June 30, 2006, and 6.2 percent at September 30, 2005. All regulatory ratios continue to be in excess of stated "well capitalized" requirements.

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

Beginning shares outstanding            1,783 1,783 1,815 1,818 1,829
Shares issued for stock option and stock
 purchase plans, acquisitions and other
 corporate purposes                        10     9     9     6     4
Shares repurchased                        (30)   (9)  (41)   (9)  (15)
                                        ------------------------------
Ending shares outstanding               1,763 1,783 1,783 1,815 1,818
                                        ------------------------------

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. On August 3, 2006, the Company announced that the Board of Directors approved an authorization to repurchase 150 million shares of common stock through December 2008. This new authorization replaces the December 21, 2004, share repurchase program. During the third quarter of 2006, the Company repurchased 30 million shares of common stock. As of September 30, 2006, there were approximately 132 million shares remaining to be repurchased under the current authorization.

                                                              Table 13
LINE OF BUSINESS FINANCIAL PERFORMANCE (a)
----------------------------------------------------------------------
($ in millions)
                                   Net Income        Percent Change
                              --------------------- ------------------
                                   3Q     2Q     3Q   3Q06 vs 3Q06 vs
Business Line                    2006   2006   2005      2Q06    3Q05
                              ----------------------------------------

Wholesale Banking               $298   $304   $287      (2.0)    3.8
Consumer Banking                 477    490    447      (2.7)    6.7
Wealth Management                147    149    122      (1.3)   20.5
Payment Services                 252    251    207        .4    21.7
Treasury and Corporate Support    29      7     91         nm  (68.1)
                              ---------------------

Consolidated Company          $1,203 $1,201 $1,154        .2     4.2
                              ---------------------

(a) preliminary data

                                                              Table 13
LINE OF BUSINESS FINANCIAL PERFORMANCE (a)
----------------------------------------------------------------------
($ in millions)
                                                              3Q 2006
                                    YTD      YTD  Percent    Earnings
Business Line                      2006     2005   Change Composition
                              ----------------------------------------

Wholesale Banking                 $907     $866      4.7          25 %
Consumer Banking                 1,379    1,262      9.3          40
Wealth Management                  433      349     24.1          12
Payment Services                   726      559     29.9          21
Treasury and Corporate Support     112      310    (63.9)          2
                              ------------------         ------------

Consolidated Company            $3,557   $3,346      6.3         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, Wealth 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, commercial real estate, equipment finance, small-ticket leasing and public sector clients, along with lending guaranteed by the Small Business Administration. Wholesale Banking contributed $298 million of the Company's net income in the third quarter of 2006, a 3.8 percent increase over the same period of 2005 and a 2.0 percent decrease as compared with the second quarter of 2006. The increase in Wholesale Banking's third quarter 2006 contribution over the same quarter of 2005 was the result of a favorable variance in total net revenue (2.2 percent). The favorable variance in total net revenue year-over-year was the result of growth in total noninterest income (6.3 percent), driven by higher equity investment revenue and commercial real estate production income, offset somewhat by lower syndication and letter of credit fee revenue. Net interest income remained relatively flat as growth from average loan balances and the margin benefit of deposits was offset by tighter credit spreads and a decline in average deposit balances.

Wholesale Banking's contribution to net income in the third quarter of 2006 compared with the second quarter of 2006 was $6 million (2.0 percent) lower, due primarily to an unfavorable variance in total net revenue (2.0 percent). Total net revenue was lower on a linked quarter basis due to a decrease in total noninterest income of $7 million (3.1 percent) and lower net interest income, driven primarily by lower average deposit balances and tightening credit spreads. Total noninterest income decreased due to lower commercial leasing revenue and seasonally lower treasury management revenue.

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, consumer lending, mortgage banking, consumer finance, workplace banking, student banking, and 24-hour banking. Consumer Banking contributed $477 million of the Company's net income in the third quarter of 2006, a 6.7 percent increase over the same period of 2005 and a 2.7 percent decrease from the prior quarter. The Company's adoption of SFAS 156 reduced the business line's total net revenue and noninterest expense compared with the third quarter of 2005 by approximately $36 million and $46 million, respectively. After consideration of the impact of adopting this accounting standard, the favorable increase in contribution from a year ago was the result of core net revenue growth (1.9 percent) and lower provision for credit losses (9.2 percent). Net interest income was higher year-over-year primarily due to growth in average loan balances of 5.4 percent and the margin benefit of deposits, somewhat offset by lower spreads on those assets given the competitive lending environment. Fee-based revenues, excluding the impact of adopting SFAS 156, increased 1.2 percent reflecting strong growth in deposit service charges (9.0 percent) due to increased transaction-related fees and net new checking accounts, offset somewhat by lower investment product sales and end-of-term retail lease residual income. Total noninterest expense in the third quarter of 2006 was lower compared with the same quarter of 2005 due to the elimination of mortgage servicing rights amortization under SFAS 156. In addition, there was a favorable variance in net shared services expense (3.3 percent) partially offset by higher compensation and employee benefit expense (3.3 percent) resulting from investments in the branch distribution network. A $6 million year-over-year decrease in net charge-offs (9.2 percent) resulted in the favorable variance in the business line's provision for credit losses.

The decrease in Consumer Banking's contribution in the third quarter of 2006 from the second quarter of 2006 was principally the result of growth in net interest income that was more than offset by lower fee-based revenues and higher noninterest expense. The change in total net revenue was due primarily to an increase in net interest income (1.9 percent) driven by average loan growth and the margin benefit of deposits, partially offset by a reduction in total noninterest income (1.5 percent). The decline in total noninterest income was primarily due to a decrease in mortgage banking revenue reflecting the impact of the interest rate environment on production gains, partially offset by higher deposit service charges. Total noninterest expense was higher on a linked quarter basis, primarily due to higher compensation costs in the branch network and an increase in business development expense. The increase in the provision for credit losses was due to a $5 million increase in net charge-offs, as bankruptcy related charge-offs continue to return to more normalized levels.

Wealth Management provides trust, private banking, financial advisory, investment management, insurance, custody and mutual fund servicing through six businesses: Private Client Group, Corporate Trust, U.S. Bancorp Investments and Insurance, FAF Advisors, Institutional Trust and Custody and Fund Services. Wealth Management contributed $147 million of the Company's net income in the third quarter of 2006, a 20.5 percent increase over the same period of 2005 and a 1.3 percent decrease from the second quarter of 2006. The growth in the business line's contribution in the third quarter of 2006 over the same quarter of 2005 was the result of core growth in net interest income and fee-based revenues and an acquired corporate and institutional trust business. Net interest income was favorably impacted year-over-year by wider deposit spreads and growth in average loan and deposit balances. Total noninterest income increased by 17.6 percent from the same quarter of 2005, primarily due to improved equity market conditions, incremental growth in customer accounts and balances and the acquisition of the corporate and institutional trust business of a large national bank. The increase in total noninterest expense was primarily due to the recent acquisition. The decrease in the business line's contribution in the third quarter of 2006, as compared with the second quarter of 2006, was due primarily to seasonally lower trust and investment management fees offset somewhat by lower production-based compensation costs.

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 $252 million of the Company's net income in the third quarter of 2006, a 21.7 percent increase from the same period of 2005 and a .4 percent increase from the second quarter of 2006. The increase in Payment Services' contribution in the third quarter of 2006 from the same period of 2005 was the result of higher total net revenue (14.1 percent) and a favorable variance in the provision for credit losses (15.9 percent), partially offset by an increase in total noninterest expense (14.7 percent). The increase in total net revenue year-over-year was due to growth in total noninterest income (16.1 percent) and net interest income (6.5 percent), reflecting growth in higher yielding retail loan balances, partially offset by the margin impact of noninterest-bearing corporate and purchasing card balances and intangibles related to recent acquisitions. All revenue categories benefited from higher transaction volumes, rate changes and business expansion initiatives. 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 decrease in the provision for credit losses was driven by lower net charge-offs, year-over-year, reflecting the impact of changes in bankruptcy legislation in the fourth quarter of 2005.

The increase in Payment Services' contribution in the third quarter of 2006 from the second quarter of 2006 was due to improved total noninterest income (2.8 percent), partially offset by increased provision for credit losses (13.8 percent) and an increase in total noninterest expense (4.6 percent). The increase in noninterest income was due to higher volumes in credit and debit card revenue and corporate payment products revenue. An $8 million increase in net charge-offs drove the increase in the provision for credit losses, as bankruptcy charge-offs continue to return to more normalized levels. The increase in total noninterest expense was primarily due to the impact of acquisitions on various costs including compensation and employee benefits and other intangible expense.

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 mortgage servicing rights 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 $29 million in the third quarter of 2006, compared with net income of $91 million in the third quarter of 2005 and $7 million in the second quarter of 2006. Net interest income decreased in the current quarter from the third quarter of 2005 by $167 million, reflecting the impact of a flatter yield curve and asset/liability management decisions during the past year, including reducing the investment securities portfolio, changes in interest rate derivative positions and the issuance of higher cost wholesale funding. The adverse impact of net interest income was offset somewhat by growth in noninterest income from a year ago related to a $32 million gain on the sale of equity interests in a card association and an increase in gains from the sale of certain corporate real estate. Total noninterest expense increased $38 million primarily due to operating costs associated with incremental investments in tax-advantaged projects relative to a year ago and business integration costs. The favorable change in income taxes, compared with a year ago, resulted from expected income tax credits from incremental tax-advantaged investments. Net income in the third quarter of 2006 was higher than the second quarter of 2006 due to lower total noninterest expense ($21 million) primarily related to debt prepayment expense recorded in the second quarter and a favorable change in income taxes ($38 million) reflecting the increase in income tax credits. This improvement was partially offset by lower net interest income ($43 million) driven by the flatter yield curve and funding earning asset growth with wholesale funding.

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 17, 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. (CT) on Tuesday, October 17th through Tuesday, October 24th at 11:00 p.m. (CT). To access the recorded call, please dial 800-839-8292. Participants calling from outside the United States, please call 402-220-6069. Find the recorded call via the internet at usbank.com.

Minneapolis-based U.S. Bancorp ("USB"), with $217 billion in assets, is the 6th largest financial holding company in the United States. The Company operates 2,462 banking offices and 4,943 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 changes in general business and economic conditions, changes in interest rates, legal and regulatory developments, increased competition from both banks and non-banks, changes in customer behavior and preferences, effects of mergers and acquisitions and related integration, and effects of critical accounting policies and judgments. For discussion of these and other risks that may cause actual results to differ from expectations, refer to our Annual Report on Form 10-K for the year ended December 31, 2005, on file with the SEC, including 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   Nine Months
(Dollars and Shares in Millions, Except      Ended          Ended
 Per Share Data)                         September 30,  September 30,
(Unaudited)                              2006    2005   2006    2005
----------------------------------------------------------------------
Interest Income
Loans                                    $2,569 $2,167  $7,350 $6,105
Loans held for sale                          40     30      99     75
Investment securities                       500    492   1,490  1,454
Other interest income                        40     29     119     84
                                        ------------------------------
    Total interest income                 3,149  2,718   9,058  7,718
Interest Expense
Deposits                                    640    414   1,721  1,083
Short-term borrowings                       321    205     861    460
Long-term debt                              528    317   1,415    895
                                        ------------------------------
    Total interest expense                1,489    936   3,997  2,438
                                        ------------------------------
Net interest income                       1,660  1,782   5,061  5,280
Provision for credit losses                 135    145     375    461
                                        ------------------------------
Net interest income after provision for
 credit losses                            1,525  1,637   4,686  4,819
Noninterest Income
Credit and debit card revenue               206    185     590    516
Corporate payment products revenue          150    135     416    362
ATM processing services                      63     64     183    168
Merchant processing services                253    200     719    576
Trust and investment management fees        305    251     916    751
Deposit service charges                     268    246     764    690
Treasury management fees                    111    109     334    333
Commercial products revenue                 100    103     311    299
Mortgage banking revenue                     68    111     167    323
Investment products fees and commissions     34     37     114    115
Securities gains (losses), net               --      1       3    (57)
Other                                       190    134     600    423
                                        ------------------------------
    Total noninterest income              1,748  1,576   5,117  4,499
Noninterest Expense
Compensation                                632    603   1,892  1,782
Employee benefits                           123    106     379    330
Net occupancy and equipment                 168    162     494    475
Professional services                        54     44     130    119
Marketing and business development           58     61     156    171
Technology and communications               128    118     372    337
Postage, printing and supplies               66     64     198    190
Other intangibles                            89    125     263    377
Debt prepayment                              --     --      11     54
Other                                       220    190     673    564
                                        ------------------------------
    Total noninterest expense             1,538  1,473   4,568  4,399
                                        ------------------------------
Income before income taxes                1,735  1,740   5,235  4,919
Applicable income taxes                     532    586   1,678  1,573
                                        ------------------------------
Net income                               $1,203 $1,154  $3,557 $3,346
                                        ------------------------------
Net income applicable to common equity   $1,187 $1,154  $3,524 $3,346
                                        ------------------------------

Earnings per common share                  $.67   $.63   $1.98  $1.82
Diluted earnings per common share          $.66   $.62   $1.95  $1.80
Dividends declared per common share        $.33   $.30    $.99   $.90
Average common shares outstanding         1,771  1,823   1,784  1,836
Average diluted common shares
 outstanding                              1,796  1,849   1,809  1,862
----------------------------------------------------------------------
U.S. Bancorp
Consolidated Ending Balance Sheet

                              September 30, December 31, September 30,
(Dollars in Millions)                 2006         2005          2005
----------------------------------------------------------------------
Assets                          (Unaudited)                (Unaudited)
Cash and due from banks             $6,355       $8,004        $6,918
Investment securities
  Held-to-maturity                      91          109           114
  Available-for-sale                39,429       39,659        41,402
Loans held for sale                  2,649        1,686         1,695
Loans
  Commercial                        46,594       42,942        43,237
  Commercial real estate            28,973       28,463        28,521
  Residential mortgages             21,215       20,730        19,469
  Retail                            47,626       45,671        45,400
                              ----------------------------------------
    Total loans                    144,408      137,806       136,627
       Less allowance for loan
        losses                      (2,034)      (2,041)       (2,055)
                              ----------------------------------------
       Net loans                   142,374      135,765       134,572
Premises and equipment               1,835        1,841         1,850
Goodwill                             7,444        7,005         6,372
Other intangible assets              3,171        2,874         2,586
Other assets                        13,507       12,522        11,386
                              ----------------------------------------
       Total assets               $216,855     $209,465      $206,895
                              ----------------------------------------

Liabilities and Shareholders'
 Equity
Deposits
  Noninterest-bearing              $30,554      $32,214       $30,871
  Interest-bearing                  69,095       70,024        69,478
  Time deposits greater than
   $100,000                         21,312       22,471        20,446
                              ----------------------------------------
    Total deposits                 120,961      124,709       120,795
Short-term borrowings               24,783       20,200        23,061
Long-term debt                      41,230       37,069        36,257
Other liabilities                    8,955        7,401         6,918
                              ----------------------------------------
    Total liabilities              195,929      189,379       187,031
Shareholders' equity
  Preferred stock                    1,000           --            --
  Common stock                          20           20            20
  Capital surplus                    5,770        5,907         5,913
  Retained earnings                 20,770       19,001        18,457
  Less treasury stock               (6,093)      (4,413)       (4,318)
  Other comprehensive income          (541)        (429)         (208)
                              ----------------------------------------
    Total shareholders' equity      20,926       20,086        19,864
                              ----------------------------------------
    Total liabilities and
     shareholders' equity         $216,855     $209,465      $206,895
----------------------------------------------------------------------

CONTACT: U.S. Bancorp
Media Relations
Steve Dale, 612-303-0784
or
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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