News Release

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(612) 973-0898	(612) 973-2261	(612) 973-2264

U.S. BANCORP REPORTS EARNINGS FOR 2ND QUARTER 2002

EARNINGS SUMMARY								Table 1
($ in millions, except per-share data)								Percent Change
		2Q		1Q		2Q		2Q02 vs
		2002		2002		2001		1Q02
Before merger and restructuring-related items and cumulative effect of change in accounting principles*:
	Operating earnings	$	869.8	$	841.6	$	818.6		3.4
	Earnings per common share (diluted)		0.45		0.44		0.43		2.3
	Return on average common equity (%)		21.2		21.1		21.0
	Return on average assets (%)		2.06		2.03		1.99
	Efficiency ratio (%)		46.8		46.1		47.6
Net income			823.1		756.0		562.3		8.9
Earnings per common share (diluted)			0.43		0.39		0.29		10.3
Dividends declared per common share			0.195		0.195		0.1875		—
Book value per common share (period-end)			8.70		8.30		8.10		4.8
Net interest margin (%)			4.59		4.62		4.34

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[Continued from above table, first column(s) repeated]

EARNINGS SUMMARY								Table 1
($ in millions, except per-share data)		Percent Change
		2Q02 vs		YTD		YTD		Percent
		2Q01		2002		2001		Change
Before merger and restructuring-related items and cumulative effect of change in accounting principles*:
	Operating earnings		6.3	$	1,711.4	$	1,615.9		5.9
	Earnings per common share (diluted)		4.7		0.89		0.84		6.0
	Return on average common equity (%)				21.1		21.0
	Return on average assets (%)				2.05		1.99
	Efficiency ratio (%)				46.5		49.1
Net income			46.4		1,579.1		972.4		62.4
Earnings per common share (diluted)			48.3		0.82		0.51		60.8
Dividends declared per common share			4.0		0.39		0.375		4.0
Book value per common share (period-end)			7.4
Net interest margin (%)					4.60		4.36

* merger and restructuring-related items, net of taxes, totaled $(46.7) million in 2Q02; $(48.4) million in 1Q02, $(256.3) million in 2Q01, $(95.1) year-to-date 2002, and $(643.5) year-to-date 2001; cumulative effect of change in accounting principles totaled $(37.2) million in 1Q02 and year-to-date.

MINNEAPOLIS, July 16, 2002 – U.S. Bancorp (NYSE: USB) today reported operating earnings of $869.8 million for the second quarter of 2002, compared with $818.6 million for the second quarter of 2001. Operating earnings of $.45 per diluted share in the second quarter of 2002 were higher than the same period of 2001 by $.02 (4.7 percent). Return on average common equity and return on average assets, excluding merger and restructuring-related items, were 21.2 percent and 2.06 percent, respectively, in the second quarter of 2002, compared with returns of 21.0 percent and 1.99 percent in the second quarter of 2001.

     Including after-tax merger and restructuring-related items of $(46.7) million in the second quarter of 2002 and $(256.3) million the second quarter of 2001, the Company recorded net income for the

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 2

second quarter of 2002 of $823.1 million, or $.43 per diluted share, compared with $562.3 million, or $.29 per diluted share, for the same period of 2001.

     U.S. Bancorp President and Chief Executive Officer Jerry A. Grundhofer said, “I am very pleased with our second quarter operating results. We experienced solid core revenue growth over the same quarter of last year, and even more rewarding for me, core revenue growth of well over 14 percent annualized from the first quarter to the second quarter of 2002. We achieved this growth despite a challenging economy and having a significant amount of resources dedicated toward the successful completion of the integration of Firstar Corporation and the former U.S. Bancorp of Minneapolis. Eighty-five percent of our customers are now on common deposit systems and we are on-track to be at 100 percent by the end of the third quarter. I am very proud of the hard work and accomplishments of our employees—not only achieving outstanding revenue growth and flawlessly integrating the two companies, but for also embracing our Five Star Service Guarantee by continuing to deliver the high level of service that our customers have come to expect.”

     Total revenue, before merger and restructuring-related gains, on a taxable-equivalent basis for the second quarter of 2002 grew by $276.7 million (9.7 percent) over the second quarter of 2001, primarily due to improvement in the net interest margin, acquisitions and core banking growth, partially offset by the impact of portfolio sales in 2001 and capital markets-related revenue.

     Total noninterest expense, before merger and restructuring-related items, increased over the second quarter of 2001 by $106.9 million (8.0 percent), primarily reflecting the impact of acquisitions, core banking growth and impairment of mortgage servicing rights (“MSR”), partially offset by the impact to goodwill and other intangible expense with the required adoption of new accounting standards and cost savings from the Company’s on-going integration efforts.

     Provision for credit losses, before merger and restructuring-related items, for the second quarter of 2002 increased by $95.0 million (39.6 percent), from the second quarter of 2001, primarily reflecting higher net charge-offs and changes in the credit risk profile of the portfolio given the sluggish economic conditions.

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 3

     Net charge-offs in the second quarter of 2002 were $330.5 million, compared with the first quarter of 2002 net charge-offs of $335.0 million and second quarter of 2001 net charge-offs of $240.3 million. Net charge-offs in the second quarter of 2002 reflected continuing weakness in the transportation, manufacturing, communications and technology sectors. Nonperforming assets increased from $1,110.8 million at March 31, 2002, to $1,147.7 million at June 30, 2002. The ratio of allowance for credit losses to nonperforming loans was 241 percent at June 30, 2002, compared with 250 percent at March 31, 2002.

     During the first quarter of 2002, the Company fully adopted new accounting standards with respect to accounting for business combinations (SFAS 141) and goodwill and other intangible assets (SFAS 142). Management anticipates that applying the provisions of SFAS 141 to recent acquisitions and the provisions of SFAS 142 to purchase acquisitions completed prior to July 1, 2001, will increase after-tax income for the year ending December 31, 2002, by approximately $200 million, or $.10 per diluted share. Additionally, the Company recognized an after-tax goodwill impairment charge of $37.2 million in the first quarter of 2002, primarily related to the purchase of a transportation leasing company in 1998 by the equipment leasing business. This charge was recognized as a “cumulative effect of change in accounting principles” in the income statement.

     On April 1, 2002, the Company completed its acquisition of Cleveland-based The Leader Mortgage Company, LLC (“Leader Mortgage”), a wholly-owned subsidiary of First Defiance Financial Corp., in a cash transaction. Leader Mortgage had $506 million in assets at December 31, 2001, and an $8.6 billion servicing portfolio. In 2001 it had $2.1 billion in mortgage production.

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 4

INCOME STATEMENT HIGHLIGHTS											Table 2
(Taxable-equivalent basis, $ in millions,											Percent
except per-share data)											Change
		2Q			1Q			2Q			2Q02 vs
		2002			2002			2001			1Q02
Net interest income		$	1,689.8		$	1,670.4		$	1,574.8			1.2
Noninterest income*			1,437.3			1,326.9			1,275.6			8.3
	Total revenue		3,127.1			2,997.3			2,850.4			4.3
Noninterest expense*			1,448.8			1,362.6			1,341.9			6.3
	Operating income before merger and restructuring- related items and cumulative effect of change in accounting principles		1,678.3			1,634.7			1,508.5			2.7
Provision for credit losses*			335.0			335.0			240.0			—
Income before taxes, merger and restructuring-related items and cumulative effect of change in accounting principles			1,343.3			1,299.7			1,268.5			3.4
Taxable-equivalent adjustment			9.0			9.1			16.8			(1.1	)
Income taxes*			464.5			449.0			433.1			3.5
Income before merger and restructuring-related items and cumulative effect of change in accounting principles			869.8			841.6			818.6			3.4
Merger and restructuring-related items (after-tax)			(46.7	)		(48.4	)		(256.3	)	nm
Cumulative effect of change in accounting principles (after-tax)			—			(37.2	)		—		nm
Net income		$	823.1		$	756.0		$	562.3			8.9
Per diluted common share:
	Earnings, before merger and restructuring- related items and cumulative effect of change in accounting principles	$	0.45		$	0.44		$	0.43			2.3
	Net income	$	0.43		$	0.39		$	0.29			10.3

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[Continued from above table, first column(s) repeated]

INCOME STATEMENT HIGHLIGHTS											Table 2
(Taxable-equivalent basis, $ in millions,		Percent
except per-share data)		Change
		2q02 vs			Ytd			Ytd			Percent
		2Q01			2002			2001			Change
Net interest income			7.3		$	3,360.2		$	3,139.1			7.0
Noninterest income*			12.7			2,764.2			2,686.3			2.9
	Total revenue		9.7			6,124.4			5,825.4			5.1
Noninterest expense*			8.0			2,811.4			2,736.2			2.7
	Operating income before merger and restructuring- related items and cumulative effect of change in accounting principles		11.3			3,313.0			3,089.2			7.2
Provision for credit losses*			39.6			670.0			605.8			10.6
Income before taxes, merger and restructuring-related items and cumulative effect of change in accounting principles			5.9			2,643.0			2,483.4			6.4
Taxable-equivalent adjustment			(46.4	)		18.1			35.3			(48.7	)
Income taxes*			7.3			913.5			832.2			9.8
Income before merger and restructuring-related items and cumulative effect of change in accounting principles			6.3			1,711.4			1,615.9			5.9
Merger and restructuring-related items (after-tax)		nm				(95.1	)		(643.5	)	nm
Cumulative effect of change in accounting principles (after-tax)		nm				(37.2	)		—		nm
Net income			46.4		$	1,579.1		$	972.4			62.4
Per diluted common share:
	Earnings, before merger and restructuring- related items and cumulative effect of change in accounting principles		4.7		$	0.89		$	0.84			6.0
	Net income		48.3		$	0.82		$	0.51			60.8

* Before effect of merger and restructuring-related items and cumulative effect of change in accounting principles

Net Interest Income

     Second quarter net interest income on a taxable-equivalent basis was $1,689.8 million, compared with $1,574.8 million recorded in the second quarter of 2001. Average earning assets for the period increased over the second quarter of 2001 by $2.4 billion (1.6 percent), primarily driven by increases in the investment portfolio, core retail loan growth and the impact of acquisitions, partially offset by a $1.0 billion reduction related to transfers of short-term, high credit quality, low margin commercial loans to Stellar Funding Group, Inc. (the “loan conduit”), a $616 million decline in residential mortgages and the securitization of a discontinued unsecured small business product in 2001.   The net interest margin in the second quarter of 2002 was 4.59 percent, compared with 4.62

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 5

percent in the first quarter of 2002 and 4.34 percent in the second quarter of 2001. The improvement in the net interest margin in the second quarter of 2002 over the second quarter of 2001 reflects the funding benefits of the declining rate environment, a more favorable funding mix and improving spreads due to product re-pricing dynamics and loan conduit transfers, partially offset by lower yields on the investment portfolio. Net interest income on a taxable-equivalent basis in the second quarter of 2002 was higher than the first quarter of 2002, primarily due to a $1.7 billion increase in average earning assets, driven by investment securities activities and the acquisition of Leader Mortgage, and day basis, which totaled $11.5 million, offset somewhat by a shift in funding mix toward longer term fixed-rate funding sources.

NET INTEREST INCOME											Table 3
(Taxable-equivalent basis; $ in millions)
											Change
		2Q			1Q			2Q			2Q02 vs
		2002			2002			2001			1Q02
Components of net interest income
	Income on earning assets	$	2,384.6		$	2,371.7		$	2,832.6		$	12.9
	Expenses on interest-bearing liabilities		694.8			701.3			1,257.8			(6.5	)
Net interest income		$	1,689.8		$	1,670.4		$	1,574.8		$	19.4
Average yields and rates paid
	Earning assets yield		6.47	%		6.57	%		7.81	%		(0.10)	%
	Rate paid on interest-bearing liabilities		2.32			2.40			4.21			(0.08	)
Gross interest margin			4.15	%		4.17	%		3.60	%		(0.02)	%
Net interest margin			4.59	%		4.62	%		4.34	%		(0.03)	%
Average balances
	Investment securities	$	28,016		$	26,626		$	21,257		$	1,390
	Loans		114,017			113,708			119,469			309
	Earning assets		147,641			145,937			145,289			1,704
	Interest-bearing liabilities		119,851			118,379			119,877			1,472
	Net free funds*		27,790			27,558			25,412			232

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NET INTEREST INCOME											Table 3
(Taxable-equivalent basis; $ in
millions)
		Change
		2Q02 vs			YTD			YTD
		2Q01			2002			2001			Change
Components of net interest income
	Income on earning assets	$	(448.0	)	$	4,756.3		$	5,860.1		$	(1,103.8	)
	Expenses on interest-bearing liabilities		(563.0	)		1,396.1			2,721.0			(1,324.9	)
Net interest income		$	115.0		$	3,360.2		$	3,139.1		$	221.1
Average yields and rates paid
	Earning assets yield		(1.34)	%		6.52	%		8.15	%		(1.63)	%
	Rate paid on interest-bearing liabilities		(1.89	)		2.36			4.59			(2.23	)
Gross interest margin			0.55	%		4.16	%		3.56	%		0.60	%
Net interest margin			0.25	%		4.60	%		4.36	%		0.24	%
Average balances
	Investment securities	$	6,759		$	27,325		$	19,575		$	7,750
	Loans		(5,452	)		113,866			120,613			(6,747	)
	Earning assets		2,352			146,797			144,581			2,216
	Interest-bearing liabilities		(26	)		119,119			119,471			(352	)
	Net free funds*		2,378			27,678			25,110			2,568

* Represents noninterest-bearing deposits, allowance for credit losses, non-earning assets, other liabilities and equity

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 6

AVERAGE LOANS								Table 4
($ in millions)								Percent Change
		2Q		1Q		2Q		2Q02 vs
		2002		2002		2001		1Q02
Commercial		$	38,826	$	39,641	$	45,632		(2.1	)
Lease financing			5,601		5,740		5,865		(2.4	)
	Total commercial		44,427		45,381		51,497		(2.1	)
Commercial mortgages			18,783		18,682		18,991		0.5
Construction and development			6,446		6,504		7,360		(0.9	)
	Total commercial real estate		25,229		25,186		26,351		0.2
Residential mortgages			8,194		7,962		8,810		2.9
Credit card			5,627		5,632		5,652		(0.1	)
Retail leasing			5,337		5,042		4,465		5.9
Home equity and second mortgages			13,144		12,513		11,367		5.0
Other retail			12,059		11,992		11,327		0.6
	Total retail		36,167		35,179		32,811		2.8
Total loans		$	114,017	$	113,708	$	119,469		0.3
Total loans, excl. residential mortgages		$	105,823	$	105,746	$	110,659		0.1

[Additional columns below]

[Continued from above table, first column(s) repeated]

AVERAGE LOANS									Table 4
($ in millions)		Percent Change
		2Q02 vs			YTD		YTD		Percent
		2Q01			2002		2001		Change
Commercial			(14.9	)	$	39,232	$	46,215		(15.1	)
Lease financing			(4.5	)		5,670		5,817		(2.5	)
	Total commercial		(13.7	)		44,902		52,032		(13.7	)
Commercial mortgages			(1.1	)		18,732		19,148		(2.2	)
Construction and development			(12.4	)		6,475		7,256		(10.8	)
	Total commercial real estate		(4.3	)		25,207		26,404		(4.5	)
Residential mortgages			(7.0	)		8,078		9,023		(10.5	)
Credit card			(0.4	)		5,633		5,653		(0.4	)
Retail leasing			19.5			5,190		4,379		18.5
Home equity and second mortgages			15.6			12,830		11,657		10.1
Other retail			6.5			12,026		11,465		4.9
	Total retail		10.2			35,679		33,154		7.6
Total loans			(4.6	)	$	113,866	$	120,613		(5.6	)
Total loans, excl. residential mortgages			(4.4	)	$	105,788	$	111,590		(5.2	)

     Average loans for the second quarter of 2002 were $5.5 billion (4.6 percent) lower than the second quarter of 2001. Year-over-year loan growth was impacted by several management actions, including, the securitization of a discontinued unsecured small business product, branch divestitures, and transfers of short-term, high credit quality, low margin commercial loans to the loan conduit. On a core basis, average loans declined approximately $3.9 billion (3.2 percent) with growth in average retail loans more than offset by a decline in average residential mortgages, commercial and commercial real estate loans.

     Average loans for second quarter of 2002 were higher than the first quarter of 2002 by $309 million (.3 percent) reflecting growth in retail loans and the net run-off of commercial loans. Investment securities at June 30, 2002, were $9.6 billion higher than at June 30, 2001, and $5.9 billion higher than at March 31, 2002. Average investment securities for the second quarter of 2002

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 7

were $6.8 billion (31.8 percent) and $1.4 billion (5.2 percent) higher than the second quarter of 2001 and first quarter of 2002, respectively, reflecting the reinvestment of proceeds from loan sales and declines in commercial and commercial real estate loan balances. During the second quarter of 2002, the Company sold $2.4 billion of fixed-rate securities. A portion of the fixed-rate securities sold were replaced with floating-rate securities in conjunction with the Company’s interest rate risk management strategies.

AVERAGE DEPOSITS									Table 5
($ in millions)									Percent Change
			2Q		1Q		2Q		2Q02 vs
			2002		2002		2001		1Q02
Noninterest-bearing deposits			$	27,267	$	27,485	$	24,512		(0.8	)
Interest-bearing deposits
	Interest checking			15,318		15,152		13,846		1.1
	Money market accounts			24,384		24,797		25,020		(1.7	)
	Savings accounts			4,957		4,773		4,533		3.9
		Savings products		44,659		44,722		43,399		(0.1	)
	Time certificates of deposit less than $100,000			19,653		20,464		23,933		(4.0	)
	Time deposits greater than $100,000			10,871		9,341		15,424		16.4
Total deposits			$	102,450	$	102,012	$	107,268		0.4

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AVERAGE DEPOSITS										Table 5
($ in millions)			Percent Change
			2Q02 vs			YTD		YTD		Percent
			2Q01			2002		2001		Change
Noninterest-bearing deposits				11.2		$	27,375	$	24,054		13.8
Interest-bearing deposits
	Interest checking			10.6			15,236		13,787		10.5
	Money market accounts			(2.5	)		24,589		24,635		(0.2	)
	Savings accounts			9.4			4,866		4,515		7.8
		Savings products		2.9			44,691		42,937		4.1
	Time certificates of deposit less than $100,000			(17.9	)		20,056		24,629		(18.6	)
	Time deposits greater than $100,000			(29.5	)		10,110		14,264		(29.1	)
Total deposits				(4.5	)	$	102,232	$	105,884		(3.4	)

     Average noninterest-bearing deposits in the second quarter of 2002 were higher than the second quarter of 2001 by $2.8 billion (11.2 percent). Average interest-bearing deposits, however, declined by $7.6 billion (9.2 percent) from the second quarter of 2001. Growth in average savings products (2.9 percent) year-over-year was more than offset by reductions in the average balances of higher cost time certificates (17.9 percent) and time deposits greater than $100,000 (29.5 percent). The decline in time certificates and time deposits greater than $100,000 reflected funding decisions toward more favorably priced wholesale funding sources given the recent rate environment.

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 8

NONINTEREST INCOME								Table 6
($ in millions)								Percent Change
		2Q		1Q		2Q		2Q02 vs
		2002		2002		2001		1Q02
Credit and debit card revenue		$	131.2	$	109.3	$	118.8		20.0
Corporate payment products revenue			82.5		75.2		77.4		9.7
Merchant processing services			144.4		133.6		31.4		8.1
ATM processing services			33.5		30.9		33.0		8.4
Trust and investment management fees			234.9		224.3		228.0		4.7
Deposit service charges			170.2		152.6		176.7		11.5
Cash management fees			104.3		104.2		84.9		0.1
Mortgage banking revenue			75.4		52.0		57.0		45.0
Trading account profits and commissions			49.5		49.9		55.8		(0.8	)
Investment products fees and commissions			107.4		111.1		114.2		(3.3	)
Investment banking revenue			70.5		53.2		71.1		32.5
Commercial product revenue			127.0		118.9		105.0		6.8
Securities gains, net			30.6		44.1		31.3		(30.6	)
Other			75.9		67.6		91.0		12.3
	Subtotal		1,437.3		1,326.9		1,275.6		8.3
Merger and restructuring-related gains			—		—		62.2
Total noninterest income		$	1,437.3	$	1,326.9	$	1,337.8

[Additional columns below]

[Continued from above table, first column(s) repeated]

NONINTEREST INCOME									Table 6
($ in millions)		Percent Change
		2Q02 vs			YTD		YTD		Percent
		2Q01			2002		2001		Change
Credit and debit card revenue			10.4		$	240.5	$	227.8		5.6
Corporate payment products revenue			6.6			157.7		156.2		1.0
Merchant processing services		nm				278.0		61.7	nm
ATM processing services			1.5			64.4		64.6		(0.3	)
Trust and investment management fees			3.0			459.2		453.0		1.4
Deposit service charges			(3.7	)		322.8		323.2		(0.1	)
Cash management fees			22.9			208.5		161.7		28.9
Mortgage banking revenue			32.3			127.4		105.2		21.1
Trading account profits and commissions			(11.3	)		99.4		127.7		(22.2	)
Investment products fees and commissions			(6.0	)		218.5		239.9		(8.9	)
Investment banking revenue			(0.8	)		123.7		131.3		(5.8	)
Commercial product revenue			21.0			245.9		190.9		28.8
Securities gains, net			(2.2	)		74.7		247.3		(69.8	)
Other			(16.6	)		143.5		195.8		(26.7	)
	Subtotal		12.7			2,764.2		2,686.3		2.9
Merger and restructuring-related gains						—		62.2
Total noninterest income					$	2,764.2	$	2,748.5

Noninterest Income

     Second quarter noninterest income, before merger and restructuring-related gains, was $1,437.3 million, an increase of $161.7 million (12.7 percent) from the same quarter of 2001, and a $110.4 million (8.3 percent) increase over the first quarter of 2002. The growth in noninterest income over the second quarter of 2001 was primarily driven by acquisitions, including NOVA Corporation (“NOVA”), Pacific Century Bank and Leader Mortgage, which contributed approximately $127.3 million of the favorable variance. Increases in revenue associated with the Company’s core banking products also contributed to the strong revenue growth over the same period of 2001. Credit and debit card revenue, corporate payment products revenue and ATM processing services were higher in the second quarter of 2002 than the second quarter of 2001 by $18.0 (7.9 percent), primarily reflecting

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 9

growth in card usage. Merchant processing services grew by $113.0 million year-over-year, primarily due to the acquisition of NOVA. Trust and investment management fees improved in the second quarter of 2002 relative to a year ago by $6.9 million (3.0 percent) primarily due to growth in new business. Cash management fees and commercial product revenue grew by $19.4 million (22.9 percent) and $22.0 million (21.0 percent), respectively, in the second quarter of 2002 over the same period of 2001. The increase in cash management fees and commercial product revenue was primarily driven by growth in core business, loan conduit activities and product enhancements. In addition to the impact of Leader Mortgage, mortgage banking revenue increased in the second quarter of 2002 compared with the second quarter of 2001, primarily due to gains on the sale of servicing rights of $5.9 million. Offsetting these favorable variances were declines in capital markets-related revenue of $13.7 million (5.7 percent), reflecting softness in the equity capital markets, and a decrease in deposit service charges of $6.5 million (3.7 percent) from the same period of 2001.

        Noninterest income increased in the second quarter of 2002 by $110.4 million (8.3 percent) over the first quarter of 2002. Leader Mortgage contributed approximately $14.0 million to the growth in revenue, while gains on the sale of securities declined by approximately the same amount. The Company experienced strong growth in the second quarter of 2002 over the first quarter of 2002 in credit and debit card revenue (20.0 percent), as well as corporate payment products revenue (9.7 percent) and merchant processing services (8.1 percent), which were driven by higher sales/charge volumes. Trust and investment management fees increased 4.7 percent due, in part, to seasonal tax filing services in the second quarter of 2002. Deposit service charges increased 11.5 percent relative to the first quarter of 2002, while cash management fees were essentially unchanged. The growth in deposit service charges was primarily due to seasonality and revenue enhancement initiatives. In addition to the acquisition of Leader Mortgage, mortgage banking revenue increased in the second quarter of 2002 over the first quarter of 2002 due to higher gains on the sale of servicing rights. Capital markets-related revenues increased $13.2 million (6.2 percent) from the first quarter of 2002, while commercial product revenue increased $8.1 million (6.8 percent) over the same time period.

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July 16, 2002
Page 10

NONINTEREST EXPENSE								Table 7
($ in millions)								Percent Change
		2Q		1Q		2Q		2Q02 vs
		2002		2002		2001		1Q02
Salaries		$	607.6	$	588.3	$	570.5		3.3
Employee benefits			91.1		96.4		90.7		(5.5	)
Net occupancy			101.8		100.1		101.4		1.7
Furniture and equipment			77.0		76.9		74.9		0.1
Capitalized software			37.7		38.4		33.2		(1.8	)
Communication			44.1		45.7		50.3		(3.5	)
Postage			44.4		46.6		43.8		(4.7	)
Goodwill			—		—		58.6	nm
Other intangible assets			104.7		80.2		54.0		30.5
Other			340.4		290.0		264.5		17.4
	Subtotal		1,448.8		1,362.6		1,341.9		6.3
Merger and restructuring-related			71.6		74.2		252.8
charges
Total noninterest expense		$	1,520.4	$	1,436.8	$	1,594.7

[Additional columns below]

[Continued from above table, first column(s) repeated]

NONINTEREST EXPENSE										Table 7
($ in millions)		Percent Change
		2Q02 vs			YTD		YTD		Percent
		2Q01			2002		2001		Change
Salaries			6.5		$	1,195.9	$	1,161.0			3.0
Employee benefits			0.4			187.5		198.8			(5.7	)
Net occupancy			0.4			201.9		211.5			(4.5	)
Furniture and equipment			2.8			153.9		151.8			1.4
Capitalized software			13.6			76.1		63.3			20.2
Communication			(12.3	)		89.8		89.0			0.9
Postage			1.4			91.0		90.7			0.3
Goodwill		nm				—		126.4		nm
Other intangible assets			93.9			184.9		100.6			83.8
Other			28.7			630.4		543.1			16.1
	Subtotal		8.0			2,811.4		2,736.2			2.7
Merger and restructuring-related						145.8		657.0
charges
Total noninterest expense					$	2,957.2	$	3,393.2

Noninterest Expense

     Second quarter noninterest expense, before merger and restructuring-related charges, totaled $1,448.8 million, an increase of $106.9 million (8.0 percent) over the second quarter of 2001. The increase in expense year-over-year was primarily due to the impact of recent acquisitions, including NOVA, Pacific Century and Leader Mortgage, which accounted for approximately $113.5 million of the increase. In addition, the second quarter of 2002 included $14.3 million of MSR impairment and higher expenses due to core banking growth. Offsetting the increases in expense were the Company’s on-going integration activities and the impact of adopting new accounting standards related to business combinations and the amortization of intangibles.

     Second quarter of 2002 noninterest expense, before merger and restructuring-related charges, was higher than the first quarter of 2002 by $86.2 million (6.3 percent). The unfavorable variance was primarily due to higher expenses related to capital markets activities, growth in payment processing, the acquisition of Leader Mortgage and a $14.3 million mortgage servicing rights impairment

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July 16, 2002
Page 11

recorded in the second quarter of 2002, in addition to seasonally higher operating expenses, including legal and professional, travel and entertainment and marketing and public relations.

SIGNIFICANT ITEMS - MERGER AND RESTRUCTURING															Table 8
($ in millions)						Timing
			Current			Actual			Estimated			Actual			Actual
Summary of Charges			Estimate			2001			2002			1Q02			2Q02
Firstar/U.S. Bancorp
	Severance and employee-related		$	268.8		$	268.2		$	0.6			($6.7	)	$	2.2
	Systems conversions and integration			390.0			208.1			171.7			57.6			64.9
	Asset write-downs and lease terminations			244.3			130.4			103.9			14.8			17.4
	Charitable foundation			76.0			76.0			—			—			—
	Balance sheet restructurings			428.9			457.6			(28.7	)		(3.8	)		(24.9	)
	Branch sale gain			(62.2	)		(62.2	)		—			—			—
	Branch consolidations			20.0			20.0			—			—			—
	Other merger-related charges			72.5			69.1			3.4			2.5			0.9
		Total Firstar/U.S. Bancorp*		1,438.3			1,167.2			250.9			64.4			60.5
NOVA				70.3			1.6			48.4			5.4			8.6
U.S. Bancorp Piper Jaffray restructuring				50.7			50.7			—			—			—
Other acquisitions, net				63.2			46.9			16.3			4.4			2.5
		Total merger and restructuring	$	1,622.5		$	1,266.4		$	315.6		$	74.2		$	71.6

* Originally estimated to be $800 million

     Earnings in the second quarter of 2002 included pre-tax net merger and restructuring-related items of $71.6 million. The total merger and restructuring-related items included $60.5 million of net expense associated with the Firstar/U.S. Bancorp merger. In addition, $11.1 million of expense was included in the second quarter of 2002 for NOVA and other smaller acquisitions.

     The $60.5 million of merger and restructuring-related items associated with the Firstar/U.S. Bancorp merger in the second quarter of 2002 was primarily related to systems conversions and integration and asset write-downs and lease terminations. Offsetting a portion of these costs were asset gains on the sale of a non-strategic investment in a sub-prime mortgage lending business.

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July 16, 2002
Page 12

ALLOWANCE FOR CREDIT LOSSES															Table 9
($ in millions)					2Q 2002		1Q 2002		4Q 2001			3Q 2001			2Q 2001
Balance, beginning of period					$	2,461.5	$	2,457.3	$	2,458.0		$	1,715.7		$	1,729.1
Net charge-offs
	Commercial					110.6		120.5		65.4			307.2			75.5
	Lease financing					35.2		32.1		7.1			78.2			9.1
				Total commercial		145.8		152.6		72.5			385.4			84.6
	Commercial mortgages					6.0		8.8		5.2			6.9			(0.2	)
	Construction and development					0.4		1.9		5.1			3.4			2.5
			Total commercial real estate			6.4		10.7		10.3			10.3			2.3
	Residential mortgages					3.9		2.7		2.5			3.6			3.3
	Credit card					73.4		67.0		72.9			71.5			68.5
	Retail leasing					8.3		10.5		9.4			7.1			7.0
	Home equity and second mortgage					25.3		26.1		35.0			19.6			18.7
	Other retail					67.4		65.4		63.2			65.8			55.9
				Total retail		174.4		169.0		180.5			164.0			150.1
				Total net charge-offs		330.5		335.0		265.8			563.3			240.3
Provision for credit losses
		Operating basis				335.0		335.0		265.8			1,275.0			240.0
		Merger-related				—		—		—			14.3			201.3
				Total provision for credit losses		335.0		335.0		265.8			1,289.3			441.3
Losses from loan sales/transfers						—		—		—			(1.3	)		(214.4	)
Acquisitions and other changes						0.4		4.2		(0.7	)		17.6			—
Balance, end of period					$	2,466.4	$	2,461.5	$	2,457.3		$	2,458.0		$	1,715.7
Net charge-offs to average loans (%)						1.16		1.19		0.92			1.90			0.81
Allowance for credit losses to period-end loans (%)						2.15		2.15		2.15			2.15			1.45

Credit Quality

     The allowance for credit losses was $2,466.4 million at June 30, 2002, compared with the allowance for credit losses of $2,461.5 million at March 31, 2002. The ratio of allowance for credit losses to nonperforming loans was 241 percent at June 30, 2002, compared with 250 percent at March 31, 2002. The ratio of allowance for credit losses to period-end loans was 2.15 percent at June 30, 2002, equal to the ratio at March 31, 2002. Total net charge-offs in the second quarter of 2002 were $330.5 million, compared with the first quarter of 2002 net charge-offs of $335.0 million and the second quarter of 2001 net charge-offs of $240.3 million.

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July 16, 2002
Page 13

     Commercial and commercial real estate loan net charge-offs were $152.2 million for the second quarter of 2002, or .88 percent of average loans outstanding, compared with $163.3 million, or .94 percent of average loans outstanding, in the first quarter of 2002.

     Retail loan net charge-offs of $174.4 million in the second quarter of 2002 were higher than the first quarter of 2002 by $5.4 million (3.2 percent) and $24.3 million (16.2 percent) higher than the second quarter of 2001. The increase in retail loan net charge-offs in the second quarter of 2002 from the first quarter of 2002 was primarily due to seasonal increases in credit card and other retail loan net charge-offs. Retail loan net charge-offs as a percent of average loans outstanding were 1.93 percent in the second quarter of 2002, compared with 1.95 percent and 1.83 percent in the first quarter of 2002 and second quarter of 2001, respectively.

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July 16, 2002
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CREDIT RATIOS											Table 10
			2Q		1Q		4Q		3Q		2Q
			2002		2002		2001		2001		2001
Net charge-offs ratios*
	Commercial			1.14		1.23		0.64		2.79		0.66
	Lease financing			2.52		2.27		0.48		5.24		0.62
		Total commercial		1.32		1.36		0.62		3.08		0.66
	Commercial mortgages			0.13		0.19		0.11		0.14		—
	Construction and development			0.02		0.12		0.30		0.19		0.14
		Total commercial real estate		0.10		0.17		0.16		0.16		0.04
	Residential mortgages			0.19		0.14		0.13		0.17		0.15
	Credit card			5.23		4.82		5.16		4.97		4.86
	Retail leasing			0.62		0.84		0.77		0.61		0.63
	Home equity and second mortgages			0.77		0.85		1.15		0.67		0.66
	Other retail			2.24		2.21		2.15		2.27		1.98
		Total retail		1.93		1.95		2.10		1.95		1.83
Total net charge-offs				1.16		1.19		0.92		1.90		0.81
Delinquent loan ratios - 90 days or more past due**
	Commercial			1.79		1.70		1.71		1.76		1.79
	Commercial real estate			0.85		0.70		0.68		0.88		0.66
	Residential mortgages			1.64		1.65		1.79		1.62		1.53
	Retail			0.74		0.89		1.03		0.92		0.86

*	annualized and calculated on average loan balances
**	ratios include nonperforming loans and are expressed as a percent of ending loan balances

     The level of net charge-offs in the second quarter of 2002 reflects current economic conditions and continued weakness in the transportation, manufacturing, communications and technology sectors. Net charge-offs are expected to remain at elevated levels but are expected to trend lower by the end of the year.

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July 16, 2002
Page 15

ASSET QUALITY											Table 11
($ in millions)
			Jun 30		Mar 31		Dec 31		Sep 30		Jun 30
			2002		2002		2001		2001		2001
Nonperforming loans
	Commercial		$	549.9	$	529.9	$	526.6	$	580.8	$	724.1
	Lease financing			202.0		203.2		180.8		136.6		126.4
		Total commercial		751.9		733.1		707.4		717.4		850.5
	Commercial mortgages			133.6		121.4		131.3		124.7		114.4
	Construction and development			43.4		32.3		35.9		55.5		37.3
		Commercial real estate		177.0		153.7		167.2		180.2		151.7
	Residential mortgages			62.0		63.7		79.1		76.7		67.7
	Retail			34.3		32.6		47.6		37.0		30.0
Total nonperforming loans				1,025.2		983.1		1,001.3		1,011.3		1,099.9
Other real estate				49.8		42.6		43.8		55.4		52.7
Other nonperforming assets				72.7		85.1		74.9		65.7		62.5
Total nonperforming assets*			$	1,147.7	$	1,110.8	$	1,120.0	$	1,132.4	$	1,215.1
Accruing loans 90 days past due			$	392.6	$	426.8	$	462.9	$	483.8	$	395.9
Allowance to nonperforming loans (%)				241		250		245		243		156
Allowance to nonperforming assets (%)				215		222		219		217		141
Nonperforming assets to loans plus ORE (%)				1.00		0.97		0.98		0.99		1.02

* does not include accruing loans 90 days past due

     Nonperforming assets at June 30, 2002, totaled $1,147.7 million, compared with $1,110.8 million at March 31, 2002, and $1,215.1 million at June 30, 2001. The ratio of nonperforming assets to loans and other real estate was 1.00 percent at June 30, 2002, compared with .97 percent at March 31, 2002, and 1.02 percent at June 30, 2001. Nonperforming assets are expected to remain at elevated levels for the remainder of the year and are expected to increase in the third quarter of 2002. The Company does not expect to see a significant reduction in the level of nonperforming assets until the economy rebounds.

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July 16, 2002
Page 16

CAPITAL POSITION													Table 12
($ in millions)	Jun 30			Mar 31			Dec 31			Sep 30			Jun 30
	2002			2002			2001			2001			2001
Total shareholders’ equity	$	16,650		$	15,892		$	16,461		$	16,817		$	15,456
Tier 1 capital		12,628			12,246			12,488			11,802			12,860
Total risk-based capital		19,937			19,722			19,148			18,687			18,066
Common equity to assets		9.6	%		9.6	%		9.6	%		10.0	%		9.4	%
Tangible common equity to assets		5.7			5.8			5.7			5.9			6.6
Tier 1 capital ratio		7.9			7.7			7.7			7.2			8.0
Total risk-based capital ratio		12.5			12.4			11.7			11.5			11.2
Leverage ratio		7.8			7.6			7.7			7.4			8.0

     Total shareholder’s equity was $16,650 billion at June 30, 2002, compared with $15,456 billion at June 30, 2001. The increase was the result of corporate earnings, including merger and restructuring-related items and cumulative effect of change in accounting principles, offset by dividends, share buybacks and acquisitions.

     Tangible common equity to assets was 5.7 percent at June 30, 2002, compared with 5.8 percent at March 31, 2002, and 6.6 percent at June 30, 2001. The tier 1 capital ratio was 7.9 percent at June 30, 2002, compared with 7.7 percent at March 31, 2002, and 8.0 percent at June 30, 2001. The total risk-based capital ratio was 12.5 percent at June 30, 2002, compared with 12.4 percent at March 31, 2002, and 11.2 percent at June 30, 2001. The improvement in the total risk-based capital ratio in the second quarter of 2002 primarily reflects changes in the mix of investment securities in addition to the issuance of “trust preferred” securities in both the second and fourth quarters of 2001. The leverage ratio was 7.8 percent at June 30, 2002, compared with 7.6 percent at March 31, 2002, and 8.0 percent at June 30, 2001. All regulatory ratios continue to be in excess of stated “well capitalized” requirements.

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July 16, 2002
Page 17

COMMON SHARES													Table 13
(Millions)	2Q			1Q			4Q			3Q			2Q
	2002			2002			2001			2001			2001
Beginning shares outstanding		1,915.1			1,951.7			1,969.0			1,907.6			1,905.3
Shares issued for stock option and stock purchase plans, acquisitions and other corporate purposes		3.9			3.4			1.1			62.7			2.3
Shares repurchased		(4.8	)		(40.0	)		(18.4	)		(1.3	)		—
Ending shares outstanding		1,914.2			1,915.1			1,951.7			1,969.0			1,907.6

     On December 18, 2001, the board of directors of U.S. Bancorp approved an authorization to repurchase 100 million shares of outstanding common stock over the next 24 months. During the second quarter of 2002, the Company repurchased 4.8 million shares of common stock related to this authorization.

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July 16, 2002
Page 18

LINE OF BUSINESS FINANCIAL PERFORMANCE*													Table 14
($ in millions)
	Operating Earnings**									Percent Change
	2Q			1Q			2Q			2Q02 vs			2Q02 vs
Business Line	2002			2002			2001			1Q02			2Q01
Wholesale Banking	$	378.9		$	392.8		$	399.6			(3.5	)		(5.2	)
Consumer Banking		397.2			338.5			387.4			17.3			2.5
Private Client, Trust and Asset Management		119.2			113.5			119.9			5.0			(0.6	)
Payment Services		169.3			143.6			112.0			17.9			51.2
Capital Markets		10.8			14.4			19.7			(25.0	)		(45.2	)
Treasury and Corporate Support		(205.6	)		(161.2	)		(220.0	)		(27.5	)		6.5
Consolidated Company***	$	869.8		$	841.6		$	818.6			3.4			6.3

[Additional columns below]

[Continued from above table, first column(s) repeated]

LINE OF BUSINESS FINANCIAL PERFORMANCE*										Table 14
($ in millions)
										2Q 2002
	YTD			YTD			Percent			Earnings
Business Line	2002			2001			Change			Composition
Wholesale Banking	$	771.7		$	580.6			32.9			44	%
Consumer Banking		735.7			736.0			—			46
Private Client, Trust and Asset Management		232.7			223.5			4.1			14
Payment Services		312.9			245.0			27.7			19
Capital Markets		25.2			42.5			(40.7	)		1
Treasury and Corporate Support		(366.8	)		(211.7	)		(73.3	)		(24	)
Consolidated Company***	$	1,711.4		$	1,615.9			5.9			100	%

*	preliminary data
**	earnings before merger and restructuring-related items and cumulative effect of change in accounting principles
***	securities gains equaled $30.6 million in 2Q02, $44.1 million in 1Q02, $31.3 million in 2Q01, $74.7 million year-to-date 2002, and $247.3 year-to-date 2001 and were substantially incurred in Treasury and Corporate Support

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, Capital Markets, and Treasury and Corporate Support. Business line results are derived from the Company’s business unit profitability reporting systems. Designations, assignments and allocations may 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. All results for 2002 and 2001 have been restated to present consistent methodologies for all business lines.

     Wholesale Banking offers lending, depository, treasury management and other financial services to middle market, large corporate and public sector clients. Wholesale Banking contributed $378.9 million of the Company’s operating earnings in the second quarter of 2002, a 5.2 percent decrease from the same period of 2001 and a 3.5 percent decline from the first quarter of 2002. The reduction in Wholesale Banking’s second quarter 2002 contribution to operating earnings from the second quarter of 2001 was the result of lower net revenue and higher noninterest expense, offset slightly by a

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 19

favorable variance in the provision for credit losses. Total net revenue in the second quarter of 2002 was lower than the second quarter of 2001 by 3.4 percent, with a favorable variance in noninterest income (18.3 percent) more than offset by a decrease in net interest income (9.7 percent). The reduction in net interest income was primarily due to lower average loans outstanding (14.3 percent), partially offset by an increase in average deposits (13.0 percent) and a higher net interest margin. The transfer of short-term, high credit quality, low margin commercial loans to the loan conduit contributed $1.0 billion of the unfavorable variance in average loans outstanding year-over-year. Partially offsetting the decline in net interest income was an increase in noninterest income year-over-year, which was driven by cash management fees and commercial product revenue. Noninterest expense increased by 10.8 percent in the second quarter of 2002 over the second quarter of 2001, primarily due to asset write-downs related to the equipment finance business. Wholesale Banking’s provision for credit losses improved by $2.5 million (9.2 percent) in the second quarter of 2002 over the same period of 2001, primarily due to a reduction in loans outstanding and an improvement in the overall credit risk profile of the business line’s loan portfolio. The reduction in Wholesale Banking’s contribution to operating earnings in the second quarter of 2002 from the first quarter of 2002 was the result of essentially flat net revenue and unfavorable variances in noninterest expense (15.2 percent), driven by equipment finance losses, and provision for credit losses (25.3 percent).

     Consumer Banking delivers products and services to the broad consumer market and small businesses through banking offices, telesales, on-line services, direct mail and automated teller machines (“ATMs”). It encompasses community banking, metropolitan banking, small business banking, consumer lending, mortgage banking, workplace banking, student banking, 24-hour banking, and investment product and insurance sales. Consumer Banking also includes the residential mortgage portfolio. Consumer Banking contributed $397.2 million of the Company’s operating income in the second quarter of 2002, a 2.5 percent increase over the same period of 2001, and a 17.3 percent increase over the first quarter of 2002. The increase in Consumer Banking’s second quarter 2002 contribution to operating earnings over the second quarter of 2001 was the result of a slight increase in net revenue (.9 percent) and a favorable variance in provision for credit losses (17.1 percent), partially offset by an increase in noninterest expense (2.2 percent). Although net interest income was flat compared with the same period of 2001, noninterest income rose by 3.1 percent. The growth in noninterest income was due to increases in mortgage banking revenue, cash management fees, securities gains, and investment products fees and commissions, offset by decreases in deposit

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July 16, 2002
Page 20

service charges, trust and investment management fees and other revenue. The increase in mortgage banking revenue can be attributed to the acquisition of Leader Mortgage and higher gains on the sale of servicing rights. Noninterest expense in the second quarter of 2002 was higher than the second quarter of 2001 (2.2 percent), primarily due to the acquisition of Leader Mortgage and MSR impairment. The provision for credit losses was lower by $15.1 million (17.1 percent) in the second quarter of 2002 than the same period of 2001, primarily due to a reduction in charge-offs and an improvement in the portfolio’s overall credit risk profile. The increase in Consumer Banking’s contribution to operating earnings in the second quarter of 2002 over the first quarter of 2002 was the result of higher net revenue and a lower provision for credit losses, partially offset by an increase in noninterest expense.

     Private Client, Trust and Asset Management provides mutual fund processing services, trust, private banking and financial advisory services through four businesses, including: the Private Client Group, Corporate Trust, Institutional Trust and Custody, and Mutual Fund Services, LLC. The business segment also offers investment management services to several client segments including mutual funds, institutional customers, and private asset management. Private Client, Trust and Asset Management contributed $119.2 million of the Company’s operating income in the second quarter of 2002, a .6 percent decrease from the same period of 2001 and a 5.0 percent increase over the first quarter of 2002. The slight decrease in the business line’s contribution to operating earnings in the second quarter of 2002 from the second quarter of 2001 was the result of favorable variances in net revenue (1.9 percent) and provision for credit losses (45.0 percent), offset by an increase in noninterest expense (8.0 percent). Growth in net interest income (3.7 percent) in the second quarter of 2002 over the second quarter of 2001 was primarily driven by growth in average loans outstanding (7.8 percent). Noninterest income rose by 1.3 percent over the same period of 2001, due to an increase in trust and investment management fees. Noninterest expense was higher in the second quarter of 2002 than the same quarter of 2001, primarily due to a favorable loss recovery in the second quarter of 2001. Provision for credit losses was lower by $1.8 million (45.0 percent) in the second quarter of 2002 than the same period of 2001 due to lower net charge-offs. The increase in the business line’s contribution to operating earnings in the second quarter of 2002 over the first quarter of 2002 was the result of higher net revenue, lower provision for credit losses, and a slight decrease in noninterest expense.

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 21

     Payment Services includes consumer and business credit cards, corporate and purchasing card services, consumer lines of credit, ATM processing and merchant processing. Payment Services contributed $169.3 million of the Company’s operating income in the second quarter of 2002, a 51.2 percent increase over the same period of 2001 and a 17.9 percent increase over the first quarter of 2002. The increase in Payment Services’ contribution to operating earnings in the second quarter of 2002 over the second quarter of 2001 was the result of higher net revenue (36.4 percent) and lower provision for credit losses (17.0 percent), offset by higher noninterest expense (74.3 percent). The growth in net revenue year-over-year was primarily due to the acquisition of NOVA, which contributed approximately $111.1 million to net revenue in the second quarter of 2002. In addition, credit and debit card revenue, corporate payment products revenue and ATM processing services increased in total by $18.0 million in the second quarter of 2002 over the same period of 2001. Noninterest expense grew by $85.4 million in the second quarter of 2002 over the second quarter of 2001, primarily due to the acquisition of NOVA. The year-over-year reduction in provision for credit losses (17.0 percent) was primarily due to an improvement in the portfolio’s overall credit risk profile. The increase in Payment Services’ contribution to operating earnings in the second quarter of 2002 over the first quarter of 2002 was the result of higher net revenue, driven by improving sales volume, slightly lower provision for credit losses, and a slight decrease in noninterest expense.

     Capital Markets engages in equity and fixed income trading activities, offers investment banking and underwriting services for corporate and public sector customers and provides financial advisory services and securities, mutual funds, annuities and insurance products to consumers and regionally-based businesses through a network of brokerage offices. Capital Markets contributed $10.8 million of the Company’s operating income in the second quarter of 2002, a 45.2 percent decline from the second quarter of 2001 and a 25.0 percent decrease from the first quarter of 2002. The decrease in Capital Market’s contribution to operating earnings in the second quarter of 2002 from the second quarter of 2001 was the result of a decline in net revenue (12.7 percent), partially offset by a favorable variance in noninterest expense (7.5 percent). The unfavorable variance in net revenue in the second quarter of 2002 to the same period of 2001 was primarily due to lower trading, investment products fees and commissions and investment banking revenues. The decrease in Capital Market’s contribution to operating earnings in the second quarter of 2002 from the first quarter of 2002 was the result of higher net revenue (10.7 percent) that was more than offset by growth in noninterest expense (16.0 percent).

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 22

     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 change in residual allocations associated with the provision for credit losses. It also includes business activities managed on a corporate basis, including income and expense of enterprise-wide operations and administrative support functions. Treasury and Corporate Support recorded an operating loss of $(205.6) million in the second quarter of 2002, compared with operating losses of $(220.0) million in the second quarter of 2001 and $(161.2) million in the first quarter of 2002. The slight reduction in the operating loss year-over-year was the net result of a $148.0 million increase in net interest income, offset by a $136.6 million increase in the residual allocation of the provision for credit losses. The decrease in the business line’s contribution to operating earnings in the second quarter of 2002 from the first quarter of 2002 was the result of lower net revenue (3.6 percent), higher noninterest expense (6.5 percent) and an unfavorable variance in provision for credit losses (28.2 percent).

     Additional schedules containing more detailed information about the Company’s business line results are available on the web at www.usbank.com or by calling Investor Relations at 612-973-2264.

VICE CHAIRMAN AND CHIEF FINANCIAL OFFICER DAVID M. MOFFETT WILL HOST A CONFERENCE CALL TO REVIEW THE FINANCIAL RESULTS ON TUESDAY, JULY 16, 2002, AT 2: 00 p.m. (CDT). To access the conference call, please dial 800-233-2795 and ask for the U.S. Bancorp earnings conference call. Participants calling from outside the United States, please call 785-832-1077. For those unable to participate during the live call, a recording of the call will be available from 5:00 p.m. (CDT) on Tuesday, July 16, 2002 through 11:00 p.m. (CDT) on Tuesday, July 23, 2002. To access the recorded message dial 800-283-8217. If calling from outside the United States, please dial 402-220-0868.

     Minneapolis-based U.S. Bancorp (“USB”), with $173 billion in assets, is the 8th largest financial services holding company in the United States. The company operates 2,131 banking offices and 4,818 ATMs, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, and trust and payment services products to consumers, businesses and institutions. U.S. Bancorp is the parent company of Firstar Bank and U.S. Bank. Visit U.S. Bancorp on the web at www.usbank.com and Firstar Bank at www.firstar.com.

U.S. Bancorp Reports Second Quarter 2002 Results
July 16, 2002
Page 23

Forward-Looking Statements

     This press release contains forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. These forward-looking statements cover, among other things, projected earnings growth, anticipated future expenses and revenue, and the future prospects of the Company. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including the following, in addition to those contained in the Company’s reports on file with the SEC: (i) general economic or industry conditions could be less favorable than expected, resulting in a deterioration in credit quality, a change in the allowance for credit losses, or a reduced demand for credit or fee-based products and services; (ii) the Company could encounter unforeseen complications in connection with the ongoing integration of the products, operations and information systems of Firstar Corporation with the former U.S. Bancorp that could adversely affect the Company’s operations or customer relationships; (iii) changes in the domestic interest rate environment could reduce net interest income and could increase credit losses; (iv) the conditions of the securities markets could change, adversely affecting revenues from capital markets businesses, the value or credit quality of the Company’s assets, or the availability and terms of funding necessary to meet the Company’s liquidity needs; (v) changes in the extensive laws, regulations and policies governing financial services companies could alter the Company’s business environment or affect operations; (vi) the potential need to adapt to industry changes in information technology systems, on which the Company is highly dependent, could present operational issues or require significant capital spending; (vii) competitive pressures could intensify and affect the Company’s profitability, including as a result of continued industry consolidation, the increased availability of financial services from non-banks, technological developments, or bank regulatory reform; (viii) acquisitions may not produce revenue enhancements or cost savings at levels or within time frames originally anticipated, or may result in unforeseen integration difficulties; and (ix) capital investments in the Company’s businesses may not produce expected growth in earnings anticipated at the time of the expenditure. 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				Six Months Ended
(Dollars and Shares in Millions, Except Per Share Data)			June 30,		June 30,		June 30,			June 30,
(Unaudited)			2002		2001		2002			2001
Interest Income
Loans			$	1,936.9	$	2,426.7	$	3,868.8		$	5,077.8
Loans held for sale				36.6		25.9		75.8			42.5
Investment securities
		Taxable		346.1		287.8		693.9			541.1
		Non-taxable		11.7		27.8		24.9			59.0
Money market investments				2.2		7.4		5.5			16.3
Trading securities				9.4		14.1		17.6			30.0
Other interest income				32.7		26.1		51.7			58.1
		Total interest income		2,375.6		2,815.8		4,738.2			5,824.8
Interest Expense
Deposits				375.8		783.0		771.3			1,666.7
Short-term borrowings				68.3		124.4		147.2			310.6
Long-term debt				197.9		315.0		371.0			680.7
Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely the junior subordinated debentures of the parent company				52.8		35.4		106.6			63.0
		Total interest expense		694.8		1,257.8		1,396.1			2,721.0
Net interest income				1,680.8		1,558.0		3,342.1			3,103.8
Provision for credit losses				335.0		441.3		670.0			973.7
Net interest income after provision for credit losses				1,345.8		1,116.7		2,672.1			2,130.1
Noninterest Income
Credit and debit card revenue				131.2		118.8		240.5			227.8
Corporate payment products revenue				82.5		77.4		157.7			156.2
Merchant processing services				144.4		31.4		278.0			61.7
ATM processing services				33.5		33.0		64.4			64.6
Trust and investment management fees				234.9		228.0		459.2			453.0
Deposit service charges				170.2		176.7		322.8			323.2
Cash management fees				104.3		84.9		208.5			161.7
Mortgage banking revenue				75.4		57.0		127.4			105.2
Trading account profits and commissions				49.5		55.8		99.4			127.7
Investment products fees and commissions				107.4		114.2		218.5			239.9
Investment banking revenue				70.5		71.1		123.7			131.3
Commercial product revenue				127.0		105.0		245.9			190.9
Securities gains, net				30.6		31.3		74.7			247.3
Merger and restructuring-related gains				—		62.2		—			62.2
Other				75.9		91.0		143.5			195.8
		Total noninterest income		1,437.3		1,337.8		2,764.2			2,748.5
Noninterest Expense
Salaries				607.6		570.5		1,195.9			1,161.0
Employee benefits				91.1		90.7		187.5			198.8
Net occupancy				101.8		101.4		201.9			211.5
Furniture and equipment				77.0		74.9		153.9			151.8
Capitalized software				37.7		33.2		76.1			63.3
Communication				44.1		50.3		89.8			89.0
Postage				44.4		43.8		91.0			90.7
Goodwill				—		58.6		—			126.4
Other intangible assets				104.7		54.0		184.9			100.6
Merger and restructuring-related charges				71.6		252.8		145.8			657.0
Other				340.4		264.5		630.4			543.1
		Total noninterest expense		1,520.4		1,594.7		2,957.2			3,393.2
Income before income taxes and cumulative effect of change in accounting principles				1,262.7		859.8		2,479.1			1,485.4
Applicable income taxes				439.6		297.5		862.8			513.0
Income before cumulative effect of change in accounting principles				823.1		562.3		1,616.3			972.4
Cumulative effect of change in accounting principles				—		—		(37.2	)		—
Net income			$	823.1	$	562.3	$	1,579.1		$	972.4
Earnings Per Share
	Income before cumulative effect of change in accounting principles		$	.43	$	.30	$	.84		$	.51
	Cumulative effect of change in accounting principles			—		—		(.02	)		—
	Net income		$	.43	$	.30	$	.82		$	.51
Diluted Earnings Per Share
	Income before cumulative effect of change in accounting principles		$	.43	$	.29	$	.84		$	.51
	Cumulative effect of change in accounting principles			—		—		(.02	)		—
	Net income		$	.43	$	.29	$	.82		$	.51
Average common shares				1,913.2		1,905.3		1,916.5			1,903.2
Average diluted common shares				1,926.9		1,917.2		1,928.5			1,916.4

U.S. Bancorp
CONSOLIDATED ENDING BALANCE SHEET

				June 30,			December 31,			June 30,
(Dollars in Millions)				2002			2001			2001
Assets				(Unaudited)						(Unaudited)
Cash and due from banks				$	7,531		$	9,120		$	7,032
Money market investments					1,113			625			1,045
Trading account securities					703			982			805
Investment securities
	Held-to-maturity				290			299			271
	Available-for-sale				30,384			26,309			20,813
Loans held for sale					1,930			2,820			2,400
Loans
	Commercial				44,491			46,330			50,489
	Commercial real estate				25,300			25,373			26,125
	Residential mortgages				8,107			7,829			8,694
	Retail				36,672			34,873			33,204
Total loans					114,570			114,405			118,512
		Less allowance for credit losses			2,466			2,457			1,716
		Net loans			112,104			111,948			116,796
Premises and equipment					1,718			1,741			1,746
Customers’ liability on acceptances					157			178			151
Goodwill					5,442			5,459			3,937
Other intangible assets					2,176			1,953			1,265
Other assets					9,408			9,956			8,895
			Total assets	$	172,956		$	171,390		$	165,156
Liabilities and Shareholders’ Equity
Deposits
	Noninterest-bearing			$	31,272		$	31,212		$	26,122
	Interest-bearing				63,172			65,447			66,084
	Time deposits greater than $100,000				10,612			8,560			14,738
			Total deposits		105,056			105,219			106,944
Short-term borrowings					9,156			14,670			11,712
Long-term debt					33,008			25,716			23,725
Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely the junior subordinated debentures of the parent company					2,894			2,826			2,039
Acceptances outstanding					157			178			151
Other liabilities					6,035			6,320			5,129
			Total liabilities		156,306			154,929			149,700
Shareholders’ equity
	Common stock				20			20			19
	Capital surplus				4,875			4,906			3,534
	Retained earnings				12,756			11,918			11,916
	Treasury stock				(1,341	)		(478	)		(26	)
	Other comprehensive income				340			95			13
			Total shareholders’ equity		16,650			16,461			15,456
			Total liabilities and shareholders’ equity	$	172,956		$	171,390		$	165,156