exv99w1

Exhibit 99.1


		News Release
		Contacts:
		Steve Dale		Judith T. Murphy
		Media Relations		Investor Relations
		(612) 303-0784		(612) 303-0783

U.S. BANCORP REPORTS NET INCOME
FOR THE SECOND QUARTER OF 2008


EARNINGS SUMMARY																	Table 1

($ in millions, except per-share data)							Percent			Percent
							Change			Change
	2Q		1Q		2Q		2Q08 vs			2Q08 vs			YTD		YTD		Percent
	2008		2008		2007		1Q08			2Q07			2008		2007		Change

Net income	$	950	$	1,090	$	1,156		(12.8	)		(17.8	)	$	2,040	$	2,286		(10.8	)
Diluted earnings per common share		.53		.62		.65		(14.5	)		(18.5	)		1.14		1.27		(10.2	)

Return on average assets (%)		1.58		1.85		2.09								1.71		2.09
Return on average common equity (%)		17.9		21.3		23.0								19.6		22.7
Net interest margin (%)		3.61		3.55		3.44								3.58		3.47
Efficiency ratio (%)		47.5		43.5		47.3								45.5		46.8
Tangible efficiency ratio (%) (a)		45.2		41.4		44.6								43.3		44.1

Dividends declared per common share	$	.425	$	.425	$	.400		—			6.3		$	.850	$	.800		6.3
Book value per common share (period-end)		11.67		11.55		11.19		1.0			4.3


(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.

MINNEAPOLIS, July 15, 2008 – U.S. Bancorp (NYSE: USB) today reported net income of $950 million for the second quarter of 2008, compared with $1,156 million for the second quarter of 2007. Diluted earnings per common share of $.53 in the second quarter of 2008 were lower than the same period of 2007 by 18.5 percent, or $.12 per diluted common share. Return on average assets and return on average common equity were 1.58 percent and 17.9 percent, respectively, for the second quarter of 2008, compared with returns of 2.09 percent and 23.0 percent, respectively, for the second quarter of 2007. Significant items included in the second quarter of 2008 results were net securities losses of $63 million, which primarily reflected impairment charges on structured investment securities, and an incremental provision for credit losses, which exceeded net-charge-offs by $200 million. Together, these items reduced earnings per diluted common share by approximately $.11. The Company’s results for the first quarter of 2008 were also affected by several significant items, including a $492 million gain related to the Visa Inc. initial public offering that occurred in March of 2008 (“Visa Gain”), $253 million of impairment charges on structured

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 2

investment securities purchased in the fourth quarter of 2007, a $62 million reduction in pretax income related to the adoption of a new accounting standard, a $25 million contribution to the U.S. Bancorp Foundation and a $22 million accrual for certain litigation matters. In addition, in the first quarter of 2008 the Company’s provision for credit losses exceeded net charge-offs by $192 million. The net impact from significant items in the first quarter of 2008 was a reduction of approximately $.02 per diluted common share.

U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis said, “U.S. Bancorp’s earnings for the second quarter of 2008, although lower than the previous quarter and the same quarter of 2007, reflected our Company’s core strengths and momentum, including our diversified business mix, prudent approach to credit and operational risk management, strong balance sheet and capital position, and commitment to investing for future growth.

“Historically, revenue growth in the second quarter of each year is seasonally the strongest, particularly for our fee-based businesses. This seasonal trend was evident again this year, as the majority of our fee revenue lines posted strong linked quarter increases, as well as year-over-year growth. Excellent growth in earning assets, coupled with a higher net interest margin, led to an increase in net interest income on both a linked quarter and year-over-year basis of 4.3 percent and 15.6 percent, respectively. Although the revenue growth rates were reduced overall by several significant first quarter items, the core revenue growth trends were favorable and point to the initial success of a number of our revenue growth initiatives, as well as our advantageous mix of businesses.

“These revenue growth initiatives, in addition to our focus and capacity to fulfill the needs of both current and new customers, also led to strong balance sheet growth this quarter. Average earning assets grew by approximately 10 percent on an annualized basis over the first quarter of 2008 and slightly above 10 percent year-over-year. The Company also posted strong growth in average deposits on a linked quarter annualized basis and year-over-year.

“As predicted, credit costs continued to climb this quarter. Net charge-offs of $396 million for the quarter were .98 percent of average loans outstanding, while total nonperforming assets at the end of the quarter totaled $1,135 million, a 34 percent increase over the balance at March 31, 2008. In addition to providing for the $396 million of net charge-offs, the Company recorded an incremental provision for credit losses of $200 million, bringing the allowance to period end loans coverage ratio to 1.60 percent at June 30, 2008. Given the continued stress in the economy, we believe this action is prudent and expect to see net

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 3

charge-offs increase in the coming quarter. Despite this upward trend, credit costs are expected to be manageable for our Company, as we continue to produce solid core operating results.

“Our capital position remains strong, with the Tier 1 capital ratio at June 30, 2008, on target at 8.5 percent. Although we have capacity in our current authorization, we do not anticipate buybacks between now and the end of the year. We will utilize our strong internal capital generation to support our growth initiatives, and rely on our earnings capacity to sustain our dividend and maintain our well-capitalized position.

“I am very proud of the exceptional efforts of the U.S. Bank team and, notwithstanding the need to very carefully manage risk during this challenging economic environment, our Company remains focused on business growth initiatives, deepening our current customer relationships and acquiring new customers. As I have said before, we are “open for business” and are cognizant of the fact that this environment has created an opportunity for our Company to both solidify and grow our position in the markets we serve for the benefit of our customers, communities, employees and shareholders. Our business model and prudent approach to risk management will enable us to successfully manage this Company through this stressed period in the economic cycle.”

The Company’s net income for the second quarter of 2008 decreased by $206 million (17.8 percent) from the same period of 2007. The reduction in net income year-over-year was the net result of a 5.4 percent increase in operating income (income before provision and taxes), offset by an increase in the provision for credit losses. On a linked quarter basis, net income declined by $140 million (12.8 percent), as strong growth in net interest income and seasonally higher fee-based operating revenues were offset by higher credit losses during the quarter and the net impact of the other significant items recorded in the first quarter of 2008.

Total net revenue on a taxable-equivalent basis for the second quarter of 2008 was $3,800 million, $265 million (7.5 percent) higher than the second quarter of 2007, reflecting a 15.6 percent increase in net interest income and a modest increase in noninterest income. The increase in net interest income year-over-year was driven by growth in earning assets and an improvement in the net interest margin. Noninterest income from a year ago was relatively flat as strong growth in the majority of revenue categories was muted by securities impairments related to certain structured investments and higher retail lease residual losses. On a linked quarter basis, total net revenue on a taxable equivalent basis decreased $74 million (1.9 percent). Strong

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 4

growth in net interest income of 4.3 percent (17.2 percent annualized), seasonally higher fee-based revenue and a favorable change in net securities losses were more than offset by a reduction in other noninterest income. The reduction in other noninterest income primarily reflected the $430 million net favorable impact on the first quarter of 2008 from the Visa Gain and the adoption of a new accounting standard.

Total noninterest expense in the second quarter of 2008 was $1,835 million, $165 million (9.9 percent) higher than the second quarter of 2007, and $39 million (2.2 percent) higher than the prior quarter. The increase year-over-year was principally due to higher costs associated with business initiatives designed to expand the Company’s geographical presence and strengthen customer relationships, including investments in relationship managers, branch initiatives, Wealth Management and Payment Services businesses. The increase in operating expense also included higher credit collection costs and incremental costs associated with investments in tax-advantaged projects. On a linked quarter basis, noninterest expense increased 2.2 percent (8.8 percent annualized), due primarily to higher credit collection costs and seasonally higher compensation and professional services fees, offset somewhat by the impact of two expense items in the first quarter that included a contribution to the Company’s foundation and litigation costs.

Provision for credit losses for the second quarter of 2008 was $596 million, an increase of $111 million over the first quarter of 2008 and $405 million over the second quarter of 2007. This represented an incremental increase to the allowance for credit losses of $200 million in the second quarter of 2008 and $192 million in the first quarter of 2008. The increase in the provision for credit losses from a year ago reflected continuing stress in the residential real estate markets, including homebuilding and related supplier industries, driven by declining home prices in most geographic regions. It also reflected the current economic conditions and the corresponding impact on the commercial and consumer loan portfolios. Net charge-offs in the second quarter of 2008 were $396 million, compared with net charge-offs of $293 million in the first quarter of 2008 and $191 million in the second quarter of 2007. Given current economic conditions and the continuing decline in home and other collateral values, the Company expects net charge-offs to increase in the third quarter of 2008. Total nonperforming assets were $1,135 million at June 30, 2008, compared with $845 million at March 31, 2008, and $565 million at June 30, 2007. Nonperforming assets increased $290 million (34.3 percent) during the second quarter of 2008 over the first quarter of 2008 as a result of stress in residential home construction and related industries, and the impact of the economic slowdown on other commercial customers. The ratio of the allowance for credit losses to nonperforming

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 5

loans was 273 percent at June 30, 2008, compared with 358 percent at March 31, 2008, and 503 percent at June 30, 2007.


INCOME STATEMENT HIGHLIGHTS																	Table 2

(Taxable-equivalent basis, $ in millions, except per-share data)
							Percent			Percent
							Change			Change
	2Q		1Q		2Q		2Q08 vs			2Q08 vs			YTD		YTD		Percent
	2008		2008		2007		1Q08			2Q07			2008		2007		Change

Net interest income	$	1,908	$	1,830	$	1,650		4.3			15.6		$	3,738	$	3,316		12.7
Noninterest income		1,892		2,044		1,885		(7.4	)		.4			3,936		3,608		9.1

Total net revenue		3,800		3,874		3,535		(1.9	)		7.5			7,674		6,924		10.8
Noninterest expense		1,835		1,796		1,670		2.2			9.9			3,631		3,242		12.0

Income before provision and taxes		1,965		2,078		1,865		(5.4	)		5.4			4,043		3,682		9.8
Provision for credit losses		596		485		191		22.9		nm				1,081		368	nm

Income before taxes		1,369		1,593		1,674		(14.1	)		(18.2	)		2,962		3,314		(10.6	)
Taxable-equivalent adjustment		33		27		18		22.2			83.3			60		35		71.4
Applicable income taxes		386		476		500		(18.9	)		(22.8	)		862		993		(13.2	)

Net income	$	950	$	1,090	$	1,156		(12.8	)		(17.8	)	$	2,040	$	2,286		(10.8	)

Net income applicable to common equity	$	928	$	1,078	$	1,141		(13.9	)		(18.7	)	$	2,006	$	2,256		(11.1	)

Diluted earnings per common share	$	.53	$	.62	$	.65		(14.5	)		(18.5	)	$	1.14	$	1.27		(10.2	)

Net Interest Income

Second quarter net interest income on a taxable-equivalent basis was $1,908 million, compared with $1,650 million in the second quarter of 2007, an increase of $258 million (15.6 percent). The increase was due to strong growth in average earning assets as well as an improving net interest margin from a year ago. Average earning assets for the period increased over the second quarter of 2007 by $19.8 billion (10.3 percent), primarily driven by an increase of $17.4 billion (12.0 percent) in average loans and $2.3 billion (5.6 percent) in average investment securities. During the second quarter of 2008, the net interest margin increased to 3.61 percent compared with 3.44 percent in the second quarter of 2007. The improvement in the net interest margin was due to several factors, including growth in higher spread assets, the benefit of the Company’s current asset/liability position in a declining interest rate environment and related asset/liability re-pricing dynamics. Also, short-term funding rates were lower due to market volatility and changing liquidity in the overnight fed fund markets given current market conditions.

Net interest income in the second quarter of 2008 increased by $78 million (4.3 percent) compared with the first quarter of 2008. This favorable variance was due to growth in average earning assets of $5.1

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 6

billion (2.5 percent) and an increase in the net interest margin from 3.55 percent in the first quarter of 2008 to 3.61 percent in the current quarter. Given the current rate environment, asset re-pricing dynamics and yield curve, the Company expects the net interest margin to remain relatively stable or decline slightly during the remainder of 2008.


NET INTEREST INCOME																						Table 3

(Taxable-equivalent basis; $ in millions)
										Change			Change
	2Q			1Q			2Q			2Q08 vs			2Q08 vs			YTD			YTD
	2008			2008			2007			1Q08			2Q07			2008			2007			Change

Components of net interest income
Income on earning assets	$	3,067		$	3,258		$	3,276		$	(191	)	$	(209	)	$	6,325		$	6,499		$	(174	)
Expense on interest-bearing liabilities		1,159			1,428			1,626			(269	)		(467	)		2,587			3,183			(596	)

Net interest income	$	1,908		$	1,830		$	1,650		$	78		$	258		$	3,738		$	3,316		$	422


Average yields and rates paid
Earning assets yield		5.81	%		6.32	%		6.83	%		(.51	)%		(1.02	)%		6.06	%		6.82	%		(.76	)%
Rate paid on interest-bearing liabilities		2.53			3.20			3.95			(.67	)		(1.42	)		2.86			3.91			(1.05	)

Gross interest margin		3.28	%		3.12	%		2.88	%		.16	%		.40	%		3.20	%		2.91	%		.29	%

Net interest margin		3.61	%		3.55	%		3.44	%		.06	%		.17	%		3.58	%		3.47	%		.11	%


Average balances
Investment securities	$	42,999		$	43,891		$	40,704		$	(892	)	$	2,295		$	43,446		$	40,791		$	2,655
Loans		163,070			155,232			145,653			7,838			17,417			159,151			145,176			13,975
Earning assets		212,089			207,014			192,301			5,075			19,788			209,552			191,721			17,831
Interest-bearing liabilities		183,855			179,451			165,177			4,404			18,678			181,653			163,937			17,716
Net free funds (a)		28,234			27,563			27,124			671			1,110			27,899			27,784			115


(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.

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 7


AVERAGE LOANS																	Table 4

($ in millions)
							Percent			Percent
							Change			Change
	2Q		1Q		2Q		2Q08 vs			2Q08 vs			YTD		YTD		Percent
	2008		2008		2007		1Q08			2Q07			2008		2007		Change

Commercial	$	47,648	$	45,471	$	41,572		4.8			14.6		$	46,559	$	41,515		12.1
Lease financing		6,331		6,238		5,625		1.5			12.6			6,285		5,588		12.5

Total commercial		53,979		51,709		47,197		4.4			14.4			52,844		47,103		12.2

Commercial mortgages		21,192		20,337		19,562		4.2			8.3			20,765		19,617		5.9
Construction and development		9,281		9,199		8,941		.9			3.8			9,240		8,956		3.2

Total commercial real estate		30,473		29,536		28,503		3.2			6.9			30,005		28,573		5.0

Residential mortgages		23,307		22,978		21,831		1.4			6.8			23,142		21,700		6.6

Credit card		11,559		11,049		9,120		4.6			26.7			11,304		8,879		27.3
Retail leasing		5,523		5,802		6,662		(4.8	)		(17.1	)		5,662		6,753		(16.2	)
Home equity and second mortgages		17,106		16,527		15,735		3.5			8.7			16,817		15,646		7.5
Other retail		21,123		17,631		16,605		19.8			27.2			19,377		16,522		17.3

Total retail		55,311		51,009		48,122		8.4			14.9			53,160		47,800		11.2


Total loans	$	163,070	$	155,232	$	145,653		5.0			12.0		$	159,151	$	145,176		9.6

Average loans for the second quarter of 2008 were $17.4 billion (12.0 percent) higher than the second quarter of 2007, driven by growth in the majority of loan categories. This included growth in average total retail loans of $7.2 billion (14.9 percent), total commercial loans of $6.8 billion (14.4 percent), total commercial real estate loans of $2.0 billion (6.9 percent) and residential mortgages of $1.5 billion (6.8 percent). Average loans for the second quarter of 2008 were higher than the first quarter of 2008 by $7.8 billion (5.0 percent), again reflecting growth in the majority of loan categories. Total commercial loans grew by $2.3 billion (4.4 percent) in the second quarter of 2008 over the first quarter of 2008, driven by growth in corporate and commercial banking balances as business customers utilized bank credit facilities, rather than the capital markets, to fund business growth and liquidity requirements. Total commercial real estate loans also increased over the first quarter of 2008, primarily reflecting changing market conditions that have limited borrower access to the capital markets and the impact of an acquisition. Consumer lending continues to experience strong growth in installment products, home equity lines and credit card balances. Retail loan growth in the second quarter of 2008 included a $2.9 billion increase in federally guaranteed student loan balances due to both the transfer of balances from loans held for sale and a portfolio purchase.

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 8

Average investment securities in the second quarter of 2008 were $2.3 billion (5.6 percent) higher than the second quarter of 2007. The increase was driven by the purchase in the fourth quarter of 2007 of structured investment securities from certain money market funds managed by an affiliate and an increase in tax exempt municipal securities, partially offset by a reduction in mortgage-backed securities. Average investment securities declined by $ .9 billion (2.0 percent) from the first quarter of 2008 principally due to a reduction in mortgage-backed securities.


AVERAGE DEPOSITS																	Table 5

($ in millions)
							Percent			Percent
							Change			Change
	2Q		1Q		2Q		2Q08 vs			2Q08 vs			YTD		YTD		Percent
	2008		2008		2007		1Q08			2Q07			2008		2007		Change

Noninterest-bearing deposits	$	27,851	$	27,119	$	27,977		2.7			(.5	)	$	27,485	$	27,828		(1.2	)
Interest-bearing savings deposits
Interest checking		32,479		30,303		25,858		7.2			25.6			31,390		25,470		23.2
Money market savings		26,426		25,590		24,603		3.3			7.4			26,008		25,154		3.4
Savings accounts		5,377		5,134		5,443		4.7			(1.2	)		5,256		5,422		(3.1	)

Total of savings deposits		64,282		61,027		55,904		5.3			15.0			62,654		56,046		11.8
Time certificates of deposit less than $100,000		12,635		13,607		14,716		(7.1	)		(14.1	)		13,121		14,745		(11.0	)
Time deposits greater than $100,000		31,041		29,105		20,378		6.7			52.3			30,073		21,228		41.7

Total interest-bearing deposits		107,958		103,739		90,998		4.1			18.6			105,848		92,019		15.0

Total deposits	$	135,809	$	130,858	$	118,975		3.8			14.1		$	133,333	$	119,847		11.3

Average noninterest-bearing deposits for the second quarter of 2008 decreased modestly, $126 million (.5 percent), from the second quarter of 2007. Average total savings deposits increased year-over-year by $8.4 billion (15.0 percent) due to a $6.6 billion increase (25.6 percent) in interest checking balances and a $1.8 billion increase (7.4 percent) in money market savings balances, driven by higher balances from broker dealer, government and institutional trust customers. This increase was partially offset by a modest decline of $66 million (1.2 percent) in average savings accounts. Average time certificates of deposit less than $100,000 were lower in the second quarter of 2008 than in the second quarter of 2007 by $2.1 billion (14.1 percent), reflecting the Company’s funding and pricing decisions and competition for these deposits by other financial institutions that have more limited access to wholesale funding sources given the current market environment. Time deposits greater than $100,000 increased by $10.7 billion (52.3 percent) over the same period of 2007 as a result of both the Company’s wholesale funding decisions and the business lines’ ability to attract larger customer deposits given the current market conditions.

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 9

Average noninterest-bearing deposits for the second quarter of 2008 increased modestly compared with the first quarter of 2008. Total average savings deposits increased $3.3 billion (5.3 percent) from the first quarter of 2008, primarily due to higher broker dealer and institutional trust balances. Average time certificates less than $100,000 declined by $972 million (7.1 percent) from the prior quarter reflecting competition for these funding sources given current market conditions. Average time deposits greater than $100,000 increased by $1.9 billion (6.7 percent) over the prior quarter, primarily due to wholesale funding decisions and growth in customer time deposits.


NONINTEREST INCOME																				Table 6
($ in millions)
									Percent			Percent
									Change			Change
	2Q			1Q			2Q		2Q08 vs			2Q08 vs			YTD			YTD		Percent
	2008			2008			2007		1Q08			2Q07			2008			2007		Change

Credit and debit card revenue	$	266		$	248		$	230		7.3			15.7		$	514		$	436		17.9
Corporate payment products revenue		174			164			159		6.1			9.4			338			306		10.5
ATM processing services		93			84			82		10.7			13.4			177			159		11.3
Merchant processing services		309			271			286		14.0			8.0			580			538		7.8
Trust and investment management fees		350			335			342		4.5			2.3			685			664		3.2
Deposit service charges		278			257			277		8.2			.4			535			524		2.1
Treasury management fees		137			124			126		10.5			8.7			261			237		10.1
Commercial products revenue		117			112			105		4.5			11.4			229			205		11.7
Mortgage banking revenue		81			105			68		(22.9	)		19.1			186			135		37.8
Investment products fees and commissions		37			36			38		2.8			(2.6	)		73			72		1.4
Securities gains (losses), net		(63	)		(251	)		3		74.9			nm			(314	)		4		nm
Other		113			559			169		(79.8	)		(33.1	)		672			328		nm


Total noninterest income	$	1,892		$	2,044		$	1,885		(7.4	)		.4		$	3,936		$	3,608		9.1

Noninterest Income

Second quarter noninterest income was $1,892 million, $7 million (.4 percent) higher than the same quarter of 2007 and $152 million (7.4 percent) lower than the first quarter of 2008. Noninterest income compared with the second quarter of 2007 was relatively flat, as strong fee-based revenue growth in several revenue categories was muted by impairment charges on certain structured investments and higher retail lease residual losses from a year ago. Credit and debit card revenue, corporate payment products revenue, ATM processing services and merchant processing services were higher in the second quarter of 2008 than the same period of 2007 by $36 million (15.7 percent), $15 million (9.4 percent), $11 million (13.4 percent) and $23 million (8.0 percent), respectively. The strong growth in credit and debit card revenue was

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 10

primarily driven by an increase in customer accounts and higher customer transaction volumes over a year ago. Corporate payment products revenue growth reflected growth in sales volumes, card usage and business expansion. The ATM processing services increase was also due to growth in transaction volumes. Merchant processing services revenue was higher in the second quarter of 2008 than the same quarter of a year ago due to higher core transaction volume and business expansion. Trust and investment management fees increased $8 million (2.3 percent) year-over-year due to core account growth, partially offset by unfavorable equity market conditions. Deposit service charges remained relatively flat year-over-year, partially due to deposit account-related revenue traditionally reflected in this fee category continuing to migrate to yield-related loan fees as customers utilized new consumer products. Treasury management fees increased $11 million (8.7 percent), due primarily to the favorable impact of declining rates on customer earnings credits and account growth. Commercial products revenue increased $12 million (11.4 percent) year-over-year due to higher commercial loan, syndication and other capital markets fees and commercial leasing revenue. Mortgage banking revenue increased $13 million (19.1 percent) due to an increase in mortgage servicing income and production revenue, partially offset by the unfavorable net change in the valuation of mortgage servicing rights (“MSRs”) and related economic hedging activities. Securities gains (losses) were lower from a year ago by $66 million due to the impact of the impairment charges on structured investment securities. Other income declined $56 million year-over-year, primarily due to the approximate $42 million adverse impact of higher retail lease residual losses compared with the second quarter of 2007.

Noninterest income was lower by $152 million (7.4 percent) in the second quarter of 2008 than the first quarter of 2008, reflecting the impact of the Visa Gain, partially offset by seasonally higher fee-based revenue and a favorable variance in securities losses. Credit and debit card revenue increased $18 million (7.3 percent), corporate payment products revenue increased $10 million (6.1 percent) and ATM processing services increased $9 million (10.7 percent) on a linked quarter basis due to seasonally higher transaction volumes. Merchant processing services were higher in the second quarter of 2008 compared with the first quarter of 2008 by $38 million (14.0 percent) due to seasonally strong sales volumes, pricing initiatives and business expansion. Trust and investment management fees increased $15 million (4.5 percent) on a linked quarter basis, primarily due to seasonal tax filing fees. Deposit service charges increased $21 million (8.2 percent) compared with seasonally lower transaction fees in the first quarter of 2008. Treasury management fees increased by $13 million (10.5 percent) on a linked quarter basis due to higher government lock box

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 11

activity and the favorable impact of declining rates on customer earnings credits. Commercial products revenue increased from the first quarter of 2008 by $5 million (4.5 percent) due to higher syndication fees, stand-by letter of credit fees and commercial leasing gains, partially offset by lower foreign exchange revenue. In addition, net securities losses reflected a $188 million favorable variance on a linked quarter basis, due primarily to the change in the impairment charges recorded on structured investment securities. These increases were offset by several unfavorable variances. Other income was lower on a linked quarter basis due to the $492 million Visa Gain in first quarter of 2008 and due to higher retail lease residual losses, partially offset by a $62 million unfavorable impact in first quarter of 2008 related to the adoption of Statement of Financial Accounting Standard No. 157 “Fair Value Measurements” (“SFAS 157”) on the valuation of certain derivatives. Mortgage banking revenue decreased by $24 million (22.9 percent) from the first quarter of 2008 due to an unfavorable change in the valuation of MSRs and related economic hedging activities and lower production income, partially offset by an increase in servicing revenue.


NONINTEREST EXPENSE																		Table 7
($ in millions)
					Percent					Percent
							Change				Change
	2Q		1Q		2Q		2Q08 vs				2Q08 vs			YTD		YTD		Percent
	2008		2008		2007		1Q08				2Q07			2008		2007		Change

Compensation	$	761	$	745	$	659		2.1				15.5		$	1,506	$	1,294		16.4
Employee benefits		129		137		123		(5.8	)			4.9			266		256		3.9
Net occupancy and equipment		190		190		184		—				3.3			380		361		5.3
Professional services		59		47		59		25.5				—			106		106		—
Marketing and business development		66		79		68		(16.5	)			(2.9	)		145		120		20.8
Technology and communications		149		140		138		6.4				8.0			289		273		5.9
Postage, printing and supplies		73		71		71		2.8				2.8			144		140		2.9
Other intangibles		87		87		95		—				(8.4	)		174		189		(7.9	)
Other		321		300		273		7.0				17.6			621		503		23.5


Total noninterest expense	$	1,835	$	1,796	$	1,670		2.2				9.9		$	3,631	$	3,242		12.0

Noninterest Expense

Second quarter noninterest expense totaled $1,835 million, an increase of $165 million (9.9 percent) over the same quarter of 2007 and an increase of $39 million (2.2 percent) over the first quarter of 2008. Compensation expense increased $102 million (15.5 percent) over the same period of 2007 due to growth in ongoing bank operations, acquired businesses and other bank initiatives and the adoption of SFAS 157. Under this new accounting standard, compensation expense is no longer deferred for origination of mortgage

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 12

loans held for sale. Employee benefits expense increased $6 million (4.9 percent) year-over-year as higher payroll taxes and medical costs were partially offset by lower pension costs. Net occupancy and equipment expense increased $6 million (3.3 percent) over the second quarter of 2007, primarily due to acquisitions and branch-based and other business expansion initiatives. Technology and communications expense increased $11 million (8.0 percent) year-over-year, primarily due to increased processing volumes and business expansion. Other expense increased $48 million (17.6 percent) year-over-year, due primarily to credit-related costs for other real estate owned and loan collection activities, investments in tax-advantaged projects, and higher litigation and fraud costs. These increases were partially offset by a decrease in other intangibles expense of $8 million (8.4 percent).

Noninterest expense in the second quarter of 2008 was higher than the first quarter of 2008 by $39 million (2.2 percent). Compensation expense increased $16 million (2.1 percent) due to continued focus on business expansion and operations, acquisitions and the timing of merit increases. Professional services expense increased $12 million (25.5 percent) on a linked quarter basis, due to the seasonal timing of legal costs and other consulting projects. Technology and communications expense increased $9 million (6.4 percent) due to increased processing volumes and the impact of a vendor credit received in the first quarter of 2008. Other expense increased by $21 million (7.0 percent) as compared with the first quarter of 2008 due to credit-related costs for other real estate owned and loan collection activities, higher fraud losses, and increased investments in tax-advantaged projects, partially offset by the favorable impact from $22 million in litigation costs recorded in the prior quarter. These increases were partially offset by favorable variances in employee benefits and marketing and business development expenses. Employee benefits decreased $8 million (5.8 percent) on a linked quarter basis, due primarily to seasonally lower payroll taxes. Marketing and business development expense decreased $13 million (16.5 percent) on a linked quarter basis due to a $25 million charitable contribution in the first quarter of 2008, partially offset by the timing of Payment Services and Consumer Banking promotions.

Provision for Income Taxes

The provision for income taxes for the second quarter of 2008 resulted in a tax rate on a taxable equivalent basis of 30.6 percent (effective tax rate of 28.9 percent) compared with 30.9 percent (effective tax rate of 30.2 percent) in the second quarter of 2007 and 31.6 percent (effective tax rate of 30.4 percent) in the first quarter of 2008.

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 13


ALLOWANCE FOR CREDIT LOSSES										Table 8
($ in millions)
	2Q		1Q			4Q		3Q		2Q
	2008		2008			2007		2007		2007

Balance, beginning of period	$	2,435	$	2,260		$	2,260	$	2,260	$	2,260

Net charge-offs
Commercial		51		39			23		26		21
Lease financing		18		16			13		11		8

Total commercial		69		55			36		37		29
Commercial mortgages		6		4			3		1		7
Construction and development		12		8			7		1		2

Total commercial real estate		18		12			10		2		9

Residential mortgages		53		26			17		17		15

Credit card		139		108			88		77		81
Retail leasing		8		7			6		3		4
Home equity and second mortgages		48		30			22		20		16
Other retail		61		55			46		43		37

Total retail		256		200			162		143		138

Total net charge-offs		396		293			225		199		191
Provision for credit losses		596		485			225		199		191
Acquisitions and other changes		13		(17	)		—		—		—

Balance, end of period	$	2,648	$	2,435		$	2,260	$	2,260	$	2,260


Components
Allowance for loan losses	$	2,518	$	2,251		$	2,058	$	2,041	$	2,028
Liability for unfunded credit commitments		130		184			202		219		232

Total allowance for credit losses	$	2,648	$	2,435		$	2,260	$	2,260	$	2,260


Gross charge-offs	$	439	$	348		$	287	$	256	$	252
Gross recoveries	$	43	$	55		$	62	$	57	$	61

Allowance for credit losses as a percentage of Period-end loans		1.60		1.54			1.47		1.52		1.55
Nonperforming loans		273		358			406		441		503
Nonperforming assets		233		288			328		353		400

Credit Quality

During the second quarter of 2008, credit losses and nonperforming assets continued to trend higher. The allowance for credit losses was $2,648 million at June 30, 2008, compared with $2,435 million at March 31, 2008, and $2,260 million at June 30, 2007. As a result of the continued stress in the residential housing markets, homebuilding and related industry sectors, and due to the growth of the loan portfolios, the Company has increased the allowance for credit losses in the first and second quarters of 2008 by $192 million and $200 million, respectively. The credit stress is being reflected in higher delinquencies,

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 14

nonperforming asset levels and net charge-offs relative to a year ago and the first quarter of 2008. Total net charge-offs in the second quarter of 2008 were $396 million, compared with the first quarter of 2008 net charge-offs of $293 million and the second quarter of 2007 net charge-offs of $191 million. The increase in total net charge-offs from a year ago was driven by the factors affecting the residential housing markets as well as credit costs associated with credit card and other consumer loan growth over the past several quarters.

Commercial and commercial real estate loan net charge-offs increased to $87 million in the second quarter of 2008 (.41 percent of average loans outstanding) compared with $67 million (.33 percent of average loans outstanding) in the first quarter of 2008 and $38 million (.20 percent of average loans outstanding) in the second quarter of 2007. This increasing trend in commercial and commercial real estate net charge-offs reflected increases in nonperforming loans and delinquencies within the portfolios, especially residential homebuilding and related industry sectors.

Residential mortgage loan net charge-offs increased to $53 million in the second quarter of 2008 (.91 percent of average loans outstanding) compared with $26 million (.46 percent of average loans outstanding) in the first quarter of 2008 and $15 million (.28 percent of average loans outstanding) in the second quarter of 2007. The increased residential mortgage losses were primarily related to loans originated within the consumer finance division and reflected the impact of rising foreclosures on sub-prime mortgages and current economic conditions.

Total retail loan net charge-offs were $256 million (1.86 percent of average loans outstanding) in the second quarter of 2008 compared with $200 million (1.58 percent of average loans outstanding) in the first quarter of 2008 and $138 million (1.15 percent of average loans outstanding) in the second quarter of 2007. The increased retail loan credit losses reflected the Company’s growth in credit card and consumer loan balances, seasonally higher losses related to credit cards, as well as the adverse impact of current economic conditions on consumers.

The ratio of the allowance for credit losses to period-end loans was 1.60 percent at June 30, 2008, compared with 1.54 percent at March 31, 2008, and 1.55 percent at June 30, 2007. The ratio of the allowance for credit losses to nonperforming loans was 273 percent at June 30, 2008, compared with 358 percent at March 31, 2008, and 503 percent at June 30, 2007.

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 15


CREDIT RATIOS									Table 9
(Percent)
	2Q		1Q		4Q		3Q		2Q
	2008		2008		2007		2007		2007

Net charge-offs ratios (a)
Commercial		.43		.34		.21		.25		.20
Lease financing		1.14		1.03		.86		.76		.57
Total commercial		.51		.43		.29		.31		.25

Commercial mortgages		.11		.08		.06		.02		.14
Construction and development		.52		.35		.31		.04		.09
Total commercial real estate		.24		.16		.14		.03		.13

Residential mortgages		.91		.46		.30		.30		.28

Credit card		4.84		3.93		3.29		3.09		3.56
Retail leasing		.58		.49		.39		.19		.24
Home equity and second mortgages		1.13		.73		.53		.49		.41
Other retail		1.16		1.25		1.05		1.00		.89
Total retail		1.86		1.58		1.28		1.15		1.15

Total net charge-offs		.98		.76		.59		.54		.53

Delinquent loan ratios - 90 days or more past due excluding nonperforming loans (b)
Commercial		.09		.09		.07		.07		.07
Commercial real estate		.09		.13		.02		.04		—
Residential mortgages		1.09		.98		.86		.58		.46
Retail		.63		.69		.68		.55		.50
Total loans		.41		.43		.38		.30		.26

Delinquent loan ratios - 90 days or more past due including nonperforming loans (b)
Commercial		.71		.60		.43		.51		.44
Commercial real estate		1.57		1.18		1.02		.83		.69
Residential mortgages		1.55		1.24		1.10		.79		.65
Retail		.74		.77		.73		.61		.58
Total loans		1.00		.86		.74		.65		.57


(a)		annualized and calculated on average loan balances

(b)		ratios are expressed as a percent of ending loan balances

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 16


ASSET QUALITY									Table 10
($ in millions)
	Jun 30		Mar 31		Dec 31		Sep 30		Jun 30
	2008		2008		2007		2007		2007

Nonperforming loans
Commercial	$	265	$	201	$	128	$	161	$	128
Lease financing		75		64		53		46		44

Total commercial		340		265		181		207		172
Commercial mortgages		139		102		84		73		90
Construction and development		326		212		209		153		107

Total commercial real estate		465		314		293		226		197
Residential mortgages		108		59		54		48		41
Retail		58		42		29		32		39

Total nonperforming loans		971		680		557		513		449

Other real estate		142		141		111		113		103
Other nonperforming assets		22		24		22		15		13


Total nonperforming assets (a)	$	1,135	$	845	$	690	$	641	$	565


Accruing loans 90 days or more past due	$	687	$	676	$	584	$	451	$	376


Restructured loans that continue to accrue interest	$	1,029	$	695	$	551	$	468	$	435


Nonperforming assets to loans plus ORE (%)		.68		.53		.45		.43		.39


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

Nonperforming assets at June 30, 2008, totaled $1,135 million, compared with $845 million at March 31, 2008, and $565 million at June 30, 2007. The ratio of nonperforming assets to loans and other real estate was .68 percent at June 30, 2008, compared with .53 percent at March 31, 2008, and .39 percent at June 30, 2007. The increase in nonperforming assets from a year ago was driven primarily by the residential construction portfolio and related industries, an increase in foreclosed residential properties and the impact of the economic slowdown on other commercial customers. The Company expects nonperforming assets to continue to increase due to general economic conditions and continuing stress in the residential mortgage portfolio and residential construction industry. Accruing loans 90 days or more past due increased to $687 million at June 30, 2008, compared with $676 million at March 31, 2008, and $376 million at June 30, 2007. Similar to nonperforming assets, the increase year-over-year in delinquent loans that continue to accrue interest was primarily related to residential mortgages, credit cards and home equity loans. However, the increase on a linked quarter basis moderated. Restructured loans that continue to accrue interest have also increased from the second quarter of 2007 and the first quarter of 2008, reflecting the impact of restructurings for certain residential mortgage customers in light of current economic conditions. The

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 17

Company expects this trend to continue during 2008 as residential home valuations continue to decline and certain borrowers take advantage of the Company’s mortgage loan restructuring programs.


CAPITAL POSITION													Table 11
($ in millions)
	Jun 30			Mar 31			Dec 31			Sep 30			Jun 30
	2008			2008			2007			2007			2007

Total shareholders’ equity	$	21,828		$	21,572		$	21,046		$	20,686		$	20,330
Tier 1 capital		18,624			18,543			17,539			17,288			16,876
Total risk-based capital		27,502			27,207			25,925			25,820			25,709

Tier 1 capital ratio		8.5	%		8.6	%		8.3	%		8.5	%		8.5	%
Total risk-based capital ratio		12.5			12.6			12.2			12.7			13.0
Leverage ratio		7.9			8.1			7.9			8.0			7.9
Common equity to assets		8.2			8.3			8.4			8.6			8.7
Tangible common equity to assets		5.2			5.3			5.1			5.3			5.2

Total shareholders’ equity was $21.8 billion at June 30, 2008, compared with $21.6 billion at March 31, 2008, and $20.3 billion at June 30, 2007. The Tier 1 capital ratio was 8.5 percent at June 30, 2008, compared with 8.6 percent at March 31, 2008, and 8.5 percent at June 30, 2007. The total risk-based capital ratio was 12.5 percent at June 30, 2008, compared with 12.6 percent at March 31, 2008, and 13.0 percent at June 30, 2007. The leverage ratio was 7.9 percent at June 30, 2008, compared with 8.1 percent at March 31, 2008, and 7.9 percent at June 30, 2007. Tangible common equity to assets was 5.2 percent at June 30, 2008, compared with 5.3 percent at March 31, 2008, and 5.2 percent at June 30, 2007. All regulatory ratios continue to be in excess of stated “well-capitalized” requirements.

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 18


COMMON SHARES											Table 12
(Millions)	2Q		1Q			4Q		3Q			2Q
	2008		2008			2007		2007			2007

Beginning shares outstanding		1,738		1,728			1,725		1,728			1,742
Shares issued for stock option and stock purchase plans, acquisitions and other corporate purposes		3		12			3		3			4
Shares repurchased		—		(2	)		—		(6	)		(18	)

Ending shares outstanding		1,741		1,738			1,728		1,725			1,728

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 31, 2008. As of June 30, 2008, there were approximately 62 million shares remaining to be repurchased under the authorization.


LINE OF BUSINESS FINANCIAL PERFORMANCE (a)																							Table 13
($ in millions)
	Net Income								Percent Change														2Q 2008
	2Q			1Q		2Q			2Q08 vs			2Q08 vs			YTD			YTD		Percent			Earnings
Business Line	2008			2008		2007			1Q08			2Q07			2008			2007		Change			Composition

Wholesale Banking	$	255		$	254	$	278			.4			(8.3	)	$	509		$	545		(6.6	)		27	%
Consumer Banking		321			387		478			(17.1	)		(32.8	)		708			927		(23.6	)		34
Wealth Management & Securities Services		149			147		153			1.4			(2.6	)		296			298		(.7	)		16
Payment Services		278			282		253			(1.4	)		9.9			560			481		16.4			29
Treasury and Corp orate Support		(53	)		20		(6	)	nm			nm				(33	)		35	nm				(6	)


Consolidated Company	$	950		$	1,090	$	1,156			(12.8	)		(17.8	)	$	2,040		$	2,286		(10.8	)		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 & Securities Services, 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

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 19

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 the Company’s diverse customer base. During 2008, certain organization and methodology changes were made and, accordingly, prior period results were restated and presented on a comparable basis.

Wholesale Banking offers lending, equipment finance and small-ticket leasing, depository, treasury management, capital markets, foreign exchange, international trade services and other financial services to middle market, large corporate, commercial real estate, and public sector clients. Wholesale Banking contributed $255 million of the Company’s net income in the second quarter of 2008, an 8.3 percent decrease from the same period of 2007 and a .4 percent increase from the first quarter of 2008. Stronger net interest income year-over-year and growth in fee-based revenues was offset by valuation losses due to adverse market conditions, an increase in total noninterest expense driven by incremental investments in the wholesale banking business and higher credit costs. Net interest income increased $30 million year-over-year due to strong growth in earning assets, partially offset by declining loan rates and a decrease in the margin benefit of deposits. The decline in total noninterest income was primarily due to security valuation losses and lower earnings from equity investments, offset somewhat by growth in treasury management fees, syndication, commercial loan and other capital markets fees and higher commercial leasing revenue. Total noninterest expense increased by $22 million (9.1 percent) over a year ago, primarily due to higher compensation and employee benefits expense related to merit increases, expanding the business line’s national corporate banking presence, investments to enhance customer relationship management, and an acquisition. The provision for credit losses increased $35 million due to continued credit deterioration in the homebuilding and commercial home supplier industries.

Wholesale Banking’s contribution to net income in the second quarter of 2008 was relatively flat compared with the first quarter of 2008. Growth in total net revenue (4.9 percent) was offset by a $12 million increase in the provision for credit losses primarily due to higher net charge-offs, and higher total noninterest expense (7.8 percent). Total net revenue was higher on a linked quarter basis due to an increase in total noninterest income, while net interest income was essentially flat to the first quarter of 2008. Growth in average loans and interest-bearing deposit balances was offset by the effect of asset repricing and the lower margin benefit of deposits given the declining rate environment. Total noninterest income increased on a linked quarter basis due to an increase in treasury management fees, an increase in commercial products

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 20

revenue due to higher commercial leasing gains, stand-by letter of credit and syndication fees, and a favorable variance in other revenue from an investment in a commercial real estate business. This was partially offset by security valuation losses driven by recent market conditions. Total noninterest expense increased $19 million (7.8 percent) due to a seasonal increase in compensation expense and higher credit collection-related costs. The provision for credit losses increased due to higher net charge-offs principally related to commercial construction lending.

Consumer Banking delivers products and services through banking offices, telephone servicing and sales, on-line services, direct mail and ATM processing. 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 $321 million of the Company’s net income in the second quarter of 2008, a 32.8 percent decrease from the same period of 2007 and a 17.1 percent decrease from the prior quarter. Within Consumer Banking, the retail banking division accounted for $285 million of the total contribution, a 36.7 percent decrease on a year-over-year basis and a 16.4 percent decrease from the prior quarter. The decrease in the retail banking division from the same period of 2007 was due to lower total net revenue, growth in total noninterest expense related to incremental business investments and an increase in the provision for credit losses. Net interest income for the retail banking division declined year-over-year as an increase in average loan balances and yield-related loan fees was more than offset by lower deposit balances, as customers utilized balances to fund higher living costs, and a decline in the margin benefit of deposits given the declining interest rate environment. Total noninterest income for the retail banking division decreased 7.2 percent from a year ago due to lower retail lease revenue related to higher retail lease residual losses, which were partially offset by growth in revenue from ATM processing services. Total noninterest expense in the second quarter of 2008 increased 9.3 percent for the division over the same quarter of 2007, reflecting branch expansion initiatives, geographical promotional activities and customer service initiatives. In addition, the division experienced higher fraud losses and credit-related costs associated with other real estate owned and foreclosures. The provision for credit losses for the retail banking division was higher due to a $97 million year-over-year increase in net charge-offs, reflecting portfolio growth and credit deterioration in residential mortgages, home equity and other installment and consumer loan portfolios. In the second quarter of 2008 the mortgage banking division’s contribution was $36 million, an $8 million increase from the same period of 2007. The increase for the mortgage banking division’s contribution was a result of higher total net revenue, partially

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 21

offset by higher noninterest expense and provision for credit losses. The division’s total net revenue increased by $54 million (59.3 percent) over a year ago, reflecting an increase in net interest income and an increase in mortgage servicing income and production revenue, partially offset by an unfavorable net change in the valuation of mortgage servicing rights (“MSRs”) and related economic hedging activities. As a result of higher rates and increased loan production, net interest income increased $40 million as average mortgage loans and loans held for sale increased over a year ago. Noninterest income was favorably impacted by loan production and the adoption of SFAS 157 in early 2008. Total noninterest expense for the mortgage banking division increased $31 million (66.0 percent) over the second quarter of 2007, primarily due to the impact of the adoption of SFAS 157 on compensation expense of $18 million, higher production levels from a year ago and servicing costs associated with other real estate owned and foreclosures.

Consumer Banking’s contribution in the second quarter of 2008 decreased $66 million (17.1 percent) compared with the first quarter of 2008. The retail banking division’s contribution decreased 16.4 percent on a linked quarter basis, driven primarily by an increase in the provision for credit losses. Total net revenue for the retail banking division decreased $9 million (.7 percent) due to lower net interest income, partially offset by an increase in total noninterest income. Net interest income declined by 2.4 percent on a linked quarter basis, as the favorable impact of growth in average loan balances was more than offset by lower deposit balances and changing credit spreads due to the current yield curve. The increase in total noninterest income was driven by seasonally higher deposit service charges and ATM processing services revenue, partially offset by higher retail lease residual losses. Total noninterest expense for the retail banking division increased $30 million (4.3 percent) on a linked quarter basis. This increase was due to higher compensation and employee benefits expense due to the timing of merit increases, higher fraud losses and processing costs and the timing of marketing programs. The provision for credit losses for the division reflected a $50 million increase in net charge-offs compared with the first quarter of 2008 reflecting higher consumer delinquencies within these portfolios. The contribution of the mortgage banking division decreased $10 million from the first quarter of 2008, driven primarily by an increase in provision for credit losses. Total net revenue decreased by 1.4 percent principally due to the net impact of an unfavorable change in the valuation of MSRs and related economic hedging activities. Total noninterest expense in the mortgage banking division increased $3 million (4.0 percent) over the first quarter of 2008, primarily driven by higher processing costs.

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 22

Wealth Management & Securities Services provides trust, private banking, financial advisory, investment management, retail brokerage services, insurance, custody and mutual fund servicing through five businesses: Wealth Management, Corporate Trust, FAF Advisors, Institutional Trust & Custody and Fund Services. Wealth Management & Securities Services contributed $149 million of the Company’s net income in the second quarter of 2008, a 2.6 percent decrease compared with the same period of 2007 and a 1.4 percent increase over the first quarter of 2008. Total net revenue year-over-year remained relatively flat. Total noninterest income increased (2.4 percent) due to core account growth, partially offset by unfavorable equity market conditions from a year ago. Net interest income declined (6.0 percent) due to a reduction in the margin benefit of deposits. Total noninterest expense was 3.6 percent higher compared with the same quarter of 2007, primarily due to higher compensation and employee benefits expense, partially offset by lower other intangibles expense.

The increase in the business line’s contribution in the second quarter of 2008 compared with the first quarter of 2008 was primarily due to seasonally higher tax filing fees. This increase was partially offset by lower net interest income due to the margin impact of declining rates on deposits and a 2.0 percent increase in total noninterest expense as compared with the first quarter of 2008.

Payment Services includes consumer and business credit cards, stored-value cards, debit cards, corporate and purchasing card services, consumer lines of credit and merchant processing. Payment Services are highly inter-related with banking products and services of the other lines of business and rely on access to the bank subsidiary’s settlement network, lower cost funding available to the Company, cross-selling opportunities and operating efficiencies. Payment Services contributed $278 million of the Company’s net income in the second quarter of 2008, a 9.9 percent increase over the same period of 2007 and a 1.4 percent decrease compared with the first quarter of 2008. Total net revenue increased year-over-year due to higher net interest income (43.8 percent) and total noninterest income (10.6 percent). Net interest income increased due to strong growth in higher spread credit card balances and the timing of asset repricing in a declining rate environment. During the past year, all payment processing revenue categories benefited from account growth, higher transaction volumes and business expansion initiatives. Growth in total noninterest expense (11.4 percent) year-over-year primarily reflected new business initiatives, including costs associated with transaction processing and recent acquisitions. An increase in the provision for credit losses was driven by an increase in net charge-offs of $67 million year-over-year, which reflected credit card portfolio growth, higher delinquency rates and changing economic conditions from a year ago.

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 23

Payment Services’ contribution in the second quarter of 2008 decreased slightly (1.4 percent) compared with the first quarter of 2008, as total net revenue growth was offset by an increase in total noninterest expense (6.7 percent) and in the provision for credit losses (25.4 percent) due to portfolio growth and changing economic conditions. Total net revenue was higher due to a 9.2 percent increase in total noninterest income, partially offset by a 4.3 percent decrease in net interest income. Total noninterest income increased due to seasonally higher transaction volumes and changes in rates, driven by the mix of sales volume. Net interest income decreased as the benefit from strong growth in retail credit card balances was offset by declining rates as these assets repriced with the recent declines in interest rates. The increase in total noninterest expense was primarily due to an increase in compensation and employee benefits, including the impact of business expansion initiatives, increased fraud losses and the timing of marketing programs.

Treasury and Corporate Support includes the Company’s investment portfolios, funding, capital management, 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. Treasury and Corporate Support recorded a net loss of $53 million in the second quarter of 2008, compared with a net loss of $6 million in the second quarter of 2007 and net income of $20 million in the first quarter of 2008. Net interest income increased $185 million in the current quarter over the second quarter of 2007, reflecting a steepening yield curve, wholesale funding decisions and the Company’s asset/liability position. Total noninterest income decreased $44 million, primarily reflecting the impairment charges for certain structured investment securities. Total noninterest expense was flat year-over-year, reflecting higher compensation and employee benefits expense, incremental costs associated with investments in tax-advantaged projects and litigation costs, partially offset by a reduction in business integration expense and net shared services expense. The provision for credit losses increased $196 million representing the incremental charge taken this quarter. This incremental provision, reflected deterioration in credit quality within the loan portfolios related to stress in the residential real estate markets, including homebuilding and related supplier industries, and the impact of economics conditions on the loan portfolios.

Net income in the second quarter of 2008 was lower on a linked quarter basis due to the impact of several significant items recognized by the Company in the first quarter of 2008. The net change in operating results, on a linked quarter basis was primarily due to the $492 million Visa Gain, net of the $62 million for adoption of SFAS 157 recorded in the first quarter of 2008, partially offset by a favorable

(MORE)

U.S. Bancorp Reports Second Quarter 2008 Results
July 15, 2008
Page 25

RICHARD K. DAVIS, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, AND ANDREW CECERE, VICE CHAIRMAN AND CHIEF FINANCIAL OFFICER, WILL HOST A CONFERENCE CALL TO REVIEW THE FINANCIAL RESULTS AT 1:00 PM (CDT) ON TUESDAY, JULY 15, 2008. The conference call will be available by telephone or on the Internet. To access the conference call from locations within the United States and Canada, please dial 866-316-1409. Participants calling from outside the United States and Canada, please dial 706-634-9086. The conference ID number for all participants is 52522493. For those unable to participate during the live call, a recording of the call will be available approximately two hours after the conference call ends on Tuesday, July 15th, and will run through Tuesday, July 22nd, at 11:00 p.m. (CDT). To access the recorded message within the United States and Canada, dial 800-642-1687. If calling from outside the United States and Canada, please dial 706-645-9291 to access the recording. The conference ID is 52522493. Find the recorded call via the Internet at usbank.com.

Minneapolis-based U.S. Bancorp (“USB”), with $247 billion in assets, is the parent company of U.S. Bank, the 6th largest commercial bank in the United States. The Company operates 2,542 banking offices and 4,895 ATMs in 24 states, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. 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, deterioration in the credit quality of our loan portfolios or in the value of the collateral securing those loans, deterioration in the value of securities held in our investment securities portfolio, 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, effects of critical accounting policies and judgments, and management’s ability to effectively manage credit risk, market risk, operational risk, legal risk, and regulatory and compliance risk. 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, 2007, on file with the Securities and Exchange Commission, 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.

###

(MORE)

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,
(Unaudited)	2008			2007		2008			2007

Interest Income
Loans	$	2,429		$	2,616	$	4,989		$	5,194
Loans held for sale		49			70		122			129
Investment securities		494			516		1,029			1,032
Other interest income		43			34		80			68

Total interest income		3,015			3,236		6,220			6,423
Interest Expense
Deposits		458			663		1,064			1,338
Short-term borrowings		263			379		585			707
Long-term debt		419			562		893			1,097

Total interest expense		1,140			1,604		2,542			3,142

Net interest income		1,875			1,632		3,678			3,281
Provision for credit losses		596			191		1,081			368

Net interest income after provision for credit losses		1,279			1,441		2,597			2,913
Noninterest Income
Credit and debit card revenue		266			230		514			436
Corporate payment products revenue		174			159		338			306
ATM processing services		93			82		177			159
Merchant processing services		309			286		580			538
Trust and investment management fees		350			342		685			664
Deposit service charges		278			277		535			524
Treasury management fees		137			126		261			237
Commercial products revenue		117			105		229			205
Mortgage banking revenue		81			68		186			135
Investment products fees and commissions		37			38		73			72
Securities gains (losses), net		(63	)		3		(314	)		4
Other		113			169		672			328

Total noninterest income		1,892			1,885		3,936			3,608
Noninterest Expense
Compensation		761			659		1,506			1,294
Employee benefits		129			123		266			256
Net occupancy and equipment		190			184		380			361
Professional services		59			59		106			106
Marketing and business development		66			68		145			120
Technology and communications		149			138		289			273
Postage, printing and supplies		73			71		144			140
Other intangibles		87			95		174			189
Other		321			273		621			503

Total noninterest expense		1,835			1,670		3,631			3,242

Income before income taxes		1,336			1,656		2,902			3,279
Applicable income taxes		386			500		862			993

Net income	$	950		$	1,156	$	2,040		$	2,286

Net income applicable to common equity	$	928		$	1,141	$	2,006		$	2,256

Earnings per common share	$	.53		$	.66	$	1.16		$	1.29
Diluted earnings per common share	$	.53		$	.65	$	1.14		$	1.27
Dividends declared per common share	$	.425		$	.400	$	.850		$	.800
Average common shares outstanding		1,740			1,736		1,735			1,744
Average diluted common shares outstanding		1,756			1,760		1,752			1,770

Page 26

U.S. Bancorp
Consolidated Ending Balance Sheet


	June 30,			December 31,			June 30,
(Dollars in Millions)	2008			2007			2007

Assets	(Unaudited)						(Unaudited)
Cash and due from banks	$	7,956		$	8,884		$	6,534
Investment securities
Held-to-maturity		64			74			81
Available-for-sale		41,058			43,042			39,433
Loans held for sale		3,788			4,819			4,552
Loans
Commercial		55,138			51,074			46,459
Commercial real estate		31,247			29,207			28,421
Residential mortgages		23,301			22,782			21,992
Retail		56,204			50,764			48,836

Total loans		165,890			153,827			145,708
Less allowance for loan losses		(2,518	)		(2,058	)		(2,028	)

Net loans		163,372			151,769			143,680
Premises and equipment		1,811			1,779			1,798
Goodwill		7,851			7,647			7,593
Other intangible assets		3,313			3,043			3,352
Other assets		17,325			16,558			15,507

Total assets	$	246,538		$	237,615		$	222,530


Liabilities and Shareholders’ Equity
Deposits
Noninterest-bearing	$	33,970		$	33,334		$	29,545
Interest-bearing		76,300			72,458			70,216
Time deposits greater than $100,000		24,861			25,653			19,941

Total deposits		135,131			131,445			119,702
Short-term borrowings		41,107			32,370			27,160
Long-term debt		39,943			43,440			45,946
Other liabilities		8,529			9,314			9,392

Total liabilities		224,710			216,569			202,200
Shareholders’ equity
Preferred stock		1,500			1,000			1,000
Common stock		20			20			20
Capital surplus		5,682			5,749			5,748
Retained earnings		23,220			22,693			22,110
Less treasury stock		(7,075	)		(7,480	)		(7,476	)
Other comprehensive income		(1,519	)		(936	)		(1,072	)

Total shareholders’ equity		21,828			21,046			20,330

Total liabilities and shareholders’ equity	$	246,538		$	237,615		$	222,530

Page 27