8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 21, 2008

U.S. BANCORP
(Exact name of registrant as specified in its charter)

1-6880
(Commission File Number)

DELAWARE
(State or other jurisdiction
of incorporation) 41-0255900
(I.R.S. Employer Identification Number)

800 Nicollet Mall
Minneapolis, Minnesota 55402
(Address of principal executive offices and zip code)

(651) 466-3000
(Registrant’s telephone number, including area code)

(not applicable)
(Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 Under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
	ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
SIGNATURES
Press Release issued October 21, 2008

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

     On October 21, 2008, U.S. Bancorp (the “Company”) issued a press release reporting quarter ended September 30, 2008 results. The press release is included as Exhibit 99.1 hereto and is incorporated herein by reference. The information included in the press release is considered to be “filed” under the Securities Exchange Act of 1934. The press release contains forward-looking statements regarding the Company and includes a cautionary statement identifying important factors that could cause actual results to differ materially from those anticipated.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits.

     99.1 Press Release issued by U.S. Bancorp on October 21, 2008, deemed “filed” under the Securities Exchange Act of 1934.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

U.S. BANCORP

By /s/ Terrance R. Dolan
Terrance R. Dolan
Executive Vice President and
Controller

     DATE: October 21, 2008

EX-99.1 2 c46720exv99w1.htm PRESS RELEASE ISSUED OCTOBER 21, 2008

Exhibit 99.1

	News Release
	Contacts:
	Steve Dale	Judith T. Murphy
	Media	Investors/Analysts
	(612) 303-0784	(612) 303-0783

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

     MINNEAPOLIS, October 21, 2008 – U.S. Bancorp (NYSE: USB) today reported its financial results for the third quarter of 2008. Diluted earnings per common share of $.32 in the current quarter were lower than the $.62 of diluted earnings per common share reported for the third quarter of 2007. Included in the results were securities valuation losses representing $.18 per diluted common share and an incremental provision for credit losses equal to $.10 per diluted common share. The Company’s fundamental business performance continues to be strong, despite the challenging financial markets. Results for the third quarter included strong growth year-over-year in net interest income, average loans and deposits and fee revenue, as customers continued to seek banks with strong capital and the ability to provide them with financial products and services during this period of economic uncertainty. Highlights for the third quarter of 2008 included:

• Net interest income growth of 16.7 percent over the third quarter of 2007, driven by:

• Average earning assets growth of 10.3 percent

• Net interest margin expansion: 3.65 percent in the third quarter of 2008 versus 3.44 percent in the third quarter of 2007

• Average loan growth of 12.9 percent over the third quarter of 2007, driven by:

• Average commercial loan growth of 15.2 percent, principally in high quality corporate lending

• Average retail loan growth of 15.2 percent, led by credit card balances, home equity lines and student loans

• Average deposit growth of 12.1 percent over the third quarter of 2007, including:

• Average noninterest-bearing deposits growth of 5.1 percent

• Average total savings deposit growth of 13.6 percent, led by 24.0 percent growth in interest checking balances

• Total deposit growth of $4.4 billion, or 3.2 percent, June 30, 2008, to September 30, 2008

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 2

• Credit costs, as expected, trended higher, but coverage ratios remained strong:

• Provision for credit losses exceeded net charge-offs by $250 million, resulting in provision expense equal to 150 percent of net charge-offs

• Allowance to period-end loans increased to 1.71 percent at September 30, 2008, compared with 1.60 percent at June 30, 2008

• Ratio of nonperforming assets to loans plus other real estate equaled .88 percent at September 30, 2008, well below the ratios posted by our peer banks-to-date

• Regulatory capital ratios remained strong and on target at September 30, 2008, with:

• Tier 1 capital ratio of 8.5 percent

• Total risk-based capital ratio of 12.3 percent

• 89 percent of earnings returned to shareholders in the first nine months of 2008

EARNINGS SUMMARY																	Table 1
($ in millions, except per-share data)							Percent			Percent
							Change			Change
	3Q		2Q		3Q		3Q08 vs			3Q08 vs			YTD		YTD		Percent
	2008		2008		2007		2Q08			3Q07			2008		2007		Change
Net income	$	576	$	950	$	1,096		(39.4	)		(47.4	)	$	2,616	$	3,382		(22.6	)
Diluted earnings per common share		.32		.53		.62		(39.6	)		(48.4	)		1.46		1.89		(22.8	)
Return on average assets (%)		.94		1.58		1.95								1.45		2.04
Return on average common equity (%)		10.8		17.9		21.7								16.6		22.4
Net interest margin (%)		3.65		3.61		3.44								3.60		3.46
Efficiency ratio (%)		48.1		47.5		50.0								46.3		47.9
Tangible efficiency ratio (%) (a)		45.8		45.2		47.3								44.1		45.2
Dividends declared per common share	$	.425	$	.425	$	.400		—			6.3		$	1.275	$	1.200		6.3
Book value per common share (period-end)		11.50		11.67		11.41		(1.5	)		.8

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

     U.S. Bancorp reported net income of $576 million for the third quarter of 2008, compared with $1,096 million for the third quarter of 2007. Diluted earnings per common share of $.32 in the third quarter of 2008 were lower than the same period of 2007 by 48.4 percent, or $.30 per diluted common share. Return on average assets and return on average common equity were .94 percent and 10.8 percent, respectively, for the third quarter of 2008, compared with returns of 1.95 percent and 21.7 percent, respectively, for the third

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 3

quarter of 2007. Challenging market conditions impacted the third quarter of 2008 results. Significant items included in the third quarter of 2008 results were $411 million of securities losses, which included valuation impairments of structured investment securities, perpetual preferred stock, including the stock of government sponsored enterprises (“GSEs”), and certain non-agency mortgage-backed securities. In addition, the Company recorded other market valuation losses related to the bankruptcy of an investment banking firm and continued to build the allowance for credit losses by recording $250 million of provision for credit losses expense in excess of net charge-offs. These items reduced earnings per diluted common share by approximately $.28. The Company’s results for the second quarter of 2008 were also affected by similar items, including 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 second quarter of 2008 earnings per diluted common share by approximately $.11.

     U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis said, “U.S. Bancorp’s third quarter results reflected the underlying strength of our banking franchise and business model, as well as the challenges presented to us by the current operating environment. Strong year-over-year growth in average loans and deposits, an expanded net interest margin and higher fee-based revenue, demonstrated our ability – and on-going opportunity – to provide banking products and services to our growing customer base. Although the Company’s fundamental performance was solid, earnings per diluted common share of $.32 were lower than both the previous quarter of 2008 and the same quarter of 2007, as current market conditions led to valuation losses on certain investments and higher credit costs.

     “Throughout the quarter, our business lines remained focused on revenue growth initiatives, while continuing to prudently manage risk. An expansion of the net interest margin to 3.65 percent, along with strong earning asset growth, resulted in a 16.7 percent increase in net interest income over the third quarter of 2007. Our fee-based products also posted strong growth, led by commercial products revenue, treasury management fees and payments-related revenue. This year-over-year growth in loans, deposits and fees specifically points to the successful implementation of a number of revenue growth initiatives, in addition to the Company’s ability to attract new business. We continue to be viewed as a strong and stable banking partner.

     “As expected, credit costs were higher this quarter, reflecting stress in the residential mortgage portfolio and residential homebuilding and related businesses, as well as the overall economy. Net charge-

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 4

offs of $498 million were higher than the previous quarter by 25.8 percent and equal to 1.19 percent of average loans outstanding. Nonperforming assets ended the quarter at $1,492 million, an increase of 31.5 percent over the second quarter of this year, and equal to .88 percent of outstanding loans plus other real estate. Consistent with the prior two quarters, the Company recorded incremental provision for credit losses. This $250 million incremental provision increased the allowance to period-end loans coverage to 1.71 percent at September 30, 2008. Given the current economic conditions, providing for credit losses over and above net charge-offs is prudent. We began this credit cycle with a strong balance sheet and we intend to keep that balance sheet strong throughout, and beyond, the end of this cycle. Credit costs will continue to increase in the coming quarter, but we expect that increase to be manageable given the Company’s capacity to produce solid, core operating earnings.

     “During September, we publicly disclosed that the Company’s third quarter results would include valuation impairments related to certain structured investment securities and the perpetual preferred stock of two government sponsored enterprises. The Company’s results for the quarter included the losses as presented in September, along with additional write-downs related to events that took place subsequent to that disclosure, including a bankruptcy and certain financial institution failures. In total, these market-related losses reduced third quarter earnings per diluted common share by $.18.

     “Our capital position remains strong. The Company’s Tier 1 capital ratio at September 30, 2008, was 8.5 percent, on target and equal to the ratio at the end of the second quarter. Our strong capital position has enabled us to grow our businesses, while still returning a substantial portion of our earnings to shareholders, primarily through dividends. Year-to-date, we have returned 89 percent of earnings to shareholders.

     “Finally, I want to take a moment to thank all of our employees for their exceptional effort and dedication during this past year. These historic times have presented challenges, but they have also given our employees the opportunity to focus on building deeper relationships with our customers, serving our communities and creating value for our shareholders. Our employees have embraced this opportunity and are now, and will be, a critical component in our ability to grow, prosper and meet the challenges of the future. Our 54,000 employees are engaged, focused and dedicated to maintaining and enhancing U.S. Bancorp’s position of strength within our markets and the financial services industry.”

     The Company’s net income for the third quarter of 2008 decreased by $520 million (47.4 percent) from the same period of 2007. The reduction in net income year-over-year was the result of strong growth in net interest income (16.7 percent), offset by securities impairments and an increase in the provision for credit

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 5

losses. On a linked quarter basis, net income declined by $374 million (39.4 percent), as strong growth in net interest income was offset by securities impairments and higher credit costs during the quarter.

     Total net revenue on a taxable-equivalent basis for the third quarter of 2008 was $3,379 million, $183 million (5.1 percent) lower than the third quarter of 2007, reflecting a 16.7 percent increase in net interest income and a 24.8 percent decrease in noninterest income. The increase in net interest income year-over-year (16.7 percent) and on a linked quarter basis (3.1 percent, 12.4 percent annualized) was driven by growth in average earning assets and an improvement in the net interest margin. Noninterest income declined from a year ago and on a linked quarter basis, as strong growth in the majority of revenue categories was offset by securities impairments, other market valuation losses and higher retail lease residual losses.

     Total noninterest expense in the third quarter of 2008 was $1,823 million, $47 million (2.6 percent) higher than the third quarter of 2007, and $12 million (.7 percent) lower 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 acquisitions and investments in relationship managers, branch initiatives and Payment Services’ businesses. The increase was partially offset by the impact of a $115 million charge recognized in the third quarter of 2007 related to Visa, Inc.’s settlement with American Express (“Visa Charge”). 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 was relatively flat as increases due to a bank acquisition, higher occupancy and equipment expense, outside data processing costs and the impact of marketing and business development campaigns were offset by lower merchant processing expense, costs related to other real estate owned, employee benefits expense and ongoing prudent expense control.

     The provision for credit losses for the third quarter of 2008 was $748 million, an increase of $152 million over the second quarter of 2008 and $549 million over the third quarter of 2007. This represented an incremental increase of $250 million over net charge-offs in the third quarter of 2008 and $200 million in the second quarter of 2008. The increase in the provision for credit losses from a year ago reflected continuing stress in the residential real estate markets, as well as homebuilding and related 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 third quarter of 2008 were $498 million, compared with net charge-offs of $396 million in the second quarter of 2008 and $199 million in the third quarter of 2007. Given current economic conditions and the continuing decline in

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 6

home and other collateral values, the Company expects net charge-offs to increase in the fourth quarter of 2008. Total nonperforming assets were $1,492 million at September 30, 2008, compared with $1,135 million at June 30, 2008, and $641 million at September 30, 2007. Nonperforming assets increased $357 million (31.5 percent) during the third quarter of 2008 over the second quarter of 2008 as a result of stress in residential home construction and related industries, as well as the residential mortgage portfolio, an increase in foreclosed properties and the impact of the economic slowdown on other commercial customers. The ratio of the allowance for credit losses to nonperforming loans was 222 percent at September 30, 2008, compared with 273 percent at June 30, 2008, and 441 percent at September 30, 2007.

INCOME STATEMENT HIGHLIGHTS																	Table 2
(Taxable-equivalent basis, $ in millions, except per-share data)
							Percent			Percent
							Change			Change
	3Q		2Q		3Q		3Q08 vs			3Q08 vs			YTD		YTD		Percent
	2008		2008		2007		2Q08			3Q07			2008		2007		Change
Net interest income	$	1,967	$	1,908	$	1,685		3.1			16.7		$	5,705	$	5,001		14.1
Noninterest income		1,412		1,892		1,877		(25.4	)		(24.8	)		5,348		5,485		(2.5	)
Total net revenue		3,379		3,800		3,562		(11.1	)		(5.1	)		11,053		10,486		5.4
Noninterest expense		1,823		1,835		1,776		(.7	)		2.6			5,454		5,018		8.7
Income before provision and taxes		1,556		1,965		1,786		(20.8	)		(12.9	)		5,599		5,468		2.4
Provision for credit losses		748		596		199		25.5		nm				1,829		567	nm
Income before taxes		808		1,369		1,587		(41.0	)		(49.1	)		3,770		4,901		(23.1	)
Taxable-equivalent adjustment		34		33		18		3.0			88.9			94		53		77.4
Applicable income taxes		198		386		473		(48.7	)		(58.1	)		1,060		1,466		(27.7	)
Net income	$	576	$	950	$	1,096		(39.4	)		(47.4	)	$	2,616	$	3,382		(22.6	)
Net income applicable to common equity	$	557	$	928	$	1,081		(40.0	)		(48.5	)	$	2,563	$	3,337		(23.2	)
Diluted earnings per common share	$	.32	$	.53	$	.62		(39.6	)		(48.4	)	$	1.46	$	1.89		(22.8	)

Net Interest Income

     Third quarter net interest income on a taxable-equivalent basis was $1,967 million, compared with $1,685 million in the third quarter of 2007, an increase of $282 million (16.7 percent). The increase was due to strong growth in average earning assets as well as an improved net interest margin over a year ago. Average earning assets for the period increased over the third quarter of 2007 by $20.1 billion (10.3 percent), primarily driven by an increase of $19.0 billion (12.9 percent) in average loans and $1.4 billion (3.5 percent) in average investment securities. During the third quarter of 2008, the net interest margin increased to 3.65 percent compared with 3.44 percent in the third quarter of 2007. The improvement in the net interest margin

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 7

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 repricing dynamics. Also, given current market conditions, short-term funding rates were lower due to volatility and changing liquidity in the overnight fed funds markets.

     Net interest income increased by $59 million (3.1 percent) over the prior quarter of 2008. This favorable variance was due to growth in average earning assets of $2.9 billion (1.4 percent) and an increase in the net interest margin from 3.61 percent in the second quarter of 2008 to 3.65 percent in the current quarter.

NET INTEREST INCOME																						Table 3
(Taxable-equivalent basis; $ in millions)
										Change			Change
	3Q			2Q			3Q			3Q08 vs			3Q08 vs			YTD			YTD
	2008			2008			2007			2Q08			3Q07			2008			2007			Change
Components of net interest income
Income on earning assets	$	3,110		$	3,067		$	3,379		$	43		$	(269	)	$	9,435		$	9,878		$	(443	)
Expense on interest-bearing liabilities		1,143			1,159			1,694			(16	)		(551	)		3,730			4,877			(1,147	)
Net interest income	$	1,967		$	1,908		$	1,685		$	59		$	282		$	5,705		$	5,001		$	704
Average yields and rates paid
Earning assets yield		5.77	%		5.81	%		6.90	%		(.04	)%		(1.13	)%		5.96	%		6.85	%		(.89	)%
Rate paid on interest-bearing liabilities		2.45			2.53			4.01			(.08	)		(1.56	)		2.72			3.95			(1.23	)
Gross interest margin		3.32	%		3.28	%		2.89	%		.04	%		.43	%		3.24	%		2.90	%		.34	%
Net interest margin		3.65	%		3.61	%		3.44	%		.04	%		.21	%		3.60	%		3.46	%		.14	%
Average balances
Investment securities	$	42,548		$	42,999		$	41,128		$	(451	)	$	1,420		$	43,144		$	40,904		$	2,240
Loans		166,560			163,070			147,517			3,490			19,043			161,639			145,965			15,674
Earning assets		214,973			212,089			194,886			2,884			20,087			211,372			192,788			18,584
Interest-bearing liabilities		185,494			183,855			167,805			1,639			17,689			182,943			165,240			17,703
Net free funds (a)		29,479			28,234			27,081			1,245			2,398			28,429			27,548			881

(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 Third Quarter 2008 Results
October 21, 2008
Page 8

AVERAGE LOANS																	Table 4
($ in millions)
							Percent			Percent
							Change			Change
	3Q		2Q		3Q		3Q08 vs			3Q08 vs			YTD		YTD		Percent
	2008		2008		2007		2Q08			3Q07			2008		2007		Change
Commercial	$	48,137	$	47,648	$	41,648		1.0			15.6		$	47,089	$	41,560		13.3
Lease financing		6,436		6,331		5,742		1.7			12.1			6,336		5,640		12.3
Total commercial		54,573		53,979		47,390		1.1			15.2			53,425		47,200		13.2
Commercial mortgages		22,302		21,192		19,592		5.2			13.8			21,281		19,608		8.5
Construction and development		9,446		9,281		8,870		1.8			6.5			9,309		8,928		4.3
Total commercial real estate		31,748		30,473		28,462		4.2			11.5			30,590		28,536		7.2
Residential mortgages		23,309		23,307		22,258		—			4.7			23,198		21,888		6.0
Credit card		12,217		11,559		9,895		5.7			23.5			11,611		9,221		25.9
Retail leasing		5,200		5,523		6,424		(5.8	)		(19.1	)		5,507		6,643		(17.1	)
Home equity and second mortgages		17,858		17,106		16,048		4.4			11.3			17,166		15,781		8.8
Other retail		21,655		21,123		17,040		2.5			27.1			20,142		16,696		20.6
Total retail		56,930		55,311		49,407		2.9			15.2			54,426		48,341		12.6
Total loans	$	166,560	$	163,070	$	147,517		2.1			12.9		$	161,639	$	145,965		10.7

     Average loans for the third quarter of 2008 were $19.0 billion (12.9 percent) higher than the third quarter of 2007, driven by growth in the majority of loan categories. This included growth in average total retail loans of $7.5 billion (15.2 percent), total commercial loans of $7.2 billion (15.2 percent), total commercial real estate loans of $3.3 billion (11.5 percent) and residential mortgages of $1.1 billion (4.7 percent). Retail loan growth for the third quarter of 2008 over the third quarter of 2007 included a $3.4 billion increase in federally guaranteed student loan balances due to both the transfer of balances from loans held for sale and a portfolio purchase earlier in 2008. Average loans for the third quarter of 2008 were higher than the second quarter of 2008 by $3.5 billion (2.1 percent), again reflecting growth in the majority of loan categories. Total commercial loans grew by $594 million (1.1 percent) in the third quarter of 2008 over the second quarter of 2008, driven by increases in corporate and commercial banking balances as business customers utilize bank credit facilities, rather than the capital markets, to fund business growth and liquidity requirements. Total commercial real estate loans also increased $1.3 billion (4.2 percent) over the second quarter of 2008, reflecting the acquisition of Mellon 1^st Business Bank late in the second quarter of 2008, as well as new business growth. Consumer lending continues to experience strong growth in installment products, home equity lines and credit card balances.

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 9

     Average investment securities in the third quarter of 2008 were $1.4 billion (3.5 percent) higher than the third 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 and government agency securities. Average investment securities declined by $451 million (1.0 percent) from the second quarter of 2008, due to reductions in mortgage-backed and other asset-backed securities including the impact of impairments.

AVERAGE DEPOSITS																	Table 5
($ in millions)
							Percent			Percent
							Change			Change
	3Q		2Q		3Q		3Q08 vs			3Q08 vs			YTD		YTD		Percent
	2008		2008		2007		2Q08			3Q07			2008		2007		Change
Noninterest-bearing deposits	$	28,322	$	27,851	$	26,947		1.7			5.1		$	27,766	$	27,531		.9
Interest-bearing savings deposits
Interest checking		32,304		32,479		26,052		(.5	)		24.0			31,697		25,666		23.5
Money market savings		26,167		26,426		25,018		(1.0	)		4.6			26,062		25,108		3.8
Savings accounts		5,531		5,377		5,283		2.9			4.7			5,348		5,375		(.5	)
Total of savings deposits		64,002		64,282		56,353		(.4	)		13.6			63,107		56,149		12.4
Time certificates of deposit less than $100,000		12,669		12,635		14,590		.3			(13.2	)		12,969		14,693		(11.7	)
Time deposits greater than $100,000		28,546		31,041		21,255		(8.0	)		34.3			29,560		21,237		39.2
Total interest-bearing deposits		105,217		107,958		92,198		(2.5	)		14.1			105,636		92,079		14.7
Total deposits	$	133,539	$	135,809	$	119,145		(1.7	)		12.1		$	133,402	$	119,610		11.5

     Average total deposits for the third quarter of 2008 increased $14.4 billion (12.1 percent) over the third quarter of 2007. Noninterest-bearing deposits increased $1.4 billion (5.1 percent) due primarily to Wealth Management & Security Services and Wholesale Banking, which included the impact of the Mellon 1^st Business Bank acquisition. Average total savings deposits increased year-over-year by $7.6 billion (13.6 percent) due to a $6.3 billion increase (24.0 percent) in interest checking balances, primarily the result of higher broker-dealer and institutional trust balances, a $1.1 billion increase (4.6 percent) in money market savings balances driven by higher balances from broker-dealers, Consumer Banking and Mellon 1^st Business Bank customers, and a modest increase in savings accounts balances. Average time certificates of deposit less than $100,000 were lower in the third quarter of 2008 than in the third quarter of 2007 by $1.9 billion (13.2 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

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 10

market environment. Time deposits greater than $100,000 increased by $7.3 billion (34.3 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 current market conditions.

     Average noninterest-bearing deposits for the third quarter of 2008 increased $471 million (1.7 percent) over the second quarter of 2008 due primarily to increases in business demand deposits, including the impact of the Mellon 1^st Business Bank acquisition, partially offset by a seasonal decline in government deposits. Total average savings deposits declined modestly by $280 million (.4 percent) from the second quarter of 2008, as an increase in savings accounts balances was offset by declines in interest checking and money market accounts. The declines in interest checking and money market balances were primarily due to seasonally lower corporate trust balances and a reduction in government deposits, partially offset by the impact of the acquisition. Average time certificates less than $100,000 were slightly higher than the prior quarter, while average time deposits greater than $100,000 decreased by $2.5 billion (8.0 percent) from the prior quarter, primarily due to wholesale funding decisions. Total deposits were $139.5 billion at September 30, 2008 an increase of $4.4 billion (3.2 percent, 12.8 percent annualized) from June 30, 2008. This increase was driven by growth in Consumer Banking, Wealth Management & Securities Services and Wholesale Banking, as well as wholesale funding decisions.

NONINTEREST INCOME																				Table 6
($ in millions)
									Percent			Percent
									Change			Change
	3Q			2Q			3Q		3Q08 vs			3Q08 vs			YTD			YTD		Percent
	2008			2008			2007		2Q08			3Q07			2008			2007		Change
Credit and debit card revenue	$	269		$	266		$	237		1.1			13.5		$	783		$	673		16.3
Corporate payment products revenue		179			174			166		2.9			7.8			517			472		9.5
ATM processing services		94			93			84		1.1			11.9			271			243		11.5
Merchant processing services		300			309			289		(2.9	)		3.8			880			827		6.4
Trust and investment management fees		329			350			331		(6.0	)		(.6	)		1,014			995		1.9
Deposit service charges		286			278			276		2.9			3.6			821			800		2.6
Treasury management fees		128			137			118		(6.6	)		8.5			389			355		9.6
Commercial products revenue		132			117			107		12.8			23.4			361			312		15.7
Mortgage banking revenue		61			81			76		(24.7	)		(19.7	)		247			211		17.1
Investment products fees and commissions		37			37			36		—			2.8			110			108		1.9
Securities gains (losses), net		(411	)		(63	)		7	nm			nm				(725	)		11	nm
Other		8			113			150		(92.9	)		(94.7	)		680			478		42.3
Total noninterest income	$	1,412		$	1,892		$	1,877		(25.4	)		(24.8	)	$	5,348		$	5,485		(2.5	)

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 11

Noninterest Income

     Third quarter noninterest income was $1,412 million, $465 million (24.8 percent) lower than the same quarter of 2007 and $480 million (25.4 percent) lower than the second quarter of 2008. Noninterest income declined from the third quarter of 2007, as strong fee-based revenue growth in a majority of revenue categories was offset by impairment charges related to structured investment securities, perpetual preferred stock, including the stock of GSEs, and certain non-agency mortgage-backed securities. In addition, retail lease residual losses increased from a year ago. Credit and debit card revenue, corporate payment products revenue, ATM processing services and merchant processing services were higher in the third quarter of 2008 than the same period of 2007 by $32 million (13.5 percent), $13 million (7.8 percent), $10 million (11.9 percent) and $11 million (3.8 percent), respectively. The strong growth in credit and debit card revenue was primarily driven by an increase in customer accounts and higher customer transaction volumes over the prior year quarter. Corporate payment products revenue growth reflected growth in sales volumes and business expansion. The ATM processing services increase was also due to growth in transaction volumes. Merchant processing services revenue was higher in the third quarter of 2008 than the same period of 2007 due to higher transaction volume and business expansion. Deposit service charges increased $10 million (3.6 percent) year-over-year, primarily due to account growth and higher transaction-related fees. Treasury management fees increased $10 million (8.5 percent), due primarily to the favorable impact of declining rates on customer earnings credits and account growth. Commercial products revenue increased $25 million (23.4 percent) year-over-year due to higher customer syndication fees, letters of credit, capital markets and other commercial loan fees. Mortgage banking revenue decreased $15 million (19.7 percent) due to an unfavorable net change in the valuation of mortgage servicing rights (“MSRs”) and related economic hedging activities, partially offset by increases in mortgage servicing income and production revenue. Net securities gains (losses) were lower than a year ago by $418 million due to the impact of impairment charges on various investment securities. Other income declined $142 million year-over-year, due to the adverse impact of higher retail lease residual losses, lower equity investment revenue and market valuation losses related to the bankruptcy of an investment banking firm.

     Noninterest income was lower by $480 million (25.4 percent) in the third quarter of 2008 than the second quarter of 2008, reflecting the unfavorable variance in net securities losses and higher retail lease residual losses. Credit and debit card revenue increased $3 million (1.1 percent) and corporate payment

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 12

products revenue increased $5 million (2.9 percent) due to higher transaction volumes. Deposit service charges increased $8 million (2.9 percent) due to account growth and more business days in the current quarter. Commercial products revenue increased over the second quarter of 2008 by $15 million (12.8 percent) due to higher syndication fees, stand-by letter of credit fees and foreign exchange revenue, partially offset by lower commercial leasing gains. These increases were offset by the several unfavorable variances. Merchant processing services revenue was lower in the third quarter of 2008 compared with the second quarter of 2008 by $9 million (2.9 percent) due to lower same store volumes and a change in the volume mix to business sectors with narrower processing margins. Trust and investment management fees decreased $21 million (6.0 percent) on a linked quarter basis due to seasonally higher second quarter tax filing fees and the impact of unfavorable equity market conditions. Treasury management fees decreased by $9 million (6.6 percent) on a linked quarter basis due primarily to seasonally higher government lock box activity in the second quarter. Mortgage banking revenue decreased by $20 million (24.7 percent) from the second quarter of 2008 due primarily to lower production income, partially offset by an increase in servicing revenue. The fair value of MSRs net of economic hedging activity remained relatively flat on a linked quarter basis. Net securities losses reflected a $348 million unfavorable variance on a linked quarter basis, due to higher impairment charges recorded on investment securities. Other income was lower on a linked quarter basis due to higher retail lease residual losses, lower equity investment revenue and market valuation losses, including derivatives write-offs.

NONINTEREST EXPENSE																	Table 7
($ in millions)
							Percent			Percent
							Change			Change
	3Q		2Q		3Q		3Q08 vs			3Q08 vs			YTD		YTD		Percent
	2008		2008		2007		2Q08			3Q07			2008		2007		Change
Compensation	$	763	$	761	$	656		.3			16.3		$	2,269	$	1,950		16.4
Employee benefits		125		129		119		(3.1	)		5.0			391		375		4.3
Net occupancy and equipment		199		190		189		4.7			5.3			579		550		5.3
Professional services		61		59		56		3.4			8.9			167		162		3.1
Marketing and business development		75		66		71		13.6			5.6			220		191		15.2
Technology and communications		153		149		140		2.7			9.3			442		413		7.0
Postage, printing and supplies		73		73		70		—			4.3			217		210		3.3
Other intangibles		88		87		94		1.1			(6.4	)		262		283		(7.4	)
Other		286		321		381		(10.9	)		(24.9	)		907		884		2.6
Total noninterest expense	$	1,823	$	1,835	$	1,776		(.7	)		2.6		$	5,454	$	5,018		8.7

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 13

Noninterest Expense

     Third quarter noninterest expense totaled $1,823 million, an increase of $47 million (2.6 percent) over the same quarter of 2007 and a decrease of $12 million (.7 percent) from the second quarter of 2008. Compensation expense increased $107 million (16.3 percent) over the same period of 2007 due to growth in ongoing bank operations, acquired businesses and other bank initiatives and the adoption of Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”). Under this new accounting standard, compensation expense is no longer deferred for origination of mortgage loans held for sale. Employee benefits expense increased $6 million (5.0 percent) year-over-year as higher payroll taxes and medical costs were partially offset by lower pension costs. Net occupancy and equipment expense increased $10 million (5.3 percent) over the third quarter of 2007, primarily due to acquisitions, as well as branch-based and other business expansion initiatives. Professional services expense increased $5 million (8.9 percent) from the third quarter of 2007 due to increased litigation related costs. Marketing and business development expense increased $4 million (5.6 percent) year-over-year due to the timing of Consumer Banking product marketing programs and a national advertising campaign. Technology and communications expense increased $13 million (9.3 percent) year-over-year, primarily due to increased processing volumes and business expansion. These increases were partially offset by decreases in other intangibles expense of $6 million (6.4 percent) and other expense of $95 million (24.9 percent), due primarily to the $115 million Visa Charge recognized in the third quarter of 2007.

     Noninterest expense in the third quarter of 2008 was relatively flat compared with the second quarter of 2008. Other expense decreased by $35 million (10.9 percent) from the second quarter of 2008 due to lower merchant processing costs and a reduction in credit-related costs for other real estate owned. Employee benefits expense decreased $4 million (3.1 percent) on a linked quarter basis due to lower employee recruitment expense, payroll taxes and other benefits. These favorable variances were offset by increases in net occupancy and equipment expense due to business expansion and other initiatives, marketing and business development expense due primarily to the national advertising campaign, and technology and communication expense due to increased volumes and the impact of an acquisition.

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 14

Provision for Income Taxes

     The provision for income taxes for the third quarter of 2008 resulted in a tax rate on a taxable-equivalent basis of 28.7 percent (effective tax rate of 25.6 percent) compared with 30.9 percent (effective tax rate of 30.1 percent) in the third quarter of 2007 and 30.6 percent (effective tax rate of 28.9 percent) in the second quarter of 2008.

ALLOWANCE FOR CREDIT LOSSES	Table 8
($ in millions)
	3Q		2Q		1Q			4Q		3Q
	2008		2008		2008			2007		2007
Balance, beginning of period	$	2,648	$	2,435	$	2,260		$	2,260	$	2,260
Net charge-offs
Commercial		57		51		39			23		26
Lease financing		22		18		16			13		11
Total commercial		79		69		55			36		37
Commercial mortgages		9		6		4			3		1
Construction and development		56		12		8			7		1
Total commercial real estate		65		18		12			10		2
Residential mortgages		71		53		26			17		17
Credit card		149		139		108			88		77
Retail leasing		9		8		7			6		3
Home equity and second mortgages		48		48		30			22		20
Other retail		77		61		55			46		43
Total retail		283		256		200			162		143
Total net charge-offs		498		396		293			225		199
Provision for credit losses		748		596		485			225		199
Acquisitions and other changes		—		13		(17	)		—		—
Balance, end of period	$	2,898	$	2,648	$	2,435		$	2,260	$	2,260
Components
Allowance for loan losses	$	2,767	$	2,518	$	2,251		$	2,058	$	2,041
Liability for unfunded credit commitments		131		130		184			202		219
Total allowance for credit losses	$	2,898	$	2,648	$	2,435		$	2,260	$	2,260
Gross charge-offs	$	544	$	439	$	348		$	287	$	256
Gross recoveries	$	46	$	43	$	55		$	62	$	57
Allowance for credit losses as a percentage of Period-end loans		1.71		1.60		1.54			1.47		1.52
Nonperforming loans		222		273		358			406		441
Nonperforming assets		194		233		288			328		353

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 15

Credit Quality

     During the third quarter of 2008, credit losses and nonperforming assets continued to trend higher. The allowance for credit losses was $2,898 million at September 30, 2008, compared with $2,648 million at June 30, 2008, and $2,260 million at September 30, 2007. As a result of the continued stress in the residential housing markets, homebuilding and related industry sectors, and growth of the loan portfolios, the Company has increased the allowance for credit losses by $638 million during 2008. The credit stress is being reflected in higher delinquencies, nonperforming asset levels and net charge-offs relative to a year ago and the second quarter of 2008. Total net charge-offs in the third quarter of 2008 were $498 million, compared with the second quarter of 2008 net charge-offs of $396 million and the third quarter of 2007 net charge-offs of $199 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 homebuilding and related industries, 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 $144 million in the third quarter of 2008 (.66 percent of average loans outstanding) compared with $87 million (.41 percent of average loans outstanding) in the second quarter of 2008 and $39 million (.20 percent of average loans outstanding) in the third quarter of 2007. This increasing trend in commercial and commercial real estate losses reflected the continuing stress within the portfolios, especially residential homebuilding and related industry sectors.

     Residential mortgage loan net charge-offs increased to $71 million in the third quarter of 2008 (1.21 percent of average loans outstanding) compared with $53 million (.91 percent of average loans outstanding) in the second quarter of 2008 and $17 million (.30 percent of average loans outstanding) in the third 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 $283 million (1.98 percent of average loans outstanding) in the third quarter of 2008 compared with $256 million (1.86 percent of average loans outstanding) in the second quarter of 2008 and $143 million (1.15 percent of average loans outstanding) in the third quarter of 2007. The increased retail loan credit losses reflected the Company’s growth in credit card and consumer loan balances, as well as the adverse impact of current economic conditions on consumers.

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 16

     The ratio of the allowance for credit losses to period-end loans was 1.71 percent at September 30, 2008, compared with 1.60 percent at June 30, 2008, and 1.52 percent at September 30, 2007. The ratio of the allowance for credit losses to nonperforming loans was 222 percent at September 30, 2008, compared with 273 percent at June 30, 2008, and 441 percent at September 30, 2007.

CREDIT RATIOS									Table 9
(Percent)
	3Q		2Q		1Q		4Q		3Q
	2008		2008		2008		2007		2007
Net charge-offs ratios (a)
Commercial		.47		.43		.34		.21		.25
Lease financing		1.36		1.14		1.03		.86		.76
Total commercial		.58		.51		.43		.29		.31
Commercial mortgages		.16		.11		.08		.06		.02
Construction and development		2.36		.52		.35		.31		.04
Total commercial real estate		.81		.24		.16		.14		.03
Residential mortgages		1.21		.91		.46		.30		.30
Credit card		4.85		4.84		3.93		3.29		3.09
Retail leasing		.69		.58		.49		.39		.19
Home equity and second mortgages		1.07		1.13		.73		.53		.49
Other retail		1.41		1.16		1.25		1.05		1.00
Total retail		1.98		1.86		1.58		1.28		1.15
Total net charge-offs		1.19		.98		.76		.59		.54
Delinquent loan ratios - 90 days or more past due excluding nonperforming loans (b)
Commercial		.11		.09		.09		.07		.07
Commercial real estate		.05		.09		.13		.02		.04
Residential mortgages		1.34		1.09		.98		.86		.58
Retail		.68		.63		.69		.68		.55
Total loans		.46		.41		.43		.38		.30
Delinquent loan ratios - 90 days or more past due including nonperforming loans (b)
Commercial		.76		.71		.60		.43		.51
Commercial real estate		2.25		1.57		1.18		1.02		.83
Residential mortgages		2.00		1.55		1.24		1.10		.79
Retail		.81		.74		.77		.73		.61
Total loans		1.23		1.00		.86		.74		.65

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

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 17

ASSET QUALITY									Table 10
($ in millions)
	Sep 30		Jun 30		Mar 31		Dec 31		Sep 30
	2008		2008		2008		2007		2007
Nonperforming loans
Commercial	$	280	$	265	$	201	$	128	$	161
Lease financing		85		75		64		53		46
Total commercial		365		340		265		181		207
Commercial mortgages		164		139		102		84		73
Construction and development		545		326		212		209		153
Total commercial real estate		709		465		314		293		226
Residential mortgages		155		108		59		54		48
Retail		74		58		42		29		32
Total nonperforming loans		1,303		971		680		557		513
Other real estate		164		142		141		111		113
Other nonperforming assets		25		22		24		22		15
Total nonperforming assets (a)	$	1,492	$	1,135	$	845	$	690	$	641
Accruing loans 90 days or more past due	$	787	$	687	$	676	$	584	$	451
Restructured loans that continue to accrue interest	$	1,180	$	1,029	$	695	$	551	$	468
Nonperforming assets to loans plus ORE (%)		.88		.68		.53		.45		.43

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

     Nonperforming assets at September 30, 2008, totaled $1,492 million, compared with $1,135 million at June 30, 2008, and $641 million at September 30, 2007. The ratio of nonperforming assets to loans and other real estate was .88 percent at September 30, 2008, compared with .68 percent at June 30, 2008, and .43 percent at September 30, 2007. The increase in nonperforming assets from a year ago was driven primarily by the residential construction portfolio and related industries, as well as the residential mortgage portfolio, 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 $787 million at September 30, 2008, compared with $687 million at June 30, 2008, and $451 million at September 30, 2007. The year-over-year increase in delinquent loans that continue to accrue interest was primarily related to residential mortgages, credit cards and home equity loans. Restructured loans that continue to accrue interest have also increased from the third quarter of 2007 and the second quarter of 2008, reflecting the impact of restructurings for certain residential mortgage customers in light of current economic conditions. The Company expects this

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 18

trend to continue in the near term as residential home valuations decline and certain borrowers take advantage of the Company’s mortgage loan restructuring programs.

CAPITAL POSITION													Table 11
($ in millions)
	Sep 30			Jun 30			Mar 31			Dec 31			Sep 30
	2008			2008			2008			2007			2007
Total shareholders’ equity	$	21,675		$	21,828		$	21,572		$	21,046		$	20,686
Tier 1 capital		18,877			18,624			18,543			17,539			17,288
Total risk-based capital		27,403			27,502			27,207			25,925			25,820
Tier 1 capital ratio		8.5	%		8.5	%		8.6	%		8.3	%		8.5	%
Total risk-based capital ratio		12.3			12.5			12.6			12.2			12.7
Leverage ratio		8.0			7.9			8.1			7.9			8.0
Common equity to assets		8.2			8.2			8.3			8.4			8.6
Tangible common equity to assets		5.3			5.2			5.3			5.1			5.3

     Total shareholders’ equity was $21.7 billion at September 30, 2008, compared with $21.8 billion at June 30, 2008, and $20.7 billion at September 30, 2007. The Tier 1 capital ratio was 8.5 percent at September 30, 2008, June 30, 2008, and September 30, 2007. The total risk-based capital ratio was 12.3 percent at September 30, 2008, compared with 12.5 percent at June 30, 2008, and 12.7 percent at September 30, 2007. The leverage ratio was 8.0 percent at September 30, 2008, compared with 7.9 percent at June 30, 2008, and 8.0 percent at September 30, 2007. Tangible common equity to assets was 5.3 percent at September 30, 2008, compared with 5.2 percent at June 30, 2008, and 5.3 percent at September 30, 2007. All regulatory ratios continue to be in excess of stated “well-capitalized” requirements. The Company does not plan to buy back shares during the remainder of 2008.

COMMON SHARES										Table 12
(Millions)	3Q		2Q		1Q			4Q		3Q
	2008		2008		2008			2007		2007
Beginning shares outstanding		1,741		1,738		1,728			1,725		1,728
Shares issued for stock option and stock purchase plans, acquisitions and other corporate purposes		13		3		12			3		3
Shares repurchased		—		—		(2	)		—		(6	)
Ending shares outstanding		1,754		1,741		1,738			1,728		1,725

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 19

LINE OF BUSINESS FINANCIAL PERFORMANCE (a)																									Table 13
($ in millions)
	Net Income									Percent Change															3Q 2008
	3Q			2Q			3Q			3Q08 vs			3Q08 vs			YTD			YTD			Percent			Earnings
Business Line	2008			2008			2007			2Q08			3Q07			2008			2007			Change			Composition
Wholesale Banking	$	237		$	254		$	265			(6.7	)		(10.6	)	$	746		$	809			(7.8	)		41	%
Consumer Banking		272			324			471			(16.0	)		(42.3	)		983			1,405			(30.0	)		47
Wealth Management & Securities Services		116			149			151			(22.1	)		(23.2	)		411			447			(8.1	)		20
Payment Services		269			277			274			(2.9	)		(1.8	)		828			757			9.4			47
Treasury and Corporate Support		(318	)		(54	)		(65	)	nm			nm				(352	)		(36	)	nm				(55	)
Consolidated Company	$	576		$	950		$	1,096			(39.4	)		(47.4	)	$	2,616		$	3,382			(22.6	)		100	%
(a) preliminary data

Lines of Business

     Within the Company, financial performance is measured by major lines of business, which include Wholesale Banking, Consumer Banking, 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 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 $237 million of the Company’s net income in the third quarter of 2008, a 10.6 percent decrease from the same period of 2007 and a 6.7 percent decrease from the second quarter of 2008. Stronger net interest income year-over-year and an increase in fee-based revenue were offset by securities valuation losses due to adverse market conditions and an increase in total noninterest expense, driven primarily by the

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 20

Mellon 1^st Business Bank acquisition. Net interest income increased $50 million year-over-year due to strong growth in average earning assets and deposits, partially offset by declining loan rates and a decrease in the margin benefit of deposits. Total noninterest income increased $9 million (4.4 percent) as growth in treasury management, letter of credit, commercial loan and foreign exchange fees was partially offset by securities valuation losses and lower earnings from equity investments. Total noninterest expense increased by $20 million (8.4 percent) over a year ago, primarily due to higher compensation and employee benefits expense related to merit increases and the impact of an acquisition and other business initiatives. The provision for credit losses increased $83 million due to continued credit deterioration in the homebuilding and commercial home supplier industries.

     Wholesale Banking’s contribution to net income in the third quarter of 2008 was $17 million (6.7 percent) lower compared with the second quarter of 2008. Growth in total net revenue (1.5 percent) and modestly lower total noninterest expense (1.9 percent) were offset by a $43 million increase in the provision for credit losses, due to higher net charge-offs. Total net revenue was higher on a linked quarter basis due to an increase in net interest income (5.2 percent), partially offset by lower total noninterest income (6.1 percent). The increase in net interest income was due primarily to growth in average loan balances, partially offset by the effect of asset repricing. Total noninterest income decreased on a linked quarter basis due primarily to lower equity investment income, including an investment in a commercial real estate business. Total noninterest expense decreased $5 million (1.9 percent) due to lower processing costs impacted by higher second quarter of 2008 government lock box volume. The provision for credit losses increased due to higher net charge-offs principally related to 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 $272 million of the Company’s net income in the third quarter of 2008, a 42.3 percent decrease from the same period of 2007 and a 16.0 percent decrease from the prior quarter. Within Consumer Banking, the retail banking division accounted for $241 million of the total contribution, a 44.9 percent decrease on a year-over-year basis and a 17.2 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

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 21

banking division declined year-over-year as increases in average loan balances and yield-related loan fees were 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 16.1 percent from a year ago due to lower retail lease revenue related to higher retail lease residual losses, partially offset by growth in revenue from ATM processing services and higher deposit service charges. Total noninterest expense in the third quarter of 2008 increased 8.2 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 $120 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 third quarter of 2008, the mortgage banking division’s contribution was $31 million, a $3 million (8.8 percent) decrease from the same period of 2007. The decrease in the mortgage banking division’s contribution was a result of higher total noninterest expense and provision for credit losses, partially offset by higher total net revenue. The division’s total net revenue increased by $27 million (25.7 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 MSRs and related economic hedging activities. As a result of higher rates and increased loan production, net interest income increased $38 million as average mortgage loans and mortgage loans held for sale increased over a year ago. Total 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 $26 million (51.0 percent) over the third quarter of 2007, primarily due to the impact of the adoption of SFAS 157 on compensation expense, higher production levels from a year ago and servicing costs associated with other real estate owned and foreclosures.

     Consumer Banking’s contribution in the third quarter of 2008 decreased $52 million (16.0 percent) compared with the second quarter of 2008. The retail banking division’s contribution decreased 17.2 percent on a linked quarter basis, driven primarily by an increase in the provision for credit losses and higher retail lease residual losses. Total net revenue for the retail banking division decreased $24 million (1.8 percent) due to lower total noninterest income, partially offset by higher net interest income. Net interest income increased by 2.7 percent on a linked quarter basis due to the favorable impact of growth in average loan

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 22

balances and loan fees. The decrease in total noninterest income was driven by higher retail lease residual losses, partially offset by higher deposit service charges. Total noninterest expense for the retail banking division increased $15 million (2.1 percent) on a linked quarter basis. This increase was due to higher compensation and employee benefits expense due to the branch expansion, higher processing costs and the timing of marketing programs. The provision for credit losses for the division reflected a $40 million increase in net charge-offs compared with the second quarter of 2008, reflecting higher consumer delinquencies. The contribution of the mortgage banking division decreased $2 million from the second quarter of 2008, driven primarily by lower total net revenue. Total net revenue decreased by 7.7 percent principally due to lower production revenue, partially offset by higher servicing income. The valuation of MSRs and related economic hedging activities was relatively flat on a linked quarter basis. Total noninterest expense in the mortgage banking division decreased $4 million (4.9 percent) from the second quarter of 2008. In addition, the mortgage banking division’s provision for credit losses declined $3 million on a linked quarter basis.

     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 $116 million of the Company’s net income in the third quarter of 2008, a 23.2 percent decrease compared with the same period of 2007 and a 22.1 percent decrease from the second quarter of 2008. Total net revenue year-over-year decreased $38 million (7.8 percent) as net interest income declined by $7 million (5.8 percent) due primarily to the lower margin benefit of deposits while total noninterest income declined by $31 million (8.5 percent) due to the impact of unfavorable equity market conditions compared with a year ago, partially offset by core account growth. Total noninterest expense was 6.5 percent higher compared with the same quarter of 2007, primarily due to higher compensation and employee benefits expense and legal related costs, partially offset by lower other intangibles expense.

     The decrease in the business line’s contribution in the third quarter of 2008 compared with the linked quarter was primarily due to the unfavorable impact of equity market conditions on fees and seasonally higher tax filing fees in the second quarter of 2008. This decrease was partially offset by higher net interest income.

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 23

     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 $269 million of the Company’s net income in the third quarter of 2008, a decrease of 1.8 percent from the same period of 2007 and a 2.9 percent decrease compared with the second quarter of 2008. The decline year-over-year was due primarily to an increase in the provision for credit losses driven by an increase in net charge-offs of $86 million which reflected credit card portfolio growth, higher delinquency rates and changing economic conditions from a year ago. In addition, total noninterest expense increased $36 million (9.8 percent) year-over-year, primarily due to business expansion and increased transaction processing costs. These unfavorable variances were partially offset by an increase in total net revenue year-over-year due to higher net interest income (28.6 percent) and total noninterest income (8.4 percent). Net interest income increased due to strong growth in 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.

     Payment Services’ contribution in the third quarter of 2008 decreased $8 million (2.9 percent) from the second quarter of 2008 primarily due to an increase in the provision for credit losses (10.7 percent) due to portfolio growth and changing economic conditions. Total net revenue was relatively flat compared with the second quarter of 2008. Net interest income increased $4 million (1.6 percent) on a linked quarter basis, as loan volume growth was offset by declining rates. Total noninterest income increased slightly (.4 percent) as increases in credit and debit card revenue and corporate payment products revenue due to volume growth were offset by a decline in merchant processing services revenue due to lower same store volumes and a change in the volume mix to business sectors with narrower processing margins.

     Treasury and Corporate Support includes the Company’s investment portfolios, funding, capital management, asset securitization, 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 $318 million in the third quarter of 2008, compared with a net loss of $65 million in the third quarter of 2007 and a net loss of $54 million in the second quarter of 2008. Net interest income increased $197 million in the current quarter

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 24

over the third quarter of 2007, reflecting the impact of the declining rate environment, wholesale funding decisions and the Company’s asset/liability position. Total noninterest income decreased $411 million, primarily reflecting the impairment charges for structured investment securities, perpetual preferred stock, including the stock of GSEs, and certain non-agency mortgage-backed securities. Total noninterest expense decreased $107 million primarily due to the Visa Charge recognized in the third quarter of 2007. The provision for credit losses increased $252 million reflecting incremental provision, which exceeded net-charge-offs, 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 industries, and the impact of economic conditions on the loan portfolios.

     Net income in the third quarter of 2008 was lower on a linked quarter basis due to the net unfavorable impact of the securities impairments and the incremental provision for credit losses.

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

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 6:30 AM (CT) ON TUESDAY, OCTOBER 21, 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 67006722. 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, October 21st, and will run through Tuesday, October 28th, at 11:00 PM (CT). 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 67006722. 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 as of June 30, 2008. The Company operates 2,556 banking offices and 4,903 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.

(MORE)

U.S. Bancorp Reports Third Quarter 2008 Results
October 21, 2008
Page 25

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 continued deterioration in general business and economic conditions and in the financial markets; 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.

A continuation of the recent turbulence in significant portions of the global financial markets, particularly if it worsens, could impact our performance, both directly by affecting our revenues and the value of our assets and liabilities, and indirectly by affecting our counterparties and the economy generally. Dramatic declines in the housing market in the past year have resulted in significant write-downs of asset values by financial institutions. Concerns about the stability of the financial markets generally have reduced the availability of funding to certain financial institutions, leading to a tightening of credit, reduction of business activity, and increased market volatility. There can be no assurance that the Emergency Economic Stabilization Act of 2008 or the actions taken by the U.S. Treasury Department thereunder will help to stabilize the U.S. financial system or alleviate the industry or economic factors that may adversely impact our business. In addition, our business and financial performance could be impacted as the financial industry restructures in the current environment, both by changes in the creditworthiness and performance of our counterparties and by changes in the competitive landscape.

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					Nine Months Ended
(Dollars and Shares in Millions, Except Per Share Data)	September 30,					September 30,
(Unaudited)	2008			2007		2008			2007
Interest Income
Loans	$	2,487		$	2,703	$	7,476		$	7,897
Loans held for sale		52			76		174			205
Investment securities		478			522		1,507			1,554
Other interest income		40			33		120			101
Total interest income		3,057			3,334		9,277			9,757
Interest Expense
Deposits		425			694		1,489			2,032
Short-term borrowings		276			374		861			1,081
Long-term debt		423			599		1,316			1,696
Total interest expense		1,124			1,667		3,666			4,809
Net interest income		1,933			1,667		5,611			4,948
Provision for credit losses		748			199		1,829			567
Net interest income after provision for credit losses		1,185			1,468		3,782			4,381
Noninterest Income
Credit and debit card revenue		269			237		783			673
Corporate payment products revenue		179			166		517			472
ATM processing services		94			84		271			243
Merchant processing services		300			289		880			827
Trust and investment management fees		329			331		1,014			995
Deposit service charges		286			276		821			800
Treasury management fees		128			118		389			355
Commercial products revenue		132			107		361			312
Mortgage banking revenue		61			76		247			211
Investment products fees and commissions		37			36		110			108
Securities gains (losses), net		(411	)		7		(725	)		11
Other		8			150		680			478
Total noninterest income		1,412			1,877		5,348			5,485
Noninterest Expense
Compensation		763			656		2,269			1,950
Employee benefits		125			119		391			375
Net occupancy and equipment		199			189		579			550
Professional services		61			56		167			162
Marketing and business development		75			71		220			191
Technology and communications		153			140		442			413
Postage, printing and supplies		73			70		217			210
Other intangibles		88			94		262			283
Other		286			381		907			884
Total noninterest expense		1,823			1,776		5,454			5,018
Income before income taxes		774			1,569		3,676			4,848
Applicable income taxes		198			473		1,060			1,466
Net income	$	576		$	1,096	$	2,616		$	3,382
Net income applicable to common equity	$	557		$	1,081	$	2,563		$	3,337
Earnings per common share	$	.32		$	.63	$	1.47		$	1.92
Diluted earnings per common share	$	.32		$	.62	$	1.46		$	1.89
Dividends declared per common share	$	.425		$	.400	$	1.275		$	1.200
Average common shares outstanding		1,743			1,725		1,738			1,737
Average diluted common shares outstanding		1,757			1,745		1,754			1,762

Page 26

U.S. Bancorp

Consolidated Ending Balance Sheet

	September 30,			December 31,			September 30,
(Dollars in Millions)	2008			2007			2007
Assets	(Unaudited)						(Unaudited)
Cash and due from banks	$	7,118		$	8,884		$	6,636
Investment securities
Held-to-maturity		64			74			78
Available-for-sale		39,285			43,042			40,293
Loans held for sale		3,116			4,819			4,601
Loans
Commercial		56,454			51,074			48,012
Commercial real estate		32,177			29,207			28,517
Residential mortgages		23,341			22,782			22,563
Retail		57,891			50,764			49,947
Total loans		169,863			153,827			149,039
Less allowance for loan losses		(2,767	)		(2,058	)		(2,041	)
Net loans		167,096			151,769			146,998
Premises and equipment		1,775			1,779			1,779
Goodwill		7,816			7,647			7,604
Other intangible assets		3,242			3,043			3,150
Other assets		17,543			16,558			16,489
Total assets	$	247,055		$	237,615		$	227,628
Liabilities and Shareholders’ Equity
Deposits
Noninterest-bearing	$	35,476		$	33,334		$	28,272
Interest-bearing		76,697			72,458			70,916
Time deposits greater than $100,000		27,331			25,653			23,560
Total deposits		139,504			131,445			122,748
Short-term borrowings		37,423			32,370			28,868
Long-term debt		40,110			43,440			45,241
Other liabilities		8,343			9,314			10,085
Total liabilities		225,380			216,569			206,942
Shareholders’ equity
Preferred stock		1,500			1,000			1,000
Common stock		20			20			20
Capital surplus		5,646			5,749			5,748
Retained earnings		23,032			22,693			22,500
Less treasury stock		(6,695	)		(7,480	)		(7,554	)
Other comprehensive income		(1,828	)		(936	)		(1,028	)
Total shareholders’ equity		21,675			21,046			20,686
Total liabilities and shareholders’ equity	$	247,055		$	237,615		$	227,628

Page 27

EX-99.1

EX-99.1