U.S. Bancorp Reports Record Earnings for the Third Quarter of 2012

  U.S. Bancorp Reports Record Earnings for the Third Quarter of 2012

15.8 Percent Increase in Net Income Over Prior Year was Driven by Record Total
                                 Net Revenue

Business Wire

MINNEAPOLIS -- October 17, 2012

U.S. Bancorp (NYSE: USB) today reported record net income of $1,474 million
for the third quarter of 2012, or $.74 per diluted common share. Earnings for
the third quarter of 2012 were driven by year-over-year growth in total net
revenue and positive operating leverage. Highlights for the third quarter of
2012 included:

  *Strong new lending activity of $66.6 billion during the third quarter,
    including:

       *$35.7 billion of new and renewed commercial and commercial real
         estate commitments
       *$2.4 billion of lines related to new credit card accounts
       *$28.5 billion of mortgage and other retail loan originations

  *Growth in average total loans of 7.3 percent over the third quarter of
    2011 (9.6 percent excluding covered loans)

       *Growth in average total loans on a linked quarter basis of 1.6
         percent, excluding the impact of a credit card portfolio sale, or 1.3
         percent inclusive of the portfolio sale (2.0 percent excluding
         covered loans)
       *Growth in average total commercial loans of 18.8 percent over the
         third quarter of 2011 and 3.6 percent over the second quarter of 2012
       *Growth in average commercial and commercial real estate commitments
         of 21.0 percent year-over-year and 3.5 percent over the prior quarter

  *Significant growth in average deposits of 11.1 percent over the third
    quarter of 2011, including:

       *Growth in average noninterest-bearing deposits of 16.2 percent
       *Growth in average total savings deposits of 6.9 percent

  *Total net revenue growth of 8.0 percent over the third quarter of 2011 and
    2.2 percent on a linked quarter basis, reaching a record high for the
    quarter
  *Net interest income growth of 6.1 percent over the third quarter of 2011
    and 2.6 percent on a linked quarter basis

       *Average earning assets growth of 7.9 percent year-over-year and 1.7
         percent on a linked quarter basis
       *Continued strong growth in lower cost core deposit funding on a
         year-over-year and linked quarter basis
       *Net interest margin of 3.59 percent for the third quarter of 2012,
         compared with 3.65 percent for the third quarter of 2011, and 3.58
         percent for the second quarter of 2012

  *Year-over-year and linked quarter growth in fee-based revenue of 10.4
    percent and 1.7 percent, respectively, led by higher mortgage banking
    revenue
  *Positive operating leverage on both a year-over-year and a linked quarter
    basis
  *Net charge-offs declined 19.6 percent year-over-year, while increasing 3.5
    percent on a linked quarter basis. Provision for credit losses was $50
    million less than net charge-offs

       *Net charge-offs increased by $18 million over the second quarter of
         2012; included $54 million of incremental charge-offs due to a
         regulatory clarification
       *Annualized net charge-offs to average total loans ratio of .99
         percent (.89 percent, excluding incremental charge-offs)
       *Allowance to period-end loans (excluding covered loans) was 2.26
         percent at September 30, 2012, compared with 2.34 percent at June 30,
         2012, and 2.66 percent at September 30, 2011

  *Nonperforming assets declined on both a linked quarter and year-over-year
    basis

       *Nonperforming assets (excluding covered assets) decreased 3.0 percent
         from the second quarter of 2012 (6.4 percent including covered
         assets)
       *Allowance to nonperforming assets (excluding covered assets) was 213
         percent at September 30, 2012, compared with 210 percent at June 30,
         2012, and 166 percent at September 30, 2011

  *Capital generation continues to fortify capital position; ratios at
    September 30, 2012 were:

       *Tier 1 capital ratio of 10.9 percent
       *Total risk based capital ratio of 13.3 percent
       *Tier 1 common equity to risk-weighted assets ratio of 9.0 percent
       *Tier 1 common equity ratio of approximately 8.2 percent using
         proposed rules for the Basel III standardized approach released June
         2012

                                                                
EARNINGS                                                         Table 1
SUMMARY
($ in
millions,
except                                Percent  Percent                 
per-share
data)
                                          Change    Change
               3Q       2Q       3Q       3Q12 vs   3Q12 vs   YTD      YTD      Percent
               2012    2012    2011    2Q12     3Q11     2012    2011    Change
                                                                                
Net income
attributable   $1,474   $1,415   $1,273   4.2       15.8      $4,227   $3,522   20.0
to U.S.
Bancorp
Diluted
earnings per   $.74     $.71     $.64     4.2       15.6      $2.12    $1.77    19.8
common share
                                                                                
Return on
average        1.70     1.67     1.57                         1.66     1.50
assets (%)
Return on
average        16.5     16.5     16.1                         16.4     15.5
common
equity (%)
Net interest   3.59     3.58     3.65                         3.59     3.67
margin (%)
Efficiency     50.4     51.1     51.5                         51.1     51.4
ratio (%)
Tangible
efficiency     49.1     49.8     50.0                         49.8     49.8
ratio (%)
(a)
                                                                                
Dividends
declared per   $.195    $.195    $.125    --        56.0      $.585    $.375    56.0
common share
Book value
per common     $18.03   $17.45   $16.01   3.3       12.6
share
(period-end)

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


Net income attributable to U.S. Bancorp was $1,474 million for the third
quarter of 2012, 15.8 percent higher than the $1,273 million for the third
quarter of 2011 and 4.2 percent higher than the $1,415 million for the second
quarter of 2012. Diluted earnings per common share of $.74 in the third
quarter of 2012 were $.10 higher than the third quarter of 2011 and $.03
higher than the previous quarter. Return on average assets and return on
average common equity were 1.70 percent and 16.5 percent, respectively, for
the third quarter of 2012, compared with 1.57 percent and 16.1 percent,
respectively, for the third quarter of 2011. During the third quarter of 2012,
the Company recognized a gain on the sale of a credit card portfolio, recorded
a charge related to an investment under the equity method of accounting and
recorded incremental provision for credit losses for charge-offs related to a
regulatory clarification in the treatment of residential mortgage and other
consumer loans to borrowers who have exited bankruptcy but continue to make
payments on their loans. Taken together, these items had no impact on third
quarter diluted earnings per common share. During the second quarter, the
Company recorded an accrual related to its portion of indemnification
obligations associated with Visa Inc. (NYSE: V) litigation matters, which
reduced diluted earnings per common share by $.02 (“Visa accrual”). The
provision for credit losses was $50 million lower than net charge-offs in the
second and third quarters of 2012 and $150 million lower than net charge-offs
in the third quarter of 2011.

U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis
said, “I am very proud to announce our Company’s third quarter results. U.S.
Bancorp, today, reported record net income of $1.5 billion, or $.74 diluted
earnings per common share, on record total net revenue of $5.2 billion. Once
again, we achieved industry-leading performance metrics with returns on
average assets and average common equity of 1.70 percent and 16.5 percent,
respectively, as well as an efficiency ratio of 50.4 percent. Additionally, we
posted positive operating leverage on both a year-over-year and linked quarter
basis, and we achieved these results despite an economy described as only
modestly growing and burdened by uncertainty.

“Our third quarter earnings included continued strong mortgage banking
activity, which contributed to our growth in fee income, residential real
estate loans and loans held for sale. Solid new lending activity outside of
mortgage also helped to grow our balance sheet, particularly in commercial
loans, which grew on average by 21.9 percent year-over-year and 4.2 percent on
a linked quarter basis. On the retail side, automobile loans and leases, a
national business for our Company, also continued to show good growth in the
quarter. Finally, strong growth in average deposits over the prior time
periods demonstrated that we continued to enjoy a flight to quality as
consumers and businesses sought a safe and stable financial partner and, along
with the growth in our loan and fee-based businesses, continued to expand our
market share.

“The overall credit quality of our loan portfolio continued to improve, as net
charge-offs and nonperforming assets, excluding a change in reporting for
collateralized loans to consumers who have filed for bankruptcy, both declined
on a linked quarter basis. We expect this downward trend in net charge-offs
and nonperforming assets to continue in the fourth quarter, with the net
charge-off ratio remaining below one percent.

“With our growth in earnings, we continued to generate significant capital.
Our capital ratios remained strong with a Tier 1 common ratio of 9.0 percent
and a Tier 1 capital ratio of 10.9 percent at September 30th. Importantly,
based on our assessment of the proposed rules for the Basel III standardized
approach, our Tier 1 common equity ratio was 8.2 percent at September 30th,
above our targeted ratio of 8.0 percent. We are where we need to be in terms
of our capital levels. As a result, during the third quarter we were able to
return 67 percent of our earnings to shareholders in the form of dividends and
share buybacks – consistent with our goal of returning 60-80 percent of the
capital we generate back to our shareholders.

“Finally, I want to take this opportunity to thank our almost 66,000
dedicated, engaged employees, who come to work each day with the goal of
providing our customers with the products and services they need to handle
their finances, buy a home, prepare for retirement, or manage and expand their
businesses. In other words, help them shape their future and reach their
dreams. Our industry has an important role to play in the growth and success
of each of our customers – large and small – and the economy as a whole. I
look forward to being a part of that future for the benefit of our customers,
communities, employees and, importantly, our shareholders.”

                                                                           
INCOME STATEMENT                                                            Table 2
HIGHLIGHTS
(Taxable-equivalent
basis, $ in                                     Percent   Percent                  
millions,
except per-share                                       Change      Change
data)
                        3Q         2Q         3Q       3Q12 vs     3Q12 vs   YTD        YTD      Percent
                        2012     2012     2011    2Q12      3Q11     2012     2011    Change
                                                                                                 
Net interest income     $2,783     $2,713     $2,624   2.6         6.1       $8,186     $7,675   6.7
Noninterest income      2,396    2,355    2,171    1.7         10.4      6,990    6,329    10.4
Total net revenue       5,179      5,068      4,795    2.2         8.0       15,176     14,004   8.4
Noninterest expense     2,609    2,601    2,476    .3          5.4       7,770    7,215    7.7
Income before           2,570      2,467      2,319    4.2         10.8      7,406      6,789    9.1
provision and taxes
Provision for           488      470      519      3.8         (6.0  )   1,439    1,846    (22.0 )
credit losses
Income before taxes     2,082      1,997      1,800    4.3         15.7      5,967      4,943    20.7
Taxable-equivalent      57         55         58       3.6         (1.7  )   168        169      (.6   )
adjustment
Applicable income       593      564      490      5.1         21.0      1,684    1,314    28.2
taxes
Net income              1,432      1,378      1,252    3.9         14.4      4,115      3,460    18.9
Net (income) loss
attributable to
noncontrolling          42       37       21       13.5        nm        112      62       80.6
interests
Net income
attributable to         $1,474   $1,415   $1,273   4.2         15.8      $4,227   $3,522   20.0
U.S. Bancorp
Net income
applicable to U.S.
Bancorp
common shareholders     $1,404   $1,345   $1,237   4.4         13.5      $4,034   $3,407   18.4
Diluted earnings        $.74     $.71     $.64     4.2         15.6      $2.12    $1.77    19.8
per common share
                                                                                
                                                                                                       

Net income attributable to U.S. Bancorp for the third quarter of 2012 was $201
million (15.8 percent) higher than the third quarter of 2011 and $59 million
(4.2 percent) higher than the second quarter of 2012. The increase in net
income year-over-year and on a linked quarter basis was the result of growth
in total net revenue, driven by increases in both net interest income and
fee-based revenue. In addition, the year-over-year increase was impacted by a
reduction in the provision for credit losses. These positive variances in both
periods were partially offset by an increase in noninterest expense.

Total net revenue on a taxable-equivalent basis for the third quarter of 2012
reached a record $5,179 million; $384 million (8.0 percent) higher than the
third quarter of 2011, reflecting a 6.1 percent increase in net interest
income and a 10.4 percent increase in noninterest income. The increase in net
interest income year-over-year was the result of higher average earning
assets, continued growth in lower cost core  deposit funding and the positive
impact from lower cost long-term debt. Noninterest income increased
year-over-year, primarily due to higher mortgage banking revenue, partially
offset by legislative-related reductions in credit and debit card revenue and
a reclass of ATM processing services revenue. Total net revenue on a
taxable-equivalent basis was $111 million (2.2 percent) higher on a linked
quarter basis due to both higher net interest income and fee-based revenue,
the latter of which was driven by higher mortgage banking revenue.

Total noninterest expense in the third quarter of 2012 was $2,609 million;
$133 million (5.4 percent) higher than the third quarter of 2011 and $8
million (.3 percent) higher than the second quarter of 2012. The increase in
total noninterest expense year-over-year was primarily due to higher
compensation expense, employee benefits costs, and mortgage servicing
review-related professional services costs. Total noninterest expense on a
linked quarter basis was higher, primarily due to increases in compensation,
marketing and business development expense and other expense, offset by the
impact of the Visa accrual recorded in the second quarter of 2012.

The Company’s provision for credit losses for the third quarter of 2012 was
$488 million, $18 million higher than the prior quarter and $31 million lower
than the third quarter of 2011. The third quarter of 2012 provision for credit
losses included $54 million in charge-offs related to a regulatory
clarification in the treatment of residential mortgage and other consumer
loans to borrowers who have exited bankruptcy but continue to make payments on
their loans. The provision for credit losses was lower than net charge-offs by
$50 million in the third quarter of 2012 and the second quarter of 2012, and
$150 million lower than net charge-offs in the third quarter of 2011. Net
charge-offs in the third quarter of 2012 were $538 million, compared with $520
million in the second quarter of 2012, and $669 million in the third quarter
of 2011. Given current economic conditions, the Company expects the level of
net charge-offs to be lower in the fourth quarter of 2012.

Nonperforming assets include assets originated or acquired by the Company, as
well as loans and other real estate acquired under FDIC loss sharing
agreements that substantially reduce the risk of credit losses to the Company
(“covered assets”). Excluding covered assets, nonperforming assets were $2,188
million at September 30, 2012, compared with $2,256 million at June 30, 2012,
and $3,036 million at September 30, 2011. The decline was led by a reduction
in commercial and commercial real estate nonperforming assets. Notably,
commercial mortgage and construction and development nonperforming assets
declined by $589 million (48.3 percent) year-over-year and $59 million (8.6
percent) on a linked quarter basis, as the Company continued to resolve and
reduce exposure to these problem assets. Nonperforming assets at September 30,
2012, included approximately $109 million of loans placed on nonaccrual status
due to the regulatory clarification in the treatment of residential mortgage
and other consumer loans to borrowers who have exited bankruptcy but continue
to make payments on their loans. In addition, beginning in the second quarter
of 2012, the Company included junior lien loans and lines greater than 120
days past due, as well as junior lien loans and lines behind a first lien
greater than 180 days past due or on nonaccrual status, as nonperforming
loans. Covered nonperforming assets were $647 million at September 30, 2012,
compared with $773 million at June 30, 2012, and $1,303 million at September
30, 2011. The ratio of the allowance for credit losses to period-end loans,
excluding covered loans, was 2.26 percent at September 30, 2012, compared with
2.34 percent at June 30, 2012, and 2.66 percent at September 30, 2011. The
ratio of the allowance for credit losses to period-end loans, including
covered loans, was 2.19 percent at September 30, 2012, compared with 2.25
percent at June 30, 2012, and 2.53 percent at September 30, 2011. The Company
expects total nonperforming assets to trend lower in the fourth quarter of
2012.

                                                                                          
NET INTEREST INCOME                                                                        Table 3
(Taxable-equivalent
basis; $ in                                                                                      
millions)
                                                            Change     Change
                      3Q          2Q          3Q            3Q12 vs    3Q12 vs     YTD         YTD
                      2012       2012       2011        2Q12      3Q11       2012       2011       Change
Components of net
interest income
Income on earning     $3,284      $3,285      $3,258        $(1   )    $26         $9,858      $9,592      $266
assets
Expense on
interest-bearing      501       572       634        (71   )   (133   )   1,672     1,917     (245    )
liabilities
Net interest income   $2,783    $2,713    $2,624     $70      $159      $8,186    $7,675    $511    
                                                                                                           
Average yields and
rates paid
Earning assets        4.24    %   4.34    %   4.53    %     (.10  )%   (.29   )%   4.33    %   4.59    %   (.26    )%
yield
Rate paid on
interest-bearing      .88       1.02      1.15       (.14  )   (.27   )   .99       1.16      (.17    )
liabilities
Gross interest        3.36    %  3.32    %  3.38    %   .04   %   (.02   )%  3.34    %  3.43    %  (.09    )%
margin
Net interest margin   3.59    %  3.58    %  3.65    %   .01   %   (.06   )%  3.59    %  3.67    %  (.08    )%
                                                                                                           
Average balances
Investment            $72,454     $73,181     $66,252       $(727 )    $6,202      $72,371     $61,907     $10,464
securities (a)
Loans                 216,928     214,069     202,169       2,859      14,759      213,731     199,533     14,198
Earning assets        308,959     303,754     286,269       5,205      22,690      304,269     279,305     24,964
Interest-bearing      226,109     226,229     218,969       (120  )    7,140       225,885     221,560     4,325
liabilities
                                                                                                           
(a) Excludes unrealized gain (loss)


Net Interest Income

Net interest income on a taxable-equivalent basis in the third quarter of 2012
was $2,783 million, compared with $2,624 million in the third quarter of 2011,
an increase of $159 million (6.1 percent). The increase was principally the
result of growth in average earning assets and lower cost core deposit
funding, as well as reduced rates on long-term debt. The year-over-year
increase was also impacted by a change in the classification of credit card
balance transfer fees from noninterest income to interest income beginning in
the first quarter of 2012. Average earning assets were $22.7 billion (7.9
percent) higher than the third quarter of 2011, driven by increases of $14.8
billion (7.3 percent) in average total loans and $6.2 billion (9.4 percent) in
average investment securities. Net interest income increased $70 million (2.6
percent) on a linked quarter basis, the result of growth in average earning
assets, including average total loans, average loans held for sale and average
cash balances held at the Federal Reserve. The net interest margin in the
third quarter of 2012 was 3.59 percent, compared with 3.65 percent in the
third quarter of 2011, and 3.58 percent in the second quarter of 2012. The
decline in the net interest margin year-over-year primarily reflected higher
balances in lower yielding investment securities, partially offset by lower
rates on deposits and long-term debt. On a linked quarter basis, the net
interest margin was relatively flat, as the reduction in the yield on the
investment securities portfolio was offset by favorable funding costs,
primarily as a result of lower rates on long-term debt.

                                                                            
AVERAGE                                                                      Table 4
LOANS
($ in                                        Percent   Percent                     
millions)
                                                  Change      Change
               3Q         2Q         3Q           3Q12 vs     3Q12 vs   YTD        YTD        Percent
               2012      2012      2011       2Q12      3Q11     2012      2011      Change
                                                                                              
Commercial     $56,655    $54,362    $46,484      4.2         21.9      $54,118    $44,448    21.8
Lease          5,537     5,658     5,860        (2.1  )     (5.5  )   5,672     5,935      (4.4  )
financing
Total          62,192     60,020     52,344       3.6         18.8      59,790     50,383     18.7
commercial
                                                                                              
Commercial     30,686     30,624     28,979       .2          5.9       30,403     28,377     7.1
mortgages
Construction
and            5,944     5,925     6,590        .3          (9.8  )   5,986     7,040      (15.0 )
development
Total
commercial     36,630     36,549     35,569       .2          3.0       36,389     35,417     2.7
real estate
                                                                                              
Residential    40,969     39,166     34,026       4.6         20.4      39,328     32,854     19.7
mortgages
                                                                                              
Credit card    16,551     16,696     16,057       (.9   )     3.1       16,675     16,022     4.1
                                                                                              
Retail         5,256      5,151      5,097        2.0         3.1       5,167      4,852      6.5
leasing
Home equity
and second     17,329     17,598     18,510       (1.5  )     (6.4  )   17,619     18,648     (5.5  )
mortgages
Other          25,406    25,151    24,773       1.0         2.6       25,154    24,654     2.0
Total other    47,991    47,900    48,380       .2          (.8   )   47,940    48,154     (.4   )
retail
                                                                                              
Total loans,
excluding      204,333   200,331   186,376      2.0         9.6       200,122   182,830    9.5
covered
loans
                                                                                              
Covered        12,595    13,738    15,793       (8.3  )     (20.2 )   13,609    16,703     (18.5 )
loans
                                                                                              
Total loans    $216,928  $214,069  $202,169     1.3         7.3       $213,731  $199,533   7.1
                                                                                                    
                                                                               

Average total loans were $14.8 billion (7.3 percent) higher in the third
quarter of 2012 than the third quarter of 2011, driven by growth in commercial
loans (21.9 percent), residential mortgages (20.4 percent), commercial
mortgages (5.9 percent), credit card loans (3.1 percent) and other retail
loans (2.6 percent). These increases were partially offset by declines in
construction and development (9.8 percent), home equity and second mortgages
(6.4 percent) and covered loans (20.2 percent). Average total loans, excluding
covered loans, were higher by 9.6 percent year-over-year. During the third
quarter of 2012, the Company sold a nearly $735 million branded consumer and
business credit card portfolio. This lowered average loans by  approximately
$485 million in the third quarter of 2012. This sale was offset
year-over-year, by the impact of the purchase of approximately $700 million of
consumer credit cards in the fourth quarter of 2011. Average total loans were
$2.9 billion (1.3 percent) higher in the third quarter of 2012 than the second
quarter of 2012, driven by increases in residential mortgages (4.6 percent),
commercial loans (4.2 percent), retail leasing (2.0 percent) and other retail
loans (1.0 percent), partially offset by decreases in home equity and second
mortgages (1.5 percent), credit card loans (.9 percent) due to the portfolio
sale, and covered loans (8.3 percent). Excluding covered loans, average total
loans grew by 2.0 percent on a linked quarter basis.

Average investment securities in the third quarter of 2012 were $6.2 billion
(9.4 percent) higher year-over-year and $.7 billion (1.0 percent) lower than
the prior quarter. The increase over the prior year was primarily due to
purchases of U.S. government agency-backed securities. The decrease on a
linked quarter basis primarily reflected the sale of non-agency
mortgage-backed and other asset-backed securities.

                                                                                      
AVERAGE DEPOSITS                                                                       Table 5
($ in millions)                                        Percent   Percent                     
                                                               Change      Change
                        3Q           2Q           3Q           3Q12 vs     3Q12 vs   YTD        YTD        Percent
                        2012       2012       2011       2Q12      3Q11     2012      2011      Change
                                                                                                           
Noninterest-bearing     $68,127      $64,531      $58,606      5.6         16.2      $65,423    $50,558    29.4
deposits
Interest-bearing
savings deposits
Interest checking       43,207       45,928       41,042       (5.9  )     5.3       45,522     42,335     7.5
Money market            47,530       44,456       44,623       6.9         6.5       45,977     45,091     2.0
savings
Savings accounts        29,743     29,556     27,042       .6          10.0      29,383    26,304     11.7
Total of savings        120,480      119,940      112,707      .5          6.9       120,882    113,730    6.3
deposits
Time certificates
of deposit less         14,362       14,768       15,251       (2.7  )     (5.8  )   14,695     15,294     (3.9  )
than $100,000
Time deposits
greater than            36,312     32,062     28,805       13.3        26.1      31,978    30,153     6.1
$100,000
Total
interest-bearing        171,154    166,770    156,763      2.6         9.2       167,555   159,177    5.3
deposits
Total deposits          $239,281   $231,301   $215,369     3.5         11.1      $232,978  $209,735   11.1
                                                                                         
                                                                                                                 

Average total deposits for the third quarter of 2012 were $23.9 billion (11.1
percent) higher than the third quarter of 2011. Average noninterest-bearing
deposits increased $9.5 billion (16.2 percent) year-over-year, with growth in
average balances in a majority of the lines of business, including Wholesale
Banking and Commercial Real Estate, Wealth Management and Securities Services,
and Consumer and Small Business Banking. Average total savings deposits were
$7.8 billion (6.9 percent) higher year-over-year, the result of growth in
Consumer and Small Business Banking and corporate trust average balances,
partially offset by lower government banking and broker-dealer average
balances. Average time certificates of deposit less than $100,000 were $.9
billion (5.8 percent) lower, while time deposits greater than $100,000 were
$7.5 billion (26.1 percent) higher than the third quarter of 2011, principally
in Wholesale Banking and Commercial Real Estate. Time deposits greater than
$100,000 are managed as an alternative to other funding sources such as
wholesale borrowing, based largely on relative pricing.

Average total deposits increased $8.0 billion (3.5 percent) over the second
quarter of 2012. Average noninterest-bearing deposits increased by $3.6
billion (5.6 percent) on a linked quarter basis, mainly driven by growth in
Consumer and Small Business Banking and corporate trust average balances.
Average total savings deposits increased slightly, $.5 billion (.5 percent) on
a linked quarter basis, due to higher Wholesale Banking and Commercial Real
Estate and Consumer and Small Business Banking average balances, partially
offset by lower institutional trust average balances. Compared with the second
quarter of 2012, average time certificates of deposit less than $100,000 were
lower by $.4 billion (2.7 percent), while average time deposits greater than
$100,000 increased $4.3 billion (13.3 percent), primarily in Wholesale Banking
and Commercial Real Estate.

                                                                           
NONINTEREST                                                            Table 6
INCOME
($ in                                     Percent  Percent                     
millions)
                                               Change    Change
              3Q       2Q         3Q           3Q12 vs   3Q12 vs   YTD        YTD        Percent
              2012    2012      2011       2Q12     3Q11     2012      2011      Change
                                                                                               
Credit and
debit card    $213     $235       $289         (9.4  )   (26.3 )   $650       $842       (22.8 )
revenue
Corporate
payment       201      190        203          5.8       (1.0  )   566        563        .5
products
revenue
Merchant
processing    345      359        338          (3.9  )   2.1       1,041      977        6.6
services
ATM
processing    87       89         115          (2.2  )   (24.3 )   263        341        (22.9 )
services
Trust and
investment    265      262        241          1.1       10.0      779        755        3.2
management
fees
Deposit
service       174      156        183          11.5      (4.9  )   483        488        (1.0  )
charges
Treasury
management    135      142        137          (4.9  )   (1.5  )   411        418        (1.7  )
fees
Commercial
products      225      216        212          4.2       6.1       652        621        5.0
revenue
Mortgage
banking       519      490        245          5.9       nm        1,461      683        nm
revenue
Investment
products      38       38         31           --        22.6      111        98         13.3
fees and
commissions
Securities
gains         1        (19    )   (9     )     nm        nm        (18    )   (22    )   18.2
(losses),
net
Other         193     197      186         (2.0  )   3.8       591      565       4.6
                                                                                               
Total
noninterest   $2,396  $2,355   $2,171      1.7       10.4      $6,990   $6,329    10.4
income
                                                                       
                                                                                               

Noninterest Income

Third quarter noninterest income was $2,396 million; $225 million (10.4
percent) higher than the third quarter of 2011 and $41 million (1.7 percent)
higher than the second quarter of 2012. The year-over-year increase in
noninterest income was primarily driven by strong mortgage banking revenue.
The $274 million increase in mortgage banking revenue over the same quarter of
last year was principally due to higher origination and sales revenue.
Merchant processing services revenue increased $7 million (2.1 percent),
primarily due to increased transaction volumes. Trust and investment
management fees increased $24 million (10.0 percent) year-over-year due to
improved market conditions and business expansion. The $13 million (6.1
percent) increase in commercial products revenue was principally driven by
higher bond underwriting fees. Investment products fees and commissions
increased $7 million (22.6 percent) compared with the prior year due to
increased volumes. Other income increased $7 million (3.8 percent)
year-over-year, reflecting the impact of the gain on the credit card portfolio
sale, partially offset by the equity-method investment charge and lower retail
lease residual revenue. In addition, the third quarter of 2012 had a $10
million favorable change in net securities gains (losses), primarily due to
impairments recorded in the prior year. Offsetting these positive variances
was a $76 million (26.3 percent) decrease in credit and debit card revenue due
to lower debit card interchange fees as a result of legislative-related
changes in the fourth quarter of 2011, net of mitigation efforts, and a change
in the classification of credit card balance transfer fees from noninterest
income to interest income beginning in the first quarter of 2012. However,
these negative variances were partially offset by higher transaction volumes.
ATM processing services revenue decreased $28 million (24.3 percent), due to
classifying surcharge revenue passed through to others as a reduction of
revenue beginning in the first quarter of 2012, rather than as occupancy
expense as in previous periods. The $9 million (4.9 percent) decrease in
deposit service charges reflected process and product changes and lower
overdraft volumes.

Noninterest income was $41 million (1.7 percent) higher in the third quarter
of 2012 than the second quarter of 2012. Corporate payment products revenue
increased $11 million (5.8 percent) due to seasonally higher sales volumes.
Deposit service charges were $18 million (11.5 percent) higher on a linked
quarter basis due to product redesign and repricing initiatives. A $9 million
(4.2 percent) increase in commercial products revenue was principally due to
higher syndication fees and bond underwriting revenue. Mortgage banking
revenue was $29 million (5.9 percent) higher than the second quarter of 2012
due to higher origination and sales revenue, partially offset by an
unfavorable change in the valuation of mortgage servicing rights (“MSRs”), net
of hedging activities. In addition, the third quarter of 2012 had a $20
million favorable change in net securities gains (losses), principally due to
impairment recognized in the second quarter of 2012 on a number of securities
following downgrades of money center banks by a rating agency. These positive
variances were offset by a $22 million (9.4 percent) decline in credit and
debit card revenue, primarily due to a benefit from the final expiration of
debit card customer rewards recognized in the second quarter of 2012. Merchant
processing services revenue and treasury management fees decreased $14 million
(3.9 percent) and $7 million (4.9 percent), respectively, due to lower
volumes. Other income declined $4 million (2.0 percent) on a linked quarter
basis, primarily due to the equity-method investment charge and lower retail
lease residual revenue, partially offset by the gain on the credit card
portfolio sale.

                                                                    
NONINTEREST                                                          Table 7
EXPENSE
($ in                                    Percent   Percent                 
millions)
                                              Change      Change
                 3Q       2Q       3Q         3Q12 vs     3Q12 vs   YTD      YTD      Percent
                 2012    2012    2011     2Q12      3Q11     2012    2011    Change
                                                                                      
Compensation     $1,109   $1,076   $1,021     3.1         8.6       $3,237   $2,984   8.5
Employee         225      229      203        (1.7  )     10.8      714      643      11.0
benefits
Net occupancy    233      230      252        1.3         (7.5  )   683      750      (8.9  )
and equipment
Professional     144      136      100        5.9         44.0      364      252      44.4
services
Marketing and
business         96       80       102        20.0        (5.9  )   285      257      10.9
development
Technology and   205      201      189        2.0         8.5       607      563      7.8
communications
Postage,
printing and     75       77       76         (2.6  )     (1.3  )   226      226      --
supplies
Other            67       70       75         (4.3  )     (10.7 )   208      225      (7.6  )
intangibles
Other            455     502     458        (9.4  )     (.7   )   1,446   1,315    10.0
                                                                                      
Total
noninterest      $2,609  $2,601  $2,476     .3          5.4       $7,770  $7,215   7.7
expense
                                                                       
                                                                                            

Noninterest Expense

Noninterest expense in the third quarter of 2012 totaled $2,609 million, an
increase of $133 million (5.4 percent) over the third quarter of 2011, and an
$8 million (.3 percent) increase over the second quarter of 2012. The increase
in total noninterest expense year-over-year was primarily due to higher
compensation expense, employee benefits expense and professional services
expense. Compensation and employee benefits expense increased over the prior
year by $88 million (8.6 percent) and $22 million (10.8 percent),
respectively. The increase in compensation expense was primarily the result of
growth in staffing for business initiatives and mortgage servicing-related
activities, in addition to higher commissions and merit increases. Employee
benefits expense increased principally due to higher pension costs and
staffing levels. Professional services expense was $44 million (44.0 percent)
higher year-over-year, principally due to mortgage servicing review-related
projects. Technology and communications expense was $16 million (8.5 percent)
higher year-over-year, due to business expansion and technology projects.
These increases were partly offset by a decrease in net occupancy and
equipment expense of $19 million (7.5 percent), principally reflecting the
change in classification in the first quarter of 2012 of ATM surcharge revenue
passed through to others, and a decrease in other intangibles expense of $8
million (10.7 percent) due to the reduction or completion of the amortization
of certain intangibles.

Noninterest expense was relatively flat on a linked quarter basis, as
increases in compensation and marketing and business development expense were
offset by the impact of the Visa accrual recorded in the second quarter of
2012. Compensation expense increased $33 million (3.1 percent) on a linked
quarter basis, due to the impact of an increase in commissions and incentives,
as well as higher staffing levels. Professional services expense was $8
million (5.9 percent) higher due to mortgage servicing review-related
projects. Marketing and business development was $16 million (20.0 percent)
higher compared to the second quarter of 2012 due to the timing of new
national media promotions. These increases were partially offset by a $47
million (9.4 percent) decrease in other expense, primarily due to the second
quarter of 2012 Visa accrual and lower FDIC insurance costs, partially offset
by higher costs related to investments in affordable housing and other
tax-advantaged projects.

Provision for Income Taxes

The provision for income taxes for the third quarter of 2012 resulted in a tax
rate on a taxable-equivalent basis of 31.2 percent (effective tax rate of 29.3
percent), compared with 30.4 percent (effective tax rate of 28.1 percent) in
the third quarter of 2011 and 31.0 percent (effective tax rate of 29.0
percent) in the second quarter of 2012.

                                                           
ALLOWANCE FOR CREDIT                                        Table 8
LOSSES
($ in millions)         3Q        2Q        1Q        4Q        3Q
                          2012      2012      2012      2011      2011
                                                                      
Balance, beginning of     $4,864     $4,919     $5,014     $5,190     $5,308
period
                                                                      
Net charge-offs
Commercial                59         56         78         51         90
Lease financing           7        15       8        21       9      
Total commercial          66         71         86         72         99
Commercial mortgages      20         47         35         37         68
Construction and          5        6        36       47       57     
development
Total commercial real     25         53         71         84         125
estate
                                                                      
Residential mortgages     121        109        112        119        122
                                                                      
Credit card               167        170        169        193        178
                                                                      
Retail leasing            --         --         1          --         (1     )
Home equity and           89         63         74         77         74
second mortgages
Other                     68       54       57       75       69     
Total other retail        157      117      132      152      142    
Total net
charge-offs,              536        520        570        620        666
excluding covered
loans
Covered loans             2        --       1        2        3      
Total net charge-offs     538        520        571        622        669
Provision for credit      488        470        481        497        519
losses
Net change for credit
losses to be              (10    )   (5     )   (5     )   (51    )   32
reimbursed by the
FDIC
Other changes             (33    )  --       --       --       --     
Balance, end of           $4,771   $4,864   $4,919   $5,014   $5,190 
period
                                                                      
Components
Allowance for loan
losses, excluding
losses to be
reimbursed by the         $4,426     $4,507     $4,575     $4,678     $4,823
FDIC
Allowance for credit
losses to be
reimbursed
by the FDIC               55         65         70         75         127
Liability for
unfunded credit           290      292      274      261      240    
commitments
Total allowance for       $4,771   $4,864   $4,919   $5,014   $5,190 
credit losses
                                                                      
Gross charge-offs         $639       $631       $681       $718       $762
Gross recoveries          $101       $111       $110       $96        $93
                                                                      
Allowance for credit
losses as a
percentage of
Period-end loans,
excluding covered         2.26       2.34       2.44       2.52       2.66
loans
Nonperforming loans,
excluding covered         244        247        238        228        196
loans
Nonperforming assets,
excluding covered         213        210        199        191        166
assets
                                                                      
Period-end loans          2.19       2.25       2.32       2.39       2.53
Nonperforming loans       202        196        174        163        145
Nonperforming assets      168        161        142        133        120
                                                             
                                                                             

Credit Quality

Net charge-offs and nonperforming assets declined on a year-over-year basis as
economic conditions continued to slowly improve. On a linked quarter basis,
net charge-offs increased $18 million (3.5 percent), while nonperforming
assets, excluding covered assets, decreased $68 million (3.0 percent). Both
were impacted by the regulatory clarification in the treatment of consumer
borrowers exiting bankruptcy. On a linked quarter basis, without the impact of
the regulatory clarification, net charge-offs would have decreased by $36
million (6.9 percent) and nonperforming assets, excluding covered assets,
would have decreased by $177 million (7.8 percent). The allowance for credit
losses was $4,771 million at September 30, 2012, compared with $4,864 million
at June 30, 2012, and $5,190 million at September 30, 2011. Total net
charge-offs in the third quarter of 2012 were $538 million, compared with $520
million in the second quarter of 2012 and $669 million in the third quarter of
2011. The $18 million (3.5 percent) increase in total net charge-offs on a
linked quarter basis, included $54 million of incremental charge-offs due to
regulatory guidance related to residential mortgage and other consumer loans
to borrowers who have exited bankruptcy but continue to make payments on their
loans, partially offset by improvement in commercial and commercial real
estate portfolios. The $131 million (19.6 percent) decline in net charge-offs
compared with the prior year was due to improvement in the commercial,
commercial real estate and credit card portfolios, compared with the third
quarter of 2011, partially offset by the current quarter incremental
bankruptcy-related charge-offs in the residential mortgage and other retail
portfolios. The Company recorded $488 million of provision for credit losses,
$50 million less than net charge-offs, during the third quarter of 2012. The
allowance for credit losses reimbursable by the FDIC decreased to $55 million
at September 30, 2012. In addition, the allowance for credit losses was
reduced by $33 million, as a result of the credit card portfolio sale in the
current quarter.

Commercial and commercial real estate loan net charge-offs decreased to $91
million (.37 percent of average loans outstanding) in the third quarter of
2012, compared with $124 million (.52 percent of average loans outstanding) in
the second quarter of 2012, and $224 million (1.01 percent of average loans
outstanding) in the third quarter of 2011.

Residential mortgage loan net charge-offs, including $22 million of current
quarter incremental bankruptcy-related charge-offs, were $121 million (1.17
percent of average loans outstanding) in the third quarter of 2012, compared
with $109 million (1.12 percent of average loans outstanding) in the second
quarter of 2012 and $122 million (1.42 percent of average loans outstanding)
in the third quarter of 2011. Credit card loan net charge-offs were $167
million (4.01 percent of average loans outstanding) in the third quarter of
2012, lower than both the $170 million (4.10 percent of average loans
outstanding) in the second quarter of 2012, and the $178 million (4.40 percent
of average loans outstanding) in the third quarter of 2011. Total other retail
loan net charge-offs included $32 million of the current quarter’s incremental
bankruptcy-related charge-offs. Total other retail loan net charge-offs were
$157 million (1.30 percent of average loans outstanding) in the third quarter
of 2012, higher than both the $117 million (.98 percent of average loans
outstanding) in the second quarter of 2012, and the $142 million (1.16 percent
of average loans outstanding) in the third quarter of 2011.

The ratio of the allowance for credit losses to period-end loans was 2.19
percent (2.26 percent excluding covered loans) at September 30, 2012, compared
with 2.25 percent (2.34 percent excluding covered loans) at June 30, 2012, and
2.53 percent (2.66 percent excluding covered loans) at September 30, 2011. The
ratio of the allowance for credit losses to nonperforming loans was 202
percent (244 percent excluding covered loans) at September 30, 2012, compared
with 196 percent (247 percent excluding covered loans) at June 30, 2012, and
145 percent (196 percent excluding covered loans) at September 30, 2011.

                                                    
CREDIT RATIOS                                        Table 9
(Percent)         3Q          2Q       1Q       4Q       3Q
                    2012        2012     2012     2011     2011
Net
charge-offs
ratios (a)
Commercial          .41            .41         .61         .41         .77
Lease               .50            1.07        .55         1.43        .61
financing
Total               .42            .48         .61         .52         .75
commercial
                                                                       
Commercial          .26            .62         .47         .50         .93
mortgages
Construction
and                 .33            .41         2.38        2.91        3.43
development
Total
commercial          .27            .58         .79         .93         1.39
real estate
                                                                       
Residential         1.17           1.12        1.19        1.30        1.42
mortgages
                                                                       
Credit card         4.01           4.10        4.05        4.71        4.40
(b)
                                                                       
Retail              --             --          .08         --          (.08  )
leasing
Home equity
and second          2.04           1.44        1.66        1.67        1.59
mortgages
Other               1.06           .86         .92         1.19        1.11
Total other         1.30           .98         1.11        1.25        1.16
retail
                                                                       
Total net
charge-offs,        1.04           1.04        1.17        1.28        1.42
excluding
covered loans
                                                                       
Covered loans       .06            --          .03         .05         .08
                                                                       
Total net           .99            .98         1.09        1.19        1.31
charge-offs
                                                                       
Delinquent loan ratios - 90 days or more past due excluding nonperforming
loans (c)
Commercial          .06            .07         .08         .08         .08
Commercial          .03            .03         .04         .04         .08
real estate
Residential         .72            .80         .79         .98         1.03
mortgages
Credit card         1.18           1.17        1.33        1.36        1.28
Other retail        .20            .19         .34         .38         .36
Total loans,
excluding           .31            .33         .38         .43         .43
covered loans
Covered loans       5.61           4.96        5.23        6.15        5.14
Total loans         .61            .61         .70         .84         .78
                                                                       
Delinquent loan ratios - 90 days or more past due including nonperforming
loans (c)
Commercial          .31            .38         .61         .63         .79
Commercial          1.75           1.92        2.15        2.55        3.51
real estate
Residential         2.52           2.46        2.58        2.73        2.88
mortgages
Credit card         2.18           2.29        2.58        2.65        2.81
Other retail        .64            .57         .48         .52         .50
Total loans,
excluding           1.24           1.27        1.40        1.54        1.79
covered loans
Covered loans       9.30           9.30        10.86       12.42       11.70
Total loans         1.69           1.76        2.04        2.30        2.53

(a) Annualized and calculated on average loan balances
(b) Net charge-offs as a percent of average loans outstanding, excluding
portfolio purchases where the acquired loans
were recorded at fair value at the purchase date were 4.17 percent for the
third quarter of 2012, 4.25 percent for
the second quarter of 2012, 4.21 percent for the first quarter of 2012, 4.88
percent for the fourth quarter of 2011
and 4.54 percent for the third quarter of 2011.
(c) Ratios are expressed as a percent of ending loan balances.
                                                         

                                                        
ASSET QUALITY                                            Table
                                                                       10
($ in millions)                                             
                       Sep 30        Jun 30      Mar 31     Dec 31     Sep 30
                       2012        2012      2012     2011     2011
Nonperforming
loans
Commercial             $133          $172        $280       $280       $342
Lease financing        19          23        31       32       40
Total commercial       152           195         311        312        382
                                                                       
Commercial             392           376         380        354        600
mortgages
Construction and       239         314       379      545      620
development
Total commercial       631           690         759        899        1,220
real estate
                                                                       
Residential            757           660         686        650        650
mortgages
Credit card            163           189         207        224        250
Other retail           210         182       65       67       66
Total
nonperforming          1,913         1,916       2,028      2,152      2,568
loans, excluding
covered loans
                                                                       
Covered loans          449         570       798      926      1,010
Total
nonperforming          2,362         2,486       2,826      3,078      3,578
loans
                                                                       
Other real             259           324         377        404        452
estate (a)
Covered other          198           203         233        274        293
real estate (a)
Other
nonperforming          16          16        18       18       16
assets
                       
Total
nonperforming          $2,835      $3,029    $3,454   $3,774   $4,339
assets (b)
                                                                       
Total
nonperforming
assets,                $2,188      $2,256    $2,423   $2,574   $3,036
excluding
covered assets
                                                                       
Accruing loans
90 days or more
past due,
excluding              $644        $663      $750     $843     $814
covered loans
                                                                       
Accruing loans
90 days or more        $1,326      $1,315    $1,492   $1,753   $1,606
past due
                                                                       
Performing
restructured
loans, excluding
GNMA
and covered            $3,387      $3,310    $3,380   $3,365   $3,095
loans
                                                                       
Performing
restructured           $2,002      $1,727    $1,675   $1,509   $1,025
GNMA and covered
loans
                                                                       
Nonperforming
assets to loans
plus ORE,
excluding              1.06          1.11        1.22       1.32       1.60
covered assets
(%)
                                                                       
Nonperforming
assets to loans
plus ORE (%)           1.30          1.40        1.63       1.79       2.11

(a) Includes equity investments in entities whose only asset is other real
estate owned.
(b) Does not include accruing loans 90 days or more past due or restructured
loans that continue to accrue interest.
                                                        
                                                                       

Nonperforming assets at September 30, 2012, totaled $2,835 million, compared
with $3,029 million at June 30, 2012, and $4,339 million at September 30,
2011. Total nonperforming assets at September 30, 2012, included $647 million
of covered assets. The ratio of nonperforming assets to loans and other real
estate was 1.30 percent (1.06 percent excluding covered assets) at September
30, 2012, compared with 1.40 percent (1.11 percent excluding covered assets)
at June 30, 2012, and 2.11 percent (1.60 percent excluding covered assets) at
September 30, 2011. The decrease in nonperforming assets, excluding covered
assets, compared with a year ago was driven primarily by reductions in the
construction and development portfolio, as well as by improvement in
commercial mortgages and other commercial loan portfolios, partially offset by
an increase in nonperforming other retail loans, primarily due to the policy
change for junior lien lines and loans in the second quarter. In addition,
residential mortgage and other retail loan portfolios were impacted by the
current quarter regulatory clarification in the treatment of consumer
borrowers exiting bankruptcy.

Accruing loans 90 days or more past due were $1,326 million ($644 million
excluding covered loans) at September 30, 2012, slightly higher than the
$1,315 million ($663 million excluding covered loans) at June 30, 2012, but
lower than the $1,606 million ($814 million excluding covered loans) at
September 30, 2011. Performing restructured loans, excluding GNMA and covered
loans, increased $77 million compared with June 30, 2012, and $292 million
compared with September 30, 2011. The increase from a year ago and on a linked
quarter basis, included $318 million due to the regulatory clarification in
the treatment of consumer borrowers exiting bankruptcy.

                                                             
CAPITAL                                               Table 11 
POSITION
($ in millions)   Sep 30     Jun 30     Mar 31     Dec 31     Sep 30
                    2012      2012      2012      2011      2011
                                                                             
Total U.S.
Bancorp             $38,661     $37,792     $35,900     $33,978     $33,230
shareholders'
equity
Tier 1 capital      30,766      30,044      29,976      29,173      28,081
Total
risk-based          37,559      36,429      36,431      36,067      35,369
capital
                                                                             
Tier 1 capital      10.9    %   10.7    %   10.9    %   10.8    %   10.8     %
ratio
Total
risk-based          13.3        13.0        13.3        13.3        13.5
capital ratio
Leverage ratio      9.2         9.1         9.2         9.1         9.0
Tangible common
equity to           7.2         6.9         6.9         6.6         6.6
tangible assets
Tangible common
equity to           8.8         8.5         8.3         8.1         8.1
risk-weighted
assets
Tier 1 common
equity to
risk-weighted
assets
using Basel I       9.0         8.8         8.7         8.6         8.5
definition
Tier 1 common
equity to
risk-weighted
assets
using Basel III
proposals           --          --          8.4         8.2         8.2
published prior
to June 2012
Tier 1 common
equity to
risk-weighted
assets
approximated
using proposed
rules for the
Basel III
standardized
approach
released June       8.2         7.9         --          --          --
2012
                                                             
                                                                             

Total U.S. Bancorp shareholders’ equity was $38.7 billion at September 30,
2012, compared with $37.8 billion at June 30, 2012, and $33.2 billion at
September 30, 2011. The Tier 1 capital ratio was 10.9 percent at September 30,
2012, compared with 10.7 percent at June 30, 2012, and 10.8 percent at
September 30, 2011. The tangible common equity to tangible assets ratio was
7.2 percent at September 30, 2012, compared with 6.9 percent at June 30, 2012,
and 6.6 percent at September 30, 2011. The Tier 1 common equity to
risk-weighted assets ratio was 9.0 percent at September 30, 2012, compared
with 8.8 percent at June 30, 2012, and 8.5 percent at September 30, 2011. All
regulatory ratios continue to be in excess of “well-capitalized” requirements.
Additionally, the Tier 1 common equity to risk-weighted assets ratio using
proposed rules for the Basel III standardized approach released June 2012 was
approximately 8.2 percent at September 30, 2012 compared with 7.9 percent at
June 20, 2012. During the third quarter, the Company declared $367 million in
common stock dividends and repurchased common stock totaling $581 million.

                                                       
COMMON SHARES                                           Table 12
(Millions)          3Q        2Q        1Q        4Q        3Q
                      2012      2012      2012      2011      2011
                                                                      
Beginning shares      1,892       1,901       1,910       1,913       1,925
outstanding
Shares issued for
stock option and
stock purchase
plans,
acquisitions and      5           4           7           3           1
other corporate
purposes
Shares                (17   )   (13   )   (16   )   (6    )   (13    )
repurchased
Ending shares         1,880    1,892    1,901    1,910    1,913  
outstanding
                                                         

                                                                                    
LINE OF BUSINESS FINANCIAL PERFORMANCE (a)                                                 Table 13    
($ in                                                                             
millions)
                 Net Income Attributable                         Net Income
                                                                 Attributable
                 to U.S. Bancorp              Percent Change     to U.S. Bancorp               3Q 2012
                 3Q       2Q       3Q         3Q12 vs   3Q12     YTD      YTD      Percent     Earnings
                                                        vs
Business       2012    2012    2011     2Q12     3Q11   2012    2011    Change    Composition 
Line
Wholesale
Banking and
Commercial       $326     $328     $304       (.6   )   7.2      $984     $781     26.0        22          %
Real Estate
Consumer and
Small
Business
Banking          326      364      221        (10.4 )   47.5     1,060    523      nm          22
Wealth
Management
and
Securities       42       40       41         5.0       2.4      127      139      (8.6    )   3
Services
Payment          376      315      354        19.4      6.2      946      1,006    (6.0    )   26
Services
Treasury and
Corporate        404     368     353        9.8       14.4     1,110   1,073    3.4         27
Support
                                                                                                           
Consolidated     $1,474  $1,415  $1,273     4.2       15.8     $4,227  $3,522   20.0        100         %
Company
                                                                                                           
(a) preliminary data



Lines of Business

The Company’s major lines of business are Wholesale Banking and Commercial
Real Estate, Consumer and Small Business Banking, Wealth Management and
Securities Services, Payment Services, and Treasury and Corporate Support.
These operating segments are components of the Company about which financial
information is prepared and is evaluated regularly by management 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 2012, certain
organization and methodology changes were made and, accordingly, prior period
results were restated and presented on a comparable basis.

Wholesale Banking and Commercial Real Estate offers lending, equipment finance
and small-ticket leasing, depository services, treasury management, capital
markets, foreign exchange, international trade services and other financial
services to middle market, large corporate, commercial real estate, financial
institution and public sector clients. Wholesale Banking and Commercial Real
Estate contributed $326 million of the Company’s net income in the third
quarter of 2012, compared with $304 million in the third quarter of 2011 and
$328 million in the second quarter of 2012. Wholesale Banking and Commercial
Real Estate’s net income increased $22 million (7.2 percent) over the same
quarter of 2011, due to a lower provision for credit losses and lower total
noninterest expense, partially offset by lower total net revenue. Net interest
income decreased $18 million (3.3 percent) year-over-year, primarily due to
lower rates on loans, a decrease in loan fees and the impact of lower rates on
the margin benefit from deposits, partially offset by higher average loan and
deposit balances. Total noninterest income decreased $21 million (6.6
percent), driven by lower equity investment revenue and commercial products
revenue. Commercial products revenue was lower, principally due to a decline
in syndication and other loan fees, commercial leasing revenue and standby
letters of credit fees, partially offset by an increase in bond underwriting
fees. Total noninterest expense decreased $7 million (2.2 percent) from a year
ago, primarily due to lower costs related to other real estate owned. The
provision for credit losses was $65 million lower year-over-year, primarily
due to lower net charge-offs.

Wholesale Banking and Commercial Real Estate’s contribution to net income in
the third quarter of 2012 was $2 million (.6 percent) lower than the second
quarter of 2012. Total net revenue decreased $16 million (1.9 percent)
compared with the prior quarter. Net interest income increased $6 million (1.2
percent) on a linked quarter basis as a result of increased loan and deposit
volumes, partially offset by lower loan rates and a reduction in the margin
benefit from deposits. Total noninterest income decreased by $22 million (6.9
percent), principally due to a decrease in equity investment revenue in the
current quarter and seasonally higher treasury management fees in the second
quarter of 2012. Total noninterest expense decreased $12 million (3.7 percent)
due to lower shared services expense related to treasury management product
processing and lower FDIC insurance expense.

Consumer and Small Business Banking delivers products and services through
banking offices, telephone servicing and sales, on-line services, direct mail,
ATM processing and over mobile devices. 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 and Small Business Banking contributed
$326 million of the Company’s net income in the third quarter of 2012, a $105
million (47.5 percent) increase over the third quarter of 2011, and a $38
million (10.4 percent) decrease from the prior quarter. Within Consumer and
Small Business Banking, the retail banking division reported a 32.5 percent
decrease in its contribution from the same quarter of last year due to lower
total net revenue and a higher provision for credit losses, partially offset
by lower total noninterest expense. The division's current quarter provision
for credit losses included incremental charge-offs related to a regulatory
clarification in the treatment of residential mortgage and other consumer
loans to borrowers who have exited bankruptcy but continue to make payments on
their loans. Retail banking’s total net revenue was 3.8 percent lower than the
third quarter of 2011. Net interest income decreased 1.3 percent, primarily
due to lower loan rates and the impact of lower rates on the margin benefit
from deposits, partially offset by higher average loan and deposit balances.
Total noninterest income for the retail banking division decreased 9.4 percent
from a year ago, principally due to a decrease in ATM processing services
revenue, a result of the change in classification of the surcharge revenue
passed through to others, and lower deposit services charges and retail lease
residual revenue. Total noninterest expense for the retail banking division in
the third quarter of 2012 decreased 1.6 percent from the same quarter of the
prior year principally due to lower net occupancy and equipment expense, a
result of the classification change to ATM surcharge revenue passed through to
others, as well as lower FDIC insurance expense and other intangibles expense,
partially offset by higher net shared services costs and compensation and
employee benefits expense. The provision for credit losses for the retail
banking division increased 8.0 percent on a year-over-year basis due to the
incremental bankruptcy-related charge-offs in the current quarter and an
increase in the reserve allocation, partially offset by lower other net
charge-offs. The contribution of the mortgage banking division increased $144
million over the third quarter of 2011 due to higher total net revenue,
partially offset by an increase in total noninterest expense. The division’s
81.1 percent increase in total net revenue was primarily due to a $267 million
increase in total noninterest income, driven by strong mortgage origination
and sales revenue. In addition, net interest income increased 35.9 percent,
primarily the result of higher average loans held-for-sale. Total noninterest
expense was 54.5 percent higher, reflecting higher compensation and employee
benefits expense and mortgage servicing review-related costs. The provision
for credit losses for the mortgage banking division decreased 10.7 percent due
to a change in the reserve allocation.

Consumer and Small Business Banking’s contribution in the third quarter of
2012 was $38 million (10.4 percent) lower than the second quarter of 2012 due
to increases in total noninterest expense and the provision for credit losses,
partially offset by higher total net revenue. Within Consumer and Small
Business Banking, the retail banking division’s contribution declined 50.6
percent on a linked quarter basis, principally due to an increase in the
provision for credit losses as a result of the incremental bankruptcy-related
charge-offs and an increase in the reserve allocation. Total net revenue for
the retail banking division was relatively flat as an increase in deposit
service charges was offset by a reduction in retail lease residual revenue.
Total noninterest expense for the retail banking division was 2.2 percent
higher than the second quarter of 2012 principally due to higher marketing and
advertising costs and higher net shared services expense, partially offset by
lower FDIC insurance expense. The contribution of the mortgage banking
division increased 22.5 percent from the second quarter of 2012 due to an
increase in total net revenue and a lower provision for credit losses,
partially offset by an increase in total noninterest expense. Total net
revenue increased 6.1 percent, due to a 5.5 percent increase in total
noninterest income, driven by higher mortgage origination and sales revenue,
partially offset by an unfavorable change in the valuation of MSRs, net of
hedging activities, and a 7.8 percent increase in net interest income due to
higher average loans held-for-sale. Total noninterest expense increased 2.2
percent, driven by increased compensation expense and mortgage servicing
review-related costs. The mortgage banking division’s provision for credit
losses decreased 41.2 percent on a linked quarter basis due to lower
net-charge-offs.

Wealth Management and Securities Services provides private banking, financial
advisory services, investment management, retail brokerage services,
insurance, trust, custody and fund servicing through five businesses: Wealth
Management, Corporate Trust Services, U.S. Bancorp Asset Management,
Institutional Trust & Custody and Fund Services. Wealth Management and
Securities Services contributed $42 million of the Company’s net income in the
third quarter of 2012, a 2.4 percent increase from the third quarter of 2011,
and a 5.0 percent increase over the second quarter of 2012. The increase in
the business line’s contribution, compared with the same quarter of 2011, was
due to higher total noninterest income, partially offset by an increase in
total noninterest expense. Total net revenue increased by $26 million (7.6
percent) year-over-year. Net interest income was relatively flat, while total
noninterest income increased by $29 million (11.4 percent), primarily due to
the impact of improved market conditions, business expansion and higher
investment products fees and commissions. Total noninterest expense increased
by $23 million (8.3 percent) due to higher compensation and employee benefits
expense, partially offset by a reduction in acquisition integration costs. The
provision for credit losses increased by $2 million due to a change in the
reserve allocation.

The business line’s contribution in the third quarter of 2012 was $2 million
(5.0 percent) higher than the prior quarter. Total net revenue increased $8
million (2.2 percent) due to a $5 million (1.8 percent) increase in total
noninterest income, mainly due to improved market conditions and a $3 million
(3.6 percent) increase in net interest income, principally due to higher
average loan and deposit balances. Total noninterest expense increased $4
million (1.4 percent) over the prior quarter, as higher compensation expense
and net shared services costs were partially offset by a decrease in FDIC
insurance expense. The provision for credit losses was $1 million higher than
the prior quarter due to a change in the reserve allocation.

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 contributed $376 million of
the Company’s net income in the third quarter of 2012, an increase of $22
million (6.2 percent) from the same period of 2011, and a $61 million (19.4
percent) increase over the prior quarter. The increase year-over-year was
primarily due to higher total net revenue, partially offset by an increase in
the provision for credit losses. Total net revenue increased $44 million (3.7
percent) year-over-year. Net interest income increased $47 million (14.0
percent), principally due to higher average loan balances, improved loan rates
and the credit card balance transfer fees classification change. Total
noninterest income decreased $3 million (.4 percent) year-over-year. Credit
and debit card revenue decreased due to lower debit card interchange fees as a
result of recent legislation, net of mitigation efforts, and the impact of
classifying credit card balance transfer fees as interest income in the
current year. However, these negative variances were partially offset by
higher transaction volumes. Partially offsetting this decrease, other revenue
increased due to the impact of the gain on the credit card portfolio sale and
merchant processing services revenue increased, principally due to higher
transaction volumes. Total noninterest expense was basically flat compared
with the third quarter of 2011. The provision for credit losses increased $10
million (8.0 percent) due to a change in the reserve allocation, partially
offset by lower net charge-offs.

Payment Services’ contribution in the third quarter of 2012 was $61 million
(19.4 percent) higher than the second quarter of 2012, due to higher total net
revenue and a lower provision for credit losses. Total net revenue was higher
by $41 million (3.4 percent) than the second quarter of 2012. Net interest
income increased $6 million (1.6 percent), driven by improved rates on loans
and higher loan fees, partially offset by impact of the credit card portfolio
sale. Total noninterest income was $35 million (4.3 percent) higher on a
linked quarter basis. Other revenue increased compared with the prior quarter,
primarily due to the gain on the credit card portfolio sale. Corporate payment
products revenue increased due to seasonally higher volumes. Offsetting these
increases was a decline in credit and debit card revenue, primarily due to a
benefit from the final expiration of debit card customer rewards recognized in
the second quarter of 2012. Merchant processing services revenue declined due
to lower transaction volumes. Total noninterest expense increased $7 million
(1.4 percent) on a linked quarter basis, principally due to the timing of
professional services projects. The provision for credit losses decreased $62
million (31.5 percent) due to a favorable change in the reserve allocation.

Treasury and Corporate Support includes the Company’s investment portfolios,
most covered commercial and commercial real estate loans and related other
real estate owned, 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 net income of $404 million in the third quarter of
2012, compared with net income of $353 million in the third quarter of 2011
and net income of $368 million in the second quarter of 2012. Net interest
income increased $95 million (18.9 percent) over the third quarter of 2011,
reflecting lower long-term funding rates, as well as the impact of wholesale
funding decisions and the Company’s asset/liability position. Total
noninterest income decreased by $4 million (10.3 percent) year-over-year, as
the equity-method investment charge was partially offset by higher commercial
products revenue. In addition, there was a $10 million favorable change in net
securities gains (losses). Total noninterest expense increased by $37 million
(17.8 percent), principally due to increased compensation and employee
benefits expense and litigation and insurance-related matters, partially
offset by lower net shared services expense.

Net income in the third quarter of 2012 was $36 million (9.8 percent) higher
on a linked quarter basis, due to an increase in total net revenue and lower
total noninterest expense. Total net revenue was higher than the second
quarter of 2012 by $41 million (6.9 percent), principally as a result of a 7.9
percent increase in net interest income, reflecting lower long-term funding
rates, partially offset by lower rates on the investment securities portfolio.
Total noninterest income decreased $3 million (7.9 percent) as the
equity-method investment charge was partially offset by higher commercial
products revenue and a favorable change in net securities gains (losses). An
$18 million (6.8 percent) decrease in total noninterest expense on a linked
quarter basis primarily reflected the impact of the Visa accrual in the second
quarter of 2012, partially offset by higher costs related to investments in
affordable housing other tax-advantaged projects in the current quarter.

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.

On Wednesday, October 17, 2012, at 8:00 a.m. (CDT) 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. The conference call will be available by telephone or on the
Internet. A presentation will be used during the call and will be available on
the Company’s website at www.usbank.com. 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 24046933. 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
Wednesday, October 17th, and will run through Wednesday, October 24th, at
11:00 p.m. (CDT). To access the recorded message within the United States and
Canada, dial 855-859-2056. If calling from outside the United States and
Canada, please dial 404-537-3406 to access the recording. The conference ID is
24046933. To access the webcast and presentation go to www.usbank.com and
click on “About U.S. Bank.” The “Webcasts & Presentations” link can be found
under the Investor/Shareholder information heading, which is at the left side
of the bottom of the page.

Minneapolis-based U.S. Bancorp (“USB”), with $352 billion in assets as of
September 30, 2012, is the parent company of U.S. Bank National Association,
the 5th largest commercial bank in the United States. The Company operates
3,086 banking offices in 25 states and 5,080 ATMs and provides a comprehensive
line of banking, brokerage, insurance, investment, mortgage, trust and payment
services products to consumers, businesses and institutions. U.S. Bancorp and
its employees are dedicated to improving the communities they serve, for which
the company earned the 2011 Spirit of America Award, the highest honor
bestowed on a company by United Way. 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 and are based
on the information available to, and assumptions and estimates made by,
management as of the date made. These forward-looking statements cover, among
other things, anticipated future revenue and expenses and the future plans and
prospects of U.S. Bancorp. Forward-looking statements involve inherent risks
and uncertainties, and important factors could cause actual results to differ
materially from those anticipated. Global and domestic economies could fail to
recover from the recent economic downturn or could experience another severe
contraction, which could adversely affect U.S. Bancorp’s revenues and the
values of its assets and liabilities. Global financial markets could
experience a recurrence of significant turbulence, which could reduce the
availability of funding to certain financial institutions and lead to a
tightening of credit, a reduction of business activity, and increased market
volatility. Continued stress in the commercial real estate markets, as well as
a delay or failure of recovery in the residential real estate markets, could
cause additional credit losses and deterioration in asset values. In addition,
U.S. Bancorp’s business and financial performance is likely to be negatively
impacted by effects of recently enacted and future legislation and regulation.
U.S. Bancorp’s results could also be adversely affected by continued
deterioration in general business and economic conditions; changes in interest
rates; deterioration in the credit quality of its loan portfolios or in the
value of the collateral securing those loans; deterioration in the value of
securities held in its 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, residual value
risk, market risk, operational risk, interest rate risk, and liquidity risk.

For discussion of these and other risks that may cause actual results to
differ from expectations, refer to U.S. Bancorp’s Annual Report on Form 10-K
for the year ended December 31, 2011, on file with the Securities and Exchange
Commission, including the sections entitled “Risk Factors” and “Corporate Risk
Profile” contained in Exhibit 13, and all subsequent filings with the
Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934. Forward-looking statements speak only as
of the date they are made, and U.S. Bancorp undertakes no obligation to update
them in light of new information or future events.

Non-GAAP Financial Measures

In addition to capital ratios defined by banking regulators under the FDIC
Improvement Act prompt corrective action provisions applicable to all banks,
the Company considers various other measures when evaluating capital
utilization and adequacy, including:

  *Tangible common equity to tangible assets,
  *Tangible common equity to risk-weighted assets using Basel I definition,
  *Tier 1 common equity to risk-weighted assets using Basel I definition,
  *Tier 1 common equity to risk-weighted assets using Basel III proposals
    published prior to June 2012, and
  *Tier 1 common equity to risk-weighted assets approximated using proposed
    rules for the Basel III standardized approach released June 2012.

These measures are viewed by management as useful additional methods of
reflecting the level of capital available to withstand unexpected market or
economic conditions. Additionally, presentation of these measures allows
investors, analysts and banking regulators to assess the Company’s capital
position relative to other financial services companies. These measures differ
from capital ratios defined by current banking regulations principally in that
the numerator excludes trust preferred securities and preferred stock, the
nature and extent of which varies among different financial services
companies. These measures are not defined in generally accepted accounting
principals (“GAAP”) or federal banking regulations. As a result, these
measures disclosed by the Company may be considered non-GAAP financial
measures.

There may be limits in the usefulness of these measures to investors. As a
result, the Company encourages readers to consider the consolidated financial
statements and other financial information contained in this press release in
their entirety, and not to rely on any single financial measure. A table
follows that shows the Company’s calculation of these non-GAAP financial
measures.

                                                               
                                                                      
U.S. Bancorp
Consolidated Statement of
Income
                                                                      
                                 Three Months Ended      Nine Months Ended
(Dollars and Shares in
Millions, Except Per Share       September 30,         September 30,
Data)
(Unaudited)                    2012     2011       2012       2011
Interest Income                          
Loans                            $2,650     $2,621       $7,919       $7,736
Loans held for sale              76         42           208          139
Investment securities            438        470          1,376        1,357
Other interest income            63       67        184       187    
Total interest income            3,227      3,200        9,687        9,419
Interest Expense
Deposits                         172        202          530          646
Short-term borrowings            103        143          353          407
Long-term debt                   226      289       786       860    
Total interest expense           501      634       1,669     1,913  
Net interest income              2,726      2,566        8,018        7,506
Provision for credit losses      488      519       1,439     1,846  
Net interest income after        2,238      2,047        6,579        5,660
provision for credit losses
Noninterest Income
Credit and debit card            213        289          650          842
revenue
Corporate payment products       201        203          566          563
revenue
Merchant processing services     345        338          1,041        977
ATM processing services          87         115          263          341
Trust and investment             265        241          779          755
management fees
Deposit service charges          174        183          483          488
Treasury management fees         135        137          411          418
Commercial products revenue      225        212          652          621
Mortgage banking revenue         519        245          1,461        683
Investment products fees and     38         31           111          98
commissions
Securities gains (losses),       1          (9     )     (18    )     (22    )
net
Other                            193      186       591       565    
Total noninterest income         2,396      2,171        6,990        6,329
Noninterest Expense
Compensation                     1,109      1,021        3,237        2,984
Employee benefits                225        203          714          643
Net occupancy and equipment      233        252          683          750
Professional services            144        100          364          252
Marketing and business           96         102          285          257
development
Technology and                   205        189          607          563
communications
Postage, printing and            75         76           226          226
supplies
Other intangibles                67         75           208          225
Other                            455      458       1,446     1,315  
Total noninterest expense        2,609    2,476     7,770     7,215  
Income before income taxes       2,025      1,742        5,799        4,774
Applicable income taxes          593      490       1,684     1,314  
Net income                       1,432      1,252        4,115        3,460
Net (income) loss
attributable to                  42       21        112       62     
noncontrolling interests
Net income attributable to       $1,474   $1,273    $4,227    $3,522 
U.S. Bancorp
Net income applicable to
U.S. Bancorp common              $1,404   $1,237    $4,034    $3,407 
shareholders
                                                                      
Earnings per common share        $.74       $.65         $2.13        $1.78
Diluted earnings per common      $.74       $.64         $2.12        $1.77
share
Dividends declared per           $.195      $.125        $.585        $.375
common share
Average common shares            1,886      1,915        1,892        1,918
outstanding
Average diluted common         1,897    1,922     1,901     1,926  
shares outstanding
                                                                             

                                                      
U.S. Bancorp
Consolidated Ending
Balance Sheet
                                                                   
                          September 30,     December 31,           September
                                                                   30,
(Dollars in Millions)   2012            2011                 2011
Assets                    (Unaudited)                              (Unaudited)
Cash and due from         $9,382            $13,962                $13,708
banks
Investment securities
Held-to-maturity          34,509            18,877                 16,269
Available-for-sale        39,636            51,937                 52,109
Loans held for sale       9,879             7,156                  5,375
Loans
Commercial                62,910            56,648                 53,832
Commercial real           36,813            35,851                 35,603
estate
Residential mortgages     41,902            37,082                 35,124
Credit card               16,402            17,360                 16,332
Other retail              47,965         48,107              48,479    
Total loans,
excluding covered         205,992           195,048                189,370
loans
Covered loans             12,158         14,787              15,398    
Total loans               218,150           209,835                204,768
Less allowance for        (4,481     )    (4,753    )          (4,950    )
loan losses
Net loans                 213,669           205,082                199,818
Premises and              2,650             2,657                  2,581
equipment
Goodwill                  8,943             8,927                  8,933
Other intangible          2,533             2,736                  2,675
assets
Other assets              31,052         28,788              28,673    
Total assets              $352,253       $340,122            $330,141  
                                                                   
Liabilities and
Shareholders' Equity
Deposits
Noninterest-bearing       $72,982           $68,579                $64,228
Interest-bearing          136,583           134,757                130,332
Time deposits greater     34,667         27,549              28,072    
than $100,000
Total deposits            244,232           230,885                222,632
Short-term borrowings     27,853            30,468                 32,029
Long-term debt            26,264            31,953                 30,624
                                                           
Other liabilities         14,079         11,845       <*Story
                                                           too
                                                           large*

[TRUNCATED]