US BANCORP \DE\ - FORM 8-K - EX-99.1

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Exhibit 99.1


		News Release
		Contacts:
		Dana Ripley		Sean O’Connor
		Media		Investors/Analysts
		(612) 303-3167		(612) 303-0778

U.S. BANCORP REPORTS FOURTH QUARTER AND FULL YEAR 2014 EARNINGS

Achieves Record Net Income and EPS for the Full Year 2014

MINNEAPOLIS, January 21, 2015 — U.S. Bancorp (NYSE: USB) today reported net income of $1,488 million for the fourth quarter of 2014, or $.79 per diluted common share, compared with $1,456 million, or $.76 per diluted common share, in the fourth quarter of 2013. The fourth quarter of 2014 reflected notable items related to equity investments, charitable contributions and accruals for legal matters that, combined, increased diluted earnings per common share for the current quarter by $.01.

Highlights for the full year 2014 included:

•

Record full year 2014 net income of $5.85 billion

•

Record full year diluted earnings per common share of $3.08, 2.7 percent higher than 2013

•

Industry-leading performance measures, including return on average assets of 1.54 percent, return on average common equity of 14.7 percent and efficiency ratio of 53.2 percent

•

Returned 72 percent of 2014 earnings to shareholders through dividends and share buybacks

Highlights for the fourth quarter of 2014 included:

•

Growth in average total loans of 5.9 percent over the fourth quarter of 2013 (5.5 percent excluding the Charter One franchise acquisition in late June 2014 and 7.1 percent excluding covered loans) and 1.0 percent on a linked quarter basis (1.2 percent excluding covered loans)

•

Growth in average total commercial loans of 15.5 percent over the fourth quarter of 2013 and 2.9 percent over the third quarter of 2014

•

Growth in average total commercial real estate loans of 4.2 percent over the fourth quarter of 2013 and .3 percent over the third quarter of 2014

•

Growth in average commercial and commercial real estate commitments of 13.3 percent year-over-year and 3.0 percent over the prior quarter

•

Strong new lending activity of $63.9 billion during the fourth quarter, including:

•

$44.2 billion of new and renewed commercial and commercial real estate commitments

•

$2.9 billion of lines related to new credit card accounts

•

$16.8 billion of mortgage and other retail loan originations

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 2

•

Net interest income growth over the fourth quarter of 2013 and third quarter 2014

•

Average earning assets growth of 11.1 percent year-over-year and 2.5 percent linked quarter

•

Continued strong growth in lower cost core deposit funding on a year-over-year and linked quarter basis

•

Decline in net charge-offs of 8.3 percent on a linked quarter basis and 1.3 percent on a year-over-year basis. Provision for credit losses was $20 million less than net charge-offs in the current quarter

•

Allowance for credit losses to period-end loans was 1.77 percent at December 31, 2014

•

Annualized net charge-offs to average total loans ratio decreased to .50 percent

•

Decreases in nonperforming assets of 11.2 percent on a year-over-year basis and 6.0 percent on a linked quarter basis

•

Growth in average total deposits of 7.2 percent over the fourth quarter of 2013 (5.5 percent excluding the Charter One acquisition) and 1.6 percent on a linked quarter basis

•

Average low cost deposits, including noninterest-bearing and total savings deposits, grew by 9.6 percent year-over-year and 2.4 percent on a linked quarter basis

•

Capital generation continued to reinforce capital position and returns. Ratios at December 31, 2014, were:

•

Basel III transitional standardized approach:

•

Common equity tier 1 capital ratio of 9.7 percent

•

Tier 1 capital ratio of 11.3 percent

•

Total risk-based capital ratio of 13.6 percent

•

Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach of 9.0 percent and for the Basel III fully implemented advanced approaches of 11.8 percent

•

Returned 66 percent of fourth quarter earnings to shareholders through dividends and the buyback of 11 million common shares

•

Compliant with fully implemented U.S. Liquidity Coverage Ratio (“LCR”) based on the Company’s interpretation of the U.S. final LCR rule

•

The notable items in the fourth quarter of 2014 included a $124 million gain related to an equity interest in Nuveen Investments (“Nuveen gain”) and $88 million of additional noninterest expense comprised of $35 million of charitable contributions and $53 million related to recent developments in certain legal matters.

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 3


EARNINGS SUMMARY			Table 1
($ in millions, except per-share data)


	4Q 2014		3Q 2014		4Q 2013		Percent Change 4Q14 vs 3Q14		Percent Change 4Q14 vs 4Q13		Full Year 2014		Full Year 2013		Percent Change
Net income attributable to U.S. Bancorp	$	1,488	$	1,471	$	1,456		1.2		2.2	$	5,851	$	5,836		.3
Diluted earnings per common share	$	.79	$	.78	$	.76		1.3		3.9	$	3.08	$	3.00		2.7
Return on average assets (%)		1.50		1.51		1.62						1.54		1.65
Return on average common equity (%)		14.4		14.5		15.4						14.7		15.8
Net interest margin (%)		3.14		3.16		3.40						3.23		3.44
Efficiency ratio (%)		54.3		52.4		54.9						53.2		52.4
Tangible efficiency ratio (%) (a)		53.3		51.3		53.7						52.2		51.3
Dividends declared per common share	$	.245	$	.245	$	.230		—		6.5	$	.965	$	.885		9.0
Book value per common share (period-end)	$	21.68	$	21.38	$	19.92		1.4		8.8

(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 $1,488 million for the fourth quarter of 2014, 2.2 percent higher than the $1,456 million for the fourth quarter of 2013, and 1.2 percent higher than the $1,471 million for the third quarter of 2014. Diluted earnings per common share of $.79 in the fourth quarter of 2014 were $.03 higher than the fourth quarter of 2013 and $.01 higher than the previous quarter. Return on average assets and return on average common equity were 1.50 percent and 14.4 percent, respectively, for the fourth quarter of 2014, compared with 1.62 percent and 15.4 percent, respectively, for the fourth quarter of 2013. The provision for credit losses was lower than net charge-offs by $20 million in the fourth quarter of 2014, $25 million lower than net charge-offs in the third quarter of 2014, and $35 million lower than net charge-offs in the fourth quarter of 2013.

U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis said, “U.S. Bancorp delivered another solid financial performance in 2014 with record full year net income of $5.85 billion, or $3.08 per diluted common share. Our fourth quarter results were also solid with net income of $1.49 billion, or $.79 per diluted common share. We maintained our industry-leading performance measures, including return on average assets (ROA) of 1.54 percent, return on average common equity (ROE) of 14.7 percent, and an efficiency ratio of 53.2 percent for the full year of 2014. We are proud of the hard work and dedication of our global team and for their commitment to providing customers with a diverse array of banking products and services, backed by the financial strength of U.S. Bancorp.”

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 4

Davis continued, “In 2014, we demonstrated our ability to create value for our shareholders and customers by returning 72 percent of our earnings to shareholders through dividends and share buybacks, and by generating steady growth in commercial and consumer lending, new credit card accounts, total deposits, and wealth management services. The diversification of our business profile continues to be a key advantage for the organization. We are particularly encouraged by the 5.7 percent growth in total net revenue, the 15.5 percent growth in average total commercial loans, and the 7.2 percent growth in average total deposits over the fourth quarter of last year. At the same time, we are preserving our strong capital position with our key capital ratios at or above our targets.”

“As we head into 2015, we remain committed to investing in a strategy centered on helping our retail, wholesale and institutional customers establish financially secure futures. We are well positioned for growth as the economic environment shows signs of improvement and our customers look for a strong and stable banking partner to help them achieve their distinct financial goals and objectives.”


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


	4Q 2014			3Q 2014			4Q 2013			Percent Change 4Q14 vs 3Q14			Percent Change 4Q14 vs 4Q13			Full Year 2014			Full Year 2013		Percent Change
Net interest income	$	2,799		$	2,748		$	2,733			1.9			2.4		$	10,997		$	10,828		1.6
Noninterest income		2,370			2,242			2,156			5.7			9.9			9,164			8,774		4.4

Total net revenue		5,169			4,990			4,889			3.6			5.7			20,161			19,602		2.9
Noninterest expense		2,804			2,614			2,682			7.3			4.5			10,715			10,274		4.3

Income before provision and taxes		2,365			2,376			2,207			(.5	)		7.2			9,446			9,328		1.3
Provision for credit losses		288			311			277			(7.4	)		4.0			1,229			1,340		(8.3	)

Income before taxes		2,077			2,065			1,930			.6			7.6			8,217			7,988		2.9
Taxable-equivalent adjustment		55			56			56			(1.8	)		(1.8	)		222			224		(.9	)
Applicable income taxes		521			523			403			(.4	)		29.3			2,087			2,032		2.7

Net income		1,501			1,486			1,471			1.0			2.0			5,908			5,732		3.1
Net (income) loss attributable to noncontrolling interests		(13	)		(15	)		(15	)		13.3			13.3			(57	)		104		nm

Net income attributable to U.S. Bancorp	$	1,488		$	1,471		$	1,456			1.2			2.2		$	5,851		$	5,836		.3

Net income applicable to U.S. Bancorp common shareholders	$	1,420		$	1,405		$	1,389			1.1			2.2		$	5,583		$	5,552		.6

Diluted earnings per common share	$	.79		$	.78		$	.76			1.3			3.9		$	3.08		$	3.00		2.7

Net income attributable to U.S. Bancorp for the fourth quarter of 2014 was $32 million (2.2 percent) higher than the fourth quarter of 2013, and $17 million (1.2 percent) higher than the third quarter of 2014.

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 5

The increase in net income year-over-year was principally due to an increase in total net revenue, driven by increases in net interest income and fee-based revenue, and the net impact of notable items. The increase in net income on a linked quarter basis was due to higher net interest income, the net impact of the notable items and a decrease in the provision for credit losses.

Total net revenue on a taxable-equivalent basis for the fourth quarter of 2014 was $5,169 million, which was $280 million (5.7 percent) higher than the fourth quarter of 2013, reflecting a 9.9 percent increase in noninterest income and a 2.4 percent increase in net interest income. Noninterest income increased year-over-year due to higher revenue in most fee businesses and higher other income, including the impact of the Nuveen gain. The increase in net interest income year-over-year was the result of an increase in average earning assets and continued growth in lower cost core deposit funding, partially offset by lower loan fees due to the previously communicated wind down of the short-term, small-dollar deposit advance product, Checking Account Advance (“CAA”). Total net revenue on a taxable-equivalent basis was $179 million (3.6 percent) higher on a linked quarter basis due to a 5.7 percent increase in noninterest income as a result of the Nuveen gain and a 1.9 percent increase in net interest income, the result of an increase in average earning assets and growth in lower cost deposits.

Total noninterest expense in the fourth quarter of 2014 was $2,804 million, which was $122 million (4.5 percent) higher than the fourth quarter of 2013 and $190 million (7.3 percent) higher than the third quarter of 2014. The increase in total noninterest expense year-over-year was primarily due to accruals related to recent developments in several legal matters, charitable contributions and an increase in compensation expense, reflecting the impact of merit increases, acquisitions, and higher staffing for risk and compliance activities. The increase in total noninterest expense on a linked quarter basis was due to seasonally higher costs related to investments in tax-advantaged projects and professional services and the notable items, including the charitable contributions and legal accruals.

The Company’s provision for credit losses for the fourth quarter of 2014 was $288 million, $23 million (7.4 percent) lower than the prior quarter and $11 million (4.0 percent) higher than the fourth quarter of 2013. The provision for credit losses was lower than net charge-offs by $20 million in the fourth quarter of 2014, $25 million lower than net charge-offs in the third quarter of 2014, and $35 million lower than net charge-offs in the fourth quarter of 2013. Net charge-offs in the fourth quarter of 2014 were $308 million, compared with $336 million in the third quarter of 2014, and $312 million in the fourth quarter of 2013. Given current economic conditions, the Company expects the level of net charge-offs to remain relatively stable in the first quarter of 2015.

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 6

Nonperforming assets were $1,808 million at December 31, 2014, compared with $1,923 million at September 30, 2014, and $2,037 million at December 31, 2013. The decrease in nonperforming assets compared with a year ago was driven primarily by reductions in the commercial, commercial mortgage and construction and development portfolios, as well as by improvement in credit card loans. The Company expects total nonperforming assets to remain relatively stable in the first quarter of 2015. The ratio of the allowance for credit losses to period-end loans was 1.77 percent at December 31, 2014, compared with 1.80 percent at September 30, 2014, and 1.93 percent at December 31, 2013. Certain loans acquired by the Company are covered under loss sharing agreements with the FDIC that substantially reduce the risk of credit losses to the Company (“covered assets”). The loss sharing agreement for the commercial and commercial real estate loans acquired from the FDIC, which comprised the majority of the nonperforming covered assets, expired at the end of the fourth quarter of 2014.

NET INTEREST INCOME

Table 3

(Taxable-equivalent basis; $ in millions)


	4Q 2014			3Q 2014			4Q 2013			Change 4Q14 vs 3Q14			Change 4Q14 vs 4Q13			Full Year 2014			Full Year 2013			Change
Components of net interest income
Income on earning assets	$	3,158		$	3,114		$	3,125		$	44		$	33		$	12,454		$	12,513		$	(59	)
Expense on interest-bearing liabilities		359			366			392			(7	)		(33	)		1,457			1,685			(228	)

Net interest income	$	2,799		$	2,748		$	2,733		$	51		$	66		$	10,997		$	10,828		$	169

Average yields and rates paid
Earning assets yield		3.54	%		3.58	%		3.89	%		(.04	)%		(.35	)%		3.65	%		3.97	%		(.32	)%
Rate paid on interest-bearing liabilities		.55			.57			.68			(.02	)		(.13	)		.58			.73			(.15	)

Gross interest margin		2.99	%		3.01	%		3.21	%		(.02	)%		(.22	)%		3.07	%		3.24	%		(.17	)%

Net interest margin		3.14	%		3.16	%		3.40	%		(.02	)%		(.26	)%		3.23	%		3.44	%		(.21	)%

Average balances
Investment securities (a)	$	98,164		$	93,141		$	77,248		$	5,023		$	20,916		$	90,327		$	75,046		$	15,281
Loans		246,421			243,867			232,791			2,554			13,630			241,692			227,474			14,218
Earning assets		354,961			346,422			319,516			8,539			35,445			340,994			315,139			25,855
Interest-bearing liabilities		259,938			254,501			229,201			5,437			30,737			249,972			230,400			19,572

(a)	Excludes unrealized gain (loss)

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 7

Net Interest Income

Net interest income on a taxable-equivalent basis in the fourth quarter of 2014 was $2,799 million, an increase of $66 million (2.4 percent) over the fourth quarter of 2013. The increase was the result of growth in average earning assets and in lower cost core deposit funding, partially offset by lower rates on new loans and securities and the CAA product wind down. Average earning assets were $35.4 billion (11.1 percent) higher than the fourth quarter of 2013, driven by increases of $20.9 billion (27.1 percent) in average investment securities and $13.6 billion (5.9 percent) in average total loans. Net interest income increased $51 million (1.9 percent) on a linked quarter basis, due to higher average earning assets, partially offset by lower loan and investment securities rates. The net interest margin in the fourth quarter of 2014 was 3.14 percent, compared with 3.40 percent in the fourth quarter of 2013, and 3.16 percent in the third quarter of 2014. The decline in the net interest margin on a year-over-year basis primarily reflected lower reinvestment rates on investment securities, as well as growth in the investment portfolio at lower average rates, lower loan fees due to the CAA product wind down, and lower rates on new loans, partially offset by lower funding costs. On a linked quarter basis, the reduction in net interest margin was principally due to growth in lower rate investment securities, partially offset by interest recoveries.

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 8

AVERAGE LOANS

Table 4

($ in millions)


	4Q 2014		3Q 2014		4Q 2013		Percent Change 4Q14 vs 3Q14			Percent Change 4Q14 vs 4Q13			Full Year 2014		Full Year 2013		Percent Change
Commercial	$	74,333	$	72,190	$	63,714		3.0			16.7		$	70,549	$	62,012		13.8
Lease financing		5,292		5,155		5,210		2.7			1.6			5,185		5,262		(1.5	)

Total commercial		79,625		77,345		68,924		2.9			15.5			75,734		67,274		12.6
Commercial mortgages		31,783		31,965		31,780		(.6	)		—			31,949		31,429		1.7
Construction and development		9,183		8,874		7,538		3.5			21.8			8,643		6,808		27.0

Total commercial real estate		40,966		40,839		39,318		.3			4.2			40,592		38,237		6.2
Residential mortgages		51,872		51,994		50,732		(.2	)		2.2			51,818		47,982		8.0
Credit card		17,990		17,753		17,366		1.3			3.6			17,635		16,813		4.9
Retail leasing		5,939		5,991		5,847		(.9	)		1.6			5,981		5,654		5.8
Home equity and second mortgages		15,853		15,704		15,488		.9			2.4			15,564		15,887		(2.0	)
Other		27,317		27,003		26,059		1.2			4.8			26,808		25,584		4.8

Total other retail		49,109		48,698		47,394		.8			3.6			48,353		47,125		2.6

Total loans, excluding covered loans		239,562		236,629		223,734		1.2			7.1			234,132		217,431		7.7

Covered loans		6,859		7,238		9,057		(5.2	)		(24.3	)		7,560		10,043		(24.7	)

Total loans	$	246,421	$	243,867	$	232,791		1.0			5.9		$	241,692	$	227,474		6.3

Average total loans were $13.6 billion (5.9 percent) higher in the fourth quarter of 2014 than the fourth quarter of 2013, driven by growth in total commercial loans (15.5 percent), total commercial real estate (4.2 percent), credit card (3.6 percent), residential mortgages (2.2 percent), and total other retail loans (3.6 percent). These increases were partially offset by a decline in covered loans (24.3 percent). Average total loans, excluding covered loans, were higher by 7.1 percent year-over-year. Average total loans were $2.6 billion (1.0 percent) higher in the fourth quarter of 2014 than the third quarter of 2014, driven by growth in total commercial loans (2.9 percent), credit card (1.3 percent), total other retail loans (.8 percent) and total commercial real estate (.3 percent). These increases were partially offset by a decline in covered loans (5.2 percent) and residential mortgages (.2 percent). Average total loans, excluding covered loans, were higher by 1.2 percent on a linked quarter basis.

Average investment securities in the fourth quarter of 2014 were $20.9 billion (27.1 percent) higher year-over-year and $5.0 billion (5.4 percent) higher than the prior quarter. The increases were primarily due to purchases of U.S. government agency-backed securities, net of prepayments and maturities, in anticipation of final liquidity coverage ratio regulatory requirements.

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 9


AVERAGE DEPOSITS			Table 5
($ in millions)


	4Q 2014		3Q 2014		4Q 2013		Percent Change 4Q14 vs 3Q14			Percent Change 4Q14 vs 4Q13			Full Year 2014		Full Year 2013		Percent Change
Noninterest-bearing deposits	$	76,958	$	74,126	$	74,468		3.8			3.3		$	73,455	$	69,020		6.4
Interest-bearing savings deposits
Interest checking		54,199		54,454		50,112		(.5	)		8.2			53,248		48,792		9.1
Money market savings		68,914		66,250		57,550		4.0			19.7			63,977		55,512		15.2
Savings accounts		34,955		34,615		32,235		1.0			8.4			34,196		31,916		7.1

Total of savings deposits		158,068		155,319		139,897		1.8			13.0			151,421		136,220		11.2
Time deposits less than $100,000		10,766		11,045		11,979		(2.5	)		(10.1	)		11,054		12,804		(13.7	)
Time deposits greater than $100,000		29,687		30,518		30,562		(2.7	)		(2.9	)		30,710		32,413		(5.3	)

Total interest-bearing deposits		198,521		196,882		182,438		.8			8.8			193,185		181,437		6.5

Total deposits	$	275,479	$	271,008	$	256,906		1.6			7.2		$	266,640	$	250,457		6.5

Average total deposits for the fourth quarter of 2014 were $18.6 billion (7.2 percent) higher than the fourth quarter of 2013. Average noninterest-bearing deposits increased $2.5 billion (3.3 percent) year-over-year, mainly in Consumer and Small Business Banking, including the $.4 billion impact of the Charter One acquisition. Average total savings deposits were $18.2 billion (13.0 percent) higher year-over-year, the result of growth in Consumer and Small Business Banking, including the $3.3 billion impact of the Charter One acquisition, corporate trust, and in Wholesale Banking and Commercial Real Estate balances. Time deposits less than $100,000 were $1.2 billion (10.1 percent) lower due to maturities, while time deposits greater than $100,000 decreased $875 million (2.9 percent), primarily due to a decline in Wholesale Banking and Commercial Real Estate and Consumer and Small Business Banking balances. 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 $4.5 billion (1.6 percent) over the third quarter of 2014. Average noninterest-bearing deposits increased $2.8 billion (3.8 percent) on a linked quarter basis, due to higher balances in Wholesale Banking and Commercial Real Estate and Consumer and Small Business Banking. Average total savings deposits increased $2.7 billion (1.8 percent), reflecting increases in corporate trust and Consumer and Small Business Banking, partially offset by a decrease in broker-dealer and government banking related balances. Compared with the third quarter of 2014, average time deposits less than $100,000 decreased $279 million (2.5 percent) due to a decrease in Consumer and Small Business Banking. Average

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 10

time deposits greater than $100,000 decreased $831 million (2.7 percent) on a linked quarter basis, principally due to a decline in corporate trust balances.


NONINTEREST INCOME		Table 6
($ in millions)


	4Q 2014		3Q 2014			4Q 2013		Percent Change 4Q14 vs 3Q14			Percent Change 4Q14 vs 4Q13			Full Year 2014		Full Year 2013		Percent Change
Credit and debit card revenue	$	272	$	251		$	263		8.4			3.4		$	1,021	$	965		5.8
Corporate payment products revenue		174		195			166		(10.8	)		4.8			724		706		2.5
Merchant processing services		384		387			367		(.8	)		4.6			1,511		1,458		3.6
ATM processing services		80		81			79		(1.2	)		1.3			321		327		(1.8	)
Trust and investment management fees		322		315			297		2.2			8.4			1,252		1,139		9.9
Deposit service charges		180		185			177		(2.7	)		1.7			693		670		3.4
Treasury management fees		136		136			130		—			4.6			545		538		1.3
Commercial products revenue		219		209			243		4.8			(9.9	)		854		859		(.6	)
Mortgage banking revenue		235		260			231		(9.6	)		1.7			1,009		1,356		(25.6	)
Investment products fees		49		49			45		—			8.9			191		178		7.3
Securities gains (losses), net		1		(3	)		1		nm			—			3		9		(66.7	)
Other		318		177			157		79.7			nm			1,040		569		82.8

Total noninterest income	$	2,370	$	2,242		$	2,156		5.7			9.9		$	9,164	$	8,774		4.4

Noninterest Income

Fourth quarter noninterest income was $2,370 million, which was $214 million (9.9 percent) higher than the fourth quarter of 2013 and $128 million (5.7 percent) higher than the third quarter of 2014. The year-over-year increase in noninterest income was due to increases in other income and a majority of fee revenue categories, partially offset by a reduction in commercial products revenue. The increase in other income of $161 million was primarily due to higher equity investment gains, including the Nuveen gain, and increased revenue from tax-advantaged projects. Trust and investment management fees increased $25 million (8.4 percent) year-over-year, reflecting account growth, improved market conditions and business expansion. Merchant processing services revenue was $17 million (4.6 percent) higher as a result of an increase in product fees and higher volumes, partially offset by lower rates. Credit and debit card revenue increased $9 million (3.4 percent) and corporate payment products revenue increased $8 million (4.8 percent) over the fourth quarter of 2013 primarily due to higher transaction volumes. The decrease in commercial products revenue of $24 million (9.9 percent) was primarily due to lower tax-advantaged project syndication fees.

Noninterest income was $128 million (5.7 percent) higher in the fourth quarter of 2014 than the third quarter of 2014, primarily due to a $141 million (79.7 percent) increase in other income, partially offset by

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lower mortgage banking revenue and seasonally lower corporate payment products revenue. The increase in other income was primarily due to the Nuveen gain and higher revenue from tax-advantaged projects. Credit and debit card revenue increased $21 million (8.4 percent) primarily due to seasonally higher sales volumes. Commercial products revenue increased $10 million (4.8 percent) primarily due to higher loan and tax-advantaged project syndication fees. Trust and investment management fees were $7 million (2.2 percent) higher than the prior quarter due to improved market conditions and higher fees. Partially offsetting these increases were decreases in mortgage banking revenue and corporate payment products revenue. Mortgage banking revenue decreased $25 million (9.6 percent), principally due to a decrease in origination and sales revenue and an $8 million unfavorable change in the valuation of mortgage servicing rights (“MSRs”), net of hedging activities. Corporate payment products revenue decreased $21 million (10.8 percent) on a linked quarter basis, primarily due to the impact of seasonally higher third quarter government-related transaction volumes.


NONINTEREST EXPENSE		Table 7
($ in millions)


	4Q 2014		3Q 2014		4Q 2013		Percent Change 4Q14 vs 3Q14			Percent Change 4Q14 vs 4Q13			Full Year 2014		Full Year 2013		Percent Change
Compensation	$	1,151	$	1,132	$	1,103		1.7			4.4		$	4,523	$	4,371		3.5
Employee benefits		245		250		275		(2.0	)		(10.9	)		1,041		1,140		(8.7	)
Net occupancy and equipment		248		249		240		(.4	)		3.3			987		949		4.0
Professional services		132		102		118		29.4			11.9			414		381		8.7
Marketing and business development		129		78		103		65.4			25.2			382		357		7.0
Technology and communications		219		219		209		—			4.8			863		848		1.8
Postage, printing and supplies		86		81		80		6.2			7.5			328		310		5.8
Other intangibles		51		51		56		—			(8.9	)		199		223		(10.8	)
Other		543		452		498		20.1			9.0			1,978		1,695		16.7

Total noninterest expense	$	2,804	$	2,614	$	2,682		7.3			4.5		$	10,715	$	10,274		4.3

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Noninterest Expense

Noninterest expense in the fourth quarter of 2014 totaled $2,804 million, an increase of $122 million (4.5 percent) over the fourth quarter of 2013, and a $190 million (7.3 percent) increase over the third quarter of 2014. The increase in total noninterest expense year-over-year was primarily the result of the charitable contributions and legal accruals, and higher compensation expense. The increase in compensation expense of $48 million (4.4 percent) reflected the impact of merit increases, acquisitions, and higher staffing for risk and compliance activities. The increase in other noninterest expense of $45 million (9.0 percent) was primarily due to the legal accruals. The increase in marketing and business development expense of $26 million (25.2 percent) was principally due to charitable contributions. Additionally, professional services expense increased $14 million (11.9 percent) due to higher costs across a majority of the lines of business, and technology and communications expense increased $10 million (4.8 percent) as a result of business initiatives across most business lines. Partially offsetting these increases was a $30 million (10.9 percent) reduction in employee benefits expense driven by lower pension costs.

Noninterest expense increased $190 million (7.3 percent) on a linked quarter basis, primarily driven by an increase in other noninterest expense of $91 million (20.1 percent) due to seasonally higher costs related to investments in tax-advantaged projects and the legal accruals. Additionally, marketing and business development expense increased $51 million (65.4 percent) primarily due to charitable contributions and advertising costs. Professional services expense was $30 million (29.4 percent) higher due to seasonally higher costs across a majority of the lines of business including risk and compliance activities. Compensation expense increased $19 million (1.7 percent) principally reflecting the impact of additional employees for risk and compliance activities.

Provision for Income Taxes

The provision for income taxes for the fourth quarter of 2014 resulted in a tax rate on a taxable-equivalent basis of 27.7 percent (effective tax rate of 25.8 percent), compared with 23.8 percent (effective tax rate of 21.5 percent) in the fourth quarter of 2013, and 28.0 percent (effective tax rate of 26.0 percent) in the third quarter of 2014. The increase on a year-over-year basis primarily reflected the affordable housing tax credit change in the first quarter of 2014 and the favorable conclusion of certain tax matters in the fourth quarter of 2013.

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January 21, 2015

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ALLOWANCE FOR CREDIT LOSSES			Table 8
($ in millions)


	4Q 2014			% (b)			3Q 2014			% (b)		2Q 2014			% (b)			1Q 2014			% (b)			4Q 2013			% (b)
Balance, beginning of period	$	4,414					$	4,449				$	4,497					$	4,537					$	4,578
Net charge-offs
Commercial		48			.26			52			.29		52			.30			34			.21			33			.21
Lease financing		(2	)		(.15	)		6			.46		3			.24			2			.16			3			.23

Total commercial		46			.23			58			.30		55			.29			36			.21			36			.21
Commercial mortgages		(3	)		(.04	)		1			.01		(6	)		(.08	)		(1	)		(.01	)		1			.01
Construction and development		(7	)		(.30	)		3			.13		2			.09			(2	)		(.10	)		(30	)		(1.58	)

Total commercial real estate		(10	)		(.10	)		4			.04		(4	)		(.04	)		(3	)		(.03	)		(29	)		(.29	)
Residential mortgages		39			.30			42			.32		57			.44			57			.45			49			.38
Credit card		160			3.53			158			3.53		170			3.92			170			3.96			163			3.72
Retail leasing		1			.07			—			—		1			.07			—			—			—			—
Home equity and second mortgages		17			.43			24			.61		23			.60			31			.82			37			.95
Other		52			.76			49			.72		45			.68			45			.69			52			.79

Total other retail		70			.57			73			.59		69			.58			76			.65			89			.75

Total net charge-offs, excluding covered loans		305			.51			335			.56		347			.60			336			.60			308			.55
Covered loans		3			.17			1			.05		2			.10			5			.24			4			.18

Total net charge-offs		308			.50			336			.55		349			.58			341			.59			312			.53
Provision for credit losses		288						311					324						306						277
Other changes (a)		(19	)					(10	)				(23	)					(5	)					(6	)

Balance, end of period	$	4,375					$	4,414				$	4,449					$	4,497					$	4,537

Components
Allowance for loan losses	$	4,039					$	4,065				$	4,132					$	4,189					$	4,250
Liability for unfunded credit commitments		336						349					317						308						287

Total allowance for credit losses	$	4,375					$	4,414				$	4,449					$	4,497					$	4,537

Gross charge-offs	$	415					$	410				$	432					$	422					$	429
Gross recoveries	$	107					$	74				$	83					$	81					$	117
Allowance for credit losses as a percentage of
Period-end loans, excluding covered loans		1.78						1.81					1.83						1.90						1.94
Nonperforming loans, excluding covered loans		297						291					294						293						297
Nonperforming assets, excluding covered assets		245						245					246						243						242
Period-end loans		1.77						1.80					1.82						1.89						1.93
Nonperforming loans		298						282					279						278						283
Nonperforming assets		242						230					229						225						223

(a)	Includes net changes in credit losses to be reimbursed by the FDIC and reductions in the allowance for covered loans where the reversal of a previously recorded allowance was offset by an associated decrease in the indemnification asset, and the impact of any loan sales.

(b)	Annualized and calculated on average loan balances

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January 21, 2015

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Credit Quality

The allowance for credit losses was $4,375 million at December 31, 2014, compared with $4,414 million at September 30, 2014, and $4,537 million at December 31, 2013. Nonperforming assets declined on a linked quarter and year-over-year basis as economic conditions continued to slowly improve. Total net charge-offs in the fourth quarter of 2014 were $308 million, compared with $336 million in the third quarter of 2014, and $312 million in the fourth quarter of 2013. The $28 million (8.3 percent) decrease in net charge-offs on a linked quarter basis was due to higher recoveries in the commercial and commercial real estate portfolios and improvement in home equity and second mortgages, while the $4 million (1.3 percent) decrease in net charge-offs on a year-over-year basis reflected improvements in residential mortgages and home equity and second mortgages, partially offset by higher commercial loan net charge-offs and lower recoveries in commercial real estate. The Company recorded $288 million of provision for credit losses in the current quarter, which was $20 million less than net charge-offs.

Commercial and commercial real estate loan net charge-offs were $36 million (.12 percent of average loans outstanding) in the fourth quarter of 2014, compared with $62 million (.21 percent of average loans outstanding) in the third quarter of 2014, and $7 million (.03 percent of average loans outstanding) in the fourth quarter of 2013.

Residential mortgage loan net charge-offs were $39 million (.30 percent of average loans outstanding) in the fourth quarter of 2014, compared with $42 million (.32 percent of average loans outstanding) in the third quarter of 2014, and $49 million (.38 percent of average loans outstanding) in the fourth quarter of 2013. Credit card loan net charge-offs were $160 million (3.53 percent of average loans outstanding) in the fourth quarter of 2014, compared with $158 million (3.53 percent of average loans outstanding) in the third quarter of 2014, and $163 million (3.72 percent of average loans outstanding) in the fourth quarter of 2013. Total other retail loan net charge-offs were $70 million (.57 percent of average loans outstanding) in the fourth quarter of 2014, compared with $73 million (.59 percent of average loans outstanding) in the third quarter of 2014, and $89 million (.75 percent of average loans outstanding) in the fourth quarter of 2013.

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January 21, 2015

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The ratio of the allowance for credit losses to period-end loans was 1.77 percent at December 31, 2014, compared with 1.80 percent at September 30, 2014, and 1.93 percent at December 31, 2013. The ratio of the allowance for credit losses to nonperforming loans was 298 percent at December 31, 2014, compared with 282 percent at September 30, 2014, and 283 percent at December 31, 2013.


DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES			Table 9
(Percent)


	Dec 31		Sep 30		Jun 30		Mar 31		Dec 31
	2014		2014		2014		2014		2013
Delinquent loan ratios—90 days or more past due excluding nonperforming loans
Commercial		.05		.05		.06		.06		.08
Commercial real estate		.05		.03		.06		.06		.07
Residential mortgages		.40		.41		.49		.64		.65
Credit card		1.13		1.10		1.06		1.21		1.17
Other retail		.15		.16		.15		.18		.18
Total loans, excluding covered loans		.23		.22		.25		.30		.31
Covered loans		7.48		6.10		6.14		5.83		5.63
Total loans		.38		.39		.43		.49		.51
Delinquent loan ratios—90 days or more past due including nonperforming loans
Commercial		.19		.27		.30		.32		.27
Commercial real estate		.65		.62		.62		.73		.83
Residential mortgages		2.07		2.02		2.06		2.14		2.16
Credit card		1.30		1.32		1.35		1.59		1.60
Other retail		.53		.53		.54		.58		.58
Total loans, excluding covered loans		.83		.84		.87		.95		.97
Covered loans		7.74		7.34		7.73		7.46		7.13
Total loans		.97		1.03		1.08		1.17		1.19

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January 21, 2015

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ASSET QUALITY			Table 10
($ in millions)


	Dec 31		Sep 30		Jun 30		Mar 31		Dec 31
	2014		2014		2014		2014		2013
Nonperforming loans
Commercial	$	99	$	161	$	174	$	174	$	122
Lease financing		13		12		16		14		12

Total commercial		112		173		190		188		134
Commercial mortgages		175		147		121		156		182
Construction and development		84		94		105		113		121

Total commercial real estate		259		241		226		269		303
Residential mortgages		864		841		818		777		770
Credit card		30		40		52		65		78
Other retail		187		184		191		188		191

Total nonperforming loans, excluding covered loans		1,452		1,479		1,477		1,487		1,476
Covered loans		14		88		119		132		127

Total nonperforming loans		1,466		1,567		1,596		1,619		1,603
Other real estate (a)		288		275		279		296		327
Covered other real estate (a)		37		72		58		73		97
Other nonperforming assets		17		9		10		11		10

Total nonperforming assets (b)	$	1,808	$	1,923	$	1,943	$	1,999	$	2,037

Total nonperforming assets, excluding covered assets	$	1,757	$	1,763	$	1,766	$	1,794	$	1,813

Accruing loans 90 days or more past due, excluding covered loans	$	550	$	532	$	581	$	695	$	713

Accruing loans 90 days or more past due	$	945	$	962	$	1,038	$	1,167	$	1,189

Performing restructured loans, excluding GNMA and covered loans	$	2,832	$	2,818	$	2,911	$	3,006	$	3,067

Performing restructured GNMA and covered loans	$	2,273	$	2,685	$	3,072	$	3,003	$	2,932

Nonperforming assets to loans plus ORE, excluding covered assets (%)		.72		.74		.75		.78		.80
Nonperforming assets to loans plus ORE (%)		.73		.78		.80		.84		.86

(a) Includes equity investments in entities whose principal assets are other real estate owned.

(b) Does not include accruing loans 90 days or more past due.

Nonperforming assets at December 31, 2014, totaled $1,808 million, compared with $1,923 million at September 30, 2014, and $2,037 million at December 31, 2013. Total nonperforming assets at December 31, 2014, included $51 million of covered assets. The ratio of nonperforming assets to loans and other real estate was .73 percent at December 31, 2014, compared with .78 percent at September 30, 2014, and .86 percent at December 31, 2013. Total commercial nonperforming loans were $61 million (35.3 percent) lower on a linked quarter basis and $22 million (16.4 percent) lower year-over-year. Commercial real estate

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nonperforming loans increased by $18 million (7.5 percent) on a linked quarter basis but decreased $44 million (14.5 percent) year-over-year. Residential mortgage nonperforming loans increased $23 million (2.7 percent) on a linked quarter basis and $94 million (12.2 percent) year-over-year. Credit card nonperforming loans were $10 million (25.0 percent) lower on a linked quarter basis and $48 million (61.5 percent) lower year-over-year. Other retail nonperforming loans increased $3 million (1.6 percent) on a linked quarter basis but decreased $4 million (2.1 percent) year-over-year.

Accruing loans 90 days or more past due were $945 million ($550 million excluding covered loans) at December 31, 2014, compared with $962 million ($532 million excluding covered loans) at September 30, 2014, and $1,189 million ($713 million excluding covered loans) at December 31, 2013.


COMMON SHARES			Table 11
(Millions)


	4Q 2014			3Q 2014			2Q 2014			1Q 2014			4Q 2013
Beginning shares outstanding		1,795			1,809			1,821			1,825			1,832
Shares issued for stock option and stock purchase plans, acquisitions and other corporate purposes		2			2			3			8			6
Shares repurchased		(11	)		(16	)		(15	)		(12	)		(13	)

Ending shares outstanding		1,786			1,795			1,809			1,821			1,825

Total U.S. Bancorp shareholders’ equity was $43.5 billion at December 31, 2014, compared with $43.1 billion at September 30, 2014, and $41.1 billion at September 30, 2013. During the fourth quarter, the Company returned 66 percent of fourth quarter earnings to shareholders, including $439 million in common stock dividends and $495 million of repurchased common stock.

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January 21, 2015

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CAPITAL POSITION			Table 12
($ in millions)


	Dec 31 2014			Sep 30 2014			Jun 30 2014			Mar 31 2014			Dec 31 2013
Total U.S. Bancorp shareholders’ equity	$	43,479		$	43,141		$	42,700		$	42,054		$	41,113
Standardized Approach
Basel III transitional standardized approach/Basel I (a)
Common equity tier 1 capital	$	30,856		$	30,213		$	29,760		$	29,463		$	27,942
Tier 1 capital		36,020			35,377			34,924			34,627			33,386
Total risk-based capital		43,208			42,509			41,034			40,741			39,340
Common equity tier 1 capital ratio		9.7	%		9.7	%		9.6	%		9.7	%		9.4	%
Tier 1 capital ratio		11.3			11.3			11.3			11.4			11.2
Total risk-based capital ratio		13.6			13.6			13.2			13.5			13.2
Leverage ratio		9.3			9.4			9.6			9.7			9.6
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach		9.0			9.0			8.9			9.0			8.8
Advanced Approaches
Common equity tier 1 capital to risk-weighted assets for the Basel III transitional advanced approaches		12.4			12.4			12.3
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced approaches		11.8			11.8			11.7
Tangible common equity to tangible assets		7.5			7.6			7.5			7.8			7.7
Tangible common equity to risk-weighted assets		9.3			9.3			9.2			9.3			9.1

(a)	2014 amounts and ratios calculated under the Basel III transitional standardized approach; December 31, 2013, under Basel I

Prior to 2014, the regulatory capital requirements effective for the Company followed the Capital Accord of the Basel Committee on Banking Supervision (“Basel I”). Beginning January 1, 2014, the regulatory capital requirements effective for the Company follow Basel III, subject to certain transition provisions from Basel I over the next four years to full implementation by January 1, 2018. Basel III includes two comprehensive methodologies for calculating risk-weighted assets: a general standardized approach and more risk-sensitive advanced approaches. As of April 1, 2014, the Company exited its parallel run qualification period, resulting in its capital adequacy now being evaluated against the Basel III methodology that is most restrictive. Under the Basel III transitional standardized approach, the common equity tier 1 capital ratio was 9.7 percent at December 31, 2014 and at September 30, 2014. The tier 1 capital ratio was 11.3 percent at December 31, 2014 and at September 30, 2014, compared with 11.2 percent at December 31, 2013. Under the Basel III transitional advanced approaches, the common equity tier 1

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capital to risk-weighted assets ratio was 12.4 percent at December 31, 2014 and at September 30, 2014. All regulatory ratios continue to be in excess of “well-capitalized” requirements. In addition, the common equity tier 1 capital to risk-weighted assets ratio estimated for the Basel III standardized approach as if fully implemented was 9.0 percent at December 31, 2014 and at September 30, 2014, compared with 8.8 percent at December 31, 2013, and the common equity tier 1 capital to risk-weighted assets ratio estimated for the Basel III advanced approaches as if fully implemented was 11.8 percent at December 31, 2014 and at September 30, 2014. The tangible common equity to tangible assets ratio was 7.5 percent at December 31, 2014, compared with 7.6 percent at September 30, 2014, and 7.7 percent at December 31, 2013.


LINE OF BUSINESS FINANCIAL PERFORMANCE (a)			Table 13
($ in millions)


	Net Income Attributable to U.S. Bancorp						Percent Change						Net Income Attributable to U.S. Bancorp
Business Line	4Q 2014		3Q 2014		4Q 2013		4Q14 vs 3Q14			4Q14 vs 4Q13			Full Year 2014		Full Year 2013		Percent Change			4Q 2014 Earnings Composition
Wholesale Banking and Commercial Real Estate	$	287	$	267	$	289		7.5			(.7	)	$	1,115	$	1,250		(10.8	)		19	%
Consumer and Small Business Banking		305		309		389		(1.3	)		(21.6	)		1,215		1,505		(19.3	)		21
Wealth Management and Securities Services		66		61		43		8.2			53.5			237		166		42.8			4
Payment Services		294		298		235		(1.3	)		25.1			1,103		980		12.6			20
Treasury and Corporate Support		536		536		500		—			7.2			2,181		1,935		12.7			36

Consolidated Company	$	1,488	$	1,471	$	1,456		1.2			2.2		$	5,851	$	5,836		.3			100	%

(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

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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 2014, 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, international trade services and other financial services to middle market, large corporate, commercial real estate, financial institution, non-profit and public sector clients. Wholesale Banking and Commercial Real Estate contributed $287 million of the Company’s net income in the fourth quarter of 2014, compared with $289 million in the fourth quarter of 2013 and $267 million in the third quarter of 2014. Wholesale Banking and Commercial Real Estate’s net income decreased $2 million (.7 percent) from the same quarter of 2013 due to an increase in noninterest expense and a decrease in total net revenue, partially offset by a lower provision for credit losses. Total net revenue declined by $5 million (.6 percent), due to a 12.8 percent decrease in total noninterest income, partially offset by a 5.9 percent increase in net interest income. Net interest income increased $30 million (5.9 percent) year-over-year, primarily due to an increase in average total loans and deposits, partially offset by lower rates and fees on loans. Total noninterest income decreased by $35 million (12.8 percent), driven by lower wholesale transaction activity and loan-related fees, partially offset by increases in commercial bond underwriting fees. Total noninterest expense was $6 million (2.0 percent) higher compared with a year ago, due to an increase in the FDIC insurance assessment allocation based on the level of commitments and higher net shared services expense. The provision for credit losses was $8 million (32.0 percent) lower year-over-year due to a favorable change in the reserve allocation, partially offset by lower recoveries.

Wholesale Banking and Commercial Real Estate’s contribution to net income in the fourth quarter of 2014 was $20 million (7.5 percent) higher than the third quarter of 2014, due to an increase in total net revenue and a decrease in the provision for credit losses, partially offset by an increase in total noninterest expense. Total net revenue increased by $24 million (3.2 percent) compared with the prior quarter. Net interest income increased by $22 million (4.2 percent) on a linked quarter basis, primarily due to higher average loans and interest recoveries. Total noninterest income was $2 million (.8 percent) higher than the prior quarter primarily due to higher equity investment revenue, partially offset by lower commercial products revenue, including standby letters of credit fees and other loan-related fees. Total noninterest

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January 21, 2015

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expense increased by $5 million (1.6 percent) due to higher compensation and employee benefits expense and seasonally higher net shared services expense. The provision for credit losses decreased by $12 million (41.4 percent) due to higher recoveries, partially offset by an unfavorable change in the reserve allocation.

Consumer and Small Business Banking delivers products and services through banking offices, telephone servicing and sales, on-line services, direct mail, ATM processing and mobile devices, such as mobile phones and tablet computers. It encompasses community banking, metropolitan banking, in-store banking, small business banking, consumer lending, workplace banking, student banking and 24-hour banking (collectively, the retail banking division), as well as mortgage banking. Consumer and Small Business Banking contributed $305 million of the Company’s net income in the fourth quarter of 2014, an $84 million (21.6 percent) decrease from the fourth quarter of 2013 and a $4 million (1.3 percent) decrease from the prior quarter. Within Consumer and Small Business Banking, the retail banking division reported a 39.9 percent decrease in its contribution from the same quarter of last year, principally due to lower total net revenue and an increase in total noninterest expense. Retail banking’s total net revenue was 5.1 percent lower than the fourth quarter of 2013. Net interest income decreased 7.7 percent, primarily as a result of lower fees due to the wind down of the CAA product, lower rates on loans 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 increased 1.3 percent over a year ago, principally due to an increase in retail lease revenue and deposit service charges. Total noninterest expense for the retail banking division in the fourth quarter of 2014 increased 4.4 percent over the same quarter of the prior year, primarily due to merger integration costs and higher compensation and employee benefits expense, partially offset by lower FDIC insurance assessments. The provision for credit losses for the retail banking division increased $70 million on a year-over-year basis due to an unfavorable change in the reserve allocation, partially offset by lower net charge-offs. The contribution of the mortgage banking division was higher by 32.7 percent than the fourth quarter of 2013, reflecting a reduction in the provision for credit losses and an increase in total net revenue. The division’s 4.0 percent increase in total net revenue was due to a 6.0 percent increase in net interest income, primarily the result of higher average loan and deposit balances, as well as a 2.6 percent increase in total noninterest income, principally due to a favorable change in the valuation of MSRs, net of hedging activities. Total noninterest expense was relatively flat compared with the prior year, as higher mortgage servicing-related expenses were partially offset by lower incentive compensation. The 97.3 percent favorable change in the provision for credit losses for the mortgage banking division was due to a favorable change in the reserve allocation and lower net charge-offs.

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

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Consumer and Small Business Banking’s contribution in the fourth quarter of 2014 was $4 million (1.3 percent) lower than the third quarter of 2014, primarily due to a decrease in total net revenue, partially offset by a decrease in the provision for credit losses. Within Consumer and Small Business Banking, the retail banking division’s contribution increased 1.7 percent, mainly due to a decrease in the provision for credit losses, partially offset by a decrease in total net revenue. Total net revenue for the retail banking division decreased 1.3 percent compared with the previous quarter. Net interest income was relatively flat compared with the prior quarter due to higher average loan and deposit balances offset by lower rates and lower loan fees. Total noninterest income was 2.9 percent lower on a linked quarter basis, driven by lower deposit service charges. Total noninterest expense increased 1.0 percent on a linked quarter basis due to higher marketing, professional services, and compensation expenses. The provision for credit losses decreased 35.5 percent on a linked quarter basis due to lower net charge-offs and a favorable change in the reserve allocation in the current quarter. The contribution of the mortgage banking division decreased 5.1 percent from the third quarter of 2014 primarily due to a higher provision for credit losses and lower total net revenue. Total net revenue decreased 4.6 percent due to an 8.6 percent decrease in total noninterest income, the result of lower origination and sales revenue as well as an unfavorable change in the valuation of MSRs, net of hedging activities, partially offset by a 1.9 percent increase in net interest income due to higher average loans held for sale and higher average loan balances. Total noninterest expense decreased 10.9 percent, primarily reflecting lower mortgage servicing-related expenses, partially offset by higher compensation and employee benefits expense. The provision for credit losses for the mortgage banking division increased $15 million on a linked quarter basis primarily due to an unfavorable change in the reserve allocation.

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 $66 million of the Company’s net income in the fourth quarter of 2014, compared with $43 million in the fourth quarter of 2013 and $61 million in the third quarter of 2014. The business line’s contribution was $23 million (53.5 percent) higher than the same quarter of 2013, principally due to an increase in total net revenue. Total net revenue increased by $40 million (9.6 percent) year-over-year, driven by a $25 million (7.5 percent) increase in total noninterest income, reflecting the impact of account growth, improved market conditions, and business expansion. In addition, net interest income increased by $15 million (17.6 percent), principally due

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 23

to higher average loan and deposit balances and an increase in the margin benefit of corporate trust deposits. Total noninterest expense increased by $2 million (.6 percent) primarily as a result of higher professional services and compensation and employee benefits expense, including the impact of business expansion, partially offset by lower net shared services expense. The provision for credit losses increased $2 million compared with the prior year quarter due to an unfavorable change in the reserve allocation.

The business line’s contribution in the fourth quarter of 2014 was $5 million (8.2 percent) higher than the prior quarter. Total net revenue increased on a linked quarter basis, reflecting an increase in net interest income of $4 million (4.2 percent), principally due to higher average deposit balances and the impact of higher rates on the margin benefit from corporate trust deposits. In addition, an increase in total noninterest income of $5 million (1.4 percent) was due to higher trust and investment management fees, resulting from improved market conditions and higher fees. Total noninterest expense was $6 million (1.7 percent) higher than the prior quarter as higher professional services expense was partially offset by lower compensation and employee benefits expense. The provision for credit losses decreased $5 million (83.3 percent) on a linked quarter basis due to a favorable change in the reserve allocation.

Payment Services includes consumer and business credit cards, stored-value cards, debit cards, corporate, government and purchasing card services, consumer lines of credit and merchant processing. Payment Services contributed $294 million of the Company’s net income in the fourth quarter of 2014, compared with $235 million in the fourth quarter of 2013 and $298 million in the third quarter of 2014. The $59 million (25.1 percent) increase in the business line’s contribution over the prior year was 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 by $88 million (7.2 percent) year-over-year. Net interest income increased by $53 million (12.7 percent), primarily due to higher average loan balances and fees and improved loan rates. Total noninterest income was $35 million (4.3 percent) higher year-over-year, due to higher merchant processing services revenue driven by increased product fees and transaction volumes, partially offset by lower rates, and an increase in credit and debit card revenue on higher transaction volumes. Total noninterest expense increased by $21 million (3.4 percent) over the fourth quarter of 2013, primarily due to higher compensation and employee benefits expense and net shared services expense, including the impact of business initiatives, partially offset by reductions in technology and communications expense and other intangibles expense. The provision for credit losses decreased by $23 million (10.6 percent) due to a favorable change in the reserve allocation and lower net charge-offs.

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

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Payment Services’ contribution in the fourth quarter of 2014 decreased $4 million (1.3 percent) from the third quarter of 2014. Total net revenue increased $28 million (2.2 percent) on a linked quarter basis driven by higher net interest income. Net interest income increased by $27 million (6.1 percent) over the third quarter mainly due to higher average loan balances and seasonally lower rebate costs on the Company’s government card program. Total noninterest income increased by $1 million (.1 percent), reflecting an increase in credit and debit card revenue due to higher transaction volumes, partially offset by lower corporate payment products revenue due to seasonally lower government-related transaction volumes. Total noninterest expense was $32 million (5.2 percent) higher on a linked quarter basis primarily due to higher net shared services, professional services, and compensation expenses. The provision for credit losses was $3 million (1.6 percent) higher on a linked quarter basis due to higher net charge-offs and an unfavorable 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, interest rate risk management, the net effect of transfer pricing related to average balances, income taxes not allocated to business lines, including most investments in tax-advantaged projects, 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 $536 million in the fourth quarter of 2014, compared with $500 million in the fourth quarter of 2013 and $536 million in the third quarter of 2014. Net interest income increased by $35 million (6.0 percent) over the fourth quarter of 2013, principally due to an increase in average balances in the investment securities portfolio and lower rates on short-term borrowings, partially offset by lower income from the run-off of acquired assets. Total noninterest income increased by $178 million over the fourth quarter of last year, mainly due to gains on the sales of equity investments and higher commercial products revenue. Total noninterest expense increased by $51 million (18.1 percent), principally due to accruals related to recent developments in several legal matters and charitable contributions, partially offset by a decrease in employee benefits expense resulting from lower pension costs and lower costs for investments in tax-advantaged projects related to a change in accounting for affordable housing investments in the first quarter of 2014. The provision for credit losses was $6 million (60.0 percent) higher year-over-year, due to an increase in net charge-offs, partially offset by a favorable change in the reserve allocation.

Net income in the fourth quarter of 2014 was flat on a linked quarter basis, as an increase in total net revenue was offset by an increase in total noninterest expense and provision for credit losses. Total net

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 25

revenue was $154 million (20.2 percent) higher than the prior quarter primarily due to the Nuveen gain. A $160 million (93.0 percent) increase in total noninterest expense was primarily due to seasonally higher costs related to investments in tax-advantaged projects, accruals related to recent developments in several legal matters and charitable contributions. The provision for credit losses was $9 million higher compared with the third quarter of 2014 due to an increase in net charge-offs, partially offset by a favorable change in the reserve allocation.

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 612-303-4328.

On Wednesday, January 21, 2015, at 8:30 a.m. CST, Richard K. Davis, chairman, president and chief executive officer, and Andrew Cecere, vice chairman and chief operating officer, will host a conference call to review the financial results. The conference call will be available online and by telephone. The presentation used during the call will be available at www.usbank.com. 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. 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 30798560. For those unable to participate during the live call, a recording of the call will be available beginning approximately two hours after the conference call ends on Wednesday, January 21 and will be accessible through Wednesday, January 28 at 11:00 p.m. CST. 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 30798560.

Minneapolis-based U.S. Bancorp (“USB”), with $403 billion in assets as of December 31, 2014, is the parent company of U.S. Bank National Association, the 5th largest commercial bank in the United States. The Company operates 3,176 banking offices in 25 states and 5,022 ATMs and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. Visit U.S. Bancorp on the web at usbank.com.

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 26

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 hereof. 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. A reversal or slowing of the current economic recovery or another severe contraction 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. Stress in the commercial real estate markets, as well as a downturn in the residential real estate markets could cause credit losses and deterioration in asset values. In addition, U.S. Bancorp’s business and financial performance is likely to be negatively impacted by recently enacted and future legislation and regulation. U.S. Bancorp’s results could also be adversely affected by 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; breaches in data security; 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, compliance risk, strategic risk, interest rate risk, liquidity risk and reputational 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, 2013, 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. However, factors other than these also could adversely affect U.S. Bancorp’s results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.

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U.S. Bancorp Reports Fourth Quarter 2014 Results

January 21, 2015

Page 27

Non-GAAP Financial Measures

In addition to capital ratios defined by banking regulators, 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,

•

Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach,

•

Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced approaches, and for additional information,

•

Tier 1 common equity to risk-weighted assets using Basel I definition.

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 currently effective capital ratios defined by banking regulations principally in that the numerator includes unrealized gains and losses related to available-for-sale securities and excludes preferred securities, including preferred stock, the nature and extent of which varies among different financial services companies. These measures are not defined in generally accepted accounting principles (“GAAP”), or are not currently effective or defined in 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.

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U.S. Bancorp

Consolidated Statement of Income


	Three Months Ended						Year Ended
(Dollars and Shares in Millions, Except Per Share Data)	December 31,						December 31,
(Unaudited)	2014			2013			2014			2013
Interest Income
Loans	$	2,541		$	2,595		$	10,113		$	10,277
Loans held for sale		41			31			128			203
Investment securities		488			409			1,866			1,631
Other interest income		32			33			121			174

Total interest income		3,102			3,068			12,228			12,285
Interest Expense
Deposits		117			128			465			561
Short-term borrowings		59			83			263			353
Long-term debt		182			180			725			767

Total interest expense		358			391			1,453			1,681

Net interest income		2,744			2,677			10,775			10,604
Provision for credit losses		288			277			1,229			1,340

Net interest income after provision for credit losses		2,456			2,400			9,546			9,264
Noninterest Income
Credit and debit card revenue		272			263			1,021			965
Corporate payment products revenue		174			166			724			706
Merchant processing services		384			367			1,511			1,458
ATM processing services		80			79			321			327
Trust and investment management fees		322			297			1,252			1,139
Deposit service charges		180			177			693			670
Treasury management fees		136			130			545			538
Commercial products revenue		219			243			854			859
Mortgage banking revenue		235			231			1,009			1,356
Investment products fees		49			45			191			178
Securities gains (losses), net		1			1			3			9
Other		318			157			1,040			569

Total noninterest income		2,370			2,156			9,164			8,774
Noninterest Expense
Compensation		1,151			1,103			4,523			4,371
Employee benefits		245			275			1,041			1,140
Net occupancy and equipment		248			240			987			949
Professional services		132			118			414			381
Marketing and business development		129			103			382			357
Technology and communications		219			209			863			848
Postage, printing and supplies		86			80			328			310
Other intangibles		51			56			199			223
Other		543			498			1,978			1,695

Total noninterest expense		2,804			2,682			10,715			10,274

Income before income taxes		2,022			1,874			7,995			7,764
Applicable income taxes		521			403			2,087			2,032

Net income		1,501			1,471			5,908			5,732
Net (income) loss attributable to noncontrolling interests		(13	)		(15	)		(57	)		104

Net income attributable to U.S. Bancorp	$	1,488		$	1,456		$	5,851		$	5,836

Net income applicable to U.S. Bancorp common shareholders	$	1,420		$	1,389		$	5,583		$	5,552

Earnings per common share	$	.79		$	.76		$	3.10		$	3.02
Diluted earnings per common share	$	.79		$	.76		$	3.08		$	3.00
Dividends declared per common share	$	.245		$	.230		$	.965		$	.885
Average common shares outstanding		1,787			1,821			1,803			1,839
Average diluted common shares outstanding		1,796			1,832			1,813			1,849

Page 28

U.S. Bancorp

Consolidated Ending Balance Sheet


	December 31,			December 31,
(Dollars in Millions)	2014			2013
Assets
Cash and due from banks	$	10,654		$	8,477
Investment securities
Held-to-maturity		44,974			38,920
Available-for-sale		56,069			40,935
Loans held for sale		4,792			3,268
Loans
Commercial		80,377			70,033
Commercial real estate		42,795			39,885
Residential mortgages		51,619			51,156
Credit card		18,515			18,021
Other retail		49,264			47,678

Total loans, excluding covered loans		242,570			226,773
Covered loans		5,281			8,462

Total loans		247,851			235,235
Less allowance for loan losses		(4,039	)		(4,250	)

Net loans		243,812			230,985
Premises and equipment		2,618			2,606
Goodwill		9,389			9,205
Other intangible assets		3,162			3,529
Other assets		27,059			26,096

Total assets	$	402,529		$	364,021

Liabilities and Shareholders’ Equity
Deposits
Noninterest-bearing	$	77,323		$	76,941
Interest-bearing		177,452			156,165
Time deposits greater than $100,000		27,958			29,017

Total deposits		282,733			262,123
Short-term borrowings		29,893			27,608
Long-term debt		32,260			20,049
Other liabilities		13,475			12,434

Total liabilities		358,361			322,214
Shareholders’ equity
Preferred stock		4,756			4,756
Common stock		21			21
Capital surplus		8,313			8,216
Retained earnings		42,530			38,667
Less treasury stock		(11,245	)		(9,476	)
Accumulated other comprehensive income (loss)		(896	)		(1,071	)

Total U.S. Bancorp shareholders’ equity		43,479			41,113
Noncontrolling interests		689			694

Total equity		44,168			41,807

Total liabilities and equity	$	402,529		$	364,021

Page 29

U.S. Bancorp

Non-GAAP Financial Measures


	December 31,			September 30,			June 30,			March 31,			December 31,
(Dollars in Millions, Unaudited)	2014			2014			2014			2014			2013
Total equity	$	44,168		$	43,829		$	43,386		$	42,743		$	41,807
Preferred stock		(4,756	)		(4,756	)		(4,756	)		(4,756	)		(4,756	)
Noncontrolling interests		(689	)		(688	)		(686	)		(689	)		(694	)
Goodwill (net of deferred tax liability) (1)		(8,403	)		(8,503	)		(8,548	)		(8,352	)		(8,343	)
Intangible assets, other than mortgage servicing rights		(824	)		(877	)		(925	)		(804	)		(849	)

Tangible common equity (a)		29,496			29,005			28,471			28,142			27,165
Tangible common equity (as calculated above)		29,496			29,005			28,471			28,142			27,165
Adjustments (2)		172			187			224			239			224

Common equity tier 1 capital estimated for the Basel III fully implemented standardized and advanced approaches (b)		29,668			29,192			28,695			28,381			27,389
Tier 1 capital, determined in accordance with prescribed regulatory requirements using Basel I definition														33,386
Preferred stock														(4,756	)
Noncontrolling interests, less preferred stock not eligible for Tier 1 capital														(688	)

Tier 1 common equity using Basel I definition (c)														27,942
Total assets		402,529			391,284			389,065			371,289			364,021
Goodwill (net of deferred tax liability) (1)		(8,403	)		(8,503	)		(8,548	)		(8,352	)		(8,343	)
Intangible assets, other than mortgage servicing rights		(824	)		(877	)		(925	)		(804	)		(849	)

Tangible assets (d)		393,302			381,904			379,592			362,133			354,829
Risk-weighted assets, determined in accordance with prescribed regulatory requirements (3) (e)		317,398	*		311,914			309,929			302,841			297,919
Adjustments (4)		11,110	*		12,837			12,753			13,238			13,712

Risk-weighted assets estimated for the Basel III fully implemented standardized approach (f)		328,508	*		324,751			322,682			316,079			311,631
Risk-weighted assets, determined in accordance with prescribed transitional advanced approaches regulatory requirements		248,596	*		243,909			241,929
Adjustments (5)		3,270	*		3,443			3,383

Risk-weighted assets estimated for the Basel III fully implemented advanced approaches (g)		251,866	*		247,352			245,312
Ratios *
Tangible common equity to tangible assets (a)/(d)		7.5	%		7.6	%		7.5	%		7.8	%		7.7	%
Tangible common equity to risk-weighted assets (a)/(e)		9.3			9.3			9.2			9.3			9.1
Tier 1 common equity to risk-weighted assets using Basel I definition (c)/(e)		—			—			—			—			9.4
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach (b)/(f)		9.0			9.0			8.9			9.0			8.8
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced approaches (b)/(g)		11.8			11.8			11.7

*	Preliminary data. Subject to change prior to filings with applicable regulatory agencies.

(1)	Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements beginning March 31, 2014.

(2)	Includes net losses on cash flow hedges included in accumulated other comprehensive income and other adjustments.

(3)	2014 amounts calculated under the Basel III transitional standardized approach; December 31, 2013, calculated under Basel I.

(4)	Includes higher risk-weighting for unfunded loan commitments, investment securities, residential mortgages, mortgage servicing rights and other adjustments.

(5)	Primarily reflects higher risk-weighting for mortgage servicing rights.

US BANCORP \DE\ - FORM 8-K - EX-99.1 - January 21, 2015

Attached files

US BANCORP \DE\ Reports