U.S. Bancorp Annual Report 2001

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FY2001 Annual Report · U.S. Bancorp

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This changes banking forever.

2001 ANNUAL REPORT AND FORM 10-K

Contents

The New U.S. Bancorp

1 Delivering Five Star
Service Guaranteed

2 Graphs of Selected
Financial Highlights

Financial Summary

Letter to Shareholders

6 Growing Diversiﬁed Businesses

8 Providing Convenient Access

10 Building the Best Bank

in America

12 Capitalizing on Growth

Opportunities

14 Providing Local Market

Leadership and Community
Support

Financial Section

16 Management's Discussion

and Analysis

48 Responsibility for

Financial Statements

48 Report of Independent

Accountants

49 Consolidated Financial

Statements

53 Notes to Consolidated

Financial Statements

Five-Year Consolidated
Financial Statements

88 Quarterly Consolidated

Financial Data

89 Supplemental Financial Data

90 Annual Report on Form 10-K

94 Executive Ofﬁcers

96 Directors

Inside

back cover Corporate Information

Back cover Corporate Proﬁle

Delivering
Five Star Service Guaranteed

This changes banking forever.
Guaranteed customer service
by every business line and
every employee for every
transaction, every day. Our
exclusive Five Star Service
Guarantee puts customer
needs ﬁrst and foremost.

Outstanding customer service is so

fundamental to the way we do business

that our employees wear lapel pins with

the inscription “Service Guaranteed” as

a visible symbol of our commitment to

customers. A replica of that pin is on the

cover of this report, signifying its impor-

tance to U.S. Bank ®.

In 1996, we created the original

Five Star Service Guarantee for all of

our customers who bank in a branch

ofﬁce. Our goal: to bring customers the

highest level of service they have ever

experienced from a ﬁnancial institution.

Since then, our pursuit of excellence

has expanded to every line of business

and department at U.S. Bank. Each one

has its own set of Five Star Service

Guarantees — more than 80 guarantees

in all, delivered by all business lines

throughout our organization.

This means that every employee is

working every day not just to meet cus-

tomer needs, but to exceed them. And, if

anyone at U.S. Bank fails to keep any of

our guarantees, we pay the customer for

the inconvenience.

We recognize that our service is

what differentiates U.S. Bank from our

competition. Product features and rates

may be similar among banks, but

guaranteed, outstanding service makes

U.S. Bank unique. We say that some

banks talk about great service, but only

U.S. Bank guarantees it.

Circle of Service Excellence

Our Five Star Service Guarantee is

built on the outstanding efforts of our

employees and their commitment and

contribution to delivering the highest

level of quality service for our customers.

Each quarter we choose a select few

employees who exemplify outstanding

service for induction into the Circle of

Service Excellence. We honor them at

a luncheon hosted by U.S. Bancorp

executives and at a Board of Directors

meeting. We prominently display their

portraits at our Five Star Halls of Fame,

located in seven major markets. Stock

options and local recognition are among

the other ways we reward these top

performers. We invite you to nominate

an outstanding employee for our

Circle of Service Excellence using the

attached self-addressed, postage-paid

nomination form.

U.S. Bancorp

Diluted Earnings
Per Common Share
(In dollars)

Dividends Declared
Per Common Share (b)
(In dollars)

Financial Summary

Return on Average Assets
(In percents)

Return on Average Common Equity
(In percents)

Dividend Payout Ratio
(In percents)

3,200

2,400

1,600

800

2.00

1.50

1.00

.50

Net Income
(In millions of dollars)

2,519.3

2,799.0

2,381.8

3,106.9

2,875.6

2,550.8

2,123.9

1,599.3

1,706.5

9797

9898

9999

0000

0101

Operating Earnings(a)
Net Income

1.96

1.81

1.76

1.49

1.86

1.59

1.64

1.24

1.54

1.03

9797

9898

9999

0000

0101

Return on Average Assets (Operating Basis)(a)
Return on Average Assets

Net Interest Margin
(In percents)

5.00

4.72

4.44

4.36

4.45

3.75

2.50

1.25

9797

9898

9999

0000

0101

Average Assets
(In millions of dollars)

200,000

150,000

129,493

142,887

150,167

158,481

165,944

100,000

50,000

9797

9898

9999

0000

0101

U.S. Bancorp

2.00

1.50

1.00

.50

1.62

1.50

1.45

1.23

1.30

1.10

1.32

.88

1.13

.85

9797

9898

9999

0000

0101

Diluted Earnings Per Common Share
(Operating Basis)(a)
Diluted Earnings Per Common Share

.75

.50

.25

.75

.65

.46

.33

.27

9797

9898

9999

0000

0101

20,000

15,000

10,000

5,000

19.5

20.3

21.2

21.6

20.0

17.2

18.0

14.7

15.7

10.5

9797

9898

9999

0000

0101

Return on Average Common Equity
(Operating Basis)(a)
Return on Average Common Equity

100

85.2

57.0

43.4

40.1

37.3

31.6

23.8

25.3

29.9

31.7

9797

9898

9999

0000

0101

Dividend Payout Ratio (Operating Basis)(a)
Dividend Payout Ratio

Efficiency Ratio
(In percents)

Banking Efficiency Ratio (c)
(In percents)

59.9

58.3

52.2

55.7

50.5

51.9

48.8

49.5

57.5

9797

9898

9999

0000

0101

Efficiency Ratio (Operating Basis)(a)
Efficiency Ratio

Average Shareholders’
Equity
(In millions of dollars)

12,383

13,221

14,365

10,882

16,201

9797

9898

9999

0000

0101

59.5

51.7

56.1

49.7

52.1

46.3

52.5

46.8

43.5

45.2

9797

9898

9999

0000

0101

Banking Efficiency Ratio (Operating Basis)(a)
Banking Efficiency Ratio

Average Equity
to Average Assets
(In percents)

8.67

8.80

9.06

8.40

9.76

9797

9898

9999

0000

0101

(Dollars in Millions, Except Per Share Data)

2001

Operating earnings (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Merger and restructuring-related items (after-tax) . . . . . . . . . . . . . . .

$ 2,550.8
(844.3)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,706.5

Per Common Share
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends declared per share (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Book value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ .89
.88
.75
8.43
20.93

2000

$ 3,106.9
(231.3)

$ 2,875.6

$ 1.51
1.50
.65
7.97
23.25

1999

$ 2,799.0
(417.2)

$ 2,381.8

$ 1.25
1.23
.46
7.23
21.13

Percent Change
2001

Percent Change
2000

(17.9)%

11.0%

(40.7)

20.7

(41.1)%
(41.3)
15.4
5.8
(10.0)

20.8%
22.0
41.3
10.2
10.0

Financial Ratios
Return on average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on average equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest margin (taxable-equivalent basis) . . . . . . . . . . . . . . . . . .
Efﬁciency ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Ratios Excluding Merger and

Restructuring-Related Items (a)

Return on average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on average equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Efﬁciency ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Banking efﬁciency ratio (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Average Balances
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earning assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Period End Balances
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Regulatory capital ratios

Tangible common equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total risk-based capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.03%
10.5
4.45
57.5

1.54%
15.7
49.5
45.2

$118,177
145,165
165,944
104,956
16,201

$114,405
2,457
171,390
105,219
16,461

1.81%
20.0
4.36
51.9

1.96%
21.6
48.8
43.5

$118,317
140,606
158,481
103,426
14,365

$122,365
1,787
164,921
109,535
15,168

1.59%
18.0
4.44
55.7

1.86%
21.2
50.5
46.3

$109,638
133,757
150,167
99,920
13,221

$113,229
1,710
154,318
103,417
13,947

5.7%
7.7
11.7
7.7

6.3%
7.2
10.6
7.4

6.7%
7.4
11.0
7.5

(.1)%
3.2
4.7
1.5
12.8

(6.5)%
37.5
3.9
(3.9)
8.5

7.9%
5.1
5.5
3.5
8.7

8.1%
4.5
6.9
5.9
8.8

(a) The Company analyzes its performance on a net income basis in accordance with accounting principles generally accepted in the United States, as well as on an operating
basis before merger and restructuring-related items referred to as “operating earnings.” Operating earnings are presented as supplemental information to enhance the reader’s
understanding of, and highlight trends in, the Company’s ﬁnancial results excluding the impact of merger and restructuring-related items of speciﬁc business acquisitions and
restructuring activities. Operating earnings should not be viewed as a substitute for net income and earnings per share as determined in accordance with accounting principles
generally accepted in the United States. Merger and restructuring-related items excluded from net income to derive operating earnings may be signiﬁcant and may not be
comparable to other companies.

(b) Dividends per share have not been restated for the 2001 merger of Firstar and the former U.S. Bancorp (“USBM”).

Forward-Looking Statements

This Annual Report and Form 10-K contains forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations,
are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from
those anticipated, including the following, in addition to those contained in the Company’s reports on ﬁle with the SEC: (i) general economic or industry conditions could be
less favorable than expected, resulting in a deterioration in credit quality, a change in the allowance for credit losses, or a reduced demand for credit or fee-based products
and services; (ii) the Company could encounter unforeseen complications in connection with the ongoing integration of the products, operations and information systems of
Firstar with USBM that could adversely affect the Company’s operations or customer relationships; (iii) changes in the domestic interest rate environment could reduce net
interest income and could increase credit losses; (iv) the conditions of the securities markets could change, adversely affecting revenues from capital markets businesses, the
value or credit quality of the Company’s assets, or the availability and terms of funding necessary to meet the Company's liquidity needs; (v) changes in the extensive laws,
regulations and policies governing ﬁnancial services companies could alter the Company's business environment or affect operations; (vi) the potential need to adapt to industry
changes in information technology systems, on which the Company is highly dependent, could present operational issues or require signiﬁcant capital spending; (vii) competitive
pressures could intensify and affect the Company's proﬁtability, including as a result of continued industry consolidation, the increased availability of ﬁnancial services from
non-banks, technological developments, or bank regulatory reform; (viii) acquisitions may not produce revenue enhancements or cost savings at levels or within time frames
originally anticipated, or may result in unforeseen integration difﬁculties; and (ix) capital investments in the Company’s businesses may not produce expected growth in earnings
anticipated at the time of the expenditure. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in
light of new information or future events.

U.S. Bancorp

Financial Summary

(Dollars in Millions, Except Per Share Data)

2001

Operating earnings (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Merger and restructuring-related items (after-tax) . . . . . . . . . . . . . . .

$ 2,550.8
(844.3)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,706.5

$ .89
.88
.75
8.43
20.93

2000

$ 3,106.9
(231.3)

$ 2,875.6

$ 1.51
1.50
.65
7.97
23.25

1999

$ 2,799.0
(417.2)

$ 2,381.8

$ 1.25
1.23
.46
7.23
21.13

Percent Change
2001

Percent Change
2000

(17.9)%

11.0%

(40.7)

20.7

(41.1)%
(41.3)
15.4
5.8
(10.0)

20.8%
22.0
41.3
10.2
10.0

Financial Ratios Excluding Merger and

Restructuring-Related Items (a)

1.03%
10.5
4.45
57.5

1.54%
15.7
49.5
45.2

$118,177
145,165
165,944
104,956
16,201

$114,405
2,457
171,390
105,219
16,461

1.81%
20.0
4.36
51.9

1.96%
21.6
48.8
43.5

$118,317
140,606
158,481
103,426
14,365

$122,365
1,787
164,921
109,535
15,168

1.59%
18.0
4.44
55.7

1.86%
21.2
50.5
46.3

$109,638
133,757
150,167
99,920
13,221

$113,229
1,710
154,318
103,417
13,947

5.7%
7.7
11.7
7.7

6.3%
7.2
10.6
7.4

6.7%
7.4
11.0
7.5

(.1)%
3.2
4.7
1.5
12.8

(6.5)%
37.5
3.9
(3.9)
8.5

7.9%
5.1
5.5
3.5
8.7

8.1%
4.5
6.9
5.9
8.8

(b) Dividends per share have not been restated for the 2001 merger of Firstar and the former U.S. Bancorp (“USBM”).

Forward-Looking Statements

U.S. Bancorp

This changes banking forever.

U.S. Bancorp

Dear Fellow Shareholders:
We are pleased to tell you that the

length or the timing of a genuine recovery.

seamless integration of Firstar and

For a company that prides itself on

U.S. Bancorp proceeds on schedule to be

consistent earnings, our third quarter

completed by the end of the third quarter

action was not an easy step to take.

of 2002. We continue to successfully

However, it helped us accomplish one

convert major systems and products to

of our primary objectives: having a

single operating platforms with virtually

balance sheet and a risk proﬁle among

no customer disruption. The integration

the strongest in the industry. We have

process has been thoughtful and inten-

positioned ourselves to manage through

tional. We have worked very diligently

the current economic cycle. Our credit

to blend the best practices, people and

quality remained stable in the fourth

products of both organizations.

quarter, but we are prepared for the

Your corporation ended 2001

likelihood that nonperforming loans and

with strong fourth quarter performance,

charge-offs will increase throughout 2002.

ing and fast-growing markets, and we

highlighted by revenue momentum,

Providing outstanding service to all

have a multi-tiered and comprehensive

margin improvement and a companywide

customers, backed by our exclusive

distribution system throughout those

focus on customer service quality. We

Five Star Service Guarantee, is an ongoing

markets. Our scope and scale make us

are committed to seeing these trends

priority at U.S. Bancorp, as is selling more

a low-cost provider with signiﬁcant com-

continue through 2002.

of our products and services. You can

petitive advantages. We have a proven

The year 2001 brought unprece-

read more about our Five Star Service

track record and skilled professionals

dented challenges for our country and

Guarantee at the front of this report.

who are the best in the industry running

our company. During the third quarter,

Our operating revenue growth in the

our businesses.

we took action to increase our reserves

fourth quarter is a sure sign that our

We assure you that, as always, our

for potential loan losses and to strengthen

sales and service culture is taking effect.

highest priority is to increase the value

our balance sheet. While we were

Although our combined franchise

of your investment in U.S. Bancorp. It is

disappointed in the resulting adverse

has yet to fulﬁll all of its potential, we

the reason we come to work each day.

effect on earnings, U.S. Bancorp now

are off to a strong start on a solid foun-

ranks among the top of our peer group

dation. The success of our integration to

Sincerely,

in the strength of our credit reserves.

date and the beneﬁts of the merger

We prudently recognized the economic

became evident in our year-end results.

slowdown and our inability to predict its

We operate in stable, moderately grow-

U.S. Bancorp is well
positioned to capitalize
on growth opportunities.

Jerry A. Grundhofer

President and Chief Executive Ofﬁcer

John F. Grundhofer

Chairman

February 22, 2002

This changes banking forever.

U.S. Bancorp

Growing
Diversified
Businesses

Each U.S. Bancorp
business line focuses
on unique customer
segments, enabling
us to best meet the
needs of our broad
customer base.

* Treasury and Corporate Support contributed (1.0)% of 2001 operating

income. Operating income represents pretax earnings before the provision
for credit losses and merger and restructuring-related items.

** Assets are as of December 31, 2001 and reﬂect U.S. Bancorp Asset Management,
Inc. and its afﬁliated private asset management group within U.S. Bank National
Association. Investment products, including shares of mutual funds, are not
obligations of, or guaranteed by, any bank, including U.S. Bank or any U.S. Bancorp
afﬁliate, nor are they insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other agency. An investment in such products
involves investment risk, including possible loss of principal.

U.S. Bancorp

Consumer Banking
Delivers comprehensive ﬁnancial

products and services to the broad

consumer and small business

markets through 2,147 banking

ofﬁces, telesales and telephone

customer service, online banking,

direct mail and 4,904 automated

teller machines (ATMs)

Wholesale Banking
Offers relationship-based lending,

depository, treasury management,

foreign exchange, international

banking, leasing and other ﬁnan-

cial services primarily to middle

market, large corporate, ﬁnancial

institution and public sector clients

Payment Services
Includes consumer and business

credit and debit cards, corporate

and purchasing card services,

consumer lines of credit, ATM pro-

cessing and merchant processing

Private Client, Trust and
Asset Management
Provides a comprehensive array

of private banking, personal,

corporate and institutional trust,

investment management, ﬁnancial

advisory, mutual fund and asset

management services to afﬂuent

individuals, businesses, institutions

and mutual funds

Capital Markets
Under the U.S. Bancorp Piper

Jaffray® brand, provides ﬁnancial

advisory and securities brokerage

services, mutual funds, annuities

and insurance products to individ-

uals and businesses; for corporate

and public sector clients, engages

in equity and ﬁxed income trading

activities and investment banking

and underwriting services

Contribution to
2001 U.S. Bancorp
Operating Income*

37.5%37.5%

Contribution to
2001 U.S. Bancorp
Operating Income*

32.1%

Contribution to
2001 U.S. Bancorp
Operating Income*

18.9%

Contribution to
2001 U.S. Bancorp
Operating Income*

10.7%

Key Business Units
(cid:1) Community Banking serves smaller and

non-urban markets

(cid:1) Metropolitan Banking serves larger
urban and high-growth markets

Strengths and Successes

(cid:1) Consumer Lending provides student

(cid:1) Segmented business model

loans and serves consumers purchasing
or leasing vehicles or marine equipment
through franchised dealers

(cid:1) Strong sales culture

(cid:1) Top 3 small business lender

(cid:1) In-Store Banking complements tradi-

(cid:1) Consumer Finance serves customers

tional branches with accessible facilities
in supermarkets, convenience stores
and other locations

(cid:1) Small Business Banking provides

comprehensive ﬁnancial solutions to
businesses with annual revenue up
to $5 million

outside the traditional bank credit proﬁle

(cid:1) Home Mortgage Lending originates,

purchases, sells and services residential
mortgage loans

(cid:1) Retail Brokerage and Insurance provides

mutual funds, variable and ﬁxed annuities,
general securities and discount brokerage

(cid:1) Top 3 Small Business Administration

bank lender

(cid:1) Top 4 bank branch network

(cid:1) Top 7 home equity lender

(cid:1) Top 8 consumer lender

Key Business Units
(cid:1) Commercial Banking serves middle
market clients with annual sales
between $5 million and $250 million,
and clients in the commercial real
estate, commercial vehicle dealership
and energy industries

(cid:1) Corporate Banking serves clients with
annual sales greater than $250 million,
those with specialized lending, equipment
finance and leasing needs, companies
in diverse specialty industries (such as

agribusiness, health care, mortgage
banking and media/communications),
correspondent banks, government
entities, and all wholesale clients in
our headquarters market

(cid:1) Treasury Management provides

comprehensive cash management
solutions to business clients, facilitating
their deposits and the collection of
funds, payments, and information
to assist in the management and
optimization of their cash position

Strengths and Successes
(cid:1) Strong distribution system

(cid:1) Comprehensive product set

(cid:1) Relationship manager tenure

and expertise

(cid:1) Leading depository bank for federal,
state and municipal governments

(cid:1) Top 5 bank-owned leasing company

(cid:1) Top 7 treasury management provider

Key Business Units
(cid:1) Corporate Payment Systems provides
Visa® corporate and purchasing cards
and other payment solutions to compa-
nies with annual sales greater than
$50 million, as well as federal, state
and local governments

(cid:1) Card Services provides credit and debit
card products to consumer and small
business customers of U.S. Bancorp,
correspondent ﬁnancial institutions and
co-brand partners

Key Business Units
(cid:1) Private Client Group fulﬁlls private

banking, personal trust and investment
management needs for afﬂuent clients
and has $79 billion in assets under
administration

(cid:1) Corporate Trust Services provides trustee
services for more than $650 billion in
municipal, corporate, asset-backed and
international bonds

(cid:1) Institutional Trust and Custody provides
retirement, investment and custodian
services to institutional clients

Key Business Units
(cid:1) Private Advisory Services helps afﬂuent
clients meet their ﬁnancial goals through
a network of 123 brokerage ofﬁces

(cid:1) Equity Capital Markets provides

research, trading, sales and equity
investment banking activities, including
public offerings and advisory services
for mergers and acquisitions, with
niches in communications, consumer,
health care, ﬁnancial institutions,
industrial growth and technology

(cid:1) NOVA Information Systems, Inc.

specializes in integrated credit and debit
card payment processing services,
related software application products
and value-added services for more than
650,000 U.S. merchant locations

(cid:1) Transaction Services specializes in ATM
processing, supporting U.S. Bank ATMs
and facilitating electronic transactions
for other ﬁnancial institutions and cor-
porations through ATMs, debit cards,
two proprietary regional networks and
a network gateway

Strengths and Successes

(cid:1) Industry-leading products

(cid:1) Proprietary technology

(cid:1) Operational economies of scale

(cid:1) No. 1 Visa commercial card issuer

(cid:1) Top 2 universal ﬂeet card provider

(cid:1) Top 3 bank-owned ATM network

(cid:1) Top 3 merchant processor

(cid:1) Top 6 Visa and MasterCard® issuer

(cid:1) Fund Services provides transfer agent,
fund accounting, fund administration/
compliance and distribution to mutual
fund complexes

(cid:1) U.S. Bancorp Asset Management, Inc.,
with more than $121 billion** in assets
under management, advises the $54
billion** First American® family of mutual
funds and provides customized portfolio
management for individuals, corporations,
endowments, foundations, pension
funds, public entities and labor unions

Strengths and Successes
(cid:1) Creative, needs-based solutions

(cid:1) Leading technology and operational

economies of scale

(cid:1) Breadth of asset management products

(cid:1) Top 2 municipal trustee

(cid:1) Top 3 transfer agent

(cid:1) Top 5 bank-afﬁliated U.S. mutual

fund family

(cid:1) Top 6 among banks in record

keeping assets

(cid:1) Fixed Income Capital Markets provides
ﬁnancing and investment expertise to
public ﬁnance issuers, corporate debt
issuers and institutional investors

Strengths and Successes
(cid:1) Strong retail distribution network

(cid:1) “Middle Market Mergers & Acquisitions
Bank of the Year,” Mergers & Acquisitions
magazine, February 2001

(cid:1) Top-performing equity bookrunner for lead-
managed IPOs and follow-on offerings

(cid:1) Record year for Fixed Income

Capital Markets

(cid:1) Leading manager of ﬁxed income new
issuance, underwriting $11.5 billion in
agency securities and $6.3 billion in
municipal bonds

Contribution to
2001 U.S. Bancorp
Operating Income*

1.8%

U.S. Bancorp

Providing
Convenient Access

Our customers can choose
the easiest way to bank,
whether in person, by
telephone, via ATM or online.

U.S. Bancorp

Cutting-Edge
Delivery Technologies
24-Hour Banking: Our

Consumer Banking customer serv-

ice call centers handled 126,207,713

inbound inquiries in 2001, including

99,783,801 served by our interactive

voice response system.

ATM Banking: 4,904 leading-

edge terminals are available around

the clock throughout our 24-state

banking region.

Internet Banking: 1,155,733

consumer and small business

customers are registered to

conduct most transactions and

inquiries at the click of a mouse.

Consumer and business customers

ATM Banking

Internet. Our Customer Automation

alike increasingly use technology to

Our ATM network is great in number

Reporting Environment (C.A.R.E.) pro-

access their accounts with us. They also

as well as functionality. We are upgrading

vides Internet access for corporate and

frequent our extensive network of bank

approximately 1,500 branch terminals to

purchasing card customers, merchants

branches and specialized ofﬁces, which

Super ATMs, bringing the total number

and government clients, who can gener-

remain the foundation of our command-

of Super ATMs to 3,444. These state-of-

ate customized reports at any time. And

ing presence in many of the highest

the-art ATMs enable customers not only

we recently became the ﬁrst institution

growth, most diversiﬁed markets in the

to access funds, check balances and make

to offer complete Web-based reporting

United States. Wherever customers inter-

deposits, but also to obtain statements,

and processing for money market instru-

act with us, they can count on consistent,

order checks, request check copies,

ment issuers. It’s all part of “e-enabling”

leading-edge service.

purchase stamps and phone minutes…

our customers and employees with the

Branch Banking

Our Community and Metropolitan

Banking branches deliver all the products

and services U.S. Bank has to offer. In

Internet Banking

and more. Updated ATMs feature the new

latest technology.

bright and colorful U.S. Bank look —

signaling the best ATM service available.

Relationship Banking

Relationships, complemented by com-

prehensive products and services, drive

our larger markets, branch staff act as

We offer comprehensive, fast, secure

several of our key businesses, including

concierges, connecting customers with

online service on all accounts across all

Wholesale Banking, Private Client, Trust

experts across the company for specialized

business lines. Consumers enjoy the latest

and Asset Management, and U.S. Bancorp

services. Nontraditional branch locations

Internet banking capabilities available on

Piper Jaffray. Clients of these businesses

bring banking directly to where our cus-

www.usbank.com or www.ﬁrstar.com,

not only want quick, convenient access

tomers live, work, study and shop inside

where they can learn about products,

to conduct transactions, they also need

retirement centers, workplaces and corpo-

open deposit accounts in real time, apply

expert advice and support. We offer both.

rate sites, colleges and universities, and

for loans and lines of credit, access

Clients always have access to an experi-

grocery and convenience stores. These

account information, pay bills and more.

enced relationship manager— an ambassa-

dynamic locations feature special products,

Businesses and investors also beneﬁt

dor who can help fulﬁll their day-to-day

services and hours geared to the unique

from increasingly sophisticated, specialized

needs or direct them, as needed, to appro-

needs of local customers. Additionally,

online tools. For example, we offer

priate specialists across our organization

many specialized ofﬁces within and beyond

advanced capabilities to deliver check

in areas as diverse as asset management,

our 24-state region serve unique customer

images to commercial customers via the

investment banking and leasing.

segments such as brokerage, home mort-

gage and trust.

Telephone Banking

Using 24-Hour Banking, consumers

have anytime, anywhere access to their

accounts by telephone, including Spanish

language options. Dedicated call centers

provide expertise to various business

customer segments and others with

specialized needs. Our telesales efforts

offer customers new products and

services to meet more of their ﬁnancial

needs while generating revenue growth

for the company. Consumer Banking

alone handled 1,402,849 inbound and

outbound telesales calls in 2001.

Branch Banking and Specialized Services/Ofﬁces

MS AL

CT
NJ
DE
MD
DC

Branch Banking

Specialized Services/Offices

2,147 branch
2,147 branch
banking offices
banking offices
in 24 states
in 24 states

All Firstar locations
All Firstar locations
will operate as U.S. Bank
will operate as U.S. Bank
by mid-2002.
by mid-2002.

Commercial Banking
Commercial Banking
Consumer Banking
Consumer Banking
Corporate Banking
Corporate Banking
Payment Services
Payment Services
Private Client, Trust and Asset Management
Private Client, Trust and Asset Management
Technology and Operations Services
Technology and Operations Services
U.S. Bancorp Piper Jaffray
U.S. Bancorp Piper Jaffray

Hong Kong
Canada
Buenos Aires
Cayman Islands
London
Tel Aviv

U.S. Bancorp

Building the
Best Bank in America

Disciplined. Detailed. Deliberate.
The ongoing integration of
Firstar and U.S. Bank is
seamlessly creating one
ﬁnancial powerhouse,
united by a single brand.

Structure and Process

Every week for more than a year,

corporate and line-of-business leaders from

across U.S. Bancorp have been gathering

to execute our comprehensive plan to

integrate Firstar and U.S. Bank. They are

united by a common goal: to ensure a

ﬂawless, cost-effective integration for the

beneﬁt of customers, shareholders and

employees. Their stellar track record—

years of experience executing dozens

of successful mergers — produces out-

standing results.

The integration has been a textbook

example of careful planning and smooth

execution. Thorough preparation,

employee training, systems testing and

customer communication has ensured
success. A series of systems conversions

is bringing all our markets together on

common operating and delivery platforms.

Together we are equipped to handle

increased capacity, enhanced functionality,

and high-quality, consistent service wher-

ever customers interact with us.

U.S. Bancorp

Quality Control and Monitoring
Exacting quality control and moni-

organizational structure. We have devel-

Completing the Integration

oped common employee beneﬁts, pro-

Our entire organization has embraced

toring — before and after conversion

grams and policies, including incentives

events — ensure that our conversions

that drive employees to generate revenue

proceed smoothly. Command centers

while fulﬁlling customers’ needs. We have

track any issues so that customer service

selected the best products and services

continues uninterrupted.

from our combined resources— or, through

Branch employee “ambassadors”

expanded capabilities, created new ones.

with expert knowledge of our combined

Along the way, we have invested in

our exclusive Five Star Service Guarantee.

Soon we’ll be completely united under

one strong brand — the new U.S. Bank.

Starting in January and continuing

through July 2002, the distinctive new

red, white and blue U.S. Bank signs are

rising market-by-market. All locations,

including our ATM network, are in the

products, systems and processes are on

cutting-edge, fully automated infrastruc-

process of displaying the updated identity,

location at newly converted branches and

ture that lays a solid foundation for

other front-ofﬁce operations after conver-

growth. In migrating to new, cost-effec-

sion. They provide ongoing training and

tive network technology, we have estab-

support for employees and ensure that

lished greater connectivity between our

customers experience business as usual.

front and back ofﬁces. We have e-enabled

“Mystery shoppers” measure service levels

employees and customers to access

before and after conversion events.

information and conduct transactions

Key Accomplishments

with unprecedented accuracy and efﬁ-
ciency. Gone are closed-end, self-contained

During the past year, we have worked

processing systems. Evolving is a dedicated

diligently to combine our two predecessor

organizations into an even stronger com-

pany. Together, we have created a better

way to do business.

open Internet protocol network that

supports more than 300 million transac-

tions a month and is backed by the Five

Star Service Guarantee — testament to

which promises “Five Star Service

Guaranteed.” In addition, all advertising

and marketing materials, business supplies

and customer documents reinforce our

new brand.

After ﬁnal systems conversions in the

third quarter of 2002, all customers will have

convenient access to our new, improved

product and service offerings wherever

we operate. They will be able to make

deposits and conduct other transactions

at any of our branches across 24 states.

Including our specialized businesses,

the new U.S. Bank brand is recognizable

from coast to coast. When customers see

the U.S. Bank name, they can expect

We have established a new, efﬁcient

our conﬁdence in our systems and staff.

familiar faces, convenient access, top-

quality solutions and unmatched service

excellence — guaranteed!

Integration Highlights

3Q01

• U.S. Bancorp closes acquisition of

NOVA Corporation

• U.S. Bancorp closes acquisition of 20 Southern

1Q02

California branches from Paciﬁc Century Bank

• Name change begins in selected markets

1Q01

• Commercial loan centers consolidate

• Integration of major deposit-related systems

• Firstar and

• Firstar Funds merge into First American Funds®

begins in selected markets

U.S. Bancorp

join forces

• Major trust systems convert to

common platform

2Q01

4Q01

3Q02

• First American Asset Management

• Branded credit cards merge

• Name change and deposit

and FIRMCO merge into U.S. Bancorp

onto common platform

integrations to be completed

Asset Management, Inc.

• Mortgage loans convert to

common platform

• Consumer loans convert to

• Teller and personal banker system

common platform

• Five Star Service Guarantee

promotion launches across all

2Q02

upgrades to be completed

business lines

• Teller and personal banker system

• Human Resources systems

upgrades begin in selected markets

convert to common platform

• Name change and deposit integrations

continue in selected markets

U.S. Bancorp

Capitalizing
on Growth Opportunities

The combination of Firstar and

Our future begins with our basic

where by our Five Star Service Guarantee.

U.S. Bancorp has created a larger,

banking operations. We already rank

Consumers enjoy expanded access

stronger company with a solid founda-

among the top three commercial banks in

through 2,147 branches and 4,904 ATMs

tion for growth. We will grow by using

50 metropolitan areas based on deposits.

in 24 states, plus state-of-the-art telephone

strategic cost advantage to gain market

We are penetrating all our markets even

and Internet banking channels. Businesses

share, emphasizing customer service and

further with our expanded, improved set

also beneﬁt from our expanded geographic

investing in higher-growth businesses.

of high-quality products — backed every-

reach and technology investments.

Outstanding products.
High-growth markets.
Flourishing businesses.
Convenient, efﬁcient delivery.
U.S. Bancorp is positioned
to soar.

U.S. Bancorp

National retailers, in particular, are bene-

Hispanic populations, both English- and

ﬁting from enhanced depository and

Spanish-speaking. More than ever before,

treasury management products accessible

we are hiring additional Hispanic employ-

through common accounts across the

ees who reﬂect the diversity of their local

region, including the expansion of our

communities and who communicate

cash vault capabilities to new markets.

more effectively with customers. Our

stored as a single electronic document

Trust customers beneﬁt from our greater

employees are visible community leaders

that is instantly available to both shipper

economies of scale and state-of-the-art

who have strong relationships with

and carrier. By eliminating manual rec-

products and systems.

Hispanic individuals, businesses and

onciliation of invoices and freight bills,

We continually strive to serve cus-

community organizations.

companies can save signiﬁcantly on each

tomers across business lines, gaining more

Our ATMs and 24-Hour Banking

transaction. With expansion into other

of their business. In 2001, for example,

system feature expanded Spanish language

industries, PowerTrack delivers the

U.S. Bancorp Piper Jaffray Fixed Income

options. Additionally, we have telephone

future — faster, more accurate payments

Capital Markets had a record year in

customer service representatives who speak

and exceptional analytical reporting

corporate debt issuance, managing 35

Spanish and other foreign languages.

tools for better management decisions.

issues with a par amount of more than

We also are displaying more signs and

The result is more efﬁciency and control

$19 billion, including preferred stock and

materials in Spanish.

for both buyer and seller.

note issues for U.S. Bancorp. Meanwhile,
customers deposited more than $490

We offer many programs that help

meet the needs of various segments of

In 2001 we closed on our purchase
of NOVA Corporation, now known as

million into U.S. Bancorp Piper Jaffray
Prime AccountsSM and other brokerage

Hispanic customers. To help ﬁrst-time

NOVA Information Systems, Inc., a wholly

borrowers, we created the Credit Builder

owned subsidiary of U.S. Bancorp. This

accounts through U.S. Bank branches and

Secured Loan. We also accept identiﬁca-

merchant payment processor ranks as the

ATMs— up over 134 percent from a year

earlier. When the integration is completed,

tion issued by the Consulate of Mexico,
issue the Visa® Payroll Card and offer a

third-largest in the United States, serving

650,000 businesses of all sizes. Merchants

investors will have access to their broker-

low-cost money transfer program.

beneﬁt from our industry-leading product

age accounts at all of our bank branches.

Our Hispanic Initiative extends to

offerings, including electronic check

Ultimately, our growth depends on

partnerships with Hispanic Chambers of

processing, a variety of Web-enabled

our people. We have created a sales

Commerce and other organizations, and

tools, and a full array of point-of-sale

culture driven by customer needs and

to community service. Free seminars, for

applications in addition to credit card

rewarded by incentives for outstanding,

example, cover topics ranging from the

and debit card processing.

measurable performance. Every employee,

basics of banking in the United States

Within our Transaction Services

from the front line to the back ofﬁce,

(especially geared to Spanish-speaking

division, Elan Financial Services serves

is eligible for incentives to strengthen

immigrants) to ﬁrst-time home owner-

more than 3,000 ﬁnancial institutions

existing customer relationships, build

ship. Hispanic customers know they can

through a complete range of products and

new ones, and provide outstanding

turn to U.S. Bank to turn their American

services including credit card issuing, and

guaranteed service to all customers,

Dream into reality.

whether external or internal.

Payment Services: Growth Engine

Hispanic Initiative Taps Success
The U.S. Hispanic community num-

Payment Services represents one of

our greatest growth opportunities. We

bers more than 35 million consumers

continue to build our core commercial

with $450 billion in spending and invest-

and consumer card businesses while

ment power. Approximately 1.2 million

investing in other industry-leading,

Hispanic businesses have $200 billion

payment-related businesses.

in revenues. It’s a remarkable success

PowerTrack®, our innovative online

ATM, debit card and merchant processing.

Elan also provides full-service support

and management tools that are offered

uniquely through a single source. The suite

of products enables small- to mid-sized

ﬁnancial institution clients to compete

effectively with larger institutions. Elan

leverages these unique capabilities to also

provide ATM driving and deployment,

and debit gateway services to large

story — and opportunity.

payment processing and transaction

corporate clients.

Our Hispanic Initiative, launched in

tracking system, has seemingly unlimited

2001, is our coordinated program to be

potential. First introduced to the freight

an outstanding bank, responsive business

industry, this single-source information

partner and superior employer in key

center provides powerful control for the

markets. It focuses on more than 300

logistics process. On the Internet or via a

branches serving communities with large

private network, shipment information is

U.S. Bancorp

Providing Local Market
Leadership and Community Support

U.S. Bancorp

Local Market Leadership

The boards include local business and

U.S. Bank markets are segmented

civic leaders in addition to U.S. Bank

into Metropolitan Banking in large

executives. The perspective of these board

urban areas and Community Banking in

members is invaluable.

U.S. Bancorp Foundation
2001 Charitable Contributions
by Program Area

smaller urban and non-urban locales.

U.S. Bank maximizes its ability to serve

our Metropolitan Banking markets

through the independent management of

our major lines of business. In Commu-

nity Banking markets, however, all lines

of business are offered and marketed

through branch ofﬁces. In every market,

large or small, our local management

teams make the decisions that most

directly affect their customers. Local

autonomy in resource allocation, com-

munity affairs, pricing and business devel-

opment enhances local market control.

Community Involvement

At U.S. Bancorp, community is

more than a location. Community is the

corporate spirit of accepting the role

as a facilitator for the people, businesses

and nonproﬁt organizations in our

markets to achieve their ﬁnancial goals

and enrich their lives.

32% United Way & Human Services
28% Economic Opportunity
18% Arts & Culture
16% Education

5% Employee Matching Gifts
1% Miscellaneous

To that end, we provide both corpo-

Through the U.S. Bancorp Founda-

rate and local leadership on issues of

tion, we contribute millions of dollars

community importance; we tailor our

back to the communities in which we do

products and services to our communi-

business through charitable grants to

ties’ diverse needs; our local managers

nonproﬁt organizations. We provide

are visible and involved in community

critical ﬁnancing for revitalization efforts,

Local Bank Boards

organizations and economic development

job programs and affordable housing.

The best decisions and the best cus-

efforts; and we encourage and support

We sponsor the United Way at generous

tomer service come from knowing our

our employees’ ongoing volunteer efforts.

levels to meet critical human service needs.

markets and our customers. To enhance

We believe that our success depends on

We sponsor a wide variety of amateur

our own management’s understanding of

the vitality of the communities we serve,

and professional artistic groups; profes-

local economies, critical issues, business

and we bring together many resources to

sional, college and high school sporting

and public affairs, we have established

help make possible economic, educational

events and teams; and neighborhood and

local bank boards throughout our markets.

and cultural development.

Local management. Local
decisions. Local involvement.
At U.S. Bancorp, we are deeply
rooted in the communities
we serve, and we recognize
that the best solutions come
most often from those who
are closest to the market.

civic events. From the smallest towns to

the largest cities, U.S. Bancorp is an inte-

gral part of the fabric of every hometown.

Development Network

The U.S. Bancorp Development

Network comprises 35 geographically

based employee chapters with a common

mission — to promote the personal and

professional development of our employ-

ees, to provide networking opportunities

within our organization and to offer a

framework for involvement in commu-

nity service. Individual Development

Network chapters recruit public school

tutors and mentors from our employee

base, raise funds for many charitable

causes and community efforts, partici-

pate in various walkathons and races,

assist elderly residents with simple home

repairs and maintenance, build Habitat

for Humanity homes, and become

involved in other community services.

U.S. Bancorp

Management's Discussion and Analysis

OVERVIEW

U.S. Bancorp and its subsidiaries (""the Company'')
compose the organization created by the acquisition by
Firstar Corporation (""Firstar'') of the former U.S. Bancorp
of Minneapolis, Minnesota (""USBM''). The merger was
completed on February 27, 2001, as a pooling-of-interests,
and accordingly all Ñnancial information has been restated
to include the historical information of both companies.
Each share of Firstar stock was exchanged for one share of
the Company's common stock while each share of USBM
stock was exchanged for 1.265 shares of the Company's
common stock. The new Company retained the U.S.
Bancorp name.

Earnings Summary The Company reported net income of
$1.7 billion in 2001, or $.88 per diluted share, compared
with $2.9 billion, or $1.50 per diluted share, in 2000.
Return on average assets and return on average common
equity were 1.03 percent and 10.5 percent in 2001,
compared with returns of 1.81 percent and 20.0 percent in
2000. The year-over-year decline in earnings per diluted
share and return on average assets was primarily due to a
decline in capital markets activities, merger and
restructuring-related items and a higher provision for credit
losses which reÖected deterioration in economic conditions
and credit quality relative to a year ago. The reduction in
the Company's return on average common equity also
reÖected the impact of recent acquisitions, which were
accounted for using the purchase method. Net income
included after-tax merger and restructuring-related items of
$844.3 million ($1.3 billion on a pre-tax basis) in 2001
compared with $231.3 million ($348.7 million on a pre-tax
basis) in 2000. Merger and restructuring-related items, on a
pre-tax basis, included a $62.2 million gain on the sale of
branches, $847.2 million of noninterest expenses and
$382.2 million of provision for credit losses associated with
the merger of Firstar and USBM. Merger and restructuring-
related items also included $50.7 million of expense for
restructuring operations of U.S. Bancorp Piper JaÅray, and
$48.5 million related to the acquisition of NOVA
Corporation (""NOVA'') and other recent acquisitions. The
eÇciency ratio (the ratio of expenses to revenues) increased
to 57.5 percent in 2001 compared with 51.9 percent in
2000 primarily due to the impact of merger and
restructuring-related items. Refer to page 22 for further
discussion of merger and restructuring-related items.

The Company had operating earnings (net income

excluding merger and restructuring-related items) of

$2.6 billion in 2001, or $1.32 per diluted share, compared
with $3.1 billion, or $1.62 per diluted share in 2000.
Operating earnings on a ""cash basis'' (calculated by adding
amortization of goodwill and other intangible assets to
operating earnings) was $1.59 per diluted share in 2001,
compared with $1.82 per diluted share in 2000. Return on
average assets and return on average common equity,
excluding merger-related items, were 1.54 percent and
15.7 percent in 2001, compared with returns of
1.96 percent and 21.6 percent in 2000. Operating earnings
in 2001 reÖected total net revenue growth on a taxable-
equivalent basis, excluding merger-related gains, of
6.7 percent, oÅset by growth in noninterest expenses,
excluding merger and restructuring-related charges, of
5.4 percent. On an operating basis, the eÇciency ratio was
49.5 percent in 2001, compared with 48.8 percent in 2000.
The banking eÇciency ratio (the ratio of expenses to
revenues without the impact of investment banking and
brokerage activity) before merger and restructuring-related
charges was 45.2 percent in 2001, compared with
43.5 percent in 2000. The increase in the banking eÇciency
ratio was primarily due to the impact of recent acquisitions
including NOVA.

Net income and operating earnings for 2001 included a
number of signiÑcant items. During 2001, the provision for
credit losses was $2.5 billion, an increase of $1.7 billion
from a year ago. The change was due to an increased level
of nonperforming assets and charge-oÅs, deterioration in
speciÑc credit portfolios, merger-related portfolio
restructurings and speciÑc actions taken by management to
accelerate the Company's workout strategy for
nonperforming assets. Results for 2001 also reÖect the
impairment of retail leasing residuals due to sluggish
pre-owned car markets, recognition of mortgage servicing
rights (""MSR'') impairment during the declining rate
environment and asset write-downs of commercial leasing
partnerships and repossessed tractor/trailer property. These
asset impairments were partially oÅset by gains related to
sales of buildings and investment securities.

The Company analyzes its performance on a net
income basis determined in accordance with accounting
principles generally accepted in the United States, as well as
on an operating basis before merger-related charges referred
to in this analysis as ""operating earnings''. Operating
earnings and related discussions are presented as
supplementary information in this analysis to enhance the
readers' understanding of, and highlight trends in, the
Company's core Ñnancial results excluding the non-recurring

U.S. Bancorp

Table 1

Selected Financial Data

Year Ended December 31
(Dollars and Shares in Millions, Except Per Share Data)

2001

2000

1999

1998

1997

Condensed Income Statement
Interest income (taxable-equivalent basis) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities gains, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Noninterest income(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total net revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Noninterest expense(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision for credit losses(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Income before taxes and merger and restructuring-related
itemsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Taxable-equivalent adjustment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Operating earnings(a)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related items (after-tax) ÏÏÏÏÏÏÏÏÏÏÏ

$11,139.5
4,674.8

6,464.7
329.1
4,968.1

11,761.9
5,658.8
2,146.6

3,956.5
55.9
1,349.8

2,550.8
(844.3)

$12,157.9
6,022.9

6,135.0
8.1
4,875.1

11,018.2
5,368.3
828.0

4,821.9
85.4
1,629.6

3,106.9
(231.3)

$10,723.0
4,790.3

5,932.7
13.2
4,231.7

10,177.6
5,128.5
638.5

4,410.6
96.3
1,515.3

2,799.0
(417.2)

$10,535.9
4,859.7

$ 9,921.8
4,389.8

5,676.2
29.1
3,572.8

9,278.1
4,829.6
453.4

3,995.1
111.2
1,364.6

2,519.3
(386.4)

5,532.0
7.3
2,711.3

8,250.6
4,306.7
619.6

3,324.3
121.1
1,079.3

2,123.9
(524.6)

Net income in accordance with GAAPÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 1,706.5

$ 2,875.6

$ 2,381.8

$ 2,132.9

$ 1,599.3

Per Common Share
Earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Diluted earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends declared per share(b) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average shares outstandingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average diluted shares outstanding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Financial Ratios
Return on average assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Return on average equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net interest margin (taxable-equivalent basis)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÇciency ratio ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Financial Ratios Excluding Merger and
Restructuring-Related Items(a)

Return on average assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Return on average equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÇciency ratio ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Banking eÇciency ratio(c) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Average Balance Sheet
Loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans held for sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Earning assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Noninterest-bearing deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
DepositsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total shareholders' equityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Year-end Balance Sheet
Loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
DepositsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total shareholders' equityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

.89
.88
.75
1,927.9
1,939.5

1.51
1.50
.65
1,906.0
1,918.5

1.25
1.23
.46
1,907.8
1,930.0

1.12
1.10
.33
1,898.8
1,930.5

.86
.85
.27
1,841.0
1,872.2

1.03%
10.5
4.45
57.5

1.54%
15.7
49.5
45.2

$ 118,177
1,911
21,916
145,165
165,944
25,109
104,956
12,980
24,608
16,201

$ 114,405
26,608
171,390
105,219
25,716
16,461

1.81%
20.0
4.36
51.9

1.96%
21.6
48.8
43.5

$ 118,317
1,303
17,311
140,606
158,481
23,820
103,426
12,586
22,410
14,365

$ 122,365
17,642
164,921
109,535
21,876
15,168

1.59%
18.0
4.44
55.7

1.86%
21.2
50.5
46.3

$ 109,638
1,450
19,271
133,757
150,167
23,556
99,920
11,707
20,248
13,221

$ 113,229
17,449
154,318
103,417
21,027
13,947

1.49%
17.2
4.44
58.3

1.76%
20.3
52.2
49.7

$ 102,451
1,264
21,114
127,738
142,887
23,011
98,940
11,102
15,732
12,383

$ 106,958
20,965
150,714
104,346
18,679
12,574

1.24%
14.7
4.72
59.9

1.64%
19.5
52.2
51.7

$ 95,149
549
19,123
117,173
129,493
20,984
93,322
11,791
9,481
10,882

$ 99,029
20,442
137,488
98,323
13,181
11,402

(a) The Company analyzes its performance on a net income basis in accordance with accounting principles generally accepted in the United States, as well as on an operating basis

before merger and restructuring-related items referred to as ""operating earnings.'' Operating earnings are presented as supplemental information to enhance the readers'
understanding of, and highlight trends in, the Company's Ñnancial results excluding the impact of merger and restructuring-related items of speciÑc business acquisitions and
restructuring activities. Operating earnings should not be viewed as a substitute for net income and earnings per share as determined in accordance with accounting principles
generally accepted in the United States. Merger and restructuring-related items excluded from net income to derive operating earnings may be signiÑcant and may not be
comparable to other companies.

(b) Dividends per share have not been restated for the 2001 merger of Firstar and USBM.
(c) Without investment banking and brokerage activity.

eÅects of discrete business acquisitions and restructuring
activities. Operating earnings should not be viewed as a
substitute for net income and earnings per share as
determined in accordance with accounting principles

generally accepted in the United States. Merger and
restructuring-related items excluded from net income to
derive operating earnings may be signiÑcant and may not be
comparable to other companies.

U.S. Bancorp

Table 2

Reconciliation of Operating Earnings(a) to Net Income in Accordance with GAAP

Year Ended December 31 (Dollars in Millions)

2001

2000

1999

1998

1997

Operating earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related items

$ 2,550.8

$3,106.9

$2,799.0

$2,519.3

$2,123.9

Gains on the sale of branches ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Integration, conversion and other chargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities losses to restructure portfolio ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision for credit losses(b) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

62.2
(946.4)

(382.2)

Pretax impactÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Applicable tax beneÑtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

(1,266.4)
422.1

(348.7)

Ì
Ì

(348.7)
117.4

(355.1)
(177.7)
(7.5)

(540.3)
123.1

48.1
(593.8)

Ì
(37.9)

(583.6)
197.2

(633.0)

Ì
(20.3)

(653.3)
128.7

Net income in accordance with GAAP ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 1,706.5

$2,875.6

$2,381.8

$2,132.9

$1,599.3

(a) The Company analyzes its performance on a net income basis in accordance with accounting principles generally accepted in the United States, as well as on an operating basis

(b) Provision for credit losses in 2001 includes losses of $201.3 million on the disposition of an unsecured small business credit line portfolio, losses of $76.6 million on the sales of
high loan-to-value home equity and indirect automobile loan portfolios, $90.0 million of charges to align credit policies and risk management practices, and $14.3 million to
restructure a co-branding credit card relationship.

Acquisition and Divestiture Activity In addition to
restating all prior periods to reÖect the merger of Firstar
and USBM, operating results for 2001 reÖect the following
transactions accounted for as purchases from the date of
completion. On July 24, 2001, the Company acquired
NOVA, the nation's third largest merchant processing
service provider, in a stock and cash transaction valued at
approximately $2.1 billion. On September 7, 2001, the
Company acquired PaciÑc Century Bank in a cash
transaction. The acquisition included 20 branches located in
Southern California with approximately $712 million in
deposits and $570 million in loans. On October 13, 2000,
the Company acquired Scripps Financial Corporation of San
Diego, which had 10 branches in San Diego County and
total assets of $650 million. On September 28, 2000, the
Company acquired Lyon Financial Services, Inc., a wholly
owned subsidiary of the privately held Schwan's Sales
Enterprises Inc. in Marshall, Minnesota. Lyon Financial
specializes in small-ticket lease transactions and had
$1.3 billion in assets. On April 7, 2000, the Company
acquired Oliver-Allen Corporation, Inc., a privately held
information technology equipment leasing company with
total assets of $280 million. On January 14, 2000, the
Company acquired Peninsula Bank of San Diego, which had
11 branches in San Diego County and total assets of
$491 million. In addition to these business combinations,
the Company purchased 41 branches in Tennessee from
First Union National Bank on December 8, 2000,
representing approximately $450 million in assets and
$1.8 billion in deposits.

On September 20, 1999, Firstar and Mercantile
Bancorporation, Inc. (""Mercantile'') merged in a pooling-
of-interests transaction and accordingly all Ñnancial
information has been restated to include the historical
information of both companies. Each share of Mercantile

stock was exchanged for 2.091 shares of Firstar common
stock. Refer to Note 3 and Note 4 of the Notes to
Consolidated Financial Statements for additional
information regarding business combinations.

On January 18, 2002, the Company announced a
deÑnitive agreement to acquire The Leader Mortgage
Company, LLC (""Leader''), a wholly owned subsidiary of
First DeÑance Financial Corporation, in a cash transaction.
Leader specializes in acquiring servicing of loans originated
for state and local housing authorities. Leader had
$506 million in assets at December 31, 2001. In 2001, it
had $2.1 billion in mortgage production and an $8.6 billion
servicing portfolio at December 31, 2001. The transaction is
expected to close in the second quarter of 2002.

STATEMENT OF INCOME ANALYSIS

Net Interest Income Net interest income on a taxable-
equivalent basis was $6.5 billion in 2001, compared with
$6.1 billion in 2000 and $5.9 billion in 1999. The
5.4 percent increase in 2001 as compared with 2000 was
due to improving net interest margin and growth in average
earning assets. The net interest margin in 2001 was
4.45 percent, compared with 4.36 percent in 2000. The
improvement in the net interest margin was due to the
funding beneÑt of the declining rate environment and
improved spreads due to product re-pricing dynamics and
loan conduit activities. This was oÅset somewhat by the
Ñrst quarter 2001 sales of the high loan-to-value (""LTV'')
home equity portfolios and lower yields on the investment
portfolio. Average earning assets for 2001 increased
$4.6 billion (3.2 percent) over 2000. The increase was
primarily driven by increases in the investment portfolio,
core retail loan growth and the impact of acquisitions. This
growth was partially oÅset by a $2.7 billion decline in
lower margin residential mortgages and a $2.2 billion

U.S. Bancorp

Table 3

Analysis of Net Interest Income

(Dollars in Millions)

2001

2000

1999

Components of net interest income

Income on earning assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expenses on interest bearing liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$11,139.5
4,674.8

$12,157.9
6,022.9

$10,723.0
4,790.3

Net interest income (taxable-equivalent basis) ÏÏÏÏÏÏÏÏÏÏÏ

$ 6,464.7

$ 6,135.0

$ 5,932.7

Net interest income, as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 6,408.8

$ 6,049.6

$ 5,836.4

2001
v 2000

2000
v 1999

$(1,018.4)
(1,348.1)

329.7

359.2

$1,434.9
1,232.6

$ 202.3

$ 213.2

Average yields and rates paid (taxable-equivalent basis)

Earning assets yieldÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rate paid on interest-bearing liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Gross interest margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net interest margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Average balances

7.67%
3.92

3.75%

4.45%

8.65%
5.19

3.46%

4.36%

8.02%
4.37

3.65%

4.44%

(.98)%

(1.27)

.29%

.09%

.63%
.82

(.19)%

(.08)%

Investment securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
LoansÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Earning assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest-bearing liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net free funds(a)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 21,916
118,177
145,165
119,390
25,775

$ 17,311
118,317
140,606
116,002
24,604

$ 19,271
109,638
133,757
109,719
24,038

4,605
(140)
4,559
3,388
1,171

$ (1,960)
8,679
6,849
6,283
566

(a) Represents noninterest-bearing deposits, allowance for credit losses, non-earning assets, other liabilities and equity.

reduction related to transfers of short-term, high credit
quality, low margin commercial loans to Stellar Funding
Group, Inc. (""loan conduit'').

Average investment securities were $4.6 billion
(26.6 percent) higher in 2001 compared with 2000,
reÖecting net purchases of securities.

Average interest-bearing deposits increased $241 million

(.3 percent) from 2000. Growth in average interest
checking and money market deposits was more than oÅset
by reductions in the average balances of higher cost time
certiÑcates of deposit less than $100,000. The decline in
time certiÑcates of deposit less than $100,000 reÖects
funding decisions toward more favorably priced wholesale
funding sources given the interest rate environment during
2001.

Average net free funds increased $1.2 billion from a

year ago including an increase in noninterest-bearing
deposits of $1.3 billion (5.4 percent) compared with 2000.
Net interest income on a taxable-equivalent basis
increased $202.3 million (3.4 percent) in 2000 compared
with 1999. The increase was primarily due to growth in
earning assets oÅset somewhat by a declining net interest
margin. Average earning assets increased $6.8 billion
(5.1 percent) in 2000, primarily due to strong core loan
growth and acquisitions partially oÅset by reductions in
residential mortgages and securities. Average loans for 2000
were up $8.7 billion (7.9 percent) from 1999, reÖecting
growth in commercial loans, retail loans, and acquisitions,
oÅset by reductions in residential mortgage loans. Average
investment securities were $2.0 billion (10.2 percent) lower
in 2000 compared with 1999, reÖecting both maturities and
sales of securities. Average interest-bearing deposits
increased $3.2 billion (4.2 percent) from 1999. This

increase in interest-bearing deposits was primarily due to a
$4.2 billion increase (48.8 percent) in time deposits greater
than $100,000 reÖecting the rising interest rate environment
during 2000. Average net free funds increased $566 million
in 2000 including an increase in noninterest-bearing deposits
of $264 million (1.1 percent) compared with 1999. The net
interest margin declined from 4.44 percent in 1999 to
4.36 percent in 2000, as lagging deposit growth in 2000
relative to total earning assets increased the Company's
incremental cost of funding. Refer to the Consolidated
Daily Average Balance Sheet and Related Yields and Rates
on pages 86 and 87 for further interest margin detail.

Provision for Credit Losses The provision for credit
losses is recorded to bring the allowance for credit losses to
a level deemed appropriate by management based on
factors discussed in ""Analysis and Determination of
Allowance for Credit Losses'' on pages 34 through 36.
During 2001, the provision for credit losses was
$2,528.8 million, compared with $828.0 million in 2000 and
$646.0 million in 1999.

Included in the provision for credit losses for 2001 was

a merger and restructuring-related provision of
$382.2 million. The merger and restructuring-related
provision consisted of: a $201.3 million provision for losses
related to the disposition of an unsecured small business
product; a $90.0 million charge to align risk management
practices, align charge-oÅ policies and expedite the
transition out of a speciÑc segment of the healthcare
industry not meeting the risk appetite of the Company; a
$76.6 million provision for losses related to the sales of
high LTV home equity loans and the indirect automobile
loan portfolio of USBM; and a $14.3 million charge related

U.S. Bancorp

Table 4

Net Interest Income Ì Changes Due to Rate and Volume

(Dollars in Millions)

Increase (decrease) in
Interest income

2001 v 2000

2000 v 1999

Volume

Yield/Rate

Total

Volume

Yield/Rate

Total

Commercial loansÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial real estateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

.9
3.6

(204.6)
254.4

Total loansÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans held for sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Money market investments ÏÏÏÏÏÏÏÏÏÏÏ
Trading securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other earning assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Interest expense

Interest checking ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Money market accounts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Savings accounts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Time certiÑcates of deposit less than

$100,000ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Time deposits greater than $100,000 ÏÏ

Total interest-bearing depositsÏÏÏÏÏ
Short-term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Company obligated mandatorily

redeemable preferred securities ÏÏÏ

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Increase (decrease) in net interest

54.3
47.7
314.1
(12.7)
(.6)
(22.1)

380.7

19.2
94.7
(6.7)

(142.9)

9.2

(26.5)
24.5
148.1

44.4

190.5

( $ 615.6)
(297.9)
(5.1)
(247.1)

(1,165.7)
(2.9)
(190.5)
(14.6)
2.3
(27.7)

($ 614.7)
(294.3)
(209.7)

7.3

(1,111.4)

44.8
123.6
(27.3)
1.7
(49.8)

$ 511.1
249.2
(233.3)
202.0

729.0
(10.5)
(128.2)
(6.3)
11.3
18.7

(1,399.1)

(1,018.4)

614.0

(86.0)
(383.7)
(24.8)

(74.0)
(195.7)

(764.2)
(272.1)
(495.8)

(66.8)
(289.0)
(31.5)

(216.9)
(186.5)

(790.7)
(247.6)
(347.7)

2.5
9.0
(17.5)

(21.9)
225.6

197.7
43.7
120.3

(6.5)

37.9

(1,538.6)

(1,348.1)

361.7

$457.8
116.0
3.0
130.0

706.8
8.7
71.9
15.3
(1.5)
19.7

820.9

36.9
148.8
(20.4)

157.6
128.2

451.1
155.6
263.2

1.0

870.9

$ 968.9
365.2
(230.3)
332.0

1,435.8

(1.8)
(56.3)
9.0
9.8
38.4

1,434.9

39.4
157.8
(37.9)

135.7
353.8

648.8
199.3
383.5

1.0

1,232.6

income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 190.2

139.5

329.7

$ 252.3

($50.0)

$ 202.3

This table shows the components of the change in net interest income by volume and rate on a taxable-equivalent basis. The eÅect of changes in rates on volume changes is allocated
based on the percentage relationship of changes in volume and changes in rate. This table does not take into account the level of noninterest-bearing funding, nor does it fully reÖect
changes in the mix of assets and liabilities.

to the restructuring of a co-branding credit card
relationship. Refer to Note 4 of the Notes to Consolidated
Financial Statements for further information on merger and
restructuring-related items.

The provision for credit losses in 2001, excluding

merger and restructuring-related items, was
$2,146.6 million, an increase of $1,318.6 million over 2000.
The increase was primarily due to a $160.0 million charge
during the Ñrst quarter of 2001 in connection with an
accelerated loan workout strategy and a $1,025.0 million
incremental provision recognized in the third quarter of
2001. The third quarter incremental provision for credit
losses was taken after extensive reviews of the Company's
commercial portfolio in light of declining economic
conditions and company-speciÑc trends. This action
recognized an increasing probability that the economic
slowdown already occurring had accelerated and may be
more prolonged than previously anticipated. Given the
continuing economic stress in various industry sectors,
increasing unemployment and trends in consumer
delinquencies and charge-oÅs, the Company may experience

higher levels of nonperforming loans and volatility in net
charge-oÅs during the next several quarters.

Refer to ""Corporate Risk ProÑle'' on pages 29 through
36, for further information on the factors considered by the
Company in assessing the credit quality of the loan
portfolio and establishing the allowance for credit losses.

Noninterest Income Noninterest income in 2001 was
$5.4 billion, compared with $4.9 billion in 2000 and
$4.2 billion in 1999. The increase of $476.2 million
(9.8 percent) in 2001 compared with 2000 included
$62.2 million of merger and restructuring-related gains in
connection with the required sale of 14 branches associated
with the merger of Firstar and USBM. Refer to Note 4 of
the Notes to Consolidated Financial Statements for further
information on merger and restructuring-related items.
Excluding merger and restructuring-related gains,
noninterest income was $5.3 billion in 2001, an increase of
$414.0 million (8.5 percent) from 2000. Credit card fee
revenue increased $12.5 million (1.6 percent) in 2001
compared to revenue growth of $113.6 million

U.S. Bancorp

Table 5

Noninterest Income

(Dollars in Millions)

Credit card fee revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merchant and ATM processing revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trust and investment management feesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deposit service charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash management feesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mortgage banking revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading account proÑts and commissions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment products fees and commissions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment banking revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Insurance product revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial product revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail product revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities gains, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

774.3
428.8
894.4
660.6
347.3
234.0
221.6
460.1
258.2
145.4
385.9
18.1
329.1
139.4

2000

761.8
230.3
926.2
551.1
292.4
189.9
258.4
466.6
360.3
145.3
304.4
69.1
8.1
319.3

1999

648.2
189.6
887.1
497.2
280.6
190.4
222.4
450.8
246.6
105.3
215.7
78.0
13.2
219.8

Total operating noninterest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related gainsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

5,297.2
62.2

4,883.2
Ì

4,244.9
Ì

Total noninterest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 5,359.4

$ 4,883.2

$ 4,244.9

(17.5 percent) in 2000 reÖecting slower growth in
corporate, purchasing and retail card transaction volumes
during the year. Corporate card transaction volumes
declined somewhat in late 2001 principally due to slower
economic conditions and declining business travel since the
events of September 11, 2001. Merchant and ATM
processing revenue increased $198.5 million, or
86.2 percent, principally due to the NOVA acquisition.
Deposit service charges, commercial product revenue, cash
management fees, and mortgage banking revenue also
improved in 2001 compared with 2000 by $109.5 million
(19.9 percent), $81.5 million (26.8 percent), $54.9 million
(18.8 percent), and $44.1 million (23.2 percent),
respectively. The increase in deposit service charges was
primarily due to the alignment and re-design of products
and features following the merger of Firstar and USBM.
The increase in commercial product revenue and cash
management fees was primarily driven by the growth in
core business, loan conduit activities and product
enhancements. Mortgage banking revenue increased in 2001
compared with 2000 due to increased origination and sales
fees and loan servicing revenue, partially oÅset by a
decrease in gains on the sale of servicing rights. Trust and
investment management fees declined $31.8 million
(3.4 percent) and capital markets-related revenue declined
$145.4 million (13.4 percent) reÖecting softness in equity
capital markets since late 2000. Included in noninterest
income for 2001 was $329.1 million of gains on the sale of
investment securities and principal-only residuals compared
with $8.1 million of similar gains in 2000. Other income
declined $179.9 million from a year ago, primarily reÖecting
a $125.0 million decline in the level of earnings from equity
investments compared with 2000 and a $40.0 million
impairment of retail leasing residuals in 2001. The decline

in other income for 2001 also reÖected a decline in
building-related gains of $42.5 million from 2000.

Noninterest income in 2000 increased $638.3 million

(15.0 percent) compared with 1999. The increase was
driven by a $165.5 million (18.0 percent) increase in capital
markets-related revenue, credit card fee revenue growth of
$113.6 million (17.5 percent), increased commercial
product revenue of $88.7 million (41.1 percent), increased
service charges on deposit accounts of $53.9 million
(10.8 percent), gains of $55.0 million on the disposal of
the Company's ownership in oÇce buildings in Portland,
Boise and Minneapolis, merchant and ATM processing
revenue growth of $40.7 million (21.5 percent), due in part
to the acquisition of the Mellon Network Services
processing business, increased insurance product revenue of
$40.0 million (38.0 percent), growth in trust and
investment management revenue of $39.1 million
(4.4 percent), and revenues associated with equity
investments, partially oÅset by a $20.0 million gain on the
sale of branches in Kansas and Iowa completed in 1999.

Noninterest Expense Noninterest expense in 2001 was
$6.6 billion compared with $5.7 billion in both 2000 and
1999. Noninterest expense included merger and
restructuring-related charges of $946.4 million in 2001,
compared with $348.7 million in 2000 and $532.8 million
in 1999. Excluding merger and restructuring-related charges,
noninterest expense on an operating basis was $5.7 billion
in 2001, compared with $5.4 billion in 2000 and
$5.1 billion in 1999. The increase in 2001 noninterest
expense, on an operating basis, of $290.5 million
(5.4 percent) was primarily the result of recent acquisitions,
including NOVA, Scripps Financial Corporation, PaciÑc
Century Bank, Lyon Financial Services, Inc. and 41 branches
in Tennessee representing an aggregate increase of

U.S. Bancorp

Table 6

Noninterest Expense

(Dollars in Millions)

2001

2000

1999

Salaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Employee beneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net occupancy ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Furniture and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Professional services ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Advertising and marketing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Travel and entertainment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Software ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Data processingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Communication ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Postage ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
PrintingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
GoodwillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
OtherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total operating noninterest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$2,347.1
366.2
417.9
305.5
123.8
121.6
90.6
136.1
80.0
181.4
179.8
77.9
251.1
278.4
701.4

5,658.8
946.4

$2,427.1
399.8
396.9
308.2
109.0
122.1
107.0
111.9
149.7
138.8
174.5
86.5
235.0
157.3
444.5

5,368.3
348.7

$2,355.3
410.1
371.8
307.9
95.7
124.1
88.4
72.2
133.7
123.4
170.7
90.7
175.8
154.0
454.7

5,128.5
532.8

Total noninterest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$6,605.2

$5,717.0

$5,661.3

EÇciency ratio(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÇciency ratio, before merger and restructuring-related items ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Banking eÇciency ratio, before merger and restructuring-related items(b) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

57.5%
49.5
45.2

51.9%
48.8
43.5

55.7%
50.5
46.3

(a) Computed as noninterest expense divided by the sum of net interest income on a taxable-equivalent basis and noninterest income excluding securities gains (losses), net
(b) Without investment banking and brokerage activity.

approximately $241.7 million. In addition to the impact of
acquisitions, noninterest expense increased over 2000 due to
recognition of mortgage servicing rights (""MSR'')
impairments of $60.8 million related to increasing mortgage
prepayments during the declining rate environment, and
asset write-downs of $52.6 million related to commercial
leasing partnerships and repossessed tractor/trailer property.
These increases were partially oÅset by a reduction in
expenses related to capital markets activity of
$108.0 million and cost savings related to merger and
restructuring-related activities.

The increase in 2000 noninterest expenses, on an

operating basis, of $239.8 million (4.7 percent) was
primarily attributed to growth in expenses related to
investment banking and brokerage activity of
$228.6 million, the impact of purchase acquisitions and
divestitures of $175.9 million and planned spending on
service-quality technology and other customer service
initiatives of USBM. These increases were somewhat oÅset
by cost savings related to the integration of Mercantile.

The eÇciency ratio before merger-related charges
increased slightly to 49.5 percent in 2001 compared with
48.8 percent in 2000 and 50.5 percent in 1999. The banking
eÇciency ratio before merger-related charges was
45.2 percent for 2001, compared with 43.5 percent in 2000
and 46.3 percent in 1999. Both the eÇciency ratio and the
banking eÇciency ratio increased in 2001 primarily due to
the NOVA acquisition. The improved banking eÇciency

ratio in 2000 compared with 1999 reÖects the results of
integrating acquired banking businesses.

Merger and Restructuring-Related Items The Company
incurred merger and restructuring-related items in each of
the last three years in conjunction with its acquisitions. In
2001, merger and restructuring-related items included in
pretax earnings were $1,266.4 million, including
$382.2 million in the provision for credit losses, a
$62.2 million gain on the required sale of branches and
$946.4 million of noninterest expense. The total merger and
restructuring-related items consisted of $1,167.2 million
related to the Firstar and USBM merger, $50.7 million of
restructuring expenses for U.S. Bancorp Piper JaÅray and
$48.5 million related to NOVA and other acquisitions.
With respect to the Firstar and USBM merger, the
$1,167.2 million of merger and restructuring-related items
included $268.2 million for severance and employee-related
costs and $477.6 million of charges to exit business lines
and products, sell credit portfolios or otherwise realign
business practices in the new Company. The Company also
incurred $208.1 million of systems conversion and business
integration costs, $48.7 million for lease cancellation and
other building-related costs, $226.8 million for transaction
costs, funding a charitable foundation to reaÇrm a
commitment to its markets and other costs, and a
$62.2 million gain related to the required sale of branches.
Total merger and restructuring-related items associated with
the Firstar and USBM merger are expected to reach

U.S. Bancorp

Table 7

Loan Portfolio Distribution

At December 31 (Dollars in Millions)

Amount

Percent
of Total

Amount

Percent
of Total

Amount

Percent
of Total

Amount

Percent
of Total

Amount

Percent
of Total

2001

2000

1999

1998

1997

Commercial

CommercialÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 40,472
5,858
Lease Ñnancing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

35.4% $ 47,041
5,776

5.1

38.5% $ 42,021
3,835

4.7

37.1% $ 37,777
3,291

3.4

35.3% $33,662
2,667

3.1

34.0%
2.7

Total commercial ÏÏÏÏÏÏÏÏÏÏ

46,330

40.5

52,817

43.2

45,856

40.5

41,068

38.4

36,329

36.7

Commercial real estate

Commercial mortgages ÏÏÏÏÏÏÏÏÏÏÏ
Construction and development ÏÏÏÏ

Total commercial real estateÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏ
Retail

Credit card ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail leasing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other retail

Home equity and second

mortgage ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Revolving credit ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Installment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Automobile ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Student ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

18,765
6,608

25,373

5,746

5,889
4,906

14,318
2,673
2,292
5,660
1,218

Total other retailÏÏÏÏÏÏÏÏ

26,161

Total retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

36,956

16.4
5.8

22.2

5.0

5.1
4.3

12.5
2.3
2.0
5.0
1.1

22.9

32.3

19,466
6,977

26,443

7,753

6,012
4,153

13,600
2,750
2,186
5,609
1,042

25,187

35,352

15.9
5.7

21.6

6.3

4.9
3.4

11.1
2.2
1.8
4.6
.9

20.6

28.9

18,636
6,506

25,142

11,395

5,004
2,123

*
*
*
*
*

16.5
5.7

22.2

10.1

4.4
1.9

*
*
*
*
*

16,602
5,206

21,808

13,980

4,856
1,621

*
*
*
*
*

15.5
4.9

20.4

13.1

4.5
1.5

*
*
*
*
*

15,739
4,059

19,798

15,892

4,993
1,087

*
*
*
*
*

15.9
4.1

20.0

16.0

5.1
1.1

*
*
*
*
*

23,709

30,836

20.9

27.2

23,625

30,102

22.1

28.1

20,930

27,010

21.1

27.3

Total loansÏÏÏÏÏÏÏÏÏÏÏÏÏ $114,405

100.0% $122,365

100.0% $113,229

100.0% $106,958

100.0% $99,029

100.0%

*Information not available

$1.4 billion with integration activities substantively being
completed in the third quarter of 2002.

In response to signiÑcant changes in the securities
markets during 2001, including increased volatility, changes
in equity valuations and the increasingly competitive
environment for the industry, U.S. Bancorp Piper JaÅray
restructured it operations. The restructuring is expected to
improve the operating eÇciency of the business by
removing excess capacity from its product distribution
network and by implementing more eÅective business
processes. These restructuring activities were completed in
2001.

In 2000, merger and restructuring-related items

included noninterest expenses consisting of $227.0 million
related to the merger of Firstar and Mercantile,
$52.6 million related to the merger of Firstar and Star Banc
and $69.1 million primarily related to other acquisitions of
USBM. Included in merger and restructuring-related items
were $59.4 for severance and employee-related costs,
$193.5 million for systems conversions, $47.3 million for
lease cancellations and other building-related costs and
$48.5 million of other business integration costs.

In 1999, merger and restructuring-related items

included noninterest expenses consisting of $417.0 million
related to the merger of Firstar and Mercantile,
$95.9 million related to the merger of Firstar and Star Banc

and $27.4 million primarily related to other acquisitions by
USBM. Included in merger and restructuring-related items
were $149.6 for severance and employee-related costs,
$132.5 million for systems conversions, $177.7 million
related to the restructuring of Mercantile's securities
portfolio, $6.2 million for lease cancellations and other
building-related costs and $66.8 million to fund charitable
foundations and other business integration costs.
Refer to Note 3 and Note 4 of the Notes to

Consolidated Financial Statements for further information
on these acquired businesses and merger and restructuring-
related items.

Income Tax Expense The provision for income taxes was
$927.7 million in 2001, compared with $1,512.2 million in
2000 and $1,392.2 million in 1999. The Company's eÅective
tax rate was 35.2 percent in 2001, compared with
34.5 percent in 2000 and 36.9 percent in 1999. The
eÅective tax rate increased in 2001 compared with 2000
primarily due to a decline in tax-exempt interest related to
sales of investment securities, the impact of unitary state tax
apportionment factors on the Company, non-deductible
merger-related costs and the acquisition of NOVA.

At December 31, 2001, the Company's net deferred tax

liability was $573.2 million, compared with $512.8 million
at December 31, 2000. For further information on income

U.S. Bancorp

taxes, refer to Note 19 of the Notes to Consolidated
Financial Statements.

BALANCE SHEET ANALYSIS

Average earning assets were $145.2 billion in 2001
compared with $140.6 billion in 2000. The increase of
$4.6 billion (3.2 percent) was primarily driven by increases
in the investment portfolio, core retail loan growth, and the
impact of acquisitions. This growth was partially oÅset by a
$2.7 billion decline in lower margin residential mortgages
and a $2.2 billion reduction related to transfers of short-
term, high credit quality, low margin commercial loans to
the loan conduit. The increase was funded with an increase
in average interest-bearing liabilities of $3.4 billion
consisting principally of more favorably priced long-term
wholesale funds and an increase in net free funds of
$1.2 billion including an increase in average noninterest-
bearing deposits of $1.3 billion.

For average balance information, refer to Consolidated
Daily Average Balance Sheet and Related Yields and Rates
on pages 86 and 87.

Loans The Company's loan portfolio decreased $8.0 billion
to $114.4 billion at December 31, 2001, from $122.4 billion
at December 31, 2000. The change in loans outstanding was
impacted by several management actions, including the sale
of high LTV home equity and indirect automobile
portfolios, the transfer of a discontinued unsecured small
business product to loans held for sale, branch divestitures
required by the merger of Firstar and USBM, and transfers
of short-term, high credit quality, low margin commercial
loans to the loan conduit. In addition, the Company
continued its business strategy to reduce the lower margin
residential mortgage portfolio. Average total loans
decreased less than one percent to $118.2 billion in 2001
compared with $118.3 billion in 2000. Excluding residential
mortgages, average loans for 2001 were $2.6 billion
(2.4 percent) higher than 2000. Average loans on a core
basis (excluding loan conduit activities, transfer of loans to
held for sale and residential mortgages) increased by $4.6
billion (4.3 percent) relative to the prior year.

Table 8

Selected Loan Maturity Distribution

The Company's loan portfolio inherently has credit

risk, which may ultimately result in loan charge-oÅs. The
Company manages this risk through stringent, centralized
credit policies and review procedures, as well as
diversiÑcation along geographic and customer lines. Refer to
""Corporate Risk ProÑle'' on pages 29 through 36, for a
more detailed discussion of the management of credit risk
including the allowance for credit losses.

Commercial Commercial loans, including lease Ñnancing,
totaled $46.3 billion at December 31, 2001, down
$6.5 billion (12.3 percent) from year-end 2000. The
decline in commercial loans reÖected tighter credit
underwriting throughout 2001, slower economic growth,
the Company's transfer of approximately $3.7 billion of
short-term, high credit quality, low margin commercial
loans into the loan conduit and the transfer of $680 million
in unsecured small business product to loans held for sale.
This was oÅset somewhat by core growth in equipment
lease Ñnancing and bank acquisitions. Average commercial
loans in 2001 were Öat compared with 2000. On a core
basis (without loan conduit activities and transfers to loans
held for sale), average commercial loans increased by 2.1
percent from a year ago.

The Company oÅers a broad array of traditional
commercial lending products and specialized products such
as asset-based lending, lease Ñnancing, agricultural credit
and correspondent banking. The Company monitors and
manages the portfolio diversiÑcation by industry, customer
and geography. The commercial portfolio reÖects the
Company's focus of serving small business customers,
middle market and larger corporate businesses throughout
its 24 state banking region and national customers within
certain niche industry groups.

Table 9 provides a summary of the signiÑcant industry

groups and geographic locations of commercial loans
outstanding at December 31, 2001 and 2000. The
commercial loan portfolio is diversiÑed among various
industries with somewhat higher concentrations in
consumer products and services, capital goods (including
manufacturing and commercial construction-related

At December 31, 2001 (Dollars in Millions)

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial real estate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total of loans due after one year with

Predetermined interest rates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Floating interest rates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

One Year
or Less

$25,761
7,256
495
13,452

$46,964

Over One
Through
Five Years

$17,896
12,238
954
13,417

$44,505

Over Five
Years

$ 2,673
5,879
4,297
10,087

$22,936

Total

$ 46,330
25,373
5,746
36,956

$114,405

$ 37,420
$ 30,021

U.S. Bancorp

Table 9

Commercial Loan Exposure by Industry Group and Geography

December 31, 2001

December 31, 2000

Industry Group(Dollars in Millions)

Consumer products and services ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital goods ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Consumer staples ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Financials ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Agriculture ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
TransportationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Paper and forestry products, mining and basic materials ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Private investors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Healthcare ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mortgage banking ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
TechnologyÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Energy ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Loans

$ 8,591
6,270
4,638
4,291
3,340
2,544
1,931
1,803
1,424
1,400
1,094
405
8,599

Percent

18.5%
13.5
10.0
9.3
7.2
5.5
4.2
3.9
3.1
3.0
2.4
.9
18.5

Loans

$ 9,791
6,984
5,427
5,438
4,177
2,775
2,249
2,405
1,631
961
1,223
742
9,014

Percent

18.4%
13.2
10.3
10.3
7.9
5.3
4.3
4.6
3.1
1.8
2.3
1.4
17.1

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$46,330

100.0%

$52,817

100.0%

Geography

California ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Colorado ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Illinois ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
MinnesotaÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Missouri ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ohio ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Oregon ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Washington ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Wisconsin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Iowa, Kansas, Nebraska, North Dakota, South Dakota ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Arkansas, Indiana, Kentucky, Tennessee ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Idaho, Montana, Wyoming ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Arizona, Nevada, Utah ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total banking region ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Outside the Company's banking region ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 3,969
2,008
2,339
6,511
2,104
2,896
2,014
3,882
3,115
5,059
1,897
1,014
1,057

37,865
8,465

8.6%
4.3
5.0
14.1
4.5
6.3
4.3
8.4
6.7
10.9
4.1
2.2
2.3

81.7
18.3

$ 3,174
2,661
3,336
8,724
2,163
2,269
2,769
4,860
3,153
4,547
2,230
1,316
1,460

42,662
10,155

6.0%
5.0
6.3
16.5
4.1
4.3
5.2
9.2
6.0
8.6
4.2
2.5
2.8

80.8
19.2

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$46,330

100.0%

$52,817

100.0%

businesses), and consumer staples industries. Additionally,
the commercial portfolio is diversiÑed across the Company's
geographical markets with 81.7 percent of total commercial
loans within the 24 state banking region. Credit
relationships outside of the Company's banking region are
typically niche businesses including the mortgage banking
and the leasing businesses. The mortgage banking sector
represented approximately 3.0 percent of commercial loans
at December 31, 2001, compared with 1.8 percent at
December 31, 2000. Loans to mortgage banking customers
are primarily warehouse lines which are collateralized with
the underlying mortgages. The Company regularly monitors
its mortgage collateral position to manage its risk exposure.

The Company provides Ñnancing to enable customers

to grow their businesses through acquisitions of existing
businesses, buyouts or other recapitalizations. Such
leveraged Ñnancings approximated $3.9 billion in loans
outstanding at December 31, 2001, compared with
approximately $4.9 billion outstanding at December 31,
2000. The decline was primarily due to tighter credit
underwriting, payoÅs and the Company's aggressive

workout strategies during 2001. During a business cycle
with slower economic growth, businesses with leveraged
capital structures may experience insuÇcient cash Öows to
service their debt. The Company manages its exposure to
leveraged Ñnancings by maintaining strong underwriting
standards, portfolio diversiÑcation and eÅectively managing
the relationship with the customer either directly or
through reputable Ñnancial intermediaries. At inception of
the credit relationship, the Company's underwriting
standards require the businesses to have acceptable capital
levels and demonstrated suÇcient cash Öows to support
debt service of the loans. The Company's portfolio of
leveraged Ñnancings is included in Table 9 and is diversiÑed
among industry groups similar to the total commercial loan
portfolio.

Commercial Real Estate The Company's portfolio of
commercial real estate mortgages and construction loans
declined to $25.4 billion at December 31, 2001, compared
with $26.4 billion at December 31, 2000. Commercial
mortgages outstanding decreased to $18.8 billion at

U.S. Bancorp

December 31, 2001, compared with $19.5 billion at
December 31, 2000. Real estate construction and
development loans at December 31, 2001, totaled
$6.6 billion compared with $7.0 billion at year-end 2000.
Average commercial real estate loans were $26.1 billion in
2001; essentially Öat compared with a year ago.

Table 10 provides a summary of commercial real estate

exposures by property type and geographic location. The
Company maintains the real estate construction designation
until the project is producing suÇcient cash Öow to service
traditional mortgage Ñnancing, at which time, if retained,
the loan is transferred to the commercial mortgage
portfolio. Approximately $601 million of construction loans
were transferred to the commercial mortgage portfolio in
2001.

At year-end 2001, real estate secured $207 million of
tax-exempt industrial development loans. The Company's
commercial real estate mortgages and construction loans
had unfunded commitments of $6.0 billion at December 31,
2001.

The Company also Ñnances the operations of real
estate developers and other entities with operations related

to real estate. These loans are not secured directly by real
estate and are subject to terms and conditions similar to
commercial loans. These loans were included in the
commercial loan category and totaled $1.4 billion at
December 31, 2001.

Residential Mortgages Residential mortgages, held in the
loan portfolio, decreased to $5.7 billion at December 31,
2001, from $7.8 billion at December 31, 2000. The decline
reÖected management's decision to reduce these lower
yielding loans and the related adverse prepayment risk by
selling most single-family residential real estate loan
originations into the secondary market.

Retail Total retail loans outstanding, which includes credit
card, retail leasing, home equity, and other retail loans,
increased $1.6 billion (4.5 percent) to $37.0 billion at
December 31, 2001, from $35.4 billion at December 31,
2000. This increase was primarily related to growth in retail
leases of $753 million, and home equity lines and loans of
$718 million. This growth was tempered somewhat by

Table 10

Commercial Real Estate Exposure by Property Type and Geography

December 31, 2001

December 31, 2000

Property Type (Dollars in Millions)

Business owner occupied ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Multi-familyÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial property

IndustrialÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
OÇceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Homebuilders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Hotel/motel ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Healthcare facilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Loans

$ 5,159
2,842

1,995
2,948
2,704
1,949
1,417
1,985
1,183
3,191

Percent

20.3%
11.2

Loans

$ 6,245
3,908

Percent

23.6%
14.8

7.9
11.6
10.7
7.7
5.6
7.8
4,7
12.5

1,923
2,761
2,537
2,755
1,521
1,916
1,084
1,793

7.3
10.4
9.6
10.4
5.8
7.2
4.1
6.8

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$25,373

100.0%

$26,443

100.0%

Geography

$ 3,399
840
1,581
1,401
2,439
2,274
1,427
2,671
2,128
2,016
2,055
690
1,182

24,103
1,270

13.4%
3.3
6.2
5.5
9.6
9.0
5.6
10.5
8.4
8.0
8.1
2.7
4.7

95.0
5.0

$ 3,255
855
836
1,088
2,842
2,425
1,638
2,937
2,113
2,982
1,798
573
1,264

24,606
1,837

12.3%
3.2
3.2
4.1
10.7
9.2
6.2
11.1
8.0
11.3
6.8
2.2
4.8

93.1
6.9

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$25,373

100.0%

$26,443

100.0%

U.S. Bancorp

portfolio sales of $1.3 billion related to the high LTV
home equity portfolio and indirect automobile loans
completed in the Ñrst quarter of 2001. Average retail loans
increased $2.5 billion (7.7 percent) to $35.2 billion in
2001. On a core basis, average retail loans increased
12.2 percent from a year ago with growth in most retail
loan categories. Of the total retail loans and residential
mortgages outstanding, approximately 93 percent are to
customers located in the Company's banking region.

Loans Held for Sale At December 31, 2001, loans held for
sale (""LHFS''), which consisted primarily of residential
mortgage loans to be sold in the secondary markets, were
$2.8 billion compared with $764 million at December 31,
2000. The increase reÖected the surge in residential
mortgage production volume in 2001 due to declining

Table 11

Investment Securities

interest rates. Residential mortgage production increased to
$15.6 billion in 2001 compared with $6.7 billion in 2000.

Securities The Company uses its investment securities
portfolio for several purposes. It serves as a vehicle to
manage interest rate and prepayment risk, generates interest
and dividend income from the investment of excess funds
depending on loan demand, provides liquidity to meet
liquidity requirements and is used as collateral for public
deposits and wholesale funding sources.

At December 31, 2001, investment securities of
$26.6 billion consisted of securities available-for-sale
($26.3 billion) and held-to-maturity ($.3 billion),
compared with total investment securities of $17.6 billion at
December 31, 2000. During the year, management realigned
the portfolio to hedge against interest rate changes and the

Available-for-Sale

Weighted
Average
Fair Maturity in
Years

Value

Amortized
Cost

Weighted
Average
Yield

Amortized
Cost

Held-to-Maturity

Weighted
Average
Fair Maturity in
Years

Value

Weighted
Average
Yield

December 31, 2001 (Dollars in Millions)

U.S. Treasuries and agencies

Maturing in one year or less ÏÏÏÏÏÏÏÏÏÏÏ
Maturing after one year through

Ñve yearsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Maturing after five years through

ten years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Maturing after ten yearsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Mortgage and asset-backed securities

Maturing in one year or less ÏÏÏÏÏÏÏÏÏÏÏ
Maturing after one year through

Ñve yearsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Maturing after five years through

ten years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Maturing after ten yearsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

105

106

290

44
Ì

439

298

45
Ì

449

13,626

13,704

8,786
1,576

8,718
1,566

TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$24,028

Obligations of states and political subdivisions
Maturing in one year or less ÏÏÏÏÏÏÏÏÏÏÏ
Maturing after one year through

Ñve yearsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Maturing after five years through

ten years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Maturing after ten yearsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Other debt securities

Maturing in one year or less ÏÏÏÏÏÏÏÏÏÏÏ
Maturing after one year through

Ñve yearsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Maturing after five years through

ten years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Maturing after ten yearsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Other investmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

185

187

384

228
80

877

137

7
262

475

393

231
80

891

138

6
235

449

492

Total investment securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$26,294

$26,309

.37

2.35

5.83
Ì

2.22

.61

3.90

5.84
14.57

5.30

.46

2.79

7.00
16.05

4.60

.53

1.93

6.46
25.35

14.51

5.40

4.29%

$ Ì

4.74

4.86
Ì

4.64

5.59

5.91

5.44
3.37

5.57

7.26

7.33

7.01
8.68

7.35

2.84

6.11

8.03
3.03

3.49

5.58%

Ì
Ì

$ Ì

Ì
Ì

$ 28

$ 83

$ 84

64
57

67
58

$271

$278

$ Ì

Ì
Ì

$ Ì

$299

Ì
Ì

$ Ì

$306

Ì
Ì

4.05

Ì
Ì

4.05

.54

3.11

7.74
15.04

5.91

Ì
Ì

Ì%

Ì
Ì

7.67

Ì
Ì

7.67

4.30

6.31

6.58
6.87

5.87

Ì
Ì

5.74

6.04%

Note: Information related to asset-backed securities included above is presented based upon weighted average maturities anticipating future prepayments. Average yields are

presented on a fully-taxable equivalent basis. Yields on available-for-sale securities are computed based on historical cost balances.

At December 31 (Dollars in Millions)

U.S. Treasuries and agencies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset-backed securities

Collateralized mortgage obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mortgage-backed securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total asset-backed securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Obligations of states and political subdivisions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other securities and investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

2000

Amortized
Cost

439

15,178
8,878

24,056
1,148
950

Percent
of Total

Amortized
Cost

1.7%

$ 1,600

Percent
of Total

9.1%

57.1
33.4

90.5
4.3
3.5

6,264
5,572

11,836
2,586
1,472

35.8
31.9

67.7
14.8
8.4

Total investment securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$26,593

100.0%

$17,494

100.0%

U.S. Bancorp

Table 12

Deposits

The composition of deposits was as follows:

December 31 (Dollars in Millions)

2001

2000

1999

1998

1997

Noninterest-bearing deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest-bearing deposits

Savings accountsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest checking ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Money market accountsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Subtotal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Time certiÑcates of deposit less than $100,000ÏÏÏÏÏÏÏÏÏÏÏÏ
Time deposits greater than $100,000

Domestic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 31,212

$ 26,633

$ 26,350

$ 27,479

$ 24,062

4,637
15,251
24,835

44,723
20,724

7,286
1,274

4,516
13,982
23,899

42,397
25,780

11,221
3,504

5,445
13,141
22,751

41,337
25,394

9,348
988

6,352
13,385
22,086

41,823
27,935

6,261
848

6,414
12,212
18,672

37,298
29,548

6,622
793

Total depositsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$105,219

$109,535

$103,417

$104,346

$ 98,323

Percent of total deposits

Noninterest-bearing deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest-bearing deposits

Subtotal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Time certiÑcates of deposit less than $100,000ÏÏÏÏÏÏÏÏÏÏÏÏ
Time deposits greater than $100,000

Domestic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

29.7%

2000

24.3%

1999

25.5%

1998

26.3%

1997

24.5%

4.4
14.5
23.6

42.5
19.7

6.9
1.2

4.1
12.8
21.8

38.7
23.5

10.3
3.2

5.3
12.7
22.0

40.0
24.5

9.0
1.0

6.1
12.8
21.2

40.1
26.8

6.0
.8

6.5
12.4
19.0

37.9
30.1

6.7
.8

Total depositsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

100.0%

The maturity of time deposits greater than $100,000 was as follows:

December 31 (Dollars in Millions)

Three months or less ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Over three months through six months ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Over six months through twelve months ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Over twelve months ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

$4,060
1,903
1,200
1,397

$8,560

impact of prepayments in the mortgage servicing rights
portfolio. The Company purchased $32.3 billion and sold
$19.2 billion of investment securities during the realignment
process and generated $329.1 million in securities gains in
the declining interest rate environment.

The weighted-average yield of the available-for-sale
portfolio was 5.58 percent at December 31, 2001, compared
with 7.23 percent at December 31, 2000. The average
maturity of the available-for-sale portfolio dropped to
5.4 years at December 31, 2001, down from 9.5 years at
December 31, 2000. The relative mix of the type of
investment securities maintained in the portfolio is provided
in Table 11. The change in investment portfolio mix
reÖected sales of tax-exempt municipal securities which
were replaced by collateralized mortgage obligations. At
December 31, 2001, the investment portfolio included a
$15 million net unrealized gain, compared with a net
unrealized gain of $148 million at December 31, 2000.

Deposits Total deposits were $105.2 billion at
December 31, 2001, down $4.3 billion (3.9 percent) from
$109.5 billion at year-end 2000. The decline since
December 31, 2000, was primarily due to the required sale
of 14 branches related to the merger of Firstar and USBM
as well as management's funding decisions to reduce higher
cost time deposits greater than $100,000.

Noninterest-bearing deposits were $31.2 billion at

December 31, 2001, compared with $26.6 billion at
December 31, 2000. Average noninterest-bearing deposits
increased to $25.1 billion in 2001 compared with
$23.8 billion in 2000. The increase in noninterest-bearing
deposits was primarily attributable to business demand
accounts that maintain compensating balances with the
Company and to bank acquisitions. Core interest-bearing
deposits, including savings accounts, interest checking and
money market accounts, increased $2.3 billion
(5.5 percent) from a year ago. Average core interest-
bearing deposits increased $2.6 billion (6.4 percent) during

U.S. Bancorp

2001. The downturn in equity capital markets in 2001 and
the current interest rate environment have prompted many
customers to increase their liquidity in accessible deposits.
Time certiÑcates of deposit less than $100,000 declined
$5.1 billion (19.6 percent) during the year. Large
denomination deposits, both domestic and foreign,
decreased $6.2 billion (41.9 percent). These deposits are
largely viewed as purchased funds and are managed to
levels deemed appropriate given alternative funding sources.
Average time certiÑcates of deposit less than $100,000
declined $2.5 billion (9.8 percent) and average large
denomination deposits were essentially Öat compared with
2000. The decline in average time certiÑcates of deposit less
than $100,000 reÖected the net impact of bank acquisitions
and branch divestitures and management's pricing decisions
to change the mix of funding toward lower rate wholesale
funding sources.

Table 12 provides a summary of total deposits by type

of deposit.

Borrowings The Company utilizes both short-term and
long-term borrowings to fund growth of earning assets in
excess of deposit growth. Short-term borrowings, which
include federal funds purchased, securities sold under
agreements to repurchase and other short-term borrowings,
were $14.7 billion at December 31, 2001, up $2.8 billion
(24.0 percent) from $11.8 billion at year-end 2000. Short-
term funding is managed to levels deemed appropriate given
alternative funding sources.

Long-term debt was $25.7 billion at December 31,
2001, up from $21.9 billion at December 31, 2000. The
increase in long-term funding reÖects favorable funding
costs during the declining rate environment relative to rate
reductions for shorter-term borrowings or large
denomination deposits. During 2001, the Company issued
$1.1 billion of senior contingent convertible debt as well as
$1.5 billion of ""Company-obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trusts
Holding Solely the Junior Subordinated Debentures of the
Parent Company'' commonly referred to as ""Trust Preferred
Securities''. The Company's subsidiary U.S. Bank National
Association issued $1.5 billion of Ñxed-rate subordinated
notes. In addition, the Company's bank subsidiaries
obtained $5.3 billion of long-term Federal Home Loan
Bank advances in 2001. Refer to ""Liquidity Risk
Management'' on pages 38 through 40 for discussion of
liquidity management of the Company.

CORPORATE RISK PROFILE

Overview Managing risks is an essential part of successfully
operating a Ñnancial services company. The most prominent
risk exposures are credit, interest rate, market and liquidity.
The Company also has exposure related to changes in

residual valuations and ongoing operational activities. Credit
risk is the risk of not collecting interest and/or the
principal balance of a loan or investment when it is due.
Interest rate risk is the potential reduction of net interest
income as a result of changes in interest rates. Rate
movements can aÅect the repricing of assets and liabilities
diÅerently, as well as their market value. Market risk arises
from Öuctuations in interest rates, foreign exchange rates,
and equity prices that may result in changes in the values of
Ñnancial instruments, such as trading account and available-
for-sale securities that are accounted for on a mark-to-
market basis. Liquidity risk is the possible inability to fund
obligations to depositors, investors and borrowers. Residual
risk is the potential reduction in the ""end-of-term'' value of
leased assets or the residual cash Öows related to asset
securitization and other oÅ-balance sheet structures.
Operational risk represents the possibility that transactions
are processed erroneously and that material errors are not
detected by the systems of internal accounting controls.

Credit Risk Management The Company's strategy for
credit risk management includes stringent, centralized credit
policies and uniform underwriting criteria for all loans,
including specialized lending categories such as mortgage
banking, energy, commercial real estate and real estate
construction, leveraged Ñnancing and consumer credit. The
strategy also emphasizes diversiÑcation on a geographic,
industry and customer level, regular credit examinations,
and quarterly management reviews of large loans and loans
experiencing deterioration of credit quality. The Company
strives to identify potential problem loans early, take any
necessary charge-oÅs promptly, and maintain adequate
reserve levels. Commercial banking operations rely on a
strong credit culture that combines prudent credit policies
and individual lender accountability. In addition, the
commercial lenders generally focus on middle market
companies within their regions or niche national markets.
The Company utilizes a credit risk rating system in order to
measure the credit quality of individual commercial loan
transactions and regularly forecasts potential changes in risk
ratings and nonperforming status. The risk rating system is
intended to identify and measure the credit quality of
lending relationships. In the Company's retail banking
operations, standard credit scoring systems are used to
assess consumer credit risks and to price consumer products
accordingly. The Company also engages in non-lending
activities that may give rise to credit risk, including interest
rate swap contracts for customers or balance sheet hedging
purposes, foreign exchange transactions, and the processing
of credit card transactions for merchants. These activities
are subject to the similar credit review, analysis and
approval processes as those applied to commercial loans.

U.S. Bancorp

In evaluating its credit risk, the Company considers
changes, if any, in underwriting activities, the loan portfolio
composition (including product mix and geographic,
industry or customer-speciÑc concentrations), trends in loan
performance, and macroeconomic factors. Generally, the
domestic economy has experienced slower growth since late
2000. Accordingly, the Company began to re-evaluate
underwriting activities to tighten credit availability to certain
types of lending, industries and customers. Additionally, in
connection with the merger of Firstar and USBM, the
Company has continued to integrate underwriting standards
throughout the organization. Core loan growth for the
Company was 4.3 percent in 2001 with the majority of this
growth in retail lending.

During 2001, corporate earnings growth rates continued

to weaken and credit quality indicators among certain
industry sectors have continued to deteriorate. Large
corporate and middle market commercial businesses
announced or continued to implement restructuring
activities in an eÅort to improve operating margins. The
stagnant economic growth is evidenced by the Federal
Reserve Board's (""FRB'') recent actions during late 2000
and 2001 to stimulate economic growth through a series of
interest rate reductions. In response to declining economic
conditions, company-speciÑc portfolio trends, and the
Firstar/USBM merger, the Company undertook an extensive
review of its commercial and consumer loan portfolios in
early 2001. As a result of this review, the Company initiated
several actions during the Ñrst six months of 2001 including
aligning the risk management practices and charge-oÅ
policies of the companies and restructuring and disposing of
certain portfolios that did not align with the credit risk
proÑle of the combined company. Credit portfolio
restructuring activities included a speciÑc segment of the
Company's healthcare portfolio, selling certain consumer
loan portfolios of USBM, renegotiating a credit card co-
branding relationship and discontinuing an unsecured small
business product that did not align with the product
oÅerings of the combined company. The Company also
implemented accelerated loan workout strategies for certain
commercial credits. By the end of the second quarter of
2001, economic stimulus by the FRB as well as
management's actions appeared to have reduced the rate of
credit quality deterioration. However, world events during
the third quarter of 2001 had a profound impact on
consumer conÑdence and related spending, governmental
priorities and business activities. As a result of these events,
the Company expected the economic slowdown to
accelerate or be more prolonged than originally estimated
by management. Since September 11, 2001, the FRB has
reduced the discount rate four times in an eÅort to stabilize
the Ñnancial markets and economic growth. Accordingly,
the Company conducted an additional review of its credit

portfolios and recognized the need to address the impact
that these events are expected to have on its credit
portfolios. In response to this evaluation, the Company
increased the provision for credit losses approximately
$1,025.0 million in the third quarter of 2001 beyond
expected levels.

Credit DiversiÑcation Tables 7, 9 and 10 provide
information with respect to the overall diversiÑcation of the
credit portfolio and changes in mix during 2001. Certain
industry segments, including transportation, manufacturing,
and technology sectors have experienced economic stress in
2001. At December 31, 2001, the transportation sector
represented 5.5 percent of the total commercial loan
portfolio. It has been impacted by reduced airline travel,
slower economic activity and higher fuel costs that
adversely impacted trucking businesses. At year-end 2001,
the Company's transportation portfolio consisted of airline
and airfreight businesses (28.8 percent of the sector),
trucking businesses (53.2 percent) and railroad and
shipping. Capital goods represented 13.5 percent of the
total commercial portfolio at December 31, 2001. Included
in this sector were approximately 29.2 percent of loans to
diversiÑed manufacturing businesses while engineering and
construction equipment and machinery businesses were
30.7 percent and 22.8 percent, respectively, of the capital
goods portfolio. Manufacturing production levels and
inventory reductions caused some deterioration in these
portfolios during late 2000 and 2001. During 2001, the
technology sector was adversely impacted by lower capital
investments by businesses over the past twelve to eighteen
months. At December 31, 2001, the technology industry
represented only 2.4 percent of the commercial loan
portfolio.

Since mid-2000, the agriculture and paper and forestry
products sectors have been stressed. However, these sectors
have improved relative to a year ago. At December 31,
2001, the Company's agricultural portfolio was diversiÑed
with 36.9 percent of agricultural loans to livestock
producers, 27.3 percent to crop producers, 20.3 percent to
food processors and 15.5 percent to wholesalers of
agricultural products. Volatility in crop prices continues to
adversely aÅect the cash Öows of crop producers. Food
processors and wholesalers have been less negatively
aÅected by commodity pricing and a rebound in livestock
prices in 2001 has improved the credit exposure within this
sector. At December 31, 2001, loans to paper and forestry
products businesses represented 2.2 percent of the
commercial loan portfolio. The industry continues to be
adversely impacted by foreign supplies and over-capacity
within the industry; however, workout strategies continue
to reduce the credit exposure to this industry.

U.S. Bancorp

Analysis of Net Charge-OÅs Net charge-oÅs increased
$721.1 million to $1,546.5 million in 2001, compared with
$825.4 million in 2000 and $672.6 million in 1999. The
ratio of total net charge-oÅs to average loans was
1.31 percent in 2001, compared with .70 percent in 2000
and .61 percent in 1999. The increase in 2001 net charge-
oÅs was due to deterioration in economic conditions
aÅecting the commercial loan portfolio, actions taken by
the Company during 2001, and an increase in credit card
net charge-oÅs. Also included in 2001 net charge-oÅs were
$90.0 million of write-oÅs to conform risk management
practices, align charge-oÅ policies and expedite the
transition out of a speciÑc segment of the healthcare
portfolio not meeting the risk proÑle of the Company.

Commercial and commercial real estate loan net
charge-oÅs for 2001 were $884.6 million, compared with
$289.2 million in 2000 and $179.3 million in 1999.
Approximately $313.2 million of the increase in charge-oÅs
reÖected several factors including: a large cattle fraud,
recent collateral deterioration speciÑc to transportation
equipment caused by the impact of higher fuel prices and

the economy, further deterioration in the manufacturing,
communications and technology sectors and speciÑc
management decisions to accelerate its workout strategy for
certain borrowers. Commercial and commercial real estate
net charge-oÅs for 2001 also included $255.0 million in
merger and restructuring-related charge-oÅs and charge-oÅs
associated with the accelerated loan workout strategy
announced in the Ñrst quarter of 2001. The increase in
commercial loan net charge-oÅs in 2000 included higher
losses on a growing portfolio of small business products,
growth in the corporate card portfolio, credit losses related
to acquired leasing businesses and lower levels of recoveries
compared with 1999.

Retail loan net charge-oÅs in 2001 were $649.3 million,

compared with $523.8 million in 2000 and $478.5 million
in 1999. The ratio of retail loan net charge-oÅs to average
loans in 2001 was 1.85 percent, up from 1.60 percent in
2000 and 1.57 percent in 1999. The increase in retail loan
net charge-oÅs in 2001 was primarily due to higher
bankruptcies and consumer delinquencies reÖecting the
continuing downturn in economic conditions.

Table 13

Net Charge-oÅs as a Percentage of Average Loans Outstanding

Year Ended December 31

Commercial

2001

2000

1999

1998

1997

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Lease Ñnancing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1.62%
1.95

Total commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1.66

Commercial real estate

Commercial mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Construction and development ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total commercial real estate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail

Credit card ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail leasing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

.21
.17

.20

.18

4.80
.65
1.40

1.85

.56%
.46

.55

.03
.11

.05

.13

4.18
.41
1.23

1.60

.41%
.24

.40

.02
.03

.02

.12

4.00
.28
1.19

1.57

*%
*

.31

*
*

(.04)

.08

4.02
*
*

1.51

*%
*

.50

*
*

(.05)

.06

4.57
*
*

1.65

Total loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1.31%

.70%

.61%

.53%

.63%

*Information not available

Analysis of Nonperforming Assets Nonperforming assets
include nonaccrual loans, restructured loans, other real
estate and other nonperforming assets owned by the
Company. Interest payments are typically applied against the
principal balance and not recorded as income.

At December 31, 2001, nonperforming assets totaled
$1,120.0 million, compared with $867.0 million at year-end
2000 and $588.5 million at year-end 1999. The
$253.0 million increase in nonperforming assets from
December 31, 2000 reÖects an increase of $190.0 million of
nonperforming commercial and commercial real estate
loans, a $22.2 million increase in nonperforming residential
mortgages and a $23.8 million increase in nonperforming

retail loans. The increase in nonperforming commercial
loans was primarily due to: merger and restructuring-related
and risk management actions taken during the year; loans
being written down to secondary market valuations and
placed on nonperforming status; and continuing stress in
sectors of the economy. The increase was partially oÅset by
the disposition of nonperforming loans identiÑed as part of
the Company's accelerated workout programs and
commercial charge-oÅs taken during 2001. Certain industry
sectors, including agriculture, have stabilized or improved
from a year ago. The increase in nonperforming residential
mortgages and retail loans generally reÖects changes in
portfolio delinquencies and the national trends in

U.S. Bancorp

unemployment and personal bankruptcies during 2001. The
ratio of nonperforming assets to loans plus other real estate
was .98 percent at December 31, 2001, compared with
.71 percent at year-end 2000 and .52 percent at year-end
1999. Given the continued economic stress in various
industry sectors, the Company may experience higher levels
of nonperforming assets during the next several quarters.

Accruing loans 90 days or more past due totaled
$462.9 million at December 31, 2001, compared with
$385.2 million at December 31, 2000, and $248.6 million at
December 31, 1999. These loans are not included in
nonperforming assets and continue to accrue interest
because they are secured by collateral and/or are in the
process of collection and are reasonably expected to result

Table 14

Nonperforming Assets(a)

(Dollars in Millions)

Commercial

2001

2000

1999

1998

1997

At December 31,

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Lease Ñnancing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total commercialÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 526.6
180.8

707.4

Commercial real estate

Commercial mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Construction and development ÏÏÏÏÏÏÏÏÏÏÏ

Total commercial real estate ÏÏÏÏÏÏÏÏÏÏ

Residential mortgagesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Retail

Credit card ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail leasing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total retailÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

131.3
35.9

167.2

79.1

Ì
6.5
41.1

47.6

Total nonperforming loans ÏÏÏÏÏÏÏÏÏ

1,001.3

Other real estate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Other assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total nonperforming assetsÏÏÏÏÏÏÏÏ

Accruing loans 90 days or more past due(b) ÏÏ
Nonperforming loans to total loansÏÏÏÏÏÏÏÏÏÏÏ
Nonperforming assets to total loans plus

other real estate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net interest lost on nonperforming loans ÏÏÏÏÏ

43.8

74.9

$1,120.0

$ 462.9

.88%

.98
63.0

Delinquent Loan Ratios(c)

$470.4
70.5

540.9

105.5
38.2

143.7

56.9

8.8
Ì
15.0

23.8

765.3

61.1

40.6

$867.0

$385.2

.63%

.71
$ 50.8

$219.0
31.5

250.5

138.2
31.6

169.8

72.8

5.0
.4
21.1

26.5

519.6

40.0

28.9

$588.5

$248.6

.46%

.52
$ 29.5

$230.4
17.7

248.1

86.9
28.4

115.3

98.7

2.6
.5
30.4

33.5

495.6

35.1

16.9

$547.6

$252.9

.46%

.51
$ 21.3

$263.9
9.8

273.7

94.9
19.5

114.4

95.0

*
.5
17.1

17.6

500.7

57.0

17.4

$575.1

$213.7

.51%

.58
$ 32.1

90 days or more past due

2001

2000

1999

1998

1997

At December 31,

Commercial

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Lease Ñnancing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total commercialÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Commercial real estate

Commercial mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Construction and development ÏÏÏÏÏÏÏÏÏÏÏ

Total commercial real estate ÏÏÏÏÏÏÏÏÏÏ

Residential mortgagesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Retail

Total retailÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1.44%
3.53

1.71

.73
.56

.68

2.44

2.18
.24
.84

.98

1.11%
1.24

1.13

.61
.57

.60

1.49

1.85
.20
.64

.79

.57%
.82

.59

.82
.53

.74

1.11

1.33
.14
.47

.59

.69%
.57

.68

.59
.60

.59

1.26

1.07
.13
.47

.55

TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1.28%

.94%

.68%

.70%

(a) Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due.
(b) These loans are not included in nonperforming assets and continue to accrue interest because they are secured by collateral and/or are in the process of collection and are

reasonably expected to result in repayment or restoration to current status.

(c) Ratios include nonperforming loans and are expressed as a percentage of ending loan balances.
* Information not available

*%
*

.84

*
*

.67

.89

*
*
*

.50

.72%

U.S. Bancorp

Table 15

Summary of Allowance for Credit Losses

(Dollars in Millions)

2001

2000

1999

1998

1997

Balance at beginning of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,786.9

$1,710.3

$1,705.7

$1,665.8

$1,600.1

Charge-oÅs
Commercial

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Lease ÑnancingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Commercial real estate

Commercial mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Construction and development ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total commercial real estateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail

Credit card ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail leasing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

779.0
144.4

923.4

49.5
12.6

62.1
15.8

294.1
34.2
441.8

770.1

319.8
27.9

347.7

15.8
10.3

26.1
13.7

235.8
14.8
379.5

630.1

Total charge-oÅs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,771.4

1,017.6

Recoveries

Commercial

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Lease ÑnancingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Commercial real estate

Commercial mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Construction and development ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total commercial real estateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail

Total retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total recoveries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net Charge-oÅs
Commercial

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Lease ÑnancingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Commercial real estate

Commercial mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Construction and development ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total commercial real estateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail

Total retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

60.6
30.4

91.0

9.1
.8

9.9
3.2

23.4
4.5
92.9

120.8

224.9

718.4
114.0

832.4

40.4
11.8

52.2
12.6

270.7
29.7
348.9

649.3

Total net charge-oÅs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,546.5

Provision for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Losses from loan sales/transfersÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Acquisitions and other changes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2,528.8
(329.3)
17.4

64.0
7.2

71.2

10.8
2.6

13.4
1.3

27.5
2.0
76.8

106.3

192.2

255.8
20.7

276.5

5.0
7.7

12.7
12.4

208.3
12.8
302.7

523.8

825.4

828.0
Ì
74.0

250.1
12.4

262.5

19.1
2.6

21.7
16.2

220.2
6.2
376.0

602.4

902.8

84.8
4.0

88.8

15.1
1.0

16.1
1.4

34.6
1.1
88.2

123.9

230.2

165.3
8.4

173.7

4.0
1.6

5.6
14.8

185.6
5.1
287.8

478.5

672.6

646.0
Ì
31.2

*
*

202.3

232.8

*
*

23.6
14.4

223.9
*
*

533.4

773.7

*
*

81.9

*
*

31.0
3.0

36.9
*
*

112.6

228.5

*
*

27.3
11.1

258.3
*
*

522.4

793.6

*
*

59.3

*
*

37.7
2.5

38.3
*
*

93.1

192.6

*
*

120.4

173.5

*
*

(7.4)
11.4

187.0
*
*

420.8

545.2

491.3
Ì
93.8

*
*

(10.4)
8.6

220.0
*
*

429.3

601.0

639.9
Ì
26.8

Balance at end of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$2,457.3

$1,786.9

$1,710.3

$1,705.7

$1,665.8

Allowance as a percentage of:

Period-end loansÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Nonperforming loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Nonperforming assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net charge-oÅs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2.15%
245
219
159

1.46%
233
206
216

1.51%
329
291
254

1.59%
344
312
313

1.68%
333
290
277

*Information not available

U.S. Bancorp

in repayment or restoration to current status. Retail loans
30 days to 89 days or more past due were 3.11 percent of
the total retail portfolio at December 31, 2001, compared
with 2.82 percent of the total retail portfolio at
December 31, 2000. Retail loans 90 days or more past due
totaled .98 percent of the total retail loan portfolio at
December 31, 2001, compared with .79 percent of the total
retail loan portfolio at December 31, 2000, and .59 percent
at December 31, 1999. The increase in retail loan
delinquencies was primarily related to the credit card, home
equity and revolving credit line portfolios and reÖects the
economic slowdown and unemployment trends during 2001.

Analysis and Determination of Allowance for Credit Losses
The allowance for credit losses provides coverage for
probable losses inherent in the Company's loan portfolio.
Management evaluates the allowance each quarter to
determine that it is adequate to cover inherent losses. The
evaluation of each element and the overall allowance is
based on a continuing assessment of problem loans and
related oÅ-balance sheet items, recent loss experience, and
other factors, including regulatory guidance and economic
conditions. Management has determined that the allowance
for credit losses is adequate.

At December 31, 2001, the allowance was $2.5 billion
(2.15 percent of loans). This compares with an allowance
of $1.8 billion (1.46 percent of loans), at year-end 2000,
and $1.7 billion (1.51 percent of loans), at December 31,
1999. The ratio of the allowance for credit losses to
nonperforming loans was 245 percent at December 31,
2001, compared with 233 percent at year-end 2000 and
329 percent at year-end 1999. The ratio of the allowance
for credit losses to net charge-oÅs was 159 percent at
December 31, 2001, compared with 216 percent at year-end
2000 and 254 percent at year-end 1999. The Company
considers historical charge-oÅ levels in addition to existing
conditions, among other factors, when establishing the
allowance for credit losses.

Several factors impacted the allowance for credit losses

during 2001, including merger and restructuring-related
credit actions and management's extensive review of the
commercial loan portfolio in light of current economic
conditions. The level of the allowance was also impacted
by risk rating changes by regulators of shared national
credits agented by other banks, Company-speciÑc portfolio
trends discussed previously, and the transfer of the
unsecured small business product portfolio to loans held
for sale. The increase in the allowance for credit losses
reÖects the impact of changes in the economy since
December 31, 2000, and related deterioration in certain
sectors of the Company's credit portfolio. It also reÖects
management's recognition that the current economic
slowdown has accelerated and may be more prolonged as a

result of world events occurring in the third quarter of
2001.

Management determines the amount of allowance that
is required for certain loan categories based on relative risk
characteristics of the loan portfolio. Table 16 shows the
amount of the allowance for credit losses by loan category.
During 2001, the Company, in connection with the merger
of Firstar and USBM, conformed its methodology for
determining speciÑc allowances for the elements of the loan
portfolio. While both predecessor companies utilized credit
risk rating processes, migration analysis and historical loss
experience to determine each element of its allowance for
credit losses, Firstar speciÑcally determined its commercial
allowance based on its net loss experience, while USBM
utilized its gross loss experience. Although diversity exists in
practice, the Company has adopted a net loss experience
methodology in determining the allowance for commercial
credit losses. Adopting the net loss experience methodology
is based, in part, on regulatory guidelines promulgated with
respect to evaluating the allowance for credit losses. In
addition to adopting a net loss experience method, the
Company enhanced its commercial migration methods for
higher quality commercial loan categories to better
diÅerentiate historical loss factors within those categories.
Also, given the current business cycle, historical loss factors
utilized in determining the allowance for commercial loans
were weighted to reÖect the adverse impact of recent losses.
Table 16 shows the determination of each element of the
allowance for credit losses on a consistent basis for 2001
and 2000. Due to the Company's inability to gather
historical loss data on a combined basis for 1997 through
1999, the methodologies and amounts assigned to each
element of the loan portfolio for these years have not been
conformed.

The allowance recorded for commercial loans is based
on a quarterly review of individual credit relationships. The
Company's regular risk rating process is an integral
component of the methodology utilized in determining the
allowance for credit losses. An analysis of the migration of
commercial and commercial real estate loans and actual loss
experience throughout the business cycle is also conducted
quarterly to assess reserves established for credits with
similar risk characteristics. An allowance is established for
pools of commercial and commercial real estate loans based
on the risk ratings assigned. The amount is supported by
the results of the migration analysis that considers historical
loss experience by risk rating, as well as current and
historical economic conditions and industry risk factors.
The Company separately analyzes the carrying value of
impaired loans to determine whether the carrying value is
less than or equal to the appraised collateral value or the
present value of expected cash Öows. Based on this analysis,
an allowance for credit losses may be speciÑcally established

U.S. Bancorp

Table 16

Elements of the Allowance for Credit Losses(a)

December 31 (Dollars in Millions)

2001

2000

1999

1998

1997

2001

2000

1999

1998

1997

Allowance Amount

Allowance as a Percent of Total Loans

Commercial

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Lease Ñnancing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,068.1 $ 418.8 $ 408.3 $ 343.7 $ 370.5
16.4

107.5

21.5

20.2

17.7

2.64%
1.84

.90%
.29

.97%
.53

.91%
.65

1.10%
.61

Total commercial ÏÏÏÏÏÏÏÏÏÏ

1,175.6

436.5

428.5

365.2

386.9

2.54

Commercial real estate

Commercial mortgages ÏÏÏÏÏÏÏÏ
Construction and development ÏÏ

Total commercial real estateÏÏ
Residential mortgages ÏÏÏÏÏÏ
Retail

Credit card ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail leasing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

176.6
76.4

253.0

16.1

295.2
38.7
377.2

42.7
17.7

60.4

9.6

110.4
22.5

105.2
25.9

105.6
27.7

132.9

131.1

133.3

18.6

27.2

36.9

265.6
27.2
360.0

320.8
18.6
389.2

304.3
6.5
365.6

217.4
4.9
257.9

Total retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

711.1

652.8

728.6

676.4

480.2

Total allocated allowanceÏÏÏ
Unallocated portion ÏÏÏÏÏÏÏÏ

2,155.8
301.5

1,159.3
627.6

1,308.6
401.7

1,199.9
505.8

1,037.3
628.5

.94
1.16

1.00

.28

5.01
.79
1.44

1.92

1.89
.26

.83

.22
.25

.23

.12

3.95
.65
1.47

1.85

.95
.51

.93

.59
.35

.53

.16

6.41
.88
1.64

2.36

1.16
.35

.89

1.06

.63
.50

.60

.19

6.27
.40
1.55

2.25

1.12
.47

.67
.68

.67

.23

4.35
.45
1.23

1.78

1.05
.63

Total allowance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$2,457.3 $1,786.9 $1,710.3 $1,705.7 $1,665.8

2.15%

1.46%

1.51%

1.59%

1.68%

(a) During 2001, the Company changed its methodology for determining the speciÑc allowance for elements of the loan portfolio. Table 16 has been restated for 2000. Due to the

Company's inability to gather historical loss data on a combined basis for 1997 through 1999, the methodologies and amounts assigned to each element of the loan portfolio for
these years have not been conformed. Utilizing the prior methods the total assigned allowance for 2000 was $1,397.3 million and the unallocated portion was $389.6 million. Refer
to paragraph four in the section captioned ""Analysis and Determination of Allowance for Credit Losses'' on page 34.

for impaired loans. The allowance established for
commercial and commercial real estate loan portfolios,
including impaired commercial and commercial real estate
loans, increased $931.7 million to $1,428.6 million in 2001.
The change reÖected higher levels of nonperforming loans,
increased loss severity reÖected in the historical migration,
increasing sector risk in certain industries and deterioration
in credit risk ratings from a year ago.

The allowance recorded for retail portfolios is based

on an analysis of product mix, credit scoring and risk
composition of the portfolio, loss and bankruptcy
experiences, economic conditions and historical and
expected delinquency and charge-oÅ statistics for each
homogenous category or group of loans. Based on this
information and analysis, an allowance is established
approximating a rolling twelve-month estimate of net
charge-oÅs. The allowance for retail loans increased
$58.3 million to $711.1 million in 2001. The increase
primarily reÖected the continuing downturn in economic
conditions.

Regardless of the extent of the Company's analysis of

customer performance, portfolio trends or risk management
processes, certain inherent but undetected losses are
probable within the loan portfolio. This is due to several
factors including inherent delays in obtaining information
regarding a customer's Ñnancial condition or changes in
their unique business conditions, the judgmental nature of
individual loan evaluations, collateral assessments and the
interpretation of economic trends. Volatility of economic or

customer-speciÑc conditions aÅecting the identiÑcation and
estimation of losses for larger non-homogeneous credits and
the sensitivity of assumptions utilized to establish
allowances for homogenous groups of loans are among
other factors. For each of these factors, the estimated
inherent loss is recorded as an unallocated allowance. The
Company estimates a range of inherent losses related to the
existence of these exposures and for the risk in
concentrations to speciÑc borrowers, Ñnancings of highly
leveraged transactions, products or industries. The estimates
are based upon the Company's evaluation of imprecision
risk associated with the commercial and retail allowance
levels and the estimated impact of the current economic
environment on portfolio segments or concentrations. The
unallocated allowance decreased to $301.5 million at
December 31, 2001, from $627.6 million at December 31,
2000. The change in unallocated allowance reÖects
deterioration in credit quality during 2001. Although the
Company determines the amount of each element of the
allowance separately and this process is an important credit
management tool, the entire allowance for credit losses is
available for the entire loan portfolio. The actual amount
of losses incurred can vary signiÑcantly from the recorded
amounts. The Company's methodology includes several
factors intended to minimize the diÅerences in recorded and
actual losses. These factors allow the Company to adjust its
estimate of losses based on the most recent information
available. Refer to Note 1 of the Notes to Consolidated

U.S. Bancorp

Financial Statements for accounting policies related to the
allowance for credit losses.

Residual Risk Management The Company manages its
risk to changes in the value of lease residual assets through
disciplined residual setting and valuation at the inception of
a lease, diversiÑcation of its vehicles, a focus on longer term
vehicle leases, eÅective end-of-term marketing of oÅ-leased
vehicles, regular asset valuation reviews and monitoring of
residual value gains or losses upon the disposition of assets.
To reduce the Ñnancial impact of potential changes in
vehicle residuals, the Company maintains residual value risk
insurance. Also, equipment lease originations are subject to
the same stringent underwriting standards referred to in the
segment captioned ""Credit Risk Management''.
Included in the retail leasing portfolio was

approximately $2.8 billion of retail leasing residuals at
December 31, 2001, compared with $2.4 billion at
December 31, 2000. The Company monitors concentrations
of leases by manufacturer, vehicle ""make'' and vehicle type.
At year-end 2001, no vehicle-type concentration exceeded
Ñve percent of the aggregate portfolio. Because retail
residual valuations tend to be less volatile for longer-term
leases, relative to the estimated residual at inception of the
lease, management actively manages lease origination
production to achieve a longer-term portfolio. At
December 31, 2001, the weighted-average term of the
portfolio was 51 months. Since 1998, the used vehicle
market has experienced a decline in used car prices. Several
factors have contributed to this deÖationary cycle.
Aggressive leasing programs by automobile manufacturers
and competitors within the banking industry included a
marketing focus on monthly lease payments, enhanced
residuals at lease inception, shorter-term leases and low
mileage leases. These practices have created a cyclical
oversupply of certain oÅ-lease vehicles. Recently,
automobile manufacturers and others have retreated from
these marketing programs or begun to exit the leasing
business. Another factor impacting the used vehicle market
has been the trend in new vehicle prices that decreased in
the late 1990's. This trend has been driven by surplus
automobile manufacturing capacity and related production
and highly competitive Internet sales programs.
Recessionary factors are expected to moderate new car
production during the next several quarters. Also, many
Internet marketers failed or transformed into distribution
channels of dealers rather than direct competitors. These
recent trends are expected to abate the deÖationary pricing
pressures of the past few years. In response to factors
impacting used vehicle prices, the Company recognized a
retail lease impairment of $40.0 million in 2001. Given the
current economic environment, it is diÇcult to assess the

timing and degree of changes in residual values that may
impact Ñnancial results over the next several quarters.
At December 31, 2001, the commercial leasing

portfolio had $984.6 million of residuals. At year-end 2001,
lease residuals related to railcars were 16.2 percent. Trucks
and other transportation equipment represented
30.2 percent of the aggregate portfolio while aircraft and
manufacturing were 14.9 percent and 12.7 percent,
respectively. No other signiÑcant concentrations of more
than 10 percent existed at December 31, 2001. During
2001, reduced airline travel and higher fuel costs adversely
impacted aircraft and transportation equipment lease
residual values. Although impairment of equipment lease
residuals was not signiÑcant in 2001, continuing economic
stress in certain industries may further impact used
equipment values into next year.

Interest Rate Risk Management In the banking industry,
a major risk exposure is changing interest rates. To
minimize the volatility of net interest income and exposure
to economic losses, the Company manages its exposure to
changes in interest rates through asset and liability
management activities within guidelines established by its
Asset Liability Policy Committee (""ALPC'') and approved
by the Board of Directors. ALPC has the responsibility for
approving and ensuring compliance with asset/liability
management policies, including interest rate risk exposure,
oÅ-balance sheet activity and the investment portfolio. The
Company uses three methods for measuring and analyzing
consolidated interest rate risk: Net Interest Income
Simulation Analysis, Market Value of Equity Modeling and
Repricing Mismatch Analysis.

Net Interest Income Simulation Analysis One of the
primary tools used to measure interest rate risk and the
eÅect of interest rate changes on net interest income and
net interest margin is simulation analysis. The monthly
analysis incorporates substantially all of the Company's
assets and liabilities and oÅ-balance sheet instruments,
together with forecasted changes in the balance sheet and
assumptions that reÖect the current interest rate
environment. Through these simulations, management
estimates the impact on net interest income of a 300 basis
point upward or downward gradual change of market
interest rates over a one year period. The simulations also
estimate the eÅect of immediate and sustained parallel shifts
in the yield curve of 50 basis points as well as the eÅect of
immediate and sustained Öattening or steepening of the
yield curve. These simulations include assumptions about
how the balance sheet is likely to change with changes in
loan and deposit growth. Assumptions are made to project
rates for new loans and deposits based on historical
analysis, management's outlook and repricing strategies.
Loan prepayment and other options risks are developed

U.S. Bancorp

Table 17

Derivative Positions

Asset and Liability Management Positions

December 31, 2001
(Dollars in Millions)

Receive Ñxed/pay Öoating swaps

Notional amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Weighted-average

Maturing

2002

2003

2004

2005

2006

Thereafter

Total

Weighted-
Average
Remaining
Maturity
in Years

Fair
Value

$3,295

$1,625

$3,223

$1,861

$875

$5,240

$16,119

$329.6

6.30

Receive rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

4.57%
2.00

6.04%
1.97

5.06%
2.10

6.05%
2.14

5.73%
2.11

6.68%
2.07

5.74%
2.06

Pay Ñxed/receive Öoating swaps

Notional amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Weighted-average

Receive rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Basis swaps ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Future and forwards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Options ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Customer Intermediated Positions

December 31, 2001
(Dollars in Millions)

Receive Ñxed/pay Öoating swaps

$ 500

$ 962

$ 500

$ Ì

$ Ì $ 1,962

$ (2.1)

1.74

1.79%
2.08
$1,000
4,087
Ì

1.90%
4.24

1.87%
3.98

Ì%
Ì
$ Ì $ Ì $ Ì
Ì
Ì

Ì
Ì

Ì%
Ì
$ Ì
Ì
45

Ì%
Ì

1.86%
3.62
$ Ì $ 1,000
4,087
45

Ì
Ì

Maturing

2002

2003

2004

2005

2006

Thereafter

Total

.2
71.7
Ì

0.69
Ì
4.9

Weighted-
Average
Remaining
Maturity
In Years

Fair
Value

Notional amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 218

$ 408

$ 386

$ 276

$424

$ 425

$ 2,137

$ 63.5

3.83

Pay Ñxed/receive Öoating swaps

Notional amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Basis swaps ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Options ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign exchange contracts

217
Ì
514

Purchase ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
SellÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,810
1,801

409
Ì
615

26
26

386
2
78

Ì
Ì

276
Ì
Ì

Ì
Ì

424
Ì
Ì

Ì
Ì

425
Ì
4

Ì
Ì

2,137
2
1,211

1,836
1,827

(53.4)
Ì
Ì

60.0
(58.0)

3.83
2.67
1.29

.25
.25

from industry estimates of prepayment speeds. Because the
results of these simulations can be signiÑcantly inÖuenced
by assumptions utilized, management evaluates the
sensitivity of the simulation's results to changes in key
assumptions.

in a 200 basis point parallel rate shock to 15 percent of the
base case. Given the low level of rates currently the down
200 basis point scenario cannot be computed. ALPC
reviews other down rate scenarios to evaluate the impact of
falling rates.

The results from the simulation are reviewed by ALPC

The valuation analysis is dependent upon certain key

monthly and are used to guide hedging strategies. ALPC
policy guidelines limit the estimated change in net interest
income to 5.0 percent of forecasted net interest income
over the succeeding 12 months. In simulations as of
December 31, 2001, the interest rate risk position of the
Company was relatively neutral as the impact of a
downward movement in rates or an upward movement in
rates of 300 basis points over a twelve month period
resulted in less than 1.0 percent change in net interest
income. At December 31, 2001, the Company was well
within policy guidelines.

Market Value of Equity Modeling The Company also
utilizes the market value of equity as a measurement tool in
managing interest rate sensitivity. The market value of
equity measures the degree to which the market values of
the Company's assets and liabilities and oÅ-balance sheet
instruments will change given a change in interest rates.
ALPC guidelines limit the change in market value of equity

assumptions about the nature of indeterminate maturity of
assets and liabilities. Management estimates the average life
and rate characteristics of asset and liability accounts based
upon historical analysis and management's expectation of
rate behavior. The results of the valuation analysis as of
December 31, 2001, were well within policy guidelines.

Repricing Mismatch Analysis The Company also evaluates
its interest rate sensitivity position to maintain a balance
between the amounts of interest-bearing assets and
interest-bearing liabilities which are expected to mature or
reprice at any point in time. While a traditional repricing
mismatch analysis (""gap analysis'') provides a snapshot of
interest rate risk, it does not take into consideration that
assets and liabilities with similar repricing characteristics
may not reprice at the same time or to the same degree.
Also, it does not necessarily predict the impact of changes
in general levels of interest rates on net interest income.

U.S. Bancorp

Use of Derivatives to Manage Market and Interest Rate
Risk In the ordinary course of business, the Company
enters into derivative transactions to manage its market and
prepayment risks and to accommodate the business
requirements of its customers. By their nature, derivative
instruments are subject to market risk. The Company does
not utilize derivative instruments for speculative purposes.
To manage its interest rate risk, the Company may enter
into interest rate swap agreements and, to a lesser degree,
basis swaps, and interest rate options such as caps and
Öoors. Interest rate swaps involve the exchange of Ñxed-
and variable-rate payments without the exchange of the
underlying notional amount on which the interest payments
are calculated. Interest rate caps protect against rising
interest rates while interest rate Öoors protect against falling
interest rates. In connection with its mortgage banking
business, the Company may enter into forward
commitments, futures and options to hedge interest rate
risk of Ñxed-rate mortgage loans held for sale and unfunded
commitments. All interest rate derivatives that qualify for
hedge accounting are recorded at fair value as other assets
or liabilities on the balance sheet and designated as either
""fair value'' or ""cash Öow'' hedges. The Company performs
an assessment, both at the inception of the hedge and
quarterly thereafter, to determine whether these derivatives
are highly eÅective in oÅsetting changes in the value of the
hedged items. Hedge ineÅectiveness for both cash Öow and
fair value hedges is immediately recorded in noninterest
income.

The Company also enters into derivative contracts to
accommodate the business requirements of its customers.
Customer intermediated transactions may include interest
rate derivatives and foreign exchange forward contracts and
options. Foreign exchange-based forward contracts provide
for the delayed delivery of a purchase or sale of foreign
currency. Generally, the Company enters into oÅsetting
derivative positions to mitigate its market risk associated
with customer-based contracts. Intermediated interest rate
swaps, foreign exchange contracts and all other derivative
contracts that do not qualify for hedge accounting are
recorded at fair value and resulting gains or losses are
recorded in trading account proÑts and commissions.
Derivative instruments are subject to credit risk associated
with counterparties to the derivative contracts. Credit risk
associated with derivatives is measured based on the
replacement cost should the counterparties with contracts
in a gain position to the Company fail to perform under the
terms of the contracts. The Company manages this risk
through diversiÑcation of its derivative positions among
dealers, primarily commercial banks, broker-dealers and
corporations, with established relationships and requiring
collateral to support credit exposures in excess of
established guidelines. To minimize the risk, the Company

enters into legally enforceable master netting agreements,
which permit the close out and netting of transactions with
the same counterparty upon the occurrence of certain
events. Also, a portion of the derivative activity involves
exchange-traded instruments. Because exchange-traded
instruments conform to standard terms and are subject to
policies set by the exchange involved, including
counterparty approval, margin requirements and security
deposit requirements, the credit risk is substantively
reduced.

Table 17 summarizes information on derivative

positions as of December 31, 2001.

Market Risk Management In addition to interest rate risk
and market risk associated with derivatives, the Company is
exposed to other forms of market risk as a consequence of
conducting normal business activities. Business activities that
contribute to market risk include, among other things,
market making, underwriting, proprietary trading and
foreign exchange positions. Value at Risk (""VaR'') is a key
measure of market risk for the Company. VaR represents
the maximum amount that the Company has placed at risk
of loss, with a ninety-nine percent degree of conÑdence, in
the course of its risk taking activities. Its purpose is to
describe the amount of earnings at risk due to potential
losses from adverse market movements.

VaR modeling on trading activities is subject to certain
limitations. Additionally, it should be recognized that there
are assumptions and estimates associated with VaR
modeling and actual results could diÅer from these
assumptions and estimates. The Company mitigates these
uncertainties through regular monitoring of trading activities
by management and other risk management practices
including stop-loss limits and position limits. A stress-test
model is used to provide management with a perspective on
market events that a VaR model does not capture. In each
case, the historical worst performance of each asset class is
observed and applied to current trading positions.

ALPC establishes market risk limits subject to approval
by the Company's Board of Directors. The Company's VaR
limit was $40.0 million at December 31, 2001. The market
risk inherent in the Company's customer-based derivative
trading, mortgage banking pipeline, broker-dealer activities,
including equities, Ñxed income, high yield securities and
foreign exchange, as estimated by the VaR analysis, was
$10.9 million at December 31, 2001.

Liquidity Risk Management ALPC establishes policies, as
well as analyzes and manages liquidity, to ensure that
adequate funds are available to meet normal operating
requirements in addition to unexpected customer demands
for funds, such as high levels of deposit withdrawals or
loan demand, in a timely and cost-eÅective manner. The
most important factor in the preservation of liquidity is

U.S. Bancorp

maintaining public conÑdence that facilitates the retention
and growth of a large, stable supply of core deposits and
wholesale funds. Ultimately, public conÑdence is generated
through proÑtable operations, sound credit quality and a
strong capital position. The Company's performance in
these areas has enabled it to develop a large and reliable
base of core funding within its market areas and in
domestic and global capital markets. Liquidity management
is viewed from a long-term and short-term perspective, as
well as from an asset and liability perspective. Management
monitors liquidity through a regular review of maturity
proÑles, yield and rate behaviors, and loan and deposit
forecasts to minimize funding risk.

The Company maintains strategic liquidity and

contingency plans that are subject to the availability of asset
liquidity in the balance sheet. ALPC periodically reviews the
Company's ability to meet funding deÑciencies due to
adverse business events. These funding needs are then
matched with speciÑc asset-based sources to ensure
suÇcient funds are available. Also, strategic liquidity policies
require diversiÑcation of wholesale funding sources to avoid
concentrations in any one market source. Subsidiary banks
are members of various Federal Home Loan Banks that
provide a source of funding through FHLB advances. The
Company maintains a Grand Cayman oÇce for issuing
eurodollar certiÑcates of deposit. The Company also
establishes relationships with dealers to issue national
market retail and institutional savings certiÑcates and short-
and medium-term bank notes. Also, the Company's
subsidiary banks have signiÑcant correspondent banking
networks and corporate accounts. Accordingly, it has access
to national fed funds, funding through repurchase
agreements and sources of more stable regionally based
certiÑcates of deposit.

Additionally, the Company previously created asset-backed
securitizations to fund the noninterest-bearing corporate
card loan portfolio and indirect automobile loans. The
corporate card securitization held $403 million in average
assets in 2001 and is scheduled to be liquidated in
February 2002. The indirect automobile securitization held
$655 million of average assets in 2001. The Company
provided credit enhancements in the form of subordination
and reserve accounts at the inception of the transactions.
The Company's risk, primarily for losses in the underlying
assets, is considered in determining the fair value of the
Company's retained interests in these securitizations. The
Company recognized income from residual interests and
servicing fees for these securitizations of $15.5 million in
2001. Refer to Note 8 of the Notes to Consolidated
Financial Statements for further information on these oÅ-
balance sheet structures.

With respect to real estate and certain equipment, the
Company enters into capital or operating leases to meet its
business requirements. Certain operating lease arrangements
involve third party lessors that acquire these business assets
through leveraged Ñnancing structures commonly referred to
as ""synthetic leases''. At December 31, 2001, synthetic lease
structures held real estate assets of $372.7 million and
equipment of $41.6 million. The Company provides
guarantees to the lender in the event of default by the
leveraged Ñnancing structures or in the event that the
Company does not exercise its option to purchase the
property at the end of the lease term and the fair value of
the assets is less than the purchase price. The Company's
minimum lease obligations for capital and operating
arrangements, including those related to synthetic leases, are
disclosed in Note 22 of the Notes to Consolidated
Financial Statements.

Asset securitization and conduits represent another

Credit, liquidity, operational and legal structural risks

source of funding the Company's growth through oÅ-
balance sheet structures. The Company has two oÅ-balance
sheet conduits that hold high-grade assets. The conduits,
which are funded by issuing commercial paper, held average
assets of $14.8 billion including short-term participations in
commercial loans, commercial paper and investment
securities. The Company provides liquidity facilities to both
conduits and credit enhancement to the loan conduit that
may be triggered by certain events. Based on the current
performance of each structure the Company does not
anticipate these triggers will occur in the foreseeable future.
Included in noninterest income was $132.7 million of
revenue related to these conduits in 2001 including fees for
servicing activities and liquidity facilities and credit
enhancements.

In November 2001, the Company established a

$738 million securitization structure related to an unsecured
small business credit product that was being discontinued.

exist due to the nature and complexity of asset
securitizations and other oÅ-balance sheet structures. ALPC
regularly monitors the performance of each oÅ-balance
sheet structure in an eÅort to minimize these risks and
ensure compliance with the requirements of the structures.
The Company utilizes its credit risk management systems to
evaluate credit quality of underlying assets and regularly
forecasts cash Öows to evaluate any potential impairment of
retained interests. Also, regulatory guidelines require
consideration of asset securitizations in the determination of
risk-based capital ratios.

The Company's ability to raise negotiated funding at

competitive prices is influenced by rating agencies' views of
the Company's credit quality, liquidity, capital and earnings.
The debt ratings noted in Table 18 reflect the rating agencies'
recognition of the strong, consistent financial performance of
the Company and quality of the balance sheet.

U.S. Bancorp

Table 18

Debt Ratings

At December 31, 2001

U.S. Bancorp

Moody's

Standard &
Poors

Short-term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Senior debt and medium-term notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Subordinated debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Preferred stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial paper ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

A1
A2
A3
P-1

U.S. Bank National Association

Short-term time deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term time deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Bank notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Subordinated debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

P-1
Aa3
Aa3/P-1
A1

A
A¿
BBB°
A-1

A-1
A°
A°/A-1
A

Fitch

F1
A°
A
A
F1

F1°
AA¿
A°/F1°
A

The parent company's routine funding requirements

consist primarily of operating expenses, dividends to
shareholders, debt service and funds used for acquisitions.
The parent company obtains funding to meet its obligations
from dividends collected from its subsidiaries and the
issuance of debt securities. Subsidiary management fees
fund operating expenses, while shareholder dividends and
debt service are satisÑed primarily through dividends from
its subsidiaries.

At December 31, 2001, parent company long-term debt
outstanding was $6.1 billion, compared with $6.6 billion at
December 31, 2000. In 2001, the parent company issued
$1.1 billion of senior contingent convertible debt, oÅset by
$1.6 billion of maturities and other repayments of long-
term debt. Total parent company debt maturing in 2002 is
$1.5 billion. These debt obligations are expected to be met
through medium-term note issuances and dividends from
subsidiaries, as well as from the approximately $3.2 billion
of parent company cash and cash equivalents at
December 31, 2001. Federal banking laws regulate the
amount of dividends that may be paid by banking
subsidiaries without prior approval. The amount of
dividends available to the parent company from its banking
subsidiaries was $1.2 billion at December 31, 2001. For
further information, see Note 23 of the Notes to
Consolidated Financial Statements.

CAPITAL MANAGEMENT

The Company is committed to managing capital for
maximum shareholder beneÑt and maintaining strong
protection for depositors and creditors. Total shareholders'
equity was $16.5 billion at December 31, 2001, compared
with $15.2 billion at December 31, 2000. The increase was
primarily the result of corporate earnings and the issuance
of stock in connection with the NOVA acquisition, oÅset
by dividend payments, merger and restructuring-related
items and share repurchases.

On February 27, 2001, the Company increased its
dividend rate per common share 15.4 percent from $.1625

per quarter to $.1875 per quarter. Excluding merger and
restructuring-related charges, the dividend payout ratio for
2001 increased to 57.0 percent compared with payout ratios
of 40.1 percent in 2000 and 31.7 percent in 1999.

Management has established Ñnancial objectives which
provide a framework to monitor future capital needs. The
Company's dividend policy is inÖuenced by the belief that
most shareholders are interested in long-term performance
as well as current dividend yields. The current dividend
payout level is considered reasonable given the Company's
present cash Öow position, level of earnings and the
strength of its subsidiary banks' capital ratios. Future
dividends will be determined based on results of operations,
growth expectations, Ñnancial condition, regulatory
constraints and other factors deemed relevant by the Board
of Directors.

On July 17, 2001, the Company's Board of Directors
authorized the repurchase of up to 56.4 million shares of
the Company's common stock in connection with the
July 24, 2001, acquisition of NOVA. During 2001, the
Company repurchased 19.7 million shares of common stock
in both public and private transactions in connection with
this authorization. The Company had forward contracts to
purchase 26.7 million shares within this authorization.
These contracts were settled in January 2002. On
December 18, 2001, the Board of Directors approved an
authorization to repurchase an additional 100 million shares
of common stock through 2003.

On February 16, 2000, the Board of Directors of
USBM authorized the repurchase of up to $2.5 billion of its
common stock over a two year period ending March 31,
2002. On April 11, 2000, Firstar's Board of Directors
approved a common stock repurchase program of
100 million shares. The stock repurchase programs of both
Firstar and USBM were rescinded on October 4, 2000, and
January 17, 2001, respectively, in connection with the
planned merger of the formerly separate companies. For a
complete analysis of activities impacting shareholders' equity

U.S. Bancorp

Table 19

Regulatory Capital Ratios

At December 31 (Dollars in Millions)

U.S. Bancorp
Tangible common equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
As a percent of tangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Tier 1 capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
As a percent of risk-weighted assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
As a percent of adjusted quarterly average assets (leverage ratio) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total risk-based capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
As a percent of risk-weighted assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Bank Subsidiaries(a)

U.S. Bank National Association

2001

2000

$ 9,374

$10,045

5.7%

6.3%

$12,488

$11,602

7.7%
7.7%

$19,148

11.7%

7.2%
7.4%

$17,038

10.6%

Tier 1 capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total risk-based capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Leverage ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

U.S. Bank National Association ND

U.S. Bank National Association MT

7.5%

11.8
7.7

18.1%
23.1
17.9

19.4%
20.5
14.0

7.3%

11.2
7.9

10.3%
15.6
10.2

14.9%
17.6
12.0

Bank Regulatory Capital Requirements

Minimum

Well-
Capitalized

Tier 1 capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total risk-based capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Leverage ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

4.0%
8.0
4.0

6.0%

10.0
5.0

(a) These balances and ratios were prepared in accordance with regulatory accounting principles as disclosed in the subsidiaries' regulatory reports.

and capital management programs, refer to Note 15 of the
Notes to Consolidated Financial Statements.

7.7 percent compared with 7.4 percent in the fourth quarter
of a year ago.

Banking regulators deÑne minimum capital
requirements for banks and Ñnancial services holding
companies. Additionally, credit rating agencies evaluate
capital adequacy including tangible common equity as a
percentage of tangible assets. The Company manages
various capital ratios to maintain appropriate capital levels
in accordance with Board-approved capital guidelines. At
December 31, 2001, tangible common equity was
$9.4 billion (5.7 percent of tangible assets), compared with
6.3 percent at year-end 2000. The decline in the tangible
common equity ratio was primarily due to the acquisition
of NOVA during the third quarter of 2001. As of
December 31, 2001, tier 1 and total risk-based capital ratios
were 7.7 percent and 11.7 percent, respectively, well above
the minimum regulatory requirements of 4.0 percent for
tier 1 and 8.0 percent for total risk-based capital. This
compared to tier 1 and total risk-based capital ratios of
7.2 percent and 10.6 percent at December 31, 2000. The
improvement in the total risk-based capital ratio during
2001 primarily reÖected changes in the mix of investment
securities in addition to the issuance of Trust Preferred
Securities. Regulatory authorities have also established a
minimum ""leverage'' ratio of 4.0 percent, which is deÑned
as tier 1 equity to average quarterly assets. For the fourth
quarter of 2001, the Company's leverage ratio improved to

With respect to each of its banking subsidiaries, the

Company intends to maintain suÇcient capital to be ""well
capitalized'' as deÑned by the regulatory agencies. The ""well
capitalized'' category requires tier 1 and total risk-based
capital ratios of at least 6.0 percent and 10.0 percent,
respectively, and a minimum leverage ratio of 5.0 percent.
All banking subsidiaries are considered ""well capitalized'' at
December 31, 2001.

Table 19 provides a summary of tier 1 and total risk-
based capital ratios as of December 31, 2001 and 2000, as
deÑned by the regulatory agencies.

FOURTH QUARTER SUMMARY

In the fourth quarter of 2001, the Company had net income
of $695.4 million ($.36 per diluted share), compared with
$768.7 million ($.40 per diluted share) in the fourth
quarter of 2000. The Company reported operating earnings
(net income excluding merger and restructuring-related
items) of $785.2 million ($.40 per diluted share) in the
fourth quarter of 2001, compared with operating earnings
of $824.2 million ($.43 per diluted share) in the fourth
quarter of 2000. Fourth quarter net interest income on a
taxable-equivalent basis increased $122.6 million to
$1,684.8 million, compared with the fourth quarter of

U.S. Bancorp

2000, primarily reÖecting increased earning assets driven by
increases in the investment portfolio, core retail loan
growth and acquisitions, partially oÅset by a $4.3 billion
reduction in loans related to transfers of short-term, high
credit quality, low margin commercial loans to the loan
conduit, a $2.8 billion decline in residential mortgage loans,
and the sale of indirect automobile and high LTV home
equity loans in the Ñrst quarter of 2001. The net interest
margin on a taxable-equivalent basis increased in the fourth
quarter of 2001 to 4.60 percent, compared with
4.33 percent in the fourth quarter of 2000, reÖecting
funding beneÑts during the declining rate environment, a
more favorable funding mix and improving loan spreads,
partially oÅset by lower yields on the investment portfolio.

Table 20

Fourth Quarter Summary

(Dollars in Millions, Except Per Share Data)

Condensed Income Statement

The provision for credit losses increased to

$265.8 million in the fourth quarter of 2001, compared
with $229.5 million in the fourth quarter of 2000. The
increase was the result of higher charge-oÅs from a year ago
due to deterioration in economic conditions and credit
quality in the loan portfolio.

Noninterest income increased $58.7 million from the
same quarter a year ago, to $1,323.6 million. Credit card
fee revenue declined quarter over quarter by $18.6 million
(8.8 percent) reÖecting lower corporate card transaction
volumes. Merchant and ATM processing revenue increased
$116.0 million principally due to the acquisition of NOVA.
Deposit service charges, cash management fees, commercial
product revenue and mortgage banking revenue improved in
the fourth quarter of 2001 from a year ago. The

Three Months Ended
December 31,

2001

2000

Interest income (taxable-equivalent basis) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$2,529.3
844.5

$3,179.7
1,617.5

Net interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities gains, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Noninterest incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total net revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Noninterest expense(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Income before taxes and merger and restructuring-related itemsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Taxable-equivalent adjustment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,684.8
22.0
1,301.6

3,008.4
1,503.9
265.8

1,238.7
9.9
443.6

1,562.2
7.0
1,257.9

2,827.1
1,347.8
229.5

1,249.8
20.7
404.9

Operating earnings(a)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related items (after-tax) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

785.2
(89.8)

824.2
(55.5)

Net income in accordance with GAAPÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 695.4

$ 768.7

Per Common Share

Earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Diluted earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends declared per share(b) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

.36
.36
.1875

.41
.40
.1625

Financial Ratios

Return on average assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Return on average equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net interest margin (taxable-equivalent basis)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÇciency ratio ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Financial Ratios Excluding Merger and Restructuring-Related Items(a)

Return on average assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Return on average equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÇciency ratio ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Banking eÇciency ratio(c) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1.64%
16.5
4.60
55.1

1.85%
18.6
50.4
46.6

1.89%
20.7
4.33
50.8

2.02%
22.2
47.8
41.9

(a) The Company analyzes its performance on a net income basis in accordance with accounting principles generally accepted in the United States, as well as on an operating basis

(b) Dividends per share have not been restated for the 2001 merger of Firstar and USBM.
(c) Without investment banking and brokerage activity.

U.S. Bancorp

improvements reÖected core business growth, product
enhancements, loan conduit activities and strong mortgage
originations. Capital markets-related revenue declined
$31.6 million (12.0 percent) reÖecting softness in equity
capital markets since late 2000. Other income declined
$99.6 million from the same quarter a year ago primarily
due to a $10.0 million retail lease residual impairment
recognized in the fourth quarter of 2001 and a decline in
the level of equity investment earnings.

Fourth quarter noninterest expense totaled

$1,644.5 million in the fourth quarter of 2001 compared
with $1,431.9 million in the fourth quarter of 2000.
Excluding merger-related charges, noninterest expense
totaled $1,503.9 million, an increase of $156.1 million
(11.6 percent) from the fourth quarter of 2000.
Approximately $100 million of the increase was the result
of acquisitions. In addition to the impact of acquisitions,
noninterest expenses were higher due to recognizing a
$27.3 million MSR impairment in the fourth quarter of
2001 and increases due to core business growth, oÅset
somewhat by a reduction in expenses related to capital
markets activities.

LINE OF BUSINESS FINANCIAL REVIEW

Operating segments are components of the Company about
which Ñnancial information is available and is evaluated
regularly in deciding how to allocate resources and assess
performance. Prior to the merger of Firstar and USBM, the
Company operated its business units separately in 2000 and
1999 and the basis of Ñnancial presentation diÅered
signiÑcantly. Accordingly, the presentation of comparative
business line results for 1999 is not practicable at this time.
At the date of the merger of Firstar and USBM, the

Company reorganized into the following operating
segments: Wholesale Banking, Consumer Banking, Private
Client, Trust and Asset Management, Payment Services,
Capital Markets, and Treasury and Corporate Support.
Units providing central support and other corporate
activities are reported as part of Treasury and Corporate
Support and allocated as appropriate. For detailed
descriptions of these operating segments see ""BUSINESS
SEGMENTS'' in Note 1 of the Notes to Consolidated
Financial Statements.

Basis of Financial Presentation Business line results are
derived from the Company's business unit proÑtability
reporting system by speciÑcally attributing managed balance
sheet assets, deposits and other liabilities and their related
interest income or expense. Funds transfer pricing
methodologies are utilized to allocate a cost for funds used
or credit for funds provided to all business line assets and
liabilities using a matched funding concept. Also, the
business unit is allocated the taxable-equivalent beneÑt of

tax-exempt products. The provision for credit losses
recorded by each operating segment was primarily based on
the net charge-oÅs of each line of business. The diÅerence
between the provision for credit losses determined in
accordance with accounting principles generally accepted in
the United States recognized by the Company on a
consolidated basis and the provision recorded by the
business lines is recorded in Treasury and Corporate
Support. Noninterest income and expenses directly managed
by each business line, including fees, service charges, salaries
and beneÑts, and other direct expenses are accounted for
within each segment's Ñnancial results in a manner similar
to the consolidated Ñnancial statements. Noninterest
expenses incurred by centrally managed operations or a
business line that directly supports another business line's
operations are not charged to the applicable business line.
Income taxes are assessed to each line of business at a
standard tax rate with the residual tax expense or beneÑt to
arrive at the consolidated eÅective tax rate included in
Treasury and Corporate Support. Merger and restructuring-
related items are not identiÑed by or allocated to lines of
business. Because capital levels are evaluated and managed
centrally, capital is not allocated to the business units.
Designations, assignments and allocations may change from
time to time as management accounting systems are
enhanced or product lines change. During 2001, certain
organization and methodology changes were made to reÖect
the merger. All results for 2001 and 2000 have been
restated to present consistent methodologies for all business
lines.

Wholesale Banking oÅers lending, depository, treasury
management and other Ñnancial services to middle market,
large corporate and public sector clients. Wholesale
Banking contributed $1,364.4 million of the Company's
pre-tax income in 2001, compared with $1,667.3 million in
2000, a decrease of $302.9 million (18.2 percent). The
decline was primarily driven by an increase in the provision
for credit losses and certain asset write-downs taken by the
business line. The line of business generated operating
income of $1,956.8 million in 2001 and $1,827.8 million in
2000, a 7.1 percent increase. Total net revenue grew by
$175.9 million (8.0 percent) in 2001. Net interest income
on a taxable-equivalent basis increased 4.7 percent for the
year primarily due to core deposit growth, as well as the
impact of banking and equipment Ñnance leasing
acquisitions. The increase is oÅset somewhat by the transfer
of short-term, high credit quality, low margin commercial
loans to the loan conduit and the impact of declining rates
on the funding beneÑt of deposits. Noninterest income
increased 19.4 percent in 2001 reÖecting revenue related to
the leasing acquisitions, core growth in syndication and cash
management-related fees and growth in securitization fee

U.S. Bancorp

income related to the loan conduit. Net fee income growth
included a $6.0 million impairment of commercial leasing
residuals and lower earnings of approximately $33.4 million
from relationship-based equity investments managed by the
line of business. OÅsetting the net growth in revenue was
an increase in noninterest expenses of $46.9 million
(12.9 percent), primarily due to bank and lease
acquisitions, planned growth in targeted markets and certain
asset write-downs. Included in expenses during the year
were asset write-downs of commercial leasing partnerships
of $38.4 million and repossessed tractor/trailer and other
related property of $14.0 million. Cost savings from
business integration activities during 2001 substantively
oÅset the core and acquisition-related expense growth.
Additionally, the provision for credit losses increased
$431.9 million during 2001. The increase reÖected
increasing net charge-oÅs due to the deterioration in credit
quality reÖected by an increase in nonperforming
commercial loans. Refer to ""Corporate Risk ProÑle'' on
pages 29 through 36 for further information on factors
impacting the credit quality of the loan portfolios.

Consumer Banking delivers products and services to the
broad consumer market and small businesses through

banking oÇces, telemarketing, on-line services, direct mail
and automated teller machines (""ATMs''). It encompasses
community banking, metropolitan banking, small business
banking, consumer lending, mortgage banking and
investment product sales. Consumer Banking contributed
$1,866.4 million of the Company's pre-tax income in 2001
compared with $2,039.4 million in 2000, a decrease of
8.5 percent. The decline was driven by the impact of
declining rates on the funding beneÑt of deposits, an
increase in the provision for credit losses, banking
acquisitions and certain asset write-downs taken by the
Company. The line of business generated operating income
of $2,287.7 million in 2001, a decline of 4.2 percent from
2000. Total net revenue grew by 1.3 percent during 2001,
or $53.9 million over 2000. Fee-based revenue growth was
strong, increasing by 19.0 percent over 2000, while net
interest income declined 4.7 percent. The decline in net
interest income reÖected the impact of declining interest
rates on the funding beneÑt of consumer deposits. It also
reÖects the sale of approximately $1.3 billion of high LTV
home equity and indirect automobile loans in the Ñrst
quarter of 2001, and the divestiture of branches with
$771.0 million of deposits during the second quarter of
2001 in connection with the merger of Firstar and USBM.

Table 21

Line of Business Financial Performance

Year Ended December 31 (Dollars in Millions)

Condensed Income Statement

Wholesale
Banking

Consumer
Banking

2001

Percent
2000 Change

2001

Percent
2000 Change

Net interest income (taxable-equivalent basis)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,774.4 $1,695.0
497.7
Noninterest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

594.2

4.7% $2,895.1 $3,039.3
1,044.5

1,242.6

19.4

Total net revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Noninterest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other intangible amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Goodwill amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2,368.6
397.9
1.4
12.5

2,192.7
355.6
1.3
8.0

8.0
11.9
7.7
56.3

4,137.7
1,685.3
150.4
14.3

4,083.8
1,628.7
62.3
4.4

Total noninterest expenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

411.8

364.9

12.9

1,850.0

1,695.4

Operating income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,956.8
592.4

1,827.8
160.5

7.1
*

2,287.7
421.3

2,388.4
349.0

Income before income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income taxes and taxable-equivalent adjustment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,364.4
496.5

1,667.3
606.8

(18.2)
(18.2)

1,866.4
679.2

2,039.4
742.1

(4.7%)
19.0

1.3
3.5
*
*

9.1

(4.2)
20.7

(8.5)
(8.5)

Operating earnings, before merger and restructuring-related itemsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 867.9 $1,060.5

(18.2) $1,187.2 $1,297.3

(8.5)

Merger and restructuring-related items (after-tax)(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Average Balance Sheet Data

Loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 54,036 $ 55,106
60,296
Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
9,434
Noninterest-bearing deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
4,938
Interest-bearing deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

60,174
10,687
6,536

(.2)

(1.9) $ 43,017 $ 42,306
47,943
49,919
11,935
11,999
62,266
61,358

13.3
32.4

1.7
4.1
.5
(1.5)

Total depositsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 17,223 $ 14,372

19.8

$ 73,357 $ 74,201

(1.1)

(a) Merger and restructuring-related items are not allocated to the business lines.

* Not meaningful.

U.S. Bancorp

The decline was partially oÅset by a funding beneÑt of
deposits related to the acquisition of 41 branches in
Tennessee. Growth in fee-based revenue was primarily
attributed to an increase in retail deposit and cash
management fees, mortgage banking originations, the
alignment and redesign of products and features in
connection with the merger of Firstar and USBM, and fee
revenue related to the Tennessee branch acquisition. Fee
income growth for 2001 was tempered somewhat by the
recognition of an impairment of retail leasing residuals of
$40.0 million during the third and fourth quarters. Consumer
Banking results reflect an increase in noninterest expense of
$154.6 million (9.1 percent) primarily related to impairments
of MSRs of $60.8 million and the Tennessee branch
acquisition. Additionally, the provision for credit losses
increased $72.3 million (20.7 percent) during the year. The
increase reflects deterioration in asset quality, higher
consumer bankruptcies and economic trends impacting the
business unit's loan and retail leasing portfolios.

Private Client, Trust and Asset Management provides
mutual fund processing services, trust, private banking and
Ñnancial advisory services through four businesses,
including: the Private Client Group, Corporate Trust
Services, Institutional Trust and Custody, and Fund Services.

The business segment also oÅers investment management
services to several client segments including mutual funds,
institutional customers, and private asset management.
Private Client, Trust and Asset Management contributed
$641.3 million of the Company's pre-tax income in 2001
compared with $649.2 million in 2000, a 1.2 percent
decline. Growth in net interest income during 2001
compared with 2000, was driven by core loan and deposit
growth partially oÅset by the impact of declining rates on
the funding beneÑt of deposits. Noninterest income
declined 3.5 percent during 2001 compared with a year ago
primarily due to trust and investment management fees
being adversely aÅected by the current capital markets
conditions. Noninterest expense decreased 2.3 percent
($11.1 million) in 2001. Cost savings related to integration
activities primarily drove the decline in noninterest expense.

Payment Services includes consumer and business credit
cards, corporate and purchasing card services, consumer
lines of credit, ATM processing and merchant processing.
Payment Services contributed $724.3 million of the
Company's pre-tax income in 2001 compared with
$708.6 million in 2000, a 2.2 percent increase. The business
unit's Ñnancial results were, in part, impacted by an increase
in the provision for credit losses and the NOVA acquisition

Private Client, Trust
and Asset Management

Payment
Services

Capital
Markets

Treasury and
Corporate Support

Consolidated
Company

2001

Percent
2000 Change

2001

Percent
2000 Change

2001

Percent
2000 Change

2001

Percent
2000 Change

2001

Percent
2000 Change

$ 244.4 $ 223.6
908.1

876.3

9.3% $ 459.6 $ 428.6
1,289.0 1,080.6

(3.5)

1,120.7 1,131.7
459.4
20.7
.4

448.2
20.8
.4

(1.0)
(2.4)
.5
Ì

1,748.6 1,509.2
412.8
23.8
11.4

525.2
55.4
11.9

7.2% $ 17.8 $

831.2 1,097.6 (24.3)

24.9 (28.5)% $1,073.4 $ 723.6
254.7

463.9

48.3% $ 6,464.7 $ 6,135.0
4,883.2
5,297.2
82.1

5.4%
8.5

849.0 1,122.5 (24.4)
738.2
907.4 (18.6)
Ì
.1

.1
.7 (85.7)

1,537.3
978.3
1,334.5 1,212.1
49.1
210.1

50.4
211.9

57.1
10.1
2.6
.9

11,761.9 11,018.2
4,976.0
157.3
235.0

5,129.3
278.4
251.1

469.4

480.5

(2.3)

592.5

448.0

32.3

738.3

908.2 (18.7)

1,596.8 1,471.3

8.5

5,658.8

5,368.3

651.3
10.0

641.3
233.4

651.2
2.0

649.2
236.2

Ì 1,156.1 1,061.2
352.6
431.8

8.9
22.5

(1.2)
(1.2)

724.3
263.6

708.6
257.9

110.7
17.6

93.1
33.9

214.3 (48.3)

(59.5) (493.0) (87.9)
(36.1)
673.5

214.3 (56.6)
78.0 (56.5)

(733.0) (456.9) 60.4
(300.9) (206.0) 46.1

6,103.1
2,146.6

3,956.5
1,405.7

5,649.9
828.0

4,821.9 (17.9)
1,715.0 (18.0)

6.7
3.1
77.0
6.9

5.4

8.0
*

$ 407.9 $ 413.0

(1.2) $ 460.7 $ 450.7

$ 4,370 $ 3,794
5,130
2,119
4,722

5,424
2,134
4,916

15.2
5.7
.7
4.1

$ 9,972 $ 9,531
10,652

12,142
168
Ì

188 (10.6)

$ 59.2 $ 136.3 (56.6)

$ (432.1)$ (250.9) 72.2

2,550.8

3,106.9 (17.9)

(844.3)

(231.3)

$ 1,706.5 $ 2,875.6

$ 483 $
3,478
174
Ì

263
3,394
154
Ì

83.7
2.5
13.0
Ì

$ 6,299 $ 7,317 (13.9)

34,807

31,066

(53)

(10)

7,037

7,680

12.0
*
(8.4)

$ 118,177 $ 118,317
158,481
23,820
79,606

165,944
25,109
79,847

(.1)
4.7
5.4
.3

19.3

15.9
27.2
*
4.4

2.2
2.2

2.2

4.6
14.0

$ 7,050 $ 6,841

3.1

168 $

188 (10.6) $ 174 $

154

13.0

$ 6,984 $ 7,670

(8.9)

$ 104,956 $ 103,426

1.5

U.S. Bancorp

completed during the third quarter of 2001. The line of
business generated operating income of $1,156.1 million in
2001, an 8.9 percent increase compared with 2000. Total
net revenue growth was 15.9 percent, or $239.4 million,
compared with 2000 including the impact of the NOVA
acquisition of $134.3 million. Excluding the NOVA
acquisitions, total net revenue growth was approximately
7.0 percent. Total net revenue growth was partially oÅset
by increased in noninterest expense of 32.3 percent,
primarily driven by the NOVA acquisition. Excluding the
impact of the NOVA acquisition, noninterest expenses for
the business line were essentially Öat relative to a year ago.
Additionally, the provision for credit losses increased
$79.2 million (22.5 percent) in 2001. The increase in
provision reÖects deterioration in delinquencies, higher
bankruptcies and credit losses in the credit card portfolio
and the economic slowdown impacting consumers.

Capital Markets engages in equity and fixed income trading
activities, offers investment banking and underwriting services
for corporate and public sector customers and provides
financial advisory services and securities, mutual funds,
annuities and insurance products to consumers and regionally
based businesses through a network of brokerage offices.
Capital Markets contributed $93.1 million of the Company's
pre-tax income in 2001, compared with $214.3 million in
2000, a decrease of 56.6 percent. The unfavorable variance in
pre-tax income from 2000 was due to significant decreases in
fees related to trading, investment product fees and
commissions and investment banking revenues reflecting the
recent adverse capital markets conditions. In response to
significant changes in the securities markets including
increased volatility, changes in equity valuations, a slowdown
in the market for new and secondary issuances of equity and
the increasingly competitive environment for the industry,
U.S. Bancorp Piper Jaffray restructured its operations during
2001. Additionally, in June 2001, the Company decided to
discontinue its U.S. Bancorp Libra operations, a business unit
that specialized in underwriting and trading high-yield debt
and mezzanine securities. These restructuring activities are
expected to improve operating efficiency of the business unit
by removing excess capacity from the product distribution
system and brokerage operations.

Treasury and Corporate Support includes the Company's
investment and residential mortgage portfolios, funding,
capital management and asset securitization activities,
interest rate risk management, the net eÅect of transfer
pricing related to loan and deposit balances, and the change
in residual allocations associated with the provision for loan
losses. It also includes business activities managed on a
corporate basis, including income and expense of enterprise-
wide operations and administrative support functions.

Treasury and Corporate Support recorded a pre-tax loss of
$733.0 million in 2001, compared to a loss of
$456.9 million in 2000. The incremental loss was driven by
an increase in the provision for credit losses, lower earnings
from equity investments and non-recurring gains from the
disposal of oÇce buildings in 2000. During 2001, total net
revenue was $1,537.3 million compared with $978.3 million
a year ago. The $559.0 million increase was primarily due
to an increase in average investment securities and the
residual beneÑt of declining interest rates given the
Company's interest rate risk management position. Also
included in 2001 were approximately $289.8 million of
securities gains compared with $8.1 million in 2000, oÅset
somewhat by lower earnings from equity investments of
$78.0 million and gains from the disposal of oÇce buildings
in 2000. Noninterest expenses were $1,596.8 million in
2001 compared with $1,471.3 million for the same period
of 2000. The increase was primarily related to core business
operations and higher costs related to increased aÅordable
housing projects. Provision for credit losses for this business
unit represents the residual aggregate of the credit losses
allocated to the reportable business units (based on net
charge-oÅs for the accounting period) and the Company's
recorded provision determined in accordance with generally
accepted accounting principles in the United States.
Provision for credit losses for the year ended December 31,
2001, was $673.5 million compared with a net recovery of
$36.1 million in 2000. The change in the provision reÖects
the Company's decision in the third quarter of 2001 to
increase the allowance for credit losses in light of recent
events, declining economic conditions and deterioration in
the credit quality of the loan portfolio from a year ago.
Refer to ""Corporate Risk ProÑle'' for further information
on provision for credit losses, nonperforming assets and
factors considered by the Company in assessing the credit
quality of the loan portfolio and establishing the allowance
for credit losses.

ACCOUNTING CHANGES

Accounting for Derivative Instruments and Hedging

U.S. Bancorp

January 1, 2001, the Company adopted SFAS 133. Transition
adjustments related to adoption resulted in an after-tax loss
of approximately $4.1 million recorded in net income and an
after-tax increase of $5.2 million to other comprehensive
income. The transition adjustments related to adoption were
not material to the Company's financial statements, and as
such, were not separately reported in the consolidated
statement of income.

Accounting for Business Combinations and Goodwill

and Other Intangible Assets In June 2001, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards No. 141 (""SFAS 141''), ""Business
Combinations'' and Statement of Financial Accounting
Standard No. 142 (""SFAS 142''), ""Goodwill and Other
Intangible Assets''. SFAS 141 mandates the purchase
method of accounting be used for all business combinations
initiated after June 30, 2001, and establishes speciÑc criteria
for the recognition of intangible assets separately from
goodwill. SFAS 142 addresses the accounting for goodwill
and intangible assets subsequent to their acquisition. The
Company is required to adopt SFAS 142 on January 1,
2002. The most signiÑcant changes made by SFAS 142 are
that goodwill and indeÑnite lived intangible assets will no
longer be amortized and will be tested for impairment at
least annually, thereafter. Any impairment charges from the
initial impairment test at the time of adoption would be
recognized as a ""cumulative eÅect of change in accounting

principles'' in the income statement. The amortization
provisions of SFAS 142 apply to goodwill and intangible
assets acquired after June 30, 2001. With respect to
goodwill and intangible assets acquired prior to July 1,
2001, the amortization provisions of SFAS 142 are eÅective
upon adoption of SFAS 142.

The Company will apply the amortization provisions of

SFAS 142 during the first quarter of 2002. Management
anticipates that applying the provisions of SFAS 141 to recent
acquisitions and the provisions of SFAS 142 to purchase
acquisitions completed prior to July 1, 2001, will increase
after-tax income for the year ending December 31, 2002, by
approximately $200 to $210 million, or $.10 per diluted share.
This considers the application of SFAS 142's definition of a
business and the impact of reclassifying certain assets from
goodwill to intangibles and changes in estimated useful lives of
certain intangible assets. The Company has not yet fully
determined the impact on earnings of impairments related to
goodwill and indefinite lived intangible assets under the new
guidelines required by SFAS 142. Any material impairment
charge resulting from these transitional accounting rules will
be reflected as a ""cumulative effect of a change in accounting
principles'' in the first quarter of 2002. Because banking
regulations exclude 100 percent of goodwill from the
determination of capital adequacy, the impact of any
impairment on the Company's capital adequacy will not be
significant.

U.S. Bancorp

Report of Independent
Accountants
To the Shareholders and Board of Directors of U.S. Bancorp:

In our opinion, the accompanying consolidated balance sheet
and the related consolidated statements of income,
shareholders' equity and cash Öows present fairly, in all
material respects, the Ñnancial position of U.S. Bancorp and
its subsidiaries at December 31, 2001 and 2000, and the
results of their operations and their cash Öows for each of the
three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in
the United States of America. These Ñnancial statements are
the responsibility of the Company's management; our
responsibility is to express an opinion on these Ñnancial
statements based on our audits. We conducted our audits of
these statements in accordance with auditing standards
generally accepted in the United States of America, which
require that we plan and perform the audit to obtain
reasonable assurance about whether the Ñnancial statements
are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the Ñnancial statements, assessing the
accounting principles used and signiÑcant estimates made by
management, and evaluating the overall Ñnancial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.

Minneapolis, Minnesota
January 15, 2002

Responsibility for Financial
Statements of U.S. Bancorp
Responsibility for the Ñnancial statements and other
information presented throughout the Annual Report on
Form 10-K rests with the management of U.S. Bancorp. The
Company believes that the consolidated Ñnancial statements
have been prepared in conformity with accounting principles
generally accepted in the United States and present fairly the
substance of transactions based on the circumstances and
management's best estimates and judgment. All Ñnancial
information throughout the Annual Report on Form 10-K is
consistent with that in the Ñnancial statements.

In meeting its responsibilities for the reliability of the financial
statements, the Company depends on its system of internal
controls. The system is designed to provide reasonable assurance
that assets are safeguarded and transactions are executed in
accordance with the appropriate corporate authorization and
recorded properly to permit the preparation of the financial
statements. To test compliance, the Company carries out an
extensive audit program. This program includes a review for
compliance with written policies and procedures and a
comprehensive review of the adequacy and effectiveness of the
internal control systems. Although control procedures are
designed and tested, it must be recognized that there are limits
inherent in all systems of internal accounting control and, as
such, errors and irregularities may nevertheless occur. Also,
estimates and judgments are required to assess and balance the
relative cost and expected benefits of the controls. The
Company believes that its system of internal controls provides
reasonable assurance that errors or irregularities that could be
material to the financial statements are prevented or would be
detected within a timely period by employees in the normal
course of performing their assigned functions.

The Board of Directors of the Company has an Audit
Committee composed of directors who are not oÇcers or
employees of U.S. Bancorp. The committee meets periodically
with management, the internal auditors and the independent
accountants to consider audit results and to discuss internal
accounting control, auditing and Ñnancial reporting matters.

The Company's independent accountants,
PricewaterhouseCoopers LLP, have been engaged to render
an independent professional opinion on the Ñnancial
statements and to assist in carrying out certain aspects of the
audit program described above. Their opinion on the Ñnancial
statements is based on procedures conducted in accordance
with auditing standards generally accepted in the United States
and forms the basis for their report as to the fair
presentation, in the Ñnancial statements, of the Company's
Ñnancial position, operating results and cash Öows.

Jerry A. Grundhofer
President and
Chief Executive OÇcer

David M. MoÅett
Vice Chairman and
Chief Financial OÇcer

U.S. Bancorp

Consolidated Balance Sheet

At December 31 (Dollars in Millions)

Assets

Cash and due from banks ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Money market investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading account securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment securities

Held-to-maturity (fair value $306 and $257, respectively) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Available-for-sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans held for sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial real estate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
RetailÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Less allowance for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net loansÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Premises and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Customers' liability on acceptances ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other intangible assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

2000

9,120
625
982

$ 8,475
657
753

299
26,309
2,820

46,330
25,373
5,746
36,956

114,405
2,457

111,948
1,741
178
5,488
1,924
9,956

252
17,390
764

52,817
26,443
7,753
35,352

122,365
1,787

120,578
1,836
183
4,312
997
8,724

Total assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$171,390

$164,921

Liabilities and Shareholders' Equity

Deposits

Noninterest-bearingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest-bearing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Time certiÑcates of deposit greater than $100,000ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total depositsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely the junior

subordinated debentures of the parent company ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Acceptances outstanding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 31,212
65,447
8,560

105,219
14,670
25,716

2,826
178
6,320

$ 26,633
68,177
14,725

109,535
11,833
21,876

1,400
183
4,926

Total liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

154,929

149,753

Shareholders' equity

Common stock, par value $0.01 a share

authorized: 2001 Ì 4,000,000,000 shares; 2000 Ì 2,000,000,000 shares
issued: 2001 Ì 1,972,777,763 shares; 2000 Ì 1,943,541,593 shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital surplus ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retained earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Less cost of common stock in treasury: 2001 Ì 21,068,251 shares; 2000 Ì 41,458,159 sharesÏÏÏÏÏÏÏÏÏÏÏÏ
Other comprehensive incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

20
4,906
11,918

(478)
95

19
4,276
11,658

(880)
95

Total shareholders' equityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

16,461

15,168

Total liabilities and shareholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$171,390

$164,921

See Notes to Consolidated Financial Statements.

U.S. Bancorp

Consolidated Statement of Income

Year Ended December 31 (Dollars and Shares in Millions, Except Per Share Data)

2001

2000

1999

Interest Income
Loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans held for saleÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment securities

Taxable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Non-taxable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Money market investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 9,455.4
146.9

$10,562.5
102.1

$ 9,122.7
103.9

1,206.1
89.5
26.6
57.5
101.6

1,008.3
140.6
53.9
53.7
151.4

1,047.1
150.1
44.9
45.0
113.0

Total interest incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

11,083.6

12,072.5

10,626.7

Interest Expense
Deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term borrowingsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding

solely the junior subordinated debentures of the parent company ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net interest income after provision for credit lossesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Noninterest Income
Credit card fee revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merchant and ATM processing revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trust and investment management feesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deposit service charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash management feesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mortgage banking revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading account proÑts and commissions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment products fees and commissions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment banking revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial product revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities gains, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related gainsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2,828.1
534.1
1,162.7

149.9

4,674.8

6,408.8
2,528.8

3,880.0

774.3
428.8
894.4
660.6
347.3
234.0
221.6
460.1
258.2
385.9
329.1
62.2
302.9

3,618.8
781.7
1,510.4

112.0

6,022.9

6,049.6
828.0

5,221.6

761.8
230.3
926.2
551.1
292.4
189.9
258.4
466.6
360.3
304.4
8.1
Ì
533.7

2,970.0
582.4
1,126.9

111.0

4,790.3

5,836.4
646.0

5,190.4

648.2
189.6
887.1
497.2
280.6
190.4
222.4
450.8
246.6
215.7
13.2
Ì
403.1

Total noninterest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

5,359.4

4,883.2

4,244.9

Noninterest Expense
Salaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Employee beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net occupancy ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Furniture and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Communication ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Postage ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
GoodwillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total noninterest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Income before income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Applicable income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2,347.1
366.2
417.9
305.5
181.4
179.8
251.1
278.4
946.4
1,331.4

6,605.2

2,634.2
927.7

2,427.1
399.8
396.9
308.2
138.8
174.5
235.0
157.3
348.7
1,130.7

5,717.0

4,387.8
1,512.2

2,355.3
410.1
371.8
307.9
123.4
170.7
175.8
154.0
532.8
1,059.5

5,661.3

3,774.0
1,392.2

Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 1,706.5

$ 2,875.6

$ 2,381.8

Earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Diluted earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Average common shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average diluted common sharesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$
$

.89
.88

1,927.9
1,939.5

$
$

1.51
1.50

1,906.0
1,918.5

$
$

1.25
1.23

1,907.8
1,930.0

See Notes to Consolidated Financial Statements.

U.S. Bancorp

Consolidated Statement of Shareholders' Equity

(Dollars in Millions)

Balance December 31, 1998 ÏÏÏÏÏÏÏÏÏÏÏ
Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrealized loss on securities available for sale ÏÏÏ
ReclassiÑcation adjustment for losses realized

in net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total comprehensive income ÏÏÏÏÏÏÏÏÏÏÏ
Cash dividends declared on common stock ÏÏÏÏ
Issuance of common stock and treasury shares ÏÏ
Purchase of treasury stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retirement of treasury stockÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Shares reserved to meet deferred

compensation obligationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization of restricted stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Common
Shares
Outstanding

Common
Stock

Capital
Surplus

Retained
Earnings

Other
Treasury Comprehensive
Income

Stock

Total
Shareholders'
Equity

1,903,461,698

$19.3

$4,338.7

$ 8,758.4
2,381.8

$ (755.4)

$ 212.9

(743.9)

163.9
210.5

69,705,239
(44,636,116)

(21,643)

213.8

(.1)

(343.8)

2.1
47.8

(1,090.8)

1,377.0
(1,187.9)
344.0

(2.0)

$12,573.9
2,381.8
(743.9)

163.9
210.5

2,012.3
(1,090.8)
1,591.0
(1,187.9)

.1
47.8

Balance December 31, 1999 ÏÏÏÏÏÏÏÏÏÏÏ

1,928,509,178

$19.4

$4,258.6

$10,049.4

$ (224.3)

$(156.6)

$13,946.5

Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrealized gain on securities available for sale ÏÏÏ
Foreign currency translation adjustment ÏÏÏÏÏÏÏ
ReclassiÑcation adjustment for gains realized in
net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

compensation obligationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization of restricted stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2,875.6

32,652,574
(58,633,923)

(444,395)

(1,267.0)

534.9
(1,182.2)

(8.5)

(35.0)

8.5
43.5

436.0

(.5)

(41.6)
(141.8)

2,875.6
436.0

(.5)

(41.6)
(141.8)

3,127.7
(1,267.0)
499.9
(1,182.2)

Ì
43.5

Balance December 31, 2000 ÏÏÏÏÏÏÏÏÏÏÏ

1,902,083,434

$19.4

$4,275.6

$11,658.0

$ (880.1)

$ 95.5

$15,168.4

Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrealized gain on securities available for sale ÏÏÏ
Unrealized gain on derivatives ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation adjustment ÏÏÏÏÏÏÏ
Realized gain on derivatives ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
ReclassiÑcation adjustment for gains realized in
net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

compensation obligationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization of restricted stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,706.5

69,502,689
(19,743,672)

(132,939)

1,383.7

(.4)

(823.2)

3.0
67.1

(1,446.5)

49.3
(467.9)
823.6

(3.0)

194.5
106.0

(4.0)
42.4

(333.1)
(5.9)

1,706.5
194.5
106.0

(4.0)
42.4

(333.1)
(5.9)

1,706.4
(1,446.5)
1,433.7
(467.9)

Ì
67.1

Balance December 31, 2001 ÏÏÏÏÏÏÏÏÏÏÏ

1,951,709,512

$19.7

$4,906.2

$11,918.0

$ (478.1)

$ 95.4

$16,461.2

See Notes to Consolidated Financial Statements.

U.S. Bancorp

Consolidated Statement of Cash Flows

Year Ended December 31 (Dollars in Millions)

2001

2000

1999

Operating Activities

Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Adjustments to reconcile net income to net cash provided by operating activities

1,706.5

2,875.6

$ 2,381.8

Provision for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Depreciation and amortization of premises and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization of goodwill and other intangiblesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision for deferred income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net (increase) decrease in trading securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(Gain) loss on sale of securities and other assets, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mortgage loans originated for sale in the secondary market ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from sales of mortgage loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other assets and liabilities, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2,528.8
284.0
529.5
(184.0)
(229.1)
(428.7)
(15,500.2)
13,483.0

(7.9)

828.0
262.6
392.3
357.1
(135.6)
(47.3)
(5,563.3)
5,475.0

(1.8)

646.0
270.6
329.8
252.9
65.6
149.9
(6,117.1)
7,229.3
(242.2)

Net cash provided by operating activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2,181.9

4,442.6

4,966.6

Investing Activities

Securities

Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Maturities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Purchases ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

19,240.2
4,572.2
(32,278.6)

Loans

Sales and securitization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Purchases ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net increase in loans outstanding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from sales of premises and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Purchases of premises and equipmentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Acquisitions, net of cash acquired ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Divestitures of branches ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

7,387.9

(87.5)
(1,126.5)
166.3
(299.2)
(741.4)
(340.0)
(143.9)

10,194.0
2,127.7
(12,161.3)

6,655.8
(688.4)
(13,511.0)

212.9
(382.8)
904.4
(78.2)
(289.1)

6,819.7
5,290.7
(9,135.8)

5,013.7
(254.6)
(9,880.0)

64.2
(289.0)
241.9
(469.0)
(961.3)

Net cash used in investing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

(3,650.5)

(7,016.0)

(3,559.5)

Financing Activities

Net change in

Deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Principal payments on long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from long-term debt issuanceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from issuance of Company-obligated mandatorily redeemable preferred securities

of subsidiary trusts holding solely the junior subordinated debentures of the parent
company ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from issuance of common stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Repurchase of common stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash dividends paidÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net cash provided by (used in) Ñnancing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Change in cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash and cash equivalents at beginning of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

(4,258.1)
5,244.3
(10,539.6)
11,702.3

1,500.0
136.4
(467.9)
(1,235.1)

2,082.3

613.7
9,131.6

3,403.7
702.1
(5,277.5)
5,862.7

Ì
210.0
(1,182.2)
(1,271.3)

(3,034.9)
544.9
(5,706.1)
8,067.5

Ì
275.5
(1,187.9)
(1,029.7)

2,447.5

(2,070.7)

(125.9)
9,257.5

(663.6)
9,921.1

Cash and cash equivalents at end of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

9,745.3

9,131.6

$ 9,257.5

See Notes to Consolidated Financial Statements.

U.S. Bancorp

Notes to Consolidated Financial Statements

Note 1

SigniÑcant Accounting Policies

U.S. Bancorp and its subsidiaries (the ""Company'')
compose the organization created by the acquisition by
Firstar Corporation (""Firstar'') of the former U.S. Bancorp
(""USBM''). The new Company retained the U.S. Bancorp
name. The Company is a multi-state Ñnancial services
holding company headquartered in Minneapolis, Minnesota.
The Company provides a full range of Ñnancial services
including lending and depository services through banking
oÇces principally in 24 states. The Company also engages in
credit card, merchant, and ATM processing, mortgage
banking, insurance, trust and investment management,
brokerage, leasing and investment banking activities
principally in domestic markets.

Basis of Presentation The consolidated Ñnancial
statements include the accounts of the Company and its
subsidiaries. The consolidation eliminates all signiÑcant
intercompany accounts and transactions. Certain items in
prior periods have been reclassiÑed to conform to the
current presentation.

Uses of Estimates The preparation of Ñnancial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that aÅect the amounts reported in the Ñnancial statements
and accompanying notes. Actual experience could diÅer
from those estimates.

BUSINESS SEGMENTS

Within the Company, Ñnancial performance is measured by
major lines of business based on the products and services
provided to customers through its distribution channels.
The Company has six reportable operating segments:

Wholesale Banking oÅers lending, depository, treasury
management and other Ñnancial services to middle market,
large corporate and public sector clients.

Consumer Banking delivers products and services to the

broad consumer market and small businesses through
banking oÇces, telemarketing, on-line services, direct mail
and automated teller machines (""ATMs''). It encompasses
community banking, metropolitan banking, small business
banking, consumer lending, mortgage banking, and
investment product sales.

Private Client, Trust and Asset Management provides
mutual fund processing services, trust, private banking and
Ñnancial advisory services through four businesses including:
the Private Client Group, Corporate Trust Services,

Institutional Trust and Custody and Fund Services. The
business segment also oÅers investment management
services to several client segments including mutual funds,
institutional customers, and private asset management.

Payment Services includes consumer and business credit

cards, corporate and purchasing card services, consumer
lines of credit, ATM processing and merchant processing.

Capital Markets engages in equity and Ñxed income

trading activities, oÅers investment banking and
underwriting services for corporate and public sector
customers and provides Ñnancial advisory services and
securities, mutual funds, annuities and insurance products to
consumers and regionally based businesses through a
network of brokerage oÇces.

Treasury and Corporate Support includes the

Company's investment and residential mortgage portfolios,
funding, capital management and asset securitization
activities, interest rate risk management, the net eÅect of
transfer pricing related to loan and deposit balances, and
the change in residual allocations associated with the
provision for loan losses. It also includes business activities
managed on a corporate basis, including income and
expense of enterprise-wide operations and administrative
support functions.

Segment Results Accounting policies for the lines of
business are the same as those used in preparation of the
consolidated Ñnancial statements with respect to activities
speciÑcally attributable to each business line. However, the
preparation of business line results requires management to
establish methodologies to allocate funding costs and
beneÑts, expenses and other Ñnancial elements to each line
of business. For details of these methodologies and segment
results, see ""Basis for Financial Presentation'' on page 43
and Table 21 ""Line of Business Financial Performance''
included in Management's Discussion and Analysis which is
incorporated by reference into these Notes to Consolidated
Financial Statements.

SECURITIES

Trading Account Securities Debt and equity securities
held for resale are classiÑed as trading account securities
and reported at fair value. Realized and unrealized gains or
losses are determined on a trade date basis and reported in
noninterest income.

Available-for-sale Securities These securities are not
trading account securities but may be sold before maturity
in response to changes in the Company's interest rate risk

U.S. Bancorp

proÑle or demand for collateralized deposits by public
entities. Available-for-sale securities are carried at fair value
with unrealized net gains or losses reported within other
comprehensive income in shareholders' equity. When sold,
the amortized cost of the speciÑc securities is used to
compute the gain or loss.

Held-to-maturity Securities Debt securities for which the
Company has the positive intent and ability to hold to
maturity are reported at historical cost adjusted for
amortization of premiums and accretion of discounts.

LOANS

Loans are reported net of unearned income. Interest income
is accrued on the unpaid principal balances as earned. Loan
and commitment fees are deferred and recognized over the
life of the loan and/or commitment period as yield
adjustments.

Allowance for Credit Losses Management determines the
adequacy of the allowance for credit losses based on
evaluations of the loan portfolio, recent loss experience,
and other pertinent factors, including economic conditions.
This evaluation is inherently subjective as it requires
estimates, including amounts of future cash collections
expected on nonaccrual loans, that may be susceptible to
signiÑcant change. The allowance for credit losses relating
to impaired loans is based on the loan's observable market
price, the collateral for certain collateral-dependent loans,
or the discounted cash Öows using the loan's eÅective
interest rate.

The Company determines the amount of the allowance

required for certain sectors based on relative risk
characteristics of the loan portfolio. The allowance
recorded for commercial loans is based on quarterly reviews
of individual credit relationships and an analysis of the
migration of commercial loans and actual loss experience.
The allowance recorded for homogeneous consumer loans
is based on an analysis of product mix, risk characteristics
of the portfolio, fraud loss and bankruptcy experiences, and
historical losses, adjusted for current trends, for each
homogenous category or group of loans. The allowance is
increased through provisions charged to operating earnings
and reduced by net charge-oÅs.

Nonaccrual Loans Generally commercial loans (including
impaired loans) are placed on nonaccrual status when the
collection of interest or principal has become 90 days past
due or is otherwise considered doubtful. When a loan is
placed on nonaccrual status, unpaid interest is reversed.
Future interest payments are generally applied against
principal. Revolving consumer lines and credit cards are
charged oÅ by 180 days past due and closed-end consumer
loans other than loans secured by 1-4 family properties are

charged oÅ at 120 days past due and are, therefore, not
placed on nonaccrual status.

Impaired Loans A loan is considered to be impaired
when, based on current information and events, it is
probable that the Company will be unable to collect all
amounts due (both interest and principal) according to the
contractual terms of the loan agreement.

Leases The Company engages in both direct and leveraged
lease Ñnancing. The net investment in direct Ñnancing leases
is the sum of all minimum lease payments and estimated
residual values, less unearned income. Unearned income is
added to interest income over the terms of the leases to
produce a level yield.

The investment in leveraged leases is the sum of all

lease payments (less nonrecourse debt payments) plus
estimated residual values, less unearned income. Income
from leveraged leases is recognized over the term of the
leases based on the unrecovered equity investment.

Loans Held for Sale Loans held for sale (""LHFS'')
represent mortgage loan originations intended to be sold in
the secondary market and other loans that management has
an active plan to sell. LHFS are carried at the lower of cost
or market value as determined on an aggregate basis by type
of loan. In the event management decides to sell loans
receivable, the loans are transferred at the lower of cost or
fair value. Any credit-related loss at the time of transfer is
recorded as a reduction in the allowance for credit losses.
Subsequent decreases in fair value are recognized in
noninterest income.

Other Real Estate Other real estate (""ORE''), which is
included in other assets, is property acquired through
foreclosure or other proceedings. ORE is carried at the
lower of cost or fair value, less estimated selling costs. The
property is evaluated regularly and any decreases in the
carrying amount are included in noninterest expense.

DERIVATIVE FINANCIAL INSTRUMENTS

In the ordinary course of business, the Company enters into
derivative transactions to manage its market and
prepayment risks and to accommodate the business
requirements of its customers. All derivative instruments are
recorded as either assets or liabilities at fair value.
Subsequent changes in a derivative's fair value are
recognized currently in earnings unless speciÑc hedge
accounting criteria are met.

All derivative instruments that qualify for speciÑc hedge
accounting are recorded at fair value and classiÑed either as
a hedge of the fair value of a recognized asset or liability
(""fair value'' hedge) or as a hedge of the variability of cash
Öows to be received or paid related to a recognized asset or
liability or a forecasted transaction (""cash Öow'' hedge).

U.S. Bancorp

Changes in the fair value of a derivative that is highly
eÅective and designated as a fair value hedge and the
oÅsetting changes in the fair value of the hedged item are
recorded in income. Changes in the fair value of a
derivative that is highly eÅective and designated as a cash
Öow hedge are recognized in other comprehensive income
until income from the cash Öows of the hedged item are
recognized. The Company performs an assessment, both at
the inception of the hedge and on a quarterly basis
thereafter, to determine whether these derivatives are highly
eÅective in oÅsetting changes in the value of the hedged
items. Any change in fair value resulting from hedge
ineÅectiveness is immediately recorded in noninterest
income.

If a derivative designated as a hedge is terminated or
ceases to be highly eÅective, the gain or loss is amortized to
earnings over the remaining life of the hedged asset or
liability (fair value hedge) or over the same period(s) that
the forecasted hedged transactions impact earnings (cash
Öow hedge). If the hedged item is disposed of, or the
forecasted transaction is no longer probable, the derivative
is recorded at fair value with any resulting gain or loss
included in the gain or loss from the disposition of the
hedged item or, in the case of a forecasted transaction that
is no longer probable, included in earnings immediately.

OTHER SIGNIFICANT POLICIES

Premises and Equipment Premises and equipment are
stated at cost less accumulated depreciation and depreciated
primarily on a straight-line basis over the estimated life of
the assets.

Capital leases, less accumulated amortization, are
included in premises and equipment. The lease obligations
are included in long-term debt. Capitalized leases are
amortized on a straight-line basis over the lease term and
the amortization is included in depreciation expense.

Mortgage Servicing Rights Mortgage servicing rights
associated with loans originated and sold, where servicing is
retained, are capitalized and included in other intangible
assets in the consolidated balance sheet. The value of these
capitalized servicing rights is amortized in proportion to,
and over the period of, estimated net servicing revenue and
recorded in noninterest expense as amortization of
intangible assets. The carrying value of these rights is
periodically reviewed for impairment based on fair value.
For purposes of measuring impairment, the servicing rights
are stratiÑed based on the underlying loan type and note
rate and compared to a valuation prepared based on a

discounted cash Öow methodology, utilizing current
prepayment speeds and discount rates. Impairment is
recognized through a valuation allowance for each impaired
stratum and recorded as amortization of intangible assets.

Intangible Assets For all purchase acquisitions completed
prior to July 1, 2001, the price paid over the net fair value
of the acquired businesses (""goodwill'') is amortized over
periods ranging up to 25 years. For purchase acquisitions
completed subsequent to June 30, 2001, goodwill is not
amortized. Other intangible assets are amortized over their
estimated useful lives, which range from seven to Ñfteen
years, using straight-line and accelerated methods. The
recoverability of goodwill and other intangible assets is
evaluated if events or circumstances indicate a possible
inability to realize the carrying amount. The evaluation
includes assessing the estimated fair value of the intangible
asset based on market prices for similar assets, where
available, and the present value of the estimated future cash
Öows associated with the intangible asset.

Income Taxes Deferred taxes are recorded to reÖect the
tax consequences on future years of diÅerences between the
tax bases of assets and liabilities and the Ñnancial reporting
amounts at each year-end.

Statement of Cash Flows For purposes of reporting cash
Öows, cash and cash equivalents include cash and money
market investments, deÑned as interest-bearing amounts due
from banks, federal funds sold and securities purchased
under agreements to resell.

Stock-based Compensation The Company grants stock
options for a Ñxed number of shares to employees and
directors with an exercise price equal to the fair value of
the shares at the date of grant. The Company accounts for
stock option grants in accordance with Accounting
Principles Board Opinion No. 25, ""Accounting for Stock
Issued to Employees,'' (""APB 25'') and accordingly
recognizes no compensation expense for the stock option
grants.

Per Share Calculations Earnings per share is calculated by
dividing net income (less preferred stock dividends) by the
weighted average number of common shares outstanding
during the year. Diluted earnings per share is calculated by
adjusting income and outstanding shares, assuming
conversion of all potentially dilutive securities, using the
treasury stock method. All per share amounts have been
restated for stock splits.

U.S. Bancorp

Note 2

Accounting Changes

Accounting for Derivative Instruments and Hedging

Activities Statement of Financial Accounting Standards
No. 133 (""SFAS 133''), ""Accounting for Derivative
Instruments and Hedging Activities,'' as amended,
establishes accounting and reporting standards for all
derivative instruments and criteria for designation and
eÅectiveness of hedging activities. SFAS 133 requires that an
entity recognize all derivatives as either assets or liabilities
on the balance sheet and measure those instruments at fair
value. The changes in the fair value of the derivatives are
recognized currently in earnings unless speciÑc hedge
accounting criteria are met. If the derivative qualiÑes as a
hedge, the accounting treatment varies based on the type of
risk being hedged. On January 1, 2001, the Company
adopted SFAS 133. Transition adjustments related to
adoption resulted in an after-tax loss of approximately
$4.1 million recorded in net income and an after-tax
increase of $5.2 million recorded in other comprehensive
income. The transition adjustments related to adoption
were not material to the Company's Ñnancial statements,
and as such, were not separately reported in the
consolidated statement of income.

Accounting for Business Combinations and Goodwill

and intangible assets subsequent to their acquisition. The
Company is required to adopt SFAS 142 on January 1,
2002. The most signiÑcant changes made by SFAS 142 are
that goodwill and indeÑnite lived intangible assets will no
longer be amortized and will be tested for impairment at
least annually, thereafter. Any impairment charges from the
initial impairment test at the date of adoption would be
recognized as a ""cumulative eÅect of change in accounting
principles'' in the income statement. The amortization
provisions of SFAS 142 apply to goodwill and intangible
assets acquired after June 30, 2001. With respect to
goodwill and intangible assets acquired prior to July 1,
2001, the amortization provisions of SFAS 142 are eÅective
upon adoption of SFAS 142.

The Company will apply the amortization provisions of

SFAS 142 during the Ñrst quarter of 2002. Management
anticipates that applying the provisions of SFAS 141 to
recent acquisitions and the provisions of SFAS 142 to
purchase acquisitions completed prior to July 1, 2001, will
increase after-tax income for the year ending December 31,
2002, by approximately $200 to $210 million, or $.10 per
diluted share. This considers the application of SFAS 142's
deÑnition of a business and the impact of reclassifying
certain assets from goodwill to intangibles and changes in
estimated useful lives of certain intangible assets. The
Company has not yet fully determined the impact on
earnings of impairments related to goodwill and indeÑnite
lived intangible assets under the new guidelines required by
SFAS 142. Any material impairment charge resulting from
these transitional accounting rules will be reÖected as a
""cumulative eÅect of a change in accounting principles'' in
the Ñrst quarter of 2002. Because banking regulations
exclude 100 percent of goodwill from the determination of
capital adequacy, the impact of any impairment on the
Company's capital adequacy will not be signiÑcant.

U.S. Bancorp

Note 3

Business Combinations

On February 27, 2001, Firstar and USBM merged in a
pooling-of-interests transaction and accordingly all Ñnancial
information has been restated to include the historical
information of both companies. Each share of Firstar stock
was exchanged for one share of the Company's common
stock while each share of USBM stock was exchanged for
1.265 shares of the Company's common stock. The new
Company retained the U.S. Bancorp name.

On September 20, 1999, Firstar and Mercantile

Bancorporation, Inc., (""Mercantile'') merged in a pooling-
of-interests transaction and accordingly all Ñnancial
information has been restated to include the historical
information of both companies. Each share of Mercantile
stock was exchanged for 2.091 shares of Firstar common
stock.

On July 24, 2001, the Company acquired NOVA
Corporation (""NOVA''), a merchant processor, in a stock
and cash transaction valued at approximately $2.1 billion.
The transaction, representing total assets acquired of
$2.9 billion and total liabilities assumed of $773 million,
was accounted for as a purchase. Included in total assets are
merchant contracts and other intangibles of $650 million
and the excess of the purchase price over the fair value of
identiÑable net assets (""goodwill'') of $1.6 billion.
In addition to these mergers, the Company has
completed several strategic acquisitions to enhance its
presence in certain growth markets and businesses. The
following table summarizes acquisitions by the Company
and its acquirees completed since January 1, 1999, treating
Firstar as the original acquiring company:

(Dollars and Shares in Millions)

Date

Assets

Deposits

PaciÑc Century BankÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
NOVA CorporationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
U.S. BancorpÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
First Union branchesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Scripps Financial CorporationÏÏÏÏÏÏÏÏÏÏ
Lyon Financial Services, Inc.ÏÏÏÏÏÏÏÏÏÏÏ
Oliver-Allen CorporationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Peninsula BankÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Western Bancorp ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mercantile Bancorporation ÏÏÏÏÏÏÏÏÏÏÏÏ
Voyager Fleet Systems, Inc. ÏÏÏÏÏÏÏÏÏÏÏ
Bank of Commerce ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mellon Network Services' Electronic

Funds Transfer Processing Unit ÏÏÏÏÏ
Libra Investments, Inc. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

September 2001
July 2001
February 2001
December 2000
October 2000
September 2000
April 2000
January 2000
November 1999
September 1999
September 1999
July 1999

June 1999
January 1999

570
949
86,602
450
650
1,289
280
491
2,508
35,520
43
638

Ì
33

712
Ì
51,335
1,779
618
Ì
Ì
452
2,105
24,334
Ì
529

Ì
Ì

Goodwill
and Other
Intangibles

Cash Paid/
(Received) Shares Issued

Accounting
Method

$ 138
1,932
Ì
347
113
124
34
71
773
Ì
25
269

78
4

(40)
842
Ì

(1,123)

Ì
307
Ì
Ì
Ì
Ì
27
Ì

170
Ì

56.9
952.4

Ì Purchase
Purchase
Pooling
Ì Purchase
9.4
Purchase
Ì Purchase
Purchase
3.6
Purchase
5.1
Purchase
35.1
Pooling
331.8
Ì Purchase
Purchase

11.8

Ì Purchase
Purchase
1.3

Separate results of operations as originally reported on a
condensed basis of Firstar and USBM, for the period prior
to the merger, were as follows:

(Dollars in Millions)

Net interest income

Firstar ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
USBM ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net income

Firstar ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
USBM ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total assets at year end

Firstar ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
USBM ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Year Ended December 31

2000

1999

2,699
3,471

6,170

1,284
1,592

2,876

$ 77,585
87,336

$164,921

2,643
3,261

5,904

875
1,507

2,382

$ 72,788
81,530

$154,318

U.S. Bancorp

Note 4

Merger and Restructuring-related
Items

The Company recorded in pre-tax earnings merger and
restructuring-related items of $1,266.4 million,
$348.7 million and $540.3 million in 2001, 2000, and 1999,
respectively. In 2001, merger-related items were primarily
incurred in connection with the merger of Firstar and
USBM, the NOVA acquisition and the Company's various

other acquisitions noted below and in Note 3 Ì Business
Combinations. In response to signiÑcant changes in the
securities markets during 2001, including increased
volatility, declines in equity valuations and the increasingly
competitive environment for the industry, the Company
also incurred a charge to restructure its subsidiary, U.S.
Bancorp PiperJaÅray, Inc. (""Piper Restructuring''). The
components of the merger and restructuring-related items
are shown below:

(Dollars in Millions)

2001

USBM

Piper
NOVA Restructuring

Mercantile

Firstar(a)

Other(b)

Total

Severance and employee-relatedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 268.2
208.1
Systems conversions and integration ÏÏÏÏÏÏÏÏÏÏÏÏÏ
130.4
Asset write-downs and lease terminations ÏÏÏÏÏÏÏÏ
76.0
Charitable contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
457.6
Balance sheet restructurings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(62.2)
Branch sale gain ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
20.0
Branch consolidationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
69.1
Other merger-related charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total 2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,167.2

Provision for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 382.2
Noninterest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Noninterest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

(62.2)
847.2

Merger-related items ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Balance sheet recognition ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,167.2
Ì

Merger-related items Ì 2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,167.2

$23.3
1.6
34.7
Ì
Ì
Ì
Ì
24.2

$83.8

$ Ì
Ì
1.6

1.6
82.2

$83.8

$28.8
Ì
11.9
Ì
Ì
Ì
Ì
10.0

$50.7

$ Ì
Ì
50.7

50.7
Ì

$ 13.2
7.3
(.3)
Ì
Ì
Ì
Ì
2.5

$ 22.7

$ Ì
Ì
22.7

22.7
Ì

$ 1.3
.7
.4
Ì
Ì
Ì
Ì
.8

$ 3.2

$ Ì
Ì
3.2

3.2
Ì

3.3
18.0
5.6
Ì
Ì
Ì
Ì
1.5

$ 338.1
235.7
182.7
76.0
457.6
(62.2)
20.0
108.1

$ 28.4

$1,356.0

$ Ì
Ì
21.0

21.0
7.4

$ 382.2

(62.2)
946.4

1,266.4
89.6

$50.7

$ 22.7

$ 3.2

$ 28.4

$1,356.0

2000

Severance and employee-relatedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Systems conversions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset write-downs and lease terminations ÏÏÏÏÏÏÏÏ
Charitable contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other merger-related charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total 2000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1999

Severance and employee-relatedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Systems conversions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset write-downs and lease terminations ÏÏÏÏÏÏÏÏ
Charitable contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities losses to restructure portfolio ÏÏÏÏÏÏÏÏÏÏ
Provision for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other merger-related charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total 1999 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 43.0
115.2
42.7
Ì
26.1

$227.0

$131.0
19.5
.2
35.0
177.7
7.5
46.1

$417.0

$16.3
19.0
4.6
Ì
12.7

$52.6

$10.6
78.9
4.4
Ì
Ì
Ì
2.0

$95.9

.1
59.3
Ì
2.5
7.2

59.4
193.5
47.3
2.5
46.0

$ 69.1

$ 348.7

8.0
34.1
1.6
Ì
Ì
Ì
(16.3)

$ 149.6
132.5
6.2
35.0
177.7
7.5
31.8

$ 27.4

$ 540.3

(a) Represents the 1998 acquisition of the former Firstar Corporation by Star Banc. Star Banc was renamed Firstar Corporation.
(b) In 2001, ""Other'' includes merger and restructuring-related items pertaining to the First Union branch acquisition and the PaciÑc Century Bank acquisition.

The Company determines merger and restructuring-
related charges and related accruals based on its integration
strategy and formulated plans. These plans are established
as of the acquisition date and regularly evaluated during the
integration process.

Severance and employee-related charges include the
cost of severance, other beneÑts and outplacement costs
associated with the termination of employees primarily in
branch oÇces and centralized corporate support and data
processing functions. The severance amounts are

determined based on the Company's existing severance pay
programs and are paid out over a beneÑt period of up to
two years from the time of termination. The total number
of employees included in severance amounts were
approximately 2,820 for USBM, 2,400 for Mercantile, 2,000
for Firstar, 160 for NOVA, 300 for the Piper Restructuring
and 520 for all other acquisitions. Severance and employee-
related costs are included in the determination of goodwill
for groups of acquired employees identiÑed at closing to be
severed. Severance and employee-related costs are recorded

U.S. Bancorp

as incurred for groups of employees not speciÑcally
identiÑed at the time of closing or acquired in business
combinations accounted for as ""poolings''.

Systems conversion and integration costs are recorded

as incurred and are associated with the preparation and
mailing of numerous customer communications for the
acquisitions and conversion of customer accounts, printing
and distribution of training materials and policy and
procedure manuals, outside consulting fees, and other
expenses related to systems conversions and the integration
of acquired branches and operations.

Asset writedowns and lease terminations represent lease

termination costs and impairment of assets for redundant
oÇce space, branches that will be vacated and equipment
disposed of as part of the integration plan. These costs are
recognized in the accounting period that contract
terminations occur or the asset becomes impaired and is
abandoned.

In connection with certain mergers, the Company has
made charitable contributions to reaÇrm a commitment to
its market or as part of speciÑc conditions necessary to
achieve regulatory approval. These contributions were
funded up front and represent costs that would not have
been incurred had the merger not occurred. Charitable
contributions are charged to merger and restructuring
expenses or considered in determining the acquisition cost
at the applicable closing date.

Balance sheet restructurings primarily represent gains or

losses incurred by the Company related to the disposal of
certain businesses, products, or customer and business
relationships that no longer align with the long-term strategy

of the Company. It may also include charges to realign risk
management practices related to certain credit portfolios. In
connection with the merger of Firstar and USBM, balance
sheet restructuring charges of $457.6 million were comprised
of a $201.3 million provision associated with the Company's
integration of certain small business products and
management's decision to discontinue an unsecured small
business product of USBM; $90.0 million of charge-offs to
align risk management practices, align charge-off policies and
to expedite the Company's transition out of a specific segment
of the healthcare industry; and $76.6 million of losses related
to the sales of two higher credit risk retail loan portfolios of
USBM. Also, the amount included $89.7 million related to the
Company's decision to discontinue a high-yield investment
banking business, to restructure a co-branding credit card
relationship of USBM, and for the planned disposition of
certain equity investments that no longer align with the long-
term strategy of the Company. The alignment of risk
management practices included a write-down of several large
commercial loans originally held separately by both Firstar and
USBM, primarily to allow the Company to exit or reduce
these credits to conform with the credit exposure policy of
the combined entity.

Other merger-related expenses of $108.1 million
primarily included $69.1 million and $24.2 million of
investment banking fees, legal fees and stock registration
fees associated with the merger of Firstar and USBM and
the acquisition of NOVA Corporation, respectively. Also, it
included $10.0 million of goodwill impairment related to
the Piper Restructuring and $4.8 million of other costs.

The following table presents a summary of activity with respect to the merger and restructuring-related accruals:

(Dollars in Millions)

Balance at December 31, 1998 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision charged to operating expenseÏÏÏÏ
Additions related to purchase acquisitions ÏÏ
Cash outlaysÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Noncash write-downs and other ÏÏÏÏÏÏÏÏÏÏÏ
Securities losses to restructure portfolio ÏÏÏ
Transfer of tax liability(b)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Balance at December 31, 1999 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision charged to operating expenseÏÏÏÏ
Additions related to purchase acquisition ÏÏÏ
Cash outlaysÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Noncash write-downs and other ÏÏÏÏÏÏÏÏÏÏÏ

Balance at December 31, 2000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision charged to operating expenseÏÏÏÏ
Additions related to purchase acquisitions ÏÏ
Cash outlaysÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Noncash write-downs and other ÏÏÏÏÏÏÏÏÏÏÏ

USBM

Piper
NOVA Restructuring

Mercantile

Firstar

Other(a)

Total

Ì
Ì
Ì
Ì
Ì
Ì
Ì

Ì
Ì
Ì
Ì
Ì

Ì
1,167.2
Ì

(532.5)
(510.4)

$ Ì
Ì
Ì
Ì
Ì
Ì
Ì

Ì
Ì
Ì
Ì
Ì

Ì
1.6
82.2
(32.4)
(3.0)

$ Ì
Ì
Ì
Ì
Ì
Ì
Ì

Ì
Ì
Ì
Ì
Ì

Ì
50.7
Ì
(22.3)
(10.3)

$ Ì
417.0
Ì

(182.8)
(35.3)
(177.7)

21.2
227.0
Ì

(197.9)
(50.3)

Ì
22.7
Ì
(23.8)
1.1

$ 125.2
95.9
Ì

(176.5)
(44.6)
Ì
Ì

Ì
52.6
Ì
(52.6)
Ì

Ì
3.2
Ì
(3.2)
Ì

$ 227.3
27.4
70.2
(148.5)
(60.6)
Ì
(33.8)

82.0
69.1
46.0
(117.1)
(30.2)

49.8
21.0
7.4
(50.6)
(13.0)

$ 352.5
540.3
70.2
(507.8)
(140.5)
(177.7)
(33.8)

103.2
348.7
46.0
(367.6)
(80.5)

49.8
1,266.4
89.6
(664.8)
(535.6)

Balance at December 31, 2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 124.3

$ 48.4

$ 18.1

$ Ì

$ 14.6

$ 205.4

(a) ""Other'' includes the 1997 acquisition of the former U.S. Bancorp of Portland, Oregon by First Bank System, Inc. (""FBS''). FBS was renamed U.S. Bancorp. ""Other'' also includes the 1998
acquisition of Piper Jaffray, Inc., the 1999 acquisitions of Libra Investments, Inc., Bank of Commerce, and Western Bancorp, and the 2000 acquisitions of Peninsula Bank, Oliver-Allen
Corporation, Lyon Financial Services, Inc., Scripps Financial Corporation and 41 branches acquired from First Union. Refer to Note 3 for further information.

(b) The liability relates to certain severance-related items.

U.S. Bancorp

The adequacy of the accrued liabilities is reviewed
regularly taking into consideration actual and projected
payments. Adjustments are made to increase or decrease
these accruals as needed. Reversals of expenses can

reÖect a lower utilization of beneÑts by aÅected staÅ,
changes in initial assumptions as a result of subsequent
mergers and alterations of business plans.

The following table presents a summary of activity with respect to the merger of Firstar and USBM:

(Dollars in Millions)

Balance at December 31, 2000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision charged to operating expense ÏÏ
Cash outlays ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Non-cash write-downs and other ÏÏÏÏÏÏÏÏÏ

Severance
and
Employee-
related

$ Ì
268.2
(175.6)
(4.3)

Balance at December 31, 2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

88.3

Investment
Banker Fees

$ Ì
66.2
(65.7)

Lease
Cancellation
and Related

Balance
Sheet
WriteoÅs Restructurings

Systems
Conversions
and
Integration

$ Ì
48.7
(5.2)
(10.4)

$ Ì
457.6
Ì

$ Ì
208.1
(208.1)

(455.5)

Other(a)

Total

$ Ì
118.4
(77.9)
(40.5)

$ Ì
1,167.2
(532.5)
(510.4)

$ 33.1

2.1

$ Ì

$ 124.3

(a) Other accruable merger and restructuring-related items included charitable contributions of $76.0 million, a branch sale gain of ($62.2) million, $20.0 million to consolidate and

rationalize the branch network, capitalized software impairments of $81.7 million, and other charges of $2.9 million.

The components of the merger and restructuring-related
accruals for all acquisitions were as follows:

December 31

(Dollars in Millions)

Severance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other employee-related costs ÏÏÏÏÏÏÏÏ
Lease termination and facility costs ÏÏÏ
Contracts and system write-oÅs ÏÏÏÏÏÏ
OtherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

$106.3
4.7
64.3
18.3
11.8

$205.4

2000

$13.8
6.8
8.4
7.4
13.4

$49.8

The merger and restructuring-related accrual by signiÑcant
acquisition or business restructuring was as follows:

December 31

(Dollars in Millions)

USBM ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
NOVA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Piper JaÅray Companies, Inc. ÏÏÏÏÏÏÏÏ
PaciÑc Century Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Lyon Financial Services, Inc. ÏÏÏÏÏÏÏÏÏ
Western BancorpÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Scripps Financial Corporation ÏÏÏÏÏÏÏÏ
Bank of Commerce ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Peninsula Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other acquisitions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

$124.3
48.4
20.8
3.1
1.0
Ì
Ì
Ì
Ì
7.8

$205.4

2000

$ Ì
Ì
15.0
Ì
2.7
5.1
4.6
4.1
3.0
15.3

$49.8

In connection with the merger of Firstar and USBM,

management estimates the Company will incur pre-tax
merger-related charges of approximately $271.1 million in
2002. These are currently estimated to include $14.0 million
in employee-related costs, $170.9 million for conversions of
systems and consolidation of operations, $57.8 million in
occupancy and equipment charges (elimination of duplicate
facilities and write-oÅ of equipment) and $28.4 million in
other merger-related costs (including legal fees, balance
sheet restructuring charges and other costs).

With respect to the NOVA acquisition, the Company

expects to incur approximately $68.3 million of merger-
related charges through 2003. The Piper Restructuring was
substantially completed by December 31, 2001. In addition,
the Company anticipates an additional $15.1 million of
merger-related expenses in 2002 as a result of other
acquisitions.

Note 5

Restrictions on Cash and Due from
Banks

Bank subsidiaries are required to maintain minimum average
reserve balances with the Federal Reserve Bank. The
amount of those reserve balances was approximately
$916 million at December 31, 2001.

U.S. Bancorp

Investment Securities

Note 6
The detail of the amortized cost, gross unrealized holding gains and losses, and fair value of held-to-maturity and available-
for-sale securities at December 31 was as follows:

(Dollars in Millions)

Held-to-maturity

Asset-backed securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Obligations of state and political

2001

Gross
Unrealized
Holding
Gains

Gross
Unrealized
Holding
Losses

Amortized
Cost

2000

Gross
Unrealized
Holding
Gains

Gross
Unrealized
Holding
Losses

Fair
Value

Amortized
Cost

$ Ì

$ Ì $

$ Ì

$ Ì $

subdivisions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

271

Total held-to-maturity securitiesÏÏÏÏÏÏÏ

299

(2)

278

216

(2)

306

252

221

$ Ì $

257

Available-for-sale

U.S. Treasuries and agenciesÏÏÏÏÏÏÏÏÏ
Asset-backed securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Obligations of state and political

subdivisions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

439
24,028

$ 10
114

$ Ì $

(114)

449
24,028

$ 1,600
11,800

877
950

16
35

(2)
(44)

891
941

2,370
1,472

$ 27
128

41
21

$ (3)
(35)

$ 1,624
11,893

(2)
(29)

2,409
1,464

Total available-for-sale securities ÏÏ

$26,294

$175

$(160)

$26,309

$17,242

$217

$(69)

$17,390

Securities carried at $18.1 billion at December 31, 2001, and $13.3 billion at December 31, 2000, were pledged to

secure public, private and trust deposits and for other purposes required by law. Securities sold under agreements to
repurchase were collateralized by securities and securities purchased under agreements to resell with an amortized cost of
$3.0 billion and $1.0 billion at December 31, 2001, and 2000, respectively.

The following table provides information as to the amount of gross gains and losses realized through the sales of available-
for-sale investment securities.

(Dollars in Millions)

Gross realized gains ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Gross realized losses(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net realized gains (losses) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Income tax (beneÑt) on realized gains (losses) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

$333.1

(4.0)

$329.1

$115.2

2000

$ 23.1

(15.0)

8.1

2.8

1999

$ 31.1

(195.6)

$(164.5)

$ (57.9)

(a) Included in the gross realized losses for 1999 is $177.7 million related to the Mercantile balance sheet restructuring. These losses were included in merger and restructuring-

related expense.

For amortized cost, fair value and yield by maturity date of held-to-maturity and available-for-sale securities outstanding

as of December 31, 2001, see Table 11 included in Management's Discussion and Analysis which is incorporated by
reference into these Notes to Consolidated Financial Statements.

U.S. Bancorp

Note 7

Loans and Allowance for Credit Losses

The composition of the loan portfolio at December 31 was as follows:

(Dollars in Millions)

Commercial

2001

2000

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Lease Ñnancing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 40,472
5,858

$ 47,041
5,776

Total commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

46,330

52,817

Commercial real estate

Commercial mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Construction and developmentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total commercial real estate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail

Credit cardÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail leasing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other retail

Home equity and second mortgage ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Revolving credit ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Installment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Automobile ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
StudentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total other retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

18,765
6,608

25,373

5,746

5,889
4,906

14,318
2,673
2,292
5,660
1,218

26,161

36,956

19,466
6,977

26,443

7,753

6,012
4,153

13,600
2,750
2,186
5,609
1,042

25,187

35,352

Total loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$114,405

$122,365

Loans are presented net of unearned interest which
amounted to $1.6 billion and $1.7 billion at December 31,
2001 and 2000, respectively. The Company had loans of
$28.0 billion at December 31, 2001, and $7.8 billion at
December 31, 2000, pledged at the Federal Home Loan
Bank. Loans of $7.2 billion at December 31, 2001, and
$3.6 billion at December 31, 2000, were pledged at the
Federal Reserve Bank.

The Company primarily lends to borrowers in the

24 states where it has banking oÇces. Collateral for
commercial loans may include marketable securities,
accounts receivable, inventory and equipment. For detail

of the Company's commercial portfolio by industry type
and geography as of December 31, 2001, and 2000, see
Table 9 included in Management's Discussion and Analysis
which is incorporated by reference into these Notes to
Consolidated Financial Statements.

For detail of the Company's commercial real estate

portfolio by property type and geography as of
December 31, 2001, and 2000, see Table 10 included in
Management's Discussion and Analysis which is
incorporated by reference into these Notes to Consolidated
Financial Statements. Such loans are collateralized by the
related property.

The following table lists information related to nonperforming loans as of December 31:

(Dollars in Millions)

Loans on nonaccrual status ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Renegotiated loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

$1,001.3
Ì

Total nonperforming loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,001.3

Interest income that would have been recognized at original contractual terms ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amount recognized as interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 109.2
46.2

Forgone revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

63.0

2000

$765.3
Ì

$765.3

$ 72.2
21.4

$ 50.8

U.S. Bancorp

Activity in the allowance for credit losses was as follows:

(Dollars in Millions)

Balance at beginning of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Add

2001

2000

1999

$1,786.9

$1,710.3

$1,705.7

Provision charged to operating expense(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2,528.8

828.0

Deduct

Loans charged oÅÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Less recoveries of loans charged oÅ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net loans charged oÅ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Losses from loan sales/transfersÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Acquisitions and other changes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,771.4
224.9

1,546.5
(329.3)
17.4

1,017.6
192.2

825.4
Ì
74.0

646.0

902.8
230.2

672.6
Ì
31.2

Balance at end of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$2,457.3

$1,786.9

$1,710.3

(a) In 2001, $382.2 million of the provision for credit losses was incurred in connection with the merger of Firstar and USBM.

A portion of the allowance for credit losses is allocated to loans deemed impaired. All impaired loans are included in non-
performing assets. A summary of these loans and their related allowance for loan losses is as follows:

(Dollars in Millions)

Impaired Loans

Valuation allowance required ÏÏÏÏÏÏÏÏÏ
No valuation allowance required ÏÏÏÏÏÏ

Total impaired loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Average balance of impaired loans during
the year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Interest income recognized on impaired

loans during the year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

2000

1999

Recorded
Investment

Valuation
Allowance

Recorded
Investment

Valuation
Allowance

Recorded
Investment

Valuation
Allowance

$125
Ì

$125

$694
Ì

$694

$780

25.0

$487
127

$614

$526

7.8

$57
Ì

$57

$257
132

$389

$408

3.3

$8
Ì

Commitments to lend additional funds to customers whose loans were classiÑed as nonaccrual or renegotiated at
December 31, 2001, totaled $82.5 million. During 2001 there were no loans that were restructured at market interest rates
and returned to a fully performing status.

Note 8

Accounting for Transfers and
Servicing of Financial Assets and
Extinguishments of Liabilities

Receivable Sales

When the Company sells receivables, it may retain interest-
only strips, servicing rights, a cash reserve account, and/or
other interests in the receivables. The gain or loss on sale
of the receivables depends in part on the previous carrying
amount of the Ñnancial assets involved in the transfer, and
is allocated between the assets sold and the retained
interests based on their relative fair values at the date of
transfer. Market prices are used to determine retained
interest fair values when readily available. However, quotes
are generally not available for retained interests, so the
Company generally estimates fair value based on the present
value of future expected cash Öows using management's
best estimates of the key assumptionsÌcredit losses,
prepayment speeds, forward yield curves, and discount rates
commensurate with the risks involved. Retained interests
are valued at inception and updated quarterly using a
discounted cash Öow methodology.

On November 16, 2001, the Company sold $737.8

million of unsecured small business receivables. The
transaction generated a loss on sale of $64.7 million. The
Company retained interest-only strips, a cash collateral
reserve, and subordinated securities. Key assumptions used
in measuring retained interests at the date of securitization
are consistent with those presented in the table below
captioned ""Residual Economic Assumptions and Adverse
Changes.'' These products are similar in nature to revolving
credit card receivables. Each month new advances on these
accounts are sold. The proceeds from these sales are netted
against the cash collected for the month. The net cash
collected is distributed accordingly to pay down the
outstanding securities. The Company receives a fee to
continue to service the receivables. Since the Company
receives adequate compensation relative to current market
servicing prices, no servicing asset or liability regarding this
securitization is recognized.

During 2001 and 2000, the Company administered a

loan conduit which holds short-term participations in
commercial loans originated by the Company. These loans
totaled $5.9 billion at December 31, 2001 and included net
sales of originated loans to the loan conduit of

U.S. Bancorp

approximately $3.7 billion during 2001. The Company
received fee revenue of $57.6 million and $18.0 million
from the loan conduit in 2001 and 2000, respectively.
Under a credit enhancement agreement with the conduit,
the Company would be required to make payments to the
conduit in speciÑed amounts if the conduit experiences
payment defaults on its loans. No credit enhancements
were needed during 2001 or 2000. In addition, the
Company maintains a reserve to reÖect its obligation to
provide credit enhancements to the conduit.

For the years ended December 31, 2001 and 2000, the

Company sold $147.5 million and $255.7 million of the
U.S. government guaranteed portions of loans originated
under Small Business Administration (SBA) programs,
recognizing a pre-tax gain on sale of $6.3 million and
$10.6 million, respectively. The SBA covers losses occurring
on these guaranteed portions. Although the Company
retains no credit recourse relating to these sales, it does
continue to own a portion of the non-guaranteed elements
of the loans. The Company continues to service the loans
and is required under the SBA programs to retain speciÑed
yield amounts. A portion of the yield is recognized as
servicing fee income as it occurs and the remainder is
capitalized as a servicing asset, and included in the gain on
sale calculation.

Servicing Asset Position

(Dollars in Millions)

Servicing assets at beginning of

year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Servicing assets recognized

during the yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Servicing assets at end of year ÏÏÏ

2001
SBA Loans

2000
SBA Loans

$6.9

2.8
(2.2)

$7.5

$ 4.3

4.0
(1.4)

$ 6.9

No valuation allowances were required during 2001 or

2000 on servicing assets. Servicing assets are reported in
aggregate but measured on a transaction speciÑc basis.
Market values were determined using discounted cash Öows,
utilizing the assumptions noted in the table below.

Key economic assumptions used in valuing servicing assets
at the date of sale resulting from sales completed during
2001 and 2000 were as follows:

(Dollars in Millions)

Fair value of assets recognized
Prepayment speed(b) ÏÏÏÏÏÏÏÏÏ
Weighted-average life (years)ÏÏ
Expected credit losses ÏÏÏÏÏÏÏÏÏ
Discount rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Variable returns to transferees

2001
SBA Loans(a)

2000
SBA Loans(a)

$9.1
21 CPR
3.7
NA
12%
NA

$7.9
21 CPR
3.9
NA
12%
NA

(a) All were adjustable rate loans based on the Wall Street Journal prime rate.
(b) The Company used a prepayment vector based on loan seasoning for valuation. The
given speed was the eÅective prepayment speed that yields the same weighted-
average life calculated using the prepayment vector.

The Company also established a securitization trust

which held credit card receivables originated by the
Company. This trust was terminated in December 2000. At
termination, $509 million of credit card receivables were
transferred from the trust to the Company in exchange for
the seller's certiÑcates held by the Company. In 2000,
$665 million of proceeds from collections of credit card
receivables were reinvested in the trust. The Company
received $18.0 million in servicing fee revenue from the
trust in 2000 and recorded a $2.2 million gain upon the
termination of the trust.

U.S. Bancorp

Residual Economic Assumptions and Adverse Changes

The Company has retained interests on the following asset sales: $1.8 billion sale of indirect automobile loans on
September 24, 1999; $420 million sale of corporate and purchasing card receivables on February 27, 1997; $737.8 million
sale of unsecured small business receivables on November 16, 2001; and sales of SBA loans since 1988. At December 31,
2001, key economic assumptions and the sensitivity of the current fair value of residual cash Öows to immediate 10 percent
and 20 percent adverse changes in those assumptions were as follows:

At December 31, 2001 (Dollars in Millions)

Carrying amount/fair value of retained interests ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Weighted-average life (in years) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Prepayment speed assumption (annual)(c)(d)(e) ÏÏÏÏÏÏÏÏÏÏ
Impact on fair value of 10% adverse change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Impact on fair value of 20% adverse change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expected credit losses (annual) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Impact on fair value of 10% adverse change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Impact on fair value of 20% adverse change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residual cash Öows discount rate (annual)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Impact on fair value of 10% adverse change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Impact on fair value of 20% adverse change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest rates on variable and adjustable contracts ÏÏÏÏÏÏÏÏÏÏÏ
Impact on fair value of 10% adverse change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Impact on fair value of 20% adverse change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Indirect
Automobile
Loans

$23.1
0.7

SBA
Loans(a)

$ 3.2
3.7

1.5 ABS

21 CPR

$(0.7)
(1.5)

2.8%
$(0.7)
(1.4)

12.0%
$(0.2)
(0.4)

NA
NA
NA

$(0.2)
(0.4)

Ì%

$ Ì
Ì

12.0%
$(0.1)
(0.2)

NA
NA
NA

Corporate
Card
Receivables(b)

Unsecured
Small Business
Receivables

$4.3
0.1

Ì
$ Ì
Ì

Ì%

$ Ì
Ì

Ì%

$ Ì
Ì

NA
NA
NA

$232.7
0.8

6.0%
$ (3.1)
(4.7)

13.5%
$ (8.7)
(16.8)

11.0%
$ (2.6)
(5.2)

10.5%
$ (6.7)
(12.9)

(a) Credit losses are covered by the appropriate SBA loan program and are not included in retained interests. Principal reductions caused by defaults are included in the prepayment

assumption.

(b) Residual interest is eÅectively a single period receivable that is paid and renewed each month during the revolving period. Therefore, no assumptions are used in its estimate.

Losses are recognized in the period they occur.

(c) The Company uses prepayment vectors based on loan seasoning for valuation. The given speed is the eÅective prepayment speed that yields the same weighted-average life

calculated using the prepayment vector.

(d) ABS • absolute prepayment rate and is the auto industry's standard measure of prepayment speed. CPR • constant prepayment rate.
(e) Monthly repayment rate on small business lines of credit.

These sensitivities are hypothetical and should be used with caution. As the Ñgures indicate, changes in fair value based on a 10 percent variation in assumptions generally cannot be
extrapolated because the relationship of the change in the assumptions to the change in fair value may not be linear. Also, in this table the eÅect of a variation in a particular
assumption on the fair value of the retained interest is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another (for
example, increases in market interest rates may result in lower prepayments and increased credit losses), which might magnify or counteract the sensitivities.

The table below summarizes certain cash Öows received from and paid to conduit or structured entities for the loan sales
described above:

Year Ended December 31 (Dollars in Millions)

Proceeds from new sales(a)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from existing securitizations(b) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reinvestment in existing securitizations(b)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Servicing and other fees receivedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other cash Öows received on retained interests(c) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Purchases of delinquent or foreclosed assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

2000

$70,209.4
6,969.9
(6,547.8)

$37,911.6
8,042.7
(7,972.9)

73.9
29.9
Ì

52.9
34.2
Ì

(a) Gross proceeds from commercial loan sales were $69.5 billion for 2001. The net cash Öows for these sales were $3.7 billion. For 2000, gross commercial loan sale proceeds were

$37.6 billion, with net cash Öows of ($30.3) million.

(b) The corporate card and unsecured small business receivables securitizations are revolving transactions where proceeds are reinvested until their legal terminations. The indirect

automobile and SBA loan sales are amortizing transactions where the cash Öow is used to pay oÅ investors.

(c) This amount represents total cash Öows received from retained interests by the transferor other than servicing fees. Other cash Öows include, for example, all cash Öows from

interest-only strips and cash above the minimum required level in cash collateral accounts.

U.S. Bancorp

Quantitative information relating to loan sales and managed assets was as follows:

At December 31

Year Ended December 31

Total
Principal Balance

Principal Amount
90 Days or More Past Due

Average Balance

Net Credit Losses

Asset Type (Dollars in Millions)

2001

2000

2001

2000

2001

2000

2001

2000

Commercial

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Lease Ñnancing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$47,867
5,858

$ 49,982
5,776

$ 590
207

$ 525
72

$ 49,672
5,852

$ 48,403
4,512

$ 724
114

Total commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

53,725

55,758

Commercial real estate

Commercial mortgages ÏÏÏÏÏÏÏÏÏÏÏÏ
Construction and developmentÏÏÏÏÏÏ

Total commercial real estate ÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏ
Retail

18,765
6,608

19,466
6,977

25,373

26,443

5,746

7,753

Credit cardÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail leasing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other retailÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

5,889
4,906
26,593

6,012
4,153
26,100

Total retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

37,388

36,265

797

136
37

173

140

128
12
224

364

597

118
40

158

116

111
8
165

285

55,524

52,915

838

19,004
7,077

19,158
6,882

26,081

26,040

6,868

9,578

5,645
4,553
25,613

5,490
3,139
25,729

35,811

34,358

40
12

271
30
360

661

$259
21

280

5
8

238
13
319

570

Total managed loans ÏÏÏÏÏÏÏÏ

$122,232

$126,219

$1,474

$1,155

$124,284

$122,891

$1,564

$875

Less:

Loans sold or securitized ÏÏÏÏÏÏÏÏÏÏ

7,827

3,854

Total loans heldÏÏÏÏÏÏÏÏÏÏÏÏÏ

$114,405

$122,365

6,107

4,574

$118,177

$118,317

Sold or securitized assets

Commercial loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Indirect automobile loans(a) ÏÏÏÏÏÏÏ
Guaranteed SBA loans(b) ÏÏÏÏÏÏÏÏÏ
Corporate card receivables(b) ÏÏÏÏÏ
Credit card receivables ÏÏÏÏÏÏÏÏÏÏÏÏ
Unsecured small business

$5,868
432
582
214
Ì

2,003
913
518
420
Ì

$ Ì
4
2
1
Ì

$ Ì
3
Ì
1
Ì

4,298
655
629
403
Ì

2,073
1,213
360
420
508

$ Ì
11
Ì
3
Ì

$ Ì
16
Ì
3
30

receivables(b) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

731

Total securitized assetsÏÏÏÏÏÏÏÏÏ

$7,827

3,854

122

6,107

4,574

$ 49

(a) Reported in ""other retail'' loans.
(b) Reported in ""commercial'' loans.

Note 9

Premises and Equipment

Premises and equipment at December 31 consisted of the following:

(Dollars in Millions)

Land ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Buildings and improvements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Furniture, Ñxtures and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capitalized building and equipment leases ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Construction in progress ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Less accumulated depreciation and amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

$ 274
1,854
2,012
173
8

4,321
2,580

TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,741

2000

$ 276
1,786
1,888
171
48

4,169
2,333

$1,836

U.S. Bancorp

Note 10

Mortgage Servicing Rights

Changes in capitalized mortgage servicing rights are summarized as follows:

Year Ended December 31,

(Dollars in Millions)

Balance at beginning of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rights purchasedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rights capitalizedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rights sold ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
ImpairmentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

$ 229
25
315
(45)
(103)
(61)

Balance at end of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 360

2000

$ 213
16
137
(35)
(101)
(1)

$ 229

The fair value of capitalized mortgage servicing rights was $360 million at December 31, 2001, and $245 million at
December 31, 2000. At December 31, 2001, the reduction in the current fair value of mortgage servicing rights to immediate
25 and 50 basis point adverse interest rate changes would be approximately $32 million and $63 million, respectively. The
Company has purchased principal-only securities that act as a partial economic hedge to this possible adverse interest rate
change. The Company serviced $22.0 billion and $17.0 billion of mortgage loans for other investors as of December 31,
2001 and 2000, respectively.

Note 11

Intangible Assets

The following is a summary of intangible assets as of December 31, which are included in the consolidated balance sheet:

(Dollars in Millions)

Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Core deposit beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merchant processing contractsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mortgage servicing rightsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other identiÑed intangiblesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

$5,488
530
680
360
354

$7,412

2000

$4,312
374
17
229
377

$5,309

Note 12

Short-Term Borrowings

The following table is a summary of short-term borrowings for the last three years:

(Dollars in Millions)

At year-end

2001

2000

1999

Amount

Rate

Amount

Rate

Amount

Rate

Federal funds purchasedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities sold under agreements to repurchase ÏÏÏÏÏÏÏÏ
Commercial paperÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Treasury, tax and loan notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other short-term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 1,146
3,001
452
4,038
6,033

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$14,670

Average for the year

$ 4,997
2,657
390
1,321
3,615

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$12,980

Maximum month-end balance

$ 7,829
3,001
590
6,618
7,149

1.1%
1.1
1.9
1.3
2.5

1.8%

5.0%
2.9
3.9
3.5
4.0

4.1%

$ 2,849
3,347
223
776
4,638

$11,833

$ 5,690
3,028
215
912
2,741

$12,586

$ 7,807
3,415
300
3,578
4,920

5.8%
4.6
6.4
5.2
6.1

5.6%

6.2%
4.8
6.3
6.1
7.7

6.2%

$ 5,489
3,174
170
619
1,106

$10,558

$ 5,898
3,128
370
577
1,734

$11,707

$ 7,080
3,278
397
1,435
4,945

4.7%
3.8
4.7
5.0
5.6

4.6%

5.0%
4.0
5.1
4.5
6.9

5.0%

U.S. Bancorp

Note 13

Long-Term Debt

Long-term debt (debt with original maturities of more than one year) at December 31 consisted of the following:

(Dollars in Millions)

U.S. Bancorp (Parent Company)
Fixed-rate subordinated notes

2001

2000

7.625% due 2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
8.125% due 2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7.00% due 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.625% due 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7.25% due 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
8.00% due 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7.625% due 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.75% due 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.875% due 2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7.30% due 2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7.50% due 2026 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Senior contingent convertible debt 1.50% due 2021 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Medium-term notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capitalized lease obligations, mortgage indebtedness and other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Subtotal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Subsidiaries
Fixed-rate subordinated notes

6.00% due 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.375% due 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.375% due 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7.55% due 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
8.35% due 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7.30% due 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.875% due 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.625% due 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.50% due 2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.30% due 2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
5.70% due 2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7.125% due 2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7.80% due 2010 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.375% due 2011 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Federal Home Loan Bank advances ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Bank notesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Euro medium-term notes due 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capitalized lease obligations, mortgage indebtedness and other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

150
150
150
100
32
73
121
191
250
200
200
1,100
3,215
142

6,074

79
75
150
100
100
100
125
100
300
300
400
500
300
1,500
7,196
7,550
400
367

150
150
150
100
32
125
150
300
250
200
200
Ì
4,634
122

6,563

100
75
150
100
100
100
125
100
300
300
400
500
300
Ì
2,753
9,300
400
210

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$25,716

$21,876

In August 2001, the Company issued $1.1 billion of
senior contingent convertible debt due August 6, 2021. The
interest rate is 1.50% per annum. The debt would be
convertible into the Company's stock only if the Company's
stock price increases to the contractual strike price. The
convertible strike price decreases over the term of the
bond. The notes are callable in August 2003 and putable in
August 2002 and on speciÑed dates thereafter.

In July 2001, the Company's subsidiary U.S. Bank

National Association issued $1.5 billion of Ñxed-rate
subordinated notes due August 1, 2011. The interest rate is
6.375% per annum.

Medium-term notes (""MTNs'') outstanding at
December 31, 2001, mature from January 2002 through
December 2004. The MTNs bear Ñxed or Öoating interest
rates ranging from 2.01 percent to 7.50 percent. The

weighted-average interest rate of MTNs at December 31,
2001, was 3.85 percent.

Federal Home Loan Bank (""FHLB'') advances

outstanding at December 31, 2001, mature from
February 2002 through October 2026. The advances bear
Ñxed or Öoating interest rates ranging from 0.50 percent to
8.25 percent. The Company has an arrangement with the
FHLB whereby based on collateral available (residential
and commercial mortgages), the Company could have
borrowed an additional $10.6 billion at December 31, 2001.
The weighted-average interest rate of FHLB advances at
December 31, 2001, was 3.36 percent.

Bank notes outstanding at December 31, 2001, mature

from January 2002 through November 2005. The Bank
notes bear Ñxed or Öoating interest rates ranging from
1.79 percent to 6.30 percent. The weighted-average interest

U.S. Bancorp

rate of Bank notes at December 31, 2001, was 2.69 percent.
Euro medium-term notes outstanding at December 31,
2001, bear Öoating rate interest at three-month LIBOR plus
.15 percent. The interest rate at December 31, 2001, was
2.58 percent.

Maturities of long-term debt outstanding at December 31,
2001, were:

(Dollars in Millions)

Consolidated

2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 6,789
3,970
5,529
3,533
242
5,653

$25,716

Parent
Company

$1,465
1,545
916
336
3
1,809

$6,074

Note 14

Company-obligated Mandatorily
Redeemable Preferred Securities of
Subsidiary Trusts Holding Solely the
Junior Subordinated Debentures of
the Parent Company

The Company has issued $2.9 billion of company-

obligated mandatorily redeemable preferred securities of
subsidiary trusts holding solely the junior subordinated
debentures of the parent company (""Trust Preferred
Securities'') through nine separate issuances by nine wholly
owned subsidiary grantor trusts (""Trusts''). The Trust
Preferred Securities accrue and pay distributions periodically
at speciÑed rates as provided in the indentures. The Trusts
used the net proceeds from the oÅerings to purchase a like

amount of junior subordinated deferrable interest
debentures (the ""Debentures'') of the Company. The
Debentures are the sole assets of the Trusts and are
eliminated, along with the related income statement eÅects,
in the consolidated Ñnancial statements.

The Company's obligations under the Debentures and

related documents, taken together, constitute a full and
unconditional guarantee by the Company of the obligations
of the Trusts. The guarantee covers the distributions and
payments on liquidation or redemption of the Trust
Preferred Securities, but only to the extent of funds held by
the Trusts.

The Trust Preferred Securities are mandatorily

redeemable upon the maturity of the Debentures, or upon
earlier redemption as provided in the indentures. The
Company has the right to redeem retail Debentures in
whole or in part on or after speciÑc dates, at a redemption
price speciÑed in the indentures plus any accrued but
unpaid interest to the redemption date. The Company has
the right to redeem institutional Debentures in whole, (but
not in part), on or after speciÑc dates, at a redemption
price speciÑed in the indentures plus any accrued but
unpaid interest to the redemption date. The Trust Preferred
Securities are redeemable in whole or in part in 2003, 2006
and 2007 in the amounts of $350 million, $2,250 million
and $300 million, respectively.

The Trust Preferred Securities qualify as tier I capital

of the Company for regulatory capital purposes. The
Company used the proceeds from the sales of the
Debentures for general corporate purposes.

The following table is a summary of the Trust Preferred Securities as of December 31, 2001:

Issuance Trust (Dollars in Millions)

Retail

USB Capital V ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
USB Capital IV ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
USB Capital III ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
USB Capital II ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Institutional

Star Capital I ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mercantile Capital Trust IÏÏÏÏÏÏÏ
USB Capital I ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Firstar Capital Trust I ÏÏÏÏÏÏÏÏÏÏ
FBS Capital I ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Issuance
Date

12/2001
11/2001
05/2001
03/1998

06/1997
02/1997
12/1996
12/1996
11/1996

Trust
Preferred
Securities
Amount

$300
500
700
350

150
150
300
150
300

(a) The variable rate Trust Preferred Securities re-price quarterly.
(b) Earliest date of redemption.

Debentures
Amount

Rate
Type(a)

Rate at
12/31/01

Maturity
Date

Redemption
Date(b)

$309
515
722
361

155
155
309
155
309

Fixed
Fixed
Fixed
Fixed

Variable
Variable
Fixed
Fixed
Fixed

7.25%
7.35%
7.75%
7.20%

2.64%
3.08%
8.27%
8.32%
8.09%

12/2031
11/2031
05/2031
04/2028

06/2027
02/2027
12/2026
12/2026
11/2026

12/07/2006
11/01/2006
05/04/2006
04/01/2003

06/15/2007
02/01/2007
12/15/2006
12/15/2006
11/15/2006

U.S. Bancorp

Note 15

Shareholders' Equity

At December 31, 2001 and 2000, the Company had
authority to issue 4 billion and 2 billion shares of common
stock, respectively, and 10 million shares of preferred stock.
The Company had 1,951.7 million and 1,902.1 million
shares of common stock outstanding at December 31, 2001
and 2000, respectively. At December 31, 2001, the
Company had 279.1 million shares of common stock
reserved for future issuances. These shares are primarily
reserved for stock option plans, dividend reinvestment plans
and deferred compensation plans. In connection with the
merger of Firstar and USBM, the number of authorized
common shares for U.S. Bancorp was increased from
2 billion to 4 billion eÅective February 27, 2001.
Additionally, the par value of the Company's common
stock was reduced from $1.25 per share to $.01 per share.

The Company has a Preferred Share Purchase Rights

Plan intended to preserve the long-term value of the
Company by discouraging a hostile takeover of the
Company. Under the plan, each share of common stock
carries a right to purchase one one-thousandth of a share of
preferred stock. The rights become exercisable in certain
limited circumstances involving a potential business
combination transaction or an acquisition of shares of the
Company and are exercisable at a price of $100 per right,
subject to adjustment. Following certain other events, each
right entitles its holder to purchase for $100 an amount of
common stock of the Company, or, in certain
circumstances, securities of the acquirer, having a then-
current market value of twice the exercise price of the
right. The dilutive eÅect of the rights on the acquiring
company is intended to encourage it to negotiate with the
Company's Board of Directors prior to attempting a
takeover. If the Board of Directors believes a proposed
acquisition is in the best interests of the Company and its
shareholders, the Board may amend the plan or redeem the
rights for a nominal amount in order to permit the
acquisition to be completed without interference from the
plan. Until a right is exercised, the holder of a right has no
rights as a shareholder of the Company. The rights expire
on February 27, 2011.

The Company issued 57.2 million and 18.2 million

shares of common stock with an aggregate value of
$1.9 billion and $298 million in connection with purchase
acquisitions during 2001 and 2000, respectively.

On February 16, 2000, USBM's Board of Directors

authorized the repurchase of up to $2.5 billion of its
common stock over a two-year period ending March 31,
2002. This USBM repurchase program replaced a program
that was scheduled to expire on March 31, 2000. On
April 11, 2000, Firstar's Board of Directors approved a
common stock repurchase program of 100 million shares.
The stock repurchase programs of Firstar and USBM were
rescinded on October 4, 2000, and January 17, 2001,
respectively, in connection with the planned merger of the
formerly separate companies. On July 17, 2001, the
Company's Board of Directors authorized the repurchase of
up to 56.4 million shares of the Company's common stock
to replace shares issued in connection with the July 24,
2001 acquisition of NOVA Corporation. The stock
repurchase authorization will expire on July 23, 2003.
Under this program the Company has repurchased 19.7
million shares for $467.9 million in 2001. The Company
had forward contracts to purchase 26.7 million shares
within this authorization. These contracts were settled in
January of 2002. On December 18, 2001, the Board of
Directors approved an authorization to repurchase an
additional 100 million shares of outstanding common stock
over the following 24 months.

The following table summarizes the Company's common
stock repurchased in each of the last three years:

(Dollars and Shares in Millions)

Value

2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1999 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

19.7
58.6
44.6

$ 467.9
1,182.2
1,187.9

USBM oÅered employees and directors an Employee
Stock Purchase Plan (""ESPP'') that permitted all eligible
employees with at least one year of service and directors to
purchase common stock. In connection with the merger
with Firstar, the ESPP was terminated eÅective October 13,
2000.

USBM's Dividend Reinvestment Plan providing for
automatic reinvestment of dividends and optional cash
purchases was suspended on November 9, 2000, following
the announcement of the deÑnitive agreement to merge
with Firstar.

U.S. Bancorp

Shareholders' equity is aÅected by transactions and valuations of asset and liability positions that require adjustments to
Accumulated Other Comprehensive Income. The reconciliation of transactions aÅecting Accumulated Other Comprehensive
Income included in shareholders' equity for the years ended December 31, is as follows:

(Dollars in Millions)

2001

Pre-tax

Tax-eÅect

Net-of-tax

Unrealized gain on securities available-for-saleÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrealized gain on derivatives ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Realized gain on derivatives ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
ReclassiÑcation adjustment for gains realized in net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 194.5
106.0
42.4
(333.1)
(4.0)

$ (77.6)
(40.3)
(16.1)
126.6
1.5

$ 116.9
65.7
26.3
(206.5)
(2.5)

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

5.8

(5.9)

(.1)

2000

Unrealized gain on securities available-for-saleÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
ReclassiÑcation adjustment for gains realized in net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 436.0

$(157.8)

$ 278.2

(41.6)
(.5)

15.8
.2

(25.8)
(.3)

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 393.9

$(141.8)

$ 252.1

1999

Unrealized loss on securities available-for-sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
ReclassiÑcation adjustment for losses realized in net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$(743.9)
163.9

$ 268.2

(57.7)

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$(580.0)

$ 210.5

$(475.7)
106.2

$(369.5)

Note 16

Earnings Per Share

The components of earnings per share were:

(Dollars and Shares in Millions, Except Per Share Data)

2001

2000

1999

Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,706.5

$2,875.6

$2,381.8

Weighted-average common shares outstanding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net eÅect of the assumed purchase of stock based on the treasury stock

1,927.9

1,906.0

1,907.8

method for options and stock plansÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

11.6

12.5

22.2

Dilutive common shares outstanding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,939.5

1,918.5

1,930.0

Earnings per share

BasicÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$
$

.89
.88

$
$

1.51
1.50

$
$

1.25
1.23

Note 17

Employee BeneÑts

Retirement Plans Pension beneÑts are provided to
substantially all employees based on years of service and
employees' compensation while employed with the
Company. Employees are fully vested after Ñve years of
service. The Company's funding policy is to contribute
amounts to its plans suÇcient to meet the minimum
funding requirements of the Employee Retirement Income
Security Act of 1974, plus such additional amounts as the
Company determines to be appropriate. The actuarial cost
method used to compute the pension liabilities and expense
is the projected unit credit method. Prior to their
acquisition dates, employees of certain acquired companies
were covered by separate, noncontributory pension plans
that provided beneÑts based on years of service and
compensation. Generally, the Company merges plans of
acquired companies into its existing pension plans when it
becomes practicable.

As a result of the Firstar and USBM merger, the
Company maintained two diÅerent qualiÑed pension plans,
with three diÅerent pension beneÑt structures during 2001:
the former USBM's cash balance pension beneÑt structure,
a Ñnal average pay beneÑt structure for the former Firstar
organization, and a cash balance pension beneÑt structure
related to the Mercantile acquisition. The two pension
plans were merged as of January 1, 2002, under a new Ñnal
average pay beneÑt structure; however, the beneÑt structure
of the new plan does not become eÅective for the
Mercantile acquisition until January 1, 2003. Under the new
plan's beneÑt structure, a participant's future retirement
beneÑts are based on a participant's highest Ñve-year average
annual compensation during his or her last 10 years before
retirement or termination from the Company. Generally,
under the two previous cash balance pension beneÑt
structures the participants' earned retirement beneÑts were
based on their average compensation over their career.
Retirement beneÑts under the former Firstar beneÑt

U.S. Bancorp

structure were earned based on Ñnal average pay and years
of service, similar to the new plan. Plan assets primarily
consist of various equity mutual funds, listed stocks and
other miscellaneous assets.

The Company also maintains several unfunded, non-
qualiÑed, supplemental executive retirement programs that
provide additional defined pension benefits for senior
managers and executive employees. Because all the non-
qualified plans are unfunded, the aggregate accumulated
benefit obligations exceed the assets. A supplemental executive
retirement plan of USBM was frozen for substantially all
participants as of September 30, 2001, but with service credit
running through December 31, 2001. The assumptions used in
computing the present value of the accumulated benefit
obligation, the projected benefit obligation and net pension
expense are substantially consistent with those assumptions
used for the funded qualified plans. The Company anticipates
recognizing curtailment gains of approximately $11.7 million
in early 2002 in connection with changes to non-qualified
pension plans.

Post-Retirement Medical Plans In addition to providing
pension beneÑts, the Company provides health care and
death beneÑts to certain retired employees through several
retiree medical programs. As a result of the merger of
USBM with Firstar, there were three major retiree medical
programs in place during 2001 with various terms and
subsidy schedules. EÅective January 1, 2002, the Company
adopted one retiree medical program for all future retirees.
For certain eligible employees, the provisions of the USBM
retiree medical plan and the Mercantile retiree medical plan
will remain in place until December 31, 2002. Generally, all
employees may become eligible for retiree health care
beneÑts by meeting deÑned age and service requirements.
The Company may also subsidize the cost of coverage for
employees meeting certain age and service requirements.
The medical plan contains other cost-sharing features such
as deductibles and coinsurance. The estimated cost of these
retiree beneÑt payments is accrued during the employees'
active service.

Information presented in the four tables below reÖects a measurement date of September 30.

The following table sets forth the components of net periodic beneÑt cost for the retirement plans:

(Dollars in Millions)

2001

2000

1999

2001

2000

1999

Pension Plans

Post-Retirement Medical Plans

Components of net periodic beneÑt cost

Service cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expected return on plan assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net amortization and deferral ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Recognized actuarial loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net periodic beneÑt cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Curtailment and settlement (gain) loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net periodic beneÑt cost after curtailment and

61.0
118.7
(232.6)
(10.7)
(1.2)

(64.8)
Ì

65.4
117.3
(201.6)
(13.2)

(31.4)
(17.0)

70.1
107.1
(177.5)

1.3
1.9

2.9
(6.2)

$ 2.1
17.9
(1.0)
.2
(.1)

19.1
Ì

$ 2.0
16.3

(.6)
.2
(1.4)

16.5
10.3

$ 3.8
16.5

(.5)
2.0
.2

22.0
Ì

settlement (gain) loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ (64.8)

(48.4)

(3.3)

$19.1

$26.8

$22.0

The following table sets forth the weighted average plan assumptions and other data:

(Dollars in Millions)

Pension plan actuarial computations

Discount rate in determining beneÑt obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expected long-term return on plan assets(b) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rate of increase in future compensation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Post-retirement medical plan actuarial computations

Discount rate in determining beneÑt obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expected long-term return on plan assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Health care cost trend rate(a)

Prior to age 65 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
After age 65ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

EÅect of one percent increase in health care cost trend rate

2001

7.5%

11.0
3.5

7.5%
5.0

10.5%
13.0

USBM

2000

1999

2001

7.8%
9.5
5.6

7.8%
5.0

7.7%
7.7

7.5%
9.5
5.6

7.5%
5.0

7.0%
5.5

7.5%

12.2
3.5

7.5%
*

10.5%
13.0

Service and interest costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated post-retirement beneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1.2
13.1

1.0
13.1

1.3
12.4

$ .4
6.0

EÅect of one percent decrease in health care cost trend rate

Service and interest costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated post-retirement beneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ (1.0)
(13.6)

(.9)
(11.6)

$ (1.0)
(10.9)

$ (.4)
(5.7)

Firstar

2000

8.0%

12.2
4.0

8.0%
*

7.5%
7.5

$ .4
5.2

$ (.4)
(4.6)

1999

6.6%

11.4
4.1

6.8%
*

7.7%
7.7

$ .4
4.0

$ (.4)
(3.6)

* The Firstar plan had no assets as of December 31, 2001, 2000 and 1999.

(a) The pre-65 and post-65 rates are assumed to decrease gradually to 5.5% and 6.0% respectively by 2011 and remain at these levels thereafter.
(b) In connection with the merger of Firstar and USBM, the asset management practices and investment strategies of the plan were conformed. At December 31, 2001, the investment

asset allocation was weighted toward equities and diversiÑed by industry and companies with varying market capitalization levels.

U.S. Bancorp

The following table summarizes beneÑt obligation and plan asset activity for the retirement plans:

(Dollars in Millions)

Change in beneÑt obligation

Pension Plans

Post-Retirement Medical Plans

2001

2000

2001

2000

BeneÑt obligation at beginning of measurement period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Service cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Plan participants' contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Plan amendments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Actuarial loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
BeneÑt paymentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Curtailments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Settlements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,595.4
61.0
118.7
Ì
4.0
47.7
(170.4)

Ì
Ì

$1,580.3
65.4
117.3
Ì
Ì
.1

(111.7)
(4.4)
(51.6)

$ 244.1
2.1
17.9
10.3
(2.4)
24.9
(31.8)
Ì
Ì

BeneÑt obligation at end of measurement periodÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,656.4

$1,595.4

$ 265.1

Change in fair value of plan assets

Fair value at beginning of measurement period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Actual return on plan assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Employer contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Plan participants' contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Acquisitions/divestitures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Settlements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
BeneÑt paymentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$2,283.2

(531.8)
30.1
Ì
Ì
Ì

(170.4)

$1,985.3
443.8
16.3
Ì
1.1
(51.6)
(111.7)

21.8
1.8
33.3
10.3
Ì
Ì
(31.8)

Fair value at end of measurement period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,611.1

$2,283.2

35.4

$ 225.0
2.0
16.3
6.8
Ì
19.8
(25.8)
Ì
Ì

$ 244.1

$ 13.4
.9
26.5
6.8
Ì
Ì
(25.8)

$ 21.8

Funded status

Funded status at end of measurement periodÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrecognized transition (asset) obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrecognized prior service cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrecognized net (gain) loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fourth quarter contribution ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ (45.3)

$ 687.8

$(229.7)

$(222.3)

Ì
(74.8)
473.2
6.7

(1.8)
(87.6)
(338.6)

3.7

8.1
(9.5)
16.6
5.7

9.0
(7.8)
(7.6)
15.9

Net amount recognized ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 359.8

$ 263.5

$(208.8)

$(212.8)

Components of statement of financial position

Prepaid beneÑt cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accrued beneÑt liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 531.7

(171.8)

$ 433.1

(169.6)

$ Ì

(208.8)

Net amount recognized ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 359.8

$ 263.5

$(208.8)

$ Ì

(212.8)

$(212.8)

The following table provides information for pension plans
with beneÑt obligations in excess of plan assets:

(Dollars in Millions)

BeneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated beneÑt obligation
Fair value of plan assets ÏÏÏÏÏÏ

2001

$227.5
220.6
Ì

2000

$216.5
193.9
Ì

matching contribution. Although the matching contribution
is initially invested in the Company's common stock,
eÅective in 2002 an employee will be allowed to reinvest
the matching contributions among various investment
alternatives. Total expense was $53.7 million, $53.6 million
and $57.3 million in 2001, 2000 and 1999, respectively.

Employee Investment Plan The Company has deÑned
contribution retirement savings plans which allow qualiÑed
employees, at their option, to make contributions up to
certain percentages of pre-tax base salary through salary
deductions under Section 401(k) of the Internal Revenue
Code. Employee contributions are invested, at the
employees' direction, among a variety of investment
alternatives. Employee contributions are 100 percent
matched by the Company, up to the Ñrst four percent of an
employee's compensation. The Company's matching
contribution vests immediately; however, a participant must
be employed on December 31st to receive that year's

Note 18

Stock Options and Compensation
Plans

As part of its employee and director compensation
programs, the Company may grant certain stock awards
under the provisions of the existing stock option and
compensation plans. The Company has stock options
outstanding under various plans at December 31, 2001,
including plans assumed in acquisitions. The plans provide
for grants of options to purchase shares of common stock
generally at the stock's fair market value at the date of

U.S. Bancorp

grant. In addition, the plans provide for grants of shares of
common stock which are subject to restriction on transfer
and to forfeiture if certain vesting requirements are not met.

With respect to stock option and stock compensation

plans, the Company has elected to follow APB 25 in
accounting for its employee stock incentive and purchase
plans. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price
of the underlying stock on the date of grant, no
compensation expense is recognized. On the date exercised,
if new shares are issued, the option proceeds equal to the
par value of the shares are credited to common stock and
additional proceeds are credited to capital surplus. If
treasury shares are issued, the option proceeds equal to the
average treasury share price are credited to treasury stock
and additional proceeds are credited to capital surplus.

Option grants are generally exercisable up to ten years

from the date of grant and vest over three to Ñve years.

Restricted shares vest over three to seven years.
Compensation expense for restricted stock is based on the
market price of the Company stock at the time of the grant
and amortized on a straight-line basis over the vesting
period. Compensation expense related to the restricted
stock was $71.9 million, $43.4 million and $69.5 million in
2001, 2000 and 1999, respectively.

Stock incentive plans of acquired companies are
generally terminated at the merger closing dates. Option
holders under such plans receive the Company's common
stock, or options to buy the Company's stock, based on the
conversion terms of the various merger agreements. The
historical option information presented below has been
restated to reÖect the options originally granted under
acquired companies' plans.

At December 31, 2001, there were 64.4 million shares
(subject to adjustment for forfeitures) available for grant
under various plans.

The following is a summary of stock options outstanding and exercised under various stock option plans of the Company:

2001

2000

1999

Stock option plans

Number outstanding at beginning

of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Granted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Assumed/converted ÏÏÏÏÏÏÏÏÏÏ
Exercised ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cancelled ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Number outstanding at end of year ÏÏ
Exercisable at end of year ÏÏÏÏÏÏÏÏ

Restricted share plans

Number outstanding at beginning

of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Granted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Assumed/converted ÏÏÏÏÏÏÏÏÏÏ
Cancelled/vested ÏÏÏÏÏÏÏÏÏÏÏÏÏ

Stock Options

153,396,226
65,144,310
8,669,285
(12,775,067)
(12,824,489)

201,610,265
117,534,343

6,377,137
1,021,887
298,988
(5,520,424)

Number outstanding at end of year ÏÏ

2,177,588

Weighted-average fair value of

shares grantedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Weighted-
Average
Exercise
Price

$17.97
27.08
16.58
13.03
25.63

$22.74
$18.00

Weighted-
Average
Exercise
Price

$22.80
21.25
16.40
13.44
23.29

$22.58
$22.36

Stock Options

153,163,030
22,633,170
447,341

(10,017,357)
(12,829,958)

153,396,226
68,870,745

4,212,954
4,110,440
Ì

(1,946,257)

6,377,137

Weighted-
Average
Exercise
Price

$22.74
19.64
6.85
11.02
19.91

$22.80
$19.78

Stock Options

107,405,102
75,922,950
1,210,738
(22,332,730)
(9,043,030)

153,163,030
70,527,758

6,072,217
1,379,808
Ì

(3,239,071)

4,212,954

$ 6.76

$ 6.32

$ 7.20

U.S. Bancorp

Additional information regarding options outstanding as of December 31, 2001, is as follows:

Range of Exercise Prices

$1.44 Ì $10.00 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$10.01 Ì $15.00 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$15.01 Ì $20.00 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$20.01 Ì $25.00 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$25.01 Ì $30.00 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$30.01 Ì $35.00 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$35.01 Ì $37.20 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Options Outstanding

Exercisable Options

Weighted-
Average
Remaining
Contractual
Life (Years)

2.7
5.3
8.7
8.2
7.0
6.4
6.5

7.6

7,679,415
8,966,154
51,659,341
65,876,786
60,157,207
6,386,174
885,188

201,610,265

Weighted-
Average
Exercise
Price

$ 5.99
11.78
18.63
22.84
28.16
32.51
35.78

7,649,800
7,366,306
16,774,997
23,274,436
55,353,547
6,230,069
885,188

$22.58

117,534,343

Weighted-
Average
Exercise
Price

$ 5.98
11.76
17.59
22.90
28.25
32.51
35.78

$22.36

Pro forma information regarding net income and earnings per share is required under Statement of Financial Accounting
Standard No. 123 (""SFAS 123''), ""Accounting and Disclosure of Stock-Based Compensation'' and has been determined as if
the Company accounted for its employee stock option plans under the fair value method of SFAS 123. The fair value of
options was estimated at the grant date using a Black-Scholes option pricing model. Option valuation models require use of
highly subjective assumptions. Because the Company's employee stock options have characteristics signiÑcantly diÅerent from
those of traded options, and because changes in the subjective input assumptions can materially aÅect the fair value estimate,
the existing models do not necessarily provide a reliable single measure of the fair value of employee stock options.

The pro forma disclosures include options granted in 2001, 2000, 1999 and 1998 and are not likely to be representative

of the pro forma disclosures for future years. The estimated fair value of the options is amortized to expense over the
options' respective vesting periods.

(Dollars in Millions, Except Per Share Data)

Pro forma net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pro forma earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Earnings per shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Diluted earnings per shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Year Ended December 31

2001(a)

2000

1999

$1,478.9

$2,752.1

$2,240.5

.77
.76

1.44
1.43

1.17
1.16

(a) Pro forma earnings per share for 2001 was impacted by changes in control provisions that accelerated the vesting of stock options granted to USBM employees.

Weighted-average assumptions in option valuation

2001

2000

1999

2000

1999

Risk-free interest rates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividend yieldsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Stock volatility factor ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expected life of options (in years) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

4.6%
3.0%
.42
4.5

5.4%
2.5%
.37
2.5-5.5

5.6%
2.0%
.41
2.5-5.5

6.1%
3.0%
.37
4.7

5.4%
3.5%
.27
6.1

U.S. Bancorp

Firstar

USBM

U.S. Bancorp

Note 19

Income Taxes

The components of income tax expense were:

(Dollars in Millions)

Federal

2001

2000

1999

Current ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 979.9

(164.5)

Federal income tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

815.4

State

State income tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

131.8
(19.5)

112.3

$ 996.1
324.5

1,320.6

159.0
32.6

191.6

$1,036.0
219.5

1,255.5

103.3
33.4

136.7

Total income tax provision ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 927.7

$1,512.2

$1,392.2

The reconciliation between income tax expense and the amount computed by applying the statutory federal income tax rate
was as follows:

(Dollars in Millions)

Tax at statutory rate (35%) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
State income tax, at statutory rates, net of federal tax beneÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Tax eÅect of:

Tax-exempt interest, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization of nondeductible goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Tax creditsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Nondeductible merger charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Sale of preferred minority interestÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other items ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

$ 922.0
73.0

2000

1999

$1,535.8
124.5

$1,320.9
88.9

(38.9)
88.1
(69.4)
52.5
Ì
(99.6)

(56.0)
91.6
(62.7)
4.9
(50.0)
(75.9)

(60.3)
73.1
(41.7)
56.4
Ì
(45.1)

Applicable income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 927.7

$1,512.2

$1,392.2

Deferred income tax assets and liabilities reÖect the tax eÅect of temporary diÅerences between the carrying amounts of

assets and liabilities for Ñnancial reporting purposes and the amounts used for the same items for income tax reporting
purposes.

SigniÑcant components of the Company's deferred tax assets and liabilities as of December 31 were as follows:

(Dollars in Millions)

Deferred tax assets

2001

2000

Allowance for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pension and post-retirement beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Real estate and other asset basis diÅerences ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
State and federal operating loss carryforwards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Federal AMT credits and capital losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accrued severance, pension and retirement beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Charitable contributionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other deferred tax assets, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 1,043.9
59.5
32.6
24.4
22.0
2.2
Ì
234.0

Gross deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,418.6

Deferred tax liabilities

Leasing activitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accelerated depreciationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities available-for-sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred fees ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other investment basis diÅerences ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other deferred tax liabilities, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Gross deferred tax liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Valuation allowance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

(1,642.5)
(117.7)
(59.7)
(49.2)
(32.5)
(73.6)

(1,975.2)
(16.6)

637.0
53.5
31.9
25.0
22.0
30.6
.9
196.0

996.9

(1,218.1)
(92.7)
(52.2)
35.0
(41.1)
(124.0)

(1,493.1)
(16.6)

Net deferred tax liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ (573.2)

$ (512.8)

U.S. Bancorp

At December 31, 2001, for income tax purposes, the
Company had federal net operating loss carryforwards of
$1.2 million available, which expire in years 2002 through
2009. A valuation allowance has been established to oÅset
deferred tax assets related to state net operating loss
carryforwards totaling approximately $437 million, which
expire at various times within the next 15 years.

Certain events covered by Internal Revenue Code
section 593(e), which was not repealed, will trigger a
recapture of base year reserves of acquired thrift
institutions. The base year reserves of acquired thrift
institutions would be recaptured if an entity ceases to
qualify as a bank for federal income tax purposes. The base
year reserves of thrift institutions also remain subject to
income tax penalty provisions that, in general, require
recapture upon certain stock redemptions of, and excess
distributions to, stockholders. At December 31, 2001,
retained earnings included approximately $101.8 million of
base year reserves for which no deferred federal income tax
liability has been recognized.

Note 20

Derivative and Other OÅ-Balance
Sheet Instruments

In the normal course of business, the Company uses various
derivative and other oÅ-balance sheet instruments to
manage its interest rate risk and market risks and
accommodate the business requirements of its customers.
These instruments carry varying degrees of credit, interest
rate, and market or liquidity risks.

DERIVATIVES

The Company requires the recognition of derivative
instruments as either assets or liabilities and the
measurement of those instruments at fair value. Subsequent
changes in the derivatives' fair values are recognized
currently in earnings unless speciÑc hedge accounting
criteria are met.

Fair Value Hedges The Company's interest rate swaps
designated as fair value hedges of underlying Ñxed-rate debt
and deposit obligations have a fair value of $276.5 million
and fair value hedges of Trust Preferred Securities have a
fair value of $(43.5) million at December 31, 2001. Each
period the changes in fair value of both the hedge
instruments and the underlying debt obligations are
recorded as gains or losses in trading account proÑts and
commissions. All fair value hedges are intended to reduce
the interest rate risk associated with the underlying hedged
item. The fair value hedge transactions were considered
highly eÅective for the year ended December 31, 2001, and
the change in fair value of the swaps attributed to hedge
ineÅectiveness was not material.

The Company enters into forward commitments to sell

groups of residential mortgage loans that it originates or
purchases as part of its mortgage banking activities. The
Company commits to sell the loans at speciÑed prices in a
future period, typically within 90 days. The Company is
exposed to interest rate risk during the period between
issuing a loan commitment and the sale of the loan into the
secondary market. SpeciÑc forward commitments are
designated as a hedge against changes in the fair value of
Ñxed-rate mortgage loans held for sale attributed to changes
in interest rates. The fair value of these forward
commitments was $52.5 million at December 31, 2001. The
change in fair value of the forward commitments attributed
to hedge ineÅectiveness recorded in noninterest income was
$17.9 million for the year ended December 31, 2001.

Cash Flow Hedges The Company has interest rate swaps
designated as cash Öow hedges linked to the cash Öows of
variable rate LIBOR loans and Öoating rate debt. The swaps
have a fair value of $106 million at December 31, 2001.
The gain will be reclassiÑed from other comprehensive
income into earnings during the same period the forecasted
transactions occur. The estimated amount of the gain to be
reclassiÑed into earnings within the next 12 months is
$64.4 million, which includes cash Öow hedges terminated
early where the forecasted transaction is still probable. The
Company has determined that the occurrence of the hedged
forecasted transactions remains probable. The change in fair
value of the swaps attributed to hedge ineÅectiveness was
not material for the year ended December 31, 2001.

Other Derivative Activity The Company acts as an
intermediary for interest rate swaps, caps, Öoors and foreign
exchange contracts on behalf of its customers. The
Company minimizes its market and liquidity risks by taking
oÅsetting positions. The Company manages its credit risk,
or potential risk of loss from default by counterparties,
through credit limit approval and monitoring procedures.
Market value changes on intermediated swaps and other
derivatives are recognized in income in the period of
change. Gains or losses on intermediated transactions were
not signiÑcant for the year ended December 31, 2001.
In addition, the Company enters into interest rate
swaps and other derivative contracts to protect against
interest rate risk and credit risk that do not meet the
criteria to receive hedge accounting treatment. These
derivatives are recorded at fair value on the balance sheet as
trading account assets or liabilities and any changes in fair
value are recorded in trading proÑts/losses and
commissions.

The Company also enters into forward commitments to

sell groups of residential mortgage loans to protect against
changes in the fair value of Ñxed-rate mortgage loan
commitments not yet funded. These forward commitment

U.S. Bancorp

transactions and unfunded loan commitments are recorded
on the balance sheet at fair value and changes in fair value
are recorded in income. The fair value of the forward
commitments and the loan commitments was $19.2 million
and $(20.3) million, respectively, at December 31, 2001.
Futures and forward contracts are agreements for the

delayed delivery of securities or cash settlement money
market instruments. The Company enters into futures
contracts to reduce market risk on its Ñxed income
inventory positions. The Company manages its credit risk
on forward contracts, which arises from the potential
nonperformance by counterparties, through credit approval
and limit procedures.

OTHER OFF-BALANCE SHEET INSTRUMENTS

Commitments to Extend Credit Commitments to extend
credit are legally binding and generally have Ñxed expiration
dates or other termination clauses. The contractual amount
represents the Company's exposure to credit loss in the
event of default by the borrower. The Company manages
this credit risk by using the same credit policies it applies to
loans. Collateral is obtained to secure commitments based
on management's credit assessment of the borrower. The
collateral may include marketable securities, receivables,
inventory, equipment and real estate. Since the Company

expects many of the commitments to expire without being
drawn, total commitment amounts do not necessarily
represent the Company's future liquidity requirements. In
addition, the commitments include consumer credit lines
that are cancelable upon notiÑcation to the consumer.

Letters of Credit Standby letters of credit are conditional
commitments the Company issues to guarantee the
performance of a customer to a third party. The guarantees
frequently support public and private borrowing
arrangements, including commercial paper issuances, bond
Ñnancings and other similar transactions. The Company
issues commercial letters of credit on behalf of customers
to ensure payment or collection in connection with trade
transactions. In the event of a customer's nonperformance,
the Company's credit loss exposure is the same as in any
extension of credit, up to the letter's contractual amount.
Management assesses the borrower's credit to determine the
necessary collateral, which may include marketable
securities, real estate, accounts receivable and inventory.
Since the conditions requiring the Company to fund letters
of credit may not occur, the Company expects its liquidity
requirements to be less than the total outstanding
commitments.

Notional amounts of commitments to extend credit and letters of credit were as follows:

December 31, 2001 (Dollars in Millions)

Commitments to extend credit

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate and purchasing cards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Consumer credit cards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other consumer ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Letters of credit

StandbyÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Expiring
Less Than
One Year

Expiring
After
One Year

$ 14,969
20,083
19,059
6,254

3,691
406

$32,687
2,688
Ì
5,836

4,054
22

Total

$47,656
22,771
19,059
12,090

7,745
428

Commitments from Securities Lending The Company
participates in securities lending activities by acting as the
customer's agent involving the loan or sale of securities.
The Company indemniÑes customers for the diÅerence
between the market value of the securities lent and the
market value of the collateral received. Cash collateralizes
these transactions.

For further information on derivatives and other oÅ-balance
sheet instruments, see Table 17 included in Management's
Discussion and Analysis which is incorporated by reference
into these Notes to Consolidated Financial Statements.

Note 21

Fair Values of Financial Instruments

Due to the nature of its business and its customers' needs,
the Company oÅers a large number of Ñnancial instruments,
most of which are not actively traded. When market quotes

are unavailable, valuation techniques including discounted
cash Öow calculations and pricing models or services are
used. The Company also uses various aggregation methods
and assumptions, such as the discount rate and cash Öow
timing and amounts. As a result, the fair value estimates can
neither be substantiated by independent market
comparisons, nor realized by the immediate sale or
settlement of the Ñnancial instrument. Also, the estimates
reÖect a point in time and could change signiÑcantly based
on changes in economic factors, such as interest rates.
Furthermore, the disclosure of certain Ñnancial and
nonÑnancial assets and liabilities are not required. Finally,
the fair value disclosure is not intended to estimate a
market value of the Company as a whole. A summary of
the Company's valuation techniques and assumptions
follows.

U.S. Bancorp

Cash and Cash Equivalents The carrying value of cash,
amounts due from banks, federal funds sold and securities
purchased under resale agreements was assumed to
approximate fair value.

Securities Generally, trading account securities and
investment securities were valued using available market
quotes. In some instances, for securities that are not widely
traded, market quotes for comparable securities were used.

Loans The loan portfolio consists of both Öoating and
Ñxed-rate loans, the fair value of which was estimated using
discounted cash Öow analyses and other valuation
techniques. To calculate discounted cash Öows, the loans
were aggregated into pools of similar types and expected
repayment terms. The expected cash Öows of loans
considered historical prepayment experiences and estimated
credit losses for nonperforming loans and were discounted
using current rates oÅered to borrowers of similar credit
characteristics.

Deposit Liabilities The fair value of demand deposits,
savings accounts and certain money market deposits is equal
to the amount payable on demand at year-end. The fair
value of Ñxed-rate certiÑcates of deposit was estimated by
discounting the contractural cash Öow using the discount
rates implied by the high-grade corporate bond yield curve.

Short-term Borrowings Federal funds purchased, securities
sold under agreements to repurchase and other short-term
funds borrowed are at Öoating rates or have short-term

maturities. Their carrying value is assumed to approximate
their fair value.

Long-term Debt and Company-obligated Mandatorily

Redeemable Preferred Securities of Subsidiary Trusts

Holding Solely the Junior Subordinated Debentures of

the Parent Company Estimated fair value for medium-
term notes, Euro medium-term notes, bank notes, Federal
Home Loan Bank advances, capital lease obligations and
mortgage note obligations was determined using a
discounted cash Öow analysis based on current market rates
of similar maturity debt securities to discounted cash Öows.
Other long-term debt instruments and company-obligated
mandatorily redeemable preferred securities of subsidiary
trusts holding solely the junior subordinated debentures of
the parent company were valued using available market
quotes.

Interest Rate Swaps and Options The interest rate swap
cash Öows were estimated using a third party pricing model
and discounted based on appropriate LIBOR, Eurodollar
futures and swap yield curves.

Loan Commitments, Letters of Credit and Guarantees

The Company's commitments have Öoating rates and do
not expose the Company to interest rate risk, with the
exception of mortgage commitments. No premium or
discount was ascribed to the loan commitments because
virtually all funding would be at current market rates.

U.S. Bancorp

The estimated fair values of the Company's Ñnancial instruments at December 31 are shown in the table below.

(Dollars in Millions)

Financial Assets

2001

2000

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

Cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading account securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans held for sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

9,745
982
26,608
2,820
111,948

9,745
982
26,615
2,820
112,236

9,132
753
17,642
764
120,578

$ 9,132
753
17,647
764
121,139

Total Ñnancial assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

152,103

$152,398

148,869

$149,435

NonÑnancial assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

19,287

Total assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$171,390

Financial Liabilities

Deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Company-obligated mandatorily redeemable preferred securities of

subsidiary trusts holding solely the junior subordinated debentures of
the parent company ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

16,052

$164,921

$109,535
11,833
21,876

$109,593
11,833
22,006

$105,219
14,670
25,716

$105,561
14,670
25,801

2,826

2,915

1,400

1,351

Total Ñnancial liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

148,431

$148,947

144,644

$144,783

NonÑnancial liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Shareholders' equityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

6,498
16,461

Total liabilities and shareholders' equityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$171,390

5,109
15,168

$164,921

Derivative Positions

Asset and liability management positions

Interest rate swaps ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Forward commitments to sell residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Customer intermediated positions

Interest rate contracts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign exchange contracts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

339
72

10
2

339
72

10
2

Ì
(14)

107
(14)

6
4

Note 22

Commitments and Contingent Liabilities

Rental expense for operating leases amounted to $165.2 million in 2001, $219.3 million in 2000 and $193.8 million in 1999.
Future minimum payments, net of sublease rentals, under capitalized leases and noncancelable operating leases with initial or
remaining terms of one year or more, consisted of the following at December 31, 2001:

(Dollars in Millions)

2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total minimum lease payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Less amount representing interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Present value of net minimum lease paymentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Operating
Leases

$ 191.5
164.4
137.4
113.6
95.3
508.4

$1,201.6

Capitalized
Leases

$12.6
9.0
8.1
6.9
6.3
51.2

94.1

38.4

$55.7

Various legal proceedings are currently pending against the Company. Due to their complex nature, it may be years
before some matters are resolved. In the opinion of management, the aggregate liability, if any, will not have a material
adverse eÅect on the Company's Ñnancial position, liquidity or results of operations.

U.S. Bancorp

Note 23

U.S. Bancorp (Parent Company)

Condensed Balance Sheet

December 31 (Dollars in Millions)

Assets

Deposits with subsidiary banks, principally interest-bearingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Available-for-sale securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investments in

Advances to

Bank aÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Nonbank aÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

2000

$ 3,184
189

$ 1,714
325

17,907
1,291

1,214
928
2,258

15,019
1,059

1,971
1,958
2,179

Total assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$26,971

$24,225

Liabilities and Shareholders' Equity

Short-term funds borrowed ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Advances from subsidiariesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Junior subordinated debentures issued to subsidiary trusts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Shareholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

452
69
6,074
2,990
925
16,461

Total liabilities and shareholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$26,971

224
97
6,563
1,443
730
15,168

$24,225

Condensed Statement of Income

Year Ended December 31 (Dollars in Millions)

Income

2001

2000

1999

Dividends from subsidiaries (including $1,300.1, $3,010.5 and $1,661.0 from bank

subsidiaries) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest from subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Service and management fees from subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,310.2
272.8
221.8
21.0

Total income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,825.8

Expenses

Interest on short-term funds borrowed ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest on long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest on junior subordinated debentures issued to subsidiary trusts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Income before income taxes and equity in undistributed income of subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income tax creditÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Income of parent company ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Equity (deÑciency) in undistributed income of subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

18.5
318.5
141.7
49.5
322.5

850.7

975.1
(102.4)

1,077.5
629.0

$3,027.8
234.8
246.0
217.0

3,725.6

19.3
441.7
111.3
21.3
225.2

818.8

2,906.8

(34.0)

2,940.8

(65.2)

$1,704.3
177.2
229.1
202.0

2,312.6

26.8
296.4
110.3
103.8
307.7

845.0

1,467.6

(36.9)

1,504.5
877.3

Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,706.5

$2,875.6

$2,381.8

U.S. Bancorp

Condensed Statement of Cash Flows

Year Ended December 31 (Dollars in Millions)

Operating Activities

2001

2000

1999

Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Adjustments to reconcile net income to net cash provided by operating activities

$1,706.5

$2,875.6

$2,381.8

(Equity) deÑciency in undistributed income of subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(Gain) loss on sale of securities, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Depreciation and amortization of premises and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

(629.0)
(8.2)
8.7
71.2

65.2
4.1
51.7
(391.1)

(877.3)
(7.0)
76.2
(3.2)

Net cash provided by operating activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,149.2

2,605.5

1,570.5

Investing Activities

Securities

Sales and maturitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Purchases ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investments in subsidiariesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Equity distributions from subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net decrease (increase) in advances to aÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

254.9
(73.5)
(1,941.0)
600.0
1,759.6
34.7

Net cash provided by (used in) investing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

634.7

Financing Activities

Net (decrease) increase in short-term advances from subsidiariesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net increase (decrease )in short-term funds borrowed ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net (decrease) increase in long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from issuance of junior subordinated debentures to subsidiary trusts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from issuance of common stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Repurchase of common stockÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash dividends paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

(10.6)
228.9
(512.8)
1,546.4
136.4
(467.9)
(1,235.1)

92.2
(59.4)
(4.6)
Ì

(829.0)
(113.7)

(914.5)

(15.6)
53.3
1,183.7
Ì
210.0
(1,182.2)
(1,271.3)

128.9
(334.3)
(26.0)
145.0
58.1
(421.3)

(449.6)

62.6
(11.5)
824.8
Ì
277.6
(1,187.9)
(1,029.7)

Net cash used in Ñnancing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

(314.7)

(1,022.1)

(1,064.1)

Change in cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash and cash equivalents at beginning of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,469.2
1,714.4

668.9
1,045.5

56.8
988.7

Cash and cash equivalents at end of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$3,183.6

$1,714.4

$1,045.5

Transfer of funds (dividends, loans or advances) from
bank subsidiaries to the Company is restricted. Federal law
prohibits loans unless they are secured and generally limits
any loan to the Company or individual aÇliate to
10 percent of the bank's equity. In aggregate, loans to the
Company and all aÇliates cannot exceed 20 percent of the
bank's equity.

Dividend payments to the Company by its subsidiary

banks are subject to regulatory review and statutory
limitations and, in some instances, regulatory approval. The
approval of the Comptroller of the Currency is required if

total dividends by a national bank in any calendar year
exceed the bank's net income for that year combined with
its retained net income for the preceding two calendar years
or if the bank's retained earnings are less than zero.
Furthermore, dividends are restricted by the Comptroller of
the Currency's minimum capital constraints for all national
banks. Within these guidelines, all bank subsidiaries have
the ability to pay dividends without prior regulatory
approval. The amount of dividends available to the parent
company from the bank subsidiaries at December 31, 2001,
was $1,183 million.

U.S. Bancorp

Note 24

Supplemental Disclosures to the Consolidated Financial Statements

Consolidated Statement of Cash Flows Listed below are supplemental disclosures to the Consolidated Statement of Cash
Flows:

Year Ended December 31 (Dollars in Millions)

2001

2000

1999

Income taxes paidÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net noncash transfers to foreclosed propertyÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 658.1
5,092.2
59.9

$ 1,046.5
5,686.3
94.3

901.1
4,697.6
102.9

Acquisitions and divestitures

Assets acquiredÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Liabilities assumed ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$1,150.8

(509.0)

$ 3,314.6

(3,755.9)

$ 4,229.3

(2,610.0)

Net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 641.8

$ (441.3)

$ 1,619.3

Money Market Investments are included with cash and due from banks as part of cash and cash equivalents. Money
market investments were comprised of the following at December 31:

(Dollars in Millions)

Interest-bearing deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Federal funds sold ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities purchased under agreements to resell ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total money market investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

$104
123
398

$625

2000

$ 82
203
372

$657

Regulatory Capital The measures used to assess capital include the capital ratios established by bank regulatory agencies,
including the speciÑc ratios for the ""well capitalized'' designation. For a description of the regulatory capital requirements
and the actual ratios as of December 31, 2001 and 2000, for the Company and its bank subsidiaries, see Table 19 included
in Management's Discussion and Analysis which is incorporated by reference into these Notes to Consolidated Financial
Statements.

U.S. Bancorp

Consolidated Balance Sheet Ì Five-Year Summary

December 31 (Dollars in Millions)

2001

2000

1999

1998

1997

Assets

Cash and due from banks ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Money market investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading account securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Held-to-maturity securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Available-for-sale securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans held for sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial real estate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
RetailÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Less allowance for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net loansÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

9,120
625
982
299
26,309
2,820

46,330
25,373
5,746
36,956

8,475
657
753
252
17,390
764

52,817
26,443
7,753
35,352

7,324
1,934
617
194
17,255
670

45,856
25,142
11,395
30,836

8,882
1,039
666
233
20,732
1,794

41,068
21,808
13,980
30,102

114,405
2,457

111,948
19,287

122,365
1,787

120,578
16,052

113,229
1,710

111,519
14,805

106,958
1,706

105,252
12,116

7,972
1,411
268
2,942
17,500
743

36,329
19,798
15,892
27,010

99,029
1,666

97,363
9,289

% Change
2000-2001

7.6%
(4.9)
30.4
18.7
51.3
*

(12.3)
(4.0)
(25.9)
4.5

(6.5)
37.5

(7.2)
20.2

Total assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$171,390

$164,921

$154,318

$150,714

$137,488

3.9%

Liabilities and Shareholders' Equity

Deposits

Noninterest-bearingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest-bearing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 31,212
74,007

$ 26,633
82,902

$ 26,350
77,067

$ 27,479
76,867

$ 24,062
74,261

17.2%
(10.7)

Total depositsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Company-obligated mandatorily redeemable preferred securities ÏÏÏ
Other liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Shareholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

105,219
14,670
25,716
2,826
6,498

154,929
16,461

109,535
11,833
21,876
1,400
5,109

149,753
15,168

103,417
10,558
21,027
1,400
3,969

140,371
13,947

104,346
10,011
18,679
1,400
3,704

138,140
12,574

98,323
10,385
13,181
1,050
3,147

126,086
11,402

(3.9)
24.0
17.6
*
27.2

3.5
8.5

Total liabilities and shareholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$171,390

$164,921

$154,318

$150,714

$137,488

3.9%

*Not meaningful

U.S. Bancorp

Consolidated Statement of Income Ì Five-Year Summary

Year Ended December 31 (Dollars in Millions)

2001

2000

1999

1998

1997

% Change
2000-2001

Interest Income

Loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans held for saleÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment securities

Taxable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Non-taxable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Money market investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 9,455.4
146.9

$10,562.5
102.1

$ 9,122.7
103.9

$ 8,818.3
91.9

$8,419.0
40.0

(10.5)%
43.9

1,206.1
89.5
26.6
57.5
101.6

1,008.3
140.6
53.9
53.7
151.4

1,047.1
150.1
44.9
45.0
113.0

1,179.5
158.2
63.0
25.6
88.2

1,060.7
158.0
63.6
16.8
42.6

Total interest incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

11,083.6

12,072.5

10,626.7

10,424.7

9,800.7

Interest Expense

Deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term borrowingsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Company-obligated mandatorily redeemable preferred securities ÏÏÏ

2,828.1
534.1
1,162.7
149.9

3,618.8
781.7
1,510.4
112.0

2,970.0
582.4
1,126.9
111.0

3,234.7
594.7
926.5
103.8

3,084.2
643.3
586.0
76.3

Total interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

4,674.8

6,022.9

4,790.3

4,859.7

4,389.8

Net interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

6,408.8
2,528.8

6,049.6
828.0

5,836.4
646.0

5,565.0
491.3

5,410.9
639.9

19.6
(36.3)
(50.6)
7.1
(32.9)

(8.2)

(21.8)
(31.7)
(23.0)
33.8

(22.4)

5.9
**

Net interest income after provision for credit lossesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

3,880.0

5,221.6

5,190.4

5,073.7

4,771.0

(25.7)

Noninterest Income

Credit card fee revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merchant and ATM processing revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trust and investment management feesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deposit service charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash management feesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mortgage banking revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading account proÑts and commissions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment products fees and commissions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment banking revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial product revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities gains, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related gainsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

774.3
428.8
894.4
660.6
347.3
234.0
221.6
460.1
258.2
385.9
329.1
62.2
302.9

761.8
230.3
926.2
551.1
292.4
189.9
258.4
466.6
360.3
304.4
8.1
Ì
533.7

648.2
189.6
887.1
497.2
280.6
190.4
222.4
450.8
246.6
215.7
13.2
Ì
403.1

748.0
*
788.3
470.3
242.0
244.6
130.3
306.9
100.4
121.9
29.1
48.1
420.1

611.8
*
686.1
450.6
214.2
137.9
44.8
110.4
Ì
97.9
7.3
Ì
357.6

1.6
86.2
(3.4)
19.9
18.8
23.2
(14.2)
(1.4)
(28.3)
26.8
**
**
(43.2)

Total noninterest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

5,359.4

4,883.2

4,244.9

3,650.0

2,718.6

9.8

Noninterest Expense

Salaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Employee beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net occupancy ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Furniture and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Communication ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Postage ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
GoodwillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2,347.1
366.2
417.9
305.5
181.4
179.8
251.1
278.4
946.4
1,331.4

2,427.1
399.8
396.9
308.2
138.8
174.5
235.0
157.3
348.7
1,130.7

2,355.3
410.1
371.8
307.9
123.4
170.7
175.8
154.0
532.8
1,059.5

2,196.7
424.9
356.9
314.1
114.2
155.4
176.0
125.8
593.8
965.6

1,892.0
424.0
335.0
312.3
*
106.6
114.1
93.3
633.0
1,029.4

Total noninterest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

6,605.2

5,717.0

5,661.3

5,423.4

4,939.7

Income before income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Applicable income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2,634.2
927.7

4,387.8
1,512.2

3,774.0
1,392.2

3,300.3
1,167.4

2,549.9
950.6

Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 1,706.5

$ 2,875.6

$ 2,381.8

$ 2,132.9

$1,599.3

(3.3)
(8.4)
5.3
(.9)

30.7
3.0
6.9
77.0
**
17.8

15.5

(40.0)
(38.7)

(40.7)

Net income applicable to common equityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 1,706.5

$ 2,875.6

$ 2,381.8

$ 2,132.8

$1,588.2

(40.7)%

*Information not available

**Not meaningful

U.S. Bancorp

Consolidated Daily Average Balance Sheet and Related

Year Ended December 31

2001

2000

(Dollars in Millions)

Assets

Balance

Interest

Yields
and Rates

Balance

Interest

Yields
and Rates

Money market investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading account securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Taxable securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Non-taxable securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans held for sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans

Commercial ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial real estate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Residential mortgages ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retail ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

712
771
20,129
1,787
1,911

50,072
26,081
6,868
35,156

26.6
59.3
1,206.1
128.9
146.9

3,642.5
2,011.2
513.7
3,302.7

Total loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

118,177

9,470.1

Other earning assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Allowance for credit losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,678
1,979

101.6

3.74%
7.69
5.99
7.21
7.69

7.31
7.71
7.48
9.39

8.01

6.05

Total earning assets(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

145,165
22,758

11,139.5

7.67

Total assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$165,944

Liabilities and Shareholders' Equity

Noninterest-bearing deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest-bearing deposits

$ 25,109

Interest checking ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Money market accountsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Savings accountsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Time certiÑcates of deposit less than $100,000 ÏÏÏÏÏÏÏÏÏÏ
Time deposits greater than $100,000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Total interest-bearing deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Company-obligated mandatorily redeemable preferred

13,962
24,932
4,571
23,328
13,054

79,847
12,980
24,608

203.6
711.0
42.5
1,241.4
629.6

2,828.1
534.1
1,162.7

securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,955

149.9

Total interest-bearing liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Shareholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

119,390
5,244
16,201

4,674.8

Total liabilities and shareholders' equity ÏÏÏÏÏÏÏÏÏÏÏ

$165,944

1.46
2.85
.93
5.32
4.82

3.54
4.11
4.72

7.66

3.92

Net interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 6,464.7

$ 6,135.0

Gross interest margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Gross interest margin without taxable-equivalent

increments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Percent of Earning Assets

Interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest expenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net interest margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Net interest margin without taxable-equivalent incrementsÏÏÏÏ

3.75%

3.71%

7.67%
3.22

4.45

4.41%

Interest and rates are presented on a fully taxable-equivalent basis under a tax rate of 35 percent.
Interest income and rates on loans include loan fees. Nonaccrual loans are included in average loan balances.

(a) Before deducting the allowance for credit losses and excluding the unrealized gain (loss) on available-for-sale securities.

U.S. Bancorp

931
779
14,567
2,744
1,303

50,062
26,040
9,578
32,637

53.9
57.6
1,008.3
203.1
102.1

4,257.2
2,305.5
723.4
3,295.4

118,317

10,581.5

151.4

5.79%
7.39
6.92
7.40
7.84

8.50
8.85
7.55
10.10

8.94

7.70

12,157.9

8.65

1,965
1,781

140,606
19,656

$158,481

$ 23,820

13,035
22,774
5,027
25,861
12,909

79,606
12,586
22,410

270.4
1,000.0
74.0
1,458.3
816.1

3,618.8
781.7
1,510.4

1,400

112.0

6,022.9

116,002
4,294
14,365

$158,481

2.07
4.39
1.47
5.64
6.32

4.55
6.21
6.74

8.00

5.19

3.46%

3.40%

8.65%
4.29

4.36

4.30%

Yields and Rates

1999

1998

Balance

Interest

Yields
and Rates

Balance

Interest

Yields
and Rates

2000-2001

% Change
Average Balance

44.9
47.8
1,047.1
220.6
103.9

3,288.3
1,940.3
953.7
2,963.4

9,145.7

113.0

10,723.0

231.0
842.2
111.9
1,322.6
462.3

2,970.0
582.4
1,126.9

111.0

4,790.3

$ 1,082
630
16,301
2,970
1,450

43,328
23,076
12,680
30,554

109,638

1,686
1,709

133,757
18,119

$150,167

$ 23,556

12,898
22,534
5,961
26,296
8,675

76,364
11,707
20,248

1,400

109,719
3,671
13,221

$150,167

63.0
27.6
1,179.5
238.2
91.9

3,110.4
1,784.1
1,170.5
2,782.5

8,847.5

88.2

10,535.9

230.9
825.1
146.7
1,622.7
409.3

3,234.7
594.7
926.5

103.8

4,859.7

4.15%
7.59
6.42
7.43
7.17

7.59
8.41
7.52
9.70

8.34

6.70

8.02

1.79
3.74
1.88
5.03
5.33

3.89
4.97
5.57

7.93

4.37

1,170
428
17,977
3,137
1,264

38,983
20,458
15,160
27,850

102,451

1,311
1,688

127,738
16,837

$142,887

$ 23,011

12,263
20,337
6,504
29,583
7,242

75,929
11,102
15,732

1,314

104,077
3,416
12,383

$142,887

$ 5,932.7

$ 5,676.2

3.65%

3.57%

8.02%
3.58

4.44

4.36%

5.38%
6.45
6.56
7.59
7.27

7.98
8.72
7.72
9.99

8.64

6.73

8.25

1.88
4.06
2.26
5.49
5.65

4.26
5.36
5.89

7.90

4.67

3.58%

3.49%

8.25%
3.81

4.44

4.36%

(23.5)%
(1.0)
38.2
(34.9)
46.7

Ì
.2

(28.3)
7.7

(.1)

(14.6)
11.1

3.2
15.8

4.7

5.4

7.1
9.5
(9.1)
(9.8)
1.1

.3
3.1
9.8

39.6

2.9
22.1
12.8

4.7%

U.S. Bancorp

Quarterly Consolidated Financial Data

(Dollars in Millions, Except Per Share Data)

Interest Income
Loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Loans held for sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investment securities

Taxable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Non-taxableÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Money market investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

2001

2000

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

$2,660.9
16.6

$2,437.9
25.9

$2,285.6
53.9

$2,071.0
50.5

$2,472.1
12.0

$2,591.8
35.2

$2,710.7
32.7

$2,787.9
22.2

253.3
31.2
8.9
15.9
32.0

287.8
27.8
7.4
14.1
26.1

321.2
15.9
6.3
11.2
24.3

343.8
14.6
4.0
16.3
19.2

251.0
38.9
13.6
14.3
37.3

255.6
33.5
15.0
12.6
37.0

250.4
34.8
14.5
12.8
37.7

251.3
33.4
10.8
14.0
39.4

Total interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

3,018.8

2,827.0

2,718.4

2,519.4

2,839.2

2,980.7

3,093.6

3,159.0

Interest Expense
Deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Company-obligated mandatorily redeemable

883.7
186.2
365.7

783.0
124.4
315.0

670.0
122.9
276.7

preferred securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

27.6

35.4

39.7

Total interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,463.2

1,257.8

1,109.3

491.4
100.6
205.3

47.2

844.5

813.2
171.1
336.9

875.9
198.7
371.3

954.0
191.2
403.9

975.7
220.7
398.3

28.4

29.3

31.5

22.8

1,349.6

1,475.2

1,580.6

1,617.5

Net interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision for credit lossesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,555.6
532.4

1,569.2
441.3

1,609.1
1,289.3

1,674.9
265.8

1,489.6
183.2

1,505.5
201.3

1,513.0
214.0

1,541.5
229.5

Net interest income after provision for credit

losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,023.2

1,127.9

319.8

1,409.1

1,306.4

1,304.2

1,299.0

1,312.0

Noninterest Income
Credit card fee revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merchant and ATM processing revenue ÏÏÏÏÏÏÏ
Trust and investment management fees ÏÏÏÏÏÏÏ
Deposit service chargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash management fees ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Mortgage banking revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Trading account proÑts and commissionsÏÏÏÏÏÏ
Investment products fees and commissionsÏÏÏÏ
Investment banking revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commercial product revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Securities gains (losses), net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related gains ÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

191.7
58.0
225.0
146.5
76.8
48.2
71.9
125.7
60.2
76.1
216.0
Ì
104.8

198.2
62.4
228.0
176.7
84.9
57.0
55.8
114.2
71.1
93.8
31.3
62.2
91.0

192.2
138.5
226.2
168.7
89.7
60.3
43.6
108.0
56.9
96.2
59.8
Ì
68.2

192.2
169.9
215.2
168.7
95.9
68.5
50.3
112.2
70.0
119.8
22.0
Ì
38.9

161.4
57.5
230.9
123.4
71.8
42.7
85.3
140.8
94.0
61.6

(.3)
Ì
112.3

187.4
59.9
230.4
138.0
74.1
48.1
59.8
109.1
72.9
71.6
.3
Ì
151.7

202.2
59.0
231.1
144.3
74.7
44.7
50.9
107.8
100.6
86.0
1.1
Ì
131.2

210.8
53.9
233.8
145.4
71.8
54.4
62.4
108.9
92.8
85.2
7.0
Ì
138.5

Total noninterest incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,400.9

1,326.6

1,308.3

1,323.6

1,181.4

1,203.3

1,233.6

1,264.9

Noninterest Expense
SalariesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Employee beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net occupancy ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Furniture and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
CommunicationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Postage ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other intangible assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Merger and restructuring-related chargesÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

590.5
108.1
110.1
76.9
38.7
46.9
67.8
46.6
404.2
308.7

570.5
90.7
101.4
74.9
50.3
43.8
58.6
54.0
252.8
297.7

580.3
85.4
102.5
74.9
49.4
44.7
62.3
84.8
148.8
334.4

605.8
82.0
103.9
78.8
43.0
44.4
62.4
93.0
140.6
390.6

629.6
111.9
97.2
76.7
33.6
44.6
56.5
39.3
65.0
268.2

601.4
100.3
95.7
75.7
33.8
42.6
57.8
39.0
81.9
282.9

602.4
89.4
99.8
79.6
35.7
43.1
58.5
39.2
117.7
286.0

593.7
98.2
104.2
76.2
35.7
44.2
62.2
39.8
84.1
293.6

Total noninterest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,798.5

1,594.7

1,567.5

1,644.5

1,422.6

1,411.1

1,451.4

1,431.9

Income before income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Applicable income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

625.6
215.5

859.8
297.5

60.6
21.9

1,088.2
392.8

1,065.2
378.4

1,096.4
386.6

1,081.2
370.9

1,145.0
376.3

Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$ 410.1

$ 562.3

Earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Diluted earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

$
$

.22
.21

$
$

.30
.29

$
$

38.7

$ 695.4

$ 686.8

$ 709.8

$ 710.3

$ 768.7

.02
.02

$
$

.36
.36

$
$

.36
.36

$
$

.37
.37

$
$

.37
.37

$
$

.41
.40

U.S. Bancorp

Supplemental Financial Data

Earnings Per Share Summary

Earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Diluted earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Ratios

Return on average assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Return on average equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average total equity to average assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends per share to net income per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Other Statistics (Shares in Millions)

Common shares outstanding Ì year end(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average common shares outstanding and common stock

equivalents

2001

$.89
.88

1.03%
10.5
9.8
84.3

2000

$1.51
1.50

1.81%
20.0
9.1
43.0

1999

$1.25
1.23

1.59%
18.0
8.8
36.8

1998

$1.12
1.10

1.49%
17.2
8.7
29.5

1997

$.86
.85

1.24%
14.7
8.4
31.4

1,951.7

1,902.1

1,928.5

1,903.5

1,864.0

Earnings per shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Diluted earnings per shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Number of shareholders Ì year end(b) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common dividends declared (millions) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

1,927.9
1,939.5
76,395
$1,446.5

1,906.0
1,918.5
46,052
$1,267.0

1,907.8
1,930.0
45,966
$1,090.8

1,898.8
1,930.5
17,523
$977.6

1,841.0
1,872.2
12,010
$801.9

(a) DeÑned as total common shares less common stock held in treasury.
(b) Based on number of common stock shareholders of record.

Stock Price Range and Dividends

First quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Second quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Third quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fourth quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Closing price Ì December 31

2001

Sales Price

Low

$18.49
20.71
18.25
16.50

Dividends
Declared

$.1875
.1875
.1875
.1875

High

$24.88
28.00
25.00
24.31

2000

Sales Price

Low

$16.38
20.88
19.25
15.38

Dividends
Declared

$.1625
.1625
.1625
.1625

High

$26.06
23.60
25.24
22.95

20.93

23.25

The common stock of U.S. Bancorp is traded on the New York Stock Exchange, under the ticker symbol ""USB.''

U.S. Bancorp

Annual Report on Form 10-K

Securities and Exchange Commission
Washington, D.C. 20549

Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the Ñscal year ended
December 31, 2001

Commission File Number 1-6880

U.S. Bancorp

Incorporated in the State of Delaware
IRS Employer IdentiÑcation #41-0255900
Address: 225 South Sixth Street
Minneapolis, Minnesota 55402-4302
Telephone: (612) 973-1111

Securities registered pursuant to Section 12(b) of the Act
(and listed on the New York Stock Exchange): Common
Stock, Par Value $.01. Prior to the merger of U.S. Bancorp
with Firstar Corporation, the par value of U.S. Bancorp
common stock was $1.25.

Securities registered pursuant to section 12(g) of the

Act: None.

Index

Part I

Item 1

Item 2

Item 3

Item 4

Part II

Page

Business
GeneralÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 91-92
Distribution of Assets, Liabilities and

Stockholders' Equity; Interest Rates
and Interest DiÅerential ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18-20, 86-87
Investment Portfolio ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27-28, 61
Loan Portfolio ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ23-27, 29-36, 54, 62-63
Summary of Loan Loss Experience ÏÏÏÏÏÏÏÏÏÏÏ 29-36, 54,

62-63

Deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 28-29
Return on Equity and Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17, 88
Short-Term Borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 29, 67

Properties ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 92

Legal ProceedingsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ none

Submission of Matters to a Vote of

Security Holders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ none

Item 5 Market for the Registrant's Common Equity

and Related Stockholder Matters ÏÏÏÏÏ 3, 40-41, 69-71,
73-75, 89, 90

Item 6

Selected Financial Data ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17

As of January 31, 2002, U.S. Bancorp had

Item 7 Management's Discussion and Analysis of

1,918,425,072 shares of common stock outstanding. The
aggregate market value of common stock held by non-
aÇliates as of January 31, 2002, was approximately
$39.0 billion.

U.S. Bancorp (1) has Ñled all reports required to be
Ñled by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been
subject to such Ñling requirements for the past 90 days.

Disclosure of delinquent Ñlers pursuant to Item 405 of

Regulation S-K is contained in the registrant's deÑnitive
proxy statement incorporated by reference in Part III of this
Form 10-K and any amendment to this Form 10-K.

This Annual Report and Form 10-K incorporates into a

single document the requirements of the accounting
profession and the Securities and Exchange Commission.
Only those sections of the Annual Report referenced in the
following cross-reference index and the information under
the caption ""Forward-Looking Statements'' are incorporated
in the Form 10-K.

Financial Condition and Results of Operations ÏÏ 16-47

Item 7A Quantitative and Qualitative Disclosures About

Market Risk ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 36-40

Financial Statements and Supplementary Data ÏÏÏÏÏ 49-89

Changes in and Disagreements with Accountants on

Accounting and Financial Disclosure ÏÏÏÏÏÏÏÏÏÏÏÏ none

Item 8

Item 9

Part III

Item 10 Directors and Executive OÇcers

of the Registrant ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 94-96*
Item 11 Executive Compensation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ *
Item 12 Security Ownership of Certain BeneÑcial Owners

and ManagementÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ *
Item 13 Certain Relationships and Related TransactionsÏÏÏÏÏÏÏÏ *
Part IV

Item 14 Exhibits, Financial Statement Schedules and

Reports on Form 8-K ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 92-93

*U.S. Bancorp's deÑnitive proxy statement for the 2002 Annual Meeting of Shareholders

is incorporated herein by reference, other than the sections entitled ""Report of the
Compensation and Human Resources Committee on Executive Compensation'' and
""Comparative Stock Performance.''

U.S. Bancorp

General U.S. Bancorp is a multi-state Ñnancial services
holding company headquartered in Minneapolis, Minnesota
and was created by the acquisition by Firstar Corporation
of the former U.S. Bancorp of Minneapolis, Minnesota.
The merger was completed on February 27, 2001, and the
combined company retained the U.S. Bancorp name.
U.S. Bancorp was incorporated in Delaware in 1929 and
operates as a Ñnancial holding company and a bank holding
company under the Bank Holding Company Act of 1956.
U.S. Bancorp provides a full range of Ñnancial services,
including lending and depository services, cash management,
foreign exchange and trust and investment management
services. It also engages in credit card services, merchant
and automated teller machine (""ATM'') processing,
mortgage banking, insurance, brokerage, leasing and
investment banking.

U.S. Bancorp's banking subsidiaries are engaged in the
general banking business, principally in domestic markets.
The subsidiaries range in size from $312 million to
$108 billion in deposits and provide a wide range of
products and services to individuals, businesses, institutional
organizations, governmental entities and other Ñnancial
institutions. Commercial and consumer lending services are
principally oÅered to customers within the Company's
domestic markets, to domestic customers with foreign
operations and within certain niche national venues.
Lending services include traditional credit products as well
as credit card services, Ñnancing and import/export trade,
asset-backed lending, agricultural Ñnance and other
products. Leasing products are oÅered through non-bank
subsidiaries. Depository services include checking accounts,
savings accounts and time certiÑcate contracts. Ancillary
services such as foreign exchange, treasury management and
receivable lock-box collection are provided to corporate
customers. U.S. Bancorp's bank and trust subsidiaries
provide a full range of Ñduciary services for individuals,
estates, foundations, business corporations and charitable
organizations.

Banking and investment services are provided through a

network of 2,147 banking oÇces principally operating in
24 states in the Midwest and West. The Company operates
a network of 4,904 branded ATMs and provides 24-hour,
seven days-a-week telephone customer service. Mortgage
banking services are provided through banking oÇces and
loan production oÇces throughout the Company's markets.

The Company is one of the largest providers of Visa@
corporate and purchasing card services and corporate trust
services in the United States. Its wholly owned subsidiary
Nova Information Systems, Inc. provides merchant
processing services directly to merchants and through a
network of banking aÇliations.

U.S. Bancorp's other non-banking subsidiaries oÅer a

variety of products and services to the Company's

customers. Its wholly-owned subsidiary U.S. Bancorp Piper
JaÅray Inc. engages in equity and Ñxed income trading
activities and oÅers investment banking and underwriting
services to corporate and public sector customers. This non-
bank subsidiary also provides brokerage products, including
securities, mutual funds and annuities, and insurance
products to consumers and regionally based businesses
through a network of 123 brokerage oÇces.

On a full-time equivalent basis, employment during

2001 averaged a total of 50,461 employees.

Competition The commercial banking business is highly
competitive. Subsidiary banks compete with other
commercial banks and with other Ñnancial institutions,
including savings and loan associations, mutual savings
banks, Ñnance companies, mortgage banking companies,
credit unions and investment companies. In recent years,
competition has increased from institutions not subject to
the same regulatory restrictions as domestic banks and bank
holding companies.

Government Policies The operations of the Company's
various operating units are aÅected by state and federal
legislative changes and by policies of various regulatory
authorities, including those of the numerous states in which
they operate, the United States and foreign governments.
These policies include, for example, statutory maximum
legal lending rates, domestic monetary policies of the Board
of Governors of the Federal Reserve System, United States
Ñscal policy, international currency regulations and
monetary policies, and capital adequacy and liquidity
constraints imposed by bank regulatory agencies.

Supervision and Regulation U.S. Bancorp is a registered
bank holding company and Ñnancial holding company
under the Bank Holding Company Act of 1956 (the ""Act'')
and is subject to the supervision of, and regulation by, the
Board of Governors of the Federal Reserve System (the
""Board'').

Under the Act, a Ñnancial holding company may engage

in banking, managing or controlling banks, furnishing or
performing services for banks it controls, and conducting
other Ñnancial activities. U.S. Bancorp must obtain the prior
approval of the Board before acquiring more than 5 percent
of the outstanding shares of another bank or bank holding
company, and must provide notice to, and in some
situations obtain the prior approval of, the Board in
connection with engaging in, or acquiring more than
5 percent of the outstanding shares of a company engaged
in, a new Ñnancial activity.

Under the Act, as amended by the Riegle-Neal
Interstate Banking and Branching EÇciency Act of 1994
(the ""Interstate Act''), U.S. Bancorp may acquire banks
throughout the United States, subject only to state or

U.S. Bancorp

federal deposit caps and state minimum age requirements.
The Interstate Act authorizes interstate branching by
acquisition and consolidations in those states that have not
opted out of interstate branching.

National banks are subject to the supervision of, and

are examined by, the Comptroller of the Currency. All
subsidiary banks of the Company are members of the
Federal Deposit Insurance Corporation (""FDIC'') and are
subject to examination by the FDIC. In practice, the
primary federal regulator makes regular examinations of
each subsidiary bank subject to its regulatory review or
participates in joint examinations with other federal
regulators. Areas subject to regulation by federal authorities
include the allowance for credit losses, investments, loans,
mergers, issuance of securities, payment of dividends,
establishment of branches and other aspects of operations.

Properties U.S. Bancorp and its signiÑcant subsidiaries
occupy their headquarter oÇces under long-term leases and
are located in Minneapolis, Minnesota and Cincinnati,
Ohio. The Company also leases seven principal freestanding
operations centers in St. Paul, Portland, Nashville and
Denver, and owns Ñve principal freestanding operations
centers in Cincinnati, Kansas City, St. Louis, Fargo and
Milwaukee. At December 31, 2001, U.S. Bancorp's
subsidiaries owned and operated a total of 1,383 facilities
and leased an additional 1,388 facilities, all of which are
well maintained. The Company believes its current facilities
are adequate to meet its needs. Additional information with
respect to premises and equipment is presented in Notes 9
and 22 of the Notes to Consolidated Financial Statements.

EXHIBITS

Financial Statements Filed

U.S. Bancorp and Subsidiaries

Consolidated Financial Statements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Notes to Consolidated Financial Statements ÏÏÏÏÏÏÏÏÏÏÏÏ
Report of Independent Accountants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ

Page

49
53
48

Schedules to the consolidated Ñnancial statements
required by Regulation S-X are omitted since the required
information is included in the footnotes or is not
applicable.

During the three months ended December 31, 2001,

the Company Ñled the following Current Reports on
Form 8-K:

Form 8-K Ñled October 17, 2001, relating to third

quarter 2001 and anticipated full year 2001 earnings;
Form 8-K Ñled October 31, 2001, announcing

commencement of an underwritten oÅering of trust
preferred securities;

Form 8-K Ñled December 6, 2001, announcing
commencement of an underwritten oÅering of trust
preferred securities.

The following Exhibit Index lists the Exhibits to the

Annual Report on Form 10-K.

(1)3.1 Restated CertiÑcate of Incorporation, as

amended. Filed as Exhibit 3.1 to Form 10-K
for the year ended December 31, 2000.

3.2 Restated bylaws, as amended.

4.1

®Pursuant to Item 601(b)(4)(iii)(A) of
Regulation S-K, copies of instruments deÑning
the rights of holders of long-term debt are not
Ñled. U.S. Bancorp agrees to furnish a copy
thereof to the Securities and Exchange
Commission upon request.©

(1)4.2 Warrant Agreement, dated as of October 2,

1995, between U.S. Bancorp and First Chicago
Trust Company of New York, as Warrant
Agent and Form of Warrant. Filed as
Exhibits 4.18 and 4.19 to Registration
Statement on Form S-3, File No. 33-61667.

(2)10.1 U.S. Bancorp 2001 Stock Incentive Plan.
(2)10.2 U.S. Bancorp Executive Incentive Plan.
(1)(2)10.3 U.S. Bancorp Executive Deferral Plan, as

(2)10.4

(1)(2)10.5

amended. Filed as Exhibit 10.7 to Form 10-K
for the year ended December 31, 1999.

Summary of NonqualiÑed Supplemental
Executive Retirement Plan, as amended, of the
former U.S. Bancorp.

1991 Performance and Equity Incentive Plan of
the former U.S. Bancorp. Filed as Exhibit 10.13
to Form 10-K for the year ended December 31,
1997.

(1)(2)10.6 Description of Retirement BeneÑts of Joshua

(1)(2)10.7

Green III. Filed as Exhibit 10.14 to Form 10-K
for the year ended December 31, 1997.

Form of Director IndemniÑcation Agreement
entered into with former directors of the
former U.S. Bancorp. Filed as Exhibit 10.15 to
Form 10-K for the year ended December 31,
1997.

(1)(2)10.8 U.S. Bancorp Independent Director Retirement

and Death BeneÑt Plan, as amended. Filed as
Exhibit 10.17 to Form 10-K for the year ended
December 31, 1999.

(1)(2)10.9 U.S. Bancorp Deferred Compensation Plan for
Directors, as amended. Filed as Exhibit 10.18
to Form 10-K for the year ended December 31,
1999.

U.S. Bancorp

(2)10.10 Summary of U.S. Bancorp Supplemental

Victoria Buyniski Gluckman

Executive Retirement Plan.

(2)10.11 U.S. Bancorp Deferred Compensation Plan.
(2)10.12 Form of Change in Control Agreement,
eÅective November 16, 2001, between
U.S. Bancorp and certain executive oÇcers of
U.S. Bancorp.

(2)10.13 Employment Agreement with Jerry A.

Grundhofer.

(2)10.14 Employment Agreement with John F.

Grundhofer.

Statement re: Computation of Ratio of Earnings
to Fixed Charges.

Director

Arthur D. Collins, Jr.

Director

Peter H. Coors

Director

John C. Dannemiller

Director

Joshua Green III

Director

J.P. Hayden, Jr.

Director

Roger L. Howe

Director

Subsidiaries of the Registrant.

Thomas H. Jacobsen

Consent of PricewaterhouseCoopers LLP.

Director

(1) Exhibit has previously been Ñled with the Securities and Exchange Commission and

Delbert W. Johnson

is incorporated herein as an exhibit by reference.

(2) Management contracts or compensatory plans or arrangements required to be Ñled

as an exhibit pursuant to Item 14(c) of Form 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on February 28, 2002, on its
behalf by the undersigned thereunto duly authorized.

U.S. Bancorp
By: Jerry A. Grundhofer
President and Chief Executive OÇcer

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below on February 28,
2002, by the following persons on behalf of the registrant
and in the capacities indicated.

Jerry A. Grundhofer

President, Chief Executive OÇcer and Director
(principal executive oÇcer)

David M. MoÅett

Vice Chairman and Chief Financial OÇcer
(principal Ñnancial oÇcer)

Terrance R. Dolan

Executive Vice President and Controller
(principal accounting oÇcer)

John F. Grundhofer

Chairman

Linda L. Ahlers

Director

Joel W. Johnson

Director

Jerry W. Levin

Director

Sheldon B. Lubar

Director

Frank Lyon, Jr.

Director

Daniel F. McKeithan, Jr.

Director

David B. O'Maley

Director

O'dell M. Owens, M.D., M.P.H.

Director

Thomas E. Petry

Director

Richard G. Reiten

Director

S. Walter Richey

Director

Warren R. Staley

Director

Patrick T. Stokes

Director

John J. Stollenwerk

Director

U.S. Bancorp

EXECUTIVE OFFICERS

Jerry A. Grundhofer

Andrew Cecere

Richard K. Davis

Mr. Grundhofer, 57, has served as

Mr. Cecere, 41, has served as Vice

Mr. Davis, 44, has served as Vice

President and Chief Executive OÇcer of

Chairman of U.S. Bancorp since the

U.S. Bancorp and Chairman, President

merger of Firstar Corporation and U.S.

and Chief Executive OÇcer of U.S. Bank

Bancorp in February 2001. He assumed

Bancorp in February 2001, when he

National Association since the merger of

responsibility for Private Client and Trust

assumed responsibility for Consumer

Firstar Corporation and U.S. Bancorp in

Services in February 2001 and U.S.

Banking and Payment Services. Previously,

February 2001. Prior to the merger,

Bancorp Asset Management in

he had been Vice Chairman of Consumer

Mr. Grundhofer was President and Chief

November 2001. Previously, he had

Banking of Firstar Corporation from 1998

Executive OÇcer of Firstar Corporation,

served as Chief Financial OÇcer of U.S.

until 2001 and Executive Vice President,

having served as Chairman, President and

Bancorp from May 2000 through

Consumer Banking of Star Banc

Chief Executive OÇcer of Star Banc

February 2001. Additionally, he served as

Corporation from 1993 until its merger

Vice Chairman of U.S. Bank with

with Firstar Corporation in 1998.

responsibility for Commercial Services

Andrew S. DuÅ

Jennie P. Carlson

Ms. Carlson, 41, has served as Executive

from 1999 to 2001, having been a Senior

Vice President of Finance since 1992.

Vice President, Human Resources since

William L. Chenevich

Mr. DuÅ, 44, has served as Vice

Chairman of U.S. Bancorp, responsible for

Private Advisory Services, Equity Capital

January 2002. Until that time, she served

Mr. Chenevich, 58, has served as Vice

Markets and Fixed Income Capital

as Executive Vice President, Deputy

Chairman of U.S. Bancorp since the

Markets, since November 2001, and until

General Counsel and Corporate Secretary

merger of Firstar Corporation and U.S.

that time as Vice Chairman responsible

of U.S. Bancorp since the merger of

Bancorp in February 2001, when he

for Wealth Management and Capital

Firstar Corporation and U.S. Bancorp in

assumed responsibility for Technology

Markets since 1999. He has served as

February 2001. From 1995 until the

and Operations Services. Previously, he

President and Chief Executive OÇcer of

merger, she was General Counsel and

had served as Vice Chairman of

U.S. Bancorp Piper JaÅray since

Secretary of Firstar Corporation and Star

Technology and Operations Services of

January 2000. Prior to that time, he had

Banc Corporation, a predecessor

Firstar Corporation from 1999 to 2001.

served as President of Piper JaÅray Inc.,

company, as well as Senior Vice President

Prior to joining Firstar he was Group

the broker-dealer subsidiary of Piper

from 1994 to 1999 and Executive Vice

Executive Vice President at Visa

JaÅray Companies, since January 1996.

President from 1999 to 2001.

International from 1994 to 1999.

U.S. Bancorp

Edward Grzedzinski

Lee R. Mitau

Stephen E. Smith

Mr. Grzedzinski, 46, has served as Vice

Mr. Mitau, 53, has served as Executive

Mr. Smith, 54, has served as Executive

Chairman of U.S. Bancorp since July

Vice President and General Counsel of

Vice President and Director of Human

2001. He is President and Chief Executive

U.S. Bancorp since 1995. Mr. Mitau also

Resources of U.S. Bancorp since the

OÇcer of NOVA Information Systems,

serves as Corporate Secretary. Prior to

merger of Firstar Corporation and U.S.

which he co-founded in 1991 and which

1995 he was a partner at the law Ñrm of

Bancorp in February 2001. Prior to the

became a wholly owned subsidiary of

Dorsey & Whitney LLP.

merger, he was Executive Vice President

U.S. Bancorp in connection with the

acquisition of NOVA Corporation in July

2001. Mr. Grzedzinski served as Chairman

of NOVA Corporation from 1995 until

July 2001.

Joseph E. Hasten

David M. MoÅett

Mr. MoÅett, 50, has served as Vice

Chairman and Chief Financial OÇcer of

U.S. Bancorp since the merger of Firstar

Corporation and U.S. Bancorp in February

2001. Prior to the merger, he was Vice

and Corporate Director of Human

Resources of Firstar Corporation and Star

Banc Corporation, a predecessor

company, since 1995, having served as

Director of Human Resources of Star

Banc Corporation since 1993.

Mr. Hasten, 50, has served as Vice

Chairman and Chief Financial OÇcer of

Chairman of U.S. Bancorp since the

Firstar Corporation, and had served as

merger of Firstar Corporation and U.S.

Chief Financial OÇcer of Star Banc

Bancorp in February 2001, when he

Corporation from 1993 until its merger

assumed responsibility for Corporate

with Firstar Corporation in 1998.

Banking. Previously, he had been Vice

Chairman of Wholesale Banking of Firstar

Corporation, after joining Mercantile

Bancorporation, a predecessor company,

as President of its St. Louis bank and of

Corporate Banking in 1995.

J. Robert HoÅmann

Daniel M. Quinn

Mr. Quinn, 45, Vice Chairman of U.S.

Bancorp, assumed responsibility for

Commercial Banking in April 1999 and

for Regional Commercial Real Estate in

August 1999. Previously, he had been

President of U.S. Bank in Colorado

Mr. HoÅman, 56, has served as Executive

(formerly Colorado National Bank) since

Vice President and Chief Credit OÇcer of

1996.

U.S. Bancorp since 1990.

U.S. Bancorp

DIRECTORS

John F. Grundhofer1

Thomas H. Jacobsen4

O'dell M. Owens, M.D., M.P.H.3,4

Chairman

U.S. Bancorp

Jerry A. Grundhofer1

Former Chairman

Firstar Corporation

Milwaukee, Wisconsin

President and Chief Executive OÇcer

Delbert W. Johnson1,3,4

Vice President

Safeguard ScientiÑcs, Inc.

Wayne, Pennsylvania

Joel W. Johnson4,5

Chairman, President and

Chief Executive OÇcer

Medical Director

United Healthcare

Cincinnati, Ohio

Thomas E. Petry1,2,3

Retired Chairman and

Chief Executive OÇcer

Eagle-Picher Industries, Inc.

Cincinnati, Ohio

Richard G. Reiten1,2,3

Chairman and Chief Executive OÇcer

Hormel Foods Corporation

Northwest Natural Gas Company

Austin, Minnesota

Jerry W. Levin2,5

Portland, Oregon

S. Walter Richey1,2

Chairman and Chief Executive OÇcer

Former Chairman and

Sunbeam Corporation

Boca Raton, Florida

Sheldon B. Lubar1,5

Chairman

Lubar & Company

Milwaukee, Wisconsin

Frank Lyon, Jr.2,4

President

Wingmead Farms

Chief Executive OÇcer

Meritex, Inc.

Roseville, Minnesota

Warren R. Staley1,3

Chairman and Chief Executive OÇcer

Cargill, Inc.

Minneapolis, Minnesota

Patrick T. Stokes1,5

President and Chief Executive OÇcer

North Little Rock, Arkansas

Daniel F. McKeithan, Jr.1,3,5

Anheuser-Busch, Inc.

St. Louis, Missouri

President and Chief Executive OÇcer

John J. Stollenwerk2,3,4

Tamarack Petroleum Company, Inc.

President and Chief Executive OÇcer

Milwaukee, Wisconsin

David B. O'Maley1,2

Chairman, President and

Chief Executive OÇcer

Ohio National Financial Services

Cincinnati, Ohio

Allen-Edmonds Shoe Corporation

Port Washington, Wisconsin

U.S. Bancorp

Linda L. Ahlers3,4

President

Marshall Field's

Minneapolis, Minnesota

Victoria Buyniski Gluckman3,4

President and Chief Executive OÇcer

United Medical Resources, Inc.

Cincinnati, Ohio

Arthur D. Collins, Jr.1,2,5

President and Chief Executive OÇcer

Medtronic, Inc.

Minneapolis, Minnesota

Peter H. Coors2,4,5

Chairman

Coors Brewing Company

Golden, Colorado

John C. Dannemiller4,5

Retired Chairman

Applied Industrial Technologies

Cleveland, Ohio

Joshua Green III3,4

Chairman and Chief Executive OÇcer

Joshua Green Corporation

Seattle, Washington

J.P. Hayden, Jr.1,2,5

Chairman of the Executive Committee

The Midland Company

Amelia, Ohio

Roger L. Howe1,2,3

Chairman Emeritus

U.S. Precision Lens, Inc.

Cincinnati, Ohio

1. Executive Committee
2. Compensation Committee
3. Audit Committee
4. Community Outreach and Fair Lending Committee
5. Governance Committee

U.S. Bancorp

Corporate Information

Executive Ofﬁces
U.S. Bancorp
225 South Sixth Street
Minneapolis, Minnesota 55402

After June 2002
800 Nicollet Mall
Minneapolis, Minnesota 55402

Common Stock Transfer Agent and Registrar
U.S. Bank National Association, a subsidiary of U.S. Bancorp,
acts as our transfer agent and registrar, dividend paying agent
and dividend reinvestment plan agent, and maintains all
shareholder records for the corporation. Inquiries related to
shareholder records, stock transfers, changes of ownership,
changes of address and dividend payment should be sent to
the transfer agent at the following address:

U.S. Bank National Association
1555 North River Center Drive, Suite 301
Milwaukee, Wisconsin 53212
Phone: 800-637-7549
Fax:
414-905-5049
Internet: www.investorservice.usbank.com

Independent Accountants
PricewaterhouseCoopers LLP serves as the independent
accountants of U.S. Bancorp.

Common Stock Listing and Trading
U.S. Bancorp common stock is listed and traded on the
New York Stock Exchange under the ticker symbol USB.

Dividends and Dividend Reinvestment Plan
U.S. Bancorp currently pays quarterly dividends on our com-
mon stock on or about the 15th day of January, April, July and
October, subject to prior approval by our Board of Directors.
U.S. Bancorp shareholders can choose to participate in a plan
that provides automatic reinvestment of dividends and/or
optional cash purchase of additional shares of U.S. Bancorp
common stock. For more information, please contact:

U.S. Bank National Association
Dividend Reinvestment Department
1555 North River Center Drive, Suite 301
Milwaukee, Wisconsin 53212
Phone: 800-637-7549

Investment Community Contacts
Howell D. McCullough
Senior Vice President, Investor Relations
howell.mccullough@usbank.com
Phone: 612-973-2261

Judith T. Murphy
Vice President, Investor Relations
judith.murphy @usbank.com
Phone: 612-973-2264

Financial Information
U.S. Bancorp news and ﬁnancial results are available through
our Web site and by mail.

Web site. For information about U.S. Bancorp, including news
and ﬁnancial results and online annual reports, access our home
page on the Internet at www.usbank.com.

Mail. At your request, we will mail to you our quarterly earnings
news releases, quarterly ﬁnancial data reported on Form 10-Q
and additional copies of our annual reports. To be added to the
U.S. Bancorp mailing list for quarterly earnings news releases or
to request other information, please contact:

U.S. Bancorp Investor Relations
225 South Sixth Street
Minneapolis, Minnesota 55402
Phone: 612-973-2263
corporaterelations@usbank.com

Media Requests
Steve Dale
Senior Vice President, Media Relations
Phone: 612-973-0898

Other Business Information
For product and service information, branch ofﬁce and
ATM locations, information about lines of business,
account access, employment opportunities and more, visit
www.usbank.com or www.ﬁrstar.com.

Diversity
U.S. Bancorp and our subsidiaries are committed to developing
and maintaining a workplace that reﬂects the diversity of the
communities we serve. We support a work environment where
individual differences are valued and respected and where each
individual who shares the fundamental values of the company has
an opportunity to contribute and grow based on individual merit.

Equal Employment Opportunity/Afﬁrmative Action
U.S. Bancorp and our subsidiaries are committed to providing
Equal Employment Opportunity to all employees and applicants
for employment. In keeping with this commitment, employment
decisions are made based upon performance, skill and abilities,
rather than race, color, religion, national origin or ancestry,
sex, age, disability, veteran status, sexual orientation or any
other factors protected by law. The corporation complies with
municipal, state and federal fair employment laws, including
regulations applying to federal contractors.

U.S. Bancorp, including each of our subsidiaries, is an
Equal Opportunity Employer and a Drug-Free Workplace.

U.S. Bank and Firstar Bank
Members FDIC

This report is printed on recycled paper containing

a minimum 10 percent post-consumer recycled waste.

Corporate Proﬁle

U.S. Bancorp is a multi-state ﬁnancial holding company

with headquarters in Minneapolis, Minnesota. The merger of

Firstar Corporation and the former U.S. Bancorp closed

on February 27, 2001, making the new U.S. Bancorp the
8th largest ﬁnancial holding company in the United States,
with total assets exceeding $171 billion. We place No. 41
in The Super 100, a Forbes magazine composite ranking

based on sales, proﬁts, assets and market value.

Through U.S. Bank, Firstar Bank and other subsidiaries,

U.S. Bancorp serves more than 10 million customers
principally through 2,147 full-service branch ofﬁces in
24 states, additional specialized ofﬁces across the country
and in several foreign countries, 4,904 ATMs, and Internet

and telephone banking.

U.S. Bancorp and our subsidiaries provide a compre-

hensive selection of premium ﬁnancial products and services

to individuals, businesses, nonproﬁt organizations, institu-

tions and government entities.

U.S. Bancorp, our subsidiary full-service banks and

other subsidiaries operate the following major lines of

business: Consumer Banking, Wholesale Banking, Payment

Services, and Private Client, Trust and Asset Management.

U.S. Bancorp Piper Jaffray offers full securities brokerage,

equity capital, ﬁxed income capital and individual investment

services.

U.S. Bancorp is home of the exclusive Five Star
Service Guarantee, which assures customers of certain
key banking standards.

U.S. Bancorp
225 South Sixth Street
Minneapolis, Minnesota 55402