<PAGE>
CONTACT:
Wendy L. Raway John R. Danielson Judith T. Murphy
Media Relations Investor Relations Investor Relations
(612) 973-2429 (612) 973-2261 (612) 973-2264
U.S. BANCORP REPORTS EARNINGS FOR 2ND QUARTER 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
2Q 2Q PERCENT YTD YTD PERCENT
EARNINGS SUMMARY 2000 1999 CHANGE 2000 1999 CHANGE
--------------------------------------------------------------------------------------------------------------------
($ in millions, except per-share data)
Before merger-related charges and available-
for-sale securities transactions*:
<S> <C> <C> <C> <C> <C> <C>
Operating earnings $402.6 $383.8 4.9 $790.2 $752.4 5.0
Earnings per common share (diluted) 0.54 0.53 1.9 1.05 1.03 1.9
Cash earnings per common share (diluted)** 0.62 0.58 6.9 1.21 1.13 7.1
Net income 393.1 374.3 5.0 772.1 741.1 4.2
Earnings per common share (diluted) 0.52 0.51 2.0 1.03 1.02 1.0
Cash earnings per common share (diluted)** 0.60 0.56 7.1 1.18 1.12 5.4
Dividends paid per common share 0.215 0.195 10.3 0.43 0.39 10.3
Book value per common share (period-end) 10.62 8.70 22.1
Return on average common equity***(%) 20.5 24.4 20.4 24.5
Return on average assets*** (%) 1.93 2.02 1.92 2.01
Net interest margin (%) 4.75 4.86 4.78 4.84
Efficiency ratio*** (%) 52.1 49.9 52.8 50.1
Banking efficiency ratio****(%) 44.7 42.4 45.0 42.9
* Net merger-related charges and available-for-sale securities
transactions totaled $9.5 million, after-tax, in 2Q00 and 2Q99. Net
merger-related charges and available-for-sale securities transactions
totaled $18.1 million, after-tax, year-to-date 2000, and $11.3 million,
after-tax, year-to-date 1999.
** calculated by adding amortization of goodwill and other intangible
assets to operating earnings and net income, respectively
*** before merger-related charges and available-for-sale securities
transactions
**** before merger-related charges; without investment banking and
brokerage activity
--------------------------------------------------------------------------------------------------------------------
</TABLE>
MINNEAPOLIS, July 20, 2000 -- U.S. Bancorp (NYSE: USB) today reported operating
earnings of $402.6 million for the second quarter of 2000, compared with $383.8
million for the second quarter of 1999. Operating earnings of $.54 per diluted
share in the second quarter of 2000 were $.01 higher than the same period of
1999. Operating earnings on a cash basis increased to $.62 per diluted share in
the second quarter of 2000 from $.58 in the second quarter of 1999. Return on
average common equity and return on average assets, excluding merger-related
charges and available-for-sale securities transactions, were 20.5 percent and
1.93 percent, respectively, in the second quarter of 2000, compared with returns
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 2
of 24.4 percent and 2.02 percent in the second quarter of 1999. The reduction in
the Company's return on average common equity from the second quarter of 1999
reflects the impact of recent acquisitions, which were accounted for using
purchase accounting.
Including after-tax merger-related charges and available-for-sale
securities transactions of $9.5 million in both of the second quarters of 2000
and 1999, the Company recorded net income for the second quarter of 2000 of
$393.1 million, or $.52 per diluted share, compared with $374.3 million, or $.51
per diluted share, for the same period of 1999.
U.S. Bancorp Chairman and Chief Executive Officer John F. Grundhofer said,
"Last December, we announced that we were making investments to improve service
quality and to accelerate growth. We are beginning to see the results of these
investments. During the second quarter, we recorded strong loan and fee growth
and on-plan expenses. However, lagging deposit growth in both Consumer Banking
and Wholesale Banking has had a negative impact on net interest income growth.
"We are confident that we are on the right course, but higher EPS growth
will take longer to achieve than we previously expected," Mr. Grundhofer
continued. "We remain committed to making the investments necessary to
accelerate earnings growth over the next two years. We reviewed and rejected
taking actions that would have achieved short-term results by sacrificing
long-term growth. Consequently, while we expect continued quarterly improvement
in EPS this year, we now expect full-year 2000 earnings to be between
$2.18-$2.23 per share, within the range of current analyst expectations."
Total revenue on a taxable-equivalent basis, before available-for-sale
securities transactions, grew by $202.0 million, or 13.7 percent, over the
second quarter of 1999. The increase in total revenue was driven by core loan
growth, credit card fee revenue and acquisitions. Excluding the impact of
acquisitions and divestitures, total revenue on a taxable-equivalent basis,
before available-for-sale securities transactions, in the second quarter of 2000
would have been approximately 9.2 percent higher than the second quarter of
1999. Offsetting the growth in total revenue were increases in noninterest
expense of $138.8 million and provision for credit losses of $37.0 million over
the second quarter of 1999. The growth in expense was primarily due to an
increase in expense related to acquisitions, investment banking and brokerage
activity and additional investments in sales, service quality and
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 3
technology. In addition to the growth in the Company's on-going technology
investment on Internet-related products and services, the second quarter of 2000
included approximately $11.2 million of Internet infrastructure-related expense.
As anticipated, the Internet infrastructure-related expense was more than offset
in the second quarter by a $35 million gain on the disposal of the Company's
ownership interest in the Portland office building.
Net charge-offs in the second quarter of 2000 were $163.2 million,
compared with first quarter of 2000 net charge-offs of $154.0 million and second
quarter of 1999 net charge-offs of $140.3 million. Nearly one half of the
increase in net charge-offs from the first quarter of 2000 and second quarter of
1999 was due to an expected increase in losses on the growing credit-scored
small business lending portfolio. The provision for credit losses of $163.0
million in the second quarter of 2000 essentially equaled net charge-offs for
the period. Nonperforming assets increased from $366.6 million at March 31,
2000, to $404.4 million at June 30, 2000, principally due to one commercial
credit. The ratio of allowance for credit losses to nonperforming loans was 285
percent at June 30, 2000.
On April 7, 2000, the Company acquired Oliver-Allen Corporation, a
privately-held information technology leasing company. During the second
quarter of 2000, the Company also acquired the PitneyWorks-SM- Business
Rewards-SM- Visa-Registered Trademark- and Business Visa-Registered Trademark-
card portfolios from Pitney Bowes Inc. (NYSE: PBI) and the commercial charge
card unit, including the corporate and purchasing card portfolio, of Royal
Bank of Canada.
On June 27, 2000, the Company announced an agreement to acquire Scripps
Financial Corporation of San Diego, which has nine branches in San Diego county
and total assets of $650 million. Pending approvals from Scripps shareholders
and regulators, the acquisition is expected to close in fourth quarter 2000.
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 4
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
LINE OF BUSINESS FINANCIAL PERFORMANCE*
----------------------------------------------------------------------------------------------------------------------------
($ in millions) YTD 2000
Operating Earnings** Percent Operating Earnings** Percent Earnings
Business Line 2Q 2000 2Q 1999 Change YTD 2000 YTD 1999 Change Composition
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Wholesale Banking $175.4 $144.8 21.1 $326.5 $288.3 13.3 41%
Consumer Banking 117.6 110.6 6.3 220.8 208.1 6.1 28
Payment Systems 53.8 45.2 19.0 102.3 75.8 35.0 13
Wealth Management &
Capital Markets 45.3 49.1 (7.7) 114.3 98.5 16.0 15
Corporate Support 10.5 34.1 nm 26.3 81.7 nm 3
--------------------------------------------------------------------------------------------
Consolidated Company $402.6 $383.8 4.9 $790.2 $752.4 5.0 100%
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
* preliminary data
** net income before merger-related charges and available-for-sale securities
transactions
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
LINE OF BUSINESS
Within the Company, financial performance is measured by major lines of
business which include: Wholesale Banking, Consumer Banking, Payment Systems,
Wealth Management and Capital Markets, and Corporate Support. These segments are
determined based on the products and services provided to respond effectively to
the needs of a diverse customer base. Business line results are derived from the
Company's business unit profitability reporting system. Designations,
assignments and allocations may change from time to time as management
accounting systems are enhanced or product lines change. During 2000 certain
organization and methodology changes were made and 1999 results are presented on
a consistent basis.
Wholesale Banking contributed $175.4 million of the Company's operating
earnings in the second quarter of 2000, a 21.1 percent increase over the second
quarter of 1999. Strong revenue growth, primarily due to core loan growth and
bank acquisitions, was partially offset by an increase in provision for credit
losses and higher noninterest expense.
Consumer Banking contributed $117.6 million of the Company's operating
earnings in the second quarter of 2000, a 6.3 percent increase over the second
quarter of 1999. Total revenue grew 5.9 percent as the increased value of
deposits in a rising interest rate environment and growth in fee income and home
equity lending more than offset the reduction in the indirect automobile loan
portfolio. A
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 5
reduction in the business line's provision for credit losses, primarily due to
improved deposit fraud management and the divestiture of the indirect automobile
portfolio, also contributed to the increase in operating earnings over the same
quarter of 1999. The Company is currently investing in a number of customer
service quality initiatives and enhanced technology designed to improve the
earnings growth of the Consumer Banking business line.
Payment Systems contributed $53.8 million of the Company's operating
earnings in the second quarter of 2000, a 19.0 percent increase over the second
quarter of 1999. Total revenue grew 18.7 percent over the second quarter of
1999. Strong growth in corporate and retail card product fees and ATM
processing-related revenue was partially offset by a slight reduction in net
interest income, reflecting the growth in the business line's
noninterest-bearing commercial loans. Payment Systems' revenue growth was
partially offset by increases in provision for credit losses and noninterest
expense over the second quarter of 1999, reflecting continued growth in
transaction volume, marketing and investments in new products and technology.
Wealth Management & Capital Markets contributed $45.3 million of the
Company's operating earnings in the second quarter of 2000, a 7.7 percent
decrease from the second quarter of 1999. Total revenue grew by 10.1 percent
over the second quarter of 1999, due to increases in investment banking, trading
account profits and commissions, and growth in loans and deposits in Private
Financial Services. Offsetting the positive impact of revenue growth was a 15.6
percent increase in expense, primarily due to the increase in investment banking
and brokerage revenue, office expansion and other growth initiatives.
Corporate Support includes the net effect of support units after internal
revenue and expense allocations, treasury management and other corporate
activities. The variance in operating earnings in the second quarter of 2000
from the second quarter of 1999 primarily reflects the change in the provision
for credit losses residual allocations.
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 6
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT HIGHLIGHTS
---------------------------------------------------------------------------------------------------------------------------------
(Taxable-equivalent basis, $ in millions,
except per-share data) 2Q 2Q PERCENT YTD YTD PERCENT
2000 1999 CHANGE 2000 1999 CHANGE
----------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income $879.8 $823.3 6.9 $1,742.1 $1,616.7 7.8
Provision for credit losses 163.0 126.0 29.4 317.0 243.0 30.5
Noninterest income* 801.4 655.9 22.2 1,597.1 1,282.2 24.6
Noninterest expense* 876.6 737.8 18.8 1,764.5 1,453.7 21.4
-------------------- ----------------------
Income before taxes, merger-related charges and
available-for-sale securities transactions 641.6 615.4 4.3 1,257.7 1,202.2 4.6
Taxable-equivalent adjustment 17.5 10.7 63.6 34.4 21.4 60.7
Income taxes* 221.5 220.9 0.3 433.1 428.4 1.1
-------------------- ----------------------
Income before merger-related charges and
available-for-sale securities transactions 402.6 383.8 4.9 790.2 752.4 5.0
Merger-related charges and available-for-sale
securities transactions (after-tax) (9.5) (9.5) nm (18.1) (11.3) nm
-------------------- ----------------------
Net income $393.1 $374.3 5.0 $772.1 $741.1 4.2
-------------------- ----------------------
-------------------- ----------------------
Per diluted common share:
Earnings, before merger-related charges and
available-for-sale securities transactions $0.54 $0.53 1.9 $1.05 $1.03 1.9
-------------------- ----------------------
Earnings on a cash basis, before merger-related charges
and available-for-sale securities transactions $0.62 $0.58 6.9 $1.21 $1.13 7.1
-------------------- ----------------------
Net income $0.52 $0.51 2.0 $1.03 $1.02 1.0
-------------------- ----------------------
Earnings on a cash basis** $0.60 $0.56 7.1 $1.18 $1.12 5.4
-------------------- ----------------------
* before effect of merger-related charges and available-for-sale
securities transactions
** calculated by adding amortization of goodwill and other intangible
assets to net income
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NET INTEREST INCOME
Second quarter net interest income on a taxable-equivalent basis was
$879.8 million, compared with $823.3 million recorded in the second quarter of
1999. Average earning assets for the period increased over the second quarter of
1999 by $6.6 billion, or 9.7 percent, primarily driven by core commercial and
home equity and second mortgage loan growth and bank acquisitions, partially
offset by
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 7
reductions in securities, indirect automobile loans and residential
mortgage loans. The net interest margin decreased in the second quarter of 2000
to 4.75 percent, compared with 4.86 percent in the second quarter of 1999,
reflecting margin compression on consumer asset products and lagging deposit
growth relative to the growth in earning assets.
Excluding indirect automobile and residential mortgage loans, average
loans for the second quarter were higher by $8.2 billion, or 15.1 percent, than
the second quarter of 1999. The decline in indirect automobile loans reflects a
$1.8 billion loan sale completed in the third quarter of 1999. The Company is in
the process of exiting this business. Without the bank acquisitions, average
loans, excluding indirect automobile and residential mortgage loans, were
approximately 10.2 percent higher than the second quarter of 1999.
Average available-for-sale securities for the second quarter of 2000 were
lower than the second quarter of 1999 by $378 million, or 7.4 percent,
reflecting both maturities and sales of securities.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
AVERAGE LOANS
---------------------------------------------------------------------------------------------------------------------------
($ in millions) 2Q 2Q PERCENT YTD YTD PERCENT
2000 1999 CHANGE 2000 1999 CHANGE
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial $28,952 $24,629 17.6 $28,094 $24,212 16.0
Commercial real estate 14,484 11,982 20.9 14,432 11,735 23.0
Lease financing 2,629 2,245 17.1 2,478 2,237 10.8
---------------------- ----------------------
Total commercial 46,065 38,856 18.6 45,004 38,184 17.9
Home equity and second mortgage 8,934 7,804 14.5 8,839 7,645 15.6
Credit card 4,184 3,988 4.9 4,139 4,001 3.4
Other 3,752 4,044 (7.2) 3,757 4,071 (7.7)
---------------------- ----------------------
Total consumer, excl. indirect automobile
and residential mortgage 16,870 15,836 6.5 16,735 15,717 6.5
Indirect automobile 448 2,829 (84.2) 489 2,892 (83.1)
Residential mortgage 2,615 2,800 (6.6) 2,625 2,912 (9.9)
---------------------- ----------------------
Total loans $65,998 $60,321 9.4 $64,853 $59,705 8.6
---------------------- ----------------------
---------------------- ----------------------
Total loans, excl. indirect automobile
and residential mortgage $62,935 $54,692 15.1 $61,739 $53,901 14.5
---------------------- ----------------------
---------------------- ----------------------
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 8
Average noninterest-bearing deposits were higher in the second quarter of
2000 by $701 million, or 5.2 percent, and average total deposits were higher by
$2.4 billion, or 5.0 percent, during the same period, reflecting bank
acquisitions.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
--------------------------------------------------------------------------------------------------------------------------
($ in millions) 2Q 2Q PERCENT YTD YTD PERCENT
2000 1999 CHANGE 2000 1999 CHANGE
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Credit card fee revenue $177.1 $148.7 19.1 $336.6 $275.5 22.2
Trust and investment management fees 117.0 112.2 4.3 234.1 229.4 2.0
Service charges on deposit accounts 117.5 107.5 9.3 226.5 210.9 7.4
Investment products fees and commissions 81.8 91.6 (10.7) 198.0 180.2 9.9
Investment banking revenue 72.8 60.3 20.7 166.8 96.5 72.8
Trading account profits and commissions 58.2 50.5 15.2 141.8 102.0 39.0
Other 177.0 85.1 108.0 293.3 187.7 56.3
------------------------ ------------------------
Subtotal 801.4 655.9 22.2 1,597.1 1,282.2 24.6
Available-for-sale securities gains 0.3 -- -- --
------------------------ ------------------------
Total noninterest income $801.7 $655.9 $1,597.1 $1,282.2
------------------------ ------------------------
------------------------ ------------------------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
NONINTEREST INCOME
Second quarter noninterest income, before available-for-sale securities
transactions, was $801.4 million, an increase of $145.5 million, or 22.2
percent, from the same quarter of 1999. Excluding the impact of acquisitions and
divestitures, noninterest income, before available-for-sale transactions, in the
second quarter of 2000 would have been approximately 16.6 percent higher than
the second quarter of 1999. Credit card fee revenue was higher quarter over
quarter by $28.4 million, or 19.1 percent, reflecting continued growth in
corporate and retail card product fees and ATM processing-related revenue. The
increase in other income in the second quarter of 2000 included a $35 million
gain on the disposal of the Company's ownership in the Portland office building,
in addition to growth due to acquisitions and on-going business line
initiatives.
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 9
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
-----------------------------------------------------------------------------------------------------------------------
($ in millions) 2Q 2Q PERCENT YTD YTD PERCENT
2000 1999 CHANGE 2000 1999 CHANGE
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Salaries and employee benefits $483.4 $410.3 17.8 $991.6 $834.4 18.8
Net occupancy 55.2 49.9 10.6 112.3 99.9 12.4
Furniture and equipment 40.5 39.0 3.8 81.6 77.1 5.8
Professional services 24.4 16.6 47.0 43.5 30.6 42.2
Telephone 21.8 17.4 25.3 43.1 35.4 21.8
Advertising and marketing 22.0 12.7 73.2 37.8 27.7 36.5
Other personnel costs 19.2 19.8 (3.0) 31.5 32.5 (3.1)
Goodwill and other intangible assets 58.4 36.6 59.6 115.0 74.4 54.6
Other 151.7 135.5 12.0 308.1 241.7 27.5
--------------------- -----------------------
Subtotal 876.6 737.8 18.8 1,764.5 1,453.7 21.4
Merger-related charges 15.0 15.0 28.1 17.9
--------------------- -----------------------
Total noninterest expense $891.6 $752.8 $1,792.6 $1,471.6
--------------------- -----------------------
--------------------- -----------------------
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
NONINTEREST EXPENSE
Second quarter noninterest expense, before merger-related charges, totaled
$876.6 million, an increase of $138.8 million, or 18.8 percent, from the second
quarter of 1999. The increase in expense over the second quarter of 1999 was
primarily the result of acquisitions and the Company's continuing investment in
sales, service quality and technology. In addition to on-going investments in
Internet-related products and services, the second quarter of 2000 included
approximately $11.2 million of incremental spending on Internet
infrastructure-related initiatives.
The $15.0 million of merger-related charges incurred in the second quarter
of 2000 were related to the integration of the Company's various acquisitions,
including Western Bancorp and Peninsula Bank of San Diego.
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 10
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES
----------------------------------------------------------------------------------------------------------------
($ in millions) 2Q 1Q 4Q 3Q 2Q
2000 2000 1999 1999 1999
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of period $1,011.1 $995.4 $966.3 $968.2 $982.5
Net charge-offs
Commercial 57.5 44.8 47.0 32.7 29.9
Consumer 105.7 109.2 99.0 109.1 110.4
------------------------------------------------------
163.2 154.0 146.0 141.8 140.3
Total
Provision for credit losses 163.0 154.0 146.0 142.0 126.0
Acquisitions and other additions (reductions) 28.5 15.7 29.1 (2.1) --
------------------------------------------------------
Balance, end of period $1,039.4 $1,011.1 $995.4 $966.3 $968.2
------------------------------------------------------
------------------------------------------------------
Net charge-offs to average loans (%) 0.99 0.97 0.94 0.92 0.93
Allowance for credit losses to
period-end loans (%) 1.54 1.56 1.58 1.60 1.59
----------------------------------------------------------------------------------------------------------------
</TABLE>
CREDIT QUALITY
Total net charge-offs in the second quarter of 2000 were $163.2 million,
compared with the first quarter of 2000 net charge-offs of $154.0 million and
the second quarter of 1999 net charge-offs of $140.3 million. Consumer loan net
charge-offs of $105.7 million were less than the same period of 1999 and $3.5
million, or 3.2 percent, less than the first quarter of 2000. Consumer loan net
charge-offs as a percent of average loans outstanding were 2.13 percent in the
second quarter of 2000, compared with 2.22 percent and 2.06 percent in the first
quarter of 2000 and second quarter of 1999, respectively.
Commercial loan net charge-offs were $57.5 million for the second quarter
of 2000, or .50 percent of average loans outstanding, compared with $44.8
million, or .41 percent, in the first quarter of 2000 and $29.9 million, or .31
percent of average loans outstanding, in the second quarter of 1999. Net
charge-offs in the second quarter of 2000 included expected higher losses on a
growing portfolio of credit-scored small business and commercial payment systems
products. Commercial loan net charge-
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 11
<TABLE>
<CAPTION>
offs, excluding net charge-offs of credit-scored small business and commercial
payment systems products, were $34.4 million, or .32 percent of the associated
average loans outstanding, compared with $24.2 million, or .23 percent on the
same basis, in the first quarter of 2000.
----------------------------------------------------------------------------------------------------------------------------
CONSUMER CREDIT
----------------------------------------------------------------------------------------------------------------------------
(Percent) JUN 30 MAR 31 DEC 31 SEP 30 JUN 30
2000 2000 1999 1999 1999
-----------------------------------------------------------
Net Charge-off Ratios:*
<S> <C> <C> <C> <C> <C>
Credit cards 4.59 3.84 3.67 3.50 4.69
Other consumer 1.75 2.09 1.87 1.97 1.73
Subtotal, excl. residential mortgage 2.44 2.51 2.31 2.30 2.36
Residential mortgage 0.12 0.35 0.07 0.12 0.09
Total consumer 2.13 2.22 2.01 2.03 2.06
Consumer Delinquency Ratios (including NPLs):
Past due 30+ days 2.58 2.57 2.65 2.43 2.24
Past due 90+ days 0.80 0.84 0.79 0.70 0.65
* annualized and calculated on average loan balances
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Consumer loans 30 days or more past due were 2.58 percent of the
portfolio at June 30, 2000, compared with 2.57 percent at March 31, 2000, and
2.24 percent at June 30, 1999.
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 12
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
ASSET QUALITY
-----------------------------------------------------------------------------------------------------------------
($ in millions)
JUN 30 MAR 31 DEC 31 SEP 30 JUN 30
2000 2000 1999 1999 1999
----------------------------------------------------
Nonperforming loans
<S> <C> <C> <C> <C> <C>
Commercial $243.6 $186.7 $161.2 $170.6 $184.2
Commercial real estate 78.7 93.8 104.2 87.6 68.3
Consumer 42.9 45.9 44.6 37.0 43.7
----------------------------------------------------
365.2 326.4 310.0 295.2 296.2
Total
Other real estate 22.7 23.8 20.7 19.7 14.2
Other nonperforming assets 16.5 16.4 16.8 10.5 9.8
----------------------------------------------------
Total nonperforming assets* $404.4 $366.6 $347.5 $325.4 $320.2
----------------------------------------------------
----------------------------------------------------
Accruing loans 90 days past due $153.4 $133.4 $125.8 $106.7 $100.6
----------------------------------------------------
----------------------------------------------------
Allowance to nonperforming loans (%) 285 310 321 327 327
Allowance to nonperforming assets (%) 257 276 286 297 302
Nonperforming assets to loans
plus ORE (%) 0.60 0.56 0.55 0.54 0.53
* does not include accruing loans 90 days past due
-----------------------------------------------------------------------------------------------------------------
</TABLE>
The allowance for credit losses was $1,039.4 million at June 30, 2000,
higher than the allowance for credit losses of $1,011.1 million at March 31,
2000, due to additions related to the acquisition of Oliver-Allen Corporation
and the Pitney Bowes and Royal Bank of Canada credit card portfolio purchases.
The ratio of allowance for credit losses to nonperforming loans was 285 percent
at June 30, 2000, down from the ratio of 310 percent at March 31, 2000.
Nonperforming assets at June 30, 2000, totaled $404.4 million, compared
with $366.6 million at March 31, 2000, and $320.2 million at June 30, 1999. The
increase in nonperforming assets from March 31, 2000, to June 30, 2000, was
principally due to one commercial credit. The ratio of nonperforming assets to
loans and other real estate was .60 percent at June 30, 2000, compared with .56
percent at March 31, 2000, and .53 percent at June 30, 1999.
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 13
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
CAPITAL POSITION
---------------------------------------------------------------------------------------------------------------------
(Percent) JUN 30 MAR 31 DEC 31 SEP 30 JUN 30
2000 2000 1999 1999 1999
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common equity to assets 9.2 9.3 9.4 8.7 8.2
Tangible common equity to assets* 6.4 6.4 6.5 6.5 6.3
Tier 1 capital ratio 6.6 6.6 6.8 6.7 6.6
Total risk-based capital ratio 10.7 10.9 11.1 11.3 11.1
Leverage ratio 7.2 7.2 7.4 7.1 7.1
* calculated by deducting goodwill from common equity and assets
---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
COMMON SHARES
------------------------------------------------------------------------------------------------------
(Millions) 2Q 1Q 4Q 3Q 2Q
2000 2000 1999 1999 1999
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning shares outstanding 749.0 753.3 730.4 725.0 726.4
Shares issued for stock option and stock purchase
plans, acquisitions and other corporate purposes 4.3 5.7 30.2 10.4 1.6
Shares repurchased (6.2) (10.0) (7.3) (5.0) (3.0)
--------------------------------------------
Ending shares outstanding 747.1 749.0 753.3 730.4 725.0
--------------------------------------------
--------------------------------------------
------------------------------------------------------------------------------------------------------
</TABLE>
On February 16, 2000, the Company announced a share repurchase program of
up to $2.5 billion of common stock over the period ending March 31, 2002. During
the second quarter of 2000, the Company repurchased 6.2 million shares under the
program for a total dollar value of $143.4 million.
<PAGE>
U.S. Bancorp Reports Second Quarter 2000 Results
July 20, 2000
Page 14
Minneapolis-based U.S. Bancorp ("USB"), with $86 billion in assets, is
the 11th largest financial services holding company in the nation and operates
approximately 1,000 banking offices in the Midwest and West. The Company
provides comprehensive banking, trust, investment, and payment systems products
and services to consumers, businesses and institutions. It operates a network of
5,300 ATMs and provides 24-hour, seven-days-a-week telephone customer service.
The Company offers full-service brokerage services at approximately 100 offices
through U.S. Bancorp Piper Jaffray. The Company is the largest provider of Visa
corporate and purchasing cards in the world, and is one of the largest providers
of corporate trust services in the nation. For further information, please see
the U.S. Bancorp web site at WWW.USBANK.COM.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements. Statements that
are not historical or current facts, including statements about beliefs and
expectations, are forward-looking statements. These forward-looking statements
cover, among other things, earnings per share estimates and projected earnings
growth, anticipated future expenses and revenues, and the future prospects of
the Company's consumer banking business. 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)
the Company's investments in its consumer banking, payment systems and wealth
management businesses and in its Internet development could require additional
incremental spending, and might not produce expected deposit and loan growth and
anticipated contributions to Company earnings; (ii) 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; (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 on-balance sheet and off-balance sheet
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 such as the Internet, or bank regulatory reform; and (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. 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.
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<PAGE>
U. S. Bancorp
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
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(Dollars in Millions, Except Per Share Data) June 30 June 30 June 30 June 30
(Unaudited) 2000 1999 2000 1999
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INTEREST INCOME
<S> <C> <C> <C> <C>
Loans $1,517.5 $1,272.2 $2,944.4 $2,510.7
Securities
Taxable 58.5 59.8 118.8 124.4
Exempt from federal income taxes 13.8 14.3 27.8 29.0
Other interest income 64.9 38.6 127.3 72.8
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Total interest income 1,654.7 1,384.9 3,218.3 2,736.9
INTEREST EXPENSE
Deposits 402.2 308.8 775.1 620.4
Federal funds purchased and repurchase agreements 45.7 43.6 89.5 83.0
Other short-term funds borrowed 15.0 12.1 28.6 25.0
Long-term debt 310.2 188.4 578.8 374.5
Company-obligated mandatorily redeemable preferred securities of subsidiary
trusts holding solely the junior subordinated debentures of the parent company 19.3 19.4 38.6 38.7
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Total interest expense 792.4 572.3 1,510.6 1,141.6
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Net interest income 862.3 812.6 1,707.7 1,595.3
Provision for credit losses 163.0 126.0 317.0 243.0
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Net interest income after provision for credit losses 699.3 686.6 1,390.7 1,352.3
NONINTEREST INCOME
Credit card fee revenue 177.1 148.7 336.6 275.5
Trust and investment management fees 117.0 112.2 234.1 229.4
Service charges on deposit accounts 117.5 107.5 226.5 210.9
Investment products fees and commissions 81.8 91.6 198.0 180.2
Investment banking revenue 72.8 60.3 166.8 96.5
Trading account profits and commissions 58.2 50.5 141.8 102.0
Available-for-sale securities gains .3 -- -- --
Other 177.0 85.1 293.3 187.7
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Total noninterest income 801.7 655.9 1,597.1 1,282.2
NONINTEREST EXPENSE
Salaries 414.1 356.7 846.2 710.8
Employee benefits 69.3 53.6 145.4 123.6
Net occupancy 55.2 49.9 112.3 99.9
Furniture and equipment 40.5 39.0 81.6 77.1
Professional services 24.4 16.6 43.5 30.6
Telephone 21.8 17.4 43.1 35.4
Advertising and marketing 22.0 12.7 37.8 27.7
Other personnel costs 19.2 19.8 31.5 32.5
Goodwill and other intangible assets 58.4 36.6 115.0 74.4
Merger-related charges 15.0 15.0 28.1 17.9
Other 151.7 135.5 308.1 241.7
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Total noninterest expense 891.6 752.8 1,792.6 1,471.6
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Income before income taxes 609.4 589.7 1,195.2 1,162.9
Applicable income taxes 216.3 215.4 423.1 421.8
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Net income $393.1 $374.3 $772.1 $741.1
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EARNINGS PER COMMON SHARE
Average shares outstanding 746,011,809 723,239,415 747,175,679 722,940,060
Earnings per share $.53 $.52 $1.03 $1.03
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Diluted average shares outstanding 748,894,830 729,263,697 749,881,897 728,833,052
Diluted earnings per share $.52 $.51 $1.03 $1.02
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</TABLE>
<TABLE>
<CAPTION>
SELECTED AVERAGE BALANCES Three Months Ended Six Months Ended
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(Dollars in Millions) June 30 June 30 June 30 June 30
(Unaudited) 2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Earning assets $74,545 $67,979 $73,344 $67,362
Total assets 84,085 76,072 82,927 75,593
Total shareholders' equity 7,884 6,312 7,790 6,200
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</TABLE>
<PAGE>
U.S. Bancorp
CONSOLIDATED ENDING BALANCE SHEET
<TABLE>
<CAPTION>
June 30 December 31 June 30
(Dollars in Millions) 2000 1999 1999
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(Unaudited) (Unaudited)
ASSETS
<S> <C> <C> <C>
Cash and due from banks $3,775 $4,036 $3,748
Federal funds sold 653 713 139
Securities purchased under agreements to resell 384 324 381
Trading account securities 765 617 639
Available-for-sale securities 4,526 4,871 5,313
Loans 67,384 62,885 60,896
Less allowance for credit losses 1,039 995 968
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Net loans 66,345 61,890 59,928
Premises and equipment 855 862 856
Interest receivable 493 433 438
Customers' liability on acceptances 166 152 156
Goodwill and other intangible assets 3,188 3,066 2,058
Other assets 5,024 4,566 3,734
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Total assets $86,174 $81,530 $77,390
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LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $16,223 $16,050 $15,394
Interest-bearing 29,842 29,671 29,337
Time certificates of deposit greater than $100,000 6,480 5,809 4,536
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Total deposits 52,545 51,530 49,267
Federal funds purchased 209 297 868
Securities sold under agreements to repurchase 998 1,235 1,180
Other short-term funds borrowed 827 724 1,154
Long-term debt 19,762 16,563 15,227
Company-obligated mandatorily redeemable preferred securities of subsidiary
trusts holding solely the junior subordinated debentures of the parent company 950 950 950
Acceptances outstanding 166 152 156
Other liabilities 2,786 2,441 2,280
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Total liabilities 78,243 73,892 71,082
Shareholders' equity
Common stock 948 943 931
Capital surplus 1,457 1,399 1,203
Retained earnings 5,839 5,389 4,913
Accumulated other comprehensive income (71) (62) (2)
Treasury stock (242) (31) (737)
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Total shareholders' equity 7,931 7,638 6,308
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Total liabilities and shareholders' equity $86,174 $81,530 $77,390
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</TABLE>
