TEXT-Fitch affirms U.S. Bancorp ratings

July 18 - Fitch Ratings has affirmed U.S. Bancorp's (USB) ratings including
its long- and short-term Issuer Default Ratings (IDR) at 'AA-' and 'F1+',
respectively. The Rating Outlook is Stable. A full list of ratings is provided
at the end of this release.

The affirmation of USB's ratings reflects the company's peer leading performance
despite a challenging economic and banking environment. Further, given the
company's strong competitive position, Fitch expects USB's performance to
continue to exceed those of peers over the near-to-intermediate term.

Fitch notes that USB operating performance continues to exceed those of peers as
well as some of Fitch's expectations. USB is able to generate earnings and
profitability owing to its low cost deposit base, efficient cost structure and
high proportion of non-interest income. This relative outperformance has been
sustained over a multi-year period.

The company's impressive average annual return on assets (ROA) of 1.33% over the
last five years handily exceeded the average ROA of similar regional banks.
Fitch notes that USB's strong net interest margin (NIM) has been a significant
contributor to this performance, as has been its solid contribution of
non-interest income, which over time has represented nearly 50% of operating
revenue.

This strong earnings generation has allowed USB to accrete capital at a
significantly faster rate than several peers. Thus, USB has been able to both
return capital to shareholders and invest in future growth, while maintaining
strong capital ratios. Fitch believes that given the company's strong earnings
profile, USB should continue to generate capital at a faster rate than most
peers.

USB's Tier 1 risk-based capital ratio of 10.7% in the second quarter of 2012
(2Q'12) places it in the middle of the pack compared to its large regional bank
peer group. However, Fitch believes that this level of capitalization is more
than adequate for USB's rating category, particularly given its strong earnings
generation and good asset quality trends over economic cycles. USB's current
Tier 1 common ratio is 8.8% under Basel I standards, Fitch would also note that
USB estimates that its Tier 1 common ratio under fully implemented current Basel
III proposals remains reasonable at 7.9%.

Fitch notes that USB's level of non-performing assets (NPAs) continues to
decline quarter over quarter. In 2Q'12, the company's level of NPAs declined
notably due to a significant reduction in NPAs related to commercial mortgage
and construction and development loans, partially offset by an increase in
non-accrual junior lien loans. The latter was due to the inclusion in
non-accrual loans of junior liens greater than 120 days past due as well as
junior liens behind a first lien greater than 180 days past due per interagency
regulatory guidance. Fitch believes the increase in this loan category is
manageable.

Additionally, Fitch's more granular analysis of USB's 2Q'12 overall asset
quality profile indicates that $773 million of the $8.8 billion in total NPAs
(which includes non-accrual loans, 90 days past due, real estate owned, and
restructured loans) are related to assets covered by loss share agreements with
the FDIC. Fitch would further note that approximately $6 billion of the
company's $8.8 billion in total NPAs are related to troubled debt restructurings
(TDRs).

While the growth of TDRs is impacting the entire banking industry, particularly
given new accounting guidance that went into effect in 3Q'11, Fitch believes
that USB's level of TDR growth remains very manageable relative to many peers.
Of the company's total TDRs, nearly 30% are either loans covered by FDIC
loss-sharing agreements or federal government guaranteed loans, where the risk
of ultimate loss is minimal. As such, Fitch estimates that with these
adjustments the company's NPA ratio is approximately 3.5%, and thus very
manageable relative to the size of the company's overall balance sheet.

Rating Drivers and Sensitivities

Fitch believes USB's strong performance throughout the credit crisis as well as
its prospects for future growth are reflective in its current ratings, which are
near the top of Fitch's bank rating universe globally. Thus, there is not a
significant amount of upside to the current ratings. However, Fitch could
envision very modestly higher ratings or a change in the Rating Outlook over
time should USB continue to profitably grow while continuing to deliver industry
leading operating performance and adhering to long-term strategic objectives.

Fitch notes that USB's regulatory and legal issues appear manageable, but that
USB as well as the rest of the industry face challenges regarding consumer
regulatory changes as well as the implementation of Basel III capital and
liquidity standards. Fitch would note that USB has been one of the more
pro-active institutions in addressing these challenges, but they do have the
potential to create headwinds for the entire industry.

More significant risks to ratings or the Rating Outlook could result from a
decision to expand USB's balance sheet through a large acquisition, or through a
material change in corporate strategy.

On the former, Fitch would acknowledge that a large acquisition done at a good
price with comprehensive due diligence on the potential target could potentially
be transformative for USB's franchise it is not without potential risks related
to price, integration, and operational issues. Thus, Fitch would analyze the
terms of any potential large acquisition closely in assessing the potential
impact to ratings. Fitch would note, however, that historically USB has been
both a good and disciplined acquirer.

While Fitch does not anticipate USB materially shifting its corporate and
business strategy, Fitch would note that underpinning USB's ratings is a
consistent strategy and solid operating history that has been executed
successfully over a multi-year period. Should this strategy change, there could
be an impact to ratings.

Examples of a strategy shift could include USB becoming more internationally
focused or sustainably more reliant on mortgage banking. Fitch does not view
the former as likely, but on the latter, Fitch does recognize that USB has
benefited from competitive dynamics in the residential mortgage market, but
would also note that to the extent that this becomes a more prominent business
for the company than it has been historically it could potentially alter the
predictability of company's earnings stream, which could impact ratings or the
Outlook.

USB operates one of the premier banking franchises in the U.S. with a retail
banking network spanning 25 states, which is augmented by meaningful presence in
payment systems, corporate trust, asset management, and credit cards.

Fitch has affirmed the following ratings with a Stable Outlook:

U.S. Bancorp

--Long-term IDR at 'AA-';
--Senior debt at 'AA-';
--Subordinated debt at 'A+';
--Preferred stock at 'BBB';
--Short-term IDR at 'F1+';
--Commercial paper at 'F1+';
--Viability at 'aa-';
--Support at '5';
--Support Floor at 'NF'.

U.S. Bank, NA
--Long-term deposits at 'AA';
--Short-term deposits at 'F1+';
--Long-term IDR at 'AA-';
--Senior debt at 'AA-';
--Subordinated debt at 'A+';
--Short-term IDR at 'F1+';
--Short-term debt at 'F1+';
--Short-term deposits at 'F1+';
--Viability at 'aa-';
--Support Rating at 5;
--Support Floor at NF.

U.S. Bank NA ND
--Long-term deposits at 'AA';
--Short-term deposits at 'F1+';
--Long-term IDR at 'AA-';
--Senior debt at 'AA-';
--Subordinated debt at 'A+';
--Short-term IDR at 'F1+';
--Short-term deposits at 'F1+';
--Viability at 'aa-';
--Support Rating at 5;
--Support Floor at NF.

Elavon Financial Services Limited
--Long-term IDR at 'AA-';
--Short-term IDR at 'F1+';
--Long-term deposits at 'AA';
--Short-term deposits at 'F1+';
--Support Rating at '1'.

USB Capital IX
USB Capital XIII
USB Realty Corp.
--Preferred at 'BBB+'.

Fitch has withdrawn the following rating:

U.S. Bancorp
--Junior subordinated debt at 'A'.