On Dec. 21, 2005, Standard&Poor's Ratings Services revised its outlook on the 'A+/A-1' counterparty credit ratings on U.S. Bancorp and its subsidiaries to positive from stable. The positive outlook for U.S. Bancorp reflects its consistently strong core profitability and lower credit risk profile, which has translated into lower credit costs and lower volatility of operating results. U.S. Bancorp operates with the highest pretax operating margin of all of the large regional and large complex banks. Profitability measures have held strong in the midst of the current challenging interest rate cycle. Given U.S. Bancorp's low-cost, core retail funding profile and the overall asset-sensitive position of its balance sheet, core earnings should benefit with rising interest rates and a steeper
