U.S. Bank’s latest profit fell as it set aside more money to cover potential losses as the economy weakens. (Richard Vogel | AP/The Minnesota Star Tribune)

U.S. Bancorp executives said Friday they see evidence of a strong economy even as there is uncertainty about the future, including concerns about a possible recession.

"If we're looking at the information today, it looks really good," Terry Dolan, chief financial officer, said in an interview after the Minneapolis-based bank reported a second-quarter increase in revenue and a decline in profits.

"The consumer spend continues to be strong. Business spend is strong. But we know there is a wide range of possible outcomes," he said.

Dolan added that the bank has seen some shifts in spending to more essential items.

"Consumers are spending more on food and fuel — and less on their boats and things like that," he said.

The company's shares rose 5.4% after it reported a record net revenue of $6.01 billion, a 4% increase from the same quarter a year ago. That was propelled by robust loan growth and rising interest rates.

Net income dropped 23% as U.S. Bank set aside more money to cover potential loan losses. The increase was necessary because the company took on more new loans and accounted for increased economic uncertainty.

"Under the current accounting rules, you have to provide for potential losses when you originate the loans," Dolan said. "Our loan growth was so strong that we had a reserve build as a result of it."

Average total loans grew by 10.2% over the last year, with commercial loans posting the highest increases. That helped drive a 10% increase in net interest income in the quarter.

Non-interest income declined 2.7%, reflecting lower mortgage banking revenue as refinancing activity has dropped and lower gains occur on the sale of securities.

U.S. Bank also recorded nearly $200 million in charges related to its planned $8 billion acquisition of MUFG Union Bank.

It first announced that deal in September and had hoped to close the deal in the first half of this year. But it's still awaiting regulatory approval as the Federal Reserve has had some changes in leadership.

Dolan said the company is now hoping to close the deal by the late third quarter or early fourth quarter. That means the conversion of MUFG to U.S. Bank will likely happen early next year instead of this fall.

"Our planning is on track," he said. "We're ready to go once we get regulatory approval."

Given the expectation for higher interest rates, U.S. Bank also updated its guidance for the rest of the year. It now expects net interest income to be in the low to mid-teens, which is higher than its previous forecast of 8% to 11%.

But that is expected to be partially offset by a slight decline in fee income as a result of a projected decline in mortgage volumes.