U.S. Bank and peers see strong economy as resilient consumers continue spending

Banks are turning out big profits and touting the resilience of the American consumer, even as industry concerns have popped up lately about potential risks lurking in the economy.

At Minneapolis-based U.S. Bancorp, the nation’s fifth largest, executives were upbeat Thursday as the company hit a third-quarter revenue record, driven by fees from credit cards and investment management. The update from the state’s biggest bank came as the nation’s largest financial institutions witnessed steady spending, deposits and credit trends.

Bank executives have remained cautiously optimistic this year despite polls showing cautiousness among consumers and pressures on businesses with new tariff announcements and shakeups earlier this year in the stock market.

Positive trends in consumer deposits marked a bright spot for U.S. Bank, which is strategically focused on attracting its clients to use the full suite of its products, rather than see them mix and match with other financial institutions.

“We very steadily see a client that might start with us on a core checking account or a core savings account, then deepens with credit card, deepens with wealth and deepens even on the small-business side,” CEO Gunjan Kedia said during a call with analysts Thursday morning.

U.S. Bank executives see other signs of a strong economy ahead.

After a down period, discretionary spending among clients bounced back in recent months and reached about the same rate as essentials like gas and health care. Bank account balances also ticked up, which Chief Financial Officer John Stern called “very encouraging” as the industry has seen higher inflation hit savings accounts.

“Meanwhile, the higher-end credit clients have been consistently spending, and that’s just been a trend we have seen kind of throughout this economic cycle,” Stern said in an interview.

The attitude at U.S. Bank followed a winning streak among the nation’s big Wall Street banks, which posted strong earnings results earlier this week.

Wells Fargo CEO Charlie Scharf said the average consumer client continues to spend, despite the headlines showing caution.

“Our results say that there’s a high degree of consistency there without any real pockets of slowing,” he said, adding some middle-market companies are being cautious to see how tariffs play out.

However, the bankruptcies of two large companies in Texas, auto lender Tricolor and auto parts company First Brands, prompted some analysts to question banks on potential for more credit risks that may be out there.

“My antenna goes up when things like that happen,” he said. “And I probably shouldn’t say this, but when you see one cockroach, there are probably more.”

U.S. Bancorp had loans out with First Brands, though Stern said the bankruptcy did not trigger a material impact for the company. He said it is too early to tell if the situation is isolated.

“Are there more things behind it? That’s certainly up for debate,” Stern said.

In the months ahead, U.S. Bank executives expect stability from income on loans. Executives are also betting on more rate cuts from the Federal Reserve to help boost economic activity by lowering borrowing costs.

U.S. Bancorp beat Wall Street predictions with $7.3 billion in revenue and $1.22 earnings per share. After some favor with investors in morning trading, the stock closed down about 2% Thursday.