U.S. Bancorp finished folding most of the recently purchased MUFG Union Bank into its operations, ushering 1.2 million consumer and small-business customers and rebranding more than 300 western branches under the U.S. Bank name and system, officials said Wednesday.

Minneapolis-based U.S. Bank, the nation's fifth largest bank, paid $8 billion for Union Bank in December and began the conversion process over Memorial Day weekend.

With the integration mostly complete, U.S. Bank has gained significant revenue and deposit growth along with a springboard for further growth and cost savings, officials said Wednesday in announcing earnings results for its second quarter that ended June 30.

"It was a great quarter," said Chief Financial Officer Terry Dolan during an interview. "We had a lot of things come together this quarter."

But even though the bank met Wall Street estimates, net income was down from the same quarter last year, and deposits were down from the first quarter.

The consumer arm of MUFG's business that U.S. Bank bought added about $80 billion in deposits from California, Washington and Oregon. Customers there are now joined to an existing network of 2,200 U.S. Bank branches that already spanned from Ohio to California.

"Entering the second half of this year, we are well-positioned as a national bank with greater scale and the opportunity to capture significant cost synergies," CEO Andrew Cecere told analysts during a conference call Wednesday morning.

Cecere expects the bank merger to produce $900 million in cost synergies by the end of 2023 and for the bank to continue improving its capital-to-risk ratios over the next year as the company shifts its asset mix and works to manage interest rate and other risks.

The bank has already shed select bodies of loans including some auto and commercial real estate loans and part of its California mortgage portfolio.

Cecere and Dolan noted they expect to deepen relationships with Union Bank's mostly "single service" small-business customers by offering additional services such as its more lucrative credit card and fee-based services.

For the quarter, net income was $1.37 billion, down from $1.53 billion in the same quarter last year. When adjusted for merger and integration costs and a significant escalation in loan-loss reserves, earnings were $1.79 billion or $1.12 per share, in line with analysts' estimates.

Deposits fell from the first quarter but were up 8.9% from a year ago, hitting $497 billion while loans rose nearly 20% to $389 billion.

Revenue for the quarter reached nearly $7.2 billion as net interest income from loans rose 28% to $4.4 billion (with the help of rising interest rates and the addition of Union Bank) and as non-interest fee income hit $2.7 billion with boosts in merchant payment services revenue, trust and investment management fees, and commercial products revenue.

The bank spent $310 million integrating operations during the second quarter. It expects to incur $1.4 billion in total integration costs, which includes $883 million spent this year.

U.S. Bank's stock price rose 6% to close at $38.91 Wednesday as investors expressed relief that officials are keenly focused on raising capital, which will allow it to operate with regulatory ease as a much larger institution.

Like most bank stocks, U.S. Bank's stock is down from $47 a share a year ago as investors turned skittish following the failure of regional banks such as First Republic, Signature and Silicon Valley Banks earlier this year.

U.S. Bank said previously that it benefited as nervous customers of smaller banks initially turned to larger national banks such as itself to find refuge for safe deposits. Such fearful reactions appear to have stabilized, Dolan said.

Still, overall economic conditions were not lost on bank executives. "The $100,000 question is whether we actually move into a recession or not," Cecere told analysts.

"Some of the things that we are seeing is that some of the excess savings that consumers have held in the past have come down to pre-pandemic levels," Cecere said. "We are seeing what was very strong consumer spending starting to normalize and soften."

The bank has watched U.S. consumer retail sales decline but corporate travel spending stay "reasonably strong." Those continued selective spends have helped. And while the bank's credit card sales maybe slowing, margins are up, Cecere said.

Given the uncertainty of the market, the bank boosted its provision for credit losses to $821 million, up from $427 million in the first quarter of 2023 and $311 million in the second quarter of 2022.

"During 2022 and continuing into 2023, economic uncertainty and recession risk have been increasing due to rising interest rates, inflationary concerns, market volatility, and pressure on corporate earnings related to these factors," officials said in a statement. "The changing economic outlook is contributing to increased provision for credit losses."

The company also lowered its outlook for the year, saying it now expects total revenue of $28 billion to $29 billion and profits of $17.5 to $18 billion.