U.S. Bancorp executives said Wednesday that the recently closed acquisition of MUFG Union Bank is now expected to help increase profitability more than initially anticipated.

In addition, they told investors they should realize about a third of the $900 million in anticipated cost savings from the deal this year, with the rest to come in the early part of next year.

"It's going to be positive with the customer and from a community point of view," Terry Dolan, the company's chief financial officer, said in an interview. "And financially, it's very attractive as well. So strategically, it's a great deal."

The $8 billion acquisition closed on Dec. 1, toward the end of the Minneapolis-based bank's most recent quarter.

The company's shares rose 5% on Wednesday after it reported better-than-expected fourth-quarter results and shared guidance for the coming year, including more financial details from the transaction.

U.S. Bancorp now expects the acquisition to increase earnings per share by 8% to 9% this year, and by low double digits after that, which is higher than its previous expectations of between 6% and 8%.

"We're seeing higher value from the deal and the earnings overall is going to be better," said Dolan.

Cost savings are expected to pick up after the conversion of Union Bank's systems onto the U.S. Bank platform, which is targeted for Memorial Day weekend. He added that Union Bank customers will also see the benefit of being able to access U.S. Bank's more sophisticated digital banking services as well as its range of other services.

About 300 Union Bank branches, which are located in California, Washington and Oregon, will also be rebranded under the U.S. Bank name at that time.

While the vast majority of efficiencies will come from the systems integration, Dolan acknowledged there have also been some recent layoffs of Union Bank employees, principally in the mortgage division. He declined to say how many were affected.

Union Bank had not downsized those operations in the last year or so as the deal was in process, even though refinancing activity had declined significantly due to higher rates, he said.

"They just deferred it to us," he said. "The employees at Union Bank in the mortgage banking business totally expected it. It was not a surprise to them."

On Wednesday, U.S. Bancorp outlined other financial benefits of the deal. The purchase of Union Bank has brought it an additional $53 billion in loans, $82 billion in deposits and $82 billion in assets. It adds about a million consumer banking customers and 190,000 business banking customers to U.S. Bank.

U.S. Bancorp, which will solidify its position as the fifth-largest bank in the U.S., moves up from being 10th- to the fifth-largest bank in California, And it is now the No. 1 Small Business Administration lender in that state.

"The completion of the Union Bank acquisition marked a significant milestone for our company," CEO Andy Cecere told analysts on a conference call. "With double-digit percent increases in loan and deposit balance, Union Bank adds meaningful scale to our business and enables us to better serve our customers and communities."

He added that California, where Union Bank is concentrated, is a "demographically attractive" market and U.S. Bank believes there is plenty of room for growth there. A slide deck that accompanied the executives' remarks showed that the bank will gain access to about 50,000 customers from affluent households.

Cecere also nodded to the uncertain economic environment in 2023. The bank is preparing for any scenario, but executives said their base case now calls for a mild recession in the second half of the year, similar to other banks' projections.

"As we've proven during previous economic downturns, our business model is resilient and recession ready in large part due to our discipline through the cycle credit underwriting standards and robust risk management infrastructure," Cecere said.

As it did in the first year of the pandemic, U.S. Bancorp increased its reserves for bad loans in the quarter, mostly as a result of taking on more loan volume from Union Bank, but also because of the uncertain economic outlook.

In its fourth quarter, net income declined 45% to $925 million, mostly due to impacts from the Union Bank acquisition such as $90 million in merger and integration-related charges.

Its net revenue grew 12% to $6.4 billion, which reflected $302 million from Union Bank and $399 million in charges from balance sheet optimization.