MUFG Americas Holdings Corporation (the Company), parent company
of San Francisco-based MUFG Union Bank, N.A. (the Bank), today
reported net income for the quarter of $181 million, compared with
$137 million for the prior quarter and $244 million for the
year-ago quarter.
Highlights:
- Net income for the second quarter was
$181 million, up $44 million from the first quarter of 2015 due to
an increase in pre-tax, pre-provision income, partially offset by
higher provision for credit losses and income tax expense.
- Credit quality remained strong in the
second quarter of 2015 reflected by continued low levels of
nonperforming assets and net charge-offs.
- In June 2015, Moody's Investors Service
upgraded MUFG Union Bank, N.A.'s long-term deposit rating to Aa2
from Aa3 and confirmed the Bank's long-term and short-term senior
debt ratings at A2 and P-1, respectively.
The following table presents financial highlights for the
periods ended June 30, 2015, March 31, 2015 and
June 30, 2014:
Percent Change to As of and for the Three Months
Ended June 30, 2015 from June 30, March
31, June 30, March 31, June
30, (Dollars in millions) 2015 2015
2014 (1)
2015 2014 Results of operations: Net interest
income $ 719 $ 683 $ 763 5 % (6
) %
Noninterest income 385 335 202 15 91 Total
revenue 1,104 1,018 965 8 14 Noninterest expense 843 849
635 (1 ) 33 Pre-tax, pre-provision income (2) 261 169
330 54 (21 ) Provision for credit losses 15 3 6
400 150
Income before income taxes and including
noncontrolling interests
246 166 324 48 (24 ) Income tax expense 71 34 84
109 (15 ) Net income including noncontrolling interests 175
132 240 33 (27 ) Deduct: Net loss from noncontrolling interests 6
5 4 20 50
Net income attributable to MUFG Americas
Holdings Corporation (MUAH)
$ 181 $ 137 $ 244 32 (26 )
Balance
sheet (end of period): Total assets $ 114,266 $ 113,698 $
108,809 — 5 Total securities 24,287 22,463 22,847 8 6 Total loans
held for investment 76,399 76,808 72,369 (1 ) 6 Core deposits (2)
73,080 74,190 72,058 (1 ) 1 Total deposits 81,702 82,741 81,566 (1
) — Long-term debt 8,852 8,856 6,995 — 27 MUAH stockholder's equity
15,278 15,200 14,753 1 4
Balance sheet (period
average): Total assets $ 112,907 $ 113,134 $ 107,871 — 5 Total
securities 22,915 22,172 22,865 3 — Total loans held for investment
76,751 77,305 71,104 (1 ) 8 Earning assets 102,289 102,645 97,405 —
5 Total deposits 82,147 84,088 81,221 (2 ) 1 MUAH stockholder's
equity 15,238 15,069 14,657 1 4 Net interest margin (2) 2.84 % 2.70
% 3.15 %
____________________________________
(1) Amounts have been revised to reflect the January
1, 2015 adoption of Accounting Standards Update 2014-01 related to
investments in qualified affordable housing projects. (2)
For additional information, please see the
footnote explanations in our financial supplement at
www.unionbank.com
Business Integration
Initiative
Effective July 1, 2014, The Bank of Tokyo-Mitsubishi UFJ, Ltd.'s
(BTMU) U.S. branch banking operations, including its employees,
were integrated under the Bank's operations. The Bank and BTMU
entered into a master services agreement, which provides for
employees of the Bank to perform various business, banking and
support services and provide facilities to BTMU. In consideration
for the support services, BTMU pays to the Bank fee income, which
reflects market-based pricing. Costs related to the support
services performed by the Bank's employees are primarily reflected
as salaries and employee benefits expense.
For the quarter and year-to-date ended June 30, 2015, the
Company recorded the following related to the support services:
For the Three Months
Ended For the Six Months Ended (Dollars in
millions) June 30, 2015 June 30, 2015 Fees
from affiliates - support services $ 134 $ 255
Staff costs associated with fees from
affiliates - support services
$ 123 $ 235
The Company also recognized fees from affiliates through revenue
sharing agreements with BTMU for various business and banking
services.
Summary of Second Quarter
Results
Second Quarter Total
Revenue
For the second quarter of 2015, total revenue (net interest
income plus noninterest income) was $1.1 billion, up $86 million
compared with the first quarter of 2015.
Net interest income for the second quarter of 2015 was $719
million, up 5% compared with the first quarter of 2015. The
increase in net interest income was largely due to a 14 basis point
increase in the net interest margin to 2.84%, which was
substantially due to higher yields on commercial and industrial
loans, purchased credit-impaired loans and investment securities.
Average total deposits were $82.1 billion, down $1.9 billion
compared with the first quarter 2015.
For the second quarter of 2015, noninterest income was $385
million, up $50 million, or 15%, compared with the first quarter of
2015, largely due to higher fees from affiliates resulting from the
business integration initiative and trading account activities.
Compared with the second quarter of 2014, total revenue
increased $139 million, largely due to fees from affiliates
resulting from the business integration initiative, partially
offset by contraction in the net interest margin.
Second Quarter Noninterest
Expense
Noninterest expense for the second quarter of 2015 was $843
million, down $6 million compared with the first quarter of 2015
and up $208 million from the second quarter of 2014. The decrease
from the first quarter of 2015 was largely due to higher employee
expenses related to first quarter seasonal factors and a decrease
in professional and outside services expense in the current
quarter, largely offset by an increase in other noninterest expense
resulting from a contract termination charge.
The increase in noninterest expense from the second quarter of
2014 was largely due to increased employee costs as a result of the
business integration initiative.
The effective tax rate for the second quarter of 2015 was 28.9%,
compared with an effective tax rate of 20.5% for the first quarter
of 2015. This increase was due primarily to discrete tax items
recorded in the first quarter, which lowered the effective tax rate
for that period.
Balance Sheet
At June 30, 2015, total assets were $114.3 billion, up
slightly from March 31, 2015. Total loans held for investment
decreased slightly compared with the first quarter of 2015,
reflecting lower balances in the commercial and industrial,
commercial mortgage and residential mortgage portfolios.
Total deposits were $81.7 billion at June 30, 2015, down $1.0
billion compared with the prior quarter end. Core deposits at
June 30, 2015 were $73.1 billion compared with $74.2 billion
at March 31, 2015.
Credit Quality
The following table presents credit quality data for the
quarters ended June 30, 2015, March 31, 2015 and
June 30, 2014:
As of and for
the Three Months Ended (Dollars in millions) June 30,
2015 March 31, 2015 June 30, 2014 Total
provision for credit losses $ 15 $ 3 $ 6 Net loans charged-off 20 3
7 Nonperforming assets 381 390 547
Credit Ratios:
Allowance for loan losses to: Total loans held for investment 0.70
% 0.69 % 0.77 % Nonaccrual loans 147.98 147.21 108.90 Allowance for
credit losses to (1): Total loans held for investment 0.89 0.90
0.97 Nonaccrual loans 188.39 191.20 137.13 Nonperforming assets to
total assets 0.33 0.34 0.50 Nonaccrual loans to total loans held
for investment 0.47 0.47 0.71
________________________________________
(1)
For additional information, please see the
footnote explanations in our financial supplement at
www.unionbank.com
Nonperforming assets as of June 30, 2015 were $381 million,
or 0.33% of total assets, compared with $390 million, or 0.34% of
total assets, at March 31, 2015, and $547 million, or 0.50% of
total assets, at June 30, 2014.
Net loans charged-off were $20 million for the second quarter of
2015, compared with net loans charged-off of $3 million for the
first quarter of 2015 and $7 million for the second quarter of
2014. The increase in net loans charged-off in the second quarter
of 2015 reflected a single $9 million charge-off in the commercial
and industrial portfolio, as well as $8 million in charge-offs
within the purchased credit-impaired loan portfolio.
The allowance for credit losses as a percentage of total loans
was 0.89% at June 30, 2015, essentially flat from
March 31, 2015 and down from 0.97% at June 30, 2014. The
allowance for credit losses as a percentage of nonaccrual loans was
188% at June 30, 2015, compared with 191% at March 31,
2015 and 137% at June 30, 2014. In the second quarter of 2015,
the provision for credit losses was $15 million, compared with a
net provision of $3 million for the first quarter of 2015 and a net
provision of $6 million for the second quarter of 2014. The
provision for credit losses increased in the second quarter of 2015
mainly due to higher reserves recorded within the oil and gas
sector and an increase in net charge-offs.
Capital
The following table presents capital ratio data for the quarters
ended June 30, 2015 and March 31, 2015:
June 30, 2015
March 31, 2015 Capital ratios (1),
(2): Regulatory: U.S. Basel III
Common Equity Tier 1 risk-based capital ratio 13.56 % 12.64 % Tier
1 risk-based capital ratio 13.56 12.64 Total risk-based capital
ratio 15.30 14.41 Tier 1 leverage ratio 11.46 11.30
Other: Tangible common equity ratio 10.72 % 10.69 %
Common Equity Tier 1 risk-based capital
ratio (U.S. Basel III standardized approach; fully phased in)
13.49 12.57
____________________________________
(1)
For additional information, please see the
footnote explanations in our financial supplement at
www.unionbank.com
(2) In December 2014, the Federal Reserve Board approved the
Company's request to opt-out of the advanced approaches methodology
under U.S. Basel III regulatory capital rules. Accordingly, the
Company now calculates its regulatory capital ratios under the
standardized approach of the U.S. Basel III rules, with certain
provisions subject to phase-in periods. The Bank continues to be
subject to the advanced approaches rules.
The Company’s stockholder’s equity was $15.3 billion at
June 30, 2015, compared with $15.2 billion at March 31,
2015.
The Company's Common Equity Tier 1, Tier 1 and Total risk-based
capital ratios, calculated in accordance with U.S. Basel III
regulatory capital rules, were 13.56%, 13.56% and 15.30%,
respectively, at June 30, 2015. The tangible common equity
ratio was 10.72% at June 30, 2015.
The Company’s estimated Common Equity Tier 1 risk-based capital
ratio under U.S. Basel III regulatory capital rules (standardized
approach, fully phased in) was 13.49% at June 30, 2015.
FOR ADDITIONAL INFORMATION, PLEASE REFER TO OUR FINANCIAL
SUPPLEMENT ON OUR WEBSITE AT WWW.UNIONBANK.COM
Non-GAAP Financial
Measures
This press release includes additional capital ratios (tangible
common equity and Common Equity Tier 1 capital (calculated under
the Basel III standardized approach on a fully phased-in basis)) to
facilitate the understanding of the Company’s capital structure and
for use in assessing and comparing the quality and composition of
the Company's capital structure to other financial institutions.
These presentations should not be viewed as a substitute for
results determined in accordance with GAAP, nor are they
necessarily comparable to non-GAAP financial measures presented by
other companies. Please refer to our separate reconciliation of
non-GAAP financial measures in our financial supplement.
Headquartered in New York, MUFG Americas Holdings Corporation is
a financial holding company and bank holding company with total
assets of $114.3 billion at June 30, 2015. Its principal
subsidiary, MUFG Union Bank, N.A., provides an array of financial
services to individuals, small businesses, middle-market companies,
and major corporations. As of June 30, 2015, MUFG Union Bank,
N.A. operated 390 branches, comprised primarily of retail banking
branches in the West Coast states, along with commercial branches
in Texas, Illinois, New York and Georgia, as well as two
international offices. MUFG Americas Holdings Corporation is a
wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd.
which is a wholly-owned subsidiary of Mitsubishi UFJ Financial
Group, Inc., one of the world’s leading financial groups. Visit
www.unionbank.com for more information.
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version on businesswire.com: http://www.businesswire.com/news/home/20150727005261/en/
MUFG Americas Holdings CorporationAlan Gulick,
425-423-7317Corporate CommunicationsorDoug
Lambert, 212-782-5911Investor Relations
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