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 $186 million, compared with
$181 million for the prior quarter and $247 million for the
year-ago quarter.
Highlights:
- Net income for the third quarter was
$186 million, up $5 million from the second quarter of 2015.
- Credit quality remained strong in the
third quarter of 2015; a modest increase in criticized loans was
driven by the oil and gas sector.
- Growth in loans held for investment and
deposits:
- September 30, 2015 total loans
held for investment were $76.6 billion, up $0.2 billion from
June 30, 2015.
- Total deposits at September 30,
2015 were $82.7 billion, up $1.0 billion or 1% from June 30,
2015.
- Continued strong capital position:
- Capital ratios continued to exceed the
regulatory thresholds for "well-capitalized" bank holding
companies. Common Equity Tier 1 and Total risk-based capital ratios
were 13.84% and 15.60%, respectively, at September 30,
2015.
The following table presents financial highlights for the
periods ended September 30, 2015, June 30, 2015 and
September 30, 2014:
Percent Change to As
of and for the Three Months Ended September 30, 2015
from
September 30,
June 30,
September 30,
June 30,
September 30,
(Dollars in millions)
2015
2015
2014 (1)
2015
2014
Results of operations: Net interest income $ 705 $ 719 $ 707
(2
)
%
—
%
Noninterest income 397 385 388 3 2 Total
revenue 1,102 1,104 1,095 — 1 Noninterest expense 855 843
764 1 12 Pre-tax, pre-provision income (2) 247 261
331 (5
)
(25 ) Provision for credit losses 18 15 1 20
nm
Income before income taxes and including
noncontrolling interests
229 246 330 (7
)
(31 )
Income tax expense
64 71 88 (10
)
(27 ) Net income including noncontrolling interests 165 175 242 (6
)
(32 ) Deduct: Net loss from noncontrolling interests 21 6
5 250 320
Net income attributable to MUFG Americas
Holdings Corporation (MUAH)
$ 186 $ 181 $ 247 3 (25 )
Balance
sheet (end of period): Total assets $ 115,157 $ 114,266 $
110,867 1 4 Total securities 24,696 24,287 22,522 2 10 Total loans
held for investment 76,641 76,399 74,635 — 3 Core deposits (2)
74,785 73,080 73,608 2 2 Total deposits 82,693 81,702 82,356 1 —
Long-term debt 11,357 8,852 6,984 28 63 MUAH stockholder's equity
15,621 15,278 14,990 2 4
Balance sheet (period
average): Total assets $ 113,451 $ 112,907 $ 109,739 — 3 Total
securities 24,141 22,915 22,592 5 7 Total loans held for investment
76,177 76,751 73,353 (1
)
4 Earning assets 102,899 102,289 98,933 1 4 Total deposits 82,488
82,147 82,239 — — MUAH stockholder's equity 15,435 15,238 14,969 1
3 Net interest margin (2) 2.76 % 2.84 % 2.87 %
____________________________________
(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.
nm = not meaningful
Summary of Third Quarter
Results
Third Quarter Total
Revenue
For the third quarter of 2015, total revenue (net interest
income plus noninterest income) was $1.1 billion, relatively flat
from the second quarter of 2015.
Net interest income for the third quarter of 2015 was $705
million, down 2% compared with the second quarter of 2015. The
decrease in net interest income was largely due to an 8 basis point
decrease in the net interest margin to 2.76%, which was
substantially due to lower yields on purchased credit-impaired
loans and investment securities. Average total deposits were $82.5
billion, up $0.3 billion compared with the second quarter 2015.
For the third quarter of 2015, noninterest income was $397
million, up $12 million, or 3%, compared with the second quarter of
2015, largely due to a gain on sale of residential loans and a
decrease in FDIC indemnification asset amortization expense, offset
by decreases in trading account activities and fees from
affiliates.
Compared with the third quarter of 2014, total revenue increased
$7 million, largely due to fees from affiliates, the gain on sale
of residential loans and a decrease in FDIC indemnification asset
amortization expense, partially offset by decreases in trading
account activities and merchant banking fees.
Third Quarter Noninterest
Expense
Noninterest expense for the third quarter of 2015 was $855
million, up $12 million compared with the second quarter of 2015
and up $91 million from the third quarter of 2014. The increase
from the second quarter of 2015 was due in part to increased
professional and outside services expense related to various
projects.
The increase in noninterest expense from the third quarter of
2014 was largely due to higher salaries and employee benefits
expense associated with employees providing support services to The
Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) as described below, as
well as increased professional and outside services expense related
to various projects.
Effective July 1, 2014, BTMU integrated its U.S. branch banking
operations, including its employees, under the Bank's operations.
The Bank and BTMU participate in a master services agreement
whereby the Bank provides BTMU with support services in exchange
for fee income. For the quarters ended September 30, 2015,
June 30, 2015 and September 30, 2014, the Company recorded the
following fee income and costs related to support services:
For the Three Months Ended
(Dollars in millions) September 30, 2015
June 30, 2015 September 30, 2014 Fees from
affiliates - support services $ 138 $ 134 $ 94
Staff costs associated with fees from
affiliates - support services
$ 128 $ 123 $ 88
The Company also recognized fees from affiliates through revenue
sharing agreements with BTMU for various business and banking
services.
The effective tax rate for the third quarter of 2015 was 27.9%,
compared with an effective tax rate of 28.9% for the second quarter
of 2015.
Balance Sheet
At September 30, 2015, total assets were $115.2 billion,
consistent with the prior quarter with slight increases in loans
held for investment and securities.
Total deposits were $82.7 billion at September 30, 2015, up
$1.0 billion compared with the prior quarter-end. Core deposits at
September 30, 2015 were $74.8 billion compared with $73.1
billion at June 30, 2015. The increase was primarily due to
growth within our transaction banking segment.
In the third quarter 2015, the Bank issued $2.5 billion in
senior unsecured long-term debt to BTMU, consistent with the
Company's objective to further strengthen its funding and liquidity
profile.
Credit Quality
The following table presents credit quality data for the
quarters ended September 30, 2015, June 30, 2015 and
September 30, 2014:
As of and for the Three Months Ended
September 30,
June 30, September 30, (Dollars in millions)
2015
2015 2014 Total provision for credit losses $
18 $ 15 $ 1 Net loans charged-off 11 20 12 Nonaccrual loans 419 362
403 Criticized loans held for investment (1) 1,642 1,395 1,245
Credit Ratios: Allowance for loan losses to: Total
loans held for investment 0.71 % 0.70 % 0.71 % Nonaccrual loans
130.46 147.98 131.28 Allowance for credit losses to (1): Total
loans held for investment 0.90 0.89 0.92 Nonaccrual loans 164.09
188.39 171.42 Nonaccrual loans to total loans held for investment
0.55 0.47 0.54
________________________________________
(1)
For additional information, please see the
footnote explanations in our financial supplement at
www.unionbank.com.
Nonaccrual loans were $419 million, $362 million and $403
million, respectively, at September 30, 2015, June 30,
2015 and September 30, 2014, or 0.55%, 0.47% and 0.54% of
total loans held for investment for those periods. Criticized loans
held for investment were $1.6 billion, an increase of $247 million
from the prior quarter. The modest increase in criticized loans was
driven by the oil and gas sector.
The allowance for credit losses as a percentage of total loans
was 0.90% at September 30, 2015, essentially flat from
June 30, 2015 and down from 0.92% at September 30, 2014.
The allowance for credit losses as a percentage of nonaccrual loans
was 164% at September 30, 2015, compared with 188% at
June 30, 2015 and 171% at September 30, 2014. In the
third quarter of 2015, the provision for credit losses was $18
million, compared with a provision of $15 million for the second
quarter of 2015 and a provision of $1 million for the third quarter
of 2014. Net loans charged-off were $11 million for the third
quarter of 2015, compared with net loans charged-off of $20 million
for the second quarter of 2015 and $12 million for the third
quarter of 2014.
Capital
The following table presents capital ratio data for the quarters
ended September 30, 2015 and June 30, 2015:
September 30, June 30,
2015 2015 Capital ratios (1):
Regulatory: U.S. Basel III Common Equity Tier
1 risk-based capital ratio 13.84 % 13.56 % Tier 1 risk-based
capital ratio 13.84 13.56 Total risk-based capital ratio 15.60
15.30 Tier 1 leverage ratio 11.58 11.46
Other:
Tangible common equity ratio 10.95 % 10.72 %
Common Equity Tier 1 risk-based capital
ratio (U.S. Basel III standardized approach; fully phased in)
13.79
13.49
____________________________________
(1)
For additional information, please see the
footnote explanations in our financial supplement at
www.unionbank.com.
The Company’s stockholder’s equity was $15.6 billion at
September 30, 2015, compared with $15.3 billion at
June 30, 2015.
The Company's preliminary Common Equity Tier 1, Tier 1 and Total
risk-based capital ratios, calculated in accordance with U.S. Basel
III regulatory capital rules, were 13.84%, 13.84% and 15.60%,
respectively, at September 30, 2015. The tangible common
equity ratio was 10.95% at September 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 13.79% at September 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.
About MUFG Americas Holdings
Corporation
Headquartered in New York, MUFG Americas Holdings Corporation is
a financial holding company and bank holding company with total
assets of $115.2 billion at September 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 September 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/20151026005714/en/
MUFG Americas Holdings CorporationAlan Gulick,
425-423-7317Corporate CommunicationsorDoug Lambert,
212-782-5911Investor Relations
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