MUFG Americas Holdings Corporation (the Company), parent company of San Francisco-based MUFG Union Bank, N.A. (the Bank), today reported third quarter 2014 results. Net income for the quarter was $246 million, compared with $249 million for the prior quarter, and up from $198 million for the year-ago quarter.

Third Quarter Highlights:

  • Continued discipline in underwriting standards produced another solid quarter of strong credit quality with low nonperforming assets and charge-offs.
  • The Company continued to have a strong capital position.
    • Capital ratios continued to exceed the regulatory thresholds for "well-capitalized" bank holding companies. Basel III Tier 1 and Total risk-based capital ratios were 12.70 percent and 14.60 percent, respectively, at September 30, 2014.
  • Effective July 1, 2014, UnionBanCal Corporation was renamed MUFG Americas Holdings Corporation and Union Bank, N.A. changed its legal name to MUFG Union Bank, N.A. In addition, the U.S. branch banking management and operations of The Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU) were integrated within the Bank. The changes position the Bank to better leverage the strength and global reach of its parent company, Mitsubishi UFJ Financial Group, to provide a broad array of products and services to address our customers' financial needs.

Business Integration Initiative

Effective July 1, 2014, the U.S. branch banking operations of BTMU were integrated under the Bank's operations. The integration did not involve a legal entity combination, but rather an integration of personnel and certain business and support activities. As a result of this initiative, all of BTMU's banking activities in the Americas are managed by employees of the Bank, which includes the addition of approximately 2,300 U.S. employees formerly employed by BTMU. The Bank and BTMU entered into a master services agreement, which provides for employees of the Bank to perform and make available various business, banking, financial, and administrative and support services (the Services) and facilities for BTMU in connection with the operation and administration of BTMU's businesses in the U.S. (including BTMU's U.S. branches). In consideration for the Services, BTMU pays to the Bank fee income, which reflects market-based pricing. Costs related to the Services performed by the transferred employees are primarily reflected as salaries and employee benefits expense. For the quarter ended September 30, 2014, the Company recorded $151 million in fee income from this initiative, including $94 million related to support services provided by the Company to BTMU. Substantially offsetting the fee income was $88 million, primarily in salaries and employee benefits expense, related to these support services. The remaining fee income was recognized through revenue sharing agreements with BTMU, with associated costs included within the Company’s third quarter results.

Summary of Third Quarter Results

Third Quarter Total Revenue

For the third quarter 2014, total revenue (net interest income plus noninterest income) was $1.1 billion, up $130 million compared with the second quarter 2014.

Net interest income decreased 7 percent while noninterest income increased 92 percent. Net interest income for the third quarter 2014 was $707 million, down $56 million compared with the second quarter 2014. The decrease in net interest income was largely due to higher levels of interest income recorded on our purchased credit-impaired (PCI) loan portfolio in the second quarter, mostly due to early payoffs of certain loans, partially offset by growth in loans held for investment in the third quarter 2014. Average total loans held for investment, excluding PCI loans, increased $2.5 billion, or 4 percent, compared with the second quarter 2014 largely due to growth in commercial and industrial loans and residential mortgages. The net interest margin was 2.87 percent, down 28 basis points from the prior quarter substantially due to the interest recorded on the PCI loan portfolio in the second quarter as described above. Excluding the impact of the PCI loan portfolio, the net interest margin would have been slightly higher than the net interest margin in the prior quarter. Average total deposits increased $1.0 billion, or 1 percent, during the quarter compared with the second quarter 2014.

For the third quarter 2014, noninterest income was $388 million, up $186 million, or 92 percent, compared with the second quarter 2014, largely due to fees from affiliates resulting from the business integration initiative.

Compared with the third quarter 2013, total revenue increased $176 million, with net interest income up 3 percent and noninterest income up 66 percent. Noninterest income increased largely due to fees from affiliates resulting from the business integration initiative. Net interest income increased $22 million compared with the year-ago quarter substantially due to loan growth. Average total loans held for investment, excluding PCI loans, increased $7.5 billion, or 11 percent, compared with the third quarter 2013. Average total deposits increased $4.8 billion compared with the third quarter of 2013 with average interest bearing deposits up $1.9 billion, or 4 percent, and average noninterest bearing deposits up $2.9 billion, or 12 percent.

Third Quarter Noninterest Expense

Noninterest expense for the third quarter 2014 was $805 million, up $156 million compared with the second quarter 2014 and up $116 million from the third quarter 2013. The increases were largely due to increased employee costs as a result of the business integration initiative.

Balance Sheet

At September 30, 2014, total assets were $110.9 billion, up $2.1 billion compared with June 30, 2014, primarily reflecting loan growth. Excluding PCI loans, total loans increased 3 percent compared with the second quarter, reflecting growth in core customer segments within the commercial and industrial loan portfolio and continuing growth in residential mortgage lending in our geographic footprint, with credit quality attributes consistent with the existing portfolio.

Total liabilities were $95.6 billion, up $1.8 billion compared with June 30, 2014 primarily due to an increase in wholesale funding and deposit growth. At September 30, 2014, total deposits were $82.4 billion, up $790 million compared with June 30, 2014. Core deposits at September 30, 2014 were $73.6 billion compared with $72.1 billion at June 30, 2014.

Credit Quality

Credit quality remained strong in the third quarter 2014 reflected by continued low levels of nonperforming assets and net charge-offs.

Excluding PCI loans and Federal Deposit Insurance Corporation (FDIC) covered other real estate owned (OREO), nonperforming assets at the end of the quarter were $402 million, or 0.36 percent of total assets; compared with $511 million, or 0.47 percent of total assets, at June 30, 2014; and $513 million, or 0.49 percent of total assets at September 30, 2013.

Excluding PCI loans and FDIC covered OREO, net charge-offs were $12 million for the third quarter of 2014 compared with $7 million for the second quarter 2014 and $1 million for the third quarter 2013.

The allowance for credit losses as a percentage of total loans, excluding PCI loans, was 0.93 percent at September 30, 2014, compared with 0.98 percent at June 30, 2014, and 1.12 percent at September 30, 2013. The allowance for credit losses as a percentage of nonaccrual loans, excluding PCI loans, was 176.28 percent at September 30, 2014, compared with 141.06 percent at June 30, 2014 and 150.14 percent at September 30, 2013. In the third quarter of 2014, the overall provision for credit losses was $1 million, compared with $6 million for the second quarter of 2014 and a provision reversal of $15 million for the third quarter of 2013.

Capital

The Company’s stockholder’s equity was $15.1 billion at September 30, 2014 compared with $14.2 billion at December 31, 2013. The Company's Common Equity Tier 1, Tier 1 and Total risk-based capital ratios, calculated in accordance with the transition guidelines set forth in the U.S. Basel III regulatory capital rules, were 12.66 percent, 12.70 percent and 14.60 percent, respectively, at September 30, 2014. The tangible common equity ratio was 10.79 percent at September 30, 2014.

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 11.89 percent at September 30, 2014.

Non-GAAP Financial Measures

This press release contains certain references to financial measures identified as excluding PCI loans, FDIC covered OREO, privatization transaction impact, fees from affiliates - support services and associated staff costs, foreclosed asset expense, other credit costs, (reversal of) provision for losses on unfunded credit commitments, productivity initiative costs and gains, low income housing credit (LIHC) investment amortization expense, expenses of the LIHC consolidated variable interest entities, merger and business integration costs, or intangible asset amortization, which are adjustments from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (GAAP). These financial measures, as used herein, differ from financial measures reported under GAAP in that they exclude unusual or non-recurring charges, losses or credits. This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. Management believes that financial presentations excluding the impact of these items provide useful supplemental information which is important to a proper understanding of the Company’s business results. This press release also includes additional capital ratios (Basel I Tier 1 common capital, the tangible common equity and the fully phased-in Basel III Common Equity Tier 1 capital ratios) 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.

Forward-Looking Statements

The following appears in accordance with the Private Securities Litigation Reform Act. This press release includes forward-looking statements that involve risks and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Often, they include the words “believe,” “continue,” “expect,” “target,” “anticipate,” “intend,” “plan,” “estimate,” “potential,” “ project,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” They may also consist of annualized amounts based on historical interim period results. There are numerous risks and uncertainties that could and will cause actual results to differ materially from those discussed in the Company’s forward-looking statements. Many of these factors are beyond the Company’s ability to control or predict and could have a material adverse effect on the Company’s financial condition, and results of operations or prospects. For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission (SEC), including the discussions under “Management’s Discussion & Analysis of Financial Condition and Results of Operations” and “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q and in any subsequent filings with the SEC and available on the SEC’s website at www.sec.gov. Any factor described above or in our SEC reports could, by itself or together with one or more other factors, adversely affect our financial results and condition. All forward-looking statements included in this press release are based on information available at the time of the release, and the Company assumes no obligation to update any forward-looking statements.

Headquartered in New York, MUFG Americas Holdings Corporation is a financial holding company and bank holding company with assets of $110.9 billion at September 30, 2014. 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, 2014, MUFG Union Bank, N.A. operated 415 branches, comprised primarily of retail banking branches in the West Coast states, along with 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 largest and most diversified financial groups. Visit www.unionbank.com for more information.

 
MUFG Americas Holdings Corporation and Subsidiaries
Financial Highlights (Unaudited)
Exhibit 1
 
          Percent Change to
As of and for the Three Months Ended September 30, 2014 from

September 30,

      June 30,       March 31,      

December 31,

     

September 30,

June 30,      

September 30,

(Dollars in millions)

2014

2014 2014

2013

2013

2014

2013

Results of operations:
Net interest income $ 707 $ 763 $ 683 $ 706 $ 685 (7

)%

3 %
Noninterest income 388   202   181   190   234   92 66
Total revenue 1,095 965 864 896 919 13 19
Noninterest expense 805   649   660   689   689   24 17
Pre-tax, pre-provision income (1) 290 316 204 207 230 (8 ) 26
(Reversal of) provision for loan losses (18 ) 9   (16 ) (23 ) (16 ) (300 ) (13 )

Income before income taxes and including noncontrolling interests

308 307 220 230 246 25
Income tax expense 67   62   50   55   55   8 22
Net income including noncontrolling interests 241 245 170 175 191 (2 ) 26
Deduct: Net loss from noncontrolling interests 5   4   5   4   7   25 (29 )
Net income attributable to
MUFG Americas Holdings Corporation (MUAH) $ 246   $ 249   $ 175   $ 179   $ 198   (1 ) 24
 
Balance sheet (end of period):
Total assets $ 110,879 $ 108,820 $ 107,237 $ 105,894 $ 105,484 2 5
Total securities 22,522 22,847 23,192 22,326 22,318 (1 ) 1
Total loans held for investment 74,635 72,369 69,933 68,312 67,170 3 11
Core deposits (2) 73,608 72,058 70,665 69,155 68,334 2 8
Total deposits 82,356 81,566 81,179 80,101 79,415 1 4
Long-term debt 6,984 6,995 6,545 6,547 7,803 (10 )
MUAH Stockholder's equity 15,051 14,815 14,460 14,215 12,549 2 20
 
Balance sheet (period average):
Total assets $ 109,739 $ 107,871 $ 106,491 $ 104,424 $ 101,534 2 8
Total securities 22,592 22,865 22,611 22,282 22,909 (1 ) (1 )
Total loans held for investment 73,353 71,104 69,293 67,619 66,608 3 10
Earning assets 98,933 97,405 96,100 94,707 92,035 2 7
Total deposits 82,239 81,221 80,433 79,747 77,434 1 6
MUAH Stockholder's equity 14,969 14,657 14,390 12,604 12,210 2 23
 
Performance ratios:
Return on average assets (3) 0.90 % 0.92 % 0.66 % 0.68 % 0.78 %
Return on average MUAH stockholder's equity (3) 6.57 6.80 4.87 5.66 6.50

Return on average assets excluding the impact of privatization transaction and merger costs related to acquisitions (3) (4)

0.94 0.97 0.72 0.75 0.81

Return on average MUAH stockholder's equity excluding the impact of privatization transaction and merger costs related to acquisitions (3) (4)

7.84 8.19 6.11 7.41 8.01
Efficiency ratio (5) 73.51 67.23 76.38 76.89 75.01
Adjusted efficiency ratio (6) 63.42 60.30 67.95 67.08 67.21
Net interest margin (3) (7) 2.87 3.15 2.87 2.99 2.99
 
Capital ratios: U.S. Basel III U.S. Basel I
 
Common Equity Tier 1 risk-based capital ratio(8) (9) 12.66 % 12.58 % 12.59 % n/a n/a
Tier 1 common capital ratio (8) (9) (10) n/a n/a n/a 12.34 % 11.10 %
Tier 1 risk-based capital ratio (8) (9) 12.70 12.62 12.62 12.41 11.17
Total risk-based capital ratio (8) (9) 14.60 14.57 14.75 14.61 13.11
Tier 1 leverage ratio (8) (9) 11.43 11.35 11.26 11.27 10.22
Tangible common equity ratio (11) 10.79 10.84 10.65 10.54 9.01
 

Common Equity Tier 1 risk-based capital ratio (U.S. Basel III standardized approach; fully phased-in) (8) (12)

11.89 11.60 11.42 11.14 % n/a
 

Refer to Exhibit 15 for footnote explanations.

 
 
MUFG Americas Holdings Corporation and Subsidiaries
Financial Highlights (Unaudited)
Exhibit 2

 

      As of and for the Nine Months Ended       Percent Change to
September 30,       September 30, September 30, 2014 from
(Dollars in millions) 2014 2013 September 30, 2013
Results of operations:  
Net interest income $ 2,153 $ 2,010 7 %
Noninterest income 771   686   12
Total revenue 2,924 2,696 8
Noninterest expense 2,114   2,104  
Pre-tax, pre-provision income (1) 810 592 37
(Reversal of) provision for loan losses (25 ) (22 ) (14 )
Income before income taxes and including
noncontrolling interests 835 614 36
Income tax expense 179   140   28
Net income including noncontrolling interests 656 474 38
Deduct: Net loss from noncontrolling interests 14   14  
Net income attributable to MUAH $ 670   $ 488   37
 
Balance sheet (end of period):
Total assets $ 110,879 $ 105,484 5
Total securities 22,522 22,318 1
Total loans held for investment 74,635 67,170 11
Core deposits (2) 73,608 68,334 8
Total deposits 82,356 79,415 4
Long-term debt 6,984 7,803 (10 )
MUAH stockholder's equity 15,051 12,549 20
 
Balance sheet (period average):
Total assets $ 108,039 $ 98,984 9
Total securities 22,689 22,643
Total loans held for investment 71,264 63,633 12
Earning assets 97,486 89,479 9
Total deposits 81,298 75,692 7
MUAH stockholder's equity 14,675 12,463 18
 
Performance ratios:
Return on average assets (3) 0.83 % 0.66 %
Return on average MUAH stockholder's equity (3) 6.08 5.23

Return on average assets excluding the impact of privatization transaction and merger costs related to acquisitions (3) (4)

0.87 0.73

Return on average MUAH stockholders' equity excluding the impact of privatization transaction and merger costs related to acquisitions (3) (4)

7.37 6.95
Efficiency ratio (5) 72.29 78.03
Adjusted efficiency ratio (6) 63.74 68.10
Net interest margin (3) (7) 2.97 3.02
 

Refer to Exhibit 15 for footnote explanations.

 
 

MUFG Americas Holdings Corporation and Subsidiaries

Credit Quality (Unaudited)
Exhibit 3
            Percent Change to
As of and for the Three Months Ended September 30, 2014 from
September 30,     June 30,     March 31,     December 31,       September 30, June 30,       September 30,
(Dollars in millions) 2014 2014 2014 2013 2013 2014 2013
 
Credit Data:

(Reversal of) provision for loan losses, excluding purchased credit-impaired loans

$ (18 ) $ 9 $ (18 ) $ (22 ) $ (16 ) (300 )% (13

)%

(Reversal of) provision for purchased credit-impaired loan losses not subject to FDIC indemnification

2 (1 ) - -

(Reversal of) provision for losses on unfunded credit commitments

19   (3 ) 16   2   1   nm nm

Total (reversal of) provision for credit losses

$ 1   $ 6   $   $ (21 ) $ (15 ) (83 ) 107
 
Net loans charged-off (recovered) $ 12 $ 7 $ (6 ) $ 11 $ (1 ) 71 nm
Nonperforming assets 428 547 506 499 574 (22 ) (25 )
Criticized loans held for investment (13) 1,245 1,450 1,317 1,274 1,270 (14 ) (2 )
 
Credit Ratios:
Allowance for loan losses to:
Total loans held for investment 0.71 % 0.77 % 0.80 % 0.83 % 0.91 %
Nonaccrual loans 131.28 108.90 119.58 128.42 119.04
Allowance for credit losses to (14):
Total loans held for investment 0.92 0.97 1.01 1.02 1.10
Nonaccrual loans 171.42 137.13 151.35 158.30 144.63
Net loans charged-off (recovered) to average total loans

held for investment (3)

0.06 0.04 (0.04 ) 0.07 (0.01 )

Nonperforming assets to total loans held for investment and Other Real Estate Owned (OREO)

0.57 0.75 0.72 0.74 0.85
Nonperforming assets to total assets 0.39 0.50 0.47 0.48 0.54
Nonaccrual loans to total loans held for investment 0.54 0.71 0.67 0.65 0.76
 
Excluding purchased credit-impaired loans and FDIC covered OREO (15):
Allowance for loan losses to:
Total loans held for investment 0.71 % 0.78 % 0.80 % 0.84 % 0.92 %
Nonaccrual loans 134.80 111.88 123.14 132.82 123.53
Allowance for credit losses to (14):
Total loans held for investment 0.93 0.98 1.02 1.04 1.12
Nonaccrual loans 176.28 141.06 156.05 163.78 150.14
Net loans charged-off (recovered) to average total loans held for

investment (3)

0.07 0.04 (0.04 ) 0.11 0.01
Nonperforming assets to total loans held for investment and OREO 0.54 0.71 0.68 0.66 0.78
Nonperforming assets to total assets 0.36 0.47 0.44 0.43 0.49
Nonaccrual loans to total loans held for investment 0.53 0.69 0.65 0.63 0.75
 
As of and for the Nine Months Ended Percent Change
September 30, September 30, to September 30, 2014
(Dollars in millions) 2014 2013 from September 30, 2013
Credit Data:
(Reversal of) provision for loan losses, excluding

purchased credit-impaired loans

$ (27 ) $ (22 ) (23 ) %
(Reversal of) provision for purchased credit-impaired

loan losses not subject to FDIC indemnification

2 200
(Reversal of) provision for losses on unfunded credit commitments 32   14   129
Total (reversal of) provision for credit losses $ 7   $ (8 ) 188
 
Net loans charged-off $ 13 $ 21 (38 )
Nonperforming assets 428 574 (25 )
Credit Ratios:
Net loans charged-off to average total loans held for investment (3) 0.02 % 0.04 %
Nonperforming assets to total assets 0.39 0.54
 
Excluding purchased credit-impaired loans and FDIC covered OREO (15):
Net loans charged-off to average total loans held for investment (3) 0.02 % 0.05 %
Nonperforming assets to total assets 0.36 0.49
 

Refer to Exhibit 15 for footnote explanations.

 
 
MUFG Americas Holdings Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
Exhibit 4
 
    For the Three Months Ended
September 30,     June 30,     March 31,     December 31,     September 30,
(Dollars in millions) 2014 2014 2014 2013 2013
Interest Income
Loans $ 693 $ 749 $ 667 $ 695 $ 668
Securities 113 115 115 115 118
Other 2   3   5   6   2  

Total interest income

808   867   787   816   788  
 
Interest Expense
Deposits 58 61 62 64 63
Commercial paper and other short-term borrowings 1 2 1 1 2
Long-term debt 42   41   41   45   38  
Total interest expense 101   104   104   110   103  
 
Net Interest Income 707 763 683 706 685
(Reversal of) provision for loan losses (18 ) 9   (16 ) (23 ) (16 )
Net interest income after (reversal of) provision for loan losses 725   754   699   729   701  
 
Noninterest Income
Service charges on deposit accounts 52 50 51 51 53
Trust and investment management fees 26 26 26 28 34
Trading account activities 33 14 16 20 15
Securities gains, net 13 1 2 8 47
Credit facility fees 30 31 28 28 31
Merchant banking fees 38 27 24 25 29
Brokerage commissions and fees 14 13 13 12 12
Card processing fees, net 8 9 8 8 8
Fees from affiliates (16) 151
Other, net 23   31   13   10   5  
Total noninterest income 388   202   181   190   234  
 
Noninterest Expense
Salaries and employee benefits 492 378 388 406 391
Net occupancy and equipment 74 75 71 70 77
Professional and outside services 66 63 55 64 66
Intangible asset amortization 13 13 13 16 16
Regulatory assessments 13 16 15 14 20
(Reversal of) provision for losses on unfunded credit commitments 19 (3 ) 16 2 1
Other 128   107   102   117   118  
Total noninterest expense 805   649   660   689   689  
 

Income before income taxes and including noncontrolling interests

308 307 220 230 246
Income tax expense 67   62   50   55   55  
Net Income including Noncontrolling Interests 241 245 170 175 191
Deduct: Net loss from noncontrolling interests 5   4   5   4   7  
Net Income attributable to MUAH $ 246   $ 249   $ 175   $ 179   $ 198  
 

Refer to Exhibit 15 for footnote explanations.

 
 
MUFG Americas Holdings Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
Exhibit 5
 
      For the Nine Months Ended
(Dollars in millions)

September 30,
2014

     

September 30,
2013

Interest Income
Loans $ 2,109 $ 1,946
Securities 343 354
Other 10   7  

Total interest income

2,462   2,307  
 
Interest Expense
Deposits 181 184
Commercial paper and other short-term borrowings 4 4
Long-term debt 124   109  
Total interest expense 309   297  
 
Net Interest Income 2,153 2,010
(Reversal of) provision for loan losses (25 ) (22 )
Net interest income after (reversal of) provision for loan losses 2,178   2,032  
 
Noninterest Income
Service charges on deposit accounts 153 158
Trust and investment management fees 78 107
Trading account activities 63 41
Securities gains, net 16 170
Credit facility fees 89 83
Merchant banking fees 89 68
Brokerage commissions and fees 40 34
Card processing fees, net 25 26
Fees from affiliates (16) 151
Other, net 67   (1 )
Total noninterest income 771   686  
 
Noninterest Expense
Salaries and employee benefits 1,258 1,225
Net occupancy and equipment 220 236
Professional and outside services 184 186
Intangible asset amortization 39 49
Regulatory assessments 44 60
(Reversal of) provision for losses on unfunded credit commitments 32 14
Other 337   334  
Total noninterest expense 2,114   2,104  
 

Income before income taxes and including noncontrolling interests

835 614
Income tax expense 179   140  
Net Income including Noncontrolling Interests 656 474
Deduct: Net loss from noncontrolling interests 14   14  
Net Income attributable to MUAH $ 670   $ 488  
 

Refer to Exhibit 15 for footnote explanations.

 
 
MUFG Americas Holdings Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
Exhibit 6
 
    September 30,     June 30,     March 31,     December 31,    

September 30,

(Dollars in millions except for per share amount) 2014 2014 2014 2013

2013

Assets
Cash and due from banks $ 1,593 $ 1,911 $ 1,792 $ 1,863 $ 1,719
Interest bearing deposits in banks 2,772 2,353 2,883 4,329 5,471
Federal funds sold and securities purchased under resale agreements 154   65   32   11   122  
Total cash and cash equivalents 4,519 4,329 4,707 6,203 7,312
Trading account assets (includes $14 at September 30, 2014, $25 at June 30, 2014; $9 at March 31, 2014; $8 at December 31, 2013; and $13 at September 30, 2013 of assets pledged as collateral) 883 941 841 851 776
Securities available for sale 14,064 14,670 15,366 15,817 16,872
Securities held to maturity (Fair value: September 30, 2014 $8,491; June 30, 2014, $8,251; March 31, 2014, $7,810; December 31, 2013, $6,439; September 30, 2013, $5,450) 8,458 8,177 7,826 6,509 5,446
Loans held for investment 74,635 72,369 69,933 68,312 67,170
Allowance for loan losses (529 ) (559 ) (557 ) (568 ) (608 )
Loans held for investment, net 74,106 71,810 69,376 67,744 66,562
Premises and equipment, net 617 632 641 688 685
Goodwill 3,227 3,227 3,227 3,228 3,168
Other assets 5,005   5,034   5,253   4,854   4,663  
Total assets $ 110,879   $ 108,820   $ 107,237   $ 105,894   $ 105,484  
 
Liabilities
Deposits:
Noninterest bearing $ 28,676 $ 27,446 $ 26,881 $ 26,495 $ 26,126
Interest bearing 53,680   54,120   54,298   53,606   53,289  
Total deposits 82,356 81,566 81,179 80,101 79,415
Commercial paper and other short-term borrowings 3,876 2,870 2,660 2,563 3,078
Long-term debt 6,984 6,995 6,545 6,547 7,803
Trading account liabilities 596 664 531 540 614
Other liabilities 1,777   1,666   1,611   1,675   1,767  
Total liabilities 95,589   93,761   92,526   91,426   92,677  
 
Equity
MUAH Stockholder's Equity:
Common stock, par value $1 per share:

Authorized 300,000,000 shares; 136,330,831 shares issued and outstanding as of September 30, 2014 and 136,330,830 as of June 30, 2014, March 31, 2014, December 31, 2013, and September 30, 2013 respectively

136 136 136 136 136
Additional paid-in capital 7,223 7,184 7,196 7,191 5,985
Retained earnings 8,191 7,936 7,687 7,512 7,333
Accumulated other comprehensive loss (499 ) (441 ) (559 ) (624 ) (905 )
Total MUAH stockholder's equity 15,051 14,815 14,460 14,215 12,549
Noncontrolling interests 239   244   251   253   258  
Total equity 15,290   15,059   14,711   14,468   12,807  
Total liabilities and equity $ 110,879   $ 108,820   $ 107,237   $ 105,894   $ 105,484  
 

Refer to Exhibit 15 for footnote explanations.

 
 
MUFG Americas Holdings Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 7
 
      For the Three Months Ended
September 30, 2014       June 30, 2014
      Interest       Average       Interest       Average
Average Income/ Yield/ Average Income/ Yield/
(Dollars in millions) Balance   Expense (7) Rate (3)(7) Balance   Expense (7) Rate (3)(7)
Assets
Loans held for investment: (17)
Commercial and industrial $ 25,746 $ 220 3.39 % $ 24,421 $ 202 3.33 %
Commercial mortgage 13,643 122 3.57 13,529 124 3.66
Construction 1,336 10 3.12 1,146 10 3.24
Lease financing 811 12 5.69 840 14 6.74
Residential mortgage 27,967 250 3.58 27,063 247 3.66
Home equity and other consumer loans 3,164   32   4.08 3,191   32   4.04
Loans, before purchased credit-impaired loans 72,667 646 3.54 70,190 629 3.59
Purchased credit-impaired loans 686   48   27.70 914   120   52.45
Total loans held for investment 73,353 694 3.77 71,104 749 4.22
Securities 22,592 117 2.08 22,865 120 2.10
Interest bearing deposits in banks 2,380 2 0.26 2,878 2 0.25
Federal funds sold and securities purchased under

resale agreements

106 102 0.02
Trading account assets 164 0.66 194 1 1.04
Other earning assets 338   1   0.73 262     0.83
Total earning assets 98,933 814   3.28 97,405 872   3.58
Allowance for loan losses (566 ) (561 )
Cash and due from banks 1,597 1,450
Premises and equipment, net 626 642
Other assets 9,149   8,935  
Total assets $ 109,739   $ 107,871  
Liabilities
Interest bearing deposits:
Transaction and money market accounts $ 39,128 33 0.34 $ 37,646 35 0.38
Savings 5,574 2 0.08 5,590 1 0.09
Time 9,766   23   0.96 10,761   25   0.91
Total interest bearing deposits 54,468   58   0.42 53,997   61   0.45
Commercial paper and other short-term borrowings (18) 2,820 1 0.17 2,521 2 0.20
Long-term debt 6,994   42   2.38 6,923   41   2.39
Total borrowed funds 9,814   43   1.75 9,444   43   1.80
Total interest bearing liabilities 64,282 101   0.63 63,441 104   0.65
Noninterest bearing deposits 27,771 27,224
Other liabilities 2,474   2,298  
Total liabilities 94,527 92,963
Equity
MUAH Stockholder's equity 14,969 14,657
Noncontrolling interests 243   251  
Total equity 15,212   14,908  
Total liabilities and equity $ 109,739   $ 107,871  
 
Net interest income/spread (taxable-equivalent basis) 713 2.65 % 768 2.93 %
Impact of noninterest bearing deposits 0.19 0.19
Impact of other noninterest bearing sources 0.03 0.03
Net interest margin 2.87 3.15
Less: taxable-equivalent adjustment 6   5  
Net interest income $ 707   $ 763  
 

Refer to Exhibit 15 for footnote explanations.

 
 
MUFG Americas Holdings Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 8
 
    For the Three Months Ended
September 30, 2014     September 30, 2013
    Interest       Average     Interest       Average
Average Income/ Yield/ Average Income/ Yield/
(Dollars in millions) Balance   Expense (7)   Rate (3)(7)   Balance   Expense (7)   Rate (3)(7)  
Assets
Loans held for investment: (17)
Commercial and industrial $ 25,746 $ 220 3.39 % $ 22,930 $ 192 3.32 %
Commercial mortgage 13,643 122 3.57 12,936 117 3.62
Construction 1,336 10 3.12 827 7 3.30
Lease financing 811 12 5.69 973 12 4.92
Residential mortgage 27,967 250 3.58 24,157 225 3.72
Home equity and other consumer loans 3,164   32   4.08 3,384   33   3.87
Loans, before purchased credit-impaired loans 72,667 646 3.54 65,207 586 3.58
Purchased credit-impaired loans 686   48   27.70 1,401   82   23.46
Total loans held for investment 73,353 694 3.77 66,608 668 4.00
Securities 22,592 117 2.08 22,909 122 2.12
Interest bearing deposits in banks 2,380 2 0.26 2,050 1 0.25

Federal funds sold and securities purchased under resale agreements

 

106 101 0.13
Trading account assets 164 0.66 134 1 0.43
Other earning assets 338   1   0.73 233     0.97
Total earning assets 98,933 814   3.28 92,035 792   3.43
Allowance for loan losses (566 ) (633 )
Cash and due from banks 1,597 1,315
Premises and equipment, net 626 694
Other assets 9,149   8,123  
Total assets $ 109,739   $ 101,534  
Liabilities
Interest bearing deposits:
Transaction and money market accounts $ 39,128 33 0.34 $ 34,912 31 0.36
Savings 5,574 2 0.08 5,633 2 0.13
Time 9,766   23   0.96 12,017   30   0.98
Total interest bearing deposits 54,468   58   0.42 52,562   63   0.47
Commercial paper and other short-term borrowings (18) 2,820 1 0.17 3,376 2 0.20
Long-term debt 6,994   42   2.38 6,135   38   2.47
Total borrowed funds 9,814   43   1.75 9,511   40   1.66
Total interest bearing liabilities 64,282 101   0.63 62,073 103   0.66
Noninterest bearing deposits 27,771 24,872
Other liabilities 2,474   2,110  
Total liabilities 94,527 89,055
Equity
MUAH Stockholder's equity 14,969 12,210
Noncontrolling interests 243   269  
Total equity 15,212   12,479  
Total liabilities and equity $ 109,739   $ 101,534  
 
Net interest income/spread (taxable-equivalent basis) 713 2.65 % 689 2.77 %
Impact of noninterest bearing deposits 0.19 0.19
Impact of other noninterest bearing sources 0.03 0.03
Net interest margin 2.87 2.99
Less: taxable-equivalent adjustment 6   4  
Net interest income $ 707   $ 685  
 

Refer to Exhibit 15 for footnote explanations.

 
 
MUFG Americas Holdings Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 9
 
    For the Nine Months Ended
September 30, 2014     September 30, 2013
    Interest     Average     Interest     Average
Average Income/ Yield/ Average Income/ Yield/
(Dollars in millions) Balance Expense (7) Rate (3)(7) Balance Expense (7) Rate (3)(7)
Assets
Loans held for investment: (17)
Commercial and industrial $ 24,708 $ 620 3.36 % $ 21,996 $ 554 3.37 %
Commercial mortgage 13,469 365 3.61 11,573 330 3.81
Construction 1,154 28 3.30 760 22 3.84
Lease financing 833 37 5.95 1,030 28 3.61
Residential mortgage 27,014 735 3.63 23,485 667 3.79
Home equity and other consumer loans 3,196   96   4.04 3,495   100   3.85
Loans, before purchased credit-impaired loans 70,374 1,881 3.57 62,339 1,701 3.64
Purchased credit-impaired loans 890   229   34.27 1,294   245   25.30
Total loans held for investment 71,264 2,110 3.95 63,633 1,946 4.08
Securities 22,689 357 2.10 22,643 365 2.15
Interest bearing deposits in banks 2,934 6 0.25 2,671 5 0.25

Federal funds sold and securities purchased under resale agreements

 

113 0.06 131 0.17
Trading account assets 208 3 1.80 149 1 0.36
Other earning assets 278   2   0.95 252   1   0.62
Total earning assets 97,486 2,478   3.39 89,479 2,318   3.46
Allowance for loan losses (568 ) (642 )
Cash and due from banks 1,512 1,356
Premises and equipment, net 638 701
Other assets 8,971   8,090  
Total assets $ 108,039   $ 98,984  
Liabilities
Interest bearing deposits:
Transaction and money market accounts 38,097 104 0.37 32,983 79 0.32
Savings 5,579 4 0.09 5,717 6 0.13
Time 10,575   73   0.93 12,346   99   1.07
Total interest bearing deposits 54,251   181   0.45 51,046   184   0.48
Commercial paper and other short-term borrowings (18) 2,658 4 0.19 2,814 4 0.19
Long-term debt 6,822   124   2.42 5,629   109   2.57
Total borrowed funds 9,480   128   1.79 8,443   113   1.78
Total interest bearing liabilities 63,731 309   0.65 59,489   297   0.67
Noninterest bearing deposits 27,047 24,646
Other liabilities 2,337   2,118  
Total liabilities 93,115 86,253
Equity
MUAH Stockholder's equity 14,675 12,463
Noncontrolling interests 249   268  
Total equity 14,924   12,731
Total liabilities and equity $ 108,039   $ 98,984  
 
Net interest income/spread (taxable-equivalent basis) 2,169 2.74 % 2,021 2.79 %
Impact of noninterest bearing deposits 0.19 0.20
Impact of other noninterest bearing sources 0.04 0.03
Net interest margin 2.97 3.02
Less: taxable-equivalent adjustment 16   11  
Net interest income $ 2,153   $ 2,010  
 

Refer to Exhibit 15 for footnote explanations.

 
 
MUFG Americas Holdings Corporation and Subsidiaries
Loans and Nonperforming Assets (Unaudited)
Exhibit 10
 
    September 30,     June 30,       March 31,     December 31,     September 30,
(Dollars in millions) 2014 2014   2014 2013 2013
 
Loans held for investment (period end)
Loans held for investment:
Commercial and industrial $ 26,429 $ 25,162 $ 23,654 $ 23,528 $ 23,125
Commercial mortgage 13,766 13,549 13,568 13,092 12,905
Construction 1,436 1,248 1,019 905 855
Lease financing 811   829   845   854   972
Total commercial portfolio 42,442 40,788 39,086 38,379 37,857
 
Residential mortgage 28,425 27,619 26,602 25,547 24,714
Home equity and other consumer loans 3,141   3,178   3,194   3,280   3,336
Total consumer portfolio 31,566   30,797   29,796   28,827   28,050
Loans held for investment, before purchased credit-impaired loans 74,008   71,585   68,882   67,206   65,907
Purchased credit-impaired loans 627   784   1,051   1,106   1,263
 
Total loans held for investment $ 74,635   $ 72,369   $ 69,933   $ 68,312   $ 67,170
 
Nonperforming Assets (period end)
Nonaccrual loans:
Commercial and industrial $ 71 $ 161 $ 89 $ 44 $ 62
Commercial mortgage 34   47   46   51   88
Total commercial portfolio 105 208 135 95 150
 
Residential mortgage 239 243 266 286 293
Home equity and other consumer loans 46   46   49   46   48
Total consumer portfolio 285   289   315   332   341
 
Nonaccrual loans, before purchased credit-impaired loans 390 497 450 427 491
Purchased credit-impaired loans 13   17   16   15   20
Total nonaccrual loans 403 514 466 442 511
 
OREO 12 14 17 20 22
FDIC covered OREO 13   19   23   37   41
 
Total nonperforming assets $ 428   $ 547   $ 506   $ 499   $ 574
 

Total nonperforming assets, excluding purchased credit-impaired loans and FDIC covered OREO

$ 402   $ 511   $ 467   $ 447   $ 513
 
Loans 90 days or more past due and still accruing (19) $ 4   $ 11   $ 4   $ 5   $ 8
 

Refer to Exhibit 15 for footnote explanations.

 
 
MUFG Americas Holdings Corporation and Subsidiaries
Allowance for Credit Losses (Unaudited)
Exhibit 11
 
    As of and for the Three Months Ended
September 30,     June 30,     March 31,     December 31,     September 30,
(Dollars in millions) 2014 2014 2014 2013 2013
 
Analysis of Allowance for Credit Losses
Balance, beginning of period $ 559 $ 557 $ 568 $ 608 $ 625

(Reversal of) provision for loan losses, excluding purchased credit-impaired loans

(18 ) 9 (18 ) (22 ) (16 )

(Reversal of) provision for purchased credit-impaired loan losses not subject to FDIC indemnification

2 (1 )

Increase/(decrease) in allowance covered by FDIC indemnification

(6 ) (2 )
Other (1 )
Loans charged-off:
Commercial and industrial (15 ) (6 ) (5 ) (18 ) (6 )
Commercial mortgage (2 ) (1 ) (2 ) (2 )
Construction         (1 )

Total commercial portfolio

(15 ) (8 ) (6 ) (20 ) (9 )
Residential mortgage (2 ) (1 ) (1 ) (2 )
Home equity and other consumer loans (2 ) (2 ) (2 ) (4 ) (2 )
Total consumer portfolio (2 ) (4 ) (3 ) (5 ) (4 )
Purchased credit-impaired loans (1 )        
Total loans charged-off (18 ) (12 ) (9 ) (25 ) (13 )
Recoveries of loans previously charged-off:
Commercial and industrial 3 3 11 6 5
Commercial mortgage 2 1 4
Construction 3 1
Lease financing       1    
Total commercial portfolio 5 4 14 7 10
Home equity and other consumer loans   1   1     2  

Total consumer portfolio

  1   1     2  
Purchased credit-impaired loans 1       7   2  
Total recoveries of loans previously charged-off 6   5   15   14   14  
Net loans recovered (charged-off) (12 ) (7 ) 6   (11 ) 1  
 
Ending balance of allowance for loan losses 529 559 557 568 608
Allowance for losses on unfunded credit commitments 162   145   148   132   131  
Total allowance for credit losses $ 691   $ 704   $ 705   $ 700   $ 739  
 
Components of allowance for loan losses and credit losses:
Allowance for loan losses, excluding allowance on purchased

credit-impaired loans

$ 526 $ 556 $ 554 $ 567 $ 607
Allowance for loan losses on purchased credit-impaired loans 3   3   3   1   1  
Total allowance for loan losses $ 529   $ 559   $ 557   $ 568   $ 608  
 

 

MUFG Americas Holdings Corporation and Subsidiaries
Securities (Unaudited)

Exhibit 12

 
Securities Available for Sale                        
 
September 30, 2014 June 30, 2014 Fair Value Fair Value
Amortized Fair Amortized Fair Change from % Change from
(Dollars in millions) Cost Value Cost Value June 30, 2014   June 30, 2014  
Asset Liability Management securities:
U.S. Treasury $ 70 $ 70 $ $ $ 70 100 %
Residential mortgage-backed securities:
U.S. government agency and government-sponsored agencies 7,886 7,739 8,281 8,157 (418 ) (5 )
Privately issued 175 177 188 191 (14 ) (7 )
Privately issued - commercial mortgage-backed securities 1,770 1,745 1,824 1,813 (68 ) (4 )
Collateralized loan obligations 2,438 2,422 2,543 2,534 (112 ) (4 )
Asset-backed and other 13 14 18 19 (5 ) (26 )
Asset Liability Management securities 12,352 12,167 12,854 12,714 (547 ) (4 )
Other debt securities:
Direct bank purchase bonds 1,819 1,833 1,888 1,897 (64 ) (3 )
Other 54 52 54 52
Equity securities 10 12 6 7 5   71
Total securities available for sale $ 14,235 $ 14,064 $ 14,802 $ 14,670 $ (606 ) (4 )%
 
Securities Held to Maturity
 
September 30, 2014 June 30, 2014 Carrying Amount Carrying Amount
Carrying Fair Carrying Fair Change from % Change from
(Dollars in millions) Amount (20) Value Amount (20) Value June 30, 2014   June 30, 2014  
U.S. Treasury $ 485 $ 484 $ 484 $ 486 $ 1 %
U.S. government-sponsored agencies 125 125 275 275 (150 ) (55 )

U.S. government agency and government-sponsored agencies - residential mortgage-backed securities

6,102 6,107 5,669 5,698 433 8

U.S. government agency and government-sponsored agencies - commercial mortgage-backed securities

1,746 1,775 1,749 1,792 (3 )
Total securities held to maturity $ 8,458 $ 8,491 $ 8,177 $ 8,251 $ 281   3
 

Refer to Exhibit 15 for footnote explanations.

 

MUFG Americas Holdings Corporation and Subsidiaries
Reconciliation of Non-GAAP Measures (Unaudited)
Exhibit 13

The following table presents a reconciliation between certain Generally Accepted Accounting Principles (GAAP) amounts and specific non-GAAP measures as used to compute selected non-GAAP financial ratios.

    As of and for the Three Months Ended
September 30,     June 30,     March 31,     December 31,     September 30,
(Dollars in millions) 2014 2014 2014 2013 2013
Net income attributable to MUAH $ 246 $ 249 $ 175 $ 179 $ 198
Net adjustments for merger costs related to acquisitions, net of tax 13 15 11 12 15
Net adjustments for privatization transaction, net of tax (8 ) (9 ) 1   2   (14 )
Net income attributable to MUAH, excluding impact of
privatization transaction and merger costs related to acquisitions $ 251   $ 255   $ 187   $ 193   $ 199  
 
Average total assets $ 109,739 $ 107,871 $ 106,491 $ 104,424 $ 101,534
Less: Net adjustments related to privatization transaction 2,255   2,260   2,272   2,297   2,309  
Average total assets, excluding impact of privatization transaction $ 107,484   $ 105,611   $ 104,219   $ 102,127   $ 99,225  
Return on average assets (3) 0.90 % 0.92 % 0.66 % 0.68 % 0.78 %
Return on average assets, excluding impact of privatization
transaction and merger costs related to acquisitions (3) (4) 0.94 0.97 0.72 0.75 0.81
 
Average MUAH stockholder's equity $ 14,969 $ 14,657 $ 14,390 $ 12,604 $ 12,210
Less: Adjustments for merger costs related to acquisitions (147 ) (132 ) (118 ) (105 ) (93 )
Less: Net adjustments for privatization transaction 2,290   2,297   2,302   2,306   2,319  
Average MUAH stockholder's equity, excluding impact of privatization
transaction and merger costs related to acquisitions $ 12,826   $ 12,492   $ 12,206   $ 10,403   $ 9,984  
Return on average MUAH stockholder's equity (3) 6.57 % 6.80 % 4.87 % 5.66 % 6.50 %
Return on average MUAH stockholder's equity, excluding impact of
privatization transaction and merger costs related to acquisitions (3) (4) 7.84 8.19 6.11 7.41 8.01
 
Noninterest expense $ 805 $ 649 $ 660 $ 689 $ 689
Less: Staff costs associated with fees from affiliates - support services 88
Less: Foreclosed asset expense and other credit costs (1 ) 1 2 (2 )
Less: (Reversal of) provision for losses on unfunded credit commitments 19 (3 ) 16 2 1
Less: Productivity initiative costs 6 4 1 20 14
Less: Low income housing credit (LIHC) investment amortization expense 25 20 20 24 17
Less: Expenses of the LIHC consolidated VIEs 8 8 8 6 11
Less: Merger and business integration costs 22 25 17 25 25
Less: Net adjustments related to privatization transaction 11 10 10 14 13
Less: Intangible asset amortization 3   3   3   3   3  
Noninterest expense, as adjusted (a) $ 624   $ 581   $ 585   $ 593   $ 607  
 
Total revenue $ 1,095 $ 965 $ 864 $ 896 $ 919
Add: Net interest income taxable-equivalent adjustment 6 5 5 4 4
Less: Fees from affiliates - support services 94
Less: Productivity initiative gains 6 11
Less: Accretion related to privatization-related fair value adjustments 4 9 6 8 8
Less: Other credit costs 17   (2 ) 2   1   1  
Total revenue, as adjusted (b) $ 986   $ 963   $ 861   $ 885   $ 903  
Adjusted efficiency ratio (a)/(b) (6) 63.42 % 60.30 % 67.95 % 67.08 % 67.21 %
 
Total MUAH stockholder's equity $ 15,051 $ 14,815 $ 14,460 $ 14,215 $ 12,549
Less: Goodwill 3,227 3,227 3,227 3,228 3,168
Less: Intangible assets, except mortgage servicing rights (MSRs) 249 262 275 288 287
Less: Deferred tax liabilities related to goodwill and intangible assets (20 ) (99 ) (102 ) (105 ) (110 )
Tangible common equity (c) $ 11,595   $ 11,425   $ 11,060   $ 10,804   $ 9,204  
Total assets $ 110,879 $ 108,820 $ 107,237 $ 105,894 $ 105,484
Less: Goodwill 3,227 3,227 3,227 3,228 3,168
Less: Intangible assets, except MSRs 249 262 275 288 287
Less: Deferred tax liabilities related to goodwill and intangible assets (20 ) (99 ) (102 ) (105 ) (110 )
Tangible assets (d) $ 107,423   $ 105,430   $ 103,837   $ 102,483   $ 102,139  
Tangible common equity ratio (c)/(d) (11) 10.79 % 10.84 % 10.65 % 10.54 % 9.01 %
 
Tier 1 capital, determined in accordance with U.S. Basel I regulatory requirements n/a n/a n/a $ 11,471 $ 10,153
Less: Junior subordinated debt payable to trusts n/a n/a n/a 66   66  
Basel I Tier 1 common capital (e) n/a n/a n/a $ 11,405 $ 10,087
Common Equity Tier 1 capital under U.S. Basel III (transitional) $ 12,189 $ 11,900 $ 11,640 n/a n/a
Accumulated other comprehensive loss related to securities available for
sale and pension and other benefits (9) (388 ) (377 ) (449 ) (522 ) n/a
Other (9) (122 ) (130 ) (138 ) (95 ) n/a
Common Equity Tier 1 capital estimated under U.S. Basel III (standardized approach;                    
fully phased-in) (f) $ 11,679   $ 11,393   $ 11,053   $ 10,788   n/a
Risk-weighted assets, determined in accordance with regulatory requirements (g) (9) $ 96,239 $ 94,556 $ 92,476 $ 92,410 $ 90,900
Add: Adjustments (9) 1,955 3,638 4,293 4,444 n/a
Total risk-weighted assets, estimated under U.S. Basel III (standardized approach;                  
fully phased-in) (h) $ 98,194   $ 98,194   $ 96,769   $ 96,854   n/a
Common Equity Tier 1 risk-based capital ratio (f)/(h) (8) (12) 11.89 % 11.60 % 11.42 % 11.14 % n/a
Tier 1 common capital ratio (e)/(g) (8) (9) (10) n/a n/a n/a 12.34 % 11.10 %
 

Refer to Exhibit 15 for footnote explanations.

 

MUFG Americas Holdings Corporation and Subsidiaries
Reconciliation of Non-GAAP Measures (Unaudited)
Exhibit 14

The following table presents a reconciliation between certain Generally Accepted Accounting Principles (GAAP) amounts and specific non-GAAP measures as used to compute selected non-GAAP financial ratios.

      For the Nine Months Ended
September 30,       September 30,
(Dollars in millions) 2014 2013
 
Net income attributable to MUAH $ 670 $ 488
Net adjustments for merger costs related to acquisitions, net of tax 39 66
Net adjustments for privatization transaction, net of tax (16 ) (23 )
Net income attributable to MUAH, excluding impact of
privatization transaction and merger costs related to acquisitions $ 693   $ 531  
 
Average total assets $ 108,039 $ 98,984
Less: Net adjustments related to privatization transaction 2,262   2,319  
Average total assets, excluding impact of privatization transaction $ 105,777   $ 96,665  
Return on average assets (3) 0.83 % 0.66 %
Return on average assets, excluding impact of privatization
transaction and merger costs related to acquisitions (3) (4) 0.87 0.73
 
Average MUAH stockholder's equity $ 14,675 $ 12,463
Less: Adjustments for merger costs related to acquisitions (132 ) (71 )
Less: Net adjustments for privatization transaction 2,296   2,336  
Average MUAH stockholder's equity, excluding impact of privatization
transaction and merger costs related to acquisitions $ 12,511   $ 10,198  
Return on average MUAH stockholder's equity (3) 6.08 % 5.23 %
Return on average MUAH stockholder's equity, excluding impact of
privatization transaction and merger costs related to acquisitions (3) (4) 7.37 6.95
 
Noninterest expense $ 2,114 $ 2,104
Less: Staff costs associated with fees from affiliates - support services 88
Less: Foreclosed asset expense and other credit costs (1 ) (6 )
Less: (Reversal of) provision for losses on unfunded credit commitments 32 14
Less: Productivity initiative costs 11 31
Less: Low income housing credit (LIHC) investment amortization expense 65 52
Less: Expenses of the LIHC consolidated VIEs 23 23
Less: Merger and business integration costs 64 109
Less: Net adjustments related to privatization transaction 31 41
Less: Intangible asset amortization 10   10  
Noninterest expense, as adjusted (a) $ 1,791   $ 1,830  
 
Total revenue $ 2,924 $ 2,696
Add: Net interest income taxable-equivalent adjustment 16 11
Less: Fees from affiliates - support services 94
Less: Productivity initiative gains 11
Less: Accretion related to privatization-related fair value adjustments 20 16
Less: Other credit costs 18   (6 )
Total revenue, as adjusted (b) $ 2,808   $ 2,686  
Adjusted efficiency ratio (a)/(b) (6) 63.74 % 68.10 %
 

Refer to Exhibit 15 for footnote explanations.

 
 

MUFG Americas Holdings Corporation and Subsidiaries

Footnotes

Exhibit 15

 
 
(1)     Pre-tax, pre-provision income is total revenue less noninterest expense. Management believes that this is a useful financial measure because it enables investors and others to assess the Company's ability to generate capital to cover loan losses through a credit cycle.
(2) Core deposits exclude brokered deposits, foreign time deposits and domestic time deposits greater than $250,000.
(3) Annualized.
(4) These ratios exclude the impact of the privatization transaction and merger costs related to acquisitions. Management believes that these ratios provide useful supplemental information regarding the Company's business results. Please refer to Exhibits 13 and 14 for reconciliations between certain GAAP amounts and these non-GAAP measures.
(5) The efficiency ratio is total noninterest expense as a percentage of total revenue (net interest income and noninterest income).
(6) The adjusted efficiency ratio, a non-GAAP financial measure, is adjusted noninterest expense (noninterest expense excluding staff costs associated with fees from affiliates - support services, foreclosed asset expense and other credit costs, (reversal of) provision for losses on unfunded credit commitments, certain costs related to productivity initiatives, low income housing credit (LIHC) investment amortization expense, expenses of the LIHC consolidated variable interest entities, merger and business integration costs, privatization-related expenses, and intangible asset amortization) as a percentage of adjusted total revenue (net interest income (taxable-equivalent basis) and noninterest income), excluding the impact of fees from affiliates - support services, gains from productivity initiatives related to the sale of certain business units and premises, accretion related to privatization-related fair value adjustments, and other credit costs. Management discloses the adjusted efficiency ratio as a measure of the efficiency of our operations, focusing on those costs most relevant to our business activities. Please refer to Exhibits 13 and 14 for reconciliations between certain GAAP amounts and these non-GAAP measures.
(7) Yields, interest income and net interest margin are presented on a taxable-equivalent basis using the federal statutory tax rate of 35 percent.
(8) Estimated as of September 30, 2014.
(9) The capital ratios displayed as of September 30, 2014, June 30, 2014, and March 30, 2014 are calculated in accordance with the transition guidelines set forth in the U.S. federal banking agencies' revised capital framework for implementing the final U.S. Basel III regulatory capital rules. The capital ratios as of and prior to December 31, 2013 are calculated under Basel I rules.
(10) The Tier 1 common capital ratio is the ratio, calculated under Basel I rules, of Tier 1 capital, less qualifying trust preferred securities, to risk-weighted assets. The Tier 1 common capital ratio, a non-GAAP financial measure, facilitates the understanding of the Company's capital structure and is used to assess and compare the quality and composition of the Company's capital structure to other financial institutions. Please refer to Exhibit 13 for a reconciliation between certain GAAP amounts and these non-GAAP measures.
(11) The tangible common equity ratio, a non-GAAP financial measure, is calculated as tangible common equity divided by tangible assets. The methodology for determining tangible common equity may differ among companies. The tangible common equity ratio facilitates the understanding of the Company's capital structure and is used to assess and compare the quality and composition of the Company's capital structure to other financial institutions. Please refer to Exhibit 13 for a reconciliation between certain GAAP amounts and these non-GAAP measures.
(12) Common Equity Tier 1 risk-based capital (standardized, fully phased-in basis) is a non-GAAP financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies as if the transition provisions of the U.S. Basel III rules were fully phased in for the periods in which the ratio is disclosed. Management reviews this ratio, which includes components of accumulated other comprehensive loss, along with other measures of capital as part of its financial analyses and has included this non-GAAP information, and the corresponding reconciliation from Common Equity Tier 1 capital (calculated according to the transition provisions under U.S. Basel III rules) because of current interest in such information by market participants. Please refer to Exhibit 13 for a reconciliation between certain GAAP amounts and these non-GAAP measures.
(13) Criticized loans held for investment reflects loans in the commercial portfolio segment that are monitored for credit quality based on internal ratings. Amounts exclude small business loans, which are monitored by business credit score and delinquency status.
(14) The allowance for credit losses ratios include the allowances for loan losses and losses on unfunded credit commitments against end of period total loans held for investment or total nonaccrual loans, as appropriate.
(15) These ratios exclude the impact of all purchased credit-impaired loans and FDIC covered OREO. Purchased credit-impaired loans and OREO related to the April 2010 acquisitions of certain assets and assumption of certain liabilities of Frontier Bank and Tamalpais Bank are covered under loss share agreements between the Bank and the Federal Deposit Insurance Corporation. Management believes the exclusion of purchased credit-impaired loans and FDIC covered OREO from certain asset quality ratios that include nonaccrual loans, nonperforming assets, net loans charged-off, total loans held for investment and the allowance for loan losses or credit losses in the numerator or denominator provides a better perspective into underlying asset quality trends.
(16) Fees from affiliates represents income resulting from the July 1, 2014 business integration initiative.
(17) Average balances on loans held for investment include all nonperforming loans. The amortized portion of net loan origination fees (costs) is included in interest income on loans, representing an adjustment to the yield.
(18) Includes interest bearing trading liabilities.
(19) Excludes loans totaling $65 million, $103 million, $123 million, $124 million, and $203 million that are 90 days or more past due and still accruing at September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013, and September 30, 2013, respectively, which consist of loans accounted for within loan pools in accordance with the accounting standards for purchased credit-impaired loans. The past due status of individual loans within the pools is not a meaningful indicator of credit quality, as potential credit losses are measured at the loan pool level.
(20) Carrying amount reflects amortized cost except for balances transferred from available for sale to held to maturity securities. Those balances reflect amortized cost plus any unrealized gains or losses at the date of transfer.
nm = not meaningful

n/a = not applicable