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MUFG Americas Holdings Corporation Reports Full Year Net Income of $825 Million, Up 24 Percent from 2013

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MUFG Americas Holdings Corporation (the Company), parent company of San Francisco-based MUFG Union Bank, N.A. (the Bank), today reported full year 2014 results. Net income for the full year was $825 million, compared with net income of $667 million in 2013. Net income for the quarter was $155 million, compared with $246 million for the prior quarter and $179 million for the year-ago quarter.

Full Year Highlights:

  • Net income was $825 million, up $158 million, or 24 percent, from the prior year.
  • Pre-tax pre-provision income was $1,064 million, up $265 million, or 33 percent, from the prior year.
  • Solid loan and deposit growth:
    • Loans held for investment were $76.8 billion at December 31, 2014, up $8.5 billion, or 12 percent, from the prior year-end.
    • Core deposits were $76.7 billion at December 31, 2014, up $7.5 billion, or 11 percent, from the prior year-end.
  • Continued strong capital position:
    • Capital ratios continued to exceed the regulatory thresholds for “well-capitalized” bank holding companies. Basel I Tier 1 and Total risk-based capital ratios were 12.79 percent and 14.73 percent, respectively, at December 31, 2014.
    • 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. The Bank will continue to be subject to the advanced approaches rules.

Fourth Quarter Highlights:

  • Net income for the fourth quarter was $155 million, down $91 million from the third quarter due to a decrease in noninterest income and increases in income tax expense and provision for loan losses.
  • Core deposits grew 4 percent from September 30, 2014 to $76.7 billion. Loans held for investment grew 3 percent from September 30, 2014 to $76.8 billion.
  • Continued disciplined underwriting standards produced strong credit quality with low levels of nonperforming assets and charge-offs.
    • Nonperforming assets were $411 million, or 0.36 percent of total assets, compared with $428 million, or 0.39 percent of total assets at September 30, 2014 and $499 million, or 0.48 percent of total assets, at December 31, 2013.
    • Net loans recovered were $1 million for the quarter, compared with net charge-offs of $12 million for the prior quarter and $11 million in the year-ago quarter.

Business Integration Initiative

Effective July 1, 2014, the U.S. branch banking operations of The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) were integrated under the Bank’s operations. This integration did not involve a legal entity combination, but rather an integration of personnel and certain business and support activities. 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 to 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 and year ending December 31, 2014, the Company recorded $168 million and $319 million, respectively, in fee income from this initiative, including $112 million and $206 million, respectively, related to support services provided by the Company to BTMU. Noninterest expense related to the Services was $105 million and $193 million for the quarter and year ending December 31, 2014, respectively, primarily comprised of salaries and employee benefits. The remaining fee income was recognized through revenue sharing agreements with BTMU, with associated costs included within the Company’s results.

Full Year 2014 Results

For the full year 2014, net income was $825 million, compared with net income of $667 million in 2013. Total revenue for the full year 2014 was $4.0 billion, an increase of $0.4 billion, or 11 percent, compared with 2013. Net interest income increased $146 million, or 5 percent, primarily due to loan growth, partially offset by a lower net interest margin. Noninterest income increased $247 million, or 28 percent, primarily due to fee income from affiliates resulting from the business integration initiative. Noninterest expense increased $128 million, or 5 percent, primarily due to increased salaries and employee benefit costs from the business integration initiative. The effective tax rate for full year 2014 was 25.4 percent, compared with an effective tax rate of 23.1 percent for 2013.

Summary of Fourth Quarter Results

Fourth Quarter Total Revenue

For the fourth quarter 2014, total revenue (net interest income plus noninterest income) was $1.1 billion, down $34 million compared with the third quarter of 2014.

Net interest income increased slightly while noninterest income decreased 9 percent. Net interest income for the fourth quarter 2014 was $709 million, up slightly compared with the third quarter of 2014. The increase in net interest income was largely due to growth in loans held for investment. Average total loans held for investment increased $2.4 billion, or 3 percent, compared with the third quarter of 2014 largely due to growth in commercial and industrial loans and residential mortgages. The net interest margin was 2.81 percent, down 6 basis points from the prior quarter substantially due to lower yields on loans held for investment and investment securities reflecting the low interest rate environment, partially offset by lower funding costs. Average total deposits increased $1.8 billion, or 2 percent, during the quarter compared with the third quarter of 2014.

For the fourth quarter 2014, noninterest income was $352 million, down $36 million, or 9 percent, compared with the third quarter of 2014, largely due to higher trading account activities and investment securities gains in the prior quarter.

Compared with the fourth quarter of 2013, total revenue increased $165 million, with net interest income increasing slightly while noninterest income increased 85 percent. Noninterest income increased largely due to fees from affiliates resulting from the business integration initiative. Average total loans held for investment increased $8.2 billion, or 12 percent, compared with the fourth quarter 2013. Average total deposits increased $4.3 billion compared with the fourth quarter of 2013, with average interest bearing deposits up $0.8 billion, or 2 percent, and average noninterest bearing deposits up $3.5 billion, or 13 percent.

Fourth Quarter Noninterest Expense

Noninterest expense for the fourth quarter 2014 was $807 million, up slightly compared with the third quarter 2014 and up $118 million from the fourth quarter 2013. The increase from the fourth quarter 2013 was largely due to increased employee costs as a result of the business integration initiative. The effective tax rate for the fourth quarter of 2014 was 38.9 percent, compared with an effective tax rate of 21.7 percent for the third quarter of 2014. Income tax expense recorded in the fourth quarter includes an adjustment to align estimated expense with actual full year 2014 results.

Balance Sheet

At December 31, 2014, total assets were $113.7 billion, up $2.8 billion compared with September 30, 2014, primarily reflecting loan growth. Total loans held for investment increased 3 percent compared with the third quarter of 2014 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 $98.5 billion, up $2.9 billion compared with September 30, 2014, primarily due to an increase in deposit growth. At December 31, 2014, total deposits were $86.0 billion, up $3.6 billion compared with September 30, 2014. Core deposits at December 31, 2014 were $76.7 billion compared with $73.6 billion at September 30, 2014.

Credit Quality

Credit quality remained strong in the fourth quarter 2014 reflected by continued low levels of nonperforming assets and a net recovery of loans previously charged off.

Nonperforming assets as of December 31, 2014 were $411 million, or 0.36 percent of total assets, compared with $428 million, or 0.39 percent of total assets, at September 30, 2014, and $499 million, or 0.48 percent of total assets at December 31, 2013.

Net loans recovered were $1 million for the fourth quarter of 2014 compared with net loans charged off of $12 million for the third quarter 2014 and $11 million for the fourth quarter 2013.

The allowance for credit losses as a percentage of total loans was 0.90 percent at December 31, 2014, compared with 0.92 percent at September 30, 2014, and 1.02 percent at December 31, 2013. The allowance for credit losses as a percentage of nonaccrual loans was 184 percent at December 31, 2014, compared with 171 percent at September 30, 2014 and 158 percent at December 31, 2013. In the fourth quarter of 2014, the overall provision for credit losses was a net reversal of $1 million, compared with a provision of $1 million for the third quarter of 2014 and a net reversal of $21 million for the fourth quarter of 2013.

Capital

The Company’s stockholder’s equity was $15.0 billion at December 31, 2014 compared with $15.1 billion at September 30, 2014.

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. As required, the Company will calculate its regulatory capital ratios under the standardized approach of the U.S. Basel III rules beginning in the first quarter of 2015, with certain provisions subject to phase-in periods. The Bank will continue to be subject to the advanced approaches rules.

The Company’s Tier 1 and Total risk-based capital ratios, calculated in accordance with U.S. Basel I regulatory capital rules, were 12.79 percent and 14.73 percent, respectively, at December 31, 2014. The Tier 1 common capital and tangible common equity ratios were 12.73 percent and 10.54 percent at December 31, 2014, respectively.

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 12.57 percent at December 31, 2014.

Non-GAAP Financial Measures

This press release contains certain references to financial measures identified as 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 (Tier 1 common capital, tangible common equity and Common Equity Tier 1 capital (calculated under the Basel III standardized approach on a transitional and 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.

Headquartered in New York, MUFG Americas Holdings Corporation is a financial holding company and bank holding company with assets of $113.7 billion at December 31, 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 December 31, 2014, MUFG Union Bank, N.A. operated 414 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 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 December 31, 2014 from
December 31, September 30, June 30, March 31, December 31, September 30, December 31,
(Dollars in millions) 2014 2014 2014 2014 2013 2014 2013
Results of operations:
Net interest income $ 709 $ 707 $ 763 $ 683 $ 706 % %
Noninterest income 352 388 202 181 190 (9 ) 85
Total revenue 1,061 1,095 965 864 896 (3 ) 18
Noninterest expense 807 805 649 660 689 17
Pre-tax, pre-provision income (1) 254 290 316 204 207 (12 ) 23
(Reversal of) provision for loan losses 9 (18 ) 9 (16 ) (23 ) 150 139

Income before income taxes and including noncontrolling interests

245 308 307 220 230 (20 ) 7
Income tax expense 95 67 62 50 55 42 73
Net income including noncontrolling interests 150 241 245 170 175 (38 ) (14 )
Deduct: Net loss from noncontrolling interests 5 5 4 5 4 25
Net income attributable to
MUFG Americas Holdings Corporation (MUAH) $ 155 $ 246 $ 249 $ 175 $ 179 (37 ) (13 )
Balance sheet (end of period):
Total assets $ 113,678 $ 110,879 $ 108,820 $ 107,237 $ 105,894 3 7
Total securities 22,015 22,522 22,847 23,192 22,326 (2 ) (1 )
Total loans held for investment 76,804 74,635 72,369 69,933 68,312 3 12
Core deposits (2) 76,666 73,608 72,058 70,665 69,155 4 11
Total deposits 86,004 82,356 81,566 81,179 80,101 4 7
Long-term debt 6,972 6,984 6,995 6,545 6,547 6
MUAH stockholder’s equity 14,985 15,051 14,815 14,460 14,215 5
Balance sheet (period average):
Total assets $ 112,589 $ 109,739 $ 107,871 $ 106,491 $ 104,424 3 8
Total securities 22,171 22,592 22,865 22,611 22,282 (2 )
Total loans held for investment 75,795 73,353 71,104 69,293 67,619 3 12
Earning assets 101,430 98,933 97,405 96,100 94,707 3 7
Total deposits 84,036 82,239 81,221 80,433 79,747 2 5
MUAH stockholder’s equity 15,202 14,969 14,657 14,390 12,604 2 21
Performance ratios:
Return on average assets (3) 0.55 % 0.90 % 0.92 % 0.66 % 0.68 %
Return on average MUAH stockholder’s equity (3) 4.06 6.57 6.80 4.87 5.66

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

0.62 0.94 0.97 0.72 0.75

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

5.27 7.84 8.19 6.11 7.41
Efficiency ratio (5) 76.12 73.51 67.23 76.38 76.89
Adjusted efficiency ratio (6) 67.24 63.42 60.30 67.95 67.08
Net interest margin (3) (7) 2.81 2.87 3.15 2.87 2.99
Capital ratios:
Regulatory: U.S. Basel I U.S. Basel III U.S. Basel I
Common Equity Tier 1 risk-based capital ratio(8) (9) n/a 12.66 % 12.58 % 12.59 % n/a
Tier 1 risk-based capital ratio (8) (9) 12.79 % 12.70 12.62 12.62 12.41 %
Total risk-based capital ratio (8) (9) 14.73 14.60 14.57 14.75 14.61
Tier 1 leverage ratio (8) (9) 11.25 11.43 11.35 11.26 11.27
Other:
Tangible common equity ratio (11) 10.54 % 10.79 % 10.84 % 10.65 % 10.54 %
Tier 1 common capital ratio (8) (9) (10) 12.73 n/a n/a n/a 12.34
Common Equity Tier 1 risk-based capital ratio (U.S. Basel III standardized; transitional) (8) (12) 12.85 n/a n/a n/a n/a

Common Equity Tier 1 risk-based capital ratio (U.S. Basel III standardized approach; fully phased in) (8) (13)

12.57 12.47 12.13 11.98 11.51

Refer to Exhibit 16 for footnote explanations.

MUFG Americas Holdings Corporation and Subsidiaries

Financial Highlights (Unaudited)
Exhibit 2
As of and for the Year Ended

Percent Change

December 31,

December 31,

to December 31, 2014

(Dollars in millions) 2014 2013

from December 31, 2013

Results of operations:
Net interest income $ 2,862 $ 2,716 5 %
Noninterest income 1,123 876 28
Total revenue 3,985 3,592 11
Noninterest expense 2,921 2,793 5
Pre-tax, pre-provision income (1) 1,064 799 33
(Reversal of) provision for loan losses (16 ) (45 ) 64
Income before income taxes and including
noncontrolling interests 1,080 844 28
Income tax expense 274 195 41
Net income including noncontrolling interests 806 649 24
Deduct: Net loss from noncontrolling interests 19 18 6
Net income attributable to MUAH $ 825 $ 667 24
Balance sheet (end of period):
Total assets $ 113,678 $ 105,894 7
Total securities 22,015 22,326 (1 )
Total loans held for investment 76,804 68,312 12
Core deposits (2) 76,666 69,155 11
Total deposits 86,004 80,101 7
Long-term debt 6,972 6,547 6
MUAH stockholder’s equity 14,985 14,215 5
Balance sheet (period average):
Total assets $ 109,186 $ 100,355 9
Total securities 22,559 22,552
Total loans held for investment 72,406 64,638 12
Earning assets 98,482 90,797 8
Total deposits 81,988 76,714 7
MUAH stockholder’s equity 14,808 12,499 18
Performance ratios:
Return on average assets (3) 0.76 % 0.66 %
Return on average MUAH stockholder’s equity (3) 5.57 5.33
Return on average assets excluding the impact of privatization transaction and merger costs related to acquisitions (3) (4) 0.81 0.74
Return on average MUAH stockholders’ equity excluding the impact of privatization transaction and merger costs related to acquisitions (3) (4) 6.84 7.06
Efficiency ratio (5) 73.31 77.74
Adjusted efficiency ratio (6) 64.63 67.85
Net interest margin (3) (7) 2.93 3.01

Refer to Exhibit 16 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 December 31, 2014 from
(Dollars in millions)

December 31,
2014

September 30,
2014

June 30,
2014

March 31,
2014

December 31,
2013

September 30,
2014

December 31,
2013

Credit Data:

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

$ 9 $ (18 ) $ 9 $ (18 ) $ (22 ) 150 % 141 %

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

2 (1 ) 100
(Reversal of) provision for losses on unfunded credit commitments (10 ) 19 (3 ) 16 2 (153 ) nm
Total (reversal of) provision for credit losses $ (1 ) $ 1 $ 6 $ $ (21 ) (200 ) 95
Net loans charged-off (recovered) $ (1 ) $ 12 $ 7 $ (6 ) $ 11 (108 ) (109 )
Nonperforming assets 411 428 547 506 499 (4 ) (18 )
Criticized loans held for investment (14) 1,141 1,245 1,450 1,317 1,274 (8 ) (10 )
Credit Ratios:
Allowance for loan losses to:
Total loans held for investment 0.70 % 0.71 % 0.77 % 0.80 % 0.83 %
Nonaccrual loans 143.35 131.28 108.90 119.58 128.42
Allowance for credit losses to (15):
Total loans held for investment 0.90 0.92 0.97 1.01 1.02
Nonaccrual loans 183.80 171.42 137.13 151.35 158.30

Net loans charged-off (recovered) to average total loans held for investment (3)

0.06 0.04 (0.04 ) 0.07
Nonperforming assets to total loans held for investment and

Other Real Estate Owned (OREO)

0.53 0.57 0.75 0.72 0.74
Nonperforming assets to total assets 0.36 0.39 0.50 0.47 0.48
Nonaccrual loans to total loans held for investment 0.49 0.54 0.71 0.67 0.65
As of and for the Year Ended Percent Change
December 31, December 31, to December 31, 2014
(Dollars in millions) 2014 2013 from December 31, 2013
Credit Data:

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

$ (18 ) $ (44 ) 59 %

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

2 (1 ) 300
(Reversal of) provision for losses on unfunded credit commitments 22 16 38
Total (reversal of) provision for credit losses $ 6 $ (29 ) 121
Net loans charged-off $ 12 $ 32 (63 )
Nonperforming assets 411 499 (18 )
Credit Ratios:
Net loans charged-off to average total loans held for investment 0.02 % 0.05 %
Nonperforming assets to total assets 0.36 0.48

Refer to Exhibit 16 for footnote explanations.

MUFG Americas Holdings Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
Exhibit 4
For the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
(Dollars in millions) 2014 2014 2014 2014 2013
Interest Income
Loans $ 696 $ 693 $ 749 $ 667 $ 695
Securities 109 113 115 115 115
Other 3 2 3 5 6
Total interest income 808 808 867 787 816
Interest Expense
Deposits 57 58 61 62 64
Commercial paper and other short-term borrowings 1 1 2 1 1
Long-term debt 41 42 41 41 45
Total interest expense 99 101 104 104 110
Net Interest Income 709 707 763 683 706
(Reversal of) provision for loan losses 9 (18 ) 9 (16 ) (23 )
Net interest income after (reversal of) provision for loan losses 700 725 754 699 729
Noninterest Income
Service charges on deposit accounts 50 52 50 51 51
Trust and investment management fees 26 26 26 26 28
Trading account activities 8 33 14 16 20
Securities gains, net 2 13 1 2 8
Credit facility fees 33 30 31 28 28
Merchant banking fees 35 38 27 24 25
Brokerage commissions and fees 13 14 13 13 12
Card processing fees, net 9 8 9 8 8
Fees from affiliates (16) 168 151
Other, net 8 23 31 13 10
Total noninterest income 352 388 202 181 190
Noninterest Expense
Salaries and employee benefits 527 492 378 388 406
Net occupancy and equipment 76 74 75 71 70
Professional and outside services 72 66 63 55 64
Intangible asset amortization 13 13 13 13 16
Regulatory assessments 13 13 16 15 14
(Reversal of) provision for losses on unfunded credit commitments (10 ) 19 (3 ) 16 2
Other 116 128 107 102 117
Total noninterest expense 807 805 649 660 689
Income before income taxes and including
noncontrolling interests 245 308 307 220 230
Income tax expense 95 67 62 50 55
Net Income including Noncontrolling Interests 150 241 245 170 175
Deduct: Net loss from noncontrolling interests 5 5 4 5 4
Net Income attributable to MUAH $ 155 $ 246 $ 249 $ 175 $ 179

Refer to Exhibit 16 for footnote explanations.

MUFG Americas Holdings Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
Exhibit 5
For the Years Ended
December 31, December 31,
(Dollars in millions) 2014 2013
Interest Income
Loans $ 2,805 $ 2,641
Securities 452 469
Other 13 13
Total interest income 3,270 3,123
Interest Expense
Deposits 238 248
Commercial paper and other short-term borrowings 5 5
Long-term debt 165 154
Total interest expense 408 407
Net Interest Income 2,862 2,716
(Reversal of) provision for loan losses (16 ) (45 )
Net interest income after (reversal of) provision for loan losses 2,878 2,761
Noninterest Income
Service charges on deposit accounts 203 209
Trust and investment management fees 104 135
Trading account activities 71 61
Securities gains, net 18 178
Credit facility fees 122 111
Merchant banking fees 124 93
Brokerage commissions and fees 53 46
Card processing fees, net 34 34
Fees from affiliates (16) 319
Other, net 75 9
Total noninterest income 1,123 876
Noninterest Expense
Salaries and employee benefits 1,785 1,631
Net occupancy and equipment 296 306
Professional and outside services 256 250
Intangible asset amortization 52 65
Regulatory assessments 57 74
(Reversal of) provision for losses on unfunded credit commitments 22 16
Other 453 451
Total noninterest expense 2,921 2,793
Income before income taxes and including
noncontrolling interests 1,080 844
Income tax expense 274 195
Net Income including Noncontrolling Interests 806 649
Deduct: Net loss from noncontrolling interests 19 18
Net Income attributable to MUAH $ 825 $ 667

Refer to Exhibit 16 for footnote explanations.

MUFG Americas Holdings Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
Exhibit 6
December 31, September 30, June 30, March 31, December 31,
(Dollars in millions except for per share amount) 2014 2014 2014 2014 2013
Assets
Cash and due from banks $ 1,759 $ 1,593 $ 1,911 $ 1,792 $ 1,863
Interest bearing deposits in banks 3,930 2,772 2,353 2,883 4,329
Federal funds sold and securities purchased under resale agreements 62 154 65 32 11
Total cash and cash equivalents 5,751 4,519 4,329 4,707 6,203
Trading account assets 1,114 883 941 841 851
Securities available for sale 13,724 14,064 14,670 15,366 15,817
Securities held to maturity:
Securities held to maturity 8,291 8,458 8,177 7,826 6,509
Loans held for investment 76,804 74,635 72,369 69,933 68,312
Allowance for loan losses (537 ) (529 ) (559 ) (557 ) (568 )
Loans held for investment, net 76,267 74,106 71,810 69,376 67,744
Premises and equipment, net 621 617 632 641 688
Goodwill 3,225 3,227 3,227 3,227 3,228
Other assets 4,685 5,005 5,034 5,253 4,854
Total assets $ 113,678 $ 110,879 $ 108,820 $ 107,237 $ 105,894
Liabilities
Deposits:
Noninterest bearing $ 30,534 $ 28,676 $ 27,446 $ 26,881 $ 26,495
Interest bearing 55,470 53,680 54,120 54,298 53,606

Total deposits

86,004 82,356 81,566 81,179 80,101
Commercial paper and other short-term borrowings 2,704 3,876 2,870 2,660 2,563
Long-term debt 6,972 6,984 6,995 6,545 6,547
Trading account liabilities 894 596 664 531 540
Other liabilities 1,889 1,777 1,666 1,611 1,675
Total liabilities 98,463 95,589 93,761 92,526 91,426
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 December 31, 2014 and September 30, 2014; and 136,330,830 as of June 30, 2014, March 31, 2014, and December 31, 2013 respectively 136 136 136 136 136
Additional paid-in capital 7,232 7,223 7,184 7,196 7,191
Retained earnings 8,346 8,191 7,936 7,687 7,512
Accumulated other comprehensive loss (729 ) (499 ) (441 ) (559 ) (624 )
Total MUAH stockholder’s equity 14,985 15,051 14,815 14,460 14,215
Noncontrolling interests 230 239 244 251 253
Total equity 15,215 15,290 15,059 14,711 14,468
Total liabilities and equity $ 113,678 $ 110,879 $ 108,820 $ 107,237 $ 105,894
MUFG Americas Holdings Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 7
For the Three Months Ended
December 31, 2014 September 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 $ 27,138 $ 228 3.33

%

$ 25,746 $ 220 3.39 %
Commercial mortgage 13,833 117 3.39 13,643 122 3.57
Construction 1,557 12 3.00 1,336 10 3.12
Lease financing 810 10 4.97 811 12 5.69
Residential mortgage 28,738 253 3.52 27,967 250 3.58
Home equity and other consumer loans 3,137 33 4.20 3,164 32 4.08
Loans, before purchased credit-impaired loans 75,213 653 3.46 72,667 646 3.54
Purchased credit-impaired loans 582 44 30.08 686 48 27.70
Total loans held for investment 75,795 697 3.67 73,353 694 3.77
Securities 22,171 113 2.04 22,592 117 2.08
Interest bearing deposits in banks 2,788 2 0.26 2,380 2 0.26

Federal funds sold and securities purchased under resale agreements

149 0.05 106
Trading account assets 196 0.72 164 0.66
Other earning assets 331 1 0.68 338 1 0.73
Total earning assets 101,430 813 3.20 98,933 814 3.28
Allowance for loan losses (533 ) (566 )
Cash and due from banks 1,727 1,597
Premises and equipment, net 614 626
Other assets 9,351 9,149
Total assets $ 112,589 $ 109,739
Liabilities
Interest bearing deposits:
Transaction and money market accounts $ 39,762 33 0.33 $ 39,128 33 0.34
Savings 5,555 1 0.08 5,574 2 0.08
Time 9,133 23 0.97 9,766 23 0.96
Total interest bearing deposits 54,450 57 0.41 54,468 58 0.42
Commercial paper and other short-term borrowings (18) 3,257 1 0.19 2,820 1 0.17
Long-term debt 6,983 41 2.36 6,994 42 2.38
Total borrowed funds 10,240 42 1.67 9,814 43 1.75
Total interest bearing liabilities 64,690 99 0.61 64,282 101 0.63
Noninterest bearing deposits 29,586 27,771
Other liabilities 2,873 2,474
Total liabilities 97,149 94,527
Equity
MUAH Stockholder’s equity 15,202 14,969
Noncontrolling interests 238 243
Total equity 15,440 15,212
Total liabilities and equity $ 112,589 $ 109,739
Net interest income/spread (taxable-equivalent basis) 714 2.59

%

713 2.65 %
Impact of noninterest bearing deposits 0.19 0.19
Impact of other noninterest bearing sources 0.03 0.03
Net interest margin 2.81 2.87
Less: taxable-equivalent adjustment 5 6
Net interest income $ 709 $ 707

Refer to Exhibit 16 for footnote explanations.

MUFG Americas Holdings Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 8
For the Three Months Ended
December 31, 2014 December 31, 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 $ 27,138 $ 228 3.33 % $ 23,176 $ 196 3.35 %
Commercial mortgage 13,833 117 3.39 12,984 123 3.78
Construction 1,557 12 3.00 868 7 3.46
Lease financing 810 10 4.97 981 8 3.43
Residential mortgage 28,738 253 3.52 25,143 231 3.67
Home equity and other consumer loans 3,137 33 4.20 3,305 35 4.13
Loans, before purchased credit-impaired loans 75,213 653 3.46 66,457 600 3.60
Purchased credit-impaired loans 582 44 30.08 1,162 96 32.75
Total loans held for investment 75,795 697 3.67 67,619 696 4.10
Securities 22,171 113 2.04 22,282 118 2.12
Interest bearing deposits in banks 2,788 2 0.26 4,242 3 0.26

Federal funds sold and securities purchased under resale agreements

149 0.05 138 0.09
Trading account assets 196 0.72 203 2 4.36
Other earning assets 331 1 0.68 223 1 1.89
Total earning assets 101,430 813 3.20 94,707 820 3.45
Allowance for loan losses (533 ) (618 )
Cash and due from banks 1,727 1,553
Premises and equipment, net 614 678
Other assets 9,351 8,104
Total assets $ 112,589 $ 104,424
Liabilities
Interest bearing deposits:
Transaction and money market accounts $ 39,762 33 0.33 $ 36,636 35 0.38
Savings 5,555 1 0.08 5,576 1 0.13
Time 9,133 23 0.97 11,431 28 0.96
Total interest bearing deposits 54,450 57 0.41 53,643 64 0.48
Commercial paper and other short-term borrowings (18) 3,257 1 0.19 2,562 1 0.22
Long-term debt 6,983 41 2.36 7,094 45 2.52
Total borrowed funds 10,240 42 1.67 9,656 46 1.91
Total interest bearing liabilities 64,690 99 0.61 63,299 110 0.69
Noninterest bearing deposits 29,586 26,104
Other liabilities 2,873 2,160
Total liabilities 97,149 91,563
Equity
MUAH Stockholder’s equity 15,202 12,604
Noncontrolling interests 238 257
Total equity 15,440 12,861
Total liabilities and equity $ 112,589 $ 104,424
Net interest income/spread (taxable-equivalent basis) 714 2.59 % 710 2.76 %
Impact of noninterest bearing deposits 0.19 0.20
Impact of other noninterest bearing sources 0.03 0.30
Net interest margin 2.81 2.99
Less: taxable-equivalent adjustment 5 4
Net interest income $ 709 $ 706

Refer to Exhibit 16 for footnote explanations.

MUFG Americas Holdings Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 9
For the Year Ended
December 31, 2014 December 31, 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 $ 25,321 $ 848 3.35 % $ 22,294 $ 750 3.36 %
Commercial mortgage 13,560 482 3.56 11,928 453 3.80
Construction 1,256 40 3.20 787 29 3.74
Lease financing 827 47 5.71 1,018 36 3.57
Residential mortgage 27,449 988 3.60 23,903 898 3.76
Home equity and other consumer loans 3,181 129 4.08 3,447 135 3.92
Loans, before purchased credit-impaired loans 71,594 2,534 3.54 63,377 2,301 3.63
Purchased credit-impaired loans 812 273 33.54 1,261 341 27.03
Total loans held for investment 72,406 2,807 3.88 64,638 2,642 4.09
Securities 22,559 470 2.09 22,552 483 2.14
Interest bearing deposits in banks 2,898 8 0.25 3,067 8 0.25

Federal funds sold and securities purchased under resale agreements

122 0.06 133 0.15
Trading account assets 205 3 1.54 163 3 1.62
Other earning assets 292 3 0.87 244 2 0.91
Total earning assets 98,482 3,291 3.34 90,797 3,138 3.46
Allowance for loan losses (559 ) (636 )
Cash and due from banks 1,566 1,405
Premises and equipment, net 632 695
Other assets 9,065 8,094
Total assets $ 109,186 $ 100,355
Liabilities
Interest bearing deposits:
Transaction and money market accounts 38,517 137 0.36 33,904 114 0.34
Savings 5,573 5 0.09 5,682 7 0.13
Time 10,211 96 0.94 12,115 127 1.04
Total interest bearing deposits 54,301 238 0.44 51,701 248 0.48
Commercial paper and other short-term borrowings (18) 2,809 5 0.19 2,751 5 0.20
Long-term debt 6,863 165 2.40 5,998 154 2.56
Total borrowed funds 9,672 170 1.76 8,749 159 1.82
Total interest bearing liabilities 63,973 408 0.64 60,450 407 0.67
Noninterest bearing deposits 27,687 25,013
Other liabilities 2,472 2,128
Total liabilities 94,132 87,591
Equity
MUAH Stockholder’s equity 14,808 12,499
Noncontrolling interests 246 265
Total equity 15,054 12,764
Total liabilities and equity $ 109,186 $ 100,355
Net interest income/spread (taxable-equivalent basis) 2,883 2.70 % 2,731 2.79 %
Impact of noninterest bearing deposits 0.19 0.19
Impact of other noninterest bearing sources 0.04 0.03
Net interest margin 2.93 3.01
Less: taxable-equivalent adjustment 21 15
Net interest income $ 2,862 $ 2,716

Refer to Exhibit 16 for footnote explanations.

MUFG Americas Holdings Corporation and Subsidiaries
Loans and Nonperforming Assets (Unaudited)
Exhibit 10

December 31,

September 30, June 30, March 31, December 31,
(Dollars in millions)

2014

2014 2014 2014 2013
Loans held for investment (period end)
Loans held for investment:
Commercial and industrial $ 27,623 $ 26,429 $ 25,162 $ 23,654 $ 23,528
Commercial mortgage 14,016 13,766 13,549 13,568 13,092
Construction 1,746 1,436 1,248 1,019 905
Lease financing 800 811 829 845 854
Total commercial portfolio 44,185 42,442 40,788 39,086 38,379
Residential mortgage 28,977 28,425 27,619 26,602 25,547
Home equity and other consumer loans 3,117 3,141 3,178 3,194 3,280
Total consumer portfolio 32,094 31,566 30,797 29,796 28,827
Loans held for investment, before purchased credit-impaired loans 76,279 74,008 71,585 68,882 67,206
Purchased credit-impaired loans 525 627 784 1,051 1,106
Total loans held for investment $ 76,804 $ 74,635 $ 72,369 $ 69,933 $ 68,312
Nonperforming Assets (period end)
Nonaccrual loans:
Commercial and industrial $ 55 $ 71 $ 161 $ 89 $ 44
Commercial mortgage 40 34 47 46 51

Total commercial portfolio

95 105 208 135 95
Residential mortgage 231 239 243 266 286
Home equity and other consumer loans 40 46 46 49 46
Total consumer portfolio 271 285 289 315 332
Nonaccrual loans, before purchased credit-impaired loans 366 390 497 450 427
Purchased credit-impaired loans 9 13 17 16 15

Total nonaccrual loans

375 403 514 466 442
OREO 12 12 14 17 20
FDIC covered OREO 24 13 19 23 37
Total nonperforming assets $ 411 $ 428 $ 547 $ 506 $ 499

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

$ 378 $ 402 $ 511 $ 467 $ 447
Loans 90 days or more past due and still accruing (19) $ 3 $ 4 $ 11 $ 4 $ 5

Refer to Exhibit 16 for footnote explanations.

MUFG Americas Holdings Corporation and Subsidiaries
Allowance for Credit Losses (Unaudited)
Exhibit 11
As of and for the Three Months Ended

December 31,

September 30,

June 30, March 31, December 31,
(Dollars in millions)

2014

2014

2014 2014 2013
Analysis of Allowance for Credit Losses
Balance, beginning of period $ 529 $ 559 $ 557 $ 568 $ 608
(Reversal of) provision for loan losses, excluding purchased credit-impaired loans 9 (18 ) 9 (18 ) (22 )
(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 )
Other (2 ) (1 )
Loans charged-off:
Commercial and industrial (8 ) (15 ) (6 ) (5 ) (18 )
Commercial mortgage (1 ) (2 ) (1 ) (2 )
Total commercial portfolio (9 ) (15 ) (8 ) (6 ) (20 )
Residential mortgage (2 ) (1 ) (1 )
Home equity and other consumer loans (2 ) (2 ) (2 ) (2 ) (4 )
Total consumer portfolio (2 ) (2 ) (4 ) (3 ) (5 )
Purchased credit-impaired loans (1 )
Total loans charged-off (11 ) (18 ) (12 ) (9 ) (25 )
Recoveries of loans previously charged-off:
Commercial and industrial 10 3 3 11 6
Commercial mortgage 2 1
Construction 3
Lease financing 1
Total commercial portfolio 10 5 4 14 7
Home equity and other consumer loans 2 1 1
Total consumer portfolio 2 1 1
Purchased credit-impaired loans 1 7
Total recoveries of loans previously charged-off 12 6 5 15 14
Net loans recovered (charged-off) 1 (12 ) (7 ) 6 (11 )
Ending balance of allowance for loan losses 537 529 559 557 568
Allowance for losses on unfunded credit commitments 152 162 145 148 132
Total allowance for credit losses $ 689 $ 691 $ 704 $ 705 $ 700
Components of allowance for loan losses and credit losses:

Allowance for loan losses, excluding allowance on purchased credit-impaired loans

$ 534 $ 526 $ 556 $ 554 $ 567
Allowance for loan losses on purchased credit-impaired loans 3 3 3 3 1
Total allowance for loan losses $ 537 $ 529 $ 559 $ 557 $ 568
MUFG Americas Holdings Corporation and Subsidiaries
Securities (Unaudited)
Exhibit 12
Securities Available for Sale

Fair Value Fair Value

December 31, 2014

September 30, 2014

Change from % Change from

Amortized

Fair

Amortized

Fair

September 30, September 30,
(Dollars in millions) Cost Value Cost Value 2014 2014
Asset Liability Management securities:
U.S. Treasury $ $ $ 70 $ 70 $ (70 ) 100 %
Residential mortgage-backed securities:
U.S. government agency and government-sponsored agencies 7,649 7,560 7,886 7,739 (179 ) (2 )
Privately issued 166 168 175 177 (9 ) (5 )
Privately issued – commercial mortgage-backed securities 1,689 1,691 1,770 1,745 (54 ) (3 )
Collateralized loan obligations 2,527 2,494 2,438 2,422 72 3
Asset-backed and other 8 9 13 14 (5 ) (36 )
Asset Liability Management securities 12,039 11,922 12,352 12,167 (245 ) (2 )
Other debt securities:
Direct bank purchase bonds 1,719 1,741 1,819 1,833 (92 ) (5 )
Other 53 52 54 52
Equity securities 8 9 10 12 (3 ) (25 )
Total securities available for sale $ 13,819 $ 13,724 $ 14,235 $ 14,064 $ (340 ) (2 )%
Securities Held to Maturity
December 31, 2014 September 30, 2014 Carrying Amount Carrying Amount
Carrying Fair Carrying Fair Change from % Change from
(Dollars in millions) Amount (20) Value Amount (20) Value September 30, 2014 September 30, 2014
U.S. Treasury $ 486 $ 489 $ 485 $ 484 $ 1 %
U.S. government-sponsored agencies 125 125 125 125

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

5,942 6,013 6,102 6,107 (160 ) (3 )

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

1,738 1,785 1,746 1,775 (8 )
Total securities held to maturity $ 8,291 $ 8,412 $ 8,458 $ 8,491 $ (167 ) (2 )%

Refer to Exhibit 16 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
(Dollars in millions)

December 31,
2014

September 30,
2014

June 30,
2014

March 31,
2014

December 31,
2013

Net income attributable to MUAH $ 155 $ 246 $ 249 $ 175 $ 179
Net adjustments for merger costs related to acquisitions, net of tax 12 13 15 11 12
Net adjustments for privatization transaction, net of tax 6 (8 ) (9 ) 1 2

Net income attributable to MUAH, excluding impact of privatization transaction and merger costs related to acquisitions

$ 173 $ 251 $ 255 $ 187 $ 193
Average total assets $ 112,589 $ 109,739 $ 107,871 $ 106,491 $ 104,424
Less: Net adjustments related to privatization transaction 2,244 2,255 2,260 2,272 2,297
Average total assets, excluding impact of privatization transaction $ 110,345 $ 107,484 $ 105,611 $ 104,219 $ 102,127
Return on average assets (3) 0.55 % 0.90 % 0.92 % 0.66 % 0.68 %

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

0.62 0.94 0.97 0.72 0.75
Average MUAH stockholder’s equity $ 15,202 $ 14,969 $ 14,657 $ 14,390 $ 12,604
Less: Adjustments for merger costs related to acquisitions (157 ) (147 ) (132 ) (118 ) (105 )
Less: Net adjustments for privatization transaction 2,279 2,290 2,297 2,302 2,306
Average MUAH stockholder’s equity, excluding impact of privatization
transaction and merger costs related to acquisitions $ 13,080 $ 12,826 $ 12,492 $ 12,206 $ 10,403
Return on average MUAH stockholder’s equity (3) 4.06 % 6.57 % 6.80 % 4.87 % 5.66 %
Return on average MUAH stockholder’s equity, excluding impact of
privatization transaction and merger costs related to acquisitions (3) (4) 5.27 7.84 8.19 6.11 7.41
Noninterest expense $ 807 $ 805 $ 649 $ 660 $ 689
Less: Staff costs associated with fees from affiliates – support services 105 88
Less: Foreclosed asset expense and other credit costs (2 ) (1 ) 1 2
Less: (Reversal of) provision for losses on unfunded credit commitments (10 ) 19 (3 ) 16 2
Less: Productivity initiative costs 2 6 4 1 20
Less: Low income housing credit (LIHC) investment amortization expense 24 25 20 20 24
Less: Expenses of the LIHC consolidated VIEs 8 8 8 8 6
Less: Merger and business integration costs 20 22 25 17 25
Less: Net adjustments related to privatization transaction 10 11 10 10 14
Less: Intangible asset amortization 3 3 3 3 3
Noninterest expense, as adjusted (a) $ 647 $ 624 $ 581 $ 585 $ 593
Total revenue $ 1,061 $ 1,095 $ 965 $ 864 $ 896
Add: Net interest income taxable-equivalent adjustment 5 6 5 5 4
Less: Fees from affiliates – support services 112 94
Less: Productivity initiative gains (1 ) 6
Less: Accretion related to privatization-related fair value adjustments (1 ) 4 9 6 8
Less: Other credit costs (6 ) 17 (2 ) 2 1
Total revenue, as adjusted (b) $ 962 $ 986 $ 963 $ 861 $ 885
Adjusted efficiency ratio (a)/(b) (6) 67.24 % 63.42 % 60.30 % 67.95 % 67.08 %

Refer to Exhibit 16 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.

As of and for the Three Months Ended

December 31,

September 30,

June 30, March 31,

December 31,

(Dollars in millions)

2014

2014

2014 2014

2013

Total MUAH stockholder’s equity $ 14,985 $ 15,051 $ 14,815 $ 14,460 $ 14,215
Less: Goodwill 3,225 3,227 3,227 3,227 3,228
Less: Intangible assets, except mortgage servicing rights (MSRs) 233 249 262 275 288
Less: Deferred tax liabilities related to goodwill and intangible assets (99 ) (20 ) (99 ) (102 ) (105 )
Tangible common equity (c) $ 11,626 $ 11,595 $ 11,425 $ 11,060 $ 10,804
Total assets $ 113,678 $ 110,879 $ 108,820 $ 107,237 $ 105,894
Less: Goodwill 3,225 3,227 3,227 3,227 3,228
Less: Intangible assets, except MSRs 233 249 262 275 288
Less: Deferred tax liabilities related to goodwill and intangible assets (99 ) (20 ) (99 ) (102 ) (105 )
Tangible assets (d) $ 110,319 $ 107,423 $ 105,430 $ 103,837 $ 102,483
Tangible common equity ratio (c)/(d) (11) 10.54 % 10.79 % 10.84 % 10.65 % 10.54 %
Tier 1 capital, determined in accordance with U.S. Basel I regulatory requirements $ 12,370 n/a n/a n/a $ 11,471
Less: Junior subordinated debt payable to trusts 52 n/a n/a n/a 66
U.S. Basel I Tier 1 common capital (e) $ 12,318 n/a n/a n/a $ 11,405
Common Equity Tier 1 capital under U.S. Basel III (standardized transitional) (f) $ 12,453 $ 12,300 $ 11,964 $ 11,750 $ 11,406
Other (9) (105 ) (121 ) (130 ) (138 ) (258 )
Common Equity Tier 1 capital estimated under U.S. Basel III (standardized approach; fully phased-in) (g) $ 12,348 $ 12,179 $ 11,834 $ 11,612 $ 11,148
Risk-weighted assets, determined in accordance with U.S. Basel I regulatory requirements (h) $ 96,742 n/a n/a n/a $ 92,410
Add: Adjustments 191 n/a n/a n/a n/a
Risk-weighted assets, estimated under U.S. Basel III (standardized transitional) (i) 96,933 $ 96,239 $ 94,556 $ 92,476 n/a
Add: Adjustments 1,285 1,441 2,963 4,427 4,446
Total risk-weighted assets, estimated under U.S. Basel III (standardized approach; fully phased in) (j) $ 98,218 $ 97,680 $ 97,519 $ 96,903 $ 96,856
Tier 1 common capital ratio (e)/(h) (8) (9) (10) 12.73 % n/a n/a n/a 12.34 %
Common Equity Tier 1 risk-based capital ratio (U.S. Basel III standardized; transitional) (f)/(i) (8) (12) 12.85 n/a n/a n/a n/a
Common Equity Tier 1 risk-based capital ratio (U.S. Basel III standardized approach; fully phased in) (g)/(j) (8) (13) 12.57 12.47 % 12.13 % 11.98 % 11.51

Refer to Exhibit 16 for footnote explanations.

MUFG Americas Holdings Corporation and Subsidiaries

Reconciliation of Non-GAAP Measures (Unaudited)

Exhibit 15

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 Year Ended
December 31, December 31,
(Dollars in millions) 2014 2013
Net income attributable to MUAH $ 825 $ 667
Net adjustments for merger costs related to acquisitions, net of tax 51 78
Net adjustments for privatization transaction, net of tax (10 ) (21 )
Net income attributable to MUAH, excluding impact of
privatization transaction and merger costs related to acquisitions $ 866 $ 724
Average total assets $ 109,186 $ 100,355
Less: Net adjustments related to privatization transaction 2,258 2,313
Average total assets, excluding impact of privatization transaction $ 106,928 $ 98,042
Return on average assets (3) 0.76 % 0.66 %
Return on average assets, excluding impact of privatization
transaction and merger costs related to acquisitions (3) (4) 0.81 0.74
Average MUAH stockholder’s equity $ 14,808 $ 12,499
Less: Adjustments for merger costs related to acquisitions (139 ) (80 )
Less: Net adjustments for privatization transaction 2,292 2,329
Average MUAH stockholder’s equity, excluding impact of privatization
transaction and merger costs related to acquisitions $ 12,655 $ 10,250
Return on average MUAH stockholder’s equity (3) 5.57 % 5.33 %
Return on average MUAH stockholder’s equity, excluding impact of
privatization transaction and merger costs related to acquisitions (3) (4) 6.84 7.06
Noninterest expense $ 2,921 $ 2,793
Less: Staff costs associated with fees from affiliates – support services 193
Less: Foreclosed asset expense and other credit costs (2 ) (4 )
Less: (Reversal of) provision for losses on unfunded credit commitments 22 16
Less: Productivity initiative costs 13 51
Less: Low income housing credit (LIHC) investment amortization expense 89 76
Less: Expenses of the LIHC consolidated VIEs 32 29
Less: Merger and business integration costs 84 134
Less: Net adjustments related to privatization transaction 41 55
Less: Intangible asset amortization 12 13
Noninterest expense, as adjusted (a) $ 2,437 $ 2,423
Total revenue $ 3,985 $ 3,592
Add: Net interest income taxable-equivalent adjustment 21 15
Less: Fees from affiliates – support services 206
Less: Productivity initiative gains (1 ) 17
Less: Accretion related to privatization-related fair value adjustments 18 24
Less: Other credit costs 11 (5 )
Total revenue, as adjusted (b) $ 3,772 $ 3,571
Adjusted efficiency ratio (a)/(b) (6) 64.63 % 67.85 %

Refer to Exhibit 16 for footnote explanations.

MUFG Americas Holdings Corporation and Subsidiaries
Footnotes
Exhibit 16
(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 15 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 15 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 December 31, 2014.
(9) The capital ratios as of December 31, 2014 and 2013 are calculated under U.S. Basel I rules. The capital ratios displayed as of September 30, 2014, June 30, 2014, and March 31, 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.
(10) The Tier 1 common capital ratio is the ratio 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 may be used to assess and compare the quality and composition of the Company’s capital structure to other financial institutions. Please refer to Exhibit 14 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 14 for a reconciliation between certain GAAP amounts and these non-GAAP measures.
(12) 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. Common Equity Tier 1 risk-based capital is 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. Management reviews this ratio, which excludes 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 Tier 1 capital (determined in accordance with U.S. Basel I) because of current interest in such information by market participants. Please refer to Exhibit 14 for a reconciliation between certain GAAP amounts and these non-GAAP measures.
(13) 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 excludes 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 Tier 1 capital (determined in accordance with U.S. Basel I) because of current interest in such information by market participants. Please refer to Exhibit 14 for a reconciliation between certain GAAP amounts and these non-GAAP measures.
(14) 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.
(15) 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.
(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 $47 million, $65 million, $103 million, $123 million, and $124 million that are 90 days or more past due and still accruing at December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 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

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