MUFG Americas Holdings Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1

MUFG Americas Holdings Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 24, 2017

Attached files

Attached files

MUFG Americas Holdings Corp Reports

file	filename
8-K - 8-K - MUFG Americas Holdings Corp	muah8kq22017.htm

Exhibit 99.1

MUFG Americas Holdings Corporation

A member of MUFG, a global financial group

FOR IMMEDIATE RELEASE (July 24, 2017)

MUFG AMERICAS HOLDINGS CORPORATION REPORTS SECOND QUARTER NET INCOME OF $295 MILLION

NEW YORK - MUFG Americas Holdings Corporation (the Company), parent company of San Francisco-based MUFG Union Bank, N.A. (the Bank), today reported net income for the second quarter of $295 million, compared with $229 million for the prior quarter and $334 million for the year-ago quarter.

Second Quarter Results:


◦	Net income for the second quarter was $295 million, up $66 million from the first quarter of 2017.


◦	The allowance for loan losses decreased $57 million during the second quarter, reflecting general improvement in portfolio credit quality and composition.


◦	Total revenue was $1.3 billion, unchanged from the preceding quarter.


◦	Average loans held for investment during the second quarter of 2017 were $78.5 billion, up $0.5 billion from the first quarter of 2017. End of period loans held for investment were down slightly from the prior quarter end.


◦	Average deposits during the second quarter of 2017 were $85.8 billion, down $0.4 billion from the first quarter of 2017.


◦	Received a non-objection to the Company's 2017 Capital Plan submission from the Federal Reserve.



	1

The following table presents financial highlights for the periods ended June 30, 2017, March 31, 2017 and June 30, 2016:



										Percent Change to
	As of and for the Three Months Ended									June 30, 2017 from
(Dollars in millions)	June 30, 2017			March 31, 2017			June 30, 2016			March 31, 2017		June 30, 2016
Results of operations:
Net interest income	$	794		$	795		$	754		—	%	5	%
Noninterest income	489			488			565			—		(13	)
Total revenue	1,283			1,283			1,319			—		(3	)
Noninterest expense	957			1,006			906			(5	)	6
Pre-tax, pre-provision income ⁽¹⁾	326			277			413			18		(21	)
(Reversal of) provision for credit losses	(22		)	(30		)	(39		)	27		44
Income before income taxes and including
noncontrolling interests	348			307			452			13		(23	)
Income tax expense	63			83			129			(24	)	(51	)
Net income including noncontrolling interests	285			224			323			27		(12	)
Deduct: Net loss from noncontrolling interests	10			5			11			100		(9	)
Net income attributable to
MUFG Americas Holdings Corporation (MUAH)	$	295		$	229		$	334		29		(12	)

Balance sheet (end of period):
Total assets	$	150,556		$	149,678		$	147,972		1		2
Total securities	26,542			25,299			23,188			5		14
Securities borrowed or purchased under resale agreements	19,820			19,992			20,363			(1	)	(3	)
Total loans held for investment	78,388			78,434			81,045			—		(3	)
Total deposits	84,957			86,533			82,652			(2	)	3
Securities loaned or sold under repurchase agreements	24,797			25,079			23,197			(1	)	7
Long-term debt	10,556			11,333			11,737			(7	)	(10	)
MUAH stockholders' equity	17,808			17,484			17,133			2		4

Balance sheet (period average):
Total assets	$	149,655		$	149,563		$	149,447		—		—
Total securities	25,369			24,900			23,341			2		9
Securities borrowed or purchased under resale agreements	20,624			20,454			24,030			1		(14	)
Total loans held for investment	78,500			77,982			81,542			1		(4	)
Earning assets	136,755			136,489			137,198			—		—
Total deposits	85,772			86,151			83,621			—		3
Securities loaned or sold under repurchase agreements	25,689			25,904			25,338			(1	)	1
MUAH stockholders' equity	17,600			17,487			16,980			1		4
Net interest margin ^{(2) (6)}	2.35		%	2.37		%	2.23		%

____________________________________

Refer to Exhibit 16 for footnote explanations.



	2

Second Quarter Results

Second Quarter Total Revenue

For the second quarter of 2017, total revenue (net interest income plus noninterest income) was $1.3 billion, unchanged from the first quarter of 2017. Net interest income for the second quarter of 2017 was $794 million, down $1 million compared with the first quarter of 2017. The net interest margin decreased 2 basis points to 2.35% during the quarter.

For the second quarter of 2017, noninterest income was $489 million, up $1 million compared with the preceding quarter.

Compared with the second quarter of 2016, total revenue decreased $36 million, primarily due to a decrease in noninterest income, driven by a decrease in trading account income and lower fee income from revenue sharing activities with BTMU. This decrease was partially offset by an increase in net interest income, driven by an increase in the net interest margin.

Second Quarter Noninterest Expense

Noninterest expense for the second quarter of 2017 was $957 million, down $49 million compared with the first quarter of 2017 and up $51 million from the second quarter of 2016. The decrease from the first quarter was driven primarily by decreases in salaries and employee benefits and professional and outside services expenses. Compared with the second quarter of 2016, the increase in noninterest expense was primarily due to increases in salaries and employee benefits and professional and outside services expenses.

The effective tax rate for the second quarter of 2017 was 18%, down from 27% for the first quarter of 2017, primarily due to a downward revision in estimated taxes and favorable discrete tax adjustments.



	3

Support Services Provided to BTMU - Second Quarter Summary Impact

For the quarters ended June 30, 2017, March 31, 2017 and June 30, 2016, the Company recorded the following fee income and costs related to support services:



	For the Three Months Ended
(Dollars in millions)	June 30, 2017		March 31, 2017		June 30, 2016

Fees from affiliates - support services ⁽¹⁴⁾	$	148	$	158	$	147

Staff costs associated with fees from
affiliates - support services ⁽¹⁴⁾	138		147		137

Net support services	$	10	$	11	$	10

__________________________

Refer to Exhibit 16 for footnote explanations.

The Company also recognized fees from affiliates through revenue sharing agreements with BTMU for various business and banking services.

Balance Sheet

At June 30, 2017, total assets were $150.6 billion, up $0.9 billion from the prior quarter, driven by increases in trading account assets and securities available for sale. Total deposits decreased $1.6 billion to $85.0 billion compared with the prior quarter-end due to a decrease in demand deposits, partially offset by an increase in savings and time deposits related to PurePoint Financial, a new online division of the Bank. Commercial paper and other short-term borrowings increased $2.7 billion compared with the prior quarter-end due to an increase in borrowings from the Federal Home Loan Bank.



	4

Credit Quality

The following table presents credit quality data for the quarters ended June 30, 2017, March 31, 2017 and June 30, 2016:




	As of and for the Three Months Ended
(Dollars in millions)	June 30, 2017			March 31, 2017			June 30, 2016

Total (reversal of) provision for credit losses	$	(22	)	$	(30	)	$	(39	)
Net loans charged-off	36			56			97
Nonaccrual loans	498			569			632
Criticized loans held for investment ⁽¹²⁾	1,862			2,151			2,918

Credit Ratios:
Allowance for loan losses to:
Total loans held for investment	0.65		%	0.73		%	0.92		%
Nonaccrual loans	103.14			100.12			118.30
Allowance for credit losses to ⁽¹³⁾:
Total loans held for investment	0.84			0.91			1.13
Nonaccrual loans	132.06			125.81			144.55
Nonaccrual loans to total loans held for investment	0.63			0.73			0.78

____________________________________

Refer to Exhibit 16 for footnote explanations.

In the second quarter of 2017, the provision (reversal) for credit losses was $(22) million, compared with $(30) million for the first quarter of 2017 and $(39) million for the second quarter of 2016. The current quarter reversal reflects general improvement in portfolio credit quality and composition.



	5

Capital

The following table presents capital ratio data as of June 30, 2017 and March 31, 2017:



	June 30, 2017		March 31, 2017
Capital ratios:

Regulatory:	U.S. Basel III
Common Equity Tier 1 risk-based capital ratio ^{(8) (9)}	15.72	%	15.17	%
Tier 1 risk-based capital ratio ^{(8) (9)}	15.72		15.17
Total risk-based capital ratio ^{(8) (9)}	17.24		16.72
Tier 1 leverage ratio ^{(8) (9)}	10.36		10.16

Other:
Tangible common equity ratio ⁽¹⁰⁾	9.81	%	9.65	%
Common Equity Tier 1 risk-based capital ratio (U.S. Basel III standardized approach; fully phased-in) ^{(7) (8) (11)}	15.71		15.15

____________________________________

Refer to Exhibit 16 for footnote explanations.

The Company’s stockholders' equity was $17.8 billion at June 30, 2017, compared with $17.5 billion at March 31, 2017.

The Company's preliminary Common Equity Tier 1, Tier 1 and Total risk-based capital ratios, calculated in accordance with U.S. Basel III regulatory capital rules, were 15.72%, 15.72% and 17.24%, respectively, at June 30, 2017. The increase in the Company's risk-based capital ratios was driven by net income and decrease in risk-weighted assets. The tangible common equity ratio was 9.81% at June 30, 2017.

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 15.71% at June 30, 2017.



	6

Non-GAAP Financial Measures

This press release includes additional non-GAAP financial measures and capital ratios (tangible common equity and Common Equity Tier 1 capital (calculated under the U.S. Basel III standardized approach on a fully phased-in basis)) to provide useful supplemental information regarding the Company's business results, 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 that of other financial institutions. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies. Please refer to our separate reconciliation of non-GAAP financial measures in Exhibits 13, 14 and 15.

About MUFG Americas Holdings Corporation

Headquartered in New York, MUFG Americas Holdings Corporation is a financial holding company and bank holding company with total assets of $150.6 billion at June 30, 2017. Its main subsidiaries are MUFG Union Bank, N.A. and MUFG Securities Americas Inc. MUFG Union Bank, N.A. provides an array of financial services to individuals, small businesses, middle-market companies, and major corporations. As of June 30, 2017, MUFG Union Bank, N.A. operated 361 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 16 PurePoint Financial Centers and two international offices. MUFG Securities Americas Inc. is a registered securities broker-dealer which engages in capital markets origination transactions, private placements, collateralized financings, securities borrowing and lending transactions, and domestic and foreign debt and equities securities transactions. MUFG Americas Holdings Corporation is owned by The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Mitsubishi UFJ Financial Group, Inc. The Bank of Tokyo-Mitsubishi UFJ, Ltd. is a wholly-owned subsidiary of Mitsubishi UFJ Financial Group, Inc., which is one of the world’s leading financial groups. Visit www.unionbank.com or www.mufgamericas.com for more information.

###



	7

MUFG Americas Holdings Corporation and Subsidiaries

Financial Highlights (Unaudited)



																Percent Change to
	As of and for the Three Months Ended															June 30, 2017 from
(Dollars in millions)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2017		June 30, 2016
Results of operations:
Net interest income	$	794		$	795		$	802		$	773		$	754		—	%	5	%
Noninterest income	489			488			616			570			565			—		(13	)
Total revenue	1,283			1,283			1,418			1,343			1,319			—		(3	)
Noninterest expense	957			1,006			956			952			906			(5	)	6
Pre-tax, pre-provision income ⁽¹⁾	326			277			462			391			413			18		(21	)
(Reversal of) provision for credit losses	(22		)	(30		)	(41		)	73			(39		)	27		44
Income before income taxes and including
noncontrolling interests	348			307			503			318			452			13		(23	)
Income tax expense	63			83			175			97			129			(24	)	(51	)
Net income including noncontrolling interests	285			224			328			221			323			27		(12	)
Deduct: Net loss from noncontrolling interests	10			5			6			39			11			100		(9	)
Net income attributable to
MUFG Americas Holdings Corporation (MUAH)	$	295		$	229		$	334		$	260		$	334		29		(12	)

Balance sheet (end of period):
Total assets	$	150,556		$	149,678		$	148,144		$	151,099		$	147,972		1		2
Total securities	26,542			25,299			24,478			24,116			23,188			5		14
Securities borrowed or purchased under resale agreements	19,820			19,992			19,747			21,906			20,363			(1	)	(3	)
Total loans held for investment	78,388			78,434			77,551			79,249			81,045			—		(3	)
Total deposits	84,957			86,533			86,947			84,643			82,652			(2	)	3
Securities loaned or sold under repurchase agreements	24,797			25,079			24,616			25,582			23,197			(1	)	7
Long-term debt	10,556			11,333			11,410			11,427			11,737			(7	)	(10	)
MUAH stockholders' equity	17,808			17,484			17,233			17,353			17,133			2		4

Balance sheet (period average):
Total assets	$	149,655		$	149,563		$	150,799		$	149,056		$	149,447		—		—
Total securities	25,369			24,900			24,105			23,503			23,341			2		9
Securities borrowed or purchased under resale agreements	20,624			20,454			21,859			20,668			24,030			1		(14	)
Total loans held for investment	78,500			77,982			78,615			80,469			81,542			1		(4	)
Earning assets	136,755			136,489			137,964			136,051			137,198			—		—
Total deposits	85,772			86,151			86,700			84,194			83,621			—		3
Securities loaned or sold under repurchase agreements	25,689			25,904			26,147			23,872			25,338			(1	)	1
MUAH stockholders' equity	17,600			17,487			17,367			17,311			16,980			1		4

Performance ratios:
Return on average assets ⁽²⁾	0.79		%	0.62		%	0.89		%	0.70		%	0.89		%
Return on average MUAH stockholders' equity ⁽²⁾	6.70			5.27			7.69			6.03			7.87
Return on average MUAH tangible common equity ^{(2) (3)}	8.41			6.64			9.71			7.60			9.92
Efficiency ratio ⁽⁴⁾	74.61			78.39			67.35			70.88			68.67
Adjusted efficiency ratio ⁽⁵⁾	70.15			73.42			64.62			62.46			62.27
Net interest margin ^{(2) (6)}	2.35			2.37			2.35			2.29			2.23

Capital ratios:

Regulatory ⁽⁷⁾:	U.S. Basel III
Common Equity Tier 1 risk-based capital ratio ^{(8) (9)}	15.72		%	15.17		%	14.77		%	13.97		%	13.58		%
Tier 1 risk-based capital ratio ^{(8) (9)}	15.72			15.17			14.77			13.97			13.58
Total risk-based capital ratio ^{(8) (9)}	17.24			16.72			16.45			15.66			15.44
Tier 1 leverage ratio ^{(8) (9)}	10.36			10.16			9.92			9.82			11.59

Other:
Tangible common equity ratio ⁽¹⁰⁾	9.81		%	9.65		%	9.58		%	9.45		%	9.53		%
Common Equity Tier 1 risk-based capital ratio (U.S. Basel III standardized approach; fully phased-in) ^{(7) (8) (11)}	15.71			15.15			14.73			13.94			13.56

___________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 1

MUFG Americas Holdings Corporation and Subsidiaries

Financial Highlights (Unaudited)



	As of and for the Six Months Ended						Percent Change to
	June 30,			June 30,			June 30, 2017 from
(Dollars in millions)	2017			2016			June 30, 2016
Results of operations:
Net interest income	$	1,589		$	1,478			8	%
Noninterest income	977			1,039				(6	)
Total revenue	2,566			2,517				2
Noninterest expense	1,963			1,874				5
Pre-tax, pre-provision income ⁽¹⁾	603			643				(6	)
(Reversal of) provision for credit losses	(52		)	123				(142	)
Income before income taxes and including
noncontrolling interests	655			520				26
Income tax expense	146			147				(1	)
Net income including noncontrolling interests	509			373				36
Deduct: Net loss from noncontrolling interests	15			23				(35	)
Net income attributable to
MUFG Americas Holdings Corporation (MUAH)	$	524		$	396			32

Balance sheet (end of period):
Total assets	$	150,556		$	147,972			2
Total securities	26,542			23,188				14
Securities borrowed or purchased under resale agreements	19,820			20,363				(3	)
Total loans held for investment	78,388			81,045				(3	)
Total deposits	84,957			82,652				3
Securities loaned or sold under repurchase agreements	24,797			23,197				7
Long-term debt	10,556			11,737				(10	)
MUAH stockholders' equity	17,808			17,133				4

Balance sheet (period average):
Total assets	$	149,527		$	152,076			(2	)
Total securities	25,136			23,445				7
Securities borrowed or purchased under resale agreements	20,539			27,864				(26	)
Total loans held for investment	78,244			80,813				(3	)
Earning assets	136,623			139,676				(2	)
Total deposits	85,961			83,795				3
Securities loaned or sold under repurchase agreements	25,796			28,271				(9	)
MUAH stockholders' equity	17,462			16,836				4

Performance ratios:
Return on average assets ⁽²⁾	0.70		%	0.52		%
Return on average MUAH stockholders' equity ⁽²⁾	6.00			4.69
Return on average MUAH tangible common equity^{(2) (3)}	7.55			5.98
Efficiency ratio ⁽⁴⁾	76.50			74.49
Adjusted efficiency ratio ⁽⁵⁾	71.78			67.71
Net interest margin ^{(2) (6)}	2.36			2.15

___________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 2

MUFG Americas Holdings Corporation and Subsidiaries

Credit Quality (Unaudited)



																Percent Change to
	As of and for the Three Months Ended															June 30, 2017 from
(Dollars in millions)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2017		June 30, 2016

Credit Data:
(Reversal of) provision for loan losses	$	(20	)	$	(14	)	$	(32	)	$	68		$	(36	)	(43	)%	44	%
(Reversal of) provision for losses on unfunded credit commitments	(2		)	(16		)	(9		)	5			(3		)	88		33
Total (reversal of) provision for credit losses	$	(22	)	$	(30	)	$	(41	)	$	73		$	(39	)	27		44

Net loans charged-off (recovered)	$	36		$	56		$	19		$	124		$	97		(36	)	(63	)
Nonperforming assets	500			572			692			724			648			(13	)	(23	)
Criticized loans held for investment ⁽¹²⁾	1,862			2,151			2,427			2,404			2,918			(13	)	(36	)

Credit Ratios:
Allowance for loan losses to:
Total loans held for investment	0.65		%	0.73		%	0.82		%	0.87		%	0.92		%
Nonaccrual loans	103.14			100.12			92.69			96.08			118.30
Allowance for credit losses to ⁽¹³⁾:
Total loans held for investment	0.84			0.91			1.03			1.09			1.13
Nonaccrual loans	132.06			125.81			116.20			119.97			144.55
Net loans charged-off (recovered) to average total loans held for investment ⁽²⁾	0.19			0.29			0.09			0.61			0.48
Nonperforming assets to total loans held for investment and Other Real Estate Owned (OREO)	0.64			0.73			0.89			0.91			0.80
Nonperforming assets to total assets	0.33			0.38			0.47			0.48			0.44
Nonaccrual loans to total loans held for investment	0.63			0.73			0.89			0.91			0.78


	As of and for the Six Months Ended						Percent Change
	June 30,			June 30,			to June 30, 2017
(Dollars in millions)	2017			2016			from June 30, 2016
Credit Data:
(Reversal of) provision for loan losses	$	(34	)	$	122		(128)%
(Reversal of) provision for losses on unfunded credit commitments	(18		)	1			nm
Total (reversal of) provision for credit losses	$	(52	)	$	123		(142)

Net loans charged-off	$	92		$	101		(9)
Nonperforming assets	500			648			(23)
Credit Ratios:
Net loans charged-off to average total loans held for investment⁽²⁾	0.24		%	0.25		%

____________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 3

MUFG Americas Holdings Corporation and Subsidiaries

Consolidated Statements of Income (Unaudited)



			For the Three Months Ended
(Dollars in millions)			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016		June 30, 2016
Interest Income
	Loans		$	724		$	708		$	703		$	711	$	719
	Securities		129			129			137			122		114
	Securities borrowed or purchased under resale agreements		83			63			54			47		44
	Trading assets		82			74			62			50		38
	Other		8			10			11			6		4
		Total interest income	1,026			984			967			936		919

Interest Expense
	Deposits		58			49			47			49		49
	Commercial paper and other short-term borrowings		10			8			15			7		7
	Long-term debt		60			57			47			57		63
	Securities loaned or sold under repurchase agreements		84			59			41			36		31
	Trading liabilities		20			16			15			14		15
		Total interest expense	232			189			165			163		165

Net Interest Income			794			795			802			773		754
	(Reversal of) provision for credit losses		(22		)	(30		)	(41		)	73		(39		)
		Net interest income after (reversal of) provision for credit losses	816			825			843			700		793

Noninterest Income
	Service charges on deposit accounts		47			48			49			48		46
	Trust and investment management fees		30			29			29			29		30
	Trading account activities		(3		)	(4		)	12			25		40
	Securities gains, net		7			2			14			23		19
	Credit facility fees		23			26			26			27		28
	Brokerage commissions and fees		18			18			5			15		25
	Card processing fees, net		13			11			11			10		9
	Investment banking and syndication fees		94			88			59			113		79
	Fees from affiliates ⁽¹⁴⁾		211			219			265			222		258
	Other, net		49			51			146			58		31
		Total noninterest income	489			488			616			570		565

Noninterest Expense
	Salaries and employee benefits		586			615			596			592		572
	Net occupancy and equipment		87			82			83			82		79
	Professional and outside services		99			116			99			84		81
	Software		47			46			41			39		37
	Regulatory assessments		19			20			22			22		14
	Intangible asset amortization		7			7			8			7		6
	Other		112			120			107			126		117
		Total noninterest expense	957			1,006			956			952		906

	Income before income taxes and including
	noncontrolling interests		348			307			503			318		452
	Income tax expense		63			83			175			97		129
Net Income including Noncontrolling Interests			285			224			328			221		323
	Deduct: Net loss from noncontrolling interests		10			5			6			39		11
Net Income attributable to MUAH			$	295		$	229		$	334		$	260	$	334

____________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 4

MUFG Americas Holdings Corporation and Subsidiaries

Consolidated Statements of Income (Unaudited)



			For the Six Months Ended
(Dollars in millions)			June 30, 2017			June 30, 2016
Interest Income
	Loans		$	1,432		$	1,425
	Securities		258			224
	Securities borrowed or purchased under resale agreements		146			94
	Trading assets		156			60
	Other		18			10
		Total interest income	2,010			1,813

Interest Expense
	Deposits		107			98
	Commercial paper and other short-term borrowings		18			10
	Long-term debt		117			136
	Securities loaned or sold under repurchase agreements		143			63
	Trading liabilities		36			28
		Total interest expense	421			335

Net Interest Income			1,589			1,478
	(Reversal of) provision for credit losses		(52		)	123
		Net interest income after (reversal of) provision for credit losses	1,641			1,355

Noninterest Income
	Service charges on deposit accounts		95			95
	Trust and investment management fees		59			62
	Trading account activities		(7		)	68
	Securities gains, net		9			32
	Credit facility fees		49			55
	Brokerage commissions and fees		36			44
	Card processing fees, net		24			18
	Investment banking and syndication fees		182			140
	Fees from affiliates ⁽¹⁴⁾		430			470
	Other, net		100			55
		Total noninterest income	977			1,039

Noninterest Expense
	Salaries and employee benefits		1,201			1,167
	Net occupancy and equipment		169			160
	Professional and outside services		215			186
	Software		93			74
	Regulatory assessments		39			28
	Intangible asset amortization		14			13
	Other		232			246
		Total noninterest expense	1,963			1,874

	Income before income taxes and including
	noncontrolling interests		655			520
	Income tax expense		146			147
Net Income including Noncontrolling Interests			509			373
	Deduct: Net loss from noncontrolling interests		15			23
Net Income attributable to MUAH			$	524		$	396

___________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 5

MUFG Americas Holdings Corporation and Subsidiaries

Consolidated Balance Sheets (Unaudited)



(Dollars in millions except for per share amount)				June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
Assets
Cash and due from banks				$	1,878		$	1,736		$	1,909		$	1,837		$	1,766
Interest bearing deposits in banks				2,470			3,091			3,844			3,537			2,306
Federal funds sold				—			—			—			—			10
		Total cash and cash equivalents		4,348			4,827			5,753			5,374			4,082
Securities borrowed or purchased under resale agreements				19,820			19,992			19,747			21,906			20,363
Trading account assets				10,013			8,926			8,942			9,405			8,427
Securities available for sale				16,169			14,925			14,141			13,728			12,929
Securities held to maturity				10,373			10,374			10,337			10,388			10,259
Loans held for investment				78,388			78,434			77,551			79,249			81,045
	Allowance for loan losses			(513		)	(570		)	(639		)	(691		)	(748		)
		Loans held for investment, net		77,875			77,864			76,912			78,558			80,297
Premises and equipment, net				614			618			591			591			599
Goodwill				3,225			3,225			3,225			3,225			3,225
Other assets				8,119			8,927			8,496			7,924			7,791
			Total assets	$	150,556		$	149,678		$	148,144		$	151,099		$	147,972

Liabilities
Deposits:
	Noninterest bearing			$	33,907		$	35,020		$	35,654		$	34,186		$	32,861
	Interest bearing			51,050			51,513			51,293			50,457			49,791
		Total deposits		84,957			86,533			86,947			84,643			82,652
Securities loaned or sold under repurchase agreements				24,797			25,079			24,616			25,582			23,197
Commercial paper and other short-term borrowings				6,195			3,487			2,360			5,865			7,137
Long-term debt				10,556			11,333			11,410			11,427			11,737
Trading account liabilities				3,563			3,233			2,905			3,328			3,053
Other liabilities				2,551			2,383			2,520			2,742			2,863
			Total liabilities	132,619			132,048			130,758			133,587			130,639

Equity
MUAH stockholders' equity:
	Common stock, par value $1 per share:
		Authorized 300,000,000 shares; 144,322,280 shares issued and outstanding as of June 30, 2017, March 31, 2017, December 31, 2016, September 30, 2016, and June 30, 2016		144			144			144			144			144
	Additional paid-in capital			7,868			7,892			7,884			7,871			7,870
	Retained earnings			10,625			10,331			10,101			9,769			9,509
	Accumulated other comprehensive loss			(829		)	(883		)	(896		)	(431		)	(390		)
			Total MUAH stockholders' equity	17,808			17,484			17,233			17,353			17,133
Noncontrolling interests				129			146			153			159			200
			Total equity	17,937			17,630			17,386			17,512			17,333
			Total liabilities and equity	$	150,556		$	149,678		$	148,144		$	151,099		$	147,972



	Exhibit 6

MUFG Americas Holdings Corporation and Subsidiaries

Net Interest Income (Unaudited)



	For the Three Months Ended
	June 30, 2017							March 31, 2017
				Interest		Average					Interest		Average
	Average			Income/		Yield/		Average			Income/		Yield/
(Dollars in millions)	Balance			Expense ⁽⁶⁾		Rate ⁽²⁾⁽⁶⁾		Balance			Expense ⁽⁶⁾		Rate ⁽²⁾⁽⁶⁾
Assets
Loans held for investment: ⁽¹⁵⁾
Commercial and industrial	$	25,220		$	228	3.61	%	$	25,612		$	220	3.49	%
Commercial mortgage	14,414			145		4.02		14,504			148		4.07
Construction	1,976			21		4.35		2,217			22		4.01
Lease financing	1,757			17		3.76		1,788			16		3.63
Residential mortgage	31,764			269		3.39		30,411			256		3.37
Home equity and other consumer loans	3,369			48		5.76		3,450			49		5.77
Total loans held for investment	78,500			728		3.71		77,982			711		3.67
Securities	25,369			135		2.13		24,900			135		2.16
Securities borrowed or purchased under resale agreements	20,624			83		1.60		20,454			63		1.26
Interest bearing deposits in banks	2,244			6		1.01		3,450			7		0.82
Federal funds sold	3			—		1.50		—			—		1.03
Trading account assets	9,584			82		3.42		9,094			74		3.29
Other earning assets	431			2		2.26		609			3		2.12
Total earning assets	136,755			1,036		3.03		136,489			993		2.93
Allowance for loan losses	(571		)					(647		)
Cash and due from banks	1,806							1,869
Premises and equipment, net	607							592
Other assets ⁽¹⁶⁾	11,058							11,260
Total assets	$	149,655						$	149,563
Liabilities
Interest bearing deposits:
Transaction and money market accounts	$	38,214		36		0.37		$	39,905		33		0.34
Savings	7,798			6		0.31		6,205			1		0.07
Time	5,601			16		1.15		5,369			15		1.13
Total interest bearing deposits	51,613			58		0.45		51,479			49		0.39
Commercial paper and other short-term borrowings	3,705			10		1.06		3,477			8		0.94
Securities loaned or sold under repurchase agreements	25,689			84		1.32		25,904			59		0.92
Long-term debt	10,961			60		2.20		11,347			57		2.01
Total borrowed funds	40,355			154		1.54		40,728			124		1.22
Trading account liabilities	2,924			20		2.63		2,567			16		2.57
Total interest bearing liabilities	94,892			232		0.98		94,774			189		0.81
Noninterest bearing deposits	34,159							34,672
Other liabilities ⁽¹⁷⁾	2,869							2,487
Total liabilities	131,920							131,933
Equity
MUAH stockholders' equity	17,600							17,487
Noncontrolling interests	135							143
Total equity	17,735							17,630
Total liabilities and equity	$	149,655						$	149,563

Net interest income/spread (taxable-equivalent basis)				804		2.05	%				804		2.12	%
Impact of noninterest bearing deposits						0.26							0.22
Impact of other noninterest bearing sources						0.04							0.03
Net interest margin						2.35							2.37
Less: taxable-equivalent adjustment				10							9
Net interest income				$	794						$	795

____________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 7

MUFG Americas Holdings Corporation and Subsidiaries

Net Interest Income (Unaudited)



	For the Three Months Ended
	June 30, 2017							June 30, 2016
				Interest		Average					Interest		Average
	Average			Income/		Yield/		Average			Income/		Yield/
(Dollars in millions)	Balance			Expense ⁽⁶⁾		Rate ⁽²⁾⁽⁶⁾		Balance			Expense ⁽⁶⁾		Rate ⁽²⁾⁽⁶⁾
Assets
Loans held for investment: ⁽¹⁵⁾
Commercial and industrial	$	25,220		$	228	3.61	%	$	30,884		$	250	3.26	%
Commercial mortgage	14,414			145		4.02		15,198			153		4.01
Construction	1,976			21		4.35		2,211			24		4.37
Lease financing	1,757			17		3.76		1,858			16		3.55
Residential mortgage	31,764			269		3.39		27,875			233		3.33
Home equity and other consumer loans	3,369			48		5.76		3,516			45		5.09
Total loans held for investment	78,500			728		3.71		81,542			721		3.54
Securities	25,369			135		2.13		23,341			119		2.04
Securities borrowed or purchased under resale agreements	20,624			83		1.60		24,030			44		0.73
Interest bearing deposits in banks	2,244			6		1.01		1,683			2		0.55
Federal funds sold	3			—		1.50		11			—		0.53
Trading account assets	9,584			82		3.42		6,384			38		2.39
Other earning assets	431			2		2.26		207			2		2.52
Total earning assets	136,755			1,036		3.03		137,198			926		2.70
Allowance for loan losses	(571		)					(881		)
Cash and due from banks	1,806							1,808
Premises and equipment, net	607							645
Other assets ⁽¹⁶⁾	11,058							10,677
Total assets	$	149,655						$	149,447
Liabilities
Interest bearing deposits:
Transaction and money market accounts	$	38,214		36		0.37		$	37,517		28		0.30
Savings	7,798			6		0.31		5,742			1		0.04
Time	5,601			16		1.15		7,519			20		1.06
Total interest bearing deposits	51,613			58		0.45		50,778			49		0.38
Commercial paper and other short-term borrowings	3,705			10		1.06		5,319			7		0.51
Securities loaned or sold under repurchase agreements	25,689			84		1.32		25,338			31		0.49
Long-term debt	10,961			60		2.20		12,572			63		1.99
Total borrowed funds	40,355			154		1.54		43,229			101		0.93
Trading account liabilities	2,924			20		2.63		2,844			15		2.10
Total interest bearing liabilities	94,892			232		0.98		96,851			165		0.68
Noninterest bearing deposits	34,159							32,843
Other liabilities ⁽¹⁷⁾	2,869							2,573
Total liabilities	131,920							132,267
Equity
MUAH stockholders' equity	17,600							16,980
Noncontrolling interests	135							200
Total equity	17,735							17,180
Total liabilities and equity	$	149,655						$	149,447

Net interest income/spread (taxable-equivalent basis)				804		2.05	%				761		2.02	%
Impact of noninterest bearing deposits						0.26							0.17
Impact of other noninterest bearing sources						0.04							0.04
Net interest margin						2.35							2.23
Less: taxable-equivalent adjustment				10							7
Net interest income				$	794						$	754

____________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 8

MUFG Americas Holdings Corporation and Subsidiaries

Net Interest Income (Unaudited)



	For the Six Months Ended
	June 30, 2017							June 30, 2016
				Interest		Average					Interest		Average
	Average			Income/		Yield/		Average			Income/		Yield/
(Dollars in millions)	Balance			Expense ⁽⁶⁾		Rate ⁽²⁾⁽⁶⁾		Balance			Expense ⁽⁶⁾		Rate ⁽²⁾⁽⁶⁾
Assets
Loans held for investment: ⁽¹⁵⁾
Commercial and industrial	$	25,415		$	448	3.55	%	$	30,679		$	498	3.27	%
Commercial mortgage	14,459			293		4.04		14,901			301		4.04
Construction	2,096			43		4.17		2,242			46		4.17
Lease financing	1,773			33		3.7		1,874			31		3.35
Residential mortgage	31,091			525		3.38		27,677			466		3.36
Home equity and other consumer loans	3,410			97		5.77		3,440			86		5.05
Total loans held for investment	78,244			1,439		3.69		80,813			1,428		3.55
Securities	25,136			270		2.15		23,445			235		2.00
Securities borrowed or purchased under resale agreements	20,539			146		1.43		27,864			94		0.68
Interest bearing deposits in banks	2,843			13		0.9		2,048			5		0.54
Federal funds sold	2			—		1.45		27			—		0.53
Trading account assets	9,340			156		3.36		5,167			60		2.34
Other earning assets	519			5		2.18		312			5		2.54
Total earning assets	136,623			2,029		2.98		139,676			1,827		2.62
Allowance for loan losses	(609		)					(804		)
Cash and due from banks	1,837							1,848
Premises and equipment, net	600							644
Other assets ⁽¹⁶⁾	11,076							10,712
Total assets	$	149,527						$	152,076
Liabilities
Interest bearing deposits:
Transaction and money market accounts	$	39,055		69		0.35		$	37,936		56		0.30
Savings	7,006			7		0.21		5,729			2		0.05
Time	5,486			31		1.14		7,548			40		1.08
Total interest bearing deposits	51,547			107		0.42		51,213			98		0.39
Commercial paper and other short-term borrowings	3,592			18		1.00		4,390			10		0.48
Securities loaned or sold under repurchase agreements	25,796			143		1.12		28,271			63		0.45
Long-term debt	11,153			117		2.10		13,028			136		2.07
Total borrowed funds	40,541			278		1.38		45,689			209		0.91
Trading account liabilities	2,747			36		2.61		2,780			28		2.04
Total interest bearing liabilities	94,835			421		0.89		99,682			335		0.67
Noninterest bearing deposits	34,414							32,582
Other liabilities ⁽¹⁷⁾	2,677							2,790
Total liabilities	131,926							135,054
Equity
MUAH stockholders' equity	17,462							16,836
Noncontrolling interests	139							186
Total equity	17,601							17,022
Total liabilities and equity	$	149,527						$	152,076

Net interest income/spread (taxable-equivalent basis)				1,608		2.09	%				1,492		1.95	%
Impact of noninterest bearing deposits						0.24							0.17
Impact of other noninterest bearing sources						0.03							0.03
Net interest margin						2.36							2.15
Less: taxable-equivalent adjustment				19							14
Net interest income				$	1,589						$	1,478

____________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 9

MUFG Americas Holdings Corporation and Subsidiaries

Loans and Nonperforming Assets (Unaudited)



(Dollars in millions)					June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016		June 30, 2016

Loans held for investment
	Loans held for investment:
		Commercial and industrial			$	24,554	$	25,602	$	25,379	$	27,662	$	29,831
		Commercial mortgage			14,297		14,468		14,625		15,024		15,238
		Construction			1,921		2,040		2,283		2,257		2,255
		Lease financing			1,738		1,779		1,819		1,840		1,878
			Total commercial portfolio		42,510		43,889		44,106		46,783		49,202

		Residential mortgage			32,523		31,162		29,922		28,873		28,343
		Home equity and other consumer loans			3,355		3,383		3,523		3,593		3,500
			Total consumer portfolio		35,878		34,545		33,445		32,466		31,843
				Total loans held for investment	$	78,388	$	78,434	$	77,551	$	79,249	$	81,045

Nonperforming Assets
	Nonaccrual loans:
		Commercial and industrial			$	321	$	400	$	458	$	487	$	397
		Commercial mortgage			24		33		31		31		26
			Total commercial portfolio		345		433		489		518		423

		Residential mortgage			128		110		171		172		177
		Home equity and other consumer loans			25		26		29		29		32
			Total consumer portfolio		153		136		200		201		209
				Total nonaccrual loans	498		569		689		719		632

	OREO				2		3		3		5		16

				Total nonperforming assets	$	500	$	572	$	692	$	724	$	648

	Loans 90 days or more past due and still accruing				$	16	$	24	$	23	$	23	$	18



	Exhibit 10

MUFG Americas Holdings Corporation and Subsidiaries

Allowance for Credit Losses (Unaudited)



	As of and for the Three Months Ended
(Dollars in millions)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016

Analysis of Allowance for Credit Losses
Allowance for loan losses, beginning of period	$	570		$	639		$	691		$	748		$	881
(Reversal of) provision for loan losses	(20		)	(14		)	(32		)	68			(36		)
Other	(1		)	1			(1		)	(1		)	—
Loans charged-off:
Commercial and industrial	(29		)	(49		)	(26		)	(66		)	(46		)
Commercial and industrial - transfer to held for sale	—			(6		)	(2		)	(60		)	(51		)
Total commercial portfolio	(29		)	(55		)	(28		)	(126		)	(97		)
Residential mortgage	1			—			—			2			—
Home equity and other consumer loans	(12		)	(11		)	(7		)	(4		)	(2		)
Total consumer portfolio	(11		)	(11		)	(7		)	(2		)	(2		)
Total loans charged-off	(40		)	(66		)	(35		)	(128		)	(99		)
Recoveries of loans previously charged-off:
Commercial and industrial	4			8			15			2			2
Commercial mortgage	—			1			—			1			—
Total commercial portfolio	4			9			15			3			2
Home equity and other consumer loans	—			1			1			1			—
Total consumer portfolio	—			1			1			1			—
Total recoveries of loans previously charged-off	4			10			16			4			2
Net loans (charged-off) recovered	(36		)	(56		)	(19		)	(124		)	(97		)
Ending balance of allowance for loan losses	513			570			639			691			748
Allowance for losses on unfunded credit commitments	144			146			162			171			166
Total allowance for credit losses	$	657		$	716		$	801		$	862		$	914



	Exhibit 11

MUFG Americas Holdings Corporation and Subsidiaries

Securities (Unaudited)



Securities Available for Sale

			June 30, 2017				March 31, 2017				Fair Value			Fair Value
			Amortized		Fair		Amortized		Fair		Change from			% Change from
(Dollars in millions)			Cost		Value		Cost		Value		March 31, 2017			March 31, 2017
Asset Liability Management securities:
U.S. Treasury			$	2,331	$	2,242	$	2,920	$	2,813	$	(571	)	(20	)%
Residential mortgage-backed securities:
	U.S. government agency and government-sponsored agencies		8,919		8,833		7,474		7,378		1,455			20
	Privately issued		501		499		431		426		73			17
Privately issued - commercial mortgage-backed securities			712		714		664		663		51			8
Collateralized loan obligations			2,227		2,230		1,985		1,997		233			12
Other			7		7		7		7		—			—
		Asset Liability Management securities	14,697		14,525		13,481		13,284		1,241			9
Other debt securities:
Direct bank purchase bonds			1,523		1,546		1,528		1,543		3			—
Other			93		93		94		93		—			—
Equity securities			5		5		5		5		—			—
		Total securities available for sale	$	16,318	$	16,169	$	15,108	$	14,925	$	1,244		8	%


Securities Held to Maturity

			June 30, 2017				March 31, 2017				Carrying Amount			Carrying Amount
			Carrying		Fair		Carrying		Fair		Change from			% Change from
(Dollars in millions)			Amount ⁽¹⁸⁾		Value		Amount ⁽¹⁸⁾		Value		March 31, 2017			March 31, 2017
U.S. Treasury			$	494	$	497	$	493	$	497	$	1		—	%
U.S. government agency and government-sponsored agencies-residential mortgage-backed securities			8,324		8,282		8,306		8,240		18			—
U.S. government agency and government-sponsored agencies-commercial mortgage-backed securities			1,555		1,597		1,575		1,611		(20		)	(1	)
		Total securities held to maturity	$	10,373	$	10,376	$	10,374	$	10,348	$	(1	)	—	%

___________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 12

MUFG Americas Holdings Corporation and Subsidiaries

Reconciliation of Non-GAAP Measures (Unaudited)

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)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
Net income attributable to MUAH	$	295		$	229		$	334		$	260		$	334
Add: intangible asset amortization, net of tax	4			4			5			4			4
Net income attributable to MUAH, excluding intangible asset amortization (a)	$	299		$	233		$	339		$	264		$	338

Average MUAH stockholders' equity	$	17,600		$	17,487		$	17,367		$	17,311		$	16,980
Less: Goodwill	3,225			3,225			3,225			3,225			3,225
Less: Intangible assets, except mortgage servicing rights (MSRs)	213			220			226			193			179
Less: Deferred tax liabilities related to goodwill and intangible assets	(72		)	(75		)	(50		)	(50		)	(48		)
Average tangible common equity (b)	$	14,234		$	14,117		$	13,966		$	13,943		$	13,624
Return on average MUAH tangible common equity ^{(2) (3)}(a)/(b)	8.41		%	6.64		%	9.71		%	7.60		%	9.92		%

Noninterest expense	$	957		$	1,006		$	956		$	952		$	906
Less: Staff costs associated with fees from affiliates - support services	138			147			162			139			137
Less: Foreclosed asset expense and other credit costs	—			—			1			1			—
Less: Productivity initiative costs	(1		)	14			26			18			4
Less: Low income housing credit (LIHC) investment amortization expense	2			2			3			2			2
Less: Expenses of the LIHC consolidated VIEs	10			5			5			40			11
Less: Merger and business integration costs	3			3			5			3			5
Less: Net adjustments related to privatization transaction	3			3			3			4			5
Less: Intangible asset amortization	4			4			5			3			2
Less: Contract termination fee	—			2			3			(2		)	—
Noninterest expense, as adjusted (c)	$	798		$	826		$	743		$	744		$	740

Total revenue	$	1,283		$	1,283		$	1,418		$	1,343		$	1,319
Add: Net interest income taxable-equivalent adjustment	10			9			7			8			8
Less: Fees from affiliates - support services	148			158			175			150			147
Less: Productivity initiative gains	3			4			71			—			—
Less: Accretion related to privatization-related fair value adjustments	2			2			1			2			3
Less: Other credit costs	(2		)	(1		)	23			4			(9		)
Less: Impairment on private equity investments	—			5			1			3			—
Less: Gains on sale of fixed assets	4			—			3			—			—
Total revenue, as adjusted (d)	$	1,138		$	1,124		$	1,151		$	1,192		$	1,186
Adjusted efficiency ratio (c)/(d) ⁽⁵⁾	70.15		%	73.42		%	64.62		%	62.46		%	62.27		%

____________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 13

MUFG Americas Holdings Corporation and Subsidiaries

Reconciliation of Non-GAAP Measures (Unaudited)

The following table presents a reconciliation between certain 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)		June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
Total MUAH stockholders' equity		$	17,808		$	17,484		$	17,233		$	17,353		$	17,133
Less: Goodwill		3,225			3,225			3,225			3,225			3,225
Less: Intangible assets, except MSRs		210			216			223			224			175
Less: Deferred tax liabilities related to goodwill and intangible assets		(73		)	(72		)	(79		)	(52		)	(48		)
	Tangible common equity (e)	$	14,446		$	14,115		$	13,864		$	13,956		$	13,781
Total assets		$	150,556		$	149,678		$	148,144		$	151,099		$	147,972
Less: Goodwill		3,225			3,225			3,225			3,225			3,225
Less: Intangible assets, except MSRs		210			216			223			224			175
Less: Deferred tax liabilities related to goodwill and intangible assets		(73		)	(72		)	(79		)	(52		)	(48		)
	Tangible assets (f)	$	147,194		$	146,309		$	144,775		$	147,702		$	144,620
Tangible common equity ratio (e)/(f) ⁽¹⁰⁾		9.81		%	9.65		%	9.58		%	9.45		%	9.53		%

Common Equity Tier 1 capital under U.S. Basel III (standardized transitional) (g)		$	15,259		$	14,977		$	14,757		$	14,426		$	13,233
Other		(27		)	(29		)	(58		)	(55		)	(38		)
	Common Equity Tier 1 capital estimated under U.S. Basel III (standardized approach; fully phased-in) (h)	$	15,232		$	14,948		$	14,699		$	14,371		$	13,195
Risk-weighted assets, estimated under U.S. Basel III (standardized transitional) (i)		$	97,049		$	99,155		$	99,904		$	103,265		$	97,412
Add: Adjustments		(100		)	(101		)	(137		)	(142		)	(118		)
	Total risk-weighted assets, estimated under U.S. Basel III (standardized approach; fully phased-in) (j)	$	96,949		$	99,054		$	99,767		$	103,123		$	97,294
Common Equity Tier 1 risk-based capital ratio (U.S. Basel III standardized approach; fully phased-in) (h)/(j) ^{(7) (8) (11)}		15.71		%	15.15		%	14.73		%	13.94		%	13.56		%

____________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 14

MUFG Americas Holdings Corporation and Subsidiaries

Reconciliation of Non-GAAP Measures (Unaudited)

The following table presents a reconciliation between certain GAAP amounts and specific non-GAAP measures as used to compute selected non-GAAP financial ratios.



		As of and for the Six Months Ended
		June 30,			June 30,
(Dollars in millions)		2017			2016

Net income attributable to MUAH		$	524		$	396
Add: Intangible asset amortization, net of tax		8			8
Net income attributable to MUAH, excluding intangible asset amortization (a)		$	532		$	404

Average MUAH stockholders' equity		$	17,462		$	16,836
Less: Goodwill		3,225			3,225
Less: Intangible assets, except MSRs		217			182
Less: Deferred tax liabilities related to goodwill and intangible assets		(75		)	(46		)
Average tangible common equity (b)		$	14,095		$	13,475
Return on average MUAH tangible common equity ^{(2) (3)}(a)/(b)		7.55		%	5.98		%

Noninterest expense		$	1,963		$	1,874
Less: Staff costs associated with fees from affiliates - support services		285			276
Less: Foreclosed asset expense and other credit costs		—			(1		)
Less: Productivity initiative costs		13			16
Less: Low income housing credit (LIHC) investment amortization expense		4			3
Less: Expenses of the LIHC consolidated VIEs		15			23
Less: Merger and business integration costs		6			10
Less: Net adjustments related to privatization transaction		7			10
Less: Intangible asset amortization		8			5
Less: Contract termination fee		2			—
	Noninterest expense, as adjusted (c)	$	1,623		$	1,532

Total revenue		$	2,566		$	2,517
Add: Net interest income taxable-equivalent adjustment		19			14
Less: Fees from affiliates - support services		306			296
Less: Productivity initiative gains		7			—
Less: Accretion related to privatization-related fair value adjustments		4			8
Less: Other credit costs		(3		)	(22		)
Less: Impairment on private equity investments		5			(12		)
Less: Gains on sale of fixed assets		4			—
	Total revenue, as adjusted (d)	$	2,262		$	2,261
Adjusted efficiency ratio (c)/(d) ⁽⁵⁾		71.78		%	67.71		%

____________________________________________

Refer to Exhibit 16 for footnote explanations.



	Exhibit 15

MUFG Americas Holdings Corporation and Subsidiaries

Footnotes


(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 credit losses through a credit cycle.


(2)	Annualized.

(3)

Return on tangible common equity, a non-GAAP financial measure, is net income excluding intangible asset amortization divided by average tangible common equity. Management believes that this ratio provides useful supplemental information regarding the Company's business results. The methodology for determining tangible common equity may differ among companies. Please refer to Exhibit 13 and 15 for reconciliations between certain GAAP amounts and this non-GAAP measure.


(4)	The efficiency ratio is total noninterest expense as a percentage of total revenue (net interest income and noninterest income).

(5)

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, certain costs related to productivity initiatives, LIHC investment amortization expense, expenses of the LIHC consolidated variable interest entities, merger and business integration costs, privatization-related expenses, intangible asset amortization, and a contract termination fee) 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, productivity initiatives related to the sale of certain premises, accretion related to privatization-related fair value adjustments, other credit costs, impairment on private equity investments and gains on sale of fixed assets. 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 Exhibit 13 and 15 for reconciliations between certain GAAP amounts and this non-GAAP measure.


(6)	Yields, interest income and net interest margin are presented on a taxable-equivalent basis using the federal statutory tax rate of 35%.


(7)	Ratios calculated at June 30, 2017, March 31, 2017, December 31, 2016 and September 30, 2016 reflect the designation of MUAH as the U.S. Intermediate Holding Company (IHC) of MUFG on July 1, 2016. Prior period ratios have not been revised to include the transferred IHC entities.


(8)	Preliminary as of June 30, 2017.


(9)	These capital ratios are calculated in accordance with the transition guidelines set forth in the U.S. federal banking agencies' final U.S. Basel III regulatory capital rules.

(10)

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.

(11)

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 because of current interest in such information by market participants. Please refer to Exhibit 14 for a reconciliation between certain GAAP amounts and this non-GAAP measure.


(12)	Criticized loans held for investment reflect 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.


(13)	The allowance for credit losses ratios include the allowances for loan losses and losses on unfunded credit commitments as a percentage of end of period total loans held for investment or total nonaccrual loans, as appropriate.


(14)	Fees from affiliates primarily represents income from BTMU pursuant to a master services agreement whereby the Bank provides BTMU with support services for its U.S. branch banking operations in exchange for fee income.


(15)	Average balances on loans held for investment include all nonaccrual loans. The amortized portion of net loan origination fees (costs) is included in interest income on loans, representing an adjustment to the yield.


(16)	Includes noninterest bearing trading account assets.


(17)	Includes noninterest bearing trading account liabilities.


(18)	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



	Exhibit 16

Alan Gulick

Mimi Mengis

Corporate Communications

Investor Relations

(425) 423-7317

(212) 782-6872