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| 8-K - 8-K - MUFG Americas Holdings Corp | q12018investorpresentation.htm |
MUFG Americas Holdings Corporation Investor Presentation for the Quarter Ended March 31, 2018 MUFG Americas Holdings Corporation
Forward-Looking Statements and Non-GAAP Financial Measures This presentation describes activities of MUFG Americas Holdings Corporation and its consolidated subsidiaries (the Company) unless otherwise specified. This presentation should be read in conjunction with the financial statements, notes and other information contained in the Company’s most recent annual report on Form 10-K and Quarterly Reports on Forms 10-Q and in any subsequent filings with the Securities and Exchange Commission (SEC). The following appears in accordance with the Private Securities Litigation Reform Act. This presentation includes forward-looking statements that involve risks and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Often, they include the words “believe,” “continue,” “expect,” “target,” “anticipate,” “intend,” “plan,” “estimate,” “potential,” “ project,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” They may also consist of annualized amounts based on historical interim period results. There are numerous risks and uncertainties that could and will cause actual results to differ materially from those discussed in the Company’s forward-looking statements. Many of these factors are beyond the Company’s ability to control or predict and could have a material adverse effect on the Company’s financial condition, and results of operations or prospects. For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the SEC, including the discussions under “Management’s Discussion & Analysis of Financial Condition and Results of Operations” and “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Forms 10-Q and in any subsequent filings with the SEC and available on the SEC’s website at www.sec.gov. Any factor described above or in our SEC reports could, by itself or together with one or more other factors, adversely affect our financial results and condition. All forward-looking statements contained herein are based on information available at the time of this presentation, and the Company assumes no obligation to update any forward-looking statements. This investor presentation includes additional capital ratios (tangible common equity and Common Equity Tier 1 capital (calculated under the Basel III standardized approach on a fully phased-in basis) to facilitate the understanding of the Company’s capital structure and for use in assessing and comparing the quality and composition of the Company's capital structure to other financial institutions. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies. Please refer to our separate reconciliation of non-GAAP financial measures in our 10-Q for the quarter ended March 31, 2018. MUFG Americas Holdings Corporation Investor Presentation, 1Q18 2
Core Strategic Subsidiary of Mitsubishi UFJ Financial Group (MUFG) MUFG Americas Holdings Corporation (MUAH) and its principal subsidiaries MUFG MUFG Branch / Financial Center Network Union Bank, N.A. (MUB) and MUFG Securities Americas (MUSA) are owned by MUFG Bank, Ltd. (formerly The Bank of Tokyo-Mitsubishi UFJ, Ltd.) and Mitsubishi UFJ Financial Group, Inc. (MUFG). MUFG Bank, Ltd. is a wholly-owned subsidiary of MUFG. • One of the largest regional bank holding companies in the United States • Solid balance sheet with high-quality capital base and strong liquidity • Conservative risk culture resulting in a high quality loan portfolio with strong credit performance • Network of 346 U.S. retail branches • Prominent market share in demographically attractive West Coast markets • Both MUB and MUAH have outstanding, publicly issued debt securities Reference Banks’ Period-End Assets ($bn) 1,2 Company Profile as of March 31, 2018 MUAH MUFG3 Headquarters New York Tokyo $460 Main Banking Office San Francisco Tokyo $379 $363 U.S. Branches4 346 N/A Employees5 Approx. 13,100 Approx. 150,000 $221 $205 6 $157 $153 $142 $137 Total Assets $157.3 billion $2,766 billion $123 $119 $104 $72 $66 Total Loans Held for Investment $81.4 billion $975 billion6 Total Deposits $83.5 billion $1,546 billion6 USB PNC COF BBT STI MUAH CFG FITB KEY RF MTB HBAN CMA ZION Common Equity Tier 1 risk-based 16.30%7 12.50%8 capital ratio (fully-phased in) 3. As of December 31, 2017 1. Source: SNL Financial as of April 24, 2018 4.In addition, MUB had 5 commercial branches, 1 international office and 21 PurePoint Financial Centers 2. ‘Reference Banks’, referred to throughout this presentation unless otherwise noted, consist of these 13 CCAR-filing public regional banks, 5. Full-time equivalent staff as of 3/31/18 plus the four largest U.S. money center banks (BAC, C, JPM and WFC) not shown here 6. JPY denominated amounts converted to USD based on an exchange rate of 113.00 JPY/USD; refer to MUFG’s Investor Relations website (http://www.mufg.jp/english/ir/) for additional information 7. Non-GAAP financial measure. Refer to our separate reconciliation of non-GAAP financial measures in our 10-Q for the quarter ended March 31, 2018 8. Calculated in accordance with Japanese banking regulations based on information derived from MUFG’s consolidated financial statements prepared in accordance with Japanese GAAP, as required by the Japanese Financial Services Agency MUFG Americas Holdings Corporation Investor Presentation, 1Q18 3
MUAH is MUFG's Intermediate Holding Company 3/31/18 assets: $120.9bn 3/31/18 assets: $32.7bn 3/31/18 assets: $3.7bn1 The enhanced prudential standards require that all foreign banking organizations with at least $50bn in assets hold ownership of controlled U.S. subsidiaries through an Intermediate Holding Company (IHC). 1. Net of intercompany eliminations MUFG Americas Holdings Corporation Investor Presentation, 1Q18 4
2018 First Quarter MUAH Results For the Three Months Ended March 31, December 31, March 31, (Dollars in millions) 2018 2017 2017 Results of operations: Net interest income $ 825 $ 799 $ 795 Noninterest income 382 518 488 Total revenue 1,207 1,317 1,283 Noninterest expense 1,084 1,039 1,006 Pre-tax, pre-provision income 1 123 278 277 (Reversal of) provision for credit losses (2) (69) (30) Income before income taxes and including noncontrolling interests 125 347 307 Income tax expense (42) 44 83 Net income including noncontrolling interests 167 303 224 Deduct: Net (income) loss from noncontrolling interests (1) 18 5 Net income attributable to MUAH $ 166 $ 321 $ 229 Compared with the first quarter of 2017, Net Income decreased by $63 million • Total revenue was $1.2 billion, down $76 million from the first quarter of 2017 largely due to the $106 million decrease in noninterest income resulting from the impact of the tax reform on renewable energy investments in 1Q18 ($164 million); these losses were partially offset by a change in presentation of certain expenses which were previously reported as a reduction to net interest income • The increase in noninterest expense for the first quarter of 2018 compared with the first quarter of 2017 was driven largely by the change in presentation of certain expenses and an increase in salaries and employee benefits expense • The income tax benefit and negative effective tax rate for the three months ended March 31, 2018 are largely due to an adjustment to certain prior period state income taxes during the quarter 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. MUFG Americas Holdings Corporation Investor Presentation, 1Q18 5
MUAH Balance Sheet and Profitability Highlights as of Period End As of Period End Compared to the previous quarter: March 31, December 31, March 31, • Total assets increased $2.8 billion (Dollars in millions) 2018 2017 2017 driven by increases in loans held Balance sheet (end of period) for investment of $1.4 billion and Total assets $ 157,310 $ 154,550 $ 149,678 trading account assets of $2.0 Total loans held for investment 81,400 80,014 78,434 Total securities 27,301 27,448 25,299 billion, partially offset by a Securities borrowed or purchased under repo 19,902 20,894 19,992 decrease in securities borrowed or Trading account assets 12,565 10,567 8,926 purchased under resale Total deposits 83,532 84,787 86,533 agreements Securities loaned or sold under repo 26,391 26,437 25,079 Long-term debt 14,085 12,162 11,333 • Loans held for investment Trading account liabilities 3,874 3,600 3,233 increased $1.4 billion from MUAH stockholders' equity 18,193 18,255 17,484 previous quarter primarily due to Performance ratios growth in the residential mortgage Net interest margin 1,2 2.32% 2.33% 2.37% portfolio Return on average assets 1 0.42 0.71 0.62 • Total deposits decreased $1.3 Return on MUAH stockholders' equity 1 3.66 6.01 5.27 1 billion due to a decrease in Return on tangible common equity 4.69 7.57 6.64 interest checking and money Efficiency ratio 3 89.84 76.42 78.39 market deposits, partially offset by an increase in interest bearing savings deposits related to PurePoint Financial 1. Annualized 2. Net interest margin is presented on a taxable-equivalent basis using the federal statutory tax rates of 21% and 35% for 2018 and 2017, respectively 3. The efficiency ratio is total noninterest expense as a percentage of total revenue (net interest income and noninterest income) MUFG Americas Holdings Corporation Investor Presentation, 1Q18 6
Business Model for Four Key Segments1 Regional Bank U.S. Wholesale & Investment Banking Branding Five main divisions: Consumer Banking, Wealth Markets, Commercial Banking, Real Estate • Delivers the full suite of MUAH products and services to large and mid-corporate Industries and PurePoint Financial customers Two customer segments: • Employs an industry-focused strategy including dedicated coverage teams in: Consumer: West Coast individuals, including high net worth • General Industries • Products and services include checking and deposit accounts, mortgages, home equity • Power and Utilities loans, consumer loans, credit cards, bill and loan payment services, merchant services, • Oil and Gas wealth planning, trust & estate services, investment management, brokerage and private • Telecom and Media wealth management • Technology • PurePoint serves consumers by offering savings accounts and CD products online with • Healthcare and Nonprofit services provided through a call center and a network of financial centers in New York, • Public Finance Florida, Illinois, and Texas • Financial Institutions (predominantly Insurance and Asset Managers) Coverage Commercial: Institutional clients and businesses with annual revenues up to $1 billion • Provides customers general corporate credit and structured credit services including • Commercial credit products and services include commercial and asset-based loans, project finance, leasing and equipment finance, commercial finance, funds finance, accounts receivable, inventory, and trade financing primarily to West Coast corporate and securitizations customers, and construction loans, commercial mortgages, bridge financing and unsecured funding to professional real estate investors and developers nationwide • Non-credit products and services include global treasury management, capital market • Non-credit products and services include global treasury management, capital solutions, foreign exchange, interest rate risk and commodity risk management products market solutions, and various foreign exchange, interest rate risk and commodity risk and services management products Transaction Banking • Automated Clearing House • Demand Deposit Account • Payables / Receivables • Cash Management • Institutional Trust and Global Custody • Treasury Management • Commercial Card • Money Market Demand Account • Trade Finance MUFG Securities Americas (MUSA) Products • Capital Markets • Private Placements • Collateralized Financings • Sales & Trading • Domestic and Foreign Debt • Securities Borrowed and Loaned and Equity Securities Transactions • Securitization 1. During 2Q17 the customer base of the Investment Banking & Markets segment, including its products and services, was consolidated into the activities performed within the other business segments MUFG Americas Holdings Corporation Investor Presentation, 1Q18 7
Strong and High Quality Capital Base MUAH's capital ratios exceed the average of the Reference Banks1 Reference Banks' MUAH Capital Ratios Average1 March 31, March 31, December 31, Capital ratios: 2018 2018 2017 Regulatory: Common Equity Tier 1 risk-based capital ratio 10.72% 16.30% 16.31% Tier 1 risk-based capital ratio 11.86 16.30 16.31 Total risk-based capital ratio 13.95 17.75 17.76 Tier 1 leverage ratio 9.71 10.20 10.06 Other: Tangible common equity ratio2 8.44 9.52 9.73 Common Equity Tier 1 risk-based capital ratio (U.S. Basel III standardized approach; fully N/A 16.30 16.27 phased-in)2 MUAH reports its regulatory capital ratios under the standardized approach of the U.S. Basel III rules, with certain provisions subject to phase-in periods. 1. Reference Banks consist of 13 CCAR-filing public regional banks depicted on slide 3 plus the four largest U.S. money center banks. Reference Banks’ average based on reporting through April 25, 2018 (Source: SNL Financial) 2. Non-GAAP financial measures. Refer to our separate reconciliation of non-GAAP financial measures in our 10-Q for the quarter ended March 31, 2018 MUFG Americas Holdings Corporation Investor Presentation, 1Q18 8
Robust Liquidity Profile MUB MUAH Deposit franchise reduces reliance on wholesale funding Holding company maintains liquidity to meet expected Substantial available liquidity includes: obligations for at least 20 months without access to funding • Excess Reserves1: $2.8 billion MUAH consolidated is compliant with modified LCR • Unpledged securities: $23.5 billion Double leverage ratio is 103%2 • Unused FHLB and Fed capacity: $25.3 billion MUB's Investment Portfolio, Carrying Value3 ($ billions) MUAH Consolidated Funding Sources ($ billions) Medium- and Long-term Debt: Agency $14.1 RMBS Commercial Paper and Other Short-term Borrowings: $9.1 $4.1 U.S. $1.5 Treasury $0.8 Agency $0.9 CMBS Securities loaned or $1.6 sold under repo: $26.4 RMBS $17.1 $1.6 Deposits: $83.5 CMBS CLO Other 1. Interest bearing deposits in banks 2. Source: MUAH FR Y-9LP as of December 31, 2017; defined as the Total Equity Investment in Subsidiaries divided by Total Equity. Management believes that this is a useful measure because it enables investors and others to assess the extent to which the Company is using debt to fund its equity investment in its subsidiaries 3. Amortized Cost / Carrying Amount reflects amortized cost except for balances transferred from AFS to HTM. Those balances reflect amortized cost plus any unrealized gains or losses at the date of transfer MUFG Americas Holdings Corporation Investor Presentation, 1Q18 9
Securities Financing Portfolio Securities Financing Maturity Profile Securities financing activity largely conducted through MUSA 25,000 Securities financing portfolio is primarily $19,667 20,000 collateralized by high quality, liquid assets ) s 15,000 $13,220 n • Approximately 88% is collateralized by o i l l i $10,400 M $10,134 ( U.S. Treasuries and Agency MBS and $ 10,000 $7,383 $6,174 12% is backed by equities, credit and 5,000 other $2,398 $966 0 Robust risk management framework 1 O/N and Continuous 2-30 days 31-90 days > 90 days governs secured financing profile including Assets Liabilities guidelines and limits for tenor gaps, Assets Liabilities counterparty concentration and stressed 3.5% 4.2% liquidity outflows 2.1% 2.8% 5.7% 6.1% 35.4% 48.6% 39.5% 52.1% 1. Includes continuous maturities which include open trades and term evergreen transactions that are primarily used to fund inventory MUFG Americas Holdings Corporation Investor Presentation, 1Q18 10
Internal TLAC1 Requirement to be Effective January 1, 2019 MUAH has sufficient aggregate capital and debt to achieve quantitative TLAC requirements; some modifications are required TLAC-related implications to MUAH due to MUFG's status as a single point of entry G-SIB are: • 18.5% of RWA overall Internal TLAC requirement; minimum 6% must be issued as eligible long-term debt • Internal TLAC must be issued by MUAH to a foreign affiliate (MUFG Bank); internal TLAC instruments may not be issued to third party investors • TLAC-eligible long-term debt will contain a contractual conversion ("bail-in") trigger while remaining external debt will not • Clean Holding Company requirements limit MUAH's external liabilities including debt, derivatives and guarantees • Compliance mandatory by January 1, 2019 MUFG is expected to be the external TLAC issuing entity for the global organization Note: MUAH is currently evaluating the impact of the NPR issued in April 2018 by the Federal Reserve and OCC which is intended to recalibrate the enhanced supplementary leverage ratio 1. "Total Loss-Absorbing Capacity, Long-Term Debt, and Clean Holding Company Requirements for Systemically Important U.S. Bank Holding Companies and Intermediate Holding Companies of Systemically Important Foreign Banking Organizations," Federal Register Vol. 82, No. 14, January 24, 2017; does not include FHLB balances MUFG Americas Holdings Corporation Investor Presentation, 1Q18 11
MUAH Long-Term Debt Outstanding and Maturity Schedule1 As of March 31, 2018 Long-Term Debt Redemption Schedule - Next 10 Years 1. Excludes nonrecourse debt, junior subordinated debt, FHLB Loans and capital leases MUFG Americas Holdings Corporation Investor Presentation, 1Q18 12
Deposit Trends Average deposit balances have been steady over the last year Average Quarterly Deposit Breakdown ($ billions) 86 87 85 35 34 33 5 5 5 • PurePoint Financial, a division of MUFG 6 8 9 Union Bank, N.A., is a hybrid digital bank 40 40 37 aimed at committed savers • PurePoint offers savings accounts and 1Q17 4Q17 1Q18 certificates of deposit (CDs), combining the Transaction & Money Market Savings convenience of online banking with in- person client service at PurePoint Financial Time Noninterest Bearing Centers Major Deposit Share in Key California Locations1,2 • This model enables PurePoint to deliver Metropolitan Statistical Area (MSA) / State Rank Share (%) competitive rates and an exceptional client Santa Maria-Santa Barbara, CA 2 17.9 experience the way clients want to bank - San Diego-Carlsbad, CA 4 14.1 online, over the phone or in person Los Angeles-Long Beach-Anaheim, CA 4 8.6 Fresno, CA 4 7.9 • As of March 31, 2018 the PurePoint Oxnard-Thousand Oaks-Ventura, CA 5 6.0 portfolio balance was $3.55 billion Salinas, CA 5 9.1 Riverside-San Bernardino-Ontario, CA 5 4.2 Sacramento--Roseville--Arden-Arcade, CA 5 4.3 San Francisco-Oakland-Hayward, CA 7 2.8 San Jose-Sunnyvale-Santa Clara, CA 9 2.4 Overall California 4 6.1 1. Source: FDIC Summary of Deposits as of September 30, 2017 2. The above balances do not include PurePoint deposits which are primarily placed with customers outside MUB's West Coast markets MUFG Americas Holdings Corporation Investor Presentation, 1Q18 13
Earning Asset Mix MUB's loan portfolio is primarily residential mortgage and commercial; MUSA contributes trading and securities financing assets 2 Earning Asset Mix 1 Loan Portfolio Composition Trading Assets & Home Equity & Other Other: 8.5% Consumer 4.3% Securities Purchased under Repo and Securities Borrowed: 14.4% Commercial & Industrial 28.8% Cash and equivalents: Residential Mortgage 1.9% 45.0% Loans: 56.1% Securities: 19.1% Commercial Mortgage 17.8% Lease Financing 1.8% Construction 2.3% 1. Average balance for the quarter ended March 31, 2018. May not total 100% due to rounding. 2. Period-end total loans held for investment, including all nonperforming loans and purchased credit-impaired loans. May not total 100% due to rounding. MUFG Americas Holdings Corporation Investor Presentation, 1Q18 14
Commercial Loan Portfolio Commercial loan growth stabilized in Q12018 after recent declines in loan balances. Net charge-offs increased by $9 million quarter-over-quarter. Commercial and Corporate Loan Portfolio Period-end Loan Balances and Net Charge-offs ($mm) MUFG Americas Holdings Corporation Investor Presentation, 1Q18 15
Consumer Loan Portfolio Consumer portfolio continues to exhibit strong credit quality Residential Mortgage Loan Portfolio Home Equity & Other Consumer Portfolio Period-end Loan Balances and Net Charge-offs ($mm) Period-end Loan Balances and Net Charge-offs ($mm) $36,660 $35,643 $34,205 $32,523 $31,162 $2 $1 $1 $— $— 1Q17 2Q17 3Q17 4Q17 1Q18 Net Charge-offs Residential Mortgage MUFG Americas Holdings Corporation Investor Presentation, 1Q18 16
Net Interest Margin Impacted by Low Rate Environment Net interest margin decreased 5 basis points during the first quarter of 2018, compared with the same period in 2017, due primarily to an increase in funding costs resulting from an increase in borrowed funds. Net Interest Income & Margin ($mm) Earning Assets ($bn) $816 $825 $795 $794 $799 $145 $144 $136 $137 $139 $4 $3 2.37% 2.35% 2.37% 2.33% 2.32% $3 $2 $2 $11 $12 $10 $10 $10 $21 $21 $22 $20 $21 $28 $27 $25 $25 $27 $78 $79 $79 $80 $81 1 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 1 2 Net Interest Margin Net Interest Income Loans Securities Securities Purchased under Repo and Borrowed Trading Assets & Other Cash and Equivalents 1. Net interest margin is presented on a taxable-equivalent basis using the federal statutory tax rates of 21% and 35% for 2018 and 2017, respectively 2. Total loans held for investment MUFG Americas Holdings Corporation Investor Presentation, 1Q18 17
Interest Rate Risk Management of Exposures Other Than Trading Net Interest Income (NII) Sensitivity ($mm) +200 bps 12-month horizon Gradual parallel yield curve shift over -100 bps MUFG Americas Holdings Corporation Investor Presentation, 1Q18 18
Asset Quality Trends Nonperforming Assets / Total Loans1 Net Charge-offs (Recoveries) / Average Loans1,3 2.0% 1.0% 1.60% 1.51% 1.47% 0.53% 1.29% 0.47% 0.48% 0.44% 0.5% 0.42% 1.15% 0.28% 1.0% 0.73% 0.03% 0.01% 0.05% 0.63% 0.59% 0.58% 0.0% 0.18% 0.43% 0.0% -0.5% 1Q2017 2Q2017 3Q2017 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 2 2 MUAH Reference Banks' Average MUAH Reference Banks' Average Criticized4 & Nonaccrual Loans / Total Loans Nonperforming Assets by Loan Type ($mm) $1,000 5.00% $900 Commercial & 4.00% $800 Industrial 3.00% 2.74% $700 Commercial 2.38% 2.35% Mortgage 1.95% 1.94% $600 2.00% 26 Residential $500 110 25 Mortgage 1.00% 0.73% 0.63% 0.59% 0.58% 23 22 0.43% $400 33 128 112 104 Home Equity and 0.38% 24 20 22 Other Consumer 0.00% $300 0.33% 22 0.30% 102 1Q17 2Q17 3Q17 4Q17 1Q18 0.30% 150.22% $200 400 Other (OREO) 321 308 319 Criticized Percent of Total Loans Held For Investment $100 211 NPA / Total Assets $0 Nonaccrual Loans % Of Total Loans Held For Investment 1Q17 2Q17 3Q17 4Q17 1Q18 1. Source: SNL Financial and company reports 2. Reference Banks consist of 13 CCAR-filing public regional banks depicted on slide 3 plus the four largest U.S. money center banks. Reference Banks’ average based on reporting through April 25, 2018 (Source: SNL Financial) 3. Annualized ratio 4. Criticized loans held for investment reflect loans in the commercial portfolio segment that are monitored for credit quality based on regulatory ratings. Amounts exclude small business loans, which are monitored by business credit score and delinquency status MUFG Americas Holdings Corporation Investor Presentation, 1Q18 19
Commercial Real Estate Overview Largely secured, California-focused commercial real estate-purposed loans1 with strong credit performance Q1 2018 Property Type Breakdown Q1 2018 Geographic Distribution2 Unsecured: Other: 13% 8% Los Angeles: 21% New Jersey: 2% Other: 13% llinois: 2% Multi-Family: 37% Washington: 8% Orange: 9% California Industrial: New York: 8% 66% 11% Secured 92% San Diego: 10% Other: 16% Santa Clara: 5% Retail: 15% Alameda: 3% Office: 16% San Francisco: 3% Commercial Real Estate Statistics March 31, December 31, March 31, ($ MM) 2017' 2017 2018 Commitments $ 22,096 $ 21,141 $ 21,119 Commercial and Industrial 3,989 3,540 3,347 Commercial Mortgage 14,569 14,529 14,689 Construction 3,538 3,071 3,082 Outstandings 18,270 17,714 17,851 Commercial and Industrial 1,808 1,645 1,548 Commercial Mortgage 14,421 14,294 14,468 Construction 2,040 1,775 1,835 Nonperforming Loans 33 21 16 1. Commercial real estate-purposed loans are comprised of commercial mortgage loans, construction loans and C&I loans to borrowers with real estate-exposed businesses. Does not include CMBS in the investment or trading portfolios 2. Excludes loans not secured by real estate; subsets of California reported by Metropolitan Statistical Area (MSA) MUFG Americas Holdings Corporation Investor Presentation, 1Q18 20
Consumer Loans Performed Well Through the Crisis Residential Mortgage Performance Trends Home Equity and Other Consumer 3 (30 days Past Due + in Foreclosure) Total Delinquency (30 Days + Past Due) 3 40.0% 4.5% 4.0% 30.0% 3.5% 3.0% 20.0% 2.5% 2.0% 10.0% 1.5% 1.0% 0.0% 0.5% 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 4 MUAH MBA-CA Conventional National Conventional MUAH National (SA) CA HE 30+ (NSA) MBA-CA Conventional ARM Residential Mortgage Portfolio as of March 31, 2018: • 36% interest-only (non-amortizing) • 65% weighted average LTV1 for the I/O portfolio • No subprime programs or option ARM loans • Low delinquency rate due to focus on prime loans, high FICO scores, and low LTVs • 81% of the consumer portfolio has a refreshed FICO score of 720 and above2 • 97% has an LTV less than or equal to 80% 1. At origination 2. Excluding loans serviced by third-party service providers and loans covered by FDIC loss share agreements, includes PCI loans 3. Data Source: Consumer Lending Monthly Summary and Key Statistics; Source: Residential – Mortgage Bankers Association, Home Equity-American Bankers Association 4. National (SA) is seasonally adjusted American Bankers Association data; Benchmark metrics are reported on a one quarter lag MUFG Americas Holdings Corporation Investor Presentation, 1Q18 21
MUAH's Capital, Asset Quality and Ratings Compare Favorably Nonperforming Assets / Total Loans1 Net Charge-offs / Average Loans1,2 1.8% 0.6% 1.5% 0.44% 1.15% 1.2% 0.4% 0.9% 0.6% 0.43% 0.2% 0.05% 0.3% 0.0% 0.0% 1Q18 1Q18 MUAH Reference Banks' Average MUAH Reference Banks' Average Common Equity Tier 1 (Basel 3) Ratio1 Reference Banks’ Credit Ratings1,3 Holding Company Ratings Bank Ratings Long-term ratings S&P Moody's Fitch S&P Moody's Fitch 20% U.S. Bancorp A+ A1 AA- AA- A1 AA- Wells Fargo & Company A- A2 A+ A+ Aa2 AA- 18% MUAH A- A2 A A A2 A 16.30% BB&T Corporation A- A2 A+ A A1 A+ 16% JPMorgan Chase & Co. A- A3 A+ A+ Aa3 AA- PNC Financial Services A- A3 A+ A A2 A+ 14% M&T Bank A- A3 A A A3 A Comerica BBB+ A3 A A- A3 A 12% 10.72% Fifth Third Bancorp BBB+ Baa1 A- A- A3 A- Bank of America Corp. A- A3 A A+ Aa3 A+ 10% Citigroup Inc. BBB+ Baa1 A A+ A1 A+ KeyCorp BBB+ Baa1 A- A- A3 A- 8% SunTrust Banks BBB+ Baa1 A- A- Baa1 A- Citizens Financial Group BBB+ NR BBB+ A- Baa1 BBB+ 6% Huntington BBB Baa1 A- BBB+ A3 A- 1Q18 Capital One Financial Corp. BBB Baa1 A- BBB+ Baa1 A- Regions Financial Corp. BBB+ Baa2 BBB+ A- Baa2 BBB+ Zions Bancorporation BBB NR NR BBB+ Baa3 NR MUAH Reference Banks' Average 1. Reference Banks consist of the 13 CCAR-filing public regional banks depicted on slide 3 plus the four largest U.S. money center banks. Reference Banks’ average based on reporting through April 25, 2018 (Source: SNL Financial) 2. Annualized ratio 3. Ratings as of April 25, 2018 MUFG Americas Holdings Corporation Investor Presentation, 1Q18 22
Key MUFG Group Credit Ratings MUFG Securities MUFG Americas Mitsubishi UFJ MUFG Union Bank, N.A. Americas Inc. Holdings Corporation MUFG Bank, Ltd. Financial Group, Inc. Deposits Senior Debt Senior Debt Senior Debt Senior Debt Senior Debt Long-Term Aa2 A2 — A2 A1 A1 Moody’s Short-Term P-1 P-1 — — P-1 P-1 Long-Term — A* A* A-* A* A-* Standard & Poor’s Short-Term — A-1 A-1 A-2 A-1 — Long-Term A+ A A A A A Fitch Short-Term F1 F1 F1 F1 F1 F1 - means not rated * outlook is positive On April 16, 2018, S&P revised MUAH and MUB's outlook to positive from stable. • The change in outlook followed S&P's revision to MUFG Group's outlook to positive from stable. • S&P views MUAH as a core banking subsidiary of MUFG Group therefore the ratings are tied to the rating of the group. • The change in MUFG's outlook is a result of S&P revising the long-term sovereign rating of Japan's outlook to positive from stable as a result of healthier economic prospects. MUFG Americas Holdings Corporation Investor Presentation, 1Q18 23
2017-2018 CCAR and 2017 Mid-Cycle DFAST Results The Federal Reserve did not object to MUAH's 2017 capital plan/CCAR submission In April 2018, MUAH timely filed its annual capital plan under the Federal Reserve's CCAR program Mid-Cycle DFAST stress test results demonstrate MUAH's capital cushion in excess of regulatory minimums • Severely Adverse scenario included a failure of effective U.S. monetary policy, a recession in the euro zone leading to drops in U.S. exports to Europe and the price of oil, and a multi-family commercial real estate (CRE) price shock 2017 Mid-Cycle Severely Adverse Scenario Results Note: MUAH is a standardized BHC for purposes of calculating capital levels and ratios. 1. Represents minimum projected capital ratios from 3Q 2017 through 3Q 2019 2. Regulatory post-stress minimum ratios as defined in the Comprehensive Capital Analysis and Review 2017 Summary Instructions, February 2017. MUFG Americas Holdings Corporation Investor Presentation, 1Q18 24
Conclusion MUAH, MUB and MUSA carry solid credit ratings and benefit from ownership by MUFG, one of the world’s largest financial organizations Strong local management team with a majority of independent board members Solid balance sheet with high-quality capital base and strong liquidity Conservative risk culture resulting in a high quality loan portfolio with historically strong credit performance There are many risks facing the banking industry and MUAH; please refer to the Risk Factors on pages 19-36 of our Form 10-K for the year ended December 31, 2017 Contacts Alan Gulick Marcy Morita Managing Director Director 425-423-7317 415-273-2452 alan.gulick@unionbank.com marcy.morita@unionbank.com MUFG Americas Holdings Corporation Investor Presentation, 1Q18 25