Safe and Sound

MUFG Union Bank, National Association

San Francisco, CA
4
Star Rating
Started in 1979, MUFG Union Bank, National Association is an FDIC-insured bank headquartered in San Francisco, CA. Regulatory filings show the bank having equity of $16.50 billion on assets of $118.54 billion, as of December 31, 2017.

With 12,228 full-time employees in 363 offices in multiple states, the bank holds loans and leases worth $78.36 billion, including real estate loans of $54.53 billion. U.S. bank customers currently have $86.66 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, MUFG Union Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of an institution's financial strength. It works as a buffer against losses and provides protection for accountholders during periods of economic instability for the bank. From a safety and soundness perspective, more capital is preferred.

MUFG Union Bank, National Association achieved a score of 14 out of a possible 30 points on our test to measure the adequacy of a bank's capital, above the national average of 13.19.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. MUFG Union Bank, National Association's Tier 1 capital ratio was 16.17 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.67 percent. A higher capital ratio suggests the bank will be better able to weather economic headwinds.

Overall, MUFG Union Bank, National Association held equity amounting to 13.83 percent of its assets, which exceeded the national average of 12.04 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of problem assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these kinds of assets could eventually require a bank to use capital to cover losses, decreasing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

MUFG Union Bank, National Association exceeded the national average of 37.70 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.57 percent of MUFG Union Bank, National Association's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.14 percent.

Banks keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on MUFG Union Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, likely making the bank more resilient in tough times. Obviously, banks that are losing money are less able to do those things.

On Bankrate's test of earnings, MUFG Union Bank, National Association scored 10 out of a possible 30, coming in below the national average of 16.06.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for MUFG Union Bank, National Association was 4.19 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $685.5 million on total equity of $16.50 billion. The bank experienced an annualized return on average assets, or ROA, of 0.59 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.