Safe and Sound

MUFG Union Bank, National Association

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

Thanks to the efforts of 12,228 full-time employees in 363 offices in multiple states, the bank has amassed loans and leases worth $78.36 billion, $54.53 billion of which are for real estate. 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 an analysis of how the bank did on the three key criteria Bankrate used to grade American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for account holders during times of economic instability for the bank. It follows then that when it comes to measuring an a bank's financial fortitude, capital is essential. When looking at safety and soundness, more capital is better.

On our test to measure the adequacy of a bank's capital, MUFG Union Bank, National Association racked up 14 out of a possible 30 points, better than the national average of 13.13.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. MUFG Union Bank, National Association's Tier 1 capital ratio was 16.17 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic difficulties.

Overall, MUFG Union Bank, National Association held equity amounting to 13.83 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due loans.

Having large numbers of these kinds of assets suggests a bank may eventually have to use capital to absorb losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and elevating the risk of a failure in the future.

MUFG Union Bank, National Association scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating out the national average of 37.49.

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 -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic 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

How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand economic shocks. Banks that are losing money, however, have less ability to do those things.

On Bankrate's earnings test, MUFG Union Bank, National Association scored 10 out of a possible 30, failing to reach the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. MUFG Union Bank, National Association's most recent annualized quarterly return on equity 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 reported 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.