Business Segments

During the second quarter of 2017, the composition of the Company’s segments was revised to reflect the realignment of its business model in the Americas, which includes MUAH. The realignment consolidated the customer base of the Investment Banking and Markets segment, including its products and services, into the activities performed within various other segments. We now have four reportable segments: Regional Bank, U.S. Wholesale & Investment Banking, Transaction Banking, and MUFG Securities Americas. Prior period results have been revised to conform to the current period presentation.

Regional Bank

The Regional Bank provides banking products and services to individual and business customers in California, Washington and Oregon through five major business lines.

Consumer Banking serves consumers and small businesses through 349 full-service branches, digital channels, call centers, ATMs and alliances with other financial institutions. Products and services include checking and deposit accounts; residential mortgage loans; consumer loans; home equity lines of credit; credit cards; bill and loan payment services; and merchant services.

Commercial Banking provides commercial and asset-based loans to clients across a wide range of industries with annual revenues up to $1 billion. Through partnerships with other areas of the Bank, Commercial Banking clients also have access to non-credit products and services including global treasury management, capital markets solutions, foreign exchange and interest rate risk and commodity risk management products and services.

Real Estate Industries provides financing solutions for existing properties and construction projects to professional real estate developers. Property types supported include apartment, office, retail, industrial and single-family residential on the West Coast and in select metropolitan areas across the country. Real Estate Industries also makes tax credit investments in affordable housing projects through its Community Development Finance unit. Through partnerships with other areas of the bank, Real Estate Industries clients also have access to non-credit products and services including global treasury management, capital markets solutions, foreign exchange and interest rate risk and commodity risk management products and services.

Wealth Markets serves corporate, institutional, non-profit and individual clients. Capabilities include Wealth Planning / Trust & Estate Services; Investment Management through HighMark Capital Management, Inc., an SEC-registered investment advisory firm wholly-owned by the bank; Brokerage through UnionBanc Investment Services, LLC, an SEC-registered broker-dealer/investment advisory firm wholly-owned by the bank; and Private Wealth Management.

PurePoint Financial serves consumers through a national deposit platform offering savings accounts and CD products to customers through an online platform with services provided through a call center and a network of financial centers in Florida, Illinois and Texas.

U.S. Wholesale & Investment Banking

U.S. Wholesale & Investment Banking delivers the full suite of MUB products and services to large and mid-corporate customers. The segment employs an industry-focused strategy including dedicated coverage teams in General Industries, Power and Utilities, Oil and Gas, Telecom and Media, Technology, Healthcare and Nonprofit, Public Finance, and Financial Institutions (predominantly Insurance and Asset Managers). U.S. Wholesale & Investment Banking provides customers general corporate credit and structured credit services, including project finance, leasing and equipment finance, commercial finance, funds finance and securitizations. By working with the Company's other segments, U.S. Wholesale & Investment Banking offers its customers a range of noncredit services, which include global treasury management, capital market solutions, and various foreign exchange, interest rate risk and commodity risk management products.

Transaction Banking

Transaction Banking works alongside the Company's other segments to provide working capital management and asset servicing solutions, including deposits and treasury management, trade finance, and institutional trust and custody, to the Company's customers. The client base consists of financial institutions, corporations, government agencies, insurance companies, mutual funds, investment managers and non-profit organizations.

MUFG Securities Americas

MUSA is MUAH's broker-dealer subsidiary which engages in capital markets origination transactions, private placements, collateralized financings, securities borrowing and lending transactions, and domestic and foreign debt and equity securities transactions.

Other

The Company generally applies a "market view" perspective in measuring the business segments. The market view is a measurement of customer markets aggregated to show all revenues generated and expenses incurred from all products and services sold to those customers regardless of where product areas organizationally report. Therefore, revenues and expenses are included in both the business segment that provides the service and the business segment that manages the customer relationship. The duplicative results from this internal management accounting view are eliminated in "Other." Certain of the transferred IHC entities are not measured using a "market view" perspective.

"Other" includes the Markets segment, Asian Corporate Banking segment and Corporate Treasury. Markets provides risk management solutions, including foreign exchange, interest rate and energy risk management solutions. The Asian Corporate Banking segment offers a range of credit, deposit, and investment management products and services to companies located primarily in the U.S. that are affiliated with companies headquartered in Japan and other Asian countries. Corporate Treasury is responsible for ALM, wholesale funding and the ALM investment and derivatives hedging portfolios. These treasury management activities are carried out to manage the net interest rate and liquidity risks of the Company's balance sheet and to manage those risks within the guidelines established by ALCO. For additional discussion regarding these risk management activities, see Part I, Item 3. “Quantitative and Qualitative Disclosures About Market Risk” in this Form 10-Q.

Additionally, "Other" is comprised of certain corporate activities of the Company; the net impact of funds transfer pricing charges and credits allocated to the reportable segments; the residual costs of support groups; fees from affiliates and noninterest expenses associated with BTMU's U.S. branch banking operations; the unallocated allowance; goodwill, intangible assets, and the related amortization/accretion associated with the Company's privatization transaction; the elimination of the fully taxable-equivalent basis amount; the difference between the marginal tax rate and the consolidated effective tax rate; and FDIC covered assets.

The information, set forth in the tables that follow, is prepared using various management accounting methodologies to measure the performance of the individual segments. Unlike GAAP, there is no standardized or authoritative guidance for management accounting. Consequently, reported results are not necessarily comparable with those presented by other companies and they are not necessarily indicative of the results that would be reported by the business units if they were unique economic entities. The management reporting accounting methodologies, which are enhanced from time to time, measure segment profitability by assigning balance sheet and statements of income items to each operating segment. Methodologies that are applied to the measurement of segment profitability include a funds transfer pricing system, an activity-based costing methodology, other indirect costs and a methodology to allocate the provision for credit losses. The funds transfer pricing system assigns a cost of funds or a credit for funds to assets or liabilities based on their type, maturity or repricing characteristics between Corporate Treasury and the operating segments. A segment receives a funding credit from Corporate Treasury for its liabilities. Conversely, a segment is assigned a charge by Corporate Treasury to fund its assets. Certain indirect costs, such as operations and technology expense, are allocated to the segments based on an activity-based costing methodology. Other indirect costs, such as corporate overhead, are allocated to the segments based on internal surveys and metrics that serve as proxies for estimated usage. During the normal course of business, the Company occasionally changes or updates its management accounting methodologies or organizational structure. Beginning with the third quarter of 2016, the Company revised its funds transfer pricing methodology related to certain deposits. Prior period results have been updated to reflect these changes in methodology. Certain of the transferred IHC entities are not measured using management accounting methodologies.



As of and for the Three Months Ended June 30, 2017:
(Dollars in millions)	Regional Bank		U.S. Wholesale & Investment Banking			Transaction Banking		MUSA		Other			MUFG Americas Holdings Corporation
Results of operations - Market View ⁽¹⁾
Net interest income (expense)	$	506	$	113		$	141	$	57	$	(23	)	$	794
Noninterest income (expense)	116		78			40		88		167			489
Total revenue	622		191			181		145		144			1,283
Noninterest expense	496		88			107		112		154			957
(Reversal of) provision for credit losses	18		(37		)	—		—		(3		)	(22		)
Income (loss) before income taxes and including noncontrolling interests	108		140			74		33		(7		)	348
Income tax expense (benefit)	26		22			30		13		(28		)	63
Net income (loss) including noncontrolling interests	82		118			44		20		21			285
Deduct: net loss from noncontrolling interests	—		—			—		—		10			10
Net income (loss) attributable to MUAH	$	82	$	118		$	44	$	20	$	31		$	295

Total assets, end of period	$	64,527	$	22,405		$	1,713	$	30,439	$	31,472		$	150,556


(1)	The transferred IHC entities are not measured using a "market view" perspective.



As of and for the Three Months Ended June 30, 2016:
(Dollars in millions)	Regional Bank			U.S. Wholesale & Investment Banking			Transaction Banking			MUSA		Other			MUFG Americas Holdings Corporation
Results of operations - Market View ⁽¹⁾
Net interest income (expense)	$	472		$	147		$	112		$	35	$	(12	)	$	754
Noninterest income (expense)	112			98			44			88		223			565
Total revenue	584			245			156			123		211			1,319
Noninterest expense	449			103			109			92		153			906
(Reversal of) provision for credit losses	(5		)	(28		)	(3		)	—		(3		)	(39		)
Income (loss) before income taxes and including noncontrolling interests	140			170			50			31		61			452
Income tax expense (benefit)	37			45			19			12		16			129
Net income (loss) including noncontrolling interests	103			125			31			19		45			323
Deduct: net (income) loss from noncontrolling interests	—			(1		)	—			—		12			11
Net income (loss) attributable to MUAH	$	103		$	124		$	31		$	19	$	57		$	334

Total assets, end of period	$	63,469		$	26,906		$	1,837		$	28,113	$	27,647		$	147,972


(1)	The transferred IHC entities are not measured using a "market view" perspective.



As of and for the Six Months Ended June 30, 2017:
(Dollars in millions)	Regional Bank		U.S. Wholesale & Investment Banking			Transaction Banking		MUSA		Other			MUFG Americas Holdings Corporation
Results of operations - Market View ⁽¹⁾
Net interest income (expense)	$	1,004	$	228		$	277	$	116	$	(36	)	$	1,589
Noninterest income (expense)	228		174			79		172		324			977
Total revenue	1,232		402			356		288		288			2,566
Noninterest expense	992		190			227		217		337			1,963
(Reversal of) provision for loan losses	20		(48		)	—		—		(24		)	(52		)
Income (loss) before income taxes and including noncontrolling interests	220		260			129		71		(25		)	655
Income tax expense (benefit)	51		39			51		27		(22		)	146
Net income (loss) including noncontrolling interests	169		221			78		44		(3		)	509
Deduct: net loss from noncontrolling interests	—		—			—		—		15			15
Net income (loss) attributable to MUAH	$	169	$	221		$	78	$	44	$	12		$	524

Total assets, end of period	$	64,527	$	22,405		$	1,713	$	30,439	$	31,472		$	150,556


(1)	The transferred IHC entities are not measured using a "market view" perspective.



As of and for the Six Months Ended June 30, 2016:
(Dollars in millions)	Regional Bank			U.S. Wholesale & Investment Banking			Transaction Banking			MUSA		Other			MUFG Americas Holdings Corporation
Results of operations - Market View ⁽¹⁾
Net interest income (expense)	$	947		$	290		$	226		$	60	$	(45	)	$	1,478
Noninterest income (expense)	226			150			91			159		413			1,039
Total revenue	1,173			440			317			219		368			2,517
Noninterest expense	896			200			228			178		372			1,874
(Reversal of) provision for loan losses	(6		)	129			(1		)	—		1			123
Income (loss) before income taxes and including noncontrolling interests	283			111			90			41		(5		)	520
Income tax expense (benefit)	75			(3		)	35			16		24			147
Net income (loss) including noncontrolling interests	208			114			55			25		(29		)	373
Deduct: net (income) loss from noncontrolling interests	—			(1		)	—			—		24			23
Net income (loss) attributable to MUAH	$	208		$	113		$	55		$	25	$	(5	)	$	396

Total assets, end of period	$	63,469		$	26,906		$	1,837		$	28,113	$	27,647		$	147,972


(1)	The transferred IHC entities are not measured using a "market view" perspective.