Magazine article American Banker

MUFG Union Bank's Parent Offset Bad Energy Loans in 2Q

Magazine article American Banker

MUFG Union Bank's Parent Offset Bad Energy Loans in 2Q

Article excerpt

Byline: Brian Patrick Eha

Despite charging off millions of dollars of energy loans, the parent company of San Francisco-based MUFG Union Bank rode higher affiliate fees, securities gains and expense cutbacks to quarterly profit growth.

The $117.2 billion-asset MUFG Americas Holdings Corp., which is based in New York, on Monday reported net income of $305 million in the second quarter, up 68.5% from the same period last year. Revenue rose 7.4% to $1.2 billion.

Fees from affiliates totaled $239 million, up 24.5% year over year. That gain was partially offset by the costs of certain support services.

Still, MUFG Americas managed to cut noninterest expenses by $33 million year over year, partly as a result of a decrease in employee salaries and benefits. Total noninterest expenses were $810 million for the second quarter of 2016.

The dark spot was energy loans. MUFG Americas in the second quarter charged off $98 million of loans, most of them commitments in the oil and gas sector. That was a 390% increase over net chargeoffs during the second quarter of 2015.

Of the company's total energy loans, 78% were connected to petroleum exploration and production companies as of June 30. …

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