EnhancesU.S.Bank’s existingWest Coastfranchise
U.S. Bankto leverage existing platforms and best-in-class technologies and products to serveMUFG Union Bankcustomers and efficiently integrate the franchise
AllMUFG Union Bankfront-line branchemployees will be retained
MINNEAPOLIS&NEW YORK--(BUSINESS WIRE)--Sep. 21, 2021 --U.S. Bancorp(NYSE: USB) today announced that it has entered into a definitive agreement to acquire MUFG Union Bank’s core regional banking franchise fromMitsubishi UFJ Financial Group(NYSE: MUFG) in a transaction that will bring together two premier organizations with a focus on being the leader in serving customers and communities inCalifornia,WashingtonandOregon.
Under the terms of the agreement,U.S, Bancorpwill purchaseMUFG Union Bankfor approximately$8 billion, including$5.5 billionin cash and approximately 44 million shares ofU.S. Bancorpcommon stock.1Upon close of the transaction, MUFG will hold a minority stake of approximately 2.9% inU.S. Bancorp. The transaction excludes the purchase of MUFG Union Bank’sGlobal Corporate & Investment Bank, certain middle and back office functions, and other assets.
With the acquisition,U.S. Bankwill gain more than 1 million loyal consumer customers and about 190,000 small business customers on theWest Coastin addition to approximately$58 billionin loans and$90 billionin deposits based on MUFG Union Bank’sJune 30, 2021balance sheet. The combination will improveU.S.Bank’s deposit position inCaliforniafrom 10thto 5thand will significantly increase its customer base inCalifornia.
This increased scale will make theU.S.Bank brand a stronger player in these markets, which will increase competition with California’s three largest banks. This will provide benefits for both customers and the communities served by the combined organization through improved technology, products and customer choice.
“The acquisition ofMUFG Union Bankunderscores our commitment to strengthen and grow our business on theWest Coast, make investments to serve customers and local communities and enhance competition in the financial services industry. WithMUFG Union Bank, we will increase access to state-of-the-art financial products while maintainingU.S.Bank’s strong track record of putting its customers and communities first. We are also committed to maintaining both organizations’ excellent records of serving low-income communities and supporting minority-led institutions,” saidAndy Cecere, chairman, president and chief executive officer ofU.S. Bancorp. “We have a great deal of respect for theMUFG Union Bankteam and share customer-centric and relationship-based strategies and cultures based on integrity. We look forward to welcomingMUFG Union Bankto theU.S. Bancorpfamily.”
“We are very pleased to have reached this agreement which will allow MUFG to focus and increase our resources on accelerating growth in ourAmericaswholesale businesses – specifically our corporate and investment banking, global markets, Japanese corporate banking and transaction banking businesses,” saidKevin Cronin,MUFG RegionalExecutive for theAmericasand CEO ofMUFG Americas Holdings CorporationandMUFG Union Bank, N.A.
EnhancesU.S.Bank’s ability to serve customers
The acquisition ofMUFG Union Bankwill provideU.S. Bankwith the ability to better serve customers of both organizations.
U.S. Bankcontinues to invest in innovative technology that meets customer needs and helps them interact with their financial institution how, when and where they want. Accelerated by the COVID-19 pandemic, 80 percent ofU.S. Banktransactions are now being done digitally, a trend the bank expects will continue. These industry-leading digital tools allow customers to bank anywhere and however they choose in a way that is safe, simple and convenient.
The U.S. Bankmobile app was recentlynamed No. 1 among allU.S.financial institutions, in addition to having a 4.8App Storerating.U.S. Bankalso was top-rated overall for all mobile banking (mobile app combined with mobile web).U.S. Bankwill bring these industry-leading technologies, which offer superior functionality and breadth of service, toMUFG Union Bankcustomers.
The combination will help meet the evolving needs of customers of bothMUFG Union BankandU.S. Bankby providing greater access to digital banking tools and by providing an expanded branch network. These enhancements will improve customer choice and, as a result, create a stronger banking competitor across theWest Coast.
Demonstrates further commitment to local communities
U.S. Bankis committed to staying in every market thatMUFG Union Bankcurrently serves inCalifornia,WashingtonandOregon. Although banking is increasingly being done online,U.S. Bankstrongly believes the future of banking includes a combination of the digital and physical world – both do-it-yourself and do-it-together. Customers appreciate the opportunity to visit their local branch or engage with professionals within their local communities to have a meaningful conversation about their financial goals, future and aspirations.
The combination also will enhanceU.S.Bank’s ability to commit to, invest in and serve low and moderate-income communities and minority-led institutions. Importantly,U.S. Bankalready proudly invests in its communities, and in 2020 invested$67 millionin corporate contributions and foundation giving, including$30 millionto support COVID-19 relief and recovery efforts. In addition,U.S. Bankmade$116 millionin annual, incremental investments to address racial and economic inequalities; spent more than$560 millionwith diverse suppliers; our employees donated$12 millionthrough the employee giving campaign; and the bank provided$6.2 billionin capital to revitalize communities, including Paycheck Protection Program (PPP) loans.
Earlier this year,U.S. Bank– which has been named one of the World’s Most Ethical Companies for seven consecutive years – launched theU.S.Bank Access Commitment, a long-term approach led by the bank’s diversity, equity and inclusion team. It brings together the strengths of theU.S. Bancorp Community Development Corporation, corporate social responsibility and our business areas to help build wealth while redefining how we serve diverse communities and provide more opportunities for diverse employees.
Provides opportunities for front-line branch and other employees
Following the closing of the transaction,U.S. Bankis committed to retaining all of MUFG Union Bank’s front-line branch employees. These bankers are frequently the first people customers and prospective customers speak to. They have demonstrated a tremendous ability to serve MUFG Union Bank’s customers, andU.S. Banklooks forward to having these branch employees join the bank’s team of talentedWest Coastemployees.
ForMUFG Union Bankemployees, joining a regional bank with increased scale and a largerU.S.geographic footprint will allow for additional opportunities for advancement and ways in which they can build a banking career.
Transaction Details
U.S. Bancorpexpects the transaction to be approximately 6% accretive to earnings per share in 2023 assuming a 75% synergy phase-in and 8% accretive to earnings when fully integrated. The transaction has an estimated internal rate of return of more than 20%. The purchase price is estimated at 1.3 times of MUFG Union Bank’s tangible book value, based on the expected capital to be delivered at close.U.S. Bancorpexpects to achieve approximately$900 millionin pre-tax cost synergies equal to 40% of estimated non-interest expenses through a combination of real estate consolidation, technology and systems conversion and other back office efficiencies.U.S. Bancorpexpects to incur merger charges of$1.2 billion.
MUFG Union Bankentered into a consent order with theOffice of the Comptroller of the CurrencyonSeptember 20, 2021.U.S. Bancorpevaluated and incorporated these regulatory concerns into all aspects of the deal process, including due diligence, integration planning and valuation. The company believes it can successfully remediate the issues applicable toMUFG Union Bankin connection with the transaction, and that the order will not restrictU.S.Bancorp’s ability to operate and grow its business as planned.
The transaction has been unanimously approved by the boards of directors ofU.S. Bancorpand MUFG. The transaction is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals. The transaction is expected to close in the first half of 2022.
Advisors
Goldman Sachs & Co. LLCis serving as exclusive financial advisor andSimpson Thacher & Bartlett LLPis serving as legal advisor toU.S. Bancorp.
Forward-Looking Statements
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements aboutU.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, any projections or expectations regardingU.S.Bancorp’s proposed acquisition ofMUFG Union Bankdescribed herein,U.S.Bancorp’s future revenues, expenses, earnings, capital expenditures, deposits or stock price, as well as the assumptions on which such expectations are based. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated.
Such risks and uncertainties include, among others, (1) the risk that the cost savings, any revenue synergies and other anticipated benefits of the proposed acquisition may not be realized or may take longer than anticipated to be realized, (2) disruption to the parties’ businesses as a result of the announcement and pendency of the proposed acquisition and diversion of management’s attention from ongoing business operations and opportunities, (3) the occurrence of any event that could give rise to the right of one or both of the parties to terminate the definitive purchase agreement, (4) the failure to obtain required governmental approvals or a delay in obtaining such approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affectU.S. Bancorpor the expected benefits of the proposed acquisition), (5) the failure of any of the closing conditions in the definitive purchase agreement to be satisfied on a timely basis or at all, (6) delays in closing the proposed acquisition, (7) the possibility that the proposed acquisition, including the integration ofMUFG Union Bank, may be more costly or difficult to complete than anticipated, (8) the dilution caused byU.S.Bancorp’s issuance of additional shares of its capital stock in connection with the proposed acquisition, (9) other factors that may affect future results ofU.S. Bancorp, including changes in asset quality and credit risk, the inability to sustain revenue and earnings growth, changes in interest rates and capital markets, inflation, customer borrowing, repayment, investment and deposit practices, the impact, extent and timing of technological changes, capital management activities, litigation, and legislative and regulatory actions and reforms, and (10) the impact of the ongoing global COVID-19 pandemic onU.S.Bancorp’s or MUFG Union Bank’s businesses or our ability to complete the proposed acquisition.
For discussion of these and other risks and uncertainties that may cause actual results to differ from expectations, refer toU.S.Bancorp’s Annual Report on Form 10-K for the year endedDecember 31, 2020, on file with theSecurities and Exchange Commission, including the sections entitled “Corporate Risk Profile” and “Risk Factors” contained in Exhibit 13, and all subsequent filings with theSecurities and Exchange Commissionunder Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. In addition, factors other than these risks also could adversely affectU.S.Bancorp’s results, and the reader should not consider these risks to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, andU.S. Bancorpundertakes no obligation to update them in light of new information or future events.
AboutU.S. Bank
U.S. Bancorp, with nearly 70,000 employees and$559 billionin assets as ofJune 30, 2021, is the parent company ofU.S. Bank National Association. TheMinneapolis-based company serves millions of customers locally, nationally and globally through a diversified mix of businesses: Consumer and Business Banking; Payment Services; Corporate & Commercial Banking; and Wealth Management and Investment Services. The company has been recognized for its approach to digital innovation, social responsibility, and customer service, including being named one of the 2021 World’s Most Ethical Companies and Fortune’s most admired superregional bank. Learn more atusbank.com/about.
AboutMUFG Union Bank, N.A.
As ofJune 30, 2021,MUFG Union Bank, N.A.operated 305 branches, consisting primarily of retail banking branches in theWest Coaststates, along with commercial branches inTexas,Illinois,New York, andGeorgia. We provide a wide spectrum of corporate, commercial, and retail banking and wealth management solutions to meet the needs of our clients. We also offer an extensive portfolio of value-added solutions for clients, including investment banking, personal and corporate trust, global custody, transaction banking, capital markets, and other services. With assets of$133.2 billion, as ofJune 30, 2021,MUFG Union Bankhas strong capital reserves, credit ratings, and capital ratios relative to peer banks.MUFG Union Bankis a proud member of theMitsubishi UFJ Financial Group(NYSE: MUFG), one of the world’s largest financial institutions with total assets of approximately ¥362.1 trillion (JPY) or$3.3 trillion(USD)¹, as ofJune 30, 2021. The corporate headquarters (principal executive office) forMUFG Americas Holdings Corporation, which is the financial holding company, andMUFG Union Bank, is inNew York City. The main banking office ofMUFG Union Bankis inSan Francisco, California.
1Tangible book value of$6.25 billiondelivered at close.
View source version onbusinesswire.com:https://www.businesswire.com/news/home/20210921005436/en/
U.S. Bancorp
Investors:Jennifer Thompson,U.S.Bancorp Investor Relations
612.303.0778,jen.thompson@usbank.com
Media:Jeff Shelman,U.S. Bancorp Public Affairs and Communications
612.303.9933,jeffrey.shelman@usbank.com
MUFG Union Bank, N.A.
Investors:Stanley Cecala, Investor Relations,MUFG Union Bank, N.A.
212.782.5629,Stanley.Cecala@unionbank.com
Media:Eva Radtke, Corporate Communications,MUFG Union Bank, N.A.
212.782.4085,ERadtke@us.mufg.jp
Source:U.S. Bancorp
