Business Segments

The Company has four reportable segments: Regional Bank, U.S. Wholesale & Investment Banking, Transaction Banking, and MUSA. The Company uses various management accounting methodologies to measure the performance of its 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 separate economic entities.

Methodologies that are applied to the measurement of segment profitability, which are enhanced from time to time, include a funds transfer pricing system, an activity-based costing methodology, other indirect costs and a methodology to allocate the provision for credit losses. In the second quarter of 2018, the Company began measuring the performance of its business segments by reporting revenues and expenses from products and services sold entirely within the business segment that manages the customer relationship. The Company previously applied a “market view” perspective in measuring the business segments, which reported revenues and expenses from products and services sold in both the business segment that provided the product and the business segment that managed the customer relationship. Prior period results have been revised to conform to the current period presentation.

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. A segment receives a credit from Corporate Treasury for its funding sources. 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. Certain non-bank subsidiaries, including MUSA, are reported based on their GAAP results.

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 343 full-service branches, digital channels, call centers, ATMs and alliances with other financial institutions. Products and services include checking and other 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. By working with the Company's other segments, 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 serves professional real estate investors and developers with products such as construction loans, commercial mortgages, bridge financing and unsecured financing. 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 referenced as LIHC investments. By working with the Company's other segments, Real Estate Industries offers its clients a range of 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 Services 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 New York, Florida, Illinois and Texas.

U.S. Wholesale & Investment Banking

U.S. Wholesale & Investment Banking delivers the full suite of MUAH 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

"Other" includes the MUFG Fund Services segment, Markets segment, Japanese Corporate Banking segment and Corporate Treasury. MUFG Fund Services provides comprehensive investment fund administrative solutions. Markets provides risk management solutions, including foreign exchange, interest rate and energy risk management solutions. The Japanese 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. 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 II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in this Form 10-K.

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 MUFG Bank, Ltd. U.S. branch banking operations; the unallocated allowance; goodwill, intangible assets, and the related amortization/accretion associated with the Company's privatization transaction when we became a privately held company in 2008; 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. Certain of the transferred IHC entities are not measured using management accounting methodologies.

As of and for the Twelve Months Ended December 31, 2018:



(Dollars in millions)	Regional Bank		U.S. Wholesale & Investment Banking		Transaction Banking			MUSA		Other			MUFG Americas Holdings Corporation
Results of operations
Net interest income (expense)	$	2,195	$	415	$	264		$	200	$	233		$	3,307
Noninterest income	451		373		59			300		994			2,177
Total revenue	2,646		788		323			500		1,227			5,484
Noninterest expense	2,058		418		255			443		1,103			4,277
(Reversal of) provision for credit losses	65		42		(3		)	—		2			106
Income (loss) before income taxes and including noncontrolling interests	523		328		71			57		122			1,101
Income tax expense (benefit) ⁽¹⁾	105		122		19			17		(211		)	52
Net income (loss) including noncontrolling interest	418		206		52			40		333			1,049
Deduct: net loss from noncontrolling interests	—		—		—			—		24			24
Net income (loss) attributable to MUAH	$	418	$	206	$	52		$	40	$	357		$	1,073

Total assets, end of period	$	73,554	$	20,933	$	941		$	33,844	$	38,828		$	168,100


(1)	Income tax expense (benefit) includes certain management accounting classification adjustments.

As of and for the Twelve Months Ended December 31, 2017:



(Dollars in millions)	Regional Bank		U.S. Wholesale & Investment Banking			Transaction Banking		MUSA		Other			MUFG Americas Holdings Corporation
Results of operations
Net interest income (expense)	$	2,051	$	417		$	247	$	234	$	255		$	3,204
Noninterest income	442		370			64		351		783			2,010
Total revenue	2,493		787			311		585		1,038			5,214
Noninterest expense	1,961		403			229		445		946			3,984
(Reversal of) provision for credit losses	22		(104		)	1		—		(22		)	(103		)
Income (loss) before income taxes and including noncontrolling interests	510		488			81		140		114			1,333
Income tax expense (benefit) ⁽¹⁾	178		(197		)	33		59		226			299
Net income (loss) including noncontrolling interest	332		685			48		81		(112		)	1,034
Deduct: net loss from noncontrolling interests	—		—			—		—		43			43
Net income (loss) attributable to MUAH	$	332	$	685		$	48	$	81	$	(69	)	$	1,077

Total assets, end of period	$	67,804	$	20,461		$	1,063	$	32,062	$	33,160		$	154,550


(1)	Income tax expense (benefit) includes certain management accounting classification adjustments.

As of and for the Twelve Months Ended December 31, 2016:



(Dollars in millions)	Regional Bank		U.S. Wholesale & Investment Banking		Transaction Banking		MUSA		Other		MUFG Americas Holdings Corporation
Results of operations
Net interest income (expense)	$	1,952	$	541	$	202	$	164	$	194	$	3,053
Noninterest income	449		368		72		302		1,034		2,225
Total revenue	2,401		909		274		466		1,228		5,278
Noninterest expense	1,843		404		190		362		983		3,782
(Reversal of) provision for credit losses	30		98		—		—		27		155
Income (loss) before income taxes and including noncontrolling interests	528		407		84		104		218		1,341
Income tax expense (benefit) ⁽¹⁾	152		91		39		41		96		419
Net income (loss) including noncontrolling interest	376		316		45		63		122		922
Deduct: net loss from noncontrolling interests	—		—		—		—		68		68
Net income (loss) attributable to MUAH	$	376	$	316	$	45	$	63	$	190	$	990

Total assets, end of period	$	63,169	$	23,805	$	1,205	$	29,252	$	30,713	$	148,144


(1)	Income tax expense (benefit) includes certain management accounting classification adjustments.