Enhances U.S. Bank’s existing West Coast
franchise
U.S. Bank to leverage existing platforms and
best-in-class technologies and products to serve MUFG Union Bank
customers and efficiently integrate the franchise
All MUFG Union Bank front-line branch employees
will be retained
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 from Mitsubishi 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 in California, Washington and Oregon.
Under the terms of the agreement, U.S, Bancorp will purchase
MUFG Union Bank for approximately $8 billion, including $5.5
billion in cash and approximately 44 million shares of U.S. Bancorp
common stock.1 Upon close of the transaction, MUFG will hold a
minority stake of approximately 2.9% in U.S. Bancorp. The
transaction excludes the purchase of MUFG Union Bank’s Global
Corporate & Investment Bank, certain middle and back office
functions, and other assets.
With the acquisition, U.S. Bank will gain more than 1 million
loyal consumer customers and about 190,000 small business customers
on the West Coast in addition to approximately $58 billion in loans
and $90 billion in deposits based on MUFG Union Bank’s June 30,
2021 balance sheet. The combination will improve U.S. Bank’s
deposit position in California from 10th to 5th and will
significantly increase its customer base in California.
This increased scale will make the U.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 of MUFG Union Bank underscores our commitment
to strengthen and grow our business on the West Coast, make
investments to serve customers and local communities and enhance
competition in the financial services industry. With MUFG Union
Bank, we will increase access to state-of-the-art financial
products while maintaining U.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,”
said Andy Cecere, chairman, president and chief executive officer
of U.S. Bancorp. “We have a great deal of respect for the MUFG
Union Bank team and share customer-centric and relationship-based
strategies and cultures based on integrity. We look forward to
welcoming MUFG Union Bank to the U.S. Bancorp family.”
“We are very pleased to have reached this agreement which will
allow MUFG to focus and increase our resources on accelerating
growth in our Americas wholesale businesses – specifically our
corporate and investment banking, global markets, Japanese
corporate banking and transaction banking businesses,” said Kevin
Cronin, MUFG Regional Executive for the Americas and CEO of MUFG
Americas Holdings Corporation and MUFG Union Bank, N.A.
Enhances U.S. Bank’s ability to serve customers
The acquisition of MUFG Union Bank will provide U.S. Bank with
the ability to better serve customers of both organizations.
U.S. Bank continues 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 of U.S. Bank transactions 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. Bank mobile app was recently named No. 1 among all U.S.
financial institutions, in addition to having a 4.8 App Store
rating. U.S. Bank also was top-rated overall for all mobile banking
(mobile app combined with mobile web). U.S. Bank will bring these
industry-leading technologies, which offer superior functionality
and breadth of service, to MUFG Union Bank customers.
The combination will help meet the evolving needs of customers
of both MUFG Union Bank and U.S. Bank by 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 the West
Coast.
Demonstrates further commitment to local communities
U.S. Bank is committed to staying in every market that MUFG
Union Bank currently serves in California, Washington and Oregon.
Although banking is increasingly being done online, U.S. Bank
strongly 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 enhance U.S. Bank’s ability to commit
to, invest in and serve low and moderate-income communities and
minority-led institutions. Importantly, U.S. Bank already proudly
invests in its communities, and in 2020 invested $67 million in
corporate contributions and foundation giving, including $30
million to support COVID-19 relief and recovery efforts. In
addition, U.S. Bank made $116 million in annual, incremental
investments to address racial and economic inequalities; spent more
than $560 million with diverse suppliers; our employees donated $12
million through the employee giving campaign; and the bank provided
$6.2 billion in 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 the U.S. Bank Access Commitment, a long-term approach led
by the bank’s diversity, equity and inclusion team. It brings
together the strengths of the U.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. Bank is 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, and U.S. Bank looks
forward to having these branch employees join the bank’s team of
talented West Coast employees.
For MUFG Union Bank employees, joining a regional bank with
increased scale and a larger U.S. geographic footprint will allow
for additional opportunities for advancement and ways in which they
can build a banking career.
Transaction Details
U.S. Bancorp expects 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. Bancorp expects to achieve approximately
$900 million in 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. Bancorp expects to incur merger charges
of $1.2 billion.
MUFG Union Bank entered into a consent order with the Office of
the Comptroller of the Currency on September 20, 2021. U.S. Bancorp
evaluated 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 to MUFG Union Bank in connection
with the transaction, and that the order will not restrict U.S.
Bancorp’s ability to operate and grow its business as planned.
The transaction has been unanimously approved by the boards of
directors of U.S. Bancorp and 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. LLC is serving as exclusive financial
advisor and Simpson Thacher & Bartlett LLP is serving as legal
advisor to U.S. Bancorp.
Conference Call and Webcast
U.S. Bancorp will hold a conference call at 7:30 a.m. CT today
to discuss the transaction. To access the webcast and presentation,
visit U.S. Bancorp’s website at usbank.com and click on “About Us”,
“Investor Relations” and “Webcasts & Presentations.”
Those participating via telephone within the United States and
Canada, please dial 866.316.1409. Participants calling from outside
the United States and Canada, please dial 706.634.9086. The
conference ID number for all participants is 2398339. For those
unable to participate during the live call, a recording will be
available at approximately 10:30 a.m. CT on Tuesday, September 21
and will be accessible until Tuesday, September 28 at 10:59 p.m.
CT. To access the recorded message within the United States and
Canada, please dial 855.859.2056. If calling from outside the
United States and Canada, please dial 404.537.3406 to access the
recording. The conference ID is 2398339. The replay will also
remain available on the U.S. Bank investor relations website.
Forward-Looking
Statements
“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995: This press release contains forward-looking
statements about U.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
regarding U.S. Bancorp’s proposed acquisition of MUFG Union Bank
described 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
affect U.S. Bancorp or 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 of MUFG Union Bank, may be more costly or difficult to
complete than anticipated, (8) the dilution caused by U.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 of U.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 on U.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 to U.S.
Bancorp’s Annual Report on Form 10-K for the year ended December
31, 2020, on file with the Securities and Exchange Commission,
including the sections entitled “Corporate Risk Profile” and “Risk
Factors” contained in Exhibit 13, and all subsequent filings with
the Securities and Exchange Commission under 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 affect U.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, and
U.S. Bancorp undertakes no obligation to update them in light of
new information or future events.
About U.S. Bank
U.S. Bancorp, with nearly 70,000 employees and $559 billion in
assets as of June 30, 2021, is the parent company of U.S. Bank
National Association. The Minneapolis-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
at usbank.com/about.
About MUFG Union Bank, N.A.
As of June 30, 2021, MUFG Union Bank, N.A. operated 305
branches, consisting primarily of retail banking branches in the
West Coast states, along with commercial branches in Texas,
Illinois, New York, and Georgia. 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 of June 30, 2021, MUFG Union Bank has
strong capital reserves, credit ratings, and capital ratios
relative to peer banks. MUFG Union Bank is a proud member of the
Mitsubishi 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 of June 30, 2021.
The corporate headquarters (principal executive office) for MUFG
Americas Holdings Corporation, which is the financial holding
company, and MUFG Union Bank, is in New York City. The main banking
office of MUFG Union Bank is in San Francisco, California.
1 Tangible book value of $6.25 billion delivered at close.
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version on businesswire.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
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