EX-99 4 pressrelease.txt TEXT OF FIRST QUARTER 2002 PRESS RELEASE EXHIBIT 99.1 [UNIONBANCAL CORPORATION LOGO APPEARS HERE] FOR IMMEDIATE RELEASE (WEDNESDAY, APRIL 17, 2002) ------------------------------------------------- CONTACT: John A. Rice, Jr. Stephen L. Johnson Michelle R. Crandall Investor Relations Public Relations Investor Relations (415) 765-2998 (415) 765-3252 (415) 765-2780 UNIONBANCAL CORPORATION REPORTS 18 PERCENT INCREASE IN FIRST QUARTER 2002 OPERATING EARNINGS PER SHARE SAN FRANCISCO - UnionBanCal Corporation (NYSE: UB) today reported first quarter 2002 net income of $114.8 million, or $0.73 per diluted common share. Net income per share increased 9.0 percent over the $0.67 per share earned a year earlier. Operating earnings for first quarter 2002 were $114.8 million, or $0.73 per diluted common share, a 17.7 percent increase over operating earnings of $0.62 per diluted common share, in first quarter 2001. "First quarter operating earnings per share grew 18 percent over last year, due primarily to a $45 million decline in the provision for credit losses, reflecting the ongoing success of our credit management initiatives, including a significant restructuring of the loan portfolio," said Norimichi Kanari, President and Chief Executive Officer. "Other highlights of the quarter included a 15 percent increase in average noninterest bearing deposits and a 16 percent increase in deposit fees. We are pleased with this solid start to the new year." TOTAL REVENUE -------------- For first quarter 2002, total revenue (taxable-equivalent net interest income plus noninterest income) on an operating basis was $552.4 million, an increase of $4.4 million, or 0.8 percent, compared with first quarter 2001. Net interest income decreased 1.8 percent, while noninterest income increased 7.1 percent. Compared to fourth quarter 2001, total revenue on an operating basis was 1.9 percent lower, with net interest income increasing 0.2 percent and noninterest income decreasing 6.3 percent, primarily due to higher auto lease residual writedowns and higher private equity portfolio net losses in first quarter 2002. Page 1 of 5 NET INTEREST INCOME (TAXABLE-EQUIVALENT) ---------------------------------------- Net interest income was $381.0 million in first quarter 2002, a $6.9 million, or 1.8 percent, decrease from the same quarter a year ago. Average earning assets grew $908.3 million, or 2.9 percent, due to a $1.4 billion increase in average securities and an $868.5 million increase in average money market assets, partially offset by a $1.3 billion, or 4.9 percent, decline in average loans. Reflecting loan portfolio restructuring initiatives commenced in 2000, average commercial loans decreased $2.9 billion, or 20.3 percent, primarily due to a major reduction in non-core relationship syndicated loans, while average residential mortgages increased $1.7 billion, or 49.0 percent. The net interest margin was 4.80 percent, a decrease of 24 basis points compared to first quarter 2001, reflecting the lower interest rate environment in first quarter 2002. The average yield on earning assets of $32.0 billion declined 209 basis points, while the average rate on interest bearing liabilities of $19.2 billion fell 272 basis points. Margin erosion was mitigated by the larger rate decline on interest bearing liabilities, as well as by significant growth in average noninterest bearing deposits, which increased $1.5 billion, or 15.0 percent. Deposit growth was particularly strong in the title and escrow businesses, reflecting a high level of refinancing activity. The Company continues to maintain a very attractive deposit mix, with $11.3 billion in average noninterest bearing deposits comprising 41.1 percent of average deposits for first quarter 2002. On a sequential quarter basis, net interest income increased $0.6 million, or 0.2 percent. An increase in earning assets, which drove an increase of approximately $6.0 million in net interest income, was largely offset by an unfavorable variance of approximately $4.7 million, due to two fewer days in the first quarter. Average earning assets grew $498.6 million, or 1.6 percent, due to higher securities and money market balances, while average loans declined $239.1 million, or 0.9 percent. The average yield on earning assets declined 33 basis points, while the average rate on interest bearing liabilities was 53 basis points lower. Average noninterest bearing deposits increased $19.6 million, or 0.2 percent, despite the normal seasonal pattern of lower volumes in the first quarter. Net interest margin declined 1 basis point to 4.80 percent. NONINTEREST INCOME ------------------ In first quarter 2002, noninterest income on an operating basis was $171.5 million, up $11.3 million, or 7.1 percent, from the same quarter a year ago. Service charges on deposit accounts increased $9.1 million, or 16.0 percent, primarily due to higher account analysis fees, reflecting the lower rate environment and higher deposit volumes. Trust and investment management fees were down $3.0 million, or 7.4 percent, primarily due to the decline in equity market values and a mix shift by clients toward lower profit money market portfolios. Merchant transaction processing fees increased $1.6 million, or 8.6 percent, primarily due to higher transaction volumes. Insurance commissions increased $7.2 million, all attributable to the Armstrong/Robitaille insurance agency acquisition, which was completed in fourth quarter 2001. Auto lease residual writedowns in first quarter 2002 were $6.0 million, compared to Page 2 of 5 $17.3 million in first quarter 2001. Private equity portfolio net losses were $6.9 million in first quarter 2002, compared to net gains of $0.3 million in first quarter 2001. Noninterest income on an operating basis decreased $11.4 million, or 6.3 percent, on a sequential quarter basis. Service charges on deposits increased $2.6 million, or 4.2 percent, due primarily to higher transaction fees and higher transaction volumes. Trust and investment management fees declined $0.5 million, or 1.3 percent, while merchant transaction processing fees were up $1.1 million, or 5.8 percent. Insurance commissions increased $6.2 million, all attributable to the first full quarter effect of the Armstrong/Robitaille acquisition. Auto lease residual writedowns in first quarter 2002 were $6.0 million, compared to zero in fourth quarter 2001. Private equity portfolio net losses in first quarter 2002 were $6.9 million, compared with $3.2 million in net losses in fourth quarter 2001. NONINTEREST EXPENSE ------------------- Noninterest expense for first quarter 2002 was $323.4 million, an increase of $22.1 million, or 7.3 percent, over first quarter 2001. Salaries and employee benefits expense increased $13.3 million, or 8.1 percent, due primarily to merit increases, performance-based incentives, payroll taxes and health benefits expense. Advertising and public relations expense increased $3.4 million, or 51.5 percent, due primarily to a new year-round approach to advertising for certain market segments, which reduces the seasonality of these expenses. Intangible asset amortization expense was $0.9 million, compared with $3.5 million a year earlier, reflecting the adoption of SFAS No. 142, Goodwill and Other Intangible Assets. On a sequential quarter basis, noninterest expense increased $15.2 million, or 4.9 percent. Salaries and employee benefits expense increased $18.2 million, or 11.4 percent, with salaries up $2.2 million, or 1.6 percent, and benefits up $16.0 million, or 78.2 percent. The increase in benefits expense was due primarily to an $8.2 million increase in payroll taxes and 401(k) expense, reflecting normal seasonality, and $2.9 million in favorable benefit program valuation adjustments recorded in fourth quarter 2001. Intangible asset amortization expense was $2.7 million lower due to the adoption of SFAS No. 142. The operating efficiency ratio for first quarter 2002 was 58.5 percent, compared with 55.0 percent in first quarter 2001, and 55.0 percent in fourth quarter 2001. The increase in the efficiency ratio, year over year, is primarily attributable to the lower interest rate environment in 2002 and its effect on net interest income. CREDIT QUALITY -------------- Nonperforming assets at March 31, 2002, were $453 million, compared with $492 million at December 31, 2001, and $439 million at March 31, 2001. Nonperforming assets were 1.25 percent of total assets at March 31, 2002, compared with 1.37 percent at December 31, 2001, and 1.23 percent at March 31, 2001. Page 3 of 5 For first quarter 2002, net loans charged off were $61 million and the provision for credit losses was $55 million. For first quarter 2001, net loans charged off were $72 million and the provision for credit losses was $100 million. For fourth quarter 2001, net loans charged off were $65 million and the provision for credit losses was $70 million. At March 31, 2002, the allowance for credit losses as a percent of total loans and as a percent of nonaccrual loans was 2.51 percent and 139.1 percent, respectively. These ratios compare with 2.54 percent and 129.0 percent, respectively, at December 31, 2001, and 2.47 percent and 149.1 percent, respectively, at March 31, 2001. Chief Credit Officer Philip Flynn commented, "In first quarter 2002, we saw signs of improving credit quality. The declines in non-performing assets and provision expense from fourth quarter 2001 are reflective of these improvements." BALANCE SHEET AND CAPITAL RATIOS -------------------------------- At March 31, 2002, the Company had total assets of $36.2 billion and total deposits of $28.8 billion. Total shareholders' equity was $3.6 billion and the tangible equity ratio was 9.64 percent. Book value per share was $22.81, up 8.5 percent from a year earlier. The Company's Tier I and total risk based capital ratios at March 31, 2002, were 11.62 percent and 13.50 percent, respectively. SHARE REPURCHASE PROGRAM ------------------------ During first quarter 2002, the Company repurchased 907,200 shares of common stock at an average price of $38.33 per share. Common shares outstanding at March 31, 2002, were 156.3 million, a decrease of 2.2 million shares, or 1.4 percent, from one year earlier. At March 31, 2002, the Company had authority from its Board of Directors to repurchase an additional $10.3 million of common stock. FORWARD-LOOKING STATEMENTS -------------------------- The following appears in accordance with the Private Securities Litigation Reform Act: This press release includes forward-looking statements that involve risks and uncertainties. Forward-looking statements can be identified by looking at the fact that they do not relate strictly to historical or current facts. Often, they include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include fluctuations in interest rates, government policies and regulations (including monetary and fiscal policies), legislation, economic conditions, credit quality of borrowers, operational factors, competition in the geographic and business areas in which the Company conducts its operations, and global political and general economic Page 4 of 5 conditions related to the terrorist attacks on September 11, 2001, and their aftermath. A complete description of the Company, including related risk factors, is discussed in the Company's public filings with the Securities and Exchange Commission, which are available by calling (415) 765-2969 or online at http://www.sec.gov. All forward-looking statements included in this press release are based on information available at the time of the release, and the Company assumes no obligation to update any forward-looking statement. CONFERENCE CALL AND WEBCAST --------------------------- The Company will conduct a conference call to review first quarter 2002 results at 8:30 am PDT (11:30 am EDT) on April 18, 2002. Interested parties calling from locations within the United States should call 1-888-246-0006 (1-612-332-1214 from outside the United States) 10 minutes prior to the beginning of the conference. A live webcast of the call will be available at http://www.uboc.com. Simply follow the links to the Investor Relations section of the website. The webcast replay will be available on the website from approximately 10:30 am PDT (1:30 pm EDT) on April 18, through 10:30 am PDT (1:30 pm EDT) on April 25. A recorded playback of the conference call will be available by calling 800-475-6701, (320-365-3844 from outside the United States) from approximately 12:00 pm PDT (3:00 pm EDT), April 18, until 11:59 pm PDT, April 25 (3:59 am EDT, April 26). The reservation number for this playback is 633801. Based in San Francisco, UnionBanCal Corporation is a bank holding company with assets of $36.2 billion at March 31, 2002. Its primary subsidiary is Union Bank of California, N.A., the third largest commercial bank in California. Union Bank of California, N.A., has 244 banking offices in California, 6 banking offices in Oregon and Washington and 15 international facilities. #### Page 5 of 5
UNIONBANCAL CORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (UNAUDITED) PERCENT CHANGE TO ON A REPORTED EARNINGS BASIS: AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2002 FROM ---------------------------- ------------------------------------------- -------------------------- MARCH 31, DECEMBER 31, MARCH 31, MARCH 31, DECEMBER 31, (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 2001 2001 2002 2001 2001 ------------------------------------------------ -------------- ------------- -------------- ------------ ------------- RESULTS OF OPERATIONS: Net interest income (1) $ 387,883 $ 380,386 $ 380,973 (1.78%) 0.15% Noninterest income 180,807 193,801 171,451 (5.17%) (11.53%) -------------- ------------- -------------- Total revenue 568,690 574,187 552,424 (2.86%) (3.79%) Noninterest expense 307,485 308,195 323,363 5.16% 4.92% Provision for credit losses 100,000 70,000 55,000 (45.00%) (21.43%) -------------- ------------- -------------- Income before income taxes (1) 161,205 195,992 174,061 7.97% (11.19%) Taxable-equivalent adjustment 622 419 533 (14.31%) 27.21% Income tax expense 53,296 63,711 58,751 10.24% (7.79%) -------------- ------------- -------------- Net income $ 107,287 $ 131,862 $ 114,777 6.98% (12.96%) ============== ============= ============== PER COMMON SHARE: Net income-basic $ 0.68 $ 0.84 $ 0.73 7.35% (13.10%) Net income-diluted 0.67 0.84 0.73 8.96% (13.10%) Dividends 0.25 0.25 0.25 0.00% 0.00% Book value (end of period) 21.02 22.66 22.81 8.52% 0.66% Common shares outstanding (end of period) 158,567,213 156,483,511 156,336,338 (1.41%) (0.09%) Weighted average common shares outstanding - basic 158,893,347 156,746,606 156,228,149 (1.68%) (0.33%) Weighted average common shares outstanding - diluted 159,269,148 157,890,507 157,810,613 (0.92%) (0.05%) BALANCE SHEET (END OF PERIOD): Total assets $ 35,823,362 $ 36,039,089 $ 36,221,931 1.11% 0.51% Total loans 25,976,936 24,994,030 25,098,097 (3.38%) 0.42% Nonaccrual loans 430,845 491,885 452,428 5.01% (8.02%) Nonperforming assets 438,980 492,482 452,761 3.14% (8.07%) Total deposits 27,208,128 28,556,199 28,758,849 5.70% 0.71% Trust preferred securities 366,526 363,928 361,903 (1.26%) (0.56%) Common equity 3,332,998 3,546,242 3,566,502 7.01% 0.57% BALANCE SHEET (PERIOD AVERAGE): Total assets $ 34,427,990 $ 34,838,155 $ 35,083,527 1.90% 0.70% Total loans 26,417,626 25,366,890 25,127,757 (4.88%) (0.94%) Earning assets 31,068,242 31,477,853 31,976,493 2.92% 1.58% Total deposits 25,767,673 27,353,182 27,568,947 6.99% 0.79% Common equity 3,337,940 3,625,459 3,624,767 8.59% (0.02%) FINANCIAL RATIOS: Return on average assets (2) 1.26% 1.50% 1.33% Return on average common equity (2) 13.04% 14.43% 12.84% Efficiency ratio (3) 54.07% 53.68% 58.51% Net interest margin (1) 5.04% 4.81% 4.80% Dividend payout ratio 36.76% 29.76% 34.25% Tangible equity ratio 9.16% 9.62% 9.64% Tier 1 risk-based capital ratio (4) 10.49% 11.47% 11.62% Total risk-based capital ratio (4) 12.32% 13.35% 13.50% Leverage ratio (4) 10.22% 10.53% 10.66% Allowance for credit losses to total loans 2.47% 2.54% 2.51% Allowance for credit losses to nonaccrual loans 149.09% 129.00% 139.11% Net loans charged off to average total loans (2) 1.10% 1.02% 0.97% Nonperforming assets to total loans, foreclosed assets, and distressed loans held for sale 1.69% 1.97% 1.80% Nonperforming assets to total assets 1.23% 1.37% 1.25% ON AN OPERATING EARNINGS BASIS: ------------------------------ SELECTED FINANCIAL DATA ON AN OPERATING EARNINGS BASIS (SEE BOTTOM OF EXHIBIT 4 FOR NON-RECURRING ITEMS): Operating earnings per common share - basic $ 0.62 $ 0.80 $ 0.73 Operating earnings per common share - diluted $ 0.62 $ 0.79 $ 0.73 Operating return on average assets (2) 1.16% 1.42% 1.33% Operating return on average common equity (2) 11.91% 13.67% 12.84% Operating efficiency ratio (3) 54.98% 54.96% 58.51% Operating dividend payout ratio 40.32% 31.25% 34.25% -------------------------------------------------------------------------------------------- (1) Taxable-equivalent basis. (2) Annualized. (3) Noninterest expense excludes foreclosed asset expense (income). (4) Estimated as of March 31, 2002.
EXHIBIT 1
UNIONBANCAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (TAXABLE-EQUIVALENT BASIS) ON A REPORTED EARNINGS BASIS ---------------------------- FOR THE THREE MONTHS ENDED ------------------------------------------- MARCH 31, DECEMBER 31, MARCH 31, (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) 2001 2001 2002 --------------------------------------------------------------- ------------- ------------- -------------- INTEREST INCOME Loans $ 536,548 $ 404,994 $ 375,984 Securities 67,839 79,026 81,654 Interest bearing deposits in banks 966 601 496 Federal funds sold and securities purchased under resale agreements 1,029 2,259 4,059 Trading account assets 2,932 1,036 720 ------------- ------------- -------------- Total interest income 609,314 487,916 462,913 ------------- ------------- -------------- INTEREST EXPENSE Domestic deposits 135,117 79,092 59,935 Foreign deposits 25,543 8,886 6,264 Federal funds purchased and securities sold under repurchase agreements 25,800 3,466 1,949 Commercial paper 20,413 5,557 3,974 Medium and long-term debt 3,196 2,572 2,412 UnionBanCal Corporation - obligated mandatorily redeemable preferred securities of subsidiary grantor trust 6,022 4,407 3,963 Other borrowed funds 5,340 3,550 3,443 ------------- ------------- -------------- Total interest expense 221,431 107,530 81,940 ------------- ------------- -------------- NET INTEREST INCOME 387,883 380,386 380,973 Provision for credit losses 100,000 70,000 55,000 ------------- ------------- -------------- Net interest income after provision for credit losses 287,883 310,386 325,973 ------------- ------------- -------------- NONINTEREST INCOME Service charges on deposit accounts 57,020 63,502 66,143 Trust and investment management fees 39,681 37,212 36,725 Merchant transaction processing fees 19,066 19,570 20,701 International commissions and fees 17,110 18,049 18,223 Brokerage commissions and fees 8,915 9,553 9,632 Merchant banking fees 9,248 6,861 6,945 Securities gains (losses), net 2,266 4,336 (2,566) Other 27,501 34,718 15,648 ------------- ------------- -------------- Total noninterest income 180,807 193,801 171,451 ------------- ------------- -------------- NONINTEREST EXPENSE Salaries and employee benefits 164,487 159,597 177,794 Net occupancy 22,759 24,777 23,381 Equipment 15,798 16,105 16,340 Communications 11,702 13,857 13,941 Merchant transaction processing 12,914 13,102 12,916 Professional services 7,824 9,325 9,503 Data processing 8,949 8,797 8,991 Foreclosed asset expense (income) 13 (14) 125 Other 63,039 62,649 60,372 ------------- ------------- -------------- Total noninterest expense 307,485 308,195 323,363 ------------- ------------- -------------- Income before income taxes 161,205 195,992 174,061 Taxable-equivalent adjustment 622 419 533 Income tax expense 53,296 63,711 58,751 ------------- ------------- -------------- NET INCOME $ 107,287 $ 131,862 $ 114,777 ============= ============= ============== NET INCOME PER COMMON SHARE - BASIC $ 0.68 $ 0.84 $ 0.73 ============= ============= ============== NET INCOME PER COMMON SHARE - DILUTED $ 0.67 $ 0.84 $ 0.73 ============= ============= ============== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC 158,893 156,747 156,228 ============= ============= ============== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED 159,269 157,891 157,811 ============= ============= ==============
EXHIBIT 2
UNIONBANCAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (TAXABLE-EQUIVALENT BASIS) ON AN OPERATING EARNINGS BASIS (1) ------------------------------ FOR THE THREE MONTHS ENDED ------------------------------------------- MARCH 31, DECEMBER 31, MARCH 31, (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) 2001 2001 2002 --------------------------------------------------------------- ------------- ------------- ------------- INTEREST INCOME Loans $ 536,548 $ 404,994 $ 375,984 Securities 67,839 79,026 81,654 Interest bearing deposits in banks 966 601 496 Federal funds sold and securities purchased under resale agreements 1,029 2,259 4,059 Trading account assets 2,932 1,036 720 ------------- ------------- ------------- Total interest income 609,314 487,916 462,913 ------------- ------------- ------------- INTEREST EXPENSE Domestic deposits 135,117 79,092 59,935 Foreign deposits 25,543 8,886 6,264 Federal funds purchased and securities sold under repurchase agreements 25,800 3,466 1,949 Commercial paper 20,413 5,557 3,974 Medium and long-term debt 3,196 2,572 2,412 UnionBanCal Corporation - obligated mandatorily redeemable preferred securities of subsidiary grantor trust 6,022 4,407 3,963 Other borrowed funds 5,340 3,550 3,443 ------------- ------------- ------------- Total interest expense 221,431 107,530 81,940 ------------- ------------- ------------- NET INTEREST INCOME 387,883 380,386 380,973 Provision for credit losses 100,000 70,000 55,000 ------------- ------------- ------------- Net interest income after provision for credit losses 287,883 310,386 325,973 ------------- ------------- ------------- NONINTEREST INCOME Service charges on deposit accounts 57,020 63,502 66,143 Trust and investment management fees 39,681 37,212 36,725 Merchant transaction processing fees 19,066 19,570 20,701 International commissions and fees 17,110 18,049 18,223 Brokerage commissions and fees 8,915 9,553 9,632 Merchant banking fees 9,248 6,861 6,945 Securities gains (losses), net 2,266 4,336 (2,566) Other 6,801 23,804 15,648 ------------- ------------- ------------- Total noninterest income 160,107 182,887 171,451 ------------- ------------- ------------- NONINTEREST EXPENSE Salaries and employee benefits 164,487 159,597 177,794 Net occupancy 22,759 24,777 23,381 Equipment 15,798 16,105 16,340 Communications 11,702 13,857 13,941 Merchant transaction processing 12,914 13,102 12,916 Professional services 7,824 9,325 9,503 Data processing 8,949 8,797 8,991 Foreclosed asset expense (income) 13 (14) 125 Other 56,857 62,649 60,372 ------------- ------------- ------------- Total noninterest expense 301,303 308,195 323,363 ------------- ------------- ------------- Income before income taxes 146,687 185,078 174,061 Taxable-equivalent adjustment 622 419 533 Income tax expense 48,014 59,740 58,751 ------------- ------------- ------------- NET OPERATING EARNINGS $ 98,051 $ 124,919 $ 114,777 ============= ============= ============= NET OPERATING EARNINGS PER COMMON SHARE - BASIC $ 0.62 $ 0.80 $ 0.73 ============= ============= ============= NET OPERATING EARNINGS PER COMMON SHARE - DILUTED $ 0.62 $ 0.79 $ 0.73 ============= ============= ============= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC 158,893 156,747 156,228 ============= ============= ============= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED 159,269 157,891 157,811 ============= ============= ============= (1) See exhibit 4 for reconciliation of 'reported earnings' to 'operating earnings'.
EXHIBIT 3
UNIONBANCAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) RECONCILIATIONS (TAXABLE-EQUIVALENT BASIS) REPORTED EARNINGS RECONCILIATION TO OPERATING EARNINGS ------------------------------------------------------ FOR THE THREE MONTHS ENDED ----------------------------------------------------------------------------------------- MARCH 31, 2001 DECEMBER 31, 2001 MARCH 31, 2002 ----------------------------- ----------------------------- ----------------------------- Non- Non- Non- (AMOUNTS IN THOUSANDS, recurring recurring recurring EXCEPT PER SHARE DATA) Reported Items Operating Reported Items Operating Reported Items Operating ----------------------------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- NET INTEREST INCOME $ 387,883 $ - $ 387,883 $ 380,386 $ - $ 380,386 $ 380,973 $ - $ 380,973 Provision for credit losses 100,000 - 100,000 70,000 - 70,000 55,000 - 55,000 --------- --------- --------- --------- --------- --------- --------- --------- --------- Net interest income after provision for credit losses 287,883 - 287,883 310,386 - 310,386 325,973 - 325,973 --------- --------- --------- --------- --------- --------- --------- --------- --------- NONINTEREST INCOME Other (1) (2) 27,501 (20,700) 6,801 34,718 (10,914) 23,804 - - - All other (no adjustments) 153,306 - 153,306 159,083 - 159,083 171,451 - 171,451 --------- --------- --------- --------- --------- --------- --------- --------- --------- Total noninterest income 180,807 (20,700) 160,107 193,801 (10,914) 182,887 171,451 - 171,451 --------- --------- --------- --------- --------- --------- --------- --------- --------- NONINTEREST EXPENSE Other (3) 63,039 (6,182) 56,857 - - - - - - All other (no adjustments) 244,446 - 244,446 308,195 - 308,195 323,363 - 323,363 --------- --------- --------- --------- --------- --------- --------- --------- --------- Total noninterest expense 307,485 (6,182) 301,303 308,195 - 308,195 323,363 - 323,363 --------- --------- --------- --------- --------- --------- --------- --------- --------- Income/Operating earnings before income taxes 161,205 (14,518) 146,687 195,992 (10,914) 185,078 174,061 - 174,061 Taxable-equivalent adjustment 622 - 622 419 - 419 533 - 533 Income tax expense (benefit) (4) 53,296 (5,282) 48,014 63,711 (3,971) 59,740 58,751 - 58,751 --------- --------- --------- --------- --------- --------- --------- --------- --------- Net Income/Operating Earnings $ 107,287 $ (9,236)$ 98,051 $ 131,862 $ (6,943)$ 124,919 $ 114,777 $ - $ 114,777 ========= ========= ========= ========= ========= ========= ========= ========= ========= Net income/Operating earnings per common share - basic $ 0.68 $ (0.06)$ 0.62 $ 0.84 $ (0.04)$ 0.80 $ 0.73 $ - $ 0.73 ========= ========= ========= ========= ========= ========= ========= ========= ========= Net income/Operating earnings per common share - diluted $ 0.67 $ (0.05)$ 0.62 $ 0.84 $ (0.05)$ 0.79 $ 0.73 $ - $ 0.73 ========= ========= ========= ========= ========= ========= ========= ========= ========= Weighted average common shares outstanding - basic 158,893 158,893 156,747 156,747 156,228 156,228 ========= ========= ========= ========= ========= ========= Weighted average common shares outstanding - diluted 159,269 159,269 157,891 157,891 157,811 157,811 ========= ========= ========= ========= ========= ========= Reported Net Income $ 107,287 $ 131,862 $ 114,777 ----------------------------------------------------------------------------------------- Non-recurring Items (1) Gain on investment in STAR System stock (1st quarter 2001) (20,700) - - (2) Gain on sale of Guam/Saipan branches (4th quarter 2001) - (10,914) (3) Transition adjustment charge for SFAS 133 (1st quarter 2001) 6,182 - - (4) Tax impact of items listed above (1) to (3) 5,282 3,971 - ----------------------------------------------------------------------------------------- Net Operating Earnings $ 98,051 $ 124,919 $ 114,777 =========================================================================================
EXHIBIT 4
UNIONBANCAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) (UNAUDITED) MARCH 31, DECEMBER 31, MARCH 31, (DOLLARS IN THOUSANDS) 2001 2001 2002 ------------------------------------------------------------------- -------------- --------------- --------------- ASSETS Cash and due from banks $ 2,827,758 $ 2,682,392 $ 1,787,942 Interest bearing deposits in banks 60,083 64,162 110,147 Federal funds sold and securities purchased under resale agreements 744,500 918,400 2,109,600 -------------- --------------- --------------- Total cash and cash equivalents 3,632,341 3,664,954 4,007,689 Trading account assets 385,772 229,697 221,179 Securities available for sale: Securities pledged as collateral 310,933 137,922 120,560 Held in portfolio 4,160,742 5,661,160 5,289,210 Loans (net of allowance for credit losses: March 31, 2001, $642,334; December 31, 2001, $634,509; March 31, 2002, $629,367) 25,334,602 24,359,521 24,468,730 Due from customers on acceptances 225,081 182,440 136,303 Premises and equipment, net 480,232 494,534 489,915 Other assets 1,293,659 1,308,861 1,488,345 -------------- --------------- --------------- Total assets $ 35,823,362 $ 36,039,089 $ 36,221,931 ============== =============== =============== LIABILITIES Domestic deposits: Noninterest bearing $ 10,966,658 $ 12,314,150 $ 11,878,768 Interest bearing 13,867,381 14,160,113 14,540,336 Foreign deposits: Noninterest bearing 260,686 404,708 404,378 Interest bearing 2,113,403 1,677,228 1,935,367 -------------- --------------- --------------- Total deposits 27,208,128 28,556,199 28,758,849 Federal funds purchased and securities sold under repurchase agreements 1,436,474 418,814 369,565 Commercial paper 1,437,467 830,657 900,851 Other borrowed funds 540,625 700,403 900,360 Acceptances outstanding 225,081 182,440 136,303 Other liabilities 1,076,063 1,040,406 827,925 Medium and long-term debt 200,000 400,000 399,673 UnionBanCal Corporation - obligated mandatorily redeemable preferred securities of subsidiary grantor trust 366,526 363,928 361,903 -------------- --------------- --------------- Total liabilities 32,490,364 32,492,847 32,655,429 -------------- --------------- --------------- Commitments and contingencies SHAREHOLDERS' EQUITY Preferred stock: Authorized 5,000,000 shares, no shares issued or outstanding as of March 31, 2001, December 31, 2001, and March 31, 2002 - - - Common stock - no stated value: Authorized 300,000,000 shares, issued 158,567,213 shares as of March 31, 2001, 156,483,511 shares as of December 31, 2001, and 156,336,338 shares as of March 31, 2002 1,256,085 1,181,925 1,172,479 Retained earnings 1,974,095 2,231,384 2,307,150 Accumulated other comprehensive income 102,818 132,933 86,873 -------------- --------------- --------------- Total shareholders' equity 3,332,998 3,546,242 3,566,502 -------------- --------------- --------------- Total liabilities and shareholders' equity $ 35,823,362 $ 36,039,089 $ 36,221,931 ============== =============== ===============
EXHIBIT 5
UNIONBANCAL CORPORATION AND SUBSIDIARIES LOANS (UNAUDITED) PERCENT CHANGE TO THREE MONTHS ENDED MARCH 31, 2002 FROM ------------------------------------------ --------------------------- MARCH 31, DECEMBER 31, MARCH 31, MARCH 31, DECEMBER 31, (DOLLARS IN MILLIONS) 2001 2001 2002 2001 2001 ------------------------------------------ ------------- ------------- ------------- ------------- ------------- LOANS (PERIOD AVERAGE) Commercial, financial and industrial $ 14,196 $ 12,086 $ 11,308 (20.34%) (6.44%) Construction 978 1,078 1,076 10.02% (0.19%) Mortgage - Commercial 3,329 3,446 3,635 9.19% 5.48% Mortgage - Residential 3,413 4,653 5,084 48.96% 9.26% Consumer 2,350 2,097 2,028 (13.70%) (3.29%) Lease financing 1,115 958 957 (14.17%) (0.10%) Loans originated in foreign branches 1,037 1,049 1,040 0.29% (0.86%) ------------- ------------- ------------- Total loans $ 26,418 $ 25,367 $ 25,128 (4.88%) (0.94%) ============= ============= ============= NONPERFORMING ASSETS (PERIOD END) Nonaccrual loans: Commercial, financial and industrial $ 417 $ 472 $ 423 1.44% (10.38%) Construction 4 - - (100.00%) 0.00% Mortgage - Commercial 10 17 27 170.00% 58.82% Lease - 3 3 nm 0.00% ------------- ------------- ------------- Total nonaccrual loans 431 492 453 5.10% (7.93%) Foreclosed assets 1 - - (100.00%) 0.00% Distressed loans held for sale 7 - - (100.00%) 0.00% ------------- ------------- ------------- Total nonperforming assets $ 439 $ 492 $ 453 3.19% (7.93%) ============= ============= ============= Loans 90 days or more past due and still accruing $ 24 $ 13 $ 14 (41.67%) 7.69% ============= ============= ============= ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES Beginning balance $ 614 $ 630 $ 635 Provision for credit losses 100 70 55 Loans charged off: Commercial, financial and industrial (75) (70) (62) Real estate - (5) - Consumer (3) (3) (3) Lease financing (1) (1) (1) ------------- ------------- ------------- Total loans charged off (79) (79) (66) ------------- ------------- ------------- Loans recovered: Commercial, financial and industrial 6 8 4 Consumer 1 1 1 Loans originated in foreign branches - 5 - ------------- ------------- ------------- Total loans recovered 7 14 5 ------------- ------------- ------------- Net loans charged-off (72) (65) (61) ------------- ------------- ------------- Ending balance $ 642 $ 635 $ 629 ============= ============= ============= ------------------------------------------ nm = not meaningful
EXHIBIT 6
UNIONBANCAL CORPORATION AND SUBSIDIARIES NET INTEREST INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED ------------------------------------------------------------------------------------------------ March 31, 2001 December 31, 2001 March 31, 2002 ------------------------------- ------------------------------- -------------------------------- Interest Average Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ (Dollars in thousands) Balance Expense(1) Rate(1) Balance Expense(1) Rate(1) Balance Expense(1) Rate(1) --------------------------------- ----------- ---------- -------- ----------- ---------- -------- ------------ ---------- ------- ASSETS Loans:(2) Domestic $25,380,787 $519,034 8.28% $24,317,993 $ 394,837 6.45% $24,088,142 $368,062 6.17% Foreign(3) 1,036,839 17,514 6.85 1,048,897 10,157 3.84 1,039,615 7,922 3.09 Securities - taxable 4,082,781 66,187 6.49 5,239,238 77,989 5.95 5,552,344 80,663 5.81 Securities - tax-exempt 67,280 1,652 9.82 39,659 1,037 10.46 38,233 991 10.37 Interest bearing deposits in banks 79,239 966 4.94 76,086 601 3.13 84,408 496 2.38 Federal funds sold and securities purchased under resale agreements 73,036 1,029 5.71 438,153 2,259 2.05 936,382 4,059 1.76 Trading account assets 348,280 2,932 3.41 317,827 1,036 1.29 237,369 720 1.23 ----------- --------- ----------- --------- ------------ ---------- Total earning assets 31,068,242 609,314 7.93 31,477,853 487,916 6.17 31,976,493 462,913 5.84 --------- --------- ---------- Allowance for credit losses (634,963) (634,568) (644,379) Cash and due from banks 2,194,017 2,198,541 1,942,621 Premises and equipment, net 480,724 497,216 496,269 Other assets 1,319,970 1,299,113 1,312,523 ----------- ----------- ------------ Total assets $34,427,990 $34,838,155 $35,083,527 ----------- ----------- ------------ LIABILITIES Domestic deposits: Interest bearing $ 6,140,117 41,342 2.73 $ 6,841,150 28,136 1.63 $ 7,459,506 23,157 1.26 Savings and consumer time 3,320,967 29,912 3.65 3,503,132 21,299 2.41 3,549,262 16,970 1.94 Large time 4,426,993 63,863 5.85 3,933,068 29,657 2.99 3,485,482 19,808 2.30 Foreign deposits(3) 2,033,685 25,543 5.09 1,769,960 8,886 1.99 1,749,251 6,264 1.45 ----------- --------- ----------- --------- ------------ ---------- Total interest bearing deposits 15,921,762 160,660 4.09 16,047,310 87,978 2.18 16,243,501 66,199 1.65 ----------- --------- ----------- --------- ------------ ---------- Federal funds purchased and securities sold under repurchase agreements 1,829,372 25,800 5.72 721,738 3,466 1.91 541,182 1,949 1.46 Commercial paper 1,478,564 20,413 5.60 1,001,557 5,557 2.20 919,259 3,974 1.75 Other borrowed funds 396,311 5,340 5.46 487,293 3,550 2.89 698,053 3,443 2.00 Medium and long-term debt 200,000 3,196 6.48 269,565 2,572 3.78 399,989 2,412 2.45 UnionBanCal Corporation - obligated mandatorily redeemable preferred securities of subsidiary grantor trust 352,130 6,022 6.83 352,733 4,407 5.01 352,300 3,963 4.46 ----------- --------- ----------- --------- ------------ ---------- Total borrowed funds 4,256,377 60,771 5.78 2,832,886 19,552 2.74 2,910,783 15,741 2.19 ----------- --------- ----------- --------- ------------ ---------- Total interest bearing liabilities 20,178,139 221,431 4.45 18,880,196 107,530 2.26 19,154,284 81,940 1.73 --------- --------- ---------- Noninterest bearing deposits 9,845,911 11,305,872 11,325,446 Other liabilities 1,066,000 1,026,628 979,030 ----------- ----------- ------------ Total liabilities 31,090,050 31,212,696 31,458,760 SHAREHOLDERS' EQUITY Common equity 3,337,940 3,625,459 3,624,767 ----------- ----------- ------------ Total shareholders' equity 3,337,940 3,625,459 3,624,767 ----------- ----------- ------------ Total liabilities and shareholders' equity $34,427,990 $34,838,155 $35,083,527 =========== =========== ============ Net interest income/margin (taxable-equivalent basis) 387,883 5.04% 380,386 4.81% 380,973 4.80% Less: taxable-equivalent adjustment 622 419 533 --------- ----------- ----------- Net interest income $ 387,261 $ 379,967 $ 380,440 ========= =========== =========== --------------------------------- (1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 35 percent. (2) Average balances on loans outstanding include all nonperforming loans. The amortized portion of net loan origination fees (costs) is included in interest income on loans, representing an adjustment to the yield. (3) Foreign loans and deposits are those loans and deposits originated in foreign branches.
EXHIBIT 7
UNIONBANCAL CORPORATION AND SUBSIDIARIES ON A REPORTED EARNINGS BASIS (REFERENCE TO EXHIBIT 2) ----------------------------------------------------- NONINTEREST INCOME (UNAUDITED) PERCENTAGE CHANGE TO FOR THE THREE MONTHS ENDED MARCH 31, 2002 FROM ----------------------------------------------- --------------------------------- MARCH 31, DECEMBER 31, MARCH 31, MARCH 31, DECEMBER 31, (DOLLARS IN THOUSANDS) 2001 2001 2002 2001 2001 ---------------------------------------- ---------------- --------------- -------------- --------------- ---------------- Service charges on deposit accounts $ 57,020 $ 63,502 $ 66,143 16.00 % 4.16 % Trust and investment management fees 39,681 37,212 36,725 (7.45) (1.31) Merchant transaction processing fees 19,066 19,570 20,701 8.58 5.78 International commissions and fees 17,110 18,049 18,223 6.51 0.96 Brokerage commissions and fees 8,915 9,553 9,632 8.04 0.83 Insurance commissions - 920 7,153 nm 677.50 Merchant banking fees 9,248 6,861 6,945 (24.90) 1.22 Foreign exchange trading gains, net 6,220 7,094 6,447 3.65 (9.12) Securities gains (losses), net 2,266 4,336 (2,566) nm nm Gain on exchange of STAR System stock 20,700 - - (100.00) - Other 581 26,704 2,048 252.50 (92.33) ---------------- --------------- -------------- Total noninterest income $ 180,807 $ 193,801 $ 171,451 (5.17)% (11.53)% ================ =============== ============== ---------------------------------------- nm = not meaningful
NONINTEREST EXPENSE (UNAUDITED) PERCENTAGE CHANGE TO FOR THE THREE MONTHS ENDED MARCH 31,2002 FROM ----------------------------------------------- --------------------------------- MARCH 31, DECEMBER 31, MARCH 31, MARCH 31, DECEMBER 31, (DOLLARS IN THOUSANDS) 2001 2001 2002 2001 2001 ---------------------------------------- ---------------- --------------- -------------- --------------- ---------------- Salaries and other compensation $ 130,973 $ 139,136 $ 141,341 7.92 % 1.58 % Employee benefits 33,514 20,461 36,453 8.77 78.16 ---------------- --------------- -------------- Salaries and employee benefits 164,487 159,597 177,794 8.09 11.40 Net occupancy 22,759 24,777 23,381 2.73 (5.63) Equipment 15,798 16,105 16,340 3.43 1.46 Communications 11,702 13,857 13,941 19.13 0.61 Merchant transaction processing 12,914 13,102 12,916 0.02 (1.42) Software 7,531 9,152 11,510 52.83 25.76 Advertising and public relations 6,606 9,576 10,008 51.50 4.51 Professional services 7,824 9,325 9,503 21.46 1.91 Data processing 8,949 8,797 8,991 0.47 2.21 Intangible asset amortization 3,538 3,534 884 (75.01) (74.99) Foreclosed asset expense (income) 13 (14) 125 861.54 nm Other 45,364 40,387 37,970 (16.30) (5.98) ---------------- --------------- -------------- Total noninterest expense $ 307,485 $ 308,195 $ 323,363 5.16 % 4.92 % ================ =============== ============== ---------------------------------------- nm = not meaningful
EXHIBIT 8
UNIONBANCAL CORPORATION AND SUBSIDIARIES ON AN OPERATING EARNINGS BASIS (REFERENCE TO EXHIBIT 3) (1) ------------------------------------------------------- NONINTEREST INCOME (UNAUDITED) PERCENTAGE CHANGE TO FOR THE THREE MONTHS ENDED MARCH 31, 2002 FROM ---------------------------------------------------------------------------------- MARCH 31, DECEMBER 31, MARCH 31, MARCH 31, DECEMBER 31, (DOLLARS IN THOUSANDS) 2001 2001 2002 2001 2001 ---------------------------------------- ---------------- --------------- -------------- --------------- ---------------- Service charges on deposit accounts $ 57,020 $ 63,502 $ 66,143 16.00 % 4.16 % Trust and investment management fees 39,681 37,212 36,725 (7.45) (1.31) Merchant transaction processing fees 19,066 19,570 20,701 8.58 5.78 International commissions and fees 17,110 18,049 18,223 6.51 0.96 Brokerage commissions and fees 8,915 9,553 9,632 8.04 0.83 Insurance commissions - 920 7,153 nm 677.50 Merchant banking fees 9,248 6,861 6,945 (24.90) 1.22 Foreign exchange trading gains, net 6,220 7,094 6,447 3.65 (9.12) Securities gains (losses), net 2,266 4,336 (2,566) nm nm Other 581 15,790 2,048 252.50 (87.03) ---------------- --------------- -------------- Total noninterest income $ 160,107 $ 182,887 $ 171,451 7.09 % (6.25)% ================ =============== ============== ---------------------------------------- nm = not meaningful
NONINTEREST EXPENSE (UNAUDITED) PERCENTAGE CHANGE TO FOR THE THREE MONTHS ENDED MARCH 31, 2002 FROM ---------------------------------------------------------------------------------- MARCH 31, DECEMBER 31, MARCH 31, MARCH 31, DECEMBER 31, (DOLLARS IN THOUSANDS) 2001 2001 2002 2001 2001 ---------------------------------------- ---------------- -------------- --------------- --------------- ---------------- Salaries and other compensation $ 130,973 $ 139,136 $ 141,341 7.92 % 1.58 % Employee benefits 33,514 20,461 36,453 8.77 78.16 ---------------- -------------- --------------- Salaries and employee benefits 164,487 159,597 177,794 8.09 11.40 Net occupancy 22,759 24,777 23,381 2.73 (5.63) Equipment 15,798 16,105 16,340 3.43 1.46 Communications 11,702 13,857 13,941 19.13 0.61 Merchant transaction processing 12,914 13,102 12,916 0.02 (1.42) Software 7,531 9,152 11,510 52.83 25.76 Advertising and public relations 6,606 9,576 10,008 51.50 4.51 Professional services 7,824 9,325 9,503 21.46 1.91 Data processing 8,949 8,797 8,991 0.47 2.21 Intangible asset amortization 3,538 3,534 884 (75.01) (74.99) Foreclosed asset expense (income) 13 (14) 125 861.54 nm Other 39,182 40,387 37,970 (3.09) (5.98) ---------------- --------------- -------------- Total noninterest expense $ 301,303 $ 308,195 $ 323,363 7.32 % 4.92 % ================ =============== ============== ---------------------------------------- nm = not meaningful (1) See exhibit 4 for reconciliation of 'reported earnings' to 'operating earnings'.
EXHIBIT 9