-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VNmcWllHNqDN/c933g6BvscPfhB/XTVipNB7RJvHdUwyvcSCeqS8njSiBfo/xrXX meeessm3/7VUs6PDel1gFA== 0001011659-03-000043.txt : 20031113 0001011659-03-000043.hdr.sgml : 20031113 20031113170959 ACCESSION NUMBER: 0001011659-03-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIONBANCAL CORP CENTRAL INDEX KEY: 0001011659 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 941234979 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-15081 FILM NUMBER: 03999047 BUSINESS ADDRESS: STREET 1: 400 CALIFORNIA STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94104-1476 BUSINESS PHONE: 4157652969 MAIL ADDRESS: STREET 1: 400 CALIFORNIA STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94104-1476 10-Q 1 form10q09302003.txt THIRD QUARTER 2003 FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 Commission file number 1-15081 UNIONBANCAL CORPORATION State of Incorporation: Delaware I.R.S. Employer Identification No. 94-1234979 400 California Street San Francisco, California 94104-1302 (Address and zip code of principal executive offices) Registrant's telephone number: (415) 765-2969 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No --- --- Number of shares of Common Stock outstanding at October 31, 2003: 145,417,533 ================================================================================

See accompanying notes to condensed consolidated financial statements. 4

See accompanying notes to condensed consolidated financial statements. 5

See accompanying notes to condensed consolidated financial statements. 6

See accompanying notes to condensed consolidated financial statements. 7 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (Unaudited) NOTE 1--BASIS OF PRESENTATION AND NATURE OF OPERATIONS The unaudited condensed consolidated financial statements of UnionBanCal Corporation and subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Rules and Regulations of the Securities and Exchange Commission. However, they do not include all of the disclosures necessary for annual financial statements in conformity with US GAAP. The results of operations for the period ended September 30, 2003 are not necessarily indicative of the operating results anticipated for the full year. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Form 10-K/A for the year ended December 31, 2002. The preparation of financial statements in conformity with US GAAP also requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. UnionBanCal Corporation is a commercial bank holding company and has, as its major subsidiary, a banking subsidiary, Union Bank of California, N.A. (the Bank). The Company provides a wide range of financial services to consumers, small businesses, middle-market companies and major corporations, primarily in California, Oregon, and Washington, but also nationally and internationally. Since November 1999, the Company has announced stock repurchase plans totaling $500 million and as of September 30, 2003 has expended $385 million. The Company repurchased $86 million and $45 million of common stock in 2002 and the first nine months of 2003, respectively, as part of these repurchase plans. As of September 30, 2003, $115 million of the Company's common stock is authorized for repurchase. In addition, the Company purchased $600 million of its common stock, $300 million in August 2002 and $300 million in September 2003, from its majority owner, The Bank of Tokyo-Mitsubishi, Ltd. (BTM), which is a wholly-owned subsidiary of Mitsubishi Tokyo Financial Group, Inc. At September 30, 2003, BTM owned approximately 63 percent of the Company's outstanding common stock. Certain amounts for prior periods have been reclassified to conform to current financial statement presentation. STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE In December 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 148, "Accounting for Stock-Based Compensation--Transition and Disclosure," which amends SFAS No. 123, "Accounting for Stock-Based Compensation." This Statement provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure requirements to require prominent disclosure in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The disclosure requirements under this Statement are effective for financial statements issued after December 15, 2002. As allowed under the provisions of SFAS No. 123, as amended, the Company has chosen to continue to recognize compensation expense using the intrinsic value-based method of valuing stock options 8 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 1--BASIS OF PRESENTATION AND NATURE OF OPERATIONS (Continued) prescribed in Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees" and related Interpretations. Under the intrinsic value-based method, compensation cost is measured as the amount by which the quoted market price of the Company's stock at the date of grant exceeds the stock option exercise price. At September 30, 2003, the Company has two stock-based employee compensation plans. For further discussion concerning our stock-based employee compensation plans see Note 14--"Management Stock Plan" of the Notes to Consolidated Financial Statements included in the Form 10-K/A for the year ended December 31, 2002. Only restricted stock awards have been reflected in compensation expense, while all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation.

Compensation cost associated with the Company's unvested restricted stock issued under the management stock plan is measured based on the market price of the stock at the grant date and is expensed over the vesting period. Compensation expense related to restricted stock awards for the third quarters and the first nine months of 2002 and 2003 was not significant. NOTE 2--RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging 9 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 2--RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued) Activities." The changes in this Statement improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. SFAS No. 149 is effective for contracts entered into or modified after September 30, 2003, except as stated below, and for hedging relationships designated after September 30, 2003. All provisions of SFAS No. 149 should be applied prospectively. The provisions of SFAS No. 149 that relate to SFAS No. 133 implementation issues that have been effective for fiscal quarters that began prior to June 15, 2003, will be applied in accordance with their respective effective dates. In addition, the provisions of SFAS No. 149, which relate to forward purchases or sales of when-issued securities or other securities that do not exist, will be applied to both existing contracts and new contracts entered into after September 30, 2003. Management believes that adoption of the provisions of this Statement will not have a material impact on the Company's financial position or results of operations. ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." The Statement establishes standards for how the Company should classify and measure certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The new standards for the classification and measurement of financial instruments should be applied retroactively. Any gain or loss resulting from the implementation of SFAS No. 150 will be reported as a cumulative effect of a change in accounting principle. Adoption of this Statement did not have a material impact on the Company's financial position or results of operations. ACCOUNTING FOR GUARANTORS AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS In November 2002, the FASB issued FASB Interpretation No. (FIN) 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45 expands on the accounting guidance of Statements No. 5, 57, and 107 and incorporates without change the provisions of FIN 34, which is superseded. FIN 45 elaborates on the existing disclosure requirements for most guarantees and requires that guarantors recognize a liability for the fair value of guarantees at inception. The disclosure requirements of FIN 45 are effective for financial statement periods ending after December 15, 2002. The initial recognition and measurement provisions of FIN 45 are applied on a prospective basis to guarantees issued or modified after December 31, 2002. A complete description of significant guarantees that have been entered into by the Company may be found in "Note 7-- Guarantees." Adopting the measurement provisions of FIN 45 did not have a material impact at the adoption date and management believes that it will not have a material impact on the Company's future financial position or results of operations. 10 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 2--RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued) CONSOLIDATION OF VARIABLE INTEREST ENTITIES In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest Entities." The purpose of this interpretation is to provide guidance on how to identify a variable interest entity (VIE) and determine when the assets, liabilities, noncontrolling interests, and results of operations of a VIE need to be included in a company's consolidated financial statements. A company that holds variable interests in an entity will need to consolidate that entity if the company's interest in the VIE is such that the company will absorb a majority of the VIE's expected losses and/or receive a majority of the VIE's expected residual returns, if they occur. New disclosure requirements are also prescribed by FIN 46. On October 9, 2003, the FASB issued FASB Staff Position (FSP) No. FIN 46-6 deferring the effective date for applying the provisions of FIN 46. The Company need not apply the provisions of FIN 46 to an interest held in a VIE created before February 1, 2003 until December 31, 2003. As of September 30, 2003, management believes the Company does not have any VIE's for which this interpretation would require consolidation. However, under FIN 46, the Company's subsidiary, which issued trust preferred securities, will be deconsolidated. Deconsolidation of this entity in the fourth quarter of 2003 will cause total assets and total liabilities to increase by approximately $10.8 million with no change to the Company's results of operations. For additional information on recently issued accounting pronouncements and other significant accounting principles, see Note 1--"Summary of Significant Accounting Policies and Nature of Operations" of the Notes to Consolidated Financial Statements included in the Form 10-K/A for the year ended December 31, 2002. NOTE 3--EARNINGS PER SHARE Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS incorporates the dilutive effect of common stock equivalents outstanding on an average basis during the period. Stock options are a common stock equivalent. The following table presents a reconciliation of basic and diluted EPS for the three and nine months ended September 30, 2002 and 2003.

11 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 4--ACCUMULATED OTHER COMPREHENSIVE INCOME The following table presents a summary of the components of accumulated other comprehensive income.

NOTE 5--BUSINESS SEGMENTS The Company is organized based on the products and services that it offers and operates in four principal areas: o The Community Banking and Investment Services Group offers a range of banking services, primarily to individuals and small businesses, delivered generally through a tri-state network of branches and ATM's. These services include commercial loans, mortgages, home equity lines of credit, consumer loans, cash management and deposit services, as well as fiduciary, private banking, investment and asset management services for individuals and institutions, and risk management and insurance products for businesses and individuals. o The Commercial Financial Services Group provides credit and cash management and deposit services to large corporate and middle market companies. Services include commercial and project loans, real estate financing, asset-based financing, trade finance and letters of credit, lease financing, cash management services and selected capital markets products. o The International Banking Group provides correspondent banking and trade-finance products and services to financial institutions. The group's revenue predominately relates to foreign customers. o The Global Markets Group manages the Company's wholesale funding needs, securities portfolio, and interest rate and liquidity risks. The group also offers a broad range of risk management and 12 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 5--BUSINESS SEGMENTS (Continued) trading products to institutional and business clients of the Company through the businesses described above. The information, set forth in the tables on the following pages, reflects selected income statement and balance sheet items by business unit. The information presented does not necessarily represent the business units' financial condition and results of operations were they independent entities. Unlike financial accounting, there is no authoritative body of guidance for management accounting equivalent to US GAAP. Consequently, reported results are not necessarily comparable with those presented by other companies. The information in these tables is derived from the internal management reporting system used by management to measure the performance of the business segments and the Company overall. The management reporting system assigns balance sheet and income statement items to each business segment based on internal management accounting policies. Net interest income is determined by the Company's internal funds transfer pricing system, which assigns a cost of funds or a credit for funds to assets or liabilities based on their type, maturity or repricing characteristics. Noninterest income and expense directly attributable to a business segment are assigned to that business. Certain indirect costs, such as operations and technology expense, are allocated to the segments based on studies of billable unit costs for product or data processing. Other indirect costs, such as corporate overhead, are allocated to the business segments based on a predetermined percentage of usage. Under the Company's risk-adjusted return on capital (RAROC) methodology, credit expense is charged to business segments based upon expected losses arising from credit risk. In addition, the attribution of economic capital is related to unexpected losses arising from credit, market and operational risks. "Other" includes the following items: o corporate activities that are not directly attributable to one of the four major business units. Included in this category are certain other nonrecurring items such as merger and integration expense, certain parent company non-bank subsidiaries, and the elimination of the fully taxable- equivalent basis amount; o the adjustment between the credit expense under RAROC and the provision for credit losses under US GAAP and earnings associated with unallocated equity capital; o the adjustment between the tax expense calculated under RAROC using a tax rate of 38.25 percent and the Company's effective tax rates; o the Pacific Rim Corporate Group, with assets at September 30, 2003 of $295 million, which offers a range of credit, deposit, and investment management products and services to companies in the US, which are affiliated with companies headquartered in Japan; and o the residual costs of support groups. 13 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 5--BUSINESS SEGMENTS (Continued) The business units' results for the prior periods have been restated to reflect certain transfer pricing changes and any reorganization changes that may have occurred.

14 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 5--BUSINESS SEGMENTS (Continued)

NOTE 6--DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS USED FOR HEDGING Derivative positions are integral components of the Company's designated asset and liability management activities. The Company uses interest rate derivatives to manage the sensitivity of the Company's net interest income to changes in interest rates. These instruments are used to manage interest rate risk relating to specified groups of assets and liabilities, primarily LIBOR-based commercial loans, certificates of deposit, trust preferred securities and medium-term notes. 15 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 6--DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS USED FOR HEDGING (Continued) CASH FLOW HEDGES HEDGING STRATEGIES FOR VARIABLE RATE LOANS AND CERTIFICATES OF DEPOSIT The Company engages in several types of cash flow hedging strategies for which the hedged transactions are forecasted future loan interest payments, and the hedged risk is the variability in those payments due to changes in the designated benchmark rate, e.g., US dollar LIBOR. In these strategies, the hedging instruments are matched with groups of variable rate loans such that the tenor of the variable rate loans and that of the hedging instrument is identical. Cash flow hedging strategies include the utilization of purchased floor, cap, corridor options and interest rate swaps. At September 30, 2003, the weighted average life of these cash flow hedges is approximately 1.6 years. The Company uses purchased interest rate floors to hedge the variable cash flows associated with 1-month LIBOR or 3-month LIBOR indexed loans. Payments received under the floor contract offset the decline in loan interest income caused by the relevant LIBOR index falling below the floor's strike rate. The Company uses interest rate floor corridors to hedge the variable cash flows associated with 1-month LIBOR or 3-month LIBOR indexed loans. Net payments to be received under the floor corridor contracts offset the decline in loan interest income caused by the relevant LIBOR index falling below the corridor's upper strike rate, but only to the extent the index falls to the lower strike rate. The corridor will not provide protection from declines in the relevant LIBOR index to the extent it falls below the corridor's lower strike rate. The Company uses interest rate collars to hedge the variable cash flows associated with 1-month LIBOR or 3-month LIBOR indexed loans. Net payments to be received under the collar contracts offset the decline in loan interest income caused by the relevant LIBOR index falling below the collar's strike rate while net payments to be paid will reduce the increase in loan interest income caused by the LIBOR index rising above the collar's cap strike rate. The Company uses interest rate swaps to hedge the variable cash flows associated with 1-month LIBOR or 3-month LIBOR indexed loans. Payments to be received (or paid) under the swap contracts will offset the fluctuations in loan interest income caused by changes in the relevant LIBOR index. As such, these instruments hedge all fluctuations in the loans' interest income caused by changes in the relevant LIBOR index. The Company uses purchased interest rate caps and cap corridors to hedge the variable interest cash flows associated with the forecasted issuance and rollover of short-term, fixed rate negotiable certificates of deposit (CDs). In these hedging relationships, the Company hedges the LIBOR component of the CD rates, which is either 3-month LIBOR or 6-month LIBOR, based on the CD's original term to maturity, which reflects their repricing frequency. Net payments to be received under these cap contracts offset the increase in interest expense caused by the relevant LIBOR index rising above the caps' strike rates. Cap corridors will not provide protection from increases in the relevant LIBOR index to the extent it rises above the cap corridor's upper strike rate. Hedging transactions are structured at inception so that the notional amounts of the hedge are matched with an equal principal amount of loans or CDs, the index and repricing frequencies of the hedge 16 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 6--DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS USED FOR HEDGING (Continued) matches those of the loans or CDs, and the period in which the designated hedged cash flows occurs is equal to the term of the hedge. As such, most of the ineffectiveness in the hedging relationship results from the mismatch between the timing of reset dates on the hedge versus those of the loans or CDs. In the third quarter of 2003, the Company recognized a net gain of less than $0.1 million due to ineffectiveness, which is recognized in noninterest expense, compared to a net gain of $0.2 million in the third quarter of 2002. FAIR VALUE HEDGES HEDGING STRATEGY FOR UNIONBANCAL CORPORATION--OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY GRANTOR TRUST (TRUST PREFERRED SECURITIES) The Company engages in an interest rate hedging strategy in which an interest rate swap is associated with a specific interest bearing liability, UnionBanCal Corporation's Trust Preferred Securities, in order to convert the liability from a fixed rate to a floating rate instrument. This strategy mitigates the changes in fair value of the hedged liability caused by changes in the designated benchmark interest rate, US dollar LIBOR. Fair value hedging transactions are structured at inception so that the notional amounts of the swap match an associated principal amount of the Trust Preferred Securities. The interest payment dates, the expiration date, and the embedded call option of the swap match those of the Trust Preferred Securities. The ineffectiveness on the fair value hedges in the third quarter of 2003 resulted in a net gain of less than $0.1 million, compared to a net loss of less than $0.1 million in the third quarter of 2002. HEDGING STRATEGY FOR MEDIUM-TERM NOTES The Company engages in an interest rate hedging strategy in which an interest rate swap is associated with a specified interest bearing liability, UnionBanCal Corporation's five-year, medium-term debt, in order to convert the liability from a fixed rate to a floating rate instrument. This strategy mitigates the changes in fair value of the hedged liability caused by changes in the designated benchmark interest rate, US dollar LIBOR. The fair value hedging transaction for the medium-term notes was structured at inception to mirror all of the provisions of the medium-term notes, which allows the Company to assume that no ineffectiveness exists. OTHER The Company uses foreign currency forward contracts as a means of managing foreign exchange rate risk associated with assets and/or liabilities denominated in foreign currencies. The Company values the forward contracts, the assets and/or the liabilities at fair value, with the resultant gain or loss recognized in noninterest income. The Company uses To-Be-Announced (TBA) contracts to fix the price and yield of anticipated purchases or sales of mortgage-backed securities that will be delivered at an agreed upon date. This strategy hedges the risk of variability in the cash flows to be paid or received upon settlement of the TBA contract. 17 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 7--GUARANTEES Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party, while commercial letters of credit are issued specifically to facilitate foreign or domestic trade transactions. The majority of these types of commitments have terms of one year or less. Collateral may be obtained based on management's credit assessment of the customer. As of September 30, 2003, the Company's maximum exposure to loss for standby and commercial letters of credit is $2.9 billion and $228.1 million, respectively. At September 30, 2003, the carrying value of the Company's standby and commercial letters of credit, which is included in "Other liabilities" on the condensed consolidated balance sheet, total $5.8 million. The Company has contingent consideration agreements that guarantee additional payments to acquired insurance agencies' shareholders based on the agencies' future performance in excess of established revenue and/or earnings before interest, taxes, depreciation and amortization (EBITDA) thresholds. If the insurance agencies' future performance exceeds these thresholds during a three-year period, the Company will be liable to make payments to former shareholders. As of September 30, 2003, the Company has a maximum exposure of $10.5 million for these agreements, which expire March 2006. The Company is fund manager for limited liability corporations issuing low-income housing investments. Low-income housing investments provide tax benefits to investors in the form of tax deductions from operating losses and tax credits. To facilitate the sale of these investments, the Company guarantees the timely completion of projects and delivery of tax benefits throughout the investment term. Guarantees may include a minimum rate of return, the availability of tax credits, and operating deficit thresholds over a ten-year average period. Additionally, the Company receives project completion and tax credit guarantees from the limited liability corporations issuing the investments that reduce the Company's ultimate exposure to loss. As of September 30, 2003, the Company's maximum exposure to loss under these guarantees is limited to a return of investor capital and minimum investment yield, or $77.0 million. The Company maintains a liability of $3.0 million for these guarantees. The Company has guarantees that obligate it to perform if its affiliates are unable to discharge their obligations. These obligations include guarantee of trust preferred securities, commercial paper obligations and leveraged lease transactions. Guarantees issued by the Bank for an affiliate's commercial paper program are done in order to facilitate their sale. As of September 30, 2003, the Bank had a maximum exposure to loss under these guarantees, which have an average term of less than one year, of $698.2 million. The Bank's guarantee is fully collateralized by a pledged deposit. UnionBanCal Corporation guarantees its subsidiaries' leveraged lease transactions, which have terms ranging from 15 to 30 years. Following the original funding of the leveraged lease transactions, UnionBanCal Corporation has no material obligation to be satisfied. As of September 30, 2003, UnionBanCal Corporation had no exposure to loss for these agreements. NOTE 8--ACQUISITIONS On July 1, 2003, the Company completed its acquisition of Monterey Bay Bank, a savings and loan association headquartered in Watsonville, California and recorded approximately $34 million in goodwill 18 UNIONBANCAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2003 (Unaudited) NOTE 8--ACQUISITIONS (Continued) and approximately $8 million in core deposit intangibles. The core deposit intangibles will be amortized on an accelerated basis over their economic useful life of a weighted average 5 years. NOTE 9--SUBSEQUENT EVENTS AND PENDING ACQUISITIONS On September 25, 2003, the Company signed a definitive agreement to acquire Business Bancorp, the parent company of Business Bank of California, a $676 million asset commercial bank headquartered in San Bernardino, California. Business Bank of California has approximately 235 employees and 15 full-service branches in two distinct markets: the Southern California Inland Empire and the San Francisco Bay Area. The Company will pay between approximately $117.7 million and $134.9 million in cash and common stock. The transaction is expected to be completed during the first quarter of 2004. On October 22, 2003, the Board of Directors declared a quarterly cash dividend of $0.31 per share of common stock. The dividend will be paid on January 2, 2004 to shareholders of record as of December 5, 2003. On October 24, 2003, UnionBanCal Corporation filed a registration statement on Form S-3 with the Securities and Exchange Commission in connection with an offer to be made to current and former participants in the Union Bank of California 401(k) Plan to rescind the previous purchases made with salary deferral or rollover or after-tax contributions within the Plan from October 24, 2002 through October 23, 2003, of up to 450,775 shares of UnionBanCal Corporation common stock. UnionBanCal Corporation is conducting the rescission offer because it has determined that these shares of UnionBanCal Corporation common stock may not have been registered in a timely manner under the Securities Act of 1933. Management does not believe that, based on our current estimates, the amount required to fund payments under the rescission offer will be material to the Company's financial position or results of operations. During October and November 2003, Southern California suffered extensive wildfires in the Counties of Los Angeles, Ventura, San Diego, San Bernardino and Riverside. These wildfires burned nearly 750,000 acres and damaged or destroyed more than 3,500 homes and other properties. The fires have now been contained. Based upon the information currently available, including the effect that these wildfires have had on the Company's Southern California facilities and operations, and on collateral securing loans made by the Bank in the affected areas, management does not believe that wildfire related losses will have a material effect on the Company's financial condition or results of operations. 19 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIS DOCUMENT INCLUDES FORWARD-LOOKING INFORMATION, WHICH IS SUBJECT TO THE "SAFE HARBOR" CREATED BY SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. WE MAY MAKE FORWARD-LOOKING STATEMENTS IN OTHER UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC) FILINGS, PRESS RELEASES, NEWS ARTICLES, CONFERENCE CALLS WITH WALL STREET ANALYSTS AND SHAREHOLDERS AND WHEN WE ARE SPEAKING ON BEHALF OF UNIONBANCAL CORPORATION. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY 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." THESE FORWARD-LOOKING STATEMENTS ARE INTENDED TO PROVIDE INVESTORS WITH ADDITIONAL INFORMATION WITH WHICH THEY MAY ASSESS OUR FUTURE POTENTIAL. ALL OF THESE FORWARD-LOOKING STATEMENTS ARE BASED ON ASSUMPTIONS ABOUT AN UNCERTAIN FUTURE AND ARE BASED ON INFORMATION AVAILABLE AT THE DATE SUCH STATEMENTS ARE ISSUED. WE DO NOT UNDERTAKE TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT FACTS, CIRCUMSTANCES, ASSUMPTIONS OR EVENTS THAT OCCUR AFTER THE DATE THE FORWARD-LOOKING STATEMENTS ARE MADE. THERE ARE NUMEROUS RISKS AND UNCERTAINTIES THAT COULD AND WILL CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN OUR FORWARD-LOOKING STATEMENTS. MANY OF THESE FACTORS ARE BEYOND OUR ABILITY TO CONTROL OR PREDICT AND COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR STOCK PRICE, FINANCIAL CONDITION, AND RESULTS OF OPERATIONS OR PROSPECTS. SUCH RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING FACTORS: ADVERSE ECONOMIC CONDITIONS IN CALIFORNIA, INCLUDING THE POSSIBLE IMPACT OF THE RECENT WILDFIRES IN SOUTHERN CALIFORNIA, GLOBAL POLITICAL AND GENERAL ECONOMIC CONDITIONS RELATED TO THE TERRORIST ATTACKS ON SEPTEMBER 11, 2001, AND THEIR AFTERMATH, THE CONTINUING HOSTILITIES IN IRAQ, ADVERSE ECONOMIC CONDITIONS AFFECTING CERTAIN INDUSTRIES, INCLUDING POWER COMPANIES AND THE AIRLINE INDUSTRY, FLUCTUATIONS IN INTEREST RATES, THE CONTROLLING INTEREST IN US OF THE BANK OF TOKYO-MITSUBISHI, LTD. (BTM), WHICH IS A WHOLLY-OWNED SUBSIDIARY OF MITSUBISHI TOKYO FINANCIAL GROUP, INC., COMPETITION IN THE BANKING INDUSTRY, RESTRICTIONS ON DIVIDENDS, ADVERSE EFFECTS OF CURRENT AND FUTURE BANKING RULES, REGULATIONS AND LEGISLATION, AND RISKS ASSOCIATED WITH VARIOUS STRATEGIES WE MAY PURSUE, INCLUDING POTENTIAL ACQUISITIONS, DIVESTITURES AND RESTRUCTURINGS. SEE ALSO THE SECTION ENTITLED "CERTAIN BUSINESS RISK FACTORS" LOCATED NEAR THE END OF THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." ALL REPORTS THAT WE FILE ELECTRONICALLY WITH THE SEC, INCLUDING THE ANNUAL REPORT ON FORM 10-K OR 10-K/A, QUARTERLY REPORTS ON FORM 10-Q, AND CURRENT REPORTS ON FORM 8-K, AS WELL AS ANY AMENDMENTS TO THOSE REPORTS, ARE ACCESSIBLE AT NO COST ON OUR INTERNET WEBSITE AT WWW.UBOC.COM. THESE FILINGS ARE ALSO ACCESSIBLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV. INTRODUCTION We are a California-based, commercial bank holding company with consolidated assets of $42.6 billion at September 30, 2003. On September 30, 2003, UnionBanCal Corporation changed its state of incorporation from California to Delaware. At September 30, 2003, Union Bank of California, N.A. (the Bank) was the fourth largest commercial bank in California, based on total assets and total deposits in California. UnionBanCal Corporation and its banking subsidiary, Union Bank of California, N.A., were created on April 1, 1996, by the combination of Union Bank with BanCal Tri-State Corporation and its banking subsidiary, The Bank of California, N.A. The combination was accounted for as a reorganization of entities under common control, similar to a pooling of interests. Since November 1999, we have announced stock repurchase plans totaling $500 million and as of September 30, 2003 we have expended $385 million. We repurchased $86 million and $45 million of common stock in 2002 and the first nine months of 2003, respectively, as part of these repurchase plans. As of September 30, 2003, $115 million of our common stock is authorized for repurchase. In addition, we purchased $600 million of our common stock, $300 million in August 2002 and $300 million in September 2003, from our majority owner, BTM. At September 30, 2003, BTM owned approximately 63 percent of our outstanding common stock. 20 SUMMARY COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2003 Net income was $155.0 million, or $1.02 per diluted common share, in the third quarter of 2003, compared with $138.2 million, or $0.88 per diluted common share, in the third quarter of 2002. This increase in diluted earnings per share of $0.14, or 16 percent, above the third quarter of 2002 was due to a $32.4 million, or 19 percent, increase in noninterest income, a $20.0 million, or 50 percent, decrease in provision for credit losses, and a $9.1 million, or 2 percent, increase in net interest income (on a taxable-equivalent basis), offset by a $31.0 million, or 10 percent, increase in noninterest expense, coupled with a decrease in weighted average shares outstanding from share repurchases. Other highlights of the third quarter of 2003 include: o Net interest income, on a taxable-equivalent basis, was $401.7 million in the third quarter of 2003, an increase of $9.1 million, or 2 percent, over the third quarter of 2002. Net interest margin in the third quarter of 2003 was 4.22 percent, a decrease of 55 basis points from the third quarter of 2002. o A provision for credit losses of $20.0 million was recorded in the third quarter of 2003 compared with $40.0 million in the third quarter of 2002. This resulted from management's regular assessment of overall credit quality, loan portfolio composition, and business and economic conditions in relation to the level of the allowance for credit losses. The allowance for credit losses was $550.6 million, or 161 percent of total nonaccrual loans, at September 30, 2003, compared with $623.1 million, or 158 percent of total nonaccrual loans, at September 30, 2002. o Noninterest income was $201.5 million in the third quarter of 2003, an increase of $32.4 million, or 19 percent, from the third quarter of 2002. This increase included a $13.2 million increase in service charges on deposit accounts, a $9.6 million increase in insurance commissions mostly associated with our insurance agency acquisitions and lower net losses of $5.6 million for commercial loans held for sale, partially offset by a $3.6 million decrease in securities gains, net. o Noninterest expense was $348.9 million in the third quarter of 2003, an increase of $31.0 million, or 10 percent, over the third quarter of 2002. This increase included a $17.6 million increase in salaries and other compensation, which was primarily attributable to our acquisitions and new branch openings, higher employee benefits of $5.4 million and a $4.0 million increase in net occupancy expense. o Income tax expense in the third quarter of 2003 was $78.7 million, resulting in a 34 percent effective income tax rate. For the third quarter of 2002, the effective income tax rate was 32 percent, which included a $3.3 million net reduction to income tax expense resulting from a change in tax law in the State of California concerning the tax treatment of loan loss reserves. o Return on average assets decreased to 1.47 percent in the third quarter of 2003 compared to 1.53 percent in the third quarter of 2002. Our return on average shareholders' equity increased to 16.04 percent in the third quarter of 2003 compared to 14.38 percent in the third quarter of 2002. o Total loans at September 30, 2003 were $26.0 billion, an increase of $85.2 million from September 30, 2002. o Nonperforming assets were $344.3 million at September 30, 2003, a decrease of $51.2 million, or 13 percent, from September 30, 2002. Nonperforming assets, as a percentage of total assets, decreased to 0.81 percent at September 30, 2003, compared with 1.05 percent at September 30, 2002. The ratio of nonaccrual loans to total loans decreased to 1.31 percent at September 30, 2003 from 1.52 percent at September 30, 2002. o Our Tier 1 and total risk-based capital ratios were 10.96 percent and 12.58 percent, respectively, at September 30, 2003, compared with 11.14 percent and 12.89 percent, respectively, at September 30, 21 2002. Our leverage ratio was 8.73 percent at September 30, 2003, compared with 10.13 percent at September 30, 2002. COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2003 Net income was $435.3 million, or $2.87 per diluted common share, in the first nine months of 2003, compared with $383.0 million, or $2.43 per diluted common share, in the first nine months of 2002. This increase in diluted earnings per share of $0.44, or 18 percent, above the first nine months of 2002 was due to a $85.9 million, or 17 percent, increase in noninterest income, a $70.0 million, or 48 percent, decrease in provision for credit losses, and a $19.7 million, or 2 percent, increase in net interest income (on a taxable-equivalent basis), offset by a $96.4 million, or 10 percent, increase in noninterest expense; coupled with a decrease in weighted average shares outstanding due to share repurchases. Other highlights of the first nine months of 2003 include: o Net interest income, on a taxable-equivalent basis, was $1.18 billion in the first nine months of 2003, an increase of $19.7 million, or 2 percent, over the first nine months of 2002. Net interest margin in the first nine months of 2003 was 4.35 percent, a decrease of 42 basis points from the first nine months of 2002. o A provision for credit losses of $75.0 million was recorded in the first nine months of 2003 compared with $145.0 million in the first nine months of 2002. This resulted from management's regular assessment of overall credit quality, loan portfolio composition, and business and economic conditions in relation to the level of the allowance for credit losses. o Noninterest income was $590.4 million in the first nine months of 2003, an increase of $85.9 million, or 17 percent, from the first nine months of 2002. This increase included a $27.4 million increase in service charges on deposit accounts, a $25.1 million increase in insurance commissions mostly associated with our insurance agency acquisitions, lower writedowns on private capital investments of $13.6 million, lower residual value writedowns on auto leases of $9.0 million, lower net losses of $8.0 million for commercial loans held for sale and a $4.1 million increase in net securities gains mainly attributable to a $9.0 million gain arising from the early call of a Mexican Brady Bond, partly offset by an $8.4 million decrease in trust and investment management fees. o Noninterest expense was $1.04 billion in the first nine months of 2003, an increase of $96.4 million, or 10 percent, over the first nine months of 2002. This increase included higher salaries and other compensation of $35.6 million, mostly related to our acquisitions and new branch openings, higher employee benefits of $19.4 million and a $16.1 million increase in net occupancy expense. o Income tax expense in the first nine months of 2003 was $215.3 million, resulting in a 33 percent effective income tax rate. For the first nine months of 2002, the effective income tax rate was also 33 percent. o Return on average assets increased slightly to 1.45 percent in the first nine months of 2003 compared to 1.44 percent in the first nine months of 2002. Our return on average shareholders' equity increased to 15.02 percent in the first nine months of 2003 compared to 13.73 percent in the first nine months of 2002. BUSINESS SEGMENTS We segregate our operations into four primary business units for the purpose of management reporting, as shown in the table on the following page. The results show the financial performance of our major business units. The risk-adjusted return on capital (RAROC) methodology used seeks to attribute economic capital to business units consistent with the level of risk they assume. These risks are primarily credit risk, market risk and operational risk. Credit risk is the potential loss in economic value due to the likelihood that the 22 obligor will not perform as agreed. Market risk is the potential loss in fair value due to changes in interest rates, currency rates and equity prices. Operational risk is the potential loss due to failures in internal control, system failures, or external events. The following tables reflect the condensed income statements, selected average balance sheet items and selected financial ratios for each of our primary business units. The information presented does not necessarily represent the business units' financial condition and results of operations as if they were independent entities. Also, the tables have been expanded to include performance center earnings. A performance center is a special unit of the Bank whose income generating activities, unlike typical profit centers, are based on other business segment units' customer base. The revenues generated and expenses incurred for those transactions entered into to accommodate our customers are allocated to other business segments where the customer relationships reside. A performance center's purpose is to foster cross-selling with a total profitability view of the products and services it manages. For example, the Global Markets Trading and Sales unit, within the Global Markets Group, is a performance center that manages the foreign exchange, derivatives, and fixed income securities activities within the Global Markets organization. Unlike financial accounting, there is no authoritative body of guidance for management accounting equivalent to US GAAP. Consequently, reported results are not necessarily comparable with those presented by other companies. The RAROC measurement methodology recognizes credit expense for expected losses arising from credit risk and attributes economic capital related to unexpected losses arising from credit, market and operational risks. As a result of the methodology used by the RAROC model to calculate expected losses, differences between the provision for credit losses and credit expense in any one period could be significant. However, over an economic cycle, the cumulative provision for credit losses and credit expense for expected losses should be substantially the same. Business unit results are based on an internal management reporting system used by management to measure the performance of the units and UnionBanCal Corporation as a whole. Our management reporting system identifies balance sheet and income statement items to each business unit based on internal management accounting policies. Net interest income is determined using our internal funds transfer pricing system, which assigns a cost of funds to assets or a credit for funds to liabilities and capital, based on their type, maturity or repricing characteristics. Noninterest income and expense directly or indirectly attributable to a business unit are assigned to that business. The business units are assigned the costs of products and services directly attributable to their business activity through standard unit cost accounting based on volume of usage. All other corporate expenses (overhead) are assigned to the business units based on a predetermined percentage of usage. 23 We have restated certain business units' results for the prior periods to reflect certain transfer pricing changes and any reorganization changes that may have occurred.

25 COMMUNITY BANKING AND INVESTMENT SERVICES GROUP The Community Banking and Investment Services Group provides financial products including a set of credit, deposit, trust, risk management, and insurance products delivered through branches, relationship managers, private bankers, trust administrators, and insurance agents to individuals and small businesses. In the third quarter of 2003, net income increased $13.5 million, or 20 percent, compared to the third quarter of 2002. Total revenue increased $49.0 million, or 17 percent, compared to a year earlier. Increased asset and deposit volumes offset the effect of a lower interest rate environment leading to an increase of $34.9 million, or 18 percent, in net interest income over the prior year. Excluding the impact of performance center earnings, noninterest income was $12.9 million, or 12 percent, higher than the prior year primarily due to our acquisitions of John Burnham & Company, in the fourth quarter of 2002, and Tanner Insurance Brokers, Inc., in the second quarter of 2003, and higher deposit-related service fees. Noninterest expense increased $26.7 million, or 15 percent, in the third quarter of 2003 compared to the third quarter of 2002, with the majority of that increase being attributable to higher salaries and employee benefits mainly related to acquisitions, deposit gathering, small business growth and residential loan growth over the third quarter of 2002. In 2003, the Community Banking and Investment Services Group continues to emphasize growing the consumer asset portfolio, expanding wealth management services, extending the small business franchise, expanding the branch network, and expanding cross selling activities throughout the Bank. The strategy for growing the consumer asset portfolio primarily focused on mortgage and home equity products that may be originated through the branch network, as well as through channels such as wholesalers, correspondents, and whole loan purchases. As of September 30, 2003, residential mortgages have grown by $1.3 billion, or 21 percent, from the prior year. The Wealth Management division is focused on becoming a growing provider of banking and investment products for affluent individuals in geographic areas already served by us. We seek to provide quality service superior to that of our competitors and offer our customers an attractive product suite. Core elements of the initiative to extend our small business franchise include improving our sales force, increasing marketing activities, adding new locations, and developing online capabilities to complement physical distribution. Expansion of the distribution network will be achieved through acquisitions and new branch openings. During 2002, we completed our acquisitions of Valencia Bank and Trust, a commercial bank with $266 million in assets and five branches, and First Western Bank, a commercial bank with $224 million in assets and seven branches. On July 1, 2003, we completed the acquisition of Monterey Bay Bank, a $632 million asset savings and loan association headquartered in Watsonville, California, with eight full-service branches in the Greater Monterey Bay area. The Community Banking and Investment Services Group is comprised of five major divisions: Community Banking, Wealth Management, Institutional Services and Asset Management, Consumer Asset Management, and Insurance Services. COMMUNITY BANKING serves its customers through 278 full-service branches in California, 4 full-service branches in Oregon and Washington, and a network of 547 proprietary ATMs. Customers may also access our services 24 hours a day by telephone or through our website at www.uboc.com. In addition, the division offers automated teller and point-of-sale merchant services. This division is organized by service delivery method, by markets and by geography. We serve our customers in the following ways: o through community banking branches, which serve consumers and businesses with checking and deposit services, as well as various types of consumer financing; o through on-line access to our internet banking services, which augment our physical delivery channels by providing an array of customer transaction, bill payment and loan payment services; 26 o through branches and business banking centers, which serve businesses with annual sales up to $5 million; and o through in-store branches, which also serve consumers and businesses. WEALTH MANAGEMENT provides private banking services to our affluent clientele as well as brokerage products and services. o The Private Bank focuses primarily on delivering financial services to high net worth individuals with sophisticated financial needs as well as to professional service firms. Specific products and services include trust and estate services, investment account management services, and deposit and credit products. A key strategy of The Private Bank is to expand its business by leveraging existing Bank client relationships. Through 14 existing locations, The Private Bank relationship managers offer all of our available products and services. o Our brokerage products and services are provided through UBOC Investment Services, Inc., a registered broker/dealer offering investment products to individuals and institutional clients. Its primary strategy is to further penetrate our existing client base. INSTITUTIONAL SERVICES AND ASSET MANAGEMENT provides investment management and administration services for a broad range of individuals and institutions. o HighMark Capital Management, Inc., a registered investment advisor, provides investment advisory services to institutional clients and its proprietary mutual funds, the affiliated HighMark Funds. It also provides advisory services to Union Bank of California, N.A. trust and agency clients, including corporations, pension funds and individuals. HighMark Capital Management, Inc. also provides mutual fund support services. HighMark Capital Management, Inc.'s strategy is to increase assets under management by broadening its client base and helping to expand the distribution of shares of its mutual fund clients. o Institutional Services provides custody, corporate trust, and retirement plan services. Custody Services provides both domestic and international safekeeping/settlement services in addition to securities lending. Corporate Trust acts as trustee for corporate and municipal debt issues. Retirement Services provides a full range of defined benefit and defined contribution administrative services, including trustee services, administration, investment management, and 401(k) valuation services. The client base of Institutional Services includes financial institutions, corporations, government agencies, unions, insurance companies, mutual funds, investment managers, and non-profit organizations. Institutional Services' strategy is to continue to leverage and expand our position in our target markets. CONSUMER ASSET MANAGEMENT provides the centralized underwriting, processing, servicing, collection and administration for consumer assets including residential loans and merchant bank cards. o Consumer Asset Management is centralized in two California sites, one in San Diego and one in Brea, and o provides customer and credit management services for consumer loan products. CERTAIN INDUSTRY DEVELOPMENTS In 1996, Wal-Mart Stores, Inc. and several other retailers sued MasterCard International Incorporated ("MCI"), VISA U.S.A., Inc. and VISA International, Inc. (together, "VISA") in cases now pending in federal court in New York, asserting that MCI and VISA's rules regarding uniform acceptance of all VISA and MasterCard credit and debit cards were an illegal tying arrangement. Prior to trial, MCI and VISA agreed to settle these cases. The settlements reportedly remain subject to court approval. Neither we nor Union Bank of California, N.A. are a party to 27 these suits, and neither will be directly liable for these settlements. However, MCI or VISA may seek to assess, or assert claims against, their members (including Union Bank of California, N.A.) to fund the settlements. While our debit card interchange income declined slightly in 2003, our interchange income from debit card operations is less than one percent of our total revenue. We cannot predict the effect that the settlements, regardless of a direct claim being asserted against members, will have on the competitive environment or our future earnings from debit card operations. INSURANCE SERVICES provides a range of risk management services and insurance products to business and retail customers. The group, which includes our 2001 acquisition of Armstrong/Robitaille, Inc., our 2002 acquisition of John Burnham & Company, and our 2003 acquisition of Tanner Insurance Brokers, Inc., offers its risk management and insurance products through offices in California and Oregon. Through alliances with other financial institutions, the Community Banking and Investment Services Group offers additional products and services, such as credit cards, leasing, and asset-based and leveraged financing. The group competes with larger banks by attempting to provide service quality superior to that of its major competitors. The group's primary means of competing with community banks include its branch network and its technology to deliver banking services. The group also offers convenient banking hours to consumers through our drive-through banking locations and selected branches that are open seven days a week. The group competes with a number of commercial banks, internet banks, savings associations and credit unions, as well as more specialized financial service providers such as investment brokerage companies, consumer finance companies, and residential real estate lenders. The group's primary competitors are other major depository institutions such as Bank of America, Citibank, Washington Mutual and Wells Fargo, as well as smaller community banks in the markets in which we operate. COMMERCIAL FINANCIAL SERVICES GROUP The Commercial Financial Services Group offers financing and cash management services to middle-market and large corporate businesses primarily headquartered in the western United States. The Commercial Financial Services Group has continued to focus specialized financing expertise to specific geographic markets and industry segments such as energy, entertainment, and real estate. Relationship managers in the Commercial Financial Services Group provide credit services, including commercial loans, accounts receivable and inventory financing, project financing, lease financing, trade financing and real estate financing. In addition to credit services, the group offers its customers access to cash management services delivered through deposit managers with experience in cash management solutions for businesses and government entities. In the third quarter of 2003, net income increased $44.7 million, or 87 percent, compared to the third quarter of 2002. Net interest income increased $46.2 million, or 27 percent, partially attributable to the impact of increasing deposit balances and a lower cost of funds resulting from the lower interest rate environment. Beginning in 2003, the transfer pricing credit for funds provides for a floor on analyzed demand deposit account balances, which was triggered during the first quarter of 2003. Had such a floor existed in the third quarter of 2002, net interest income would have been approximately $13 million higher. Excluding higher income in the private equity portfolio of $3.4 million mainly related to lower writedowns on private capital investments in the third quarter of 2003 compared to the third quarter of 2002, noninterest income increased $16.9 million, or 34 percent. This 34 percent increase was mainly attributable to higher deposit-related service fees. Noninterest expense increased $4.1 million, or 4 percent, compared to a year earlier due to higher expenses to support increased product sales and deposit volume. Credit 28 expense decreased $7.8 million mainly attributable to a refinement in the RAROC allocation of capital and expected losses and lower loan balances year-over-year. The group's initiatives during 2003 include expanding wholesale deposit activities and increasing domestic trade financing. Loan strategies include originating, underwriting and syndicating loans in core competency markets, such as the California middle-market, commercial real estate, energy, entertainment, equipment leasing and commercial finance. The Commercial Financial Services Group provides strong processing services, including services such as check processing, front-end item processing, cash vault services and digital imaging. The Commercial Financial Services Group is comprised of the following business units: o the Commercial Banking Division, which serves California middle-market and large corporate companies with commercial lending, trade financing, and asset- based loans; o the Corporate Deposit and Treasury Management Division, which provides deposit and cash management expertise to clients in the middle-market, large corporate market, government agencies and specialized industries; o the Real Estate Industries Division, which provides real estate lending products such as construction loans, commercial mortgages and bridge financing; o the Energy Capital Services Division, which provides custom financing and project financing to oil and gas companies, as well as power and utility companies, nationwide and internationally; and o the Corporate Capital Markets Division, which provides custom financing to middle-market and large corporate clients in their defined industries and geographic markets, together with limited merchant and investment banking related products and services. The group competes with other banks primarily on the basis of the quality of its relationship managers, the delivery of quality customer service, and its reputation as a "business bank." The group's main strategy is to target industries and companies for which the group can reasonably expect to be one of a customer's primary banks. Consistent with its strategy, the group attempts to serve a large part of its targeted customers' credit and depository needs. The group competes with a variety of other financial services companies. Competitors include other major California banks, as well as regional, national and international banks. In addition, the group competes with investment banks, commercial finance companies, leasing companies, and insurance companies. INTERNATIONAL BANKING GROUP The International Banking Group primarily focuses on providing correspondent banking and trade finance related products and services to international financial institutions worldwide. This focus includes products and services such as letters of credit, international payments, collections and financing of mostly short-term transactions. The majority of the revenue generated by the International Banking Group is from customers domiciled outside of the US. In the third quarter of 2003, net income increased $1.6 million, or 25 percent, compared to the third quarter of 2002. Total revenue in the third quarter of 2003 increased $2.2 million, or 8 percent, compared to the third quarter of 2002. Net interest income increased $1.4 million, or 15 percent, from the third quarter of 2002, mainly attributable to both higher deposit and loan volumes. Noninterest income was $0.9 million, or 5 percent, higher than the third quarter of 2002 reflecting growth in international remittance and account analysis fees. Noninterest expense of $15.4 million was relatively unchanged from the third quarter of 2002. Credit expense of $0.5 million was relatively unchanged from the third quarter of 2002. The International Banking Group's business revolves around short-term trade financing, mostly to 29 banks, which provides service-related income, as well as significantly lower credit risk when compared to other lending activities. The group has a long history of providing correspondent banking and trade-related products and services to international financial institutions. We believe the group continues to achieve strong customer loyalty in the correspondent banking market. The International Banking Group, headquartered in San Francisco, also maintains representative offices in Asia and Latin America and an international banking subsidiary in New York. GLOBAL MARKETS GROUP The Global Markets Group conducts business activities primarily to support the previously described business groups and their customers. This group offers a broad range of risk management products, such as foreign exchange contracts and interest rate swaps and options. It trades money market, government, agency, and other securities to meet investment needs of our institutional and business clients. Another primary area of the group is treasury management for the Company, which encompasses wholesale funding, liquidity management, interest rate risk management, including securities portfolio management, and hedging activities. The Global Markets Group results include the transfer pricing activity for the Bank, which allocates to the other business segments their cost of funds on all asset categories or credit for funds in the case of all liability categories. In the third quarter of 2003, net loss was $51.5 million compared to a net loss of $4.9 million in the third quarter of 2002. Total revenue in the third quarter of 2003 decreased by $75.1 million, compared to the third quarter of 2002, resulting from a $71.5 million decrease in net interest income. The decrease in net interest income was primarily attributable to a higher transfer pricing residual in the third quarter of 2003 resulting from significantly higher quarter-over-prior year quarter growth in deposits, which are priced on longer-term liability rates, compared to credits on earning assets, which are priced on shorter-term lending rates. Beginning in 2003, the transfer pricing credit for funds provides for a floor on analyzed demand deposit account balances, which was triggered during the first quarter 2003. Had such a floor existed in the third quarter of 2002, net interest income would have declined by approximately $13 million. Noninterest income was $3.7 million, or 143 percent, lower than the third quarter of 2002, mainly attributable to losses of $2.3 million on the sale of available for sale securities in the third quarter of 2003. Compared to the third quarter of 2002, noninterest expense of $3.9 million in the third quarter of 2003 was relatively unchanged. OTHER "Other" includes the following items: o corporate activities that are not directly attributable to one of the four major business units. Included in this category are certain other nonrecurring items such as merger and integration expense, certain parent company non-bank subsidiaries, and the elimination of the fully taxable- equivalent basis amount; o the adjustment between the credit expense under RAROC and the provision for credit losses under US GAAP and earnings associated with unallocated equity capital; o the adjustment between the tax expense calculated under RAROC using a tax rate of 38.25 percent and the Company's effective tax rates; o the Pacific Rim Corporate Group, with assets at September 30, 2003 of $295 million, which offers a range of credit, deposit, and investment management products and services to companies in the US, which are affiliated with companies headquartered in Japan; and o the residual costs of support groups. 30 Net income for "Other" in the third quarter of 2003 was $20.9 million. The results were impacted by the following factors: o Credit expense (income) of ($28.0) million was due to the difference between the $20.0 million in provision for credit losses calculated under our US GAAP methodology and the $48.0 million in expected losses for the reportable business segments, which utilizes the RAROC methodology; o Net interest income of $17.0 million, which resulted from the differences between the credit for equity for the reportable segments under RAROC and the net interest income earned by UnionBanCal Corporation, and a credit for deposits in the Pacific Rim Corporate Group; o Noninterest income of $6.0 million; and o Noninterest expense of $24.1 million. Net income for "Other" in the third quarter of 2002 was $17.3 million. The results were impacted by the following factors: o Credit expense (income) of ($15.3) million was due to the difference between the $40.0 million in provision for credit losses calculated under our US GAAP methodology and the $55.3 million in expected losses for the reportable business segments, which utilizes the RAROC methodology; offset by o Net interest income of $19.0 million, which resulted from the differences between the credit for equity for the reportable segments under RAROC and the net interest income earned by UnionBanCal Corporation, and a credit for deposits in the Pacific Rim Corporate Group; o Noninterest income of $5.2 million; and o Noninterest expense of $23.7 million. 31 NET INTEREST INCOME The following tables show the major components of net interest income and net interest margin.

33 Our net interest income is impacted by changes in interest rates, the steepening and flattening of the yield curve and changes in volumes and mix of earning assets, deposits, and interest bearing liabilities. In addition, we use interest rate derivatives as an asset-liability management tool to manage the effect of changes in interest rates on net interest income. These interest rate derivatives have offset a portion of the interest rate compression experienced over the past year. If interest rates remain at their current levels, our net interest income will be positively impacted by our in-the-money hedge positions but to a lesser extent, as our existing cash flow hedges mature. THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2003 Net interest income, on a taxable-equivalent basis, was $401.7 million in the third quarter of 2003, compared with $392.6 million in the third quarter of 2002. This increase of $9.1 million, or 2 percent, was attributable primarily to the impact of the decreasing interest rate environment on interest bearing liabilities, increasing average noninterest bearing deposits, and higher earning assets, mostly offset by significantly lower yields on our earning assets. Decreasing market rates resulted in lower average rates on our interest bearing liabilities of 63 basis points on average balances of $20.8 billion, which was mostly offset by lower average yields of 92 basis points on average earning assets of $37.9 billion, which was favorably impacted by higher interest rate derivatives income of $10.8 million. Mitigating the impact of the lower interest rate environment on our net interest margin was an increase in average earning assets of $5.1 billion, primarily in securities and residential mortgage loans, funded by a $3.8 billion, or 31 percent, increase in average noninterest bearing deposits. As a result of these changes and a flattening yield curve environment, as long-term interest rates declined, our net interest margin decreased by 55 basis points, to 4.22 percent. Average earning assets were $37.9 billion in the third quarter of 2003, compared with $32.8 billion in the third quarter of 2002. This growth was attributable to a $4.0 billion, or 68 percent, increase in average securities, a $652.5 million, or 199 percent, increase in federal funds sold and securities purchased under resale agreements and a $360.5 million, or 1 percent, increase in average loans. The increase in average securities, which were comprised primarily of fixed rate securities, reflected liquidity and interest rate risk management actions. The increase in average loans was mostly due to a $1.4 billion increase in average residential mortgages, as we have continued to strategically shift from non-relationship commercial lending, and a $399.8 million increase in average commercial mortgages, partly offset by a $1.3 billion decrease in average commercial, financial, and industrial loans. The increase in federal funds sold and securities purchased under resale agreements was mainly attributed to a significant acceleration in the rate of deposit growth relative to loan growth. Deposit growth, especially in our title and escrow industries, has contributed significantly to our lower cost of funds year-over-year. Average noninterest bearing deposits were $3.8 billion, or 31 percent, higher in the third quarter of 2003 over the prior year, which included a $1.2 billion increase in average title and escrow deposits. We anticipate that the growth rates in average noninterest bearing deposits will decline from the 2003 growth rates as refinancings slow down due to interest rate increases. NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2003 Net interest income, on a taxable-equivalent basis, was $1.18 billion in the first nine months of 2003, compared with $1.16 billion in the first nine months of 2002. This increase of $19.7 million, or 2 percent, was attributable primarily to the impact of the decreasing interest rate environment throughout the prior year on interest bearing liabilities, increasing average noninterest bearing deposits, and higher earning assets, more than offset by significantly lower yields on our earning assets. Decreasing market rates resulted in lower rates on our interest bearing liabilities of 59 basis points on average balances of $20.0 billion, which was partly offset by a lower average yield of 80 basis points on average earning assets of $36.3 billion, which was favorably impacted by higher interest rate derivatives income of $27.1 million. Mitigating the impact of the lower interest rate environment on our net interest margin was an increase in 34 average earning assets of $3.8 billion, primarily in securities and residential mortgage loans, funded by a $3.2 billion, or 27 percent, increase in average noninterest bearing deposits. As a result of these changes and a flattening yield curve environment, as long-term interest rates declined, our net interest margin decreased by 42 basis points, to 4.35 percent. Average earning assets were $36.3 billion in the first nine months of 2003, compared with $32.5 billion in 2002. This growth was attributable to a $2.5 billion, or 45 percent, increase in average securities and a $960.2 million, or 4 percent, increase in average loans. The increase in average securities, which were comprised primarily of fixed rate securities, reflected liquidity and interest rate risk management actions. The increase in average loans was mostly due to a $1.4 billion increase in average residential mortgages, which was a result of a strategic portfolio shift from more volatile commercial loans and a $456.7 million increase in average commercial mortgages, partially offset by a $774.7 million decrease in average commercial, financial, and industrial loans. Deposit growth, especially in our title and escrow industries, has contributed significantly to our lower cost of funds year-over-year. Average noninterest bearing deposits were $3.2 billion, or 27 percent, higher in the first nine months of 2003 over the first nine months of 2002, which included a $1.1 billion increase in average title and escrow deposits. NONINTEREST INCOME

THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2003 In the third quarter of 2003, noninterest income was $201.5 million, an increase of $32.4 million, or 19 percent, over the third quarter of 2002. This increase was mainly attributable to a $13.2 million increase in service charges on deposit accounts, a $9.6 million increase in insurance commissions, and lower net losses of $5.6 million for commercial loans held for sale. Revenue from service charges on deposit accounts was $81.8 million, an increase of $13.2 million or 19 percent over the third quarter of 2002. This increase was primarily attributable to a 25 percent increase in quarterly average demand deposits (excluding title and escrow deposits) and overdraft fees of $3.5 million associated with a new overdraft program introduced in April 2003. Trust and investment management fees were $35.4 million, up slightly from the third quarter of 2002. Total assets under administration were $147.1 billion as of September 30, 2003, an increase of $17.4 billion, or 13 percent, from September 30, 2002. The increase in asset levels has been in lower earning, non-managed assets, while higher earning managed assets have declined. The change in the mix of assets 35 has led to the relatively flat revenue levels. In addition, the current low interest rate environment has led to a significant reduction in balances in the HighMark money market funds. Insurance commissions were $15.8 million, an increase of $9.6 million, or 153 percent, over the third quarter of 2002, primarily reflecting the incremental revenues associated with our insurance agency acquisitions. Other noninterest income was $14.0 million, an increase of $9.4 million, or 205 percent from the third quarter of 2002. This increase included: o lower net losses of $5.6 million for commercial loans held for sale, and o lower writedowns on private capital investments of $3.7 million in the third quarter of 2003 compared to the third quarter of 2002 as the economy appears to be improving. Our private capital investments include direct investments in private and public companies and indirect investments in private equity funds. The fair values of publicly traded investments are determined by using quoted market prices. Investments that are not publicly traded are initially valued at cost and subsequent adjustments to fair value are estimated based on a company's business model, current projected financial performance, liquidity and overall economic and market conditions. NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2003 In the first nine months of 2003, noninterest income was $590.4 million, an increase of $85.9 million, or 17 percent, over the first nine months of 2002. This increase was mainly attributable to a $27.4 million increase in service charges on deposit accounts, a $25.1 million increase in insurance commissions, lower writedowns on private capital investments of $13.6 million, lower residual value writedowns on auto leases of $9.0 million, lower net losses of $8.0 million for commercial loans held for sale, a $5.5 million increase in international commissions and fees and a $4.1 million increase in net securities gains mainly attributable to a $9.0 million gain arising from the early call of a Mexican Brady Bond, partly offset by an $8.4 million decrease in trust and investment management fees. Revenue from service charges on deposit accounts was $232.1 million, an increase of $27.4 million, or 13 percent, over the first nine months of 2002. This increase was primarily attributable to a 22 percent increase in average demand deposits (excluding title and escrow deposits) over the first nine months of 2002 and overdraft fees of $7.0 million associated with a new overdraft program introduced in April 2003. Trust and investment management fees were $101.2 million, a decrease of $8.4 million, or 8 percent, from the first nine months of 2002. This decrease is primarily attributable to the decline in equity market values and lower revenues as our clients shift toward fixed income investments. In addition, the current low interest rate environment has led to a significant reduction in balances in the HighMark money market funds. International commissions and fees were $63.1 million, an increase of $5.5 million, or 10 percent, reflecting a stronger growth in international markets. Insurance commissions were $45.1 million, an increase of $25.1 million, or 126 percent, reflecting the incremental revenues associated with our insurance agency acquisitions, and growth in insurance commissions at Armstrong/Robitaille, Inc. Securities gains, net, were $7.0 million compared to securities gains, net, of $3.0 million in the first nine months of 2002. In the first nine months of 2003, we realized a gain of $9.0 million on an early call of a Mexican Brady Bond. Other noninterest income was $44.9 million, an increase of $33.8 million, or 303 percent, from the first nine months of 2002. This increase was mainly attributable to lower writedowns on private capital investments of $13.6 million, reflecting an improving economy, a decrease of $9.0 million in residual value 36 writedowns on auto leases, as our auto lease portfolio liquidates, lower net losses of $8.0 million for commercial loans held for sale and $3.7 million in insurance recoveries from the September 11, 2001 World Trade Center attack recorded in the current year. NONINTEREST EXPENSE

THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2003 In the third quarter of 2003, noninterest expense was $348.9 million, an increase of $31.0 million, or 10 percent, over the third quarter of 2002. This increase was primarily due to a $23.0 million increase in salaries and employee benefits and a $4.0 million increase in net occupancy. Salaries and employee benefits were $205.3 million, an increase of $23.0 million, or 13 percent, over the third quarter of 2002. This increase was primarily attributable to annual merit increases, higher staff levels associated with our recent acquisitions, higher performance-related incentive expense, and increased insurance and health benefits expenses due to increasing healthcare costs. Net occupancy expense was $31.3 million, an increase of $4.0 million, or 15 percent over the third quarter of 2002. This increase was primarily attributable to recent acquisitions, new branch openings, other facilities restructuring initiatives and higher property insurance. NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2003 In the first nine months of 2003, noninterest expense was $1.04 billion, an increase of $96.4 million, or 10 percent, over the first nine months of 2002. This increase was primarily due to a $55.1 million increase in salaries and employee benefits and a $16.1 million increase in net occupancy, including $4.2 million related to the write-off of certain leasehold improvements. Salaries and employee benefits were $602.3 million, an increase of $55.1 million, or 10 percent, over the first nine months of 2002. This increase was primarily attributable to annual merit increases, higher staff levels mostly associated with our recent acquisitions, higher performance-related incentive expense, increased insurance and health benefits expense due to increasing healthcare costs, and higher 401(k) plan expenses. Net occupancy expense was $91.8 million, an increase of $16.1 million, or 21 percent, over the first nine months of 2002. This increase was primarily attributable to recent acquisitions, new branch openings, 37 other facilities restructuring initiatives, higher property insurance and a $4.2 million write-off of certain leasehold improvements. Professional services expense was $38.3 million, an increase of $7.5 million, or 24 percent over the first nine months of 2002. This increase was primarily attributable to increased legal services, consulting and other professional service expenses. Intangible asset amortization was $8.3 million, an increase of $4.6 million, or 126 percent, from the first nine months of 2002. This increase was primarily associated with our acquisitions in the fourth quarter of 2002 and in 2003. Other noninterest expense was $125.8 million, an increase of $9.5 million, or 8 percent, over the first nine months of 2002. This increase was primarily attributable to a $6.4 million increase in low-income housing credit (LIHC) amortization expense mostly related to a higher number of LIHC investments in the current year and higher operating losses of $3.9 million mostly related to an increase in the provision for contingency losses associated with various lawsuits. INCOME TAX EXPENSE Income tax expense in the third quarter of 2003 was $78.7 million, resulting in a 34 percent effective income tax rate. For the third quarter of 2002, the effective income tax rate was 32 percent, which included a $3.3 million net reduction to income tax expense resulting from a change in tax law in the State of California concerning the tax treatment of loan loss reserves. Income tax expense in the first nine months of 2003 was $215.3 million, resulting in a 33 percent effective income tax rate. For the first nine months of 2002, the effective income tax rate was also 33 percent. LOANS The following table shows loans outstanding by loan type.

38 Our lending activities are predominantly domestic, with such loans comprising 94 percent of the total loan portfolio at September 30, 2003. Total loans at September 30, 2003, were $26.0 billion, an increase of $85 million, or 0.3 percent, from September 30, 2002. The increase was mainly attributable to an increase in the residential mortgage portfolio of $1.3 billion, an increase in the commercial mortgage portfolio of $360 million, and an increase in the loans originated in foreign branches of $175 million, partly offset by a decline in the commercial, financial and industrial loan portfolio of $1.5 billion and a decline in lease financing of $169 million. Commercial, financial and industrial loans represent one of the largest categories in the loan portfolio. These loans are extended principally to corporations, middle-market businesses, and small businesses, with no industry concentration exceeding 10 percent of total loans. This portfolio has a high degree of geographic diversification based upon our customers' revenue bases, which we believe lowers our vulnerability to changes in the economic outlook of any particular region of the US. The commercial, financial and industrial loan portfolio was $9.3 billion, or 36 percent of total loans, at September 30, 2003, compared with $10.8 billion, or 41 percent of total loans, at September 30, 2002. The decrease of $1.5 billion, or 14 percent, from the prior year was primarily attributable to current economic conditions that have reduced loan demand in some segments. Loan sales and managed exits also contributed to the decline and are consistent with our strategy to reduce our exposure to more volatile commercial loans and increase the percentage of more stable consumer loans (including residential mortgages). The construction loan portfolio totaled $1.1 billion, or 4 percent of total loans, at September 30, 2003, compared with $1.3 billion, or 5 percent of total loans, at September 30, 2002. This decrease of $132 million, or 10 percent, from the prior year was primarily attributable to the slowing economy and its impact on development and construction projects. Commercial mortgages were $4.3 billion, or 17 percent of total loans, at September 30, 2003, compared with $4.0 billion, or 15 percent, at September 30, 2002. The mortgage loan portfolio consists of loans on commercial and industrial projects primarily in California. The increase in commercial mortgages of $360 million, or 9 percent, from September 30, 2002, was primarily due to our acquisition of Monterey Bay Bank in the third quarter of 2003. Residential mortgages were $7.1 billion, or 27 percent of total loans, at September 30, 2003, compared with $5.9 billion, or 23 percent of total loans, at September 30, 2002. The increase in residential mortgages of $1.3 billion, or 21 percent, from September 30, 2002, continues to be influenced by high refinance market due to low rates. While we hold most of the loans we originate, we sell most of our 30-year, fixed rate non-Community Reinvestment Act (CRA) residential mortgage loans. Consumer loans totaled $2.0 billion, or 8 percent of total loans, substantially unchanged from September 30, 2002. A slight increase in consumer loans of $79.0 million, or 4 percent, was primarily attributable to an increase in home equity loans, partially offset by pay-offs related to the run-off of the automobile dealer lending business exited in the third quarter of 2000. The indirect automobile dealer lending portfolio at September 30, 2003 was $68.3 million. Lease financing totaled $668.1 million, or 3 percent of total loans, at September 30, 2003, compared with $836.7 million, or 3 percent of total loans, at September 30, 2002. As we announced in 2001, we have ceased originating auto leases. At September 30, 2003, our portfolio had declined to $119.6 million and will decline 40 percent by December 2003, 90 percent by December 2004, and will fully mature by mid-year 2006. Loans originated in foreign branches totaled $1.5 billion, or 6 percent of total loans, at September 30, 2003, compared with $1.3 billion, or 5 percent, at September 30, 2002. The increase in loans originated in foreign branches of $174.7 million, or 13 percent, from September 30, 2002, was primarily attributable to higher trade finance borrowings from financial institutions attracted to lower US interest rates and increased lending in Canada where we established a branch in 2002. 39 CROSS-BORDER OUTSTANDINGS Our cross-border outstandings reflect certain additional economic and political risks that are not reflected in domestic outstandings. These risks include those arising from exchange rate fluctuations and restrictions on the transfer of funds. The following table sets forth our cross-border outstandings as of September 30, 2002, December 31, 2002 and September 30, 2003, for any country where such outstandings exceeded 1 percent of total assets. The cross-border outstandings were compiled based upon category and domicile of ultimate risk and are comprised of balances with banks, trading account assets, securities available for sale, securities purchased under resale agreements, loans, accrued interest receivable, acceptances outstanding and investments with foreign entities. The amounts outstanding exclude local currency outstandings. For any country shown in the table below, we do not have significant local currency outstandings that are not hedged or are not funded by local currency borrowings.

40 PROVISION FOR CREDIT LOSSES We recorded a $20 million provision for credit losses in the third quarter of 2003, compared with a $40 million provision for credit losses for the same period in the prior year. The provision for credit losses in the first nine months of 2003 was $75 million, compared with a $145 million provision for credit losses for the same period in the prior year. Provisions for credit losses are charged to income to bring our allowance for credit losses to a level deemed appropriate by management based on the factors discussed under "Allowance for Credit Losses" below. ALLOWANCE FOR CREDIT LOSSES We maintain an allowance for credit losses to absorb losses inherent in the loan portfolio. The allowance is based on our regular, quarterly assessments of the probable estimated losses inherent in the loan portfolio, and to a lesser extent, unused commitments to provide financing. Our methodology for measuring the appropriate level of the allowance relies on several key elements, which include the formula allowance, specific allowances for identified problem loans and portfolio segments, and the unallocated allowance. The formula allowance is calculated by applying loss factors to outstanding loans, leases and unused commitments, in each case based on the internal risk grade of such credit exposures. Changes in risk grades affect the amount of the formula allowance. Loss factors are based on our historical loss experience and may be adjusted for significant factors that, in management's judgment, affect the collectibility of the portfolio as of the evaluation date. Loss factors are developed in the following ways: o pass graded loss factors for commercial, financial, and industrial loans, as well as all problem graded loan loss factors, are derived from a migration model that tracks historical losses over a period, which we believe captures the inherent losses in our loan portfolio; o pass graded loss factors for commercial real estate loans and construction loans are based on the average annual net charge-off rate over a period reflective of a full economic cycle; and o pooled loan loss factors (not individually graded loans) are based on expected net charge-offs for one year. Pooled loans are loans that are homogeneous in nature, such as consumer installment, home equity, residential mortgage loans and automobile leases. We believe that an economic cycle is a period in which both upturns and downturns in the economy have been reflected. We calculate loss factors over a time interval that we believe is reflective of a complete and representative economic cycle. Specific allowances are established in cases where management has identified significant conditions or circumstances related to a credit or a portfolio segment that management believes indicate the probability that a loss has been incurred. This amount may be determined either by a method prescribed by SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan--Income Recognition and Disclosures" or methods that include a range of probable outcomes based upon certain qualitative factors. The unallocated allowance is based on management's evaluation of conditions that are not directly reflected in the determination of the formula and specific allowances. The evaluation of the inherent loss with respect to these conditions is subject to a higher degree of uncertainty because they may not be identified with specific problem credits or portfolio segments. The conditions evaluated in connection with the unallocated allowance include the following, which existed at the balance sheet date: o general economic and business conditions affecting our key lending areas; o credit quality trends (including trends in nonperforming loans expected to result from existing conditions); 41 o collateral values; o loan volumes and concentrations; o seasoning of the loan portfolio; o specific industry conditions within portfolio segments; o recent loss experience in particular segments of the portfolio; o duration of the current economic cycle; o bank regulatory examination results; and o findings of our internal credit examiners. Executive management reviews these conditions quarterly in discussion with our senior credit officers. To the extent that any of these conditions is evidenced by a specifically identifiable problem credit or portfolio segment as of the evaluation date, management's estimate of the effect of such conditions may be reflected as a specific allowance, applicable to such credit or portfolio segment. Where any of these conditions is not evidenced by a specifically identifiable problem credit or portfolio segment as of the evaluation date, management's evaluation of the probable loss related to such condition is reflected in the unallocated allowance. The allowance for credit losses is based upon estimates of probable losses inherent in the loan portfolio. The actual losses can vary from the estimated amounts. Our methodology includes several features that are intended to reduce the differences between estimated and actual losses. The loss migration model that is used to establish the loan loss factors for problem graded loans and pass graded commercial, financial, and industrial loans is designed to be self-correcting by taking into account our loss experience over prescribed periods. Similarly, by basing the pass graded loan loss factors over a period reflective of an economic cycle, the methodology is designed to take into account our recent loss experience for commercial real estate mortgages and construction loans. Pooled loan loss factors are adjusted quarterly primarily based upon the level of net charge-offs expected by management in the next twelve months. Furthermore, based on management's judgement, our methodology permits adjustments to any loss factor used in the computation of the formula allowance for significant factors, which affect the collectibility of the portfolio as of the evaluation date, but are not reflected in the loss factors. By assessing the probable estimated losses inherent in the loan portfolio on a quarterly basis, we are able to adjust specific and inherent loss estimates based upon the most recent information that has become available. COMPARISON OF THE TOTAL ALLOWANCE AND RELATED PROVISION FOR CREDIT LOSSES FROM DECEMBER 31, 2002 At December 31, 2002, our total allowance for credit losses was $609 million, or 2.30 percent of the total loan portfolio and 180.9 percent of total nonaccrual loans. At September 30, 2003, our total allowance for credit losses was $551 million, or 2.11 percent of the total loan portfolio and 161.4 percent of total nonaccrual loans. In addition, the allowance incorporates the results of measuring impaired loans as provided in SFAS No. 114 as amended by SFAS No. 118. These accounting standards prescribe the measurement methods, income recognition and disclosures related to impaired loans. At December 31, 2002, total impaired loans were $300 million, and the associated impairment allowance was $106 million, compared with $289 million and $93 million, respectively, at September 30, 2003. On September 30, 2003 and December 31, 2002, the total allowance for credit losses for off-balance sheet commitments was $78.5 million and $75.4 million, respectively. During the third quarter of 2003, there were no changes in estimation methods or assumptions that affected our methodology for assessing the appropriateness of the formula and specific allowances for credit losses, except for an adjustment in the years in the historical period used to calculate loss factors, which resulted in a $14 million increase to the allocated allowance. We believe that this adjustment more 42 closely reflects the current economic environment. Changes in estimates and assumptions regarding the effects of economic and business conditions on borrowers and other factors, which are described below, affected the assessment of the unallocated allowance. We recorded a $20 million provision in the third quarter of 2003, which took into consideration the following factors: fragility of the U.S. economy; weakness in capital spending and employment growth; and trends in credit quality. CHANGES IN THE FORMULA AND SPECIFIC ALLOWANCES At September 30, 2003, the formula allowance was $272 million, compared to $294 million at December 31, 2002, a decrease of $22 million. The decline in the formula allowance is primarily related to lower levels of criticized credits. The specific allowance was $104 million at September 30, 2003, compared to $121 million at December 31, 2002, a decrease of $17 million. The decrease in the specific allowance is due to slightly lower average loss content on reduced levels of impaired loans. CHANGES IN THE UNALLOCATED ALLOWANCE At September 30, 2003, the unallocated allowance was $175 million, compared to $194 million at December 31, 2002, a decrease of $19 million. In evaluating the appropriateness of the unallocated allowance, we considered the following factors, as well as more general factors such as the interest rate environment and the impact of the economic downturn on those borrowers who have a more leveraged financial profile: o With respect to the commercial real estate sector, management considered the continuing weak demand growth and excess supply in many markets with the national office vacancy rate continuing to rise and average rents falling, as well as the specific weakness in Northern California resulting from regional over-dependence on the technology sector and some portfolio concentration in the office and apartment markets, which could be in the range of $16 million to $32 million. o With respect to the communications/media industry, management considered the impact of low consumer confidence on consumer spending and weak, although improving, advertising revenues, as well as the increasingly competitive environment facing telecommunication carriers, which could be in the range of $11 million to $31 million. o With respect to power companies and utilities, management considered the continuing excess capacity and weak prices in the power generation market, compounded by the costs and disruptions of moving out of merchant generation and energy trading operations, which could be in the range of $14 million to $28 million. o With respect to cross-border loans and acceptances to certain Asia/Pacific Rim countries, management considered the effects of slower US growth up to very recently, Japan's continuing struggle to break out of recession and the need for further structural reform across most of the East Asian region, which could be in the range of $8 million to $17 million. o With respect to the retail sector, management considered the adverse effects of still weak labor markets, high consumer debt levels and near-record personal bankruptcies, which could be in the range of $6 million to $12 million. o With respect to the State of California, management considered the adverse effects of the recent Gubernatorial recall, which aggravated an already volatile political environment and uncertain fiscal situation, and the severity of challenges that the new Governor will face, which could be in the range of $6 million to $12 million. 43 o With respect to leasing, management considered the ongoing problems of the airline industry as it continues to struggle with the weaker economy, the sluggish recovery of international travel and high fuel prices, which could be in the range of $5 million to $11 million. o With respect to the technology industry, management considered weak, although improving, capital spending in the US, as well as the effects of steepening price declines resulting in less robust revenue growth, which could be in the range of $4 million to $9 million. There can be no assurance that the adverse impact of any of these conditions on us will not be in excess of the ranges set forth above. Although in certain instances the downgrading of a loan resulting from these effects was reflected in the formula allowance, management believes that in most instances the impact of these events on the collectibility of the applicable loans may not have been reflected in the level of nonperforming loans or in the internal risk grading process with respect of such loans. Accordingly, our evaluation of the probable losses related to these factors was reflected in the unallocated allowance. The evaluations of the inherent losses with respect to these factors were subject to higher degrees of uncertainty because they were not identified with specific problem credits. CHANGE IN THE TOTAL ALLOWANCE FOR CREDIT LOSSES The following table sets forth a reconciliation of changes in our allowance for credit losses.

44 Total loans charged off in the third quarter of 2003 increased by $0.8 million from the third quarter of 2002. Charge-offs reflect the realization of losses in the portfolio that were recognized previously through provisions for credit losses. Third quarter 2003 recoveries of loans previously charged off increased by $4.3 million from the third quarter of 2002. The percentage of net loans charged off to average loans outstanding for the third quarter of 2003 decreased by 6 basis points from the same period in 2002. At September 30, 2003, the allowance for credit losses exceeded the annualized net loans charged off during the third quarter of 2003, reflecting management's belief, based on the foregoing analysis, that there are additional losses inherent in the portfolio. Historical net charge-offs are not necessarily indicative of the amount of net charge-offs that we will realize in the future. NONPERFORMING ASSETS

At September 30, 2003, nonperforming assets totaled $344.3 million, an increase of $6.9 million, or 2 percent, from December 31, 2002. This relatively small increase was primarily due to a significant reduction in inflows of new nonperforming loans during 2003. The increase in nonaccrual loans was primarily due to our decision to place additional airplane leases on nonaccrual, partially offset by our decision during the second quarter of 2003, to return two airplane leases, totaling $18.3 million, to accrual status. In addition, we placed two San Francisco Bay Area office loans, totaling approximately $22.8 million, on nonaccrual status in the second quarter of 2003. Nonaccrual loans as a percentage of total loans were 1.31 percent at September 30, 2003, compared with 1.52 percent at September 30, 2002. Nonperforming assets as a percentage of total loans and foreclosed assets were 1.32 percent at September 30, 2003, compared to 1.52 percent at September 30, 2002. 45 LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING

The increase in commercial, financial, and industrial loans 90 days or more past due, but still accruing is attributable to one loan of $17.8 million that is current on its interest payments but is past its maturity date. We expect that this facility will be refinanced in the fourth quarter of 2003 and will not become a nonperforming asset. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT INTEREST RATE RISK MANAGEMENT (OTHER THAN TRADING) THE FOLLOWING INFORMATION ON MARKET RISK ASSOCIATED WITH INTEREST RATE RISK IS BEING PROVIDED IN ORDER TO EXPAND THE INFORMATION ON THE ASSUMPTIONS USED IN OUR SIMULATION MODELS, WHICH QUANTIFY OUR SENSITIVITY TO CHANGES IN INTEREST RATES. SEE ALSO PART I, ITEM 3 OF THIS DOCUMENT, TITLED "QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK." Market risk is the risk of loss to future earnings, to fair values, or to future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments, including securities, loans, deposits, and borrowings, as well as derivative instruments. Our exposure to market risk is a function of our asset and liability management activities, our trading activities for our own account, and our role as a financial intermediary in customer-related transactions. The objective of market risk management is to avoid excessive exposure of our earnings and equity to loss and to reduce the volatility inherent in certain financial instruments. The management of market risk is governed by policies reviewed and approved annually by our Board of Directors (Board). The Board assigns responsibility for the administration of market risk management to the Chief Executive Officer who designates the chairman of the Asset & Liability Management Committee (ALCO), a committee composed of UnionBanCal Corporation executives. ALCO meets monthly and reports quarterly to the Finance and Capital Committee of the Board on activities related to the management of market risk. As part of the management of our market risk, ALCO may direct changes in the mix of assets and liabilities and the extent to which we utilize investment securities and derivative instruments such as interest rate swaps, caps and floors to hedge our interest rate exposures. ALCO reviews and approves specific market risk management programs involving investment and hedging activities and certain market risk limits. The ALCO Chairman is responsible for the company-wide management of market risk. The Treasurer is responsible for implementing funding, investing, and hedging strategies designed to manage this risk. On a day-to-day basis, the monitoring of market risk takes place at a centralized level within the Market Risk Monitoring unit (MRM). MRM is responsible for measuring risks to ensure compliance with all market risk limits and guidelines incorporated within the policies and procedures established by the Board and ALCO. MRM reports monthly to ALCO on trading risk exposures and on compliance with interest rate risk, securities portfolio and derivatives policy limits. MRM 46 also reports quarterly to ALCO on the effectiveness of our hedging activities. In addition, periodic reviews by our internal audit department and regulators provide further evaluation of controls over the risk management process. We have separate and distinct methods for managing the market risk associated with our trading activities and our asset and liability management activities, as described below. INTEREST RATE RISK MANAGEMENT (OTHER THAN TRADING) We engage in asset and liability management activities with the primary purposes of managing the sensitivity of net interest income (NII) to changes in interest rates within limits established by the Board and maintaining a risk profile that is consistent with management's strategic objectives. The Asset & Liability Management (ALM) Policy approved by the Board requires monthly monitoring of interest rate risk by ALCO through a variety of modeling techniques that are used to quantify the sensitivity of NII to changes in interest rates. As directed by ALCO, and in consideration of the importance of our demand deposit accounts as a funding source, NII is adjusted in the official policy risk measure to incorporate the effect of certain noninterest expense items related to these deposits that are nevertheless sensitive to changes in interest rates. In managing interest rate risk, ALCO monitors NII sensitivity on both an adjusted and unadjusted basis. Our unhedged NII remains inherently asset sensitive, meaning that our assets generally reprice more quickly than our liabilities, particularly our core deposits. Since the NII associated with an asset sensitive balance sheet tends to decrease when interest rates decline and increase when interest rates rise, derivative hedges and the securities portfolio are used to manage this risk. In the third quarter of 2003, we entered into $1 billion in interest rate floors to offset the adverse impact that declining interest rates could have on the interest income generated by our variable rate commercial loans. We continued to increase the size of our securities portfolio in response to strong growth in core deposits. Our recent purchases were concentrated in short duration securities to maintain flexibility to respond to changes in interest rates. For a further discussion of derivative instruments and our hedging strategies, see Note 16--"Derivative Instruments" of the Notes to Consolidated Financial Statements included in our Form 10-K/A for the year ended December 31, 2002. Together, our hedging and investment activities resulted in an essentially neutral risk profile for the hedged balance sheet with respect to parallel yield curve shifts. However, our NII is also sensitive to non-parallel shifts in the yield curve. In general, our NII increases when the yield curve steepens (specifically when short rates, under one year, drop and long rates, beyond one year, rise), while a flattening curve tends to depress our NII and net interest margin. In this respect, our NII is asset sensitive when measured against changes in long rates and slightly liability sensitive when measured against changes in short rates. This asset sensitivity in relation to a flattening of the yield curve is manifested in the NII simulations primarily by an acceleration of mortgage prepayments (in both the residential portfolio and securities portfolio) when long rates decline. In the current rate environment, run off of fixed rate assets, including prepayments, depress NII even if interest rates do not change because the cash flows from the repaid and prepaid assets that were booked at higher rates must be reinvested at lower prevailing rates. As a result, we expect the low prevailing rates, coupled with the recent high volume of prepayments, will further compress our net interest margin and negatively affect NII in the coming months, even if market rates remain at current levels. Our official NII policy measure involves a simulation of "Earnings-at-Risk" (EaR) in which we estimate the impact that gradual, ramped-on parallel shifts in the yield curve would have on NII over a 12-month horizon. Under the Board's policy limits, the negative change in simulated NII in either the up or down 200 basis point shock scenarios may not exceed 4 percent of NII as measured in the base case, or 47 no change, scenario. The following table sets forth the simulation results in both the up and down 200 basis point ramp scenarios as of June 30, 2003 and September 30, 2003(1):

EaR in the down 200 basis point scenario was ($16.0) million, or 1.21 percent of adjusted NII in the base case scenario, well within the Board's guidelines. However, with federal funds and LIBOR rates already below two percent, a downward ramp scenario of 200 basis points would result in short-term rate levels below zero. As a result, we believe that a downward ramp scenario of 100 basis points provides a more reasonable measure of asset sensitivity in a falling interest rate environment. As of September 30, 2003, the difference between adjusted NII in the base case and adjusted NII after a gradual 100 basis point downward ramp was a negative $6.5 million, or .45 percent of the base case. Management's goal in the NII simulations is to capture the risk embedded in the balance sheet. As a result, asset and liability balances are kept constant throughout the analysis horizon. Two exceptions are non-maturity deposits, which vary with levels of interest rates according to statistically derived balance equations, and discretionary derivative hedges and fixed income portfolios, which are allowed to run off. Additional assumptions are made to model the future behavior of deposit rates and loan spreads based on statistical analysis, management's outlook, and historical experience. The prepayment risks related to residential loans and mortgage-backed securities are measured using industry estimates of prepayment speeds. The sensitivity of the simulation results to the underlying assumptions is tested as a regular part of the risk measurement process by running simulations with different assumptions. In addition, management supplements the official risk measures based on the constant balance sheet assumption with volume-based simulations of NII based on forecasted balances and with value-based simulations that measure the sensitivity of economic- value-of-equity (EVE) to changes in interest rates. We believe that, together, these simulations provide management with a reasonably comprehensive view of the sensitivity of our operating results to changes in interest rates, at least over the measurement horizon. However, as with any financial model, the underlying assumptions are inherently uncertain and subject to refinement as modeling techniques and theory improve and historical data becomes more readily accessible. Consequently, our simulation models cannot predict with certainty how rising or falling interest rates might impact net interest income. Actual and simulated NII results will differ to the extent there are differences between actual and assumed interest rate changes, balance sheet volumes, and management strategies, among other factors. TRADING ACTIVITIES We enter into trading account activities primarily as a financial intermediary for customers, and, to a minor extent, for our own account. By acting as a financial intermediary, we are able to provide our customers with access to a wide range of products from the securities, foreign exchange, and derivatives markets. In acting for our own account, we may take positions in some of these instruments with the objective of generating trading profits. These activities expose us to two primary types of market risk: interest rate and foreign currency exchange risk. 48 In order to manage interest rate and foreign currency exchange risk associated with our trading activities, we utilize a variety of non-statistical methods including: position limits for each trading activity, daily marking of all positions to market, daily profit and loss statements, position reports, and independent verification of all inventory pricing. Additionally, Market Risk Monitoring (MRM) reports positions and profits and losses daily to the Treasurer and trading managers and weekly to the ALCO Chairman. ALCO is provided reports on a monthly basis. We believe that these procedures, which stress timely communication between MRM and senior management, are the most important elements of the risk management process. We use a form of Value at Risk (VaR) methodology to measure the overall market risk inherent in our trading account activities. Under this methodology, management statistically calculates, with 97.5 percent confidence, the potential loss in fair value that we might experience if an adverse shift in market prices were to occur within a period of 5 business days. The amount of VaR is managed within limits well below the maximum limit established by Board policy at 0.5 percent of shareholders' equity. The VaR model incorporates a number of key assumptions, including assumed holding period and historical volatility based on 3 years of historical market data updated quarterly. The following table sets forth the average, high and low year-to-date VaR for our trading activities.

Consistent with our business strategy of focusing on the sale of capital markets products to customers, we manage our trading risk exposures at conservative levels, well below the trading risk policy limits established by the Board. As a result, our foreign exchange business continues to derive the bulk of its revenue from customer-related transactions. We take inter-bank trading positions only on a limited basis and we do not take any large or long-term strategic positions in the market for the Bank's own portfolio. We continue to grow our customer-related foreign exchange business while maintaining an essentially unchanged inter-bank trading risk profile as measured under our VaR methodology. The Securities Trading & Institutional Sales department serves the fixed income needs of our institutional clients and acts as the fixed income wholesaler for our broker/dealer subsidiary, UBOC Investment Services, Inc. As with our foreign exchange business, we continue to generate the vast majority of our securities income from customer-related transactions. Our interest rate derivative contracts included as of September 30, 2003, $3.8 billion of derivative contracts entered into as an accommodation for customers. We act as an intermediary and match these contracts, at a credit spread, to contracts with major dealers, thus neutralizing the related market risk. LIQUIDITY RISK Liquidity risk represents the potential for loss as a result of limitations on our ability to adjust our future cash flows to meet the needs of depositors and borrowers and to fund operations on a timely and cost-effective basis. The ALM Policy approved by the Board requires quarterly reviews of our liquidity by ALCO. Additionally, ALCO conducts monthly ongoing reviews of our liquidity situation. Liquidity is managed through this ALCO coordination process on a Bank-wide basis, encompassing all major business units. The operating management of liquidity is implemented through the funding and investment functions of the Global Markets Group. Our liquidity management draws upon the strengths of our extensive retail and commercial core deposit franchise, coupled with the ability to obtain funds for various terms in a variety of domestic and international money markets. Our securities portfolio represents a significant source of additional liquidity. 49 Core deposits provide us with a sizable source of relatively stable and low-cost funds. Our average core deposits, which include demand deposits, money market demand accounts, savings, and consumer time deposits, combined with average common shareholders' equity, funded 84 percent of average total assets of $41.9 billion for the third quarter of 2003. Most of the remaining funding was provided by short-term borrowings in the form of negotiable certificates of deposit, large time deposits, foreign deposits, federal funds purchased, securities sold under repurchase agreements, commercial paper, and other borrowings. The securities portfolio provides additional enhancement to our liquidity position, which may be created through either securities sales, or repurchase agreements. Liquidity may also be provided by the sale or maturity of assets. Such assets include interest-bearing deposits in banks, federal funds sold, securities purchased under resale agreements, and trading account securities. The aggregate of these assets averaged $1.6 billion for the quarter ended September 30, 2003. Additional liquidity may be provided through loan maturities and sales. In the third quarter of 2003, the Company terminated the issuance of commercial paper under the UnionBanCal Corporation's commercial paper program. UnionBanCal Commercial Funding Corporation (a UnionBanCal Corporation subsidiary) continues to issue commercial paper under an existing commercial paper program. The proceeds of this commercial paper program are deposited in Union Bank of California, N.A. and used for Bank funding. REGULATORY CAPITAL The following tables summarize our risk-based capital, risk-weighted assets, and risk-based capital ratios.

We and Union Bank of California, N.A. are subject to various regulations of the federal banking agencies, including minimum capital requirements. We both are required to maintain minimum ratios of Total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to quarterly average assets (the leverage ratio). 50 Compared with December 31, 2002, our Tier 1 risk-based capital ratio at September 30, 2003, decreased 22 basis points to 10.96 percent, our total risk-based capital ratio decreased 35 basis points to 12.58 percent, and our leverage ratio decreased 102 basis points to 8.73 percent. The decrease in our capital ratios was primarily attributable to lower Tier 1 capital primarily resulting from a decrease in shareholders' equity including the purchase of $300 million of our common stock, in September 2003, from BTM, higher goodwill associated with our recent acquisitions (which reduces both Tier 1 and 2 capital), coupled with an increase in risk-weighted assets. As of September 30, 2003, management believes the capital ratios of Union Bank of California, N.A. met all regulatory requirements of "well-capitalized" institutions, which are 10 percent for the total risk-based capital ratio, 6 percent for the Tier 1 risk-based capital ratio and 5 percent for the leverage ratio. CERTAIN BUSINESS RISK FACTORS ADVERSE CALIFORNIA ECONOMIC CONDITIONS COULD ADVERSELY AFFECT OUR BUSINESS A substantial majority of our assets, deposits and fee income are generated in California. As a result, poor economic conditions in California may cause us to incur losses associated with higher default rates and decreased collateral values in our loan portfolio. Economic conditions in California are subject to various uncertainties at this time, including the long-term impact of the California energy crisis, the decline in the technology sector, recent wildfires in Southern California and the California state government's recent budgetary crisis and continuing fiscal difficulties. If economic conditions in California continue to decline, we expect that our level of problem assets could increase. THE CONTINUING WAR ON TERRORISM COULD FURTHER ADVERSELY AFFECT US ECONOMIC CONDITIONS Acts or threats of terrorism and actions taken by the US or other governments as a result of such acts or threats have contributed to the downturn in US economic conditions experienced recently and could further adversely affect business and economic conditions in the US generally and in our principal markets. For example, the events of September 11, 2001, caused a decrease in air travel in the US, which adversely affected the airline industry and many other travel-related industries, including those operating in California. ADVERSE ECONOMIC FACTORS AFFECTING CERTAIN INDUSTRIES COULD ADVERSELY AFFECT OUR BUSINESS We are subject to certain industry-specific economic factors. For example, a significant and increasing portion of our total loan portfolio is related to residential real estate. Accordingly, a downturn in the real estate and housing industries in California could have an adverse effect on our operations. In addition, auto leases comprise a declining portion of our total loan portfolio. We ceased originating auto leases in April 2001; however, continued deterioration in the used car market may result in additional losses on the valuation of auto lease residuals on our remaining auto leases. We provide financing to businesses in a number of other industries that may be particularly vulnerable to industry-specific economic factors, including the communications/media industry, the retail industry, the airline industry, the power industry and the technology industry. Industry-specific risks are beyond our control and could adversely affect our portfolio of loans, potentially resulting in an increase in nonperforming loans or charge-offs. 51 RISKS ASSOCIATED WITH CURTAILED MARKET ACCESS OF POWER COMPANIES COULD AFFECT OUR PORTFOLIO CREDIT QUALITY The failure of Enron Corporation, coupled with continued turbulence in the energy markets, has significantly impacted debt ratings and equity valuations of a broad spectrum of power companies, particularly those involved in energy trading and in deregulated or non-regulated markets. These developments have sharply reduced these companies' ability to access public debt and equity markets, contributing to heightened liquidity pressures. Should these negative trends continue and/or intensify, the credit quality of certain of our borrowers could be adversely affected. FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR BUSINESS Significant increases in market interest rates, or the perception that an increase may occur, could adversely affect both our ability to originate new loans and our ability to grow. Conversely, further decreases in interest rates could result in an acceleration in the prepayment of loans. An increase in market interest rates could also adversely affect the ability of our floating-rate borrowers to meet their higher payment obligations. If this occurred, it could cause an increase in nonperforming assets and charge-offs, which could adversely affect our business. FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR MARGIN SPREAD Changes in market interest rates, including changes in the relationship between short-term and long-term market interest rates or between different interest rate indices, can impact our margin spread, that is, the difference between the interest rates we charge on interest earning assets, such as loans, and the interest rates we pay on interest bearing liabilities, such as deposits or other borrowings. The impact, particularly in a falling interest rate environment, could result in a decrease in our interest income relative to interest expense. SHAREHOLDER VOTES ARE CONTROLLED BY BTM; OUR INTERESTS MAY NOT BE THE SAME AS BTM'S INTERESTS BTM, a wholly owned subsidiary of Mitsubishi Tokyo Financial Group, Inc., owns a majority (approximately 63 percent as of September 30, 2003) of the outstanding shares of our common stock. As a result, BTM can elect all of our directors and, as a result, can control the vote on all matters, including determinations such as: approval of mergers or other business combinations; sales of all or substantially all of our assets; any matters submitted to a vote of our shareholders; issuance of any additional common stock or other equity securities; incurrence of debt other than in the ordinary course of business; the selection and tenure of our Chief Executive Officer; payment of dividends with respect to common stock or other equity securities; and other matters that might be favorable to BTM. A majority of our directors are not officers or employees of UnionBanCal Corporation or any of our affiliates, including BTM. However, because of BTM's control over the election of our directors, BTM could change the composition of our Board of Directors so that the Board would not have a majority of outside directors. BTM's ability to prevent an unsolicited bid for us or any other change in control could have an adverse effect on the market price for our common stock. POSSIBLE FUTURE SALES OF SHARES BY BTM COULD ADVERSELY AFFECT THE MARKET FOR OUR STOCK BTM may sell shares of our common stock in compliance with the federal securities laws. By virtue of BTM's current control of us, BTM could sell large amounts of shares of our common stock by causing us to file a registration statement that would allow them to sell shares more easily. In addition, BTM could sell shares of our common stock without registration. Although we can make no prediction as to the effect, if any, that such sales would have on the market price of our common stock, sales of substantial amounts of our common stock, or the perception that such sales could occur, could adversely affect the market price of 52 our common stock. If BTM sells or transfers shares of our common stock as a block, another person or entity could become our controlling shareholder. BTM'S FINANCIAL CONDITION COULD ADVERSELY AFFECT OUR OPERATIONS Although we fund our operations independently of BTM and believe our business is not necessarily closely related to BTM's business or outlook, BTM's credit ratings may affect our credit ratings. BTM is also subject to regulatory oversight and review by Japanese and US regulatory authorities. Our business operations and expansion plans could be negatively affected by regulatory concerns related to the Japanese financial system and BTM. POTENTIAL CONFLICTS OF INTEREST WITH BTM COULD ADVERSELY AFFECT US BTM's view of possible new businesses, strategies, acquisitions, divestitures or other initiatives may differ from ours. This may delay or hinder us from pursuing such initiatives. Also, as part of BTM's normal risk management processes, BTM manages global credit exposures and concentrations on an aggregate basis, including UnionBanCal Corporation. Therefore, at certain levels or in certain circumstances, our ability to approve certain credits or other banking transactions and categories of customers is subject to the concurrence of BTM. We may wish to extend credit or furnish other banking services to the same customers as BTM. Our ability to do so may be limited for various reasons, including BTM's aggregate credit exposure and marketing policies. Certain directors' and officers' ownership interests in BTM's common stock or service as a director or officer or other employee of both us and BTM could create or appear to create potential conflicts of interest, especially since both of us compete in the US banking industry. SUBSTANTIAL COMPETITION IN THE CALIFORNIA BANKING MARKET COULD ADVERSELY AFFECT US Banking is a highly competitive business. We compete actively for loan, deposit, and other financial services business in California, as well as nationally and internationally. Our competitors include a large number of state and national banks, thrift institutions and major foreign-affiliated or foreign banks, as well as many financial and non-financial firms that offer services similar to those offered by us. Some of our competitors are community banks that have strong local market positions. Other competitors include large financial institutions (such as Bank of America, Citibank, Washington Mutual, and Wells Fargo) that have substantial capital, technology and marketing resources. Such large financial institutions may have greater access to capital at a lower cost than us, which may adversely affect our ability to compete effectively. Banks, securities firms, and insurance companies can now combine as a "financial holding company." Financial holding companies can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting), and merchant banking. Recently, a number of foreign banks have acquired financial services companies in the US, further increasing competition in the US market. RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS COULD LIMIT AMOUNTS PAYABLE TO US As a holding company, a substantial portion of our cash flow typically comes from dividends our bank and nonbank subsidiaries pay to us. Various statutory provisions restrict the amount of dividends our subsidiaries can pay to us without regulatory approval. In addition, if any of our subsidiaries liquidate, that subsidiary's creditors will be entitled to receive distributions from the assets of that subsidiary to satisfy their claims against it before we, as a holder of an equity interest in the subsidiary, will be entitled to receive any of the assets of the subsidiary. 53 ADVERSE EFFECTS OF, OR CHANGES IN, BANKING OR OTHER LAWS AND REGULATIONS OR GOVERNMENTAL FISCAL OR MONETARY POLICIES COULD ADVERSELY AFFECT US We are subject to significant federal and state regulation and supervision, which is primarily for the benefit and protection of our customers and not for the benefit of investors. In the past, our business has been materially affected by these regulations. This trend is likely to continue in the future. Laws, regulations or policies, including accounting standards and interpretations currently affecting us and our subsidiaries may change at any time. Regulatory authorities may also change their interpretation of these statutes and regulations. Therefore, our business may be adversely affected by any future changes in laws, regulations, policies or interpretations, including legislative and regulatory reactions to the terrorist attack on September 11, 2001, and future acts of terrorism, and the Enron Corporation, WorldCom, Inc. and other major US corporate bankruptcies and reports of accounting irregularities at US public companies, including various large and publicly traded companies. Additionally, our international activities may be subject to the laws and regulations of the jurisdiction where business is being conducted. International laws, regulations and policies affecting us and our subsidiaries may change at any time and affect our business opportunities and competitiveness in these jurisdictions. Due to BTM's controlling ownership of us, laws, regulations and policies adopted or enforced by the Government of Japan may adversely affect our activities and investments and those of our subsidiaries in the future. Additionally, our business is affected significantly by the fiscal and monetary policies of the federal government and its agencies. We are particularly affected by the policies of the Federal Reserve Board (FRB), which regulates the supply of money and credit in the US. Under long-standing policy of the FRB, a bank holding company is expected to act as a source of financial strength for its subsidiary banks. As a result of that policy, we may be required to commit financial and other resources to our subsidiary bank in circumstances where we might not otherwise do so. Among the instruments of monetary policy available to the FRB are (a) conducting open market operations in US government securities, (b) changing the discount rates of borrowings by depository institutions, and (c) imposing or changing reserve requirements against certain borrowings by banks and their affiliates. These methods are used in varying degrees and combinations to directly affect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits. The policies of the FRB may have a material effect on our business, results of operations and financial condition. WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR OPERATING STRATEGIES From time to time, we develop long-term financial performance goals to guide and measure the success of our operating strategies. We can make no assurances that we will be successful in achieving these long-term goals or that our operating strategies will be successful. Achieving success in these areas is dependent on a number of factors, many of which are beyond our direct control. Factors that may adversely affect our ability to attain our long-term financial performance goals include: o deterioration of our asset quality; o our inability to control noninterest expense, including, but not limited to, rising employee and healthcare costs; o our inability to increase noninterest income; o our inability to decrease reliance on revenues generated from assets; o our ability to manage loan growth; o our ability to find acquisition targets at valuation levels we find attractive; o regulatory and other impediments associated with making acquisitions; o deterioration in general economic conditions, especially in our core markets; 54 o decreases in our net interest margin; o increases in competition; o adverse regulatory or legislative developments; and o unexpected increases in costs related to acquisitions. RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS OR DIVESTITURES OR RESTRUCTURING MAY ADVERSELY AFFECT US We may seek to acquire or invest in companies, technologies, services or products that complement our business. There can be no assurance that we will be successful in completing any such acquisition or investment as this will depend on the availability of prospective target companies at valuation levels we find attractive and the competition for such opportunities from other bidders. In addition, we continue to evaluate the performance of all of our businesses and business lines and may sell a business or business line. Any acquisitions, divestitures or restructuring may result in the issuance of potentially dilutive equity securities, significant write-offs, including those related to goodwill and other intangible assets, and/or the incurrence of debt, any of which could have a material adverse effect on our business, financial condition and results of operations. Acquisitions, divestitures or restructuring could involve numerous additional risks including difficulties in obtaining any required regulatory approvals and in the assimilation or separation of operations, services, products and personnel, the diversion of management's attention from other business concerns, higher than expected deposit attrition (run-off), divestitures required by regulatory authorities, the disruption of our business, and the potential loss of key employees. There can be no assurance that we will be successful in overcoming these or any other significant risks encountered. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK A complete explanation concerning our market risk exposure is incorporated by reference from the text under the caption "Quantitative and Qualitative Disclosures About Market Risk" in the Form 10-K/A for the year ended December 31, 2002 and by reference to Part I, Item 2 of this document under the captions "Quantitative and Qualitative Disclosure about Interest Rate Risk Management (Other Than Trading)," "Liquidity Risk," and "Certain Business Risk Factors." ITEM 4. CONTROLS AND PROCEDURES (a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Based on their evaluation as of September 30, 2003, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) are effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission (SEC) rules and forms. (b) CHANGES IN INTERNAL CONTROLS. These officers have also concluded that during the third quarter of 2003 there was no significant change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 55 PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION ANNUAL MEETING OF SHAREHOLDERS: The Annual Meeting of Shareholders will be held on Wednesday, April 28, 2004, at 9:30 a.m. upon the approval of the Board of Directors, expected at the December 2003 meeting. Shareholders who expect to present a proposal at the 2004 Annual Meeting of Shareholders for publication in the Company's proxy statement and action on the proxy form or otherwise for such meeting must submit their proposal by November 25, 2003. The proposal must be mailed to the Corporate Secretary of the Company at 400 California Street, Mail Code 1-001-16, San Francisco, CA 94104. Without such notice, proxy holders appointed by the Board of Directors of the Company will be entitled to exercise their discretionary voting authority when the proposal is raised at the annual meeting, without any discussion of the proposal in the proxy statement. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS: NO. DESCRIPTION - ---- ---------------------------------------------------------------------- 3.1 Restated Certificate of Incorporation of the Registrant (effective September 30, 2003)(1) 3.2 By-laws of UnionBanCal Corporation (a Delaware Corporation) (effective September 30, 2003)(1) 31.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(1) 31.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(1) 32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(1) 32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(1) - ------------------------------------ (1) Filed herewith (B) REPORTS ON FORM 8-K We furnished a report on Form 8-K on July 16, 2003 reporting under Item 9 thereof that UnionBanCal Corporation issued a press release concerning earnings for the second quarter of 2003. 56 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, UnionBanCal Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. UNIONBANCAL CORPORATION (Registrant) By: /S/ NORIMICHI KANARI ------------------------------------- Norimichi Kanari PRESIDENT AND CHIEF EXECUTIVE OFFICER (Principal Executive Officer) By: /S/ DAVID I. MATSON ------------------------------------- David I. Matson EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER (Principal Financial Officer) By: /S/ DAVID A. ANDERSON ------------------------------------- David A. Anderson SENIOR VICE PRESIDENT AND CONTROLLER (Principal Accounting Officer) Date: November 13, 2003 57 EX-3.(I) 3 exhibit3-1.htm RESTATED CERTIFICATE OF INCORPORATION Exhibit 3.1

Exhibit 3.1

RESTATED CERTIFICATE OF INCORPORATION

OF UNIONBANCAL CORPORATION

UnionBanCal Corporation, a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

FIRST: The name of the corporation is UnionBanCal Corporation.

SECOND: The original Certificate of Incorporation of the corporation was filed with the Secretary of State of the State of Delaware on November 1, 2002.

THIRD: The corporation has not yet received any payment for any of its stock.

FOURTH: Pursuant to Sections 241 and 245 of the General Corporation Law of the State of Delaware, this Restated Certificate of Incorporation restates, integrates and further amends the provisions of the Certificate of Incorporation of the corporation.

FIFTH: The Certificate of Incorporation of the corporation is hereby amended and restated to read in full as follows:

ARTICLE I

The name of the corporation is UnionBanCal Corporation.

ARTICLE II

The address of the registered office of the corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of the corporation’s registered agent at such address is The Corporation Trust Company.

ARTICLE III

The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE IV

A. CLASSES OF STOCK. The total number of shares of all classes of capital stock that the corporation shall have authority to issue is three hundred five million (305,000,000), of which three hundred million (300,000,000) shares shall be Common Stock of the par value of one dollar ($1.00) per share (the “Common Stock”) and five million (5,000,000) shares shall be Preferred Stock of the par value of one dollar ($1.00) per share (the “Preferred Stock”). Subject to the rights of the holders of any series of Preferred Stock pursuant to the terms of this Restated Certificate of Incorporation or any resolution or resolutions providing for the issuance of such series of stock adopted by the Board of Directors, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number

of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the corporation entitled to vote generally in the election of directors irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.

B. PREFERRED STOCK. The Preferred Stock may be issued from time to time in one or more series, as determined by the Board of Directors. The Board of Directors is expressly authorized to provide for the issue, in one or more series, of all or any shares of Preferred Stock and, in the resolution or resolutions providing for such issue, to establish for each such series the number of its shares, the voting powers, full or limited, of the shares of such series, or that such shares shall have no voting powers, and the designations, preferences and relative, participating, optional or other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof. The Board of Directors is also expressly authorized (unless forbidden in the resolution or resolutions providing for such issue) to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issuance of shares of that series. In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.

C. COMMON STOCK.

1. RELATIVE RIGHTS OF PREFERRED STOCK AND COMMON STOCK. All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations, or restrictions of the Common Stock are expressly made subject to those that may be fixed with respect to any shares of the Preferred Stock.

2. VOTING RIGHTS. Except as otherwise required by law or this Restated Certificate of Incorporation, each holder of Common Stock shall have one vote in respect of each share of Common Stock held by such holder of record on the books of the corporation for the election of directors and on all matters submitted to a vote of stockholders of the corporation.

3. DIVIDENDS. Subject to the preferential rights of the Preferred Stock, if any, the holders of shares of Common Stock shall be entitled to receive, when and if declared by the Board of Directors, out of the assets of the corporation which are by law available therefor, dividends payable either in cash, in property or in shares of capital stock.

4. DISSOLUTION, LIQUIDATION OR WINDING UP. In the event of any dissolution, liquidation or winding up of the affairs of the corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock, holders of Common Stock shall be entitled, unless otherwise provided by law or this Restated Certificate of Incorporation, to receive all of the remaining assets of the corporation of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively.

ARTICLE V

In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware:

A. Except for Section 2.1 of the Bylaws, relating to the number of directors which shall constitute the whole Board of Directors, the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws of the corporation.

B. Elections of directors need not be by written ballot unless the Bylaws of the corporation shall so provide.

C. The books of the corporation may be kept at such place within or without the State of Delaware as the Bylaws of the corporation may provide or as may be designated from time to time by the Board of Directors.

ARTICLE VI

Special meetings of the stockholders of the corporation may be called only by the Board of Directors, the Chairman of the Board of Directors, the President and Chief Executive Officer, or the holders of shares representing a majority of the votes entitled to be cast at the meeting.

ARTICLE VII

A. LIMITATION ON LIABILITY. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (1) for any breach of the director’s duty of loyalty to the corporation or its stockholders; (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (3) under Section 174 of the General Corporation Law of the State of Delaware; or (4) for any transaction from which the director derived an improper personal benefit.

If the General Corporation Law of the State of Delaware hereafter is amended to further eliminate or limit the liability of directors, then the liability of a director of the corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended General Corporation Law of the State of Delaware.

B. INDEMNIFICATION. To the fullest extent permitted by applicable law, the corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers, employees or agents of the corporation (and any other persons to which Delaware law permits the corporation to provide indemnification and advancement) through bylaw provisions, agreements with such directors, officers, employees, agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law of the State of Delaware, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to the corporation, its stockholders, and others and subject to the limits on indemnification and advancement provided in Part 359 of Title 12 of the Code of Federal Regulations.

C. REPEAL AND MODIFICATION. Any repeal or modification of the provisions of this Article VII shall not adversely affect any right or protection of any director, officer, employee, agent of the corporation or such other persons to which Delaware law permits the corporation to provide indemnification existing at the time of such repeal or modification.

ARTICLE VIII

The corporation shall not, without the approval of the holders of at least ninety percent (90%) of the then outstanding shares of Common Stock, be a constituent corporation in a merger pursuant to Section 251, 252, 263 or 264 of the General Corporation Law of the State of Delaware if a constituent corporation, limited liability company or partnership to such merger (each such entity (including the corporation) being a “Constituent Entity”) or its Parent is a Parent of the corporation immediately prior to such merger, in which nonredeemable shares of common stock or other nonredeemable equity interests, respectively, of any Constituent Entity are converted into anything other than nonredeemable shares of common stock or other nonredeemable equity interests of the surviving Constituent Entity or its Parent. For purposes of this Article VIII, a person or entity which owns, directly or indirectly, more than 50% of the aggregate voting power of all outstanding equity interests of an entity is that entity’s “Parent”.

The provisions of this Article VIII shall not apply to any merger described above in this Article VIII if the Commissioner of Corporations of the State of California (or any successor agency thereto) has approved the terms and conditions of the transaction and the fairness of those terms and conditions pursuant to Section 25142 of the California Corporate Securities Law of 1968 (or any successor provision thereto).

This Article VIII may be amended only with the approval of the holders of at least ninety percent (90%) of the then outstanding shares of Common Stock.

ARTICLE IX

The corporation expressly elects not to be governed by Section 203 of the General Corporation Law of the State of Delaware.

ARTICLE X

Any vacancy on the Board of Directors created by the removal of a director of the corporation may only be filled at a meeting of the stockholders or by an action by the unanimous written consent of the stockholders. The stockholders may elect a director at any time to fill any vacancy created by the removal of a director or a vacancy not filled by the directors. Any such election by written consent other than to fill a vacancy created by removal requires the consent of a majority of the outstanding shares entitled to vote.

* * *

SIXTH: This Restated Certificate of Incorporation was duly adopted by the Board of Directors of the corporation in accordance with Sections 241 and 245 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, UnionBanCal Corporation has caused this certificate to be signed by its President and Chief Executive Officer and Secretary this 8th day of September, 2003.

/S/ JOHN H. MCGUCKIN, JR.
——————————————————
John H. McGuckin, Jr., President and
Chief Executive Officer

/S/ MORRIS W. HIRSCH
——————————————————
Morris W. Hirsch, Secretary

EX-3.(II) 4 exhibit3-2.htm BYLAWS OF UNIONBANCAL CORPORATION Exhibit 3-2

Exhibit 3.2

B Y L A W S

OF

UNIONBANCAL CORPORATION

(a Delaware corporation)

AS OF SEPTEMBER 30, 2003

	TABLE OF CONTENTS	Page

ARTICLE 1	Meeting of Stockholders	1
1.1	Place of Meeting	1
1.2	Annual Meeting	1
1.3	Special Meetings	2
1.4	Notice of Meetings	2
1.5	List of Stockholders	3
1.6	Quorum and Adjournments	3
1.7	Voting Rights	3
1.8	Majority Vote	4
1.9	Record Date for Stockholder Notice and Voting	4
1.10	Proxies	5
1.11	Inspectors of Election	5
1.12	Action Without a Meeting	5
ARTICLE 2	Directors	5
2.1	Number, Election, Tenure and Qualifications	5
2.2	Vacancies	6
2.3	Resignation and Removal	6
2.4	Powers	7
2.5	Place of Meetings	7
2.6	Annual Meetings	7
2.7	Regular Meetings	7
2.8	Special Meetings	7
2.9	Quorum, Action at Meeting, Adjournments	7
2.10	Action Without Meeting	8
2.11	Participation in Meetings by Communications Equipment	8
2.12	Executive Committee	8
2.13	Other Committees of the Board of Directors	9
2.14	Contents of Notice and Waiver of Notice	9
ARTICLE 3	Officers	9

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3.1	Officers Designated	9
3.2	Election and Tenure	9
3.3	Removal and Resignation	9
3.4	Vacancies	10
3.5	Chairman, President and Chief Executive Officer, Deputy Chairman and Vice Chairman	10
3.6	President and Chief Executive Officer	10
3.7	Chief Financial Officer	10
3.8	Secretary	10
3.9	Bond	10
ARTICLE 4	Notices	11
4.1	Delivery of Notice, Notice by Electronic Transmission	11
4.2	Waiver of Notice	11
ARTICLE 5	Indemnification	12
5.1	Indemnification of Directors, Officers, Employees and Agents	12
ARTICLE 6	Capital Stock	16
6.1	Certificates for Shares	16
6.2	Transfer of Stock	16
6.3	Registered Stockholders	16
6.4	Lost, Stolen or Destroyed Certificates	16
6.5	Dividends	17
ARTICLE 7	Certain Transactions	17
7.1	Transactions with Interested Parties	17
7.2	Quorum	17
ARTICLE 8	Amendments	18
8.1	Amendments by Stockholders	18
8.2	Amendments by Directors	18
ARTICLE 9	Emergency Provisions	18
9.1	Emergency Defined	18
9.2	Alternate Locations	18
9.3	Alternate Management	18
ARTICLE 10	General Provisions	19
10.1	Reserves	19

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10.2	Checks	19
10.3	Corporate Seal	19
10.4	Fiscal Year	19
10.5	Execution of Corporate Contracts and Instruments	19
10.6	Representation of Shares of Other Corporations	19

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B Y L A W S

OF

UNIONBANCAL CORPORATION

(a Delaware corporation)

ARTICLE 1

Meeting of Stockholders

1.1 Place of Meeting. Meetings of stockholders may be held at such place, either within or without of the State of Delaware, as may be designated by or in the manner provided in these Bylaws, or, if not so designated, at the registered office of the Corporation or the principal executive offices of the Corporation.

1.2 Annual Meeting. Annual meetings of stockholders shall be held each year at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. At such annual meeting, the stockholders shall elect by a plurality vote a Board of Directors. The stockholders shall also transact such other business as may properly be brought before the meetings.

To be properly brought before the annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors or the President and Chief Executive Officer, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors or the President and Chief Executive Officer, or (c) otherwise properly brought before the meeting by a stockholder of record. A motion related to business proposed to be brought before any stockholders’ meeting may be made by any stockholder entitled to vote if the business proposed is otherwise proper to be brought before the meeting. However, any such stockholder may propose business to be brought before a meeting only if such stockholder has given timely notice to the Secretary of the Corporation in proper written form of the stockholder’s intent to propose such business. To be timely, the stockholder’s notice must be delivered to or mailed and received by the Secretary of the Corporation not less than one hundred twenty (120) calendar days in advance of the date the Corporation’s proxy statement was released to the stockholders in connection with the previous year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the stockholder must be received by the Secretary of the Corporation not later than the close of business on the later of (1) one hundred twenty (120) days prior to such annual meeting; or (2) seven (7) days after the day on which public announcement of the date of such meeting is first made. For the purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any

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time period) for the giving of stockholder’s notice as described above. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the Corporation, the language of the proposed amendment) and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class, series and number of shares of capital stock of the Corporation that are owned beneficially and of record by the stockholder and such beneficial owner, and (iv) any material interest of the stockholder in such business.

Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section; provided, however, that nothing in this Section shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting.

The Chairman of the Board of Directors of the Corporation (or such other person presiding at the meeting in accordance with these Bylaws) shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

1.3 Special Meetings. Special meetings of the stockholders may be called at any time by the Board of Directors, the Chairman of the Board of Directors, the President and Chief Executive Officer, or the holders of shares representing a majority of the votes entitled to be cast at the meeting.

If a special meeting is called by any person or persons other than the Board of Directors, the Chairman of the Board of Directors or the President and Chief Executive Officer, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the Chairman of the Board of Directors or the President and Chief Executive Officer, and the Secretary of the Corporation. The officer receiving the request shall cause notice to be promptly given to the stockholders entitled to vote, in accordance with the provisions of these Bylaws, that a meeting will be held at the time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after the receipt of the request, the person or persons requesting the meeting may give the notice. Nothing contained in this paragraph of this Section 1.3 shall be construed as limiting, fixing or affecting the time when a meeting of stockholders called by action of the Board of Directors, the Chairman of the Board of Directors or the President and Chief Executive Officer may be held.

1.4 Notice of Meetings. Notice of stockholders’ meetings, stating the place, date and time of the meeting and, in the case of a special meeting, the purpose or purposes for which such

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special meeting is called, shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days prior to the meeting.

When a meeting is adjourned to another place, date or time, notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than thirty (30) days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, notice of the place, date and time of the adjourned meeting shall be given in conformity herewith.

1.5 List of Stockholders. The officer in charge of the stock ledger of the Corporation or the transfer agent shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

1.6 Quorum and Adjournments. Except where otherwise provided by law or the Certificate of Incorporation or these Bylaws, the holders of a majority of the stock issued and outstanding and entitled to vote, present in person or represented in proxy, shall constitute a quorum at all meetings of the stockholders. The stockholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to have less than a quorum if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. At such adjourned meeting at which a quorum is present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If, however, a quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat who are present in person or represented by proxy or, if no stockholder is present or represented by proxy, by any officer entitled to preside at or to act as secretary of such meeting, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.

1.7 Voting Rights. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder.

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1.8 Majority Vote. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of applicable law, rule or regulation (including applicable stock exchange rules) or of the Certificate of Incorporation or of these Bylaws, a different vote is required in which case such express provision shall govern and control the decision of such question.

1.9 Record Date for Stockholder Notice and Voting. For purposes of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

For purposes of determining the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the General Corporation Law of the State of Delaware, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business or the Secretary of the Corporation. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the General Corporation Law of the State of Delaware, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

For purposes of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

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1.10 Proxies. To the extent permitted by law, any stockholder of record may appoint a person or persons to act as the stockholder’s proxy or proxies at any meeting of the stockholders for the purpose of representing and voting the stockholder’s shares. The stockholder may make this appointment by any means the General Corporation Law of the State of Delaware specifically authorizes. Prior to any vote, and subject to any contract rights of the proxy holder, the stockholder may revoke the proxy appointment either directly or by the creation of a new appointment, which will automatically revoke the former one. The inspector or inspectors of elections appointed for the meeting may establish requirements concerning such proxy appointments or revocations that the inspector considers necessary or appropriate to assure the integrity of the vote and to comply with law.

1.11 Inspectors of Election. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. The Corporation may designate one or more persons to act as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability.

1.12 Action Without a Meeting. Unless otherwise specified in the Certificate of Incorporation, an action which may be taken at any annual or special meeting of stockholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing to the extent required by applicable law.

Any stockholder giving a written consent, or the stockholder’s proxyholders, or a transferee of the shares (who pursuant to the terms of the instrument or agreement of transfer is empowered to vote the shares) or a personal representative of the stockholder or their respective proxyholders, may revoke the consent by a writing received by the Corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the Corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the Corporation.

ARTICLE 2

Directors

2.1 Number, Election, Tenure and Qualifications. The number of directors which shall constitute the whole Board of Directors shall be not less than fourteen (14) nor more than thirty (30). Within such limit, the number of directors that shall constitute the whole Board of Directors shall be fixed from time to time by resolution adopted by a majority of the entire Board of Directors or by the stockholders. No reduction of the authorized number of directors shall have the effect of removing any director before his or her term expires. An amendment to this

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Section 2.1 of the Bylaws changing the number of directors which shall constitute the whole Board of Directors shall require the affirmative vote or written consent of a majority of the outstanding shares entitled to vote.

At each annual meeting of the stockholders, the directors shall be elected, except as otherwise provided in Section 2.2 of this Article, and each director so elected shall hold office until such director’s successor is duly elected and qualified or until such director’s earlier resignation, removal, death or incapacity.

Nomination for election of members of the Board of Directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors at the annual meeting. Notice of intention to make any nominations by a stockholder shall be made in writing and shall be delivered or mailed to and received by the Secretary of the Corporation not less than one hundred twenty (120) calendar days in advance of the date the Corporation’s proxy statement was released to the stockholders in connection with the previous year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the stockholder must be received by the Secretary of the Corporation not later than the close of business on the later of (1) one hundred and twenty (120) days prior to such annual meeting; or (2) seven (7) days after the day on which public announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of stockholder’s notice as described above. Such notification shall contain the following information to the extent known to the notifying stockholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the number of shares of capital stock of the Corporation owned by each proposed nominee; (d) the name and residence address of the notifying stockholder and the beneficial owner, if any, on whose behalf the nomination is made; and (e) the number of shares of capital stock of the Corporation owned beneficially and of record by the notifying stockholder and such beneficial owner. Nominations not made in accordance herewith may, in the discretion of the chairman of the meeting, be disregarded and upon the chairman’s instructions, the inspectors of election can disregard all votes cast for each such nominee.

2.2 Vacancies. A vacancy or vacancies on the Board of Directors shall exist on the death, resignation, or removal of any director, or if the number of directors is increased or the stockholders fail to elect the full number of directors. Except as provided in the Certificate of Incorporation, vacancies on the Board of Directors may be filled by a majority of the remaining directors then in office, whether or not less than a quorum, or by a sole remaining director, and each director elected in this manner shall hold office until his or her successor is elected at an annual or special stockholders’ meeting. If there are no directors in office, then an election of directors may be held in the manner provided by statute. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law or these Bylaws, may exercise the powers of the full Board of Directors until the vacancy is filled.

2.3 Resignation and Removal. Any director may resign at any time upon written notice to the Corporation at its principal place of business or to the Chairman of the Board of

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Directors, the Deputy Chairman, the President and Chief Executive Officer, the Secretary or the Board of Directors. Such resignation shall be effective upon receipt of such notice unless the notice specifies such resignation to be effective at some other time or upon the happening of some other event. Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, unless otherwise specified by law or the Certificate of Incorporation.

2.4 Powers. The business of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things which are not by statute or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.

2.5 Place of Meetings. The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware.

2.6 Annual Meetings. The annual meetings of the Board of Directors shall be held immediately following the annual meeting of stockholders, and no notice of such meeting shall be necessary to the Board of Directors, provided a quorum shall be present. The annual meetings shall be for the purposes of organization, and an election of officers and the transaction of other business.

2.7 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as may be determined from time to time by the Board of Directors; provided that any director who is absent when such a determination is made shall be given prompt notice of such determination.

2.8 Special Meetings. Special meetings of the Board of Directors for any purpose may be called at any time by the Chairman of the Board of Directors, the Deputy Chairman, or the President and Chief Executive Officer, or the Secretary, or any two directors or by one director in the event that there is only one director in office.

Special meetings of the Board of Directors shall be held upon four days notice by mail or twenty-four (24) hours notice delivered personally or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, telegraph, facsimile, electronic mail, or other electronic means.

2.9 Quorum, Action at Meeting, Adjournments. At all meetings of the Board of Directors, a majority of directors then in office, but in no event less than one third of the entire Board of Directors, shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by law or by the Certificate of Incorporation. For purposes of this Section 2.9, the term “entire” shall mean the number of directors last fixed by the stockholders or directors, as the case may be, in accordance with law and the Bylaws. If a quorum shall not be present at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

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2.10 Action Without Meeting. The Board of Directors may take any action without a meeting that may be required or permitted to be taken by the Board at a meeting, if all members of the Board individually or collectively consent in writing or by electronic transmission to the action. The written consent or consents or a written copy of the electronic transmission or transmissions shall be filed in the minutes of the proceedings of the Board of Directors. Such action by written consent or electronic transmission shall have the same effect as a unanimous vote of directors.

2.11 Participation in Meetings by Communications Equipment. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any member of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or of any committee, as the case may be, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

2.12 Executive Committee. There shall be an executive committee composed of the chairman of the board, the president, the deputy chairman and not less than four (4) other directors who shall be appointed by the Board of Directors to serve during its pleasure. Subject at all times to the control of the Board of Directors, the committee shall have and may exercise all the powers of the Board of Directors, subject to the limitations in Section 2.13 below and provided that the Executive Committee shall not have the authority to do any of the following:

(a) The approval of any action for which stockholder approval or approval of outstanding shares is also required.

(b) The filling of vacancies on the Board of Directors or on any committee.

(d) The amendment or repeal of these Bylaws or the adoption of new Bylaws.

(e) The amendment or repeal of any resolution of the Board of Directors which by its express terms is not so amendable or repealable by the Executive Committee.

(f) Authorization or approval of distributions to the stockholders of the Corporation, except at a rate or in a periodic amount or within a price range set forth in the Restated Certificate of Incorporation or determined by the Board of Directors.

(g) The appointment of other committees of the Board of Directors or the members thereof.

The Board of Directors may designate one or more directors as alternate members of the Executive Committee, who may replace any absent members at any meeting of the committee. The appointment of members or alternate members of the Executive Committee requires the vote of a majority of the authorized number of directors. The committee shall meet at such times as it or the Board of Directors may designate and shall make its own rules of procedures. A majority of its members shall constitute a quorum. The affirmative vote of the majority of its members

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shall be necessary for the adoption of any resolution. The committee shall keep minutes of its meetings and such minutes shall be submitted to the next regular meeting of the Board of Directors at which a quorum is present, and any action taken by the Board of Directors with respect thereto shall be entered into the minutes of the Board of Directors.

2.13 Other Committees of the Board of Directors. The Board of Directors may designate one or more other committees, each committee to consist of one or more directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any such other committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of any such other committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such other committee, to the extent permitted by law and the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation.

2.14 Contents of Notice and Waiver of Notice. Neither the business to be transacted at, nor the purpose of, any regular or special Board meeting need be specified in the notice or waiver of notice of the meeting.

ARTICLE 3

Officers

3.1 Officers Designated. The officers of the Corporation shall be a Chairman of the Board, a President and Chief Executive Officer, a Deputy Chairman, one or more Vice Chairmen of the Board, a Chief financial officer, a Treasurer, a general auditor, one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, one or more assistant vice presidents, a Secretary, one or more Assistant Secretaries and such other officers as the Board of Directors may by resolution create, and such officers shall have such powers and perform such duties as are prescribed in these Bylaws or as may be prescribed by the Board of Directors.

3.2 Election and Tenure. The officers of the Corporation shall be chosen by the Board of Directors at any meeting of the Board, and each shall hold his office until he resigns or is removed or otherwise disqualified to serve, or his successor is elected and qualified.

3.3 Removal and Resignation. Any officer may be removed with or without cause by the Board of Directors at any time. Any officer may resign at any time by giving written notice to the Board of Directors, the President and Chief Executive Officer or the Secretary of the Corporation. An officer’s resignation shall take effect when it is received or at any later time specified in the resignation. Unless the resignation specifies otherwise, its acceptance by the Corporation shall not be necessary to make it effective.

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3.4 Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to the office.

3.5 Chairman, President and Chief Executive Officer, Deputy Chairman and Vice Chairman. The chairman of the board shall preside at all stockholders’ meetings and all meetings of the Board of Directors unless he delegates this duty to the President and Chief Executive Officer or Deputy Chairman. In the absence or disability of the chairman of the board, the following shall perform the duties and have the powers of the Chairman of the Board in the order set forth:

President and Chief Executive Officer;

Deputy Chairman;

Vice Chairmen in the order designated by the Board of Directors.

3.6 President and Chief Executive Officer. The President shall have general and active management of the business of the Corporation and shall have and may exercise any and all powers and duties pertaining by law, regulation, or practice, to the office of president or prescribed in these Bylaws. The President shall be the Chief Executive Officer.

3.7 Chief Financial Officer. The Chief Financial Officer shall be the principal financial officer of the Corporation and shall perform the duties imposed upon him by these Bylaws or the Board of Directors.

3.8 Secretary. The Secretary shall keep or cause to be kept, and be available at the principal executive office or any other place that the Board of Directors specifies, a book of minutes of all directors’ and stockholders’ meetings. The minutes of each meeting shall state the time and place that it was held; whether it was regular or special; if a special meeting, how it was authorized; the notice given; and the proceedings of the meetings. A similar minute book shall be kept for each committee of the Board of Directors.

The Secretary shall keep, or cause to be kept, at the principal executive office or at the office of the Corporation’s transfer agent, a share register, or duplicate share register, showing the stockholders’ names and addresses, the number of shares held by each, the number and date of each certificate issued for these shares, and the number and date of cancellation of each certificate surrendered for cancellation.

The Secretary shall give, or cause to be given, notice of all directors’ and stockholders’ meetings required to be given under these Bylaws or by law, shall keep the corporate seal in safe custody, and shall have any other powers and perform any other duties that are prescribed by the Board of Directors or these Bylaws.

3.9 Bond. If required by the Board of Directors, any officer shall give the Corporation a bond in such sum and with such surety or sureties and upon such terms and conditions as shall be satisfactory to the Board of Directors, including without limitation a bond for the faithful performance of the duties of such officer’s office and for the restoration to the

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Corporation of all books, papers, vouchers, money and other property of whatever kind in such officer’s possession or under such officer’s control and belonging to the Corporation.

ARTICLE 4

Notices

4.1 Delivery of Notice, Notice by Electronic Transmission. Whenever, under the provisions of law, or of the Certificate of Incorporation or these Bylaws, written notice is required to be given to any director or stockholder, such notice may be given by mail, addressed to such director or stockholder, at such person’s address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail or delivered to a nationally recognized courier service. Oral notice or other in-hand delivery, in person or by telephone, shall be deemed given at the time it is actually given. To the full extent permitted by the General Corporation Law of the State of Delaware, any notice given by the Corporation under any provision of law, the Certificate of Incorporation, or these Bylaws shall be effective if given by a form of electronic transmission. Electronic notices shall be deemed given: (1) if by facsimile telecommunication, when directed to a number at which the stockholder or director has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the stockholder or director has consented to receive notice; (3) if by a posting on an electronic network together with separate notice to the stockholder or director of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (4) if by any other form of electronic transmission, when directed to the stockholder or director. An affidavit of the Secretary or an assistant secretary or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall be prima facie evidence of the facts stated therein.

4.2 Waiver of Notice. Whenever any notice is required to be given under the provisions of law or of the Certificate of Incorporation or of these Bylaws, a waiver thereof in writing or by electronic transmission by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, Board of Directors or members of a committee of the Board of Directors need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Restated Certificate of Incorporation or these Bylaws. All such waivers under this Section 4.2 shall be filed with the corporate records or made a part of the minutes of the meeting.

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ARTICLE 5

Indemnification

5.1 Indemnification of Directors, Officers, Employees and Agents.

(a) The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was an officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as an officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(b) The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was an officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as an officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees and expenses) actually or reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

(c) To the extent that an officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b), or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees and expenses) actually and reasonably incurred by him in connection therewith.

(d) Any indemnification under subsections (a) and (b) (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the officer, employee or agent is proper in the circumstances because he

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has met the applicable standard of conduct set forth in subsections (a) and (b). Such determination shall be made, with respect to a person who is a director or officer at the time of such determination (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or, if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders of the Corporation.

(e) Expenses incurred by an officer in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such officer to repay such amounts if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article 5. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate.

(f) The Corporation shall indemnify, to the fullest extent permitted by applicable law as such may be amended from time to time, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that he or she is or was a member of the Board of Directors of the Corporation, or is or was serving at the request of the Corporation as a member of the board of directors or any committee thereof of another corporation, partnership, joint venture, trust or other enterprise (any such person, for the purposes of this subsection (f), a “director”), against expenses (including attorneys’ fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding; provided, however, that the Corporation is not authorized to provide indemnification of any director for any acts or omissions or transactions from which a director may not be relieved of liability as set forth in Section 102(b)(7) of the General Corporation Law of the State of Delaware. The Corporation shall advance expenses incurred or to be incurred in defending any such proceeding to any such director.

(1) The following procedures shall apply with respect to advancement of expenses and the right to indemnification under this subsection (f):

(i) Advancement of Expenses. All reasonable expenses incurred by or on behalf of a director in connection with any proceeding shall be advanced to the director by the Corporation within twenty days after the receipt by the Corporation of a statement or statements from the director requesting such advance or advances from time to time, whether prior to or after final disposition of such proceeding. Such statement or statements shall reasonably evidence the expenses incurred or to be incurred by the director and, if required by law at the time of such advance, shall include or be accompanied by an undertaking by or on behalf of the director to repay the amounts advanced if it should ultimately be determined that the director is not entitled to be indemnified against such expenses.

(ii) Written Request for Indemnification. To obtain indemnification under this subsection (f), a director shall submit to the Secretary of the Corporation a written request,

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including such documentation and information as is reasonably available to the director and reasonably necessary to determine whether and to what extent the director is entitled to indemnification (the “Supporting Documentation”). Any claim for indemnification under this Article 5 shall be paid in full within thirty days after receipt by the Corporation of the written request for indemnification together with the Supporting Documentation unless independent legal counsel to the Corporation, acting at the request of the Board of Directors of the Corporation (or a committee of the Board designated by the Board of Directors for such purpose), shall have determined, in a written legal opinion to the Corporation without material qualification, that the director is not entitled to indemnification by reason of any of the circumstances specified in the proviso to the first sentence of this subsection (f) or in subsection (k) of this Article 5. The Secretary of the Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that the director has requested indemnification and shall promptly, upon receipt of any such opinion, advise the Board of Directors in writing that such determination has been made.

Notwithstanding the foregoing, the Corporation shall not be required to advance such expenses to a director who is a party to an action, suit or proceeding brought by the Corporation and approved by a majority of the Board of Directors which alleges willful misappropriation of corporate assets by such director, a transaction in which the director derived an improper personal benefit or any other willful and deliberate breach in bad faith of such director’s duty to the Corporation or its stockholders.

(2) The rights to indemnification and to the advancement of expenses conferred in this subsection (f) shall be contract rights. If a claim under this subsection (f) is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the director may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the director shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by a director to enforce a right to indemnification hereunder (but not in a suit brought by the director to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the director has not met any applicable standard for indemnification under the applicable law then in effect. Neither the failure of the Corporation to have made payment in full of the claim for indemnification prior to the commencement of such suit, nor an actual determination by independent legal counsel to the Corporation that the director is not entitled to such indemnification, shall create a presumption that the director has not met the applicable standard of conduct or, in the case of such a suit brought by the director, be a defense to such suit. In any suit brought by the director to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the director is not entitled to be indemnified, or to such advancement of expenses, under this subsection (f) or otherwise shall be on the Corporation.

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(g) The indemnification provided by this Article 5 shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in this official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(h) The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article 5.

(i) For purposes of this Article 5, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existing had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article 5 with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

(j) For purposes of this Article 5, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article 5.

(k) Notwithstanding anything in this Article 5 to the contrary, the Corporation shall not indemnify any director, officer or employee nor purchase and maintain insurance on behalf of any director, officer or employee in circumstances not permitted by 12 C.F.R. Part 359.

(l) If any provision or provisions of this Article 5 shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions (including, without limitation, each portion of this Article 5 containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

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ARTICLE 6

Capital Stock

6.1 Certificates for Shares. The shares of the Corporation shall be represented by certificates or shall be uncertificated. Certificates shall be signed by, or in the name of the Corporation by the Chairman or Vice Chairmen of the Board or the President and Chief Executive Officer or a vice president and by the Chief Financial Officer or an assistant treasurer or the Secretary or any assistant secretary. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified.

Within a reasonable time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required by the General Corporation Law of the State of Delaware or a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

6.2 Transfer of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate of shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, and proper evidence of compliance of other conditions to rightful transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions and proper evidence of compliance of other conditions to rightful transfer from the registered owner of any uncertificated shares, such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation.

6.3 Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

6.4 Lost, Stolen or Destroyed Certificates. The Board of Directors may direct that a new certificate or certificates or uncertificated stock be issued to replace any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be

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lost, stolen or destroyed. When authorizing the issue of a new certificate or certificates or uncertificated stock, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of the lost, stolen or destroyed certificate or certificates, or his or her legal representative, to give reasonable evidence of such loss, theft or destruction, to advertise the same in such manner as it shall require, and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificate or uncertificated stock.

6.5 Dividends. Dividends upon the capital stock of the Corporation, subject to any restrictions contained in the General Corporation Law of the State of Delaware or the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting or by written consent. Dividends may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.

ARTICLE 7

Certain Transactions

7.1 Transactions with Interested Parties. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction or solely because the vote or votes of such director or officer are counted for such purpose, if:

(a) the material facts as to such person’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or

(b) the material facts as to such person’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or

(c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders.

7.2 Quorum. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

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ARTICLE 8

Amendments

8.1 Amendments by Stockholders. New Bylaws may be adopted or these Bylaws may be amended or repealed by the affirmative vote or written consent of a majority of the outstanding shares entitled to vote.

8.2 Amendments by Directors. Except as otherwise specified in the Certificate of Incorporation or these Bylaws, Bylaws may be adopted, amended, or repealed by the Board of Directors.

ARTICLE 9

Emergency Provisions

9.1 Emergency Defined. “Emergency” as used in this Article 9 means disorder, disturbance or damage caused by disaster, war, enemy attack or other warlike acts which prevent conduct and management of the affairs and business of the Corporation by the Board of Directors and officers. The powers and duties conferred and imposed by this Article 9 and any resolutions adopted pursuant hereto shall be effective only during an Emergency. This Article 9 may be implemented from time to time by resolutions adopted by the Board of Directors before or during an Emergency, or during an Emergency by the Executive Committee of the Board of Directors constituted and then acting pursuant thereto. During an Emergency, the provisions of this Article 9 and any implementing resolutions shall supersede any conflicting provisions of any Article of these Bylaws or resolutions adopted pursuant hereto.

9.2 Alternate Locations. During an Emergency, the business ordinarily conducted at the principal executive office of the Corporation shall, if so permitted by applicable statutes or regulations, be relocated elsewhere in suitable quarters, as may be designated by the Board of Directors or by the Executive Committee of the Board of Directors or by such persons as are then, in accordance with these Bylaws or resolutions adopted from time to time by the Board of Directors, dealing with the exercise of authority in a time of such Emergency, conducting the affairs of the Corporation. Any temporarily relocated place of business of the Corporation shall be returned to its legally authorized location as soon as practicable and such temporary place of business shall then be discontinued.

9.3 Alternate Management.

(a) In the event of a state of disaster of sufficient severity to prevent the conduct and management of the affairs of business of the Corporation by its directors and officers as contemplated by these Bylaws, any available members of the then incumbent Executive Committee of the Board of Directors shall constitute an Interim Executive Committee for the full conduct and management of the affairs and business of the Corporation.

(b) If as a result of a state of disaster as described under Section 9.3(a) above, the chief executive officer is unable or unavailable to act, then until such chief executive officer

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becomes able and available to act or a new chief executive officer is appointed or elected, the senior surviving officer who is able and available to act shall act as the chief executive officer of the Corporation. If a person in good faith assumes the powers of the chief executive officer pursuant to these provisions in the belief he is the senior surviving officer and the office of the chief executive officer is vacant, the acts of such a person shall be valid and binding although it may subsequently develop that he was not in fact the senior surviving officer or that the office was not in fact vacant.

(c) No officer, director or employee acting in accordance with these Emergency Provisions shall be liable except for willful misconduct.

ARTICLE 10

General Provisions

10.1 Reserves. The Board of Directors may set apart out of any funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve.

10.2 Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

10.3 Corporate Seal. The Board of Directors may, by resolution, adopt a corporate seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the word “Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. The seal may be altered from time to time by the Board of Directors.

10.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

10.5 Execution of Corporate Contracts and Instruments. The Board of Directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

10.6 Representation of Shares of Other Corporations. The President and Chief Executive Officer, the Deputy Chairman, any Vice Chairman, any Vice President, the Chief Financial Officer or the Treasurer or any Assistant Treasurer, or the Secretary or any Assistant Secretary of the Corporation is authorized to vote, represent and exercise on behalf of the Corporation all rights incident to any and all shares of or equity interests in any corporation or corporations (or other entities) standing in the name of the Corporation. The authority herein

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granted to said officers to vote or represent on behalf of the Corporation any and all shares and equity interests held by the Corporation in any other corporation or corporations (or other entities) may be exercised either by such officers in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officers.

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EX-31 5 exhibit31-12003q3.txt SECTION 302 CERTIFICATION Exhibit 31.1 CERTIFICATIONS I, Norimichi Kanari, certify that: 1. I have reviewed this quarterly report on Form 10-Q of UnionBanCal Corporation (the "Registrant"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the Registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; c) disclosed in this quarterly report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: November 13, 2003 By: /s/ NORIMICHI KANARI -------------------------------------- Norimichi Kanari PRESIDENT AND CHIEF EXECUTIVE OFFICER 2 EX-31 6 exhibit31-22003q3.txt SECTION 302 CERTIFICATION Exhibit 31.2 CERTIFICATIONS I, David I. Matson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of UnionBanCal Corporation (the "Registrant"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the Registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; c) disclosed in this quarterly report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: November 13, 2003 By: /s/ DAVID I. MATSON -------------------------------------- David I. Matson EXECUTIVE VICE PRESIDENT CHIEF FINANCIAL OFFICER (Principal Financial Officer) 2 EX-32 7 exhibit32-1q32003.txt SECTION 906 CERTIFICATION Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with this Quarterly Report of UnionBanCal Corporation (the "Company") on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Norimichi Kanari, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 13, 2003 By: /S/ NORIMICHI KANARI ----------------------------------------- Norimichi Kanari Chief Executive Officer EX-32 8 exhibit32-2q32003.txt SECTION 906 CERTIFICATION Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with this Quarterly Report of UnionBanCal Corporation (the "Company") on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David I. Matson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 13, 2003 By: /S/ DAVID I. MATSON ----------------------------------------- David I. Matson Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----