<DOCUMENT>
<TYPE>425
<SEQUENCE>1
<FILENAME>a4493716.txt
<DESCRIPTION>UNIONBANCAL 425
<TEXT>
FILED PURSUANT TO RULE 425
Filer: UnionBanCal Corporation
Issuer: UnionBanCal Corporation
Commission File Number: 001-15081
UnionBanCal Corporation Reports 16% Increase in Third Quarter
Net Income Per Share and 19% Increase in Operating Earnings Per Share
SAN FRANCISCO--(BUSINESS WIRE)--Oct. 15, 2003--UnionBanCal
Corporation (NYSE:UB) today reported third quarter 2003 net income of
$155.0 million, or $1.02 per diluted common share, a 15.9 percent
increase over the $0.88 per diluted common share earned in third
quarter 2002. Operating earnings were the same as net income for the
quarter, representing an 18.6 percent increase over operating earnings
of $0.86 per diluted common share in third quarter 2002. Operating
earnings for third quarter 2002 excluded the after-tax effect of a
$3.2 million net reduction in income tax expense attributable to a
permanent reduction in taxes associated with changes in California
state tax law.
For the first nine months of 2003, net income was $435.3 million,
up $52.4 million, or 13.7 percent, compared with the same period last
year. Net income per diluted common share was $2.87, up 18.1 percent
over the first nine months of 2002, while operating earnings per
diluted common share were $2.83, up 17.9 percent.
"I am pleased with both our third quarter and year-to-date
results," stated Norimichi Kanari, President and Chief Executive
Officer. "Our 18.6 percent increase in third quarter operating
earnings per share was fueled by excellent deposit growth, which led
to higher net interest income and noninterest income. Total revenue
was more than 7 percent higher than prior year, despite a markedly
lower interest rate environment. Noninterest income grew 19 percent
over last year, and represented 33 percent of total revenue for the
quarter, up from 30 percent a year earlier, demonstrating the ongoing
success of our strategic initiatives emphasizing fee income growth. In
addition, asset quality continued to improve, resulting in a lower
provision for credit losses.
"During the quarter, we completed the acquisition of Monterey Bay
Bank, which added eight full-service branches in the greater Monterey
Bay area to Union Bank of California's existing branch network, and we
announced our agreement to acquire Business Bank of California, which
operates 15 branches in southern and northern California. The Business
Bank acquisition is expected to close early next year and will further
advance our strategy of extending and adding density to our footprint
in California," continued Kanari.
"In September, we announced the repurchase of 6.7 million shares
of common stock from our majority shareholder, The Bank of
Tokyo-Mitsubishi, for $300 million," continued Kanari. "The
transaction further demonstrates our commitment to prudently manage
capital and provide increased returns to our shareholders. Our recent
capital management initiatives have contributed significantly to the
200 basis point increase in our third quarter operating return on
equity," concluded Kanari.
Total Revenue
For third quarter 2003, total revenue (taxable-equivalent net
interest income plus noninterest income) was $603.2 million, an
increase of $ 41.5 million, or 7.4 percent, compared with third
quarter 2002. Net interest income increased 2.3 percent, while
noninterest income increased 19.1 percent. Compared with second
quarter 2003, total revenue on an operating basis was $22.6 million,
or 3.9 percent, higher with net interest income increasing 4.0 percent
and noninterest income on an operating basis increasing 3.8 percent.
Net Interest Income (Taxable-equivalent)
Net interest income was $401.7 million in third quarter 2003, up
$9.1 million from the same quarter a year ago. Volume gains in
deposits and earning assets were largely offset by the effects of the
lower interest rate environment and a shift in the mix of earning
assets. Average earning assets grew $5.1 billion, or 15.6 percent,
primarily due to a $4.0 billion, or 67.7 percent, increase in average
securities, a $763 million, or 164.6 percent, increase in average
money market assets, and a $361 million, or 1.4 percent, increase in
average loans. Average residential mortgages increased $1.4 billion,
or 24.5 percent, and average commercial mortgages increased $400
million, or 10.4 percent. Average commercial loans decreased $1.6
billion, or 14.1 percent, primarily due to weak commercial loan
demand. Average noninterest bearing deposits increased $3.8 billion,
or 30.6 percent, with title and escrow deposits increasing 56 percent
and other business demand deposits increasing 27 percent. Average
noninterest bearing deposits represented 46.8 percent of total
deposits, up from 43.9 percent in the same quarter a year ago. The
annualized all-in cost of funds contracted to just 0.50 percent.
Due to the lower interest rate environment, the average yield on
earning assets of $37.9 billion declined 92 basis points
year-over-year, while the average rate on interest bearing liabilities
of $20.8 billion fell 63 basis points. The net interest margin in
third quarter 2003 was 4.22 percent, a decrease of 55 basis points
compared with third quarter 2002.
On a sequential quarter basis, net interest income increased $15.3
million, or 4.0 percent. Average earning assets grew $1.8 billion, or
4.9 percent, with average securities increasing $2.2 billion, or 29.0
percent, and average loans declining $185 million, or 0.7 percent.
Average noninterest bearing deposits increased $1.3 billion, or 8.6
percent. The net interest margin decreased 7 basis points to 4.22
percent.
Noninterest Income
In third quarter 2003, noninterest income on an operating basis
was $201.5 million, up $32.4 million, or 19.1 percent, from the same
quarter a year ago. Service charges on deposit accounts increased
$13.2 million, or 19.2 percent, primarily due to higher deposit
volumes and higher account analysis and overdraft fees. Trust and
investment management fees were flat, and insurance commissions
increased $9.6 million, to $15.8 million, primarily reflecting the
fourth quarter 2002 acquisition of John Burnham Insurance Services and
the second quarter 2003 acquisition of Tanner Insurance Brokers.
Noninterest income on an operating basis increased $7.3 million,
or 3.8 percent, on a sequential quarter basis. Service charges on
deposits increased $3.9 million, or 5.0 percent, and trust and
investment management fees increased $2.3 million, or 6.9 percent.
Noninterest Expense
Noninterest expense for third quarter 2003 was $348.9 million, an
increase of $31.0 million, or 9.8 percent, over third quarter 2002.
Salaries and other compensation expense increased $17.6 million, or
11.6 percent, primarily due to higher employee count associated with
acquisitions and de novo branch openings, and annual merit increases.
Employee benefits expense increased $5.4 million, or 17.8 percent,
primarily due to higher employee count associated with acquisitions
and de novo branch openings, and increases in health benefits expense
for both current employees and retirees. Intangible asset amortization
expense was $2.6 million, an increase of $1.1 million compared with
prior year, due to recent acquisitions.
Compared with second quarter 2003, noninterest expense on an
operating basis increased $2.1 million, or 0.6 percent. Salaries and
other compensation expense increased $8.1 million, or 5.0 percent, due
primarily to higher performance-related incentive expense and higher
employee count associated with acquisitions.
The operating efficiency ratio for third quarter 2003 was 57.8
percent, compared with 56.6 percent in third quarter 2002, and 59.7
percent in second quarter 2003. The increase in the efficiency ratio
versus prior year was due primarily to the lower interest rate
environment in third quarter 2003 and its adverse effect on net
interest income.
Year-to-Date Results
For the first nine months of 2003, total revenue on an operating
basis was $1.8 billion, an increase of $97 million, or 5.8 percent,
compared with the same period in 2002. Net interest income increased
1.7 percent, and noninterest income on an operating basis increased
15.3 percent.
Net interest income was $1.2 billion in the first nine months of
2003, a $20 million, or 1.7 percent, increase from the same period a
year ago. The positive effect of higher volumes of noninterest bearing
demand deposits and earning assets was substantially offset by the
adverse effect of the lower interest rate environment in 2003.
Compared with prior year, net interest margin for the first nine
months declined 42 basis points, to 4.35 percent.
Noninterest income on an operating basis in the first nine months
of 2003 increased $76.9 million, or 15.3 percent, over the same period
in 2002. Service charges on deposits increased $27.4 million, or 13.4
percent, primarily due to higher account analysis and overdraft fees,
and higher deposit volumes. Trust and investment management fees
decreased $8.4 million, or 7.7 percent, while insurance commissions
increased $25.1 million, or 125.6 percent, due primarily to recent
insurance brokerage acquisitions. In the first nine months of 2003,
auto lease residual writedowns were $0.3 million, compared with $9.0
million in the first nine months of 2002.
For the first nine months of 2003, noninterest expense on an
operating basis increased $92.2 million, or 9.7 percent, over the same
period in 2002. Salaries and other compensation expense increased
$35.6 million, or 7.9 percent, primarily due to merit increases and
higher employee count associated with recent acquisitions and de novo
branch openings. Employee benefits expense increased $19.4 million, or
19.7 percent, primarily due to higher health benefits expense for
current employees and retirees, and to higher employee count.
Intangible asset amortization expense was $8.3 million, an increase of
$4.6 million compared with prior year, due to recent acquisitions. The
operating efficiency ratio for the first nine months of 2003 was 59.0
percent, compared with 56.8 percent in the first nine months of 2002.
The increase in the efficiency ratio was due primarily to the lower
interest rate environment in 2003 and its adverse effect on net
interest income.
Credit Quality
Nonperforming assets at September 30, 2003, were $344 million, or
0.81 percent of total assets. This compares with $380 million, or 0.89
percent of total assets at June 30, 2003, and $396 million, or 1.05
percent of total assets, at September 30, 2002.
For third quarter 2003, the provision for credit losses was $20
million, compared with $25 million in second quarter 2003, and $40
million in third quarter 2002. Net loans charged off in third quarter
2003 were $38 million, compared with $53 million in second quarter
2003, and $42 million in third quarter 2002.
At September 30, 2003, the allowance for credit losses as a
percent of total loans and as a percent of nonaccrual loans was 2.11
percent and 161.4 percent, respectively. These ratios were 2.17
percent and 147.1 percent, respectively, at June 30, 2003, and 2.40
percent and 157.7 percent, respectively, at September 30, 2002.
Balance Sheet and Capital Ratios
At September 30, 2003, the Company had total assets of $42.6
billion and total deposits of $36.0 billion. Total shareholders'
equity was $3.7 billion and the tangible equity ratio was 8.05
percent. Book value per share was $25.32, up 4.5 percent from a year
earlier. The Company's Tier I and total risk based capital ratios at
September 30, 2003, were 10.96 percent and 12.58 percent,
respectively.
Share Repurchases
As previously announced, on September 4, 2003, the Company
repurchased 6.7 million shares of common stock, at a price of $45.05
per share, from its majority shareholder, The Bank of
Tokyo-Mitsubishi, Limited. The Company did not repurchase any other
shares during the quarter. At September 30, 2003, the Company had
authority from its Board of Directors to repurchase an additional $115
million of common stock under its common stock repurchase plan.
Common shares outstanding at September 30, 2003, were 145.1
million, a decrease of 5.1 million shares, or 3.4 percent, from one
year earlier.
Fourth Quarter 2003 Earnings Per Share Guidance
The Company currently estimates that fourth quarter 2003 fully
diluted earnings per share will be in the range of $0.98 to $1.03,
with a provision for credit losses of approximately $15 million.
Recent Event
On September 26, 2003, UnionBanCal Corporation announced its
intention to acquire Business Bank of California, a subsidiary of
Business Bancorp. This communication is not a solicitation of a proxy
from any security holder of Business Bancorp. Business Bancorp, and
its directors and executive officers and other members of its
management and employees, may be deemed to be participants in the
solicitation of proxies from the stockholders of Business Bancorp in
connection with the merger. Information about the directors and
executive officers of Business Bancorp and their ownership in Business
Bancorp stock is set forth in the proxy statement for Business
Bancorp's 2003 annual meeting of stockholders. Employment and
compensation agreements of certain potential participants, including
salary continuation agreements and change of control agreements, are
filed as exhibits to the Business Bancorp Form 10-K for the year ended
December 31, 2002, and Form 10-Q for the quarter ended June 30, 2003.
Investors may obtain additional information regarding the interests of
the participants by reading the proxy statement/prospectus when it
becomes available.
Shareholders of Business Bancorp and other investors are urged to
read the proxy statement/prospectus that will be included in the
registration statement on Form S-4, which UnionBanCal and Business
Bancorp will file with the SEC in connection with the proposed merger,
because it will contain important information about UnionBanCal, Union
Bank of California, Business Bancorp, Business Bank of California, the
merger, the persons soliciting proxies in the merger and their
interests in the merger, and related matters. After it is filed with
the SEC, the proxy statement/prospectus will be available for free,
both on the SEC website (http://www.sec.gov) and from each of Union
Bank of California and Business Bank of California by contacting:
John A. Rice, Jr., SVP - UnionBanCal Corporation Investor
Relations, 415-765-2969
Alan J. Lane, CEO - Business Bancorp, 909-888-2265
Use of Non-GAAP Financial Measures
This press release contains certain references to operating
earnings, and other financial measures identified as being stated on
"an operating basis" or qualified by the word "operating", that
include adjustments from comparable measures calculated and presented
in accordance with accounting principles generally accepted in the
United States of America (GAAP). Operating earnings, as used herein,
differs from net income reported under GAAP in that operating earnings
excludes unusual or non-recurring charges, losses, credits or gains.
Similarly, other financial measures that are identified herein as
being stated on "an operating basis" or qualified by the word
"operating" exclude these unusual or non-recurring charges, losses,
credits or gains. This press release identifies the specific items
excluded from the comparable GAAP financial measure in the calculation
of each non-GAAP financial measure. Because these items and their
impact on the Company's performance are difficult to predict,
management believes that financial presentations excluding the impact
of these items provide useful supplemental information which is
important to a proper understanding of the Company's core business
results by investors. These presentations should not be viewed as a
substitute for results determined in accordance with GAAP, nor are
they necessarily comparable to non-GAAP financial measures presented
by other companies. For a detailed reconciliation of data presented on
an operating basis to GAAP financial measures, please refer to
Exhibits 5 and 6 accompanying this press release.
Forward-Looking Statements
The following appears in accordance with the Private Securities
Litigation Reform Act: This press release includes forward-looking
statements that involve risks and uncertainties. Forward-looking
statements can be identified by looking at the fact that they do not
relate strictly to historical or current facts. Often, they include
the words "believe," "expect," "anticipate," "intend," "plan,"
"estimate," "project," or words of similar meaning, or future or
conditional verbs such as "will," "would," "should," "could," or
"may." They may also consist of annualized amounts based on historical
interim period results. A number of important factors could cause
actual results to differ materially from those in the forward-looking
statements. Those factors include fluctuations in interest rates,
government policies and regulations (including monetary and fiscal
policies), legislation, economic conditions, credit quality of
borrowers, operational factors, competition in the geographic and
business areas in which the Company conducts its operations, and
global political and general economic conditions. A complete
description of the Company, including related risk factors, is
discussed in the Company's public filings with the Securities and
Exchange Commission, which are available by calling (415) 765-2969 or
online at http://www.sec.gov. All forward-looking statements included
in this press release are based on information available at the time
of the release, and the Company assumes no obligation to update any
forward-looking statement.
Conference Call and Webcast
The Company will conduct a conference call to review third quarter
and year-to-date results at 8:30 AM PDT (11:30 AM EDT) on October 16,
2003. Interested parties calling from locations within the United
States should call 888-428-4480 (651-291-0900 from outside the United
States) 10 minutes prior to the beginning of the conference.
A live webcast of the call will be available at
http://www.uboc.com. Simply follow the links to the Investor Relations
section of the website. The webcast replay will be available on the
website within 24 hours after the conclusion of the call, and will
remain on the website for a period of one year.
A recorded playback of the conference call will be available by
calling 800-475-6701, (320-365-3844 from outside the United States)
from approximately 12:00 PM PDT (3:00 PM EDT), October 16, through
11:59 PM PDT, October 23 (2:59 AM EDT, October 24). The reservation
number for this playback is 699420.
Based in San Francisco, UnionBanCal Corporation is a bank holding
company with assets of $42.6 billion at September 30, 2003. Its
primary subsidiary, Union Bank of California, N.A., has 278 banking
offices in California, 4 banking offices in Oregon and Washington and
20 international facilities.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)
As of and for the Percent Change to
Three Months Ended Sept. 30, 2003 from
-------------------------------- ------------------
On a Reported
Earnings Basis:
(Dollars in
thousands,
except per Sept. 30, June 30, Sept. 30, Sept. 30, June 30,
share data) 2002 2003 2003 2002 2003
-------------- --------- --------- -------- -------- -------
Results of
operations:
Net interest
income (1) $392,636 $386,422 $401,736 2.32% 3.96%
Noninterest
income 169,116 203,171 201,470 19.13% (0.84%)
-------- --------- ---------
Total revenue 561,752 589,593 603,206 7.38% 2.31%
Noninterest
expense 317,824 351,004 348,861 9.77% (0.61%)
Provision for
credit losses 40,000 25,000 20,000 (50.00%)(20.00%)
-------- --------- ---------
Income before
income
taxes (1) 203,928 213,589 234,345 14.92% 9.72%
Taxable-
equivalent
adjustment 534 645 647 21.16% 0.31%
Income tax
expense 65,163 68,186 78,653 20.70% 15.35%
--------- --------- --------- -
Net income $138,231 $144,758 $155,045 12.16% 7.11%
========= ========= =========
Per common share:
Net income-
basic $0.89 $0.96 $1.04 16.85% 8.33%
Net income-
diluted 0.88 0.96 1.02 15.91% 6.25%
Dividends (2) 0.28 0.31 0.31 10.71% 0.00%
Book value
(end of period) 24.22 25.79 25.32 4.54% (1.82%)
Common shares
outstanding
(end of
period) 150,220,119 149,993,652 145,105,566 (3.40%) (3.26%)
Weighted
average
common shares
outstanding -
basic 154,889,552 150,046,659 149,528,298 (3.46%) (0.35%)
Weighted
average
common shares
outstanding -
diluted 156,709,715 151,489,337 151,561,790 (3.29%) 0.05%
Balance sheet
(end of period):
Total assets $37,608,001 $42,668,834 $42,602,745 13.28% (0.15%)
Total loans 25,962,159 25,668,660 26,047,376 0.33% 1.48%
Nonaccrual
loans 395,212 379,487 341,039 (13.71%)(10.13%)
Nonperforming
assets 395,521 379,758 344,347 (12.94%) (9.32%)
Total
deposits 30,588,080 35,365,260 35,957,805 17.55% 1.68%
Trust
preferred
securities 370,286 360,166 356,629 (3.69%) (0.98%)
Shareholders'
equity 3,637,945 3,868,959 3,674,107 0.99% (5.04%)
Balance sheet
(period average):
Total assets $35,803,475 $39,776,349 $41,913,515 17.07% 5.37%
Total loans 25,971,483 26,517,316 26,331,986 1.39% (0.70%)
Earning
assets 32,757,523 36,074,488 37,855,869 15.56% 4.94%
Total
deposits 28,455,452 32,587,173 34,902,964 22.66% 7.11%
Shareholders'
equity 3,814,927 3,919,276 3,834,834 0.52% (2.15%)
Financial ratios:
Return on
average
assets (3) 1.53% 1.46% 1.47%
Return on
average
shareholders'
equity (3) 14.38% 14.81% 16.04%
Efficiency
ratio (4) 56.57% 59.53% 57.85%
Net interest
margin (1) 4.77% 4.29% 4.22%
Dividend
payout ratio 31.46% 32.29% 29.81%
Tangible
equity ratio 9.38% 8.59% 8.05%
Tier 1 risk-
based capital
ratio (5) 11.14% 11.44% 10.96%
Total risk-
based capital
ratio (5) 12.89% 13.06% 12.58%
Leverage ratio
(5) 10.13% 9.63% 8.72%
Allowance for
credit losses
to total loans 2.40% 2.17% 2.11%
Allowance for
credit losses
to nonaccrual
loans 157.66% 147.11% 161.43%
Net loans
charged off
to average
total loans (3) 0.64% 0.80% 0.58%
Nonperforming assets
to total loans,
foreclosed assets,
and distressed
loans held
for sale 1.52% 1.48% 1.32%
Nonperforming
assets to
total assets 1.05% 0.89% 0.81%
On an Operating Earnings Basis:
Selected financial data on an
operating earnings basis
(see bottom of exhibit 5 for
non-recurring items):
Operating
earnings per
common share
- basic $0.87 $0.93 $1.04
Operating
earnings per
common share
- diluted $0.86 $0.92 $1.02
Operating
return on
average
assets (3) 1.50% 1.40% 1.47%
Operating
return on
average
shareholders'
equity (3) 14.04% 14.23% 16.04%
Operating
efficiency
ratio (4) 56.57% 59.73% 57.85%
Operating
dividend
payout ratio 32.18% 33.33% 29.81%
(1) Taxable-equivalent basis.
(2) Dividends per share reflect dividends declared on UnionBanCal
Corporation's common stock
outstanding as of the declaration date.
(3) Annualized.
(4) Noninterest expense excludes foreclosed asset expense
(income).
(5) Estimated as of September 30, 2003.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)
Percent
Change to
On a Reported As of and for the Nine Sept. 30,
Earnings Basis: Months Ended 2003 from
------------------------ --------
(Dollars in thousands, except per Sept. 30, Sept. 30, Sept. 30,
share data) 2002 2003 2002
--------------------------------- ------------ ------------ --------
Results of operations:
Net interest income (1) $1,159,907 $1,179,562 1.69%
Noninterest income 504,465 590,412 17.04%
------------ ------------
Total revenue 1,664,372 1,769,974 6.34%
Noninterest expense 946,102 1,042,465 10.19%
Provision for credit losses 145,000 75,000 (48.28%)
------------ ------------
Income before income taxes (1) 573,270 652,509 13.82%
Taxable-equivalent adjustment 1,604 1,916 19.45%
Income tax expense 188,716 215,273 14.07%
------------ ------------
Net income $382,950 $435,320 13.68%
============ ============
Per common share:
Net income-basic $2.45 $2.90 18.37%
Net income-diluted 2.43 2.87 18.11%
Dividends (2) 0.81 0.90 11.11%
Book value (end of period) 24.22 25.32 4.54%
Common shares outstanding
(end of period) 150,220,119 145,105,566 (3.40%)
Weighted average common shares
outstanding - basic 156,139,173 150,059,789 (3.89%)
Weighted average common shares
outstanding - diluted 157,892,168 151,544,757 (4.02%)
Balance sheet (end of period):
Total assets $37,608,001 $42,602,745 13.28%
Total loans 25,962,159 26,047,376 0.33%
Nonaccrual loans 395,212 341,039 (13.71%)
Nonperforming assets 395,521 344,347 (12.94%)
Total deposits 30,588,080 35,957,805 17.55%
Trust preferred securities 370,286 356,629 (3.69%)
Shareholders' equity 3,637,945 3,674,107 0.99%
Balance sheet (period average):
Total assets $35,541,802 $40,025,749 12.62%
Total loans 25,562,452 26,522,687 3.76%
Earning assets 32,472,409 36,263,471 11.67%
Total deposits 28,085,461 32,870,184 17.04%
Shareholders' equity 3,730,273 3,875,990 3.91%
Financial ratios:
Return on average assets (3) 1.44% 1.45%
Return on average shareholders'
equity (3) 13.73% 15.02%
Efficiency ratio (4) 56.84% 58.90%
Net interest margin (1) 4.77% 4.35%
Dividend payout ratio 33.06% 31.03%
Tangible equity ratio 9.38% 8.05%
Tier 1 risk-based capital ratio
(5) 11.14% 10.96%
Total risk-based capital ratio (5) 12.89% 12.58%
Leverage ratio (5) 10.13% 8.72%
Allowance for credit losses to
total loans 2.40% 2.11%
Allowance for credit losses to
nonaccrual loans 157.66% 161.43%
Net loans charged off to average
total loans (3) 0.83% 0.73%
Nonperforming assets to total loans,
foreclosed assets, and distressed
loans held for sale 1.52% 1.32%
Nonperforming assets to total
assets 1.05% 0.81%
On an Operating Earnings Basis:
---------------------------------
Selected financial data on an
operating earnings basis (see
bottom of exhibit 6 for
non-recurring items):
Operating earnings per common
share (basic) $2.43 $2.86
Operating earnings per common
share (diluted) $2.40 $2.83
Operating return on average
assets 1.43% 1.44%
Operating return on average
shareholders' equity (3) 13.61% 14.82%
Operating efficiency ratio (4) 56.84% 58.96%
Operating dividend payout ratio 33.33% 31.47%
------------------------------------------------------------
(1) Taxable-equivalent basis.
(2) Dividends per share reflect dividends declared on UnionBanCal
Corporation's common stock outstanding as of the declaration date.
(3) Annualized.
(4) Noninterest expense excludes foreclosed asset expense
(income).
(5) Estimated as of September 30, 2003.
UnionBanCal Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(Taxable-Equivalent Basis)
On a Reported Earnings Basis
For the Three Months Ended For the Nine Months
Ended
----------------------------- -----------------------
Sept. 30, June 30, Sept. 30, September 30,
(Amounts in
thousands,
except per
share data) 2002 2003 2003 2002 2003
---------------- --------- --------- --------- ----------- -----------
Interest Income
Loans $382,177 $355,199 $350,210 $1,136,921 $1,068,648
Securities 77,815 78,357 93,568 238,020 252,118
Interest bearing
deposits in
banks 773 1,130 922 1,898 3,014
Federal funds
sold and
securities
purchased under
resale agreements 1,467 4,001 2,532 10,354 8,210
Trading account
assets 1,415 981 909 3,107 2,847
--------- --------- --------- ----------- -----------
Total interest
income 463,647 439,668 448,141 1,390,300 1,334,837
--------- --------- --------- ----------- -----------
Interest Expense
Domestic deposits 52,049 40,217 34,984 167,395 116,772
Foreign deposits 4,727 2,811 1,991 17,096 8,008
Federal funds
purchased and
securities sold
under repurchase
agreements 1,789 747 689 5,134 2,763
Commercial paper 4,488 2,946 1,723 12,998 7,397
Medium and long-
term debt 2,375 1,818 1,738 7,198 5,422
UnionBanCal Corporation -
obligated mandatorily
redeemable preferred
securities of
subsidiary
grantor trust 3,921 3,652 3,607 11,832 10,930
Other borrowed
funds 1,662 1,055 1,673 8,740 3,983
--------- --------- --------- ----------- -----------
Total interest
expense 71,011 53,246 46,405 230,393 155,275
--------- --------- --------- ----------- -----------
Net Interest
Income 392,636 386,422 401,736 1,159,907 1,179,562
Provision for
credit losses 40,000 25,000 20,000 145,000 75,000
--------- --------- --------- ----------- -----------
Net interest
income after
provision for
credit losses 352,636 361,422 381,736 1,014,907 1,104,562
--------- --------- --------- ----------- -----------
Noninterest Income
Service charges
on deposit
accounts 68,629 77,942 81,832 204,641 232,061
Trust and
investment
management fees 35,368 33,141 35,429 109,680 101,245
International
commissions and
fees 20,131 21,276 22,223 57,593 63,112
Insurance
commissions 6,259 16,024 15,814 19,969 45,056
Card processing
fees, net 9,068 9,340 10,335 26,343 29,357
Brokerage
commissions and
fees 9,034 8,412 7,549 27,614 24,614
Merchant banking
fees 6,819 6,191 9,312 22,845 21,521
Foreign exchange
trading gains,
net 8,193 6,958 7,574 21,653 21,466
Securities gains
(losses), net 1,017 9,660 (2,618) 2,986 7,042
Other 4,598 14,227 14,020 11,141 44,938
--------- --------- --------- ----------- -----------
Total noninterest
income 169,116 203,171 201,470 504,465 590,412
--------- --------- --------- ----------- -----------
Noninterest Expense
Salaries and
employee
benefits 182,275 198,929 205,302 547,251 602,338
Net occupancy 27,340 32,866 31,342 75,750 91,844
Equipment 16,343 16,354 15,680 48,650 48,705
Communications 13,186 13,354 12,661 39,695 39,859
Professional
services 10,350 13,566 12,676 30,789 38,256
Data processing 7,944 7,744 7,659 24,475 23,887
Foreclosed asset
expense (income) 18 - (79) 130 (28)
Other 60,368 68,191 63,620 179,362 197,604
--------- --------- --------- ----------- -----------
Total noninterest
expense 317,824 351,004 348,861 946,102 1,042,465
--------- --------- --------- ----------- -----------
Income before
income taxes 203,928 213,589 234,345 573,270 652,509
Taxable-
equivalent
adjustment 534 645 647 1,604 1,916
Income tax
expense 65,163 68,186 78,653 188,716 215,273
--------- --------- --------- ----------- -----------
Net Income $138,231 $144,758 $155,045 $382,950 $435,320
========= ========= ========= =========== ===========
Net income per
common share -
basic $0.89 $0.96 $1.04 $2.45 $2.90
========= ========= ========= =========== ===========
Net income per
common share -
diluted $0.88 $0.96 $1.02 $2.43 $2.87
========= ========= ========= =========== ===========
Weighted average
common shares
outstanding -
basic 154,890 150,047 149,528 156,139 150,060
========= ========= ========= =========== ===========
Weighted average
common shares
outstanding -
diluted 156,710 151,489 151,562 157,892 151,545
========= ========= ========= =========== ===========
UnionBanCal Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(Taxable-Equivalent Basis)
On an Operating Earnings Basis (1)
For the Three Months For the Nine Months
Ended Ended
------------------------------ ----------------------
(Amounts in Sept. 30, June 30, Sept. 30, September 30,
thousands,
except per
share data) 2002 2003 2003 2002 2003
--------- --------- --------- ---------- -----------
Interest Income
Loans $382,177 $355,199 $350,210 $1,136,921 $1,068,648
Securities 77,815 78,357 93,568 238,020 252,118
Interest
bearing
deposits in
banks 773 1,130 922 1,898 3,014
Federal funds
sold and
securities
purchased
under resale
agreements 1,467 4,001 2,532 10,354 8,210
Trading
account
assets 1,415 981 909 3,107 2,847
--------- --------- --------- ----------- -----------
Total
interest
income 463,647 439,668 448,141 1,390,300 1,334,837
--------- --------- --------- ----------- -----------
Interest Expense
Domestic
deposits 52,049 40,217 34,984 167,395 116,772
Foreign
deposits 4,727 2,811 1,991 17,096 8,008
Federal funds
purchased and
securities
sold under
repurchase
agreements 1,789 747 689 5,134 2,763
Commercial
paper 4,488 2,946 1,723 12,998 7,397
Medium and
long-term
debt 2,375 1,818 1,738 7,198 5,422
UnionBanCal Corporation -
obligated mandatorily
redeemable preferred
securities of
subsidiary
grantor trust 3,921 3,652 3,607 11,832 10,930
Other borrowed
funds 1,662 1,055 1,673 8,740 3,983
--------- --------- --------- ----------- -----------
Total interest
expense 71,011 53,246 46,405 230,393 155,275
--------- --------- --------- ----------- -----------
Net Interest
Income 392,636 386,422 401,736 1,159,907 1,179,562
Provision for
credit losses 40,000 25,000 20,000 145,000 75,000
--------- --------- --------- ----------- -----------
Net interest
income after
provision
for credit
losses 352,636 361,422 381,736 1,014,907 1,104,562
--------- --------- --------- ----------- -----------
Noninterest Income
Service
charges on
deposit
accounts 68,629 77,942 81,832 204,641 232,061
Trust and
investment
management
fees 35,368 33,141 35,429 109,680 101,245
International
commissions
and fees 20,131 21,276 22,223 57,593 63,112
Insurance
commissions 6,259 16,024 15,814 19,969 45,056
Card processing
fees, net 9,068 9,340 10,335 26,343 29,357
Brokerage
commissions
and fees 9,034 8,412 7,549 27,614 24,614
Merchant
banking fees 6,819 6,191 9,312 22,845 21,521
Foreign
exchange
trading
gains, net 8,193 6,958 7,574 21,653 21,466
Securities
gains
(losses), net 1,017 647 (2,618) 2,986 (1,971)
Other 4,598 14,227 14,020 11,141 44,938
--------- --------- --------- ----------- -----------
Total noninterest
income 169,116 194,158 201,470 504,465 581,399
--------- --------- --------- ----------- -----------
Noninterest Expense
Salaries and
employee
benefits 182,275 198,929 205,302 547,251 602,338
Net occupancy 27,340 28,666 31,342 75,750 87,644
Equipment 16,343 16,354 15,680 48,650 48,705
Communications 13,186 13,354 12,661 39,695 39,859
Professional
services 10,350 13,566 12,676 30,789 38,256
Data
processing 7,944 7,744 7,659 24,475 23,887
Foreclosed
asset expense
(income) 18 - (79) 130 (28)
Other 60,368 68,191 63,620 179,362 197,604
--------- --------- --------- ----------- -----------
Total
noninterest
expense 317,824 346,804 348,861 946,102 1,038,265
--------- --------- --------- ----------- -----------
Income before
income taxes 203,928 208,776 234,345 573,270 647,696
Taxable-
equivalent
adjustment 534 645 647 1,604 1,916
Income tax
expense 68,413 69,072 78,653 191,966 216,159
--------- --------- --------- ----------- -----------
Net operating
earnings $134,981 $139,059 $155,045 $379,700 $429,621
========= ========= ========= =========== ===========
Net operating
earnings per
common share -
basic $0.87 $0.93 $1.04 $2.43 $2.86
========= ========= ========= =========== ===========
Net operating
earnings per
common share -
diluted $0.86 $0.92 $1.02 $2.40 $2.83
========= ========= ========= =========== ===========
Weighted average
common shares
outstanding -
basic 154,890 150,047 149,528 156,139 150,060
========= ========= ========= =========== ===========
Weighted average
common shares
outstanding -
diluted 156,710 151,489 151,562 157,892 151,545
========= ========= ========= =========== ===========
(1) See exhibits 5 and 6 for reconciliation of 'reported earnings'
to 'operating earnings'
UnionBanCal Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited) Reconciliations
(Taxable-Equivalent Basis)
Reported Earnings Reconciliation to Operating Earnings
For the Three Months Ended
September 30, 2002
----------------------------
Non-recurring
(Amounts in thousands, except per Reported Items Operating
share data)
--------------------------------- --------- -------- ----------
Net Interest Income $392,636 $- $392,636
Provision for credit losses 40,000 - 40,000
--------- -------- ---------
Net interest income after
provision for credit losses 352,636 - 352,636
--------- -------- ---------
Noninterest Income
Securities gains (losses), net
(1) 1,017 - 1,017
All other (no adjustments) 168,099 - 168,099
--------- -------- ---------
Total noninterest income 169,116 - 169,116
--------- -------- ---------
Noninterest Expense
Net occupancy (2) 27,340 - 27,340
All other (no adjustments) 290,484 - 290,484
--------- -------- ---------
Total noninterest expense 317,824 - 317,824
--------- -------- ---------
Income/Operating earnings before
income taxes 203,928 - 203,928
Taxable-equivalent adjustment 534 - 534
Income tax expense (benefit) (3)
(4) (5) 65,163 3,250 68,413
--------- -------- ---------
Net Income/Operating Earnings $138,231 $(3,250) $134,981
========= ======== =========
Net income/Operating earnings per
common share - basic $0.89 $(0.02) $0.87
========= ======== =========
Net income/Operating earnings per
common share - diluted $0.88 $(0.02) $0.86
========= ======== =========
Weighted average common shares
outstanding - basic 154,890 154,890
========= =========
Weighted average common shares
outstanding - diluted 156,710 156,710
========= =========
Reported Net Income $138,231
-----------------------------
Non-recurring Items
(1) Gain on the early call of a
Mexican Brady bond (2nd quarter
2003) -
(2) Write-off of leasehold
improvements (2nd quarter 2003) -
(3) Tax impact of items listed above
(1) and (2) -
(4) Reduction in income tax due to
change in CA tax law (3rd
quarter 2002) (3,250)
(5) Reduction in income tax due to
IRS Audit wrap up (2nd quarter
2003) -
-----------------------------
Net Operating Earnings $134,981
=============================
For the Three Months Ended
June 30, 2003
----------------------------
Non-recurring
(Amounts in thousands, except per Reported Items Operating
share data)
--------------------------------- -------- --------- ---------
Net Interest Income $386,422 $- $386,422
Provision for credit losses 25,000 - 25,000
--------- -------- ---------
Net interest income after
provision for credit losses 361,422 - 361,422
--------- -------- ---------
Noninterest Income
Securities gains (losses), net
(1) 9,660 (9,013) 647
All other (no adjustments) 193,511 - 193,511
--------- -------- ---------
Total noninterest income 203,171 (9,013) 194,158
--------- -------- ---------
Noninterest Expense
Net occupancy (2) 32,866 (4,200) 28,666
All other (no adjustments) 318,138 - 318,138
--------- -------- ---------
Total noninterest expense 351,004 (4,200) 346,804
--------- -------- ---------
Income/Operating earnings before
income taxes 213,589 (4,813) 208,776
Taxable-equivalent adjustment 645 - 645
Income tax expense (benefit) (3)
(4) (5) 68,186 886 69,072
--------- -------- ---------
Net Income/Operating Earnings $144,758 $(5,699) $139,059
========= ======== =========
Net income/Operating earnings per
common share - basic $0.96 $(0.03) $0.93
========= ======== =========
Net income/Operating earnings per
common share - diluted $0.96 $(0.04) $0.92
========= ======== =========
Weighted average common shares
outstanding - basic 150,047 150,047
========= =========
Weighted average common shares
outstanding - diluted 151,489 151,489
========= =========
Reported Net Income $144,758
-----------------------------
Non-recurring Items
(1) Gain on the early call of a
Mexican Brady bond (2nd quarter
2003) (9,013)
(2) Write-off of leasehold
improvements (2nd quarter 2003) 4,200
(3) Tax impact of items listed above
(1) and (2) 1,766
(4) Reduction in income tax due to
change in CA tax law (3rd
quarter 2002) -
(5) Reduction in income tax due to
IRS Audit wrap up (2nd quarter
2003) (2,652)
-----------------------------
Net Operating Earnings $139,059
=============================
For the Three Months Ended
September 30, 2003
--------------------------------
Non-recurring
(Amounts in thousands, except per Reported Items Operating
share data)
----------------------------------- ---------- ------ --------------
Net Interest Income $401,736 $- $401,736
Provision for credit losses 20,000 - 20,000
---------- ------ --------------
Net interest income after
provision for credit losses 381,736 - 381,736
---------- ------ --------------
Noninterest Income
Securities gains (losses), net (1) (2,618) - (2,618)
All other (no adjustments) 204,088 - 204,088
---------- ------ --------------
Total noninterest income 201,470 - 201,470
---------- ------ --------------
Noninterest Expense
Net occupancy (2) 31,342 - 31,342
All other (no adjustments) 317,519 - 317,519
---------- ------ --------------
Total noninterest expense 348,861 - 348,861
---------- ------ --------------
Income/Operating earnings before
income taxes 234,345 - 234,345
Taxable-equivalent adjustment 647 - 647
Income tax expense (benefit) (3)
(4) (5) 78,653 - 78,653
---------- ------ --------------
Net Income/Operating Earnings $155,045 $- $155,045
========== ====== ==============
Net income/Operating earnings per
common share - basic $1.04 $- $1.04
========== ====== ==============
Net income/Operating earnings per
common share - diluted $1.02 $- $1.02
========== ====== ==============
Weighted average common shares
outstanding - basic 149,528 149,528
========== ==============
Weighted average common shares
outstanding - diluted 151,562 151,562
========== ==============
Reported Net Income $155,045
---------- ------ --------------
Non-recurring Items
(1) Gain on the early call of a
Mexican Brady bond (2nd quarter
2003) -
(2) Write-off of leasehold
improvements (2nd quarter 2003) -
(3) Tax impact of items listed above
(1) and (2) -
(4) Reduction in income tax due to
change in CA tax law (3rd
quarter 2002) -
(5) Reduction in income tax due to
IRS Audit wrap up (2nd quarter
2003) -
---------- ------ --------------
Net Operating Earnings $155,045
========== ====== ==============
UnionBanCal Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited) Reconciliations
(Taxable-Equivalent Basis)
Reported Earnings Reconciliation to Operating Earnings
For the Nine Months Ended
---------------------------------
September 30, 2002
---------------------------------
Non-recurring
(Amounts in thousands, except per Reported Items Operating
share data)
--------------------------------- ----------- -------- -----------
Net Interest Income $1,159,907 $- $1,159,907
Provision for credit losses 145,000 - 145,000
----------- -------- -----------
Net interest income after
provision for credit losses 1,014,907 - 1,014,907
----------- -------- -----------
Noninterest Income
Securities gains (losses), net
(1) 2,986 - 2,986
All other (no adjustments) 501,479 - 501,479
----------- -------- -----------
Total noninterest income 504,465 - 504,465
----------- -------- -----------
Noninterest Expense
Net occupancy (2) 75,750 - 75,750
All other (no adjustments) 870,352 - 870,352
----------- -------- -----------
Total noninterest expense 946,102 - 946,102
----------- -------- -----------
Income/Operating earnings
before income taxes 573,270 - 573,270
Taxable-equivalent adjustment 1,604 - 1,604
Income tax expense (benefit)
(3) (4) (5) 188,716 3,250 191,966
----------- -------- -----------
Net Income/Operating Earnings $382,950 $(3,250) $379,700
=========== ======== ===========
Net income/Operating earnings per
common share - basic $2.45 $(0.02) $2.43
=========== ======== ===========
Net income/Operating earnings per
common share - diluted $2.43 $(0.03) $2.40
=========== ======== ===========
Weighted average common shares
outstanding - basic 156,139 156,139
=========== ===========
Weighted average common shares
outstanding - diluted 157,892 157,892
=========== ===========
Reported Net Income $382,950
---------------------------------
Non-recurring Items
(1) Gain on the early call of a
Mexican Brady bond (2nd quarter
2003) -
(2) Write-off of leasehold
improvements (2nd quarter 2003) -
(3) Tax impact of items listed
above (1) and (2) -
(4) Reduction in income tax due to
change in CA tax law (3rd quarter
2002) (3,250)
(5) Reduction in income tax due to IRS
Audit wrap up (2nd quarter 2003) -
---------------------------------
Net Operating Earnings $379,700
=================================
For the Nine Months Ended
September 30, 2003
--------------------------------
Non-recurring
(Amounts in thousands, except per Reported Items Operating
share data)
---------------------------------- ----------- -------- -----------
Net Interest Income $1,179,562 $- $1,179,562
Provision for credit losses 75,000 - 75,000
----------- -------- -----------
Net interest income after
provision for credit losses 1,104,562 - 1,104,562
----------- -------- -----------
Noninterest Income
Securities gains (losses), net
(1) 7,042 (9,013) (1,971)
All other (no adjustments) 583,370 - 583,370
----------- -------- -----------
Total noninterest income 590,412 (9,013) 581,399
----------- -------- -----------
Noninterest Expense
Net occupancy (2) 91,844 (4,200) 87,644
All other (no adjustments) 950,621 - 950,621
----------- -------- -----------
Total noninterest expense 1,042,465 (4,200) 1,038,265
----------- -------- -----------
Income/Operating earnings
before income taxes 652,509 (4,813) 647,696
Taxable-equivalent adjustment 1,916 - 1,916
Income tax expense (benefit)
(3) (4) (5) 215,273 886 216,159
----------- -------- -----------
Net Income/Operating Earnings $435,320 $(5,699) $429,621
=========== ======== ===========
Net income/Operating earnings per
common share - basic $2.90 $(0.04) $2.86
=========== ======== ===========
Net income/Operating earnings per
common share - diluted $2.87 $(0.04) $2.83
=========== ======== ===========
Weighted average common shares
outstanding - basic 150,060 150,060
=========== ===========
Weighted average common shares
outstanding - diluted 151,545 151,545
=========== ===========
Reported Net Income $435,320
--------------------------------
Non-recurring Items
(1) Gain on the early call of a Mexican
Brady bond (2nd quarter 2003) (9,013)
(2) Write-off of leasehold improvements
(2nd quarter 2003) 4,200
(3) Tax impact of items listed
above (1) and (2) 1,766
(4) Reduction in income tax due to
change in CA tax law (3rd quarter
2002) -
(5) Reduction in income tax due to IRS
Audit wrap up (2nd quarter 2003) (2,652)
--------------------------------
Net Operating Earnings $429,621
================================
UnionBanCal Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited) (Unaudited)
Sept. 30, Dec. 31, Sept. 30,
(Dollars in thousands) 2002 2002 2003
------------------------------- ------------ ------------ ------------
Assets
Cash and due from banks $2,184,714 $2,823,573 $2,619,580
Interest bearing deposits in
banks 139,323 278,849 341,230
Federal funds sold and
securities purchased under
resale agreements 1,137,550 1,339,700 1,325,470
------------ ------------ ------------
Total cash and cash
equivalents 3,461,587 4,442,122 4,286,280
Trading account assets 383,749 276,021 320,199
Securities available for sale:
Securities pledged as
collateral 132,974 157,823 68,440
Held in portfolio 6,061,875 7,109,498 9,930,281
Loans (net of allowance for
credit losses:
September 30, 2002, $623,078;
December 31, 2002, $609,190;
September 30, 2003, $550,550) 25,339,081 25,828,893 25,496,826
Due from customers on
acceptances 68,605 62,469 52,816
Premises and equipment, net 492,687 504,666 506,321
Intangible assets 23,119 38,518 49,288
Goodwill 93,279 150,542 215,903
Other assets 1,551,045 1,599,221 1,676,391
------------ ------------ ------------
Total assets $37,608,001 $40,169,773 $42,602,745
============ ============ ============
Liabilities
Domestic deposits:
Noninterest bearing $14,125,497 $15,537,906 $16,854,483
Interest bearing 14,701,824 15,258,479 17,320,728
Foreign deposits:
Noninterest bearing 401,202 583,836 556,687
Interest bearing 1,359,557 1,460,594 1,225,907
------------ ------------ ------------
Total deposits 30,588,080 32,840,815 35,957,805
Federal funds purchased and
securities sold under
repurchase agreements 303,307 334,379 284,764
Commercial paper 880,170 1,038,982 678,903
Other borrowed funds 218,282 267,047 240,803
Acceptances outstanding 68,605 62,469 52,816
Other liabilities 1,122,957 1,083,836 939,549
Medium and long-term debt 418,369 418,360 417,369
UnionBanCal Corporation-
obligated mandatorily
redeemable
preferred securities of
subsidiary grantor trust 370,286 365,696 356,629
------------ ------------ ------------
Total liabilities 33,970,056 36,411,584 38,928,638
------------ ------------ ------------
Commitments and contingencies
Shareholders' Equity
Preferred stock:
Authorized 5,000,000 shares, no shares
issued or outstanding as of
September 30, 2002, December
31, 2002, and September 30,
2003 - - -
Common stock, par value $1 per share at
September 30, 2003, and no stated
value at September 30, 2002,
and December 31, 2002 (1):
Authorized 300,000,000 shares, issued
150,220,119 shares as of
September 30, 2002, 150,702,363
shares as of December 31, 2002,
and 145,105,566 shares as of
September 30, 2003 907,088 926,460 145,106
Additional paid-in capital - - 520,876
Retained earnings 2,488,873 2,591,635 2,893,240
Accumulated other comprehensive
income 241,984 240,094 114,885
------------ ------------ ------------
Total shareholders'
equity 3,637,945 3,758,189 3,674,107
------------ ------------ ------------
Total liabilities and
shareholders' equity $37,608,001 $40,169,773 $42,602,745
============ ============ ============
(1) On September 30, 2003, UnionBanCal Corporation reincorporated in
the state of Delaware, establishing a common stock $1 per share
par value.
UnionBanCal Corporation and Subsidiaries
Loans (Unaudited)
Percent Change to
Sept. 30, 2003
Three Months Ended from
-------------------------- -----------------
Sept. 30, June 30, Sept. 30, Sept. 30, June 30,
(Dollars in millions) 2002 2003 2003 2002 2003
------------------------- -------- -------- -------- -------- --------
Loans (period average)
Commercial, financial
and industrial $11,172 $10,047 $9,600 (14.07%) (4.45%)
Construction 1,198 1,192 1,172 (2.17%) (1.68%)
Mortgage -
Commercial 3,839 4,180 4,239 10.42% 1.41%
Mortgage -
Residential 5,732 6,735 7,136 24.49% 5.95%
Consumer 1,972 2,032 2,028 2.84% (0.20%)
Lease financing 857 731 684 (20.19%) (6.43%)
Loans originated in
foreign branches 1,201 1,600 1,473 22.65% (7.94%)
-------- -------- --------
Total loans $25,971 $26,517 $26,332 1.39% (0.70%)
======== ======== ========
Nonperforming assets
(period end)
Nonaccrual loans:
Commercial, financial
and industrial $368 $274 $244 (33.70%) (10.95%)
Construction 1 - 1 0.00% nm
Mortgage -
Commercial 24 50 43 79.17% (14.00%)
Lease 2 53 52 nm (1.89%)
Foreign - 3 1 nm (66.67%)
-------- -------- --------
Total nonaccrual
loans 395 380 341 (13.67%) (10.26%)
Foreclosed assets 1 - 3 200.00% nm
-------- -------- --------
Total nonperforming
assets $396 $380 $344 (13.13%) (9.47%)
======== ======== ========
Loans 90 days or more
past due and still
accruing $7 $10 $26 271.43% 160.00%
======== ======== ========
Analysis of Allowance for
Credit Losses
Beginning balance $625 $586 $558
Provision for
credit losses 40 25 20
Foreign translation
adjustment and other
net additions
(deductions)(1) - - 11
Loans charged off:
Commercial, financial
and industrial (48) (51) (41)
Real estate (2) - (7)
Consumer (2) (3) (2)
Lease financing (1) (13) (1)
Loans originated in
foreign branches - - (2)
-------- -------- --------
Total loans
charged off (53) (67) (53)
-------- -------- --------
Loans recovered:
Commercial, financial
and industrial 9 13 14
Consumer 2 1 1
-------- -------- --------
Total loans
recovered 11 14 15
-------- -------- --------
Net loans
charged-off (42) (53) (38)
-------- -------- --------
Ending balance $623 $558 $551
======== ======== ========
(1) Includes a transfer of $10.3 million related to the Monterey Bay
Bank acquisition in the third quarter of 2003.
nm = not meaningful
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
For the Three Months Ended
----------------------------------------------------------------------
September 30, 2002
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense(1) Rate(1)
------------------ ------------ ------------------
Assets
Loans:(2)
Domestic $24,770,565 $374,043 6.00 %
Foreign(3) 1,200,918 8,134 2.69
Securities - taxable 5,907,792 76,825 5.20
Securities - tax-exempt 35,761 990 11.08
Interest bearing deposits in banks 135,952 773 2.26
Federal funds sold and securities
purchased under resale agreements 327,820 1,467 1.78
Trading account assets 378,715 1,415 1.48
------------ ---------
Total earning assets 32,757,523 463,647 5.63
---------
Allowance for credit losses (631,581)
Cash and due from banks 1,860,183
Premises and equipment, net 497,542
Other assets 1,319,808
------------
Total assets $35,803,475
============
Liabilities
Domestic deposits:
Interest bearing $8,292,080 22,855 1.09
Savings and consumer time 3,614,192 14,593 1.60
Large time 2,679,594 14,601 2.16
Foreign deposits(3) 1,369,123 4,727 1.37
------------ ---------
Total interest bearing deposits 15,954,989 56,776 1.41
------------ ---------
Federal funds purchased and securities
sold under repurchase agreements 487,201 1,789 1.46
Commercial paper 1,043,111 4,488 1.71
Other borrowed funds 270,795 1,662 2.44
Medium and long-term debt 399,697 2,375 2.36
UnionBanCal Corporation - obligated
mandatorily redeemable preferred
securities of subsidiary grantor trust 351,879 3,921 4.48
------------ ---------
Total borrowed funds 2,552,683 14,235 2.22
------------ ---------
Total interest bearing liabilities 18,507,672 71,011 1.52
---------
Noninterest bearing deposits 12,500,463
Other liabilities 980,413
------------
Total liabilities 31,988,548
Shareholders' Equity
Common equity 3,814,927
------------
Total shareholders' equity 3,814,927
------------
Total liabilities and
shareholders' equity $35,803,475
============
Net interest income/margin
(taxable-equivalent basis) 392,636 4.77 %
Less: taxable-equivalent adjustment 534
---------
Net interest income $392,102
=========
June 30, 2003
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense(1) Rate(1)
------------------ ------------ ------------------
Assets
Loans:(2)
Domestic $24,916,936 $346,204 5.63 %
Foreign(3) 1,600,380 8,995 2.28
Securities - taxable 7,685,140 77,341 4.03
Securities - tax-exempt 40,984 1,016 9.91
Interest bearing deposits in banks 221,004 1,130 2.05
Federal funds sold and securities
purchased under resale agreements 1,276,224 4,001 1.26
Trading account assets 333,820 981 1.18
------------ ---------
Total earning assets 36,074,488 439,668 4.88
---------
Allowance for credit losses (585,597)
Cash and due from banks 2,099,440
Premises and equipment, net 509,372
Other assets 1,678,646
------------
Total assets $39,776,349
============
Liabilities
Domestic deposits:
Interest bearing $9,928,211 18,799 0.76
Savings and consumer time 3,871,674 11,277 1.17
Large time 2,532,971 10,141 1.61
Foreign deposits(3) 1,224,201 2,811 0.92
------------ ---------
Total interest bearing deposits 17,557,057 43,028 0.98
------------ ---------
Federal funds purchased and securities
sold under repurchase agreements 333,415 747 0.90
Commercial paper 995,048 2,946 1.19
Other borrowed funds 138,074 1,055 3.06
Medium and long-term debt 399,745 1,818 1.82
UnionBanCal Corporation - obligated
mandatorily redeemable preferred
securities of subsidiary grantor trust 351,553 3,652 4.16
------------ ---------
Total borrowed funds 2,217,835 10,218 1.85
------------ ---------
Total interest bearing liabilities 19,774,892 53,246 1.08
---------
Noninterest bearing deposits 15,030,116
Other liabilities 1,052,065
------------
Total liabilities 35,857,073
Shareholders' Equity
Common equity 3,919,276
------------
Total shareholders' equity 3,919,276
------------
Total liabilities and
shareholders' equity $39,776,349
============
Net interest income/margin
(taxable-equivalent basis) 386,422 4.29 %
Less: taxable-equivalent adjustment 645
---------
Net interest income $385,777
=========
September 30, 2003
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense(1) Rate(1)
------------------ ------------ ------------------
Assets
Loans:(2)
Domestic $24,858,766 $342,629 5.48 %
Foreign(3) 1,473,220 7,581 2.04
Securities - taxable 9,928,708 92,553 3.73
Securities - tax-exempt 40,592 1,015 10.00
Interest bearing deposits in banks 246,897 922 1.48
Federal funds sold and securities
purchased under resale agreements 980,271 2,532 1.02
Trading account assets 327,415 909 1.10
------------ ---------
Total earning assets 37,855,869 448,141 4.71
---------
Allowance for credit losses (570,773)
Cash and due from banks 2,324,389
Premises and equipment, net 510,205
Other assets 1,793,825
------------
Total assets $41,913,515
============
Liabilities
Domestic deposits:
Interest bearing $10,952,652 16,586 0.60
Savings and consumer time 4,116,669 9,990 0.96
Large time 2,303,754 8,408 1.45
Foreign deposits(3) 1,200,668 1,991 0.66
------------ ---------
Total interest bearing deposits 18,573,743 36,975 0.79
------------ ---------
Federal funds purchased and securities
sold under repurchase agreements 393,772 689 0.69
Commercial paper 781,552 1,723 0.87
Other borrowed funds 262,512 1,673 2.53
Medium and long-term debt 399,761 1,738 1.73
UnionBanCal Corporation - obligated
mandatorily redeemable preferred
securities of subsidiary grantor trust 351,575 3,607 4.10
------------ ---------
Total borrowed funds 2,189,172 9,430 1.71
------------ ---------
Total interest bearing liabilities 20,762,915 46,405 0.89
---------
Noninterest bearing deposits 16,329,221
Other liabilities 986,545
------------
Total liabilities 38,078,681
Shareholders' Equity
Common equity 3,834,834
------------
Total shareholders' equity 3,834,834
------------
Total liabilities and
shareholders' equity $41,913,515
============
Net interest income/margin
(taxable-equivalent basis) 401,736 4.22 %
Less: taxable-equivalent adjustment 647
---------
Net interest income $401,089
=========
(1) Yields and interest income are presented on a taxable-equivalent
basis using the federal statutory tax rate of 35 percent.
(2) Average balances on loans outstanding include all nonperforming
loans. The amortized portion of net loan origination fees (costs)
is included in interest income on loans, representing an
adjustment to the yield.
(3) Foreign loans and deposits are those loans and deposits originated
in foreign branches.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
For the Nine Months Ended
----------------------------------------------------------------------
September 30, 2002
--------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense(1) Rate(1)
------------------ ------------ ----------- -------
Assets
Loans:(2)
Domestic $24,468,284 $1,113,279 6.08 %
Foreign(3) 1,094,168 23,642 2.89
Securities - taxable 5,678,095 235,041 5.52
Securities - tax-exempt 36,971 2,979 10.75
Interest bearing deposits in banks 113,779 1,898 2.23
Federal funds sold and securities
purchased under resale agreements 782,607 10,354 1.77
Trading account assets 298,505 3,107 1.39
------------ -----------
Total earning assets 32,472,409 1,390,300 5.72
-----------
Allowance for credit losses (635,313)
Cash and due from banks 1,878,616
Premises and equipment, net 497,503
Other assets 1,328,587
------------
Total assets $35,541,802
============
Liabilities
Domestic deposits:
Interest bearing $7,881,352 68,564 1.16
Savings and consumer time 3,587,824 46,830 1.75
Large time 3,125,003 52,001 2.22
Foreign deposits(3) 1,576,176 17,096 1.45
------------ -----------
Total interest bearing deposits 16,170,355 184,491 1.53
------------ -----------
Federal funds purchased and
securities sold under
repurchase agreements 463,067 5,134 1.48
Commercial paper 999,030 12,998 1.74
Other borrowed funds 543,796 8,740 2.15
Medium and long-term debt 399,788 7,198 2.41
UnionBanCal Corporation -
obligated mandatorily
redeemable preferred
securities of subsidiary
grantor trust 352,183 11,832 4.47
------------ -----------
Total borrowed funds 2,757,864 45,902 2.22
------------ -----------
Total interest bearing
liabilities 18,928,219 230,393 1.63
-----------
Noninterest bearing deposits 11,915,106
Other liabilities 968,204
------------
Total liabilities 31,811,529
Shareholders' Equity
Common equity 3,730,273
------------
Total shareholders' equity 3,730,273
------------
Total liabilities
and shareholders' equity $35,541,802
============
Net interest income/margin
(taxable-equivalent basis) 1,159,907 4.77 %
Less: taxable-equivalent adjustment 1,604
-----------
Net interest income $1,158,303
===========
September 30, 2003
--------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense(1) Rate(1)
------------------ ------------ ----------- -------
Assets
Loans:(2)
Domestic $24,986,259 $1,043,906 5.58 %
Foreign(3) 1,536,428 24,742 2.15
Securities - taxable 8,220,231 249,073 4.04
Securities - tax-exempt 41,168 3,045 9.86
Interest bearing
deposits in banks 223,937 3,014 1.80
Federal funds sold and securities
purchased under resale agreements 932,496 8,210 1.18
Trading account assets 322,952 2,847 1.18
------------ -----------
Total earning assets 36,263,471 1,334,837 4.92
-----------
Allowance for credit losses (586,418)
Cash and due from banks 2,173,775
Premises and equipment, net 508,859
Other assets 1,666,062
------------
Total assets $40,025,749
============
Liabilities
Domestic deposits:
Interest bearing $10,087,830 54,194 0.72
Savings and consumer time 3,937,051 33,583 1.14
Large time 2,416,606 28,995 1.60
Foreign deposits(3) 1,269,010 8,008 0.84
------------ -----------
Total interest bearing deposits 17,710,497 124,780 0.94
------------ -----------
Federal funds purchased and
securities sold under
repurchase agreements 414,446 2,763 0.89
Commercial paper 899,456 7,397 1.10
Other borrowed funds 191,480 3,983 2.78
Medium and long-term debt 399,745 5,422 1.81
UnionBanCal Corporation -
obligated mandatorily redeemable
preferred securities of
subsidiary grantor trust 351,594 10,930 4.15
------------ -----------
Total borrowed funds 2,256,721 30,495 1.80
------------ -----------
Total interest bearing
liabilities 19,967,218 155,275 1.04
-----------
Noninterest bearing deposits 15,159,687
Other liabilities 1,022,854
------------
Total liabilities 36,149,759
Shareholders' Equity
Common equity 3,875,990
------------
Total shareholders' equity 3,875,990
------------
Total liabilities and
shareholders' equity $40,025,749
============
Net interest income/margin
(taxable-equivalent basis) 1,179,562 4.35 %
Less: taxable-equivalent adjustment 1,916
-----------
Net interest income $1,177,646
===========
(1) Yields and interest income are presented on a taxable-equivalent
basis using the federal statutory tax rate of 35 percent.
(2) Average balances on loans outstanding include all nonperforming
loans. The amortized portion of net loan origination fees (costs)
is included in interest income on loans, representing an
adjustment to the yield.
(3) Foreign loans and deposits are those loans and deposits originated
in foreign branches.
UnionBanCal Corporation and Subsidiaries
On a Reported Earnings Basis (reference to exhibit 3)
-----------------------------------------------------
Noninterest Income (Unaudited)
Percentage Change to
For the Three Months Ended Sept. 30, 2003 from
------------------------------- -------------------
(Dollars in Sept. 30, June 30, Sept. 30, Sept. 30, June 30,
thousands) 2002 2003 2003 2002 2003
-------------- --------- --------- --------- ---------- -------
Service
charges on
deposit
accounts $68,629 $77,942 $81,832 19.24 % 4.99 %
Trust and
investment
management
fees 35,368 33,141 35,429 0.17 6.90
International
commissions
and fees 20,131 21,276 22,223 10.39 4.45
Insurance
commissions 6,259 16,024 15,814 152.66 (1.31)
Card processing
fees, net 9,068 9,340 10,335 13.97 10.65
Merchant
banking fees 6,819 6,191 9,312 36.56 50.41
Foreign exchange
trading gains,
net 8,193 6,958 7,574 (7.56) 8.85
Brokerage
commissions
and fees 9,034 8,412 7,549 (16.44) (10.26)
Securities
gains (losses),
net 1,017 9,660 (2,618) nm nm
Other 4,598 14,227 14,020 204.92 (1.46)
--------- --------- ---------
Total
noninterest
income $169,116 $203,171 $201,470 19.13 % (0.84)%
========= ========= =========
Noninterest Expense (Unaudited)
Percentage Change to
For the Three Months Ended Sept. 30, 2003 from
------------------------------- -------------------
(Dollars in Sept. 30, June 30, Sept. 30, Sept. 30, June 30,
thousands) 2002 2003 2003 2002 2003
-------------- --------- --------- --------- ---------- -------
Salaries and
other
compensation $152,057 $161,567 $169,705 11.61 % 5.04 %
Employee
benefits 30,218 37,362 35,597 17.80 (4.72)
--------- --------- ---------
Salaries and
employee
benefits 182,275 198,929 205,302 12.63 3.20
Net occupancy 27,340 32,866 31,342 14.64 (4.64)
Equipment 16,343 16,354 15,680 (4.06) (4.12)
Professional
services 10,350 13,566 12,676 22.47 (6.56)
Communications 13,186 13,354 12,661 (3.98) (5.19)
Software 10,061 10,849 11,996 19.23 10.57
Advertising and
public relations 9,145 9,693 9,227 0.90 (4.81)
Data processing 7,944 7,744 7,659 (3.59) (1.10)
Intangible asset
amortization 1,497 3,227 2,587 72.81 (19.83)
Foreclosed
asset expense
(income) 18 - (79) nm nm
Other 39,665 44,422 39,810 0.37 (10.38)
--------- --------- ---------
Total
noninterest
expense $317,824 $351,004 $348,861 9.77 % (0.61)%
========= ========= =========
nm = not meaningful
UnionBanCal Corporation and Subsidiaries
On an Operating Earnings Basis (reference to exhibit 4) (1)
-----------------------------------------------------------
Noninterest Income (Unaudited)
Percentage Change to
For the Three Months Ended Sept. 30, 2003 from
------------------------------- -------------------
(Dollars in Sept. 30, June 30, Sept. 30, Sept. 30, June 30,
thousands) 2002 2003 2003 2002 2003
-------------- --------- --------- --------- ---------- -------
Service charges on
deposit accounts $68,629 $77,942 $81,832 19.24 % 4.99 %
Trust and investment
management fees 35,368 33,141 35,429 0.17 6.90
International
commissions and fees 20,131 21,276 22,223 10.39 4.45
Insurance commissions 6,259 16,024 15,814 152.66 (1.31)
Card processing
fees, net 9,068 9,340 10,335 13.97 10.65
Merchant banking fees 6,819 6,191 9,312 36.56 50.41
Foreign exchange
trading gains, net 8,193 6,958 7,574 (7.56) 8.85
Brokerage commissions
and fees 9,034 8,412 7,549 (16.44) (10.26)
Securities gains
(losses), net 1,017 647 (2,618) nm nm
Other 4,598 14,227 14,020 204.92 (1.46)
--------- --------- ---------
Total noninterest
income $169,116 $194,158 $201,470 19.13 % 3.77 %
========= ========= =========
Noninterest Expense (Unaudited)
Percentage Change to
For the Three Months Ended Sept. 30, 2003 from
------------------------------- -------------------
(Dollars in Sept. 30, June 30, Sept. 30, Sept. 30, June 30,
thousands) 2002 2003 2003 2002 2003
-------------- --------- --------- --------- ---------- -------
Salaries and other
compensation $152,057 $161,567 $169,705 11.61 % 5.04 %
Employee benefits 30,218 37,362 35,597 17.80 (4.72)
--------- --------- ---------
Salaries and
employee
benefits 182,275 198,929 205,302 12.63 3.20
Net occupancy 27,340 28,666 31,342 14.64 9.34
Equipment 16,343 16,354 15,680 (4.06) (4.12)
Professional
services 10,350 13,566 12,676 22.47 (6.56)
Communications 13,186 13,354 12,661 (3.98) (5.19)
Software 10,061 10,849 11,996 19.23 10.57
Advertising and
public relations 9,145 9,693 9,227 0.90 (4.81)
Data processing 7,944 7,744 7,659 (3.59) (1.10)
Intangible asset
amortization 1,497 3,227 2,587 72.81 (19.83)
Foreclosed asset
expense (income) 18 - (79) nm nm
Other 39,665 44,422 39,810 0.37 (10.38)
--------- --------- ---------
Total noninterest
expense $317,824 $346,804 $348,861 9.77 % 0.59 %
========= ========= =========
nm = not meaningful
(1) See exhibit 5 for reconciliation of 'reported earnings' to
'operating earnings'.
UnionBanCal Corporation and Subsidiaries
On a Reported Earnings Basis (reference to exhibit 3)
-----------------------------------------------------
Noninterest Income (Unaudited)
Percentage
Change to
For the Nine Months Sept. 30,
Ended 2003 from
--------------------- ----------
Sept. 30, Sept. 30, Sept. 30,
(Dollars in thousands) 2002 2003 2002
---------------------------------- --------- ----------- ---------
Service charges on deposit accounts $204,641 $232,061 13.40 %
Trust and investment management fees 109,680 101,245 (7.69)
International commissions and fees 57,593 63,112 9.58
Insurance commissions 19,969 45,056 125.63
Card processing fees, net 26,343 29,357 11.44
Brokerage commissions and fees 27,614 24,614 (10.86)
Merchant banking fees 22,845 21,521 (5.80)
Foreign exchange trading gains, net 21,653 21,466 (0.86)
Securities gains (losses), net 2,986 7,042 135.83
Other 11,141 44,938 303.36
--------- -----------
Total noninterest income $504,465 $590,412 17.04 %
========= ===========
Noninterest Expense (Unaudited)
Percentage
Change to
For the Nine Months Sept. 30,
Ended 2003 from
--------------------- ----------
Sept. 30, Sept. 30, Sept. 30,
(Dollars in thousands) 2002 2003 2002
---------------------------------- --------- ----------- ---------
Salaries and other compensation $448,690 $484,333 7.94
Employee benefits 98,561 118,005 19.73 %
--------- -----------
Salaries and employee benefits 547,251 602,338 10.07
Net occupancy 75,750 91,844 21.25
Equipment 48,650 48,705 0.11
Communications 39,695 39,859 0.41
Professional services 30,789 38,256 24.25
Software 31,610 34,921 10.47
Advertising and public relations 27,774 28,587 2.93
Data processing 24,475 23,887 (2.40)
Intangible asset amortization 3,661 8,291 126.47
Foreclosed asset expense (income) 130 (28) nm
Other 116,317 125,805 8.16
--------- -----------
Total noninterest expense $946,102 $1,042,465 10.19 %
========= ===========
nm = not meaningful
UnionBanCal Corporation and Subsidiaries
On an Operating Earnings Basis (reference to exhibit 4) (1)
-----------------------------------------------------------
Noninterest Income (Unaudited)
Percentage
Change to
For the Nine Months Sept. 30,
Ended 2003 from
--------------------- ----------
Sept. 30, Sept. 30, Sept. 30,
(Dollars in thousands) 2002 2003 2002
---------------------------------- --------- ----------- ---------
Service charges on deposit accounts $204,641 $232,061 13.40 %
Trust and investment management fees 109,680 101,245 (7.69)
International commissions and fees 57,593 63,112 9.58
Insurance commissions 19,969 45,056 125.63
Card processing fees, net 26,343 29,357 11.44
Brokerage commissions and fees 27,614 24,614 (10.86)
Merchant banking fees 22,845 21,521 (5.80)
Foreign exchange trading gains, net 21,653 21,466 (0.86)
Securities gains (losses), net 2,986 (1,971) nm
Other 11,141 44,938 303.36
--------- -----------
Total noninterest income $504,465 $581,399 15.25 %
========= ===========
Noninterest Expense (Unaudited)
Percentage
Change to
For the Nine Months Sept. 30,
Ended 2003 from
--------------------- ----------
Sept. 30, Sept. 30, Sept. 30,
(Dollars in thousands) 2002 2003 2002
---------------------------------- --------- ----------- ---------
Salaries and other compensation $448,690 $484,333 7.94 %
Employee benefits 98,561 118,005 19.73
--------- -----------
Salaries and employee benefits 547,251 602,338 10.07
Net occupancy 75,750 87,644 15.70
Equipment 48,650 48,705 0.11
Communications 39,695 39,859 0.41
Professional services 30,789 38,256 24.25
Software 31,610 34,921 10.47
Advertising and public relations 27,774 28,587 2.93
Data processing 24,475 23,887 (2.40)
Intangible asset amortization 3,661 8,291 126.47
Foreclosed asset expense (income) 130 (28) nm
Other 116,317 125,805 8.16
--------- -----------
Total noninterest expense $946,102 $1,038,265 9.74 %
========= ===========
nm = not meaningful
(1) See exhibit 6 for reconciliation of 'reported earnings' to
'operating earnings'.
CONTACT: UnionBanCal Corporation
John A. Rice, Jr., 415-765-2998 (Investor Relations)
Stephen L. Johnson, 415-765-3252 (Public Relations)
Michelle R. Crandall, 415-765-2780 (Investor Relations)
</TEXT>
</DOCUMENT>