EX-99.1 2 a4684170ex991.txt UNIONBANCAL CORPORATION EXHIBIT 99.1 Exhibit 99.1 UnionBanCal Corporation Reports 21.7% Increase in Second Quarter Operating Earnings Per Share SAN FRANCISCO--(BUSINESS WIRE)--July 20, 2004--UnionBanCal Corporation (NYSE:UB) today reported second quarter 2004 net income of $231.1 million, or $1.54 per diluted common share. The Company earned $144.8 million, or $0.96 per diluted common share, in the second quarter of 2003. Second quarter 2004 operating earnings were $168.6 million, or $1.12 per diluted common share, compared with $139.1 million, or $0.92 per diluted common share, for second quarter 2003. Operating earnings increased 21.2 percent, while operating earnings per diluted common share increased 21.7 percent. Operating earnings for second quarter 2004 exclude an after-tax gain of $57.3 million on the sale of the Company's merchant card portfolio, and an after-tax gain of $5.3 million on the sale of real property. Operating earnings for second quarter 2003 exclude an after-tax gain of $5.7 million on the redemption of a Mexican Brady Bond, an after-tax write-off of $2.7 million for certain leasehold improvements, and a tax refund of $2.7 million resulting from the settlement of several tax issues with the IRS. Compared with first quarter 2004, operating earnings increased $11.1 million, or 7.0 percent, and operating earnings per diluted common share increased 6.7 percent. Net income and operating earnings were equivalent for first quarter 2004. "Business momentum continued to be very solid in the second quarter," stated Norimichi Kanari, President and Chief Executive Officer. "The 21.7 percent increase in operating earnings per share was driven by strong noninterest income and further improvement in credit quality. In addition, we generated sequential quarter commercial loan growth for the first time in many quarters, and continued to generate strong core deposit growth. The combination of strong earnings growth and effective capital management generated a return on average stockholders' equity on an operating earnings basis of 17.2 percent, in the second quarter. This is an improvement of three percentage points compared to the 14.2 percent return generated a year earlier." Kanari continued, "During the course of the last three months, we announced three strategic transactions that tighten our business focus and position the Company for future growth. In May, we entered into a definitive agreement to acquire the business portfolio of CNA Trust Company, which specializes in the delivery of retirement plan services. With this acquisition, expected to close in the third quarter, Union Bank is expected to rank 25th nationally based on the number of retirement plans serviced. On May 31, we completed the sale of our merchant card portfolio to NOVA Information Systems and formed a long-term marketing alliance with NOVA, under which NOVA will provide processing services, customer service and support operations to Union Bank's merchant card customers. Finally, on July 2, we announced that we will acquire Jackson Federal Bank, which operates 14 branches in Southern California. As of June 30, 2004, Jackson Federal Bank had $1.2 billion in loans and $1.1 billion in deposits. We expect this acquisition to be accretive to our 2005 GAAP earnings per share. "Our ability to generate capital at attractive rates also permits us to return more capital to our shareholders. In April, we announced a 16.1 percent increase in our common stock dividend, bringing our annual dividend rate to $1.44 per share. At the same time, we announced a $200 million extension of our share repurchase program," concluded Kanari. Second Quarter Total Revenue For second quarter 2004, total revenue (taxable-equivalent net interest income plus noninterest income) on an operating basis was $630.1 million, an increase of $49.6 million, or 8.5 percent, compared with second quarter 2003. Net interest income increased 3.7 percent, and noninterest income on an operating basis increased 18.2 percent. Compared with first quarter 2004, total revenue on an operating basis was $17.7 million, or 2.9 percent, higher with net interest income flat, and noninterest income on an operating basis increasing 8.7 percent. Second Quarter Net Interest Income (Taxable-equivalent) Net interest income was $400.7 million in second quarter 2004, up $14.2 million from the same quarter a year ago. Volume gains in earning assets and deposits were partially offset by the effects of the lower interest rate environment and a shift in the mix of earning assets. Average earning assets grew $4.3 billion, or 11.9 percent, primarily due to a $4.0 billion, or 52.3 percent, increase in average securities and a $321 million, or 1.2 percent, increase in average loans. Average residential mortgages increased $1.0 billion, or 15.0 percent, and average commercial mortgages increased $153 million, or 3.7 percent. While average commercial loans grew on a sequential quarter basis, they declined $940 million, or 9.4 percent, year-over-year, due to a decline in volumes throughout 2003 and the first quarter of 2004. Average noninterest bearing deposits increased $3.3 billion, or 21.8 percent, including a $496 million increase in title and escrow deposits. Average noninterest bearing deposits represented 48.4 percent of total deposits, up from 46.1 percent in the same quarter a year ago. The annualized average all-in cost of funds was just 0.42 percent, reflecting the Company's high deposit to loan ratio of 140.9 percent and the high proportion of noninterest bearing deposits to total deposits. Due to the lower interest rate environment compared with second quarter 2003, the average yield on earning assets of $40.4 billion declined 48 basis points year-over-year, while the average rate on interest bearing liabilities of $21.4 billion fell 30 basis points. The net interest margin in second quarter 2004 was 3.98 percent, compared with 4.29 percent in second quarter 2003. On a sequential quarter basis, net interest income was flat. Average earning assets increased $1.5 billion, or 3.8 percent, due to an increase in average loans of $697 million, or 2.7 percent, an increase in average money market assets of $430 million, or 43.2 percent, and an increase in average securities of $303 million, or 2.6 percent. Average commercial loans increased $213 million, or 2.4 percent, primarily due to improving loan demand. Average residential mortgages increased $269 million, or 3.6 percent. Average noninterest bearing deposits increased $1.6 billion, or 9.3 percent, including an $854 million, or 33.0 percent, increase in title and escrow deposits. The net interest margin declined 16 basis points to 3.98 percent. Second Quarter Noninterest Income In second quarter 2004, noninterest income on an operating basis was $229 million, up $35 million, or 18.2 percent, from the same quarter a year ago. Second quarter 2004 noninterest income on an operating basis excludes a $93.0 million gain on the sale of the Company's merchant card portfolio, and an $8.5 million gain on the sale of real property. Second quarter 2003 noninterest income on an operating basis excludes a $9.0 million gain on the redemption of a Mexican Brady Bond. Noninterest income on an operating basis represented 36.4 percent of total revenue on an operating basis in the quarter, up from 33.4 percent during the same period last year. Service charges on deposit accounts increased $12 million, or 15.5 percent, primarily due to higher overdraft and account analysis fees, and higher deposit volumes. Trust and investment management fees increased 11.0 percent, primarily due to an increase in trust assets. Insurance commissions increased 16.4 percent, primarily due to organic growth and the December 2003 acquisition of Knight Insurance Agency. Card processing fees, net, increased $6 million, primarily due to the second quarter sale of the Company's merchant card portfolio. Historically, the Company received and recorded merchant card revenue on a one-month lag, while the related interchange expense was recorded in the month incurred. The May 31 sale of the merchant card portfolio consequently resulted in the recognition of three months of revenue, but only two months of interchange expense, in the second quarter. Included in second quarter 2004 other noninterest income was an additional $3.7 million insurance recovery in final settlement of the Company's losses related to the World Trade Center terrorist attacks of September 11, 2001. Noninterest income on an operating basis increased $18 million, or 8.7 percent, on a sequential quarter basis. Service charges on deposit accounts increased $9 million, or 11.0 percent, primarily due to higher overdraft and account analysis fees, and higher deposit volumes. Insurance commissions decreased $3 million, or 14.2 percent, primarily due to normal seasonal factors. Second Quarter Noninterest Expense Noninterest expense on an operating basis for second quarter 2004 was $376 million, an increase of $30 million, or 8.5 percent, over second quarter 2003. Noninterest expense on an operating basis for second quarter 2003 excludes a $4.2 million write-off of certain leasehold improvements. Salaries and employee benefits expense increased $19 million, or 9.4 percent, primarily due to higher employee count associated with acquisitions and de novo branch openings, annual merit increases, higher performance-related incentive expense, and higher pension expense. Net occupancy expense increased 12.2 percent, primarily due to acquisitions and de novo branch openings. Intangible asset amortization expense was $4.5 million, an increase of $1.3 million compared with prior year, due to recent acquisitions. Compared with first quarter 2004, noninterest expense increased $3 million, or 0.9 percent. Income Tax Expense Income tax expense on an operating basis for second quarter 2004 was $94.3 million. The effective tax rate for second quarter 2004 was 35.9 percent, compared with an effective tax rate of 33.2 percent for second quarter 2003. Second quarter 2003 operating income tax expense of $69.1 million excludes a $2.7 million income tax refund. The increase in the effective tax rate was due to higher California state income taxes and lower low-income housing tax credits in 2004. Year-To-Date Results Total revenue on an operating basis was $1.2 billion in the first six months of 2004, an increase of $85 million, or 7.3 percent, compared with 2003. Net interest income increased 3.1 percent, and noninterest income on an operating basis increased 16.0 percent. Net interest income was $802 million in the first half of 2004, a $24 million, or 3.1 percent, increase from prior year. The positive effect of higher volumes of earning assets and noninterest bearing demand deposits was partially offset by the adverse effect of the lower interest rate environment in 2004, and a shift in the mix of earning assets. Compared with prior year, net interest margin declined 34 basis points, to 4.07 percent. Noninterest income on an operating basis in the first half of 2004 was $441 million, an increase of $61 million, or 16.0 percent, over the same period in 2003. Service charges on deposits increased $21 million, or 13.9 percent, primarily due to higher overdraft and account analysis fees, and higher deposit volumes. Trust and investment management fees increased $7 million, or 10.3 percent, primarily due to increased trust assets. Insurance commissions increased $11 million, or 38.1 percent, due to two insurance brokerage acquisitions and organic growth. For the first half of 2004, noninterest expense on an operating basis increased $60 million, or 8.7 percent, over the first half of 2003. Salaries and employee benefits expense increased $40 million, or 10.1 percent, primarily due to higher employee count associated with recent acquisitions and de novo branch openings, merit increases, higher performance-related incentive expense, higher pension expense and higher employer tax expense. Intangible asset amortization expense was $9 million, an increase of $3 million compared with prior year, due to recent acquisitions. Credit Quality Nonperforming assets at June 30, 2004, were $184 million, or 0.40 percent of total assets. This compares with $263 million, or 0.57 percent of total assets at March 31, 2004, and $380 million, or 0.89 percent of total assets, at June 30, 2003. Nonperforming assets declined 30.0 percent during second quarter, and 51.6 percent during the past year. In second quarter 2004, the provision for credit losses was negative $10 million, reflecting further improvement in the credit quality of the loan portfolio. In first quarter 2004, the provision for credit losses was negative $5 million, and in second quarter 2003, the provision was $25 million. Net loans charged off in second quarter 2004 were $10 million, compared with $13 million in first quarter 2004, and $53 million in second quarter 2003. At June 30, 2004, the allowance for credit losses as a percent of total loans and as a percent of nonaccrual loans was 1.82 percent and 281.6 percent, respectively. These ratios were 2.00 percent and 203.0 percent, respectively, at March 31, 2004, and 2.17 percent and 147.1 percent, respectively, at June 30, 2003. Balance Sheet and Capital Ratios At June 30, 2004, the Company had total assets of $46.3 billion and total deposits of $39.4 billion. Total stockholders' equity was $4.0 billion and the tangible equity ratio was 7.88 percent. Book value per share was $26.98, up 4.6 percent from a year earlier. The Company's Tier I and total risk based capital ratios at June 30, 2004, were 10.46 percent and 13.06 percent, respectively. Stock Repurchases During second quarter 2004, the Company repurchased 210,000 shares of common stock at an average price of $55.31 per share. At June 30, 2004, the Company had authority from its Board of Directors to repurchase an additional $246 million of common stock. Common shares outstanding at June 30, 2004, were 147.8 million, a decrease of 2.1 million shares, or 1.4 percent, from one year earlier. Third Quarter/Full Year 2004 Earnings Per Share Guidance The Company currently estimates that third quarter 2004 fully diluted earnings per share will be in the range of $1.07 to $1.12. Full year 2004 fully diluted operating earnings per share are estimated to be in the range of $4.25 to $4.45. 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. Recent Event On July 2, 2004, UnionBanCal Corporation announced its intention to acquire Jackson Federal Bank, a wholly-owned subsidiary of Jackson National Life (JNL). The securities offered to JNL have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. 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 second quarter results at 8:30 AM PDT (11:30 AM EDT) on July 21, 2004. Interested parties calling from locations within the United States should call 888-428-4479 (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), July 21, through 11:59 PM PDT, July 28 (2:59 AM EDT, July 29). The reservation number for this playback is 735733. Based in San Francisco, UnionBanCal Corporation is a bank holding company with assets of $46.3 billion at June 30, 2004. Its primary subsidiary, Union Bank of California, N.A., had 297 banking offices in California, 4 banking offices in Oregon and Washington and 21 international facilities, at June 30, 2004. UnionBanCal Corporation and Subsidiaries Financial Highlights (Unaudited) On a Reported Earnings Basis: As of and for the Three Months Ended ------------------------------- -------------------------------------- (Dollars in thousands, except June 30, March 31, June 30, per share data) 2003 2004 2004 ------------------------------- ------------ ------------ ------------ Results of operations: Net interest income(1) $386,422 $401,223 $400,661 Noninterest income 203,171 211,205 331,010 ------------ ------------ ------------ Total revenue 589,593 612,428 731,671 Noninterest expense 351,004 373,106 376,402 (Reversal of) provision for credit losses 25,000 (5,000) (10,000) ------------ ------------ ------------ Income before income taxes(1) 213,589 244,322 365,269 Taxable-equivalent adjustment 645 802 803 Income tax expense 68,186 86,033 133,369 ------------ ------------ ------------ Net income $144,758 $157,487 $231,097 ============ ============ ============ Per common share: Net income-basic $0.96 $1.07 $1.56 Net income-diluted 0.96 1.05 1.54 Dividends(2) 0.31 0.31 0.36 Book value (end of period) 25.79 27.12 26.98 Common shares outstanding (end of period) 149,993,652 147,474,843 147,845,160 Weighted average common shares outstanding - basic 150,046,659 147,400,298 147,687,350 Weighted average common shares outstanding - diluted 151,489,337 149,952,021 150,183,938 Balance sheet (end of period): Total assets $42,668,834 $46,102,177 $46,295,831 Total loans 25,668,660 26,036,305 27,594,271 Nonaccrual loans 379,487 256,741 178,062 Nonperforming assets 379,758 262,894 183,913 Total deposits 35,365,260 39,005,555 39,367,911 Junior subordinated debt - 16,243 16,017 Trust preferred securities 360,166 - - Stockholders' equity 3,868,959 3,999,061 3,988,676 Balance sheet (period average): Total assets $39,776,349 $43,051,127 $44,611,351 Total loans 26,517,316 26,141,856 26,838,622 Earning assets 36,074,488 38,876,228 40,351,016 Total deposits 32,587,173 35,939,525 37,810,048 Stockholders' equity 3,919,276 3,949,888 3,933,788 Financial ratios: Return on average assets(3) 1.46% 1.47% 2.08% Return on average stockholders' equity(3) 14.81% 16.04% 23.63% Efficiency ratio(4) 59.53% 60.84% 51.44% Net interest margin(1) 4.29% 4.14% 3.98% Dividend payout ratio 32.29% 28.97% 23.08% Tangible equity ratio 8.59% 7.92% 7.88% Tier 1 risk-based capital ratio(5) 11.44% 10.29% 10.46% Total risk-based capital ratio(5) 13.06% 13.06% 13.06% Leverage ratio(5) 9.63% 8.24% 8.36% Allowance for credit losses to total loans 2.17% 2.00% 1.82% Allowance for credit losses to nonaccrual loans 147.11% 202.97% 281.60% Net loans charged off to average total loans(3) 0.80% 0.19% 0.15% Nonperforming assets to total loans, foreclosed assets, and distressed loans held for sale 1.48% 1.01% 0.67% Nonperforming assets to total assets 0.89% 0.57% 0.40% 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 $0.93 $1.07 $1.14 Operating earnings per common share - diluted $0.92 $1.05 $1.12 Operating return on average assets(3) 1.40% 1.47% 1.52% Operating return on average stockholders' equity(3) 14.23% 16.04% 17.24% Operating efficiency ratio(4) 59.73% 60.84% 59.73% Operating dividend payout ratio 33.33% 28.97% 31.58% ---------------------------------------------------------------------- Percent Change to On a Reported Earnings Basis: June 30, 2004 from ------------------------------------------------- -------------------- June 30, March 31, (Dollars in thousands, except per share data) 2003 2004 ------------------------------------------------- --------- ---------- Results of operations: Net interest income(1) 3.68% (0.14%) Noninterest income 62.92% 56.72% Total revenue 24.10% 19.47% Noninterest expense 7.24% 0.88% (Reversal of) provision for credit losses nm 100.00% Income before income taxes(1) 71.01% 49.50% Taxable-equivalent adjustment 24.50% 0.12% Income tax expense 95.60% 55.02% Net income 59.64% 46.74% Per common share: Net income-basic 62.50% 45.79% Net income-diluted 60.42% 46.67% Dividends(2) 16.13% 16.13% Book value (end of period) 4.61% (0.52%) Common shares outstanding (end of period) (1.43%) 0.25% Weighted average common shares outstanding - basic (1.57%) 0.19% Weighted average common shares outstanding - diluted (0.86%) 0.15% Balance sheet (end of period): Total assets 8.50% 0.42% Total loans 7.50% 5.98% Nonaccrual loans (53.08%) (30.65%) Nonperforming assets (51.57%) (30.04%) Total deposits 11.32% 0.93% Junior subordinated debt nm (1.39%) Trust preferred securities (100.00%) 0.00% Stockholders' equity 3.09% (0.26%) Balance sheet (period average): Total assets 12.16% 3.62% Total loans 1.21% 2.67% Earning assets 11.85% 3.79% Total deposits 16.03% 5.20% Stockholders' equity 0.37% (0.41%) ------------------------------------------------- (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) The efficiency ratio is noninterest expense, excluding foreclosed asset expense (income), as a percentage of net interest income (taxable-equivalent basis) and noninterest income. (5) Estimated as of June 30, 2004. nm = not meaningful Exhibit 1 UnionBanCal Corporation and Subsidiaries Financial Highlights (Unaudited) On a Reported Earnings As of and for the Percent Change to Basis: Six Months Ended June 30, 2004 from ------------------------ ------------------------- ------------------- (Dollars in thousands, June 30, June 30, June 30, except per share data) 2003 2004 2003 ------------------------ ------------ ------------ ------------------- Results of operations: Net interest income(1) $777,826 $801,884 3.09% Noninterest income 388,942 542,215 39.41% ------------ ------------ Total revenue 1,166,768 1,344,099 15.20% Noninterest expense 693,604 749,508 8.06% (Reversal of) provision nm for credit losses 55,000 (15,000) ------------ ------------ Income before income taxes(1) 418,164 609,591 45.78% Taxable-equivalent adjustment 1,269 1,605 26.48% Income tax expense 136,620 219,402 60.59% ------------ ------------ Net income $280,275 $388,584 38.64% ============ ============ Per common share: Net income-basic $1.86 $2.63 41.40% Net income-diluted 1.85 2.59 40.00% Dividends(2) 0.59 0.67 13.56% Book value (end of period) 25.79 26.98 4.61% Common shares outstanding (end of period) 149,993,652 147,845,160 (1.43%) Weighted average common shares outstanding - basic 150,329,939 147,543,824 (1.85%) Weighted average common shares outstanding - diluted 151,746,328 149,991,567 (1.16%) Balance sheet (end of period): Total assets $42,668,834 $46,295,831 8.50% Total loans 25,668,660 27,594,271 7.50% Nonaccrual loans 379,487 178,062 (53.08%) Nonperforming assets 379,758 183,913 (51.57%) Total deposits 35,365,260 39,367,911 11.32% Junior subordinated debt - 16,017 nm Trust preferred securities 360,166 - (100.00%) Stockholders' equity 3,868,959 3,988,676 3.09% Balance sheet (period average): Total assets $39,066,221 $43,831,266 12.20% Total loans 26,619,618 26,490,239 (0.49%) Earning assets 35,454,075 39,613,622 11.73% Total deposits 31,836,948 36,874,787 15.82% Stockholders' equity 3,896,909 3,941,855 1.15% Financial ratios: Return on average assets(3) 1.45% 1.78% Return on average stockholders' equity(3) 14.50% 19.82% Efficiency ratio(4) 59.44% 55.72% Net interest margin(1) 4.41% 4.07% Dividend payout ratio 31.72% 25.48% Tangible equity ratio 8.59% 7.88% Tier 1 risk-based capital ratio(5) 11.44% 10.46% Total risk-based capital ratio(5) 13.06% 13.06% Leverage ratio(5) 9.63% 8.36% Allowance for credit losses to total loans 2.17% 1.82% Allowance for credit losses to nonaccrual loans 147.11% 281.60% Net loans charged off to average total loans(3) 0.80% 0.17% Nonperforming assets to total loans, foreclosed assets, and distressed loans held for sale 1.48% 0.67% Nonperforming assets to total assets 0.89% 0.40% 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) $1.83 $2.21 Operating earnings per common share (diluted) $1.81 $2.17 Operating return on average assets(3) 1.42% 1.50% Operating return on average stockholders' equity(3) 14.21% 16.64% Operating efficiency ratio(4) 59.54% 60.28% Operating dividend payout ratio 32.24% 30.32% --------------------------------------------------- (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) The efficiency ratio is noninterest expense, excluding foreclosed asset expense (income), as a percentage of net interest income (taxable-equivalent basis) and noninterest income. (5) Estimated as of June 30, 2004. nm = not meaningful Exhibit 2 UnionBanCal Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (Taxable-Equivalent Basis) On a Reported Earnings Basis For the For the Three Months Ended Six Months Ended (Amounts in ----------------------------- ------------------- thousands, except June 30, March 31, June 30, June 30, per share data) 2003 2004 2004 2003 2004 -------------------- --------- --------- --------- --------- --------- Interest Income Loans $355,199 $335,611 $328,647 $718,438 $664,258 Securities 78,357 106,328 108,570 158,550 214,898 Interest bearing deposits in banks 1,130 908 1,121 2,092 2,029 Federal funds sold and securities purchased under resale agreements 4,001 1,959 2,928 5,678 4,887 Trading account assets 981 595 883 1,938 1,478 --------- --------- --------- --------- --------- Total interest income 439,668 445,401 442,149 886,696 887,550 --------- --------- --------- --------- --------- Interest Expense Domestic deposits 40,217 33,610 32,123 81,788 65,733 Foreign deposits 2,811 2,132 2,761 6,017 4,893 Federal funds purchased and securities sold under repurchase agreements 747 681 552 2,074 1,233 Commercial paper 2,946 1,135 1,051 5,674 2,186 Medium and long- term debt 1,818 3,139 3,693 3,684 6,832 Preferred securities and trust notes 3,652 2,181 130 7,323 2,311 Other borrowed funds 1,055 1,300 1,178 2,310 2,478 --------- --------- --------- --------- --------- Total interest expense 53,246 44,178 41,488 108,870 85,666 --------- --------- --------- --------- --------- Net Interest Income 386,422 401,223 400,661 777,826 801,884 (Reversal of) provision for credit losses 25,000 (5,000) (10,000) 55,000 (15,000) --------- --------- --------- --------- --------- Net interest income after (reversal of) provision for credit losses 361,422 406,223 410,661 722,826 816,884 --------- --------- --------- --------- --------- Noninterest Income Service charges on deposit accounts 77,942 81,096 90,031 150,229 171,127 Trust and investment management fees 33,141 35,822 36,788 65,816 72,610 Insurance commissions 16,024 21,735 18,652 29,242 40,387 International commissions and fees 16,856 17,545 18,102 32,201 35,647 Card processing fees, net 9,340 8,792 15,456 19,022 24,248 Foreign exchange gains, net 6,958 8,344 8,294 13,892 16,638 Brokerage commissions and fees 8,412 8,297 8,023 17,066 16,320 Merchant banking fees 6,191 7,467 7,714 12,209 15,181 Securities gains (losses), net 9,660 1,622 (4) 9,660 1,618 Other 18,647 20,485 127,954 39,605 148,439 --------- --------- --------- --------- --------- Total noninterest income 203,171 211,205 331,010 388,942 542,215 --------- --------- --------- --------- --------- Noninterest Expense Salaries and employee benefits 198,929 219,423 217,597 397,036 437,020 Net occupancy 32,866 31,582 32,173 60,502 63,755 Equipment 16,354 17,271 16,883 33,025 34,154 Communications 13,354 13,410 13,035 27,198 26,445 Software 10,849 12,995 12,908 22,925 25,903 Professional services 13,566 11,303 10,290 25,580 21,593 Foreclosed asset expense - 519 17 51 536 Other 65,086 66,603 73,499 127,287 140,102 --------- --------- --------- --------- --------- Total noninterest expense 351,004 373,106 376,402 693,604 749,508 --------- --------- --------- --------- --------- Income before income taxes 213,589 244,322 365,269 418,164 609,591 Taxable-equivalent adjustment 645 802 803 1,269 1,605 Income tax expense 68,186 86,033 133,369 136,620 219,402 --------- --------- --------- --------- --------- Net Income $144,758 $157,487 $231,097 $280,275 $388,584 ========= ========= ========= ========= ========= Net income per common share - basic $0.96 $1.07 $1.56 $1.86 $2.63 ========= ========= ========= ========= ========= Net income per common share - diluted $0.96 $1.05 $1.54 $1.85 $2.59 ========= ========= ========= ========= ========= Weighted average common shares outstanding - basic 150,047 147,400 147,687 150,330 147,544 ========= ========= ========= ========= ========= Weighted average common shares outstanding - diluted 151,489 149,952 150,184 151,746 149,992 ========= ========= ========= ========= ========= Exhibit 3 UnionBanCal Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (Taxable-Equivalent Basis) On an Operating Earnings Basis (1) ---------------------------------- For the Three For the Six Months Ended Months Ended ----------------------------- ------------------- June 30, March 31, June 30, June 30, (Amounts in thousands, except per share data) 2003 2004 2004 2003 2004 ---------- --------- --------- --------- --------- Interest Income Loans $355,199 $335,611 $328,647 $718,438 $664,258 Securities 78,357 106,328 108,570 158,550 214,898 Interest bearing deposits in banks 1,130 908 1,121 2,092 2,029 Federal funds sold and securities purchased under resale agreements 4,001 1,959 2,928 5,678 4,887 Trading account assets 981 595 883 1,938 1,478 ---------- --------- --------- --------- --------- Total interest income 439,668 445,401 442,149 886,696 887,550 ---------- --------- --------- --------- --------- Interest Expense Domestic deposits 40,217 33,610 32,123 81,788 65,733 Foreign deposits 2,811 2,132 2,761 6,017 4,893 Federal funds purchased and securities sold under repurchase agreements 747 681 552 2,074 1,233 Commercial paper 2,946 1,135 1,051 5,674 2,186 Medium and long-term debt 1,818 3,139 3,693 3,684 6,832 Preferred securities and trust notes 3,652 2,181 130 7,323 2,311 Other borrowed funds 1,055 1,300 1,178 2,310 2,478 ---------- --------- --------- --------- --------- Total interest expense 53,246 44,178 41,488 108,870 85,666 ---------- --------- --------- --------- --------- Net Interest Income 386,422 401,223 400,661 777,826 801,884 (Reversal of) provision for credit losses 25,000 (5,000) (10,000) 55,000 (15,000) ---------- --------- --------- --------- --------- Net interest income after (reversal of) provision for credit losses 361,422 406,223 410,661 722,826 816,884 ---------- --------- --------- --------- --------- Noninterest Income Service charges on deposit accounts 77,942 81,096 90,031 150,229 171,127 Trust and investment management fees 33,141 35,822 36,788 65,816 72,610 Insurance commissions 16,024 21,735 18,652 29,242 40,387 International commissions and fees 16,856 17,545 18,102 32,201 35,647 Card processing fees, net 9,340 8,792 15,456 19,022 24,248 Foreign exchange gains, net 6,958 8,344 8,294 13,892 16,638 Brokerage commissions and fees 8,412 8,297 8,023 17,066 16,320 Merchant banking fees 6,191 7,467 7,714 12,209 15,181 Securities gains (losses), net 647 1,622 (4) 647 1,618 Other 18,647 20,485 26,419 39,605 46,904 ---------- --------- --------- --------- --------- Total noninterest income 194,158 211,205 229,475 379,929 440,680 ---------- --------- --------- --------- --------- Noninterest Expense Salaries and employee benefits 198,929 219,423 217,597 397,036 437,020 Net occupancy 28,666 31,582 32,173 56,302 63,755 Equipment 16,354 17,271 16,883 33,025 34,154 Communications 13,354 13,410 13,035 27,198 26,445 Software 10,849 12,995 12,908 22,925 25,903 Professional services 13,566 11,303 10,290 25,580 21,593 Foreclosed asset expense -- 519 17 51 536 Other 65,086 66,603 73,499 127,287 140,102 ---------- --------- --------- --------- --------- Total noninterest expense 346,804 373,106 376,402 689,404 749,508 ---------- --------- --------- --------- --------- Income before income taxes 208,776 244,322 263,734 413,351 508,056 Taxable-equivalent adjustment 645 802 803 1,269 1,605 Income tax expense 69,072 86,033 94,345 137,506 180,378 ---------- --------- --------- --------- --------- Net operating earnings $139,059 $157,487 $168,586 $274,576 $326,073 ========== ========= ========= ========= ========= Net operating earnings per common share - basic $ 0.93 $ 1.07 $ 1.14 $ 1.83 $ 2.21 ========== ========= ========= ========= ========= Net operating earnings per common share - diluted $ 0.92 $ 1.05 $ 1.12 $ 1.81 $ 2.17 ========== ========= ========= ========= ========= Weighted average common shares outstanding - basic 150,047 147,400 147,687 150,330 147,544 ========== ========= ========= ========= ========= Weighted average common shares outstanding - diluted 151,489 149,952 150,184 151,746 149,992 ========== ========= ========= ========= ========= (1) See exhibits 5 and 6 for reconciliations of 'reported earnings' to 'operating earnings' Exhibit 4 UnionBanCal Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) Reconciliations (Taxable-Equivalent Basis) Reported Earnings Reconciliation to Operating Earnings ------------------------------------------------------- June 30, 2003 ---------------------------------------------- Non-recurring (Amounts in thousands, Reported Items Operating Reported except per share data) ---------------------- ---------- ------------- --------- ---------- Net Interest Income $386,422 $ -- $386,422 $401,223 (Reversal of) provision for credit losses 25,000 -- 25,000 (5,000) ---------- ------------- --------- ---------- Net interest income after (reversal of) provision for credit losses 361,422 -- 361,422 406,223 ---------- ------------- --------- ---------- Noninterest Income Securities gains (losses), net (1) 9,660 (9,013) 647 1,622 Other (3) (4) 18,647 -- 18,647 20,485 All other (no adjustments) 174,864 -- 174,864 189,098 ---------- ------------- --------- ---------- Total noninterest income 203,171 (9,013) 194,158 211,205 ---------- ------------- --------- ---------- Noninterest Expense Net Occupancy (2) 32,866 (4,200) 28,666 31,582 All other (no adjustments) 318,138 -- 318,138 341,524 ---------- ------------- --------- ---------- Total noninterest expense 351,004 (4,200) 346,804 373,106 ---------- ------------- --------- ---------- Income/Operating earnings before income taxes 213,589 (4,813) 208,776 244,322 Taxable-equivalent adjustment 645 -- 645 802 Income tax expense (5) (6) 68,186 886 69,072 86,033 ---------- ------------- --------- ---------- Net Income/Operating Earnings $144,758 $(5,699) $139,059 $157,487 ========== ============= ========= ========== Net income/Operating earnings per common share - basic $0.96 $(0.03) $0.93 $1.07 ========== ============= ========= ========== Net income/Operating earnings per common share - diluted $0.96 $(0.04) $0.92 $1.05 ========== ============= ========= ========== Weighted average common shares outstanding - basic 150,047 150,047 147,400 ========== ========= ========== Weighted average common shares outstanding - diluted 151,489 151,489 149,952 ========== ========= ========== Reported Net Income $144,758 $157,487 ---------------------------------------------- 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) Gain on sale of real property (2nd quarter 2004) -- -- (4) Gain on sale of Merchant Card Portfolio (2nd quarter 2004) -- -- (5) Tax impact of items listed above (1)(2)(3)(4) 1,766 -- (6) Reduction in income tax due to IRS Audit wrap up (2nd quarter 2003) (2,652) -- ---------------------------------------------- Net Operating Earnings $139,059 $157,487 ============================================== UnionBanCal Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) Reconciliations (Taxable-Equivalent Basis) Reported Earnings Reconciliation to Operating Earnings ------------------------------------------------------- For the Three Months Ended ---------------------------------------------------- March 31, June 30, 2004 2004 --------------------- ------------------------------ Non-recurring Non-recurring (Amounts in Items Items thousands, except per share data) Operating Reported Operating ----------------- -------- ----------- ---------- -------- ---------- Net Interest Income $ -- $401,223 $400,661 $ -- $400,661 (Reversal of) provision for credit losses -- (5,000) (10,000) -- (10,000) -------- ----------- ---------- -------- ---------- Net interest income after (reversal of) provision for credit losses -- 406,223 410,661 -- 410,661 ----------- --------- --------- --------- --------- Noninterest Income Securities gains (losses), net (1) -- 1,622 (4) -- (4) Other (3) (4) -- 20,485 127,954 (101,535) 26,419 All other (no adjustments) -- 189,098 203,060 -- 203,060 ----------- --------- --------- --------- --------- Total noninterest income -- 211,205 331,010 (101,535) 229,475 ----------- --------- --------- --------- --------- Noninterest Expense Net Occupancy (2) -- 31,582 32,173 -- 32,173 All other (no adjustments) -- 341,524 344,229 -- 344,229 ----------- --------- --------- --------- --------- Total noninterest expense -- 373,106 376,402 -- 376,402 ----------- --------- --------- --------- --------- Income/Operating earnings before income taxes -- 244,322 365,269 (101,535) 263,734 Taxable-equivalent adjustment -- 802 803 -- 803 Income tax expense (5) (6) -- 86,033 133,369 (39,024) 94,345 ----------- --------- --------- --------- --------- Net Income/Operating Earnings $-- $157,487 $231,097 $(62,511) $168,586 =========== ========= ========= ========= ========= Net income/Operating earnings per common share - basic $-- $1.07 $1.56 $(0.42) $1.14 =========== ========= ========= ========= ========= Net income/Operating earnings per common share - diluted $-- $1.05 $1.54 $(0.42) $1.12 =========== ========= ========= ========= ========= Weighted average common shares outstanding - basic 147,400 147,687 147,687 ========= ========= ========= Weighted average common shares outstanding - diluted 149,952 150,184 150,184 ========= ========= ========= Reported Net Income $231,097 --------------------------------------------------- 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) Gain on sale of real property (2nd quarter 2004) (8,535) (4) Gain on sale of Merchant Card Portfolio (2nd quarter 2004) (93,000) (5) Tax impact of items listed above (1)(2)(3)(4) 39,024 (6) Reduction in income tax due to IRS Audit wrap up (2nd quarter 2003) -- --------------------------------------------------- Net Operating Earnings $168,586 =================================================== Exhibit 5 UnionBanCal Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) Reconciliations (Taxable-Equivalent Basis) Reported Earnings Reconciliation to Operating Earnings --------------------------------------------------------- For the Six Months Ended ----------------------------------- June 30, 2003 ----------------------------------- (Amounts in thousands, except Non-recurring per share data) Reported Items Operating ---------------------------------- --------- ------------- ---------- Net Interest Income $777,826 $ -- $777,826 (Reversal of) provision for credit losses 55,000 -- 55,000 --------- ------------- ---------- Net interest income after (reversal of) provision for credit losses 722,826 -- 722,826 --------- ------------- ---------- Noninterest Income Securities gains, net (1) 9,660 (9,013) 647 Other (3) (4) 39,605 -- 39,605 All other (no adjustments) 339,677 -- 339,677 --------- ------------- ---------- Total noninterest income 388,942 (9,013) 379,929 --------- ------------- ---------- Noninterest Expense Net occupancy (2) 60,502 (4,200) 56,302 All other (no adjustments) 633,102 -- 633,102 --------- ------------- ---------- Total noninterest expense 693,604 (4,200) 689,404 --------- ------------- ---------- Income/Operating earnings before income taxes 418,164 (4,813) 413,351 Taxable-equivalent adjustment 1,269 -- 1,269 Income tax expense (5) (6) 136,620 886 137,506 --------- ------------- ---------- Net Income/Operating Earnings $280,275 $(5,699) $274,576 ========= ============= ========== Net income/Operating earnings per common share - basic $1.86 $(0.03) $1.83 ========= ============= ========== Net income/Operating earnings per common share - diluted $1.85 $(0.04) $1.81 ========= ============= ========== Weighted average common shares outstanding - basic 150,330 150,330 ========= ========== Weighted average common shares outstanding - diluted 151,746 151,746 ========= ========== Reported Net Income $280,275 ----------------------------------- 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) Gain on sale of real property (2nd quarter 2004) -- (4) Gain on sale of Merchant Card Portfolio (2nd quarter 2004) -- (5) Tax impact of items listed above (1)(2)(3)(4) 1,766 (6) Reduction in income tax due to IRS Audit wrap up (2nd quarter 2003) (2,652) ----------------------------------- Net Operating Earnings $274,576 =================================== UnionBanCal Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) Reconciliations (Taxable-Equivalent Basis) Reported Earnings Reconciliation to Operating Earnings ------------------------------------------------------- ------------------------------ June 30, 2004 ------------------------------ (Amounts in thousands, except Non-recurring per share data) Reported Items Operating ---------------------------------- --------- ------------- ---------- Net Interest Income $801,884 $-- $801,884 (Reversal of) provision for credit losses (15,000) -- (15,000) --------- ------------- ---------- Net interest income after (reversal of) provision for credit losses 816,884 -- 816,884 --------- ------------- ---------- Noninterest Income Securities gains, net (1) 1,618 -- 1,618 Other (3) (4) 148,439 (101,535) 46,904 All other (no adjustments) 392,158 -- 392,158 --------- ------------- ---------- Total noninterest income 542,215 (101,535) 440,680 --------- ------------- ---------- Noninterest Expense Net occupancy (2) 63,755 -- 63,755 All other (no adjustments) 685,753 -- 685,753 --------- ------------- ---------- Total noninterest expense 749,508 -- 749,508 --------- ------------- ---------- Income/Operating earnings before income taxes 609,591 (101,535) 508,056 Taxable-equivalent adjustment 1,605 -- 1,605 Income tax expense (5) (6) 219,402 (39,024) 180,378 --------- ------------- ---------- Net Income/Operating Earnings $388,584 $(62,511) $326,073 ========= ============= ========== Net income/Operating earnings per common share - basic $2.63 $(0.42) $2.21 ========= ============= ========== Net income/Operating earnings per common share - diluted $2.59 $(0.42) $2.17 ========= ============= ========== Weighted average common shares outstanding - basic 147,544 147,544 ========= ========== Weighted average common shares outstanding - diluted 149,992 149,992 ========= ========== Reported Net Income $388,584 ----------------------------------- 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) Gain on sale of real property (2nd quarter 2004) (8,535) (4) Gain on sale of Merchant Card Portfolio (2nd quarter 2004) (93,000) (5) Tax impact of items listed above (1)(2)(3)(4) 39,024 (6) Reduction in income tax due to IRS Audit wrap up (2nd quarter 2003) -- ----------------------------------- Net Operating Earnings $326,073 =================================== Exhibit 6 UnionBanCal Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (Unaudited) June 30, December 31, June 30, (Dollars in thousands) 2003 2003 2004 ------------------------------- ------------ ------------ ------------ Assets Cash and due from banks $3,096,509 $2,494,127 $2,287,708 Interest bearing deposits in banks 212,746 235,158 630,451 Federal funds sold and securities purchased under resale agreements 1,624,552 769,720 1,156,650 ------------ ------------ ------------ Total cash and cash equivalents 4,933,807 3,499,005 4,074,809 Trading account assets 387,928 252,929 307,334 Securities available for sale: Securities pledged as collateral 154,961 106,560 77,532 Held in portfolio 9,438,110 10,660,332 12,151,635 Loans (net of allowance for credit losses: June 30, 2003, $558,282; December 31, 2003, $532,970; June 30, 2004, $501,419) 25,110,378 25,411,658 27,092,852 Due from customers on acceptances 81,560 71,078 52,867 Premises and equipment, net 498,708 509,734 502,204 Intangible assets 46,240 49,592 56,696 Goodwill 178,591 226,556 315,356 Other assets 1,838,551 1,711,023 1,664,546 ------------ ------------ ------------ Total assets $42,668,834 $42,498,467 $46,295,831 ============ ============ ============ Liabilities Domestic deposits: Noninterest bearing $17,198,024 $16,668,773 $19,255,245 Interest bearing 16,494,167 17,146,858 17,982,340 Foreign deposits: Noninterest bearing 490,314 619,249 733,394 Interest bearing 1,182,755 1,097,403 1,396,932 ------------ ------------ ------------ Total deposits 35,365,260 35,532,283 39,367,911 Federal funds purchased and securities sold under repurchase agreements 337,785 280,968 294,597 Commercial paper 835,268 542,270 552,038 Other borrowed funds 238,239 212,088 180,426 Acceptances outstanding 81,560 71,078 52,867 Other liabilities 1,160,744 934,916 1,042,311 Medium and long-term debt 420,853 820,488 800,988 Junior subordinated debt payable to subsidiary grantor trust - 363,940 16,017 UnionBanCal Corporation - obligated mandatorily redeemable preferred securities of subsidiary grantor trust 360,166 - - ------------ ------------ ------------ Total liabilities 38,799,875 38,758,031 42,307,155 ------------ ------------ ------------ Commitments and contingencies Stockholders' Equity Preferred stock: Authorized 5,000,000 shares, no shares issued or outstanding as of June 30, 2003, December 31, 2003, and June 30, 2004 - - - Common stock, no stated value per share at June 30, 2003, and par value of $1 per share at December 31, 2003 and June 30, 2004 (1) : Authorized 300,000,000 shares, issued 149,993,652 shares as of June 30, 2003, 146,000,156 shares as of December 31, 2003, and 149,126,860 shares as of June 30, 2004 894,979 146,000 149,127 Additional paid-in capital - 555,156 712,255 Treasury stock - 242,000 shares as of December 31, 2003 and 1,281,700 shares as of June 30, 2004 - (12,846) (68,557) Retained earnings 2,783,314 2,999,884 3,289,676 Accumulated other comprehensive income (loss) 190,666 52,242 (93,825) ------------ ------------ ------------ Total stockholders' equity 3,868,959 3,740,436 3,988,676 ------------ ------------ ------------ Total liabilities and stockholders' equity $42,668,834 $42,498,467 $46,295,831 ============ ============ ============ (1) On September 30, 2003, UnionBanCal Corporation changed its state of incorporation from California to Delaware, establishing a par value of $1 per share common stock. Exhibit 7 UnionBanCal Corporation and Subsidiaries Loans (Unaudited) Percent Change to June 30, 2004 Three Months Ended from -------------------------- ----------------- (Dollars in June 30, March 31, June 30, June 30, March 31, millions) 2003 2004 2004 2003 2004 ------------------------- -------- -------- -------- -------- -------- Loans (period average) Commercial, financial and industrial $10,047 $8,894 $9,107 (9.36%) 2.39% Construction 1,192 1,102 1,060 (11.07%) (3.81%) Mortgage - Commercial 4,180 4,367 4,333 3.66% (0.78%) Mortgage - Residential 6,724 7,461 7,730 14.96% 3.61% Consumer 2,032 2,057 2,117 4.18% 2.92% Lease financing 731 649 617 (15.60%) (4.93%) Loans originated in foreign branches 1,600 1,609 1,871 16.94% 16.28% -------- -------- -------- Total loans held to maturity $26,506 $26,139 $26,835 1.24% 2.66% Total loans held for sale 11 3 4 (63.64%) 33.33% -------- -------- -------- Total loans $26,517 $26,142 $26,839 1.21% 2.67% ======== ======== ======== Nonperforming assets (period end) Nonaccrual loans: Commercial, financial and industrial $274 $178 $111 (59.49%) (37.64%) Construction - - 5 nm nm Mortgage - Commercial 50 27 23 (54.00%) (14.81%) Lease 53 51 37 (30.19%) (27.45%) Foreign 3 1 2 (33.33%) 100.00% -------- -------- -------- Total nonaccrual loans 380 257 178 (53.16%) (30.74%) Foreclosed assets - 6 6 nm 0.00% -------- -------- -------- Total nonperforming assets $380 $263 $184 (51.58%) (30.04%) ======== ======== ======== Loans 90 days or more past due and still accruing $10 $7 $10 0.00% 42.86% ======== ======== ======== Analysis of Allowance for Credit Losses Beginning balance $586 $533 $521 (Reversal of) provision for credit losses 25 (5) (10) Foreign translation adjustment and other net additions (deductions) (1) - 6 - Loans charged off: Commercial, financial and industrial (51) (20) (21) Consumer (3) (2) (1) Lease financing (13) - (2) -------- -------- -------- Total loans charged off (67) (22) (24) -------- -------- -------- Loans recovered: Commercial, financial and industrial 13 9 12 Mortgage - Commercial - - 2 Consumer 1 - - -------- -------- -------- Total loans recovered 14 9 14 -------- -------- -------- Net loans charged- off (53) (13) (10) -------- -------- -------- Ending balance $558 $521 $501 ======== ======== ======== (1) Includes a transfer of $6 million related to the Business Bancorp acquisition in the first quarter of 2004. nm = not meaningful Exhibit 8 UnionBanCal Corporation and Subsidiaries Net Interest Income (Unaudited) For the Three Months Ended ---------------------------------------------------------------------- June 30, 2003 --------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate (1) (1) (2) ----------------------------- ------------- -------------------- Assets Loans: (3) Domestic $24,916,936 $346,204 5.63 % Foreign (4) 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 (4) 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 Preferred securities and trust notes (5) 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 Stockholders' Equity Common equity 3,919,276 ------------- Total stockholders' equity 3,919,276 ------------- Total liabilities and stockholders' 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 ========= For the Three Months Ended ---------------------------------------------------------------------- March 31, 2004 ------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate (1) (1) (2) ------------------------------ -------------- ------------------ Assets Loans: (3) Domestic $24,532,402 $327,933 5.38 % Foreign (4) 1,609,454 7,678 1.92 Securities - taxable 11,396,654 104,993 3.69 Securities - tax-exempt 65,813 1,335 8.11 Interest bearing deposits in banks 207,854 908 1.76 Federal funds sold and securities purchased under resale agreements 786,994 1,959 1.00 Trading account assets 277,057 595 0.86 -------------- --------- Total earning assets 38,876,228 445,401 4.60 --------- Allowance for credit losses (534,226) Cash and due from banks 2,276,055 Premises and equipment, net 519,962 Other assets 1,913,108 -------------- Total assets $43,051,127 ============== Liabilities Domestic deposits: Interest bearing $11,390,393 16,556 0.58 Savings and consumer time 4,136,695 8,719 0.85 Large time 2,432,602 8,335 1.38 Foreign deposits (4) 1,227,223 2,132 0.70 -------------- --------- Total interest bearing deposits 19,186,913 35,742 0.75 -------------- --------- Federal funds purchased and securities sold under repurchase agreements 395,466 681 0.69 Commercial paper 542,853 1,135 0.84 Other borrowed funds 187,829 1,300 2.78 Medium and long-term debt 806,062 3,139 1.57 Preferred securities and trust notes (5) 203,022 2,181 4.30 -------------- --------- Total borrowed funds 2,135,232 8,436 1.59 -------------- --------- Total interest bearing liabilities 21,322,145 44,178 0.83 --------- Noninterest bearing deposits 16,752,612 Other liabilities 1,026,482 -------------- Total liabilities 39,101,239 Stockholders' Equity Common equity 3,949,888 -------------- Total stockholders' equity 3,949,888 -------------- Total liabilities and stockholders' equity $43,051,127 ============== Net interest income/margin (taxable-equivalent basis) 401,223 4.14 % Less: taxable-equivalent adjustment 802 --------- Net interest income $400,421 ========= For the Three Months Ended ---------------------------------------------------------------------- June 30, 2004 -------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate (1) (1) (2) ---------------------------------- -------------- ------------------ Assets Loans: (3) Domestic $24,967,825 $319,829 5.14 % Foreign (4) 1,870,797 8,818 1.90 Securities - taxable 11,696,096 107,146 3.66 Securities - tax-exempt 69,654 1,424 8.18 Interest bearing deposits in banks 280,892 1,121 1.61 Federal funds sold and securities purchased under resale agreements 1,143,901 2,928 1.03 Trading account assets 321,851 883 1.10 -------------- --------- Total earning assets 40,351,016 442,149 4.40 --------- Allowance for credit losses (525,435) Cash and due from banks 2,233,586 Premises and equipment, net 514,122 Other assets 2,038,062 -------------- Total assets $44,611,351 ============== Liabilities Domestic deposits: Interest bearing $11,498,339 16,198 0.57 Savings and consumer time 4,225,435 8,540 0.81 Large time 2,298,403 7,385 1.29 Foreign deposits (4) 1,476,450 2,761 0.75 -------------- --------- Total interest bearing deposits 19,498,627 34,884 0.72 -------------- --------- Federal funds purchased and securities sold under repurchase agreements 344,416 552 0.64 Commercial paper 517,333 1,051 0.82 Other borrowed funds 176,449 1,178 2.69 Medium and long-term debt 819,595 3,693 1.81 Preferred securities and trust notes (5) 16,119 130 3.23 -------------- --------- Total borrowed funds 1,873,912 6,604 1.42 -------------- --------- Total interest bearing liabilities 21,372,539 41,488 0.78 --------- Noninterest bearing deposits 18,311,421 Other liabilities 993,603 -------------- Total liabilities 40,677,563 Stockholders' Equity Common equity 3,933,788 -------------- Total stockholders' equity 3,933,788 -------------- Total liabilities and stockholders' equity $44,611,351 ============== Net interest income/margin (taxable-equivalent basis) 400,661 3.98 % Less: taxable-equivalent adjustment 803 --------- Net interest income $399,858 ========= ---------------------------------- (1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 35 percent. (2) Annualized (3) 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. (4) Foreign loans and deposits are those loans and deposits originated in foreign branches. (5) Include interest expense for both trust preferred securities and trust notes. Exhibit 9 UnionBanCal Corporation and Subsidiaries Net Interest Income (Unaudited) For the Six Months Ended ---------------------------------- June 30, 2003 ---------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense(1) Rate(1)(2) ----------------------------------- ------------ ---------- ---------- Assets Loans:(3) Domestic $25,051,062 $701,277 5.63% Foreign(4) 1,568,556 17,161 2.21 Securities - taxable 7,351,834 156,520 4.26 Securities - tax-exempt 41,461 2,030 9.79 Interest bearing deposits in banks 212,266 2,092 1.99 Federal funds sold and securities purchased under resale agreements 908,213 5,678 1.26 Trading account assets 320,683 1,938 1.22 ------------ ---------- Total earning assets 35,454,075 886,696 5.03 ---------- Allowance for credit losses (594,370) Cash and due from banks 2,097,220 Premises and equipment, net 508,175 Other assets 1,601,121 ------------ Total assets $39,066,221 ============ Liabilities Domestic deposits: Interest bearing $9,648,251 37,608 0.79 Savings and consumer time 3,845,754 23,593 1.24 Large time 2,473,968 20,587 1.68 Foreign deposits(4) 1,303,747 6,017 0.93 ------------ ---------- Total interest bearing deposits 17,271,720 87,805 1.03 ------------ ---------- Federal funds purchased and securities sold under repurchase agreements 424,955 2,074 0.98 Commercial paper 959,386 5,674 1.19 Other borrowed funds 155,375 2,310 3.00 Medium and long-term debt 399,737 3,684 1.86 Preferred securities and trust notes(5) 351,603 7,323 4.17 ------------ ---------- Total borrowed funds 2,291,056 21,065 1.85 ------------ ---------- Total interest bearing liabilities 19,562,776 108,870 1.12 ---------- Noninterest bearing deposits 14,565,228 Other liabilities 1,041,308 ------------ Total liabilities 35,169,312 Stockholders' Equity Common equity 3,896,909 ------------ Total stockholders' equity 3,896,909 ------------ Total liabilities and stockholders' equity $39,066,221 ============ Net interest income/margin (taxable-equivalent basis) 777,826 4.41% Less: taxable-equivalent adjustment 1,269 ---------- Net interest income $776,557 ========== For the Six Months Ended ---------------------------------- June 30, 2004 ---------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense(1) Rate(1)(2) ----------------------------------- ------------ ---------- ---------- Assets Loans:(3) Domestic $24,750,113 $647,762 5.26% Foreign(4) 1,740,126 16,496 1.91 Securities - taxable 11,546,375 212,139 3.67 Securities - tax-exempt 67,733 2,759 8.15 Interest bearing deposits in banks 244,373 2,029 1.67 Federal funds sold and securities purchased under resale agreements 965,448 4,887 1.02 Trading account assets 299,454 1,478 0.99 ------------ ---------- Total earning assets 39,613,622 887,550 4.50 ---------- Allowance for credit losses (529,803) Cash and due from banks 2,254,820 Premises and equipment, net 517,042 Other assets 1,975,585 ------------ Total assets $43,831,266 ============ Liabilities Domestic deposits: Interest bearing $11,444,366 32,755 0.58 Savings and consumer time 4,181,065 17,258 0.83 Large time 2,365,502 15,720 1.34 Foreign deposits(4) 1,351,837 4,893 0.73 ------------ ---------- Total interest bearing deposits 19,342,770 70,626 0.73 ------------ ---------- Federal funds purchased and securities sold under repurchase agreements 369,941 1,233 0.67 Commercial paper 530,093 2,186 0.83 Other borrowed funds 182,139 2,478 2.74 Medium and long-term debt 812,829 6,832 1.69 Preferred securities and trust notes(5) 109,571 2,311 4.22 ------------ ---------- Total borrowed funds 2,004,573 15,040 1.51 ------------ ---------- Total interest bearing liabilities 21,347,343 85,666 0.81 ---------- Noninterest bearing deposits 17,532,017 Other liabilities 1,010,051 ------------ Total liabilities 39,889,411 Stockholders' Equity Common equity 3,941,855 ------------ Total stockholders' equity 3,941,855 ------------ Total liabilities and stockholders' equity $43,831,266 ============ Net interest income/margin (taxable-equivalent basis) 801,884 4.07% Less: taxable-equivalent adjustment 1,605 ---------- Net interest income $800,279 ========== ----------------------------------- (1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 35 percent. (2) Annualized (3) 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. (4) Foreign loans and deposits are those loans and deposits originated in foreign branches. (5) Include interest expense for both trust preferred securities and trust notes. Exhibit 10 UnionBanCal Corporation and Subsidiaries On a Reported Earnings Basis (reference to exhibit 2) ----------------------------------------------------- Noninterest Income (Unaudited) Percentage Change to For the Three Months Ended June 30, 2004 from ------------------------------- -------------------- (Dollars in June 30, March 31, June 30, June 30, March 31, thousands) 2003 2004 2004 2003 2004 --------------- --------- ---------- ---------- --------- ---------- Service charges on deposit accounts $77,942 $81,096 $90,031 15.51% 11.02% Trust and investment management fees 33,141 35,822 36,788 11.00 2.70 Insurance commissions 16,024 21,735 18,652 16.40 (14.18) International commissions and fees 16,856 17,545 18,102 7.39 3.17 Card processing fees, net 9,340 8,792 15,456 65.48 75.80 Foreign exchange gains, net 6,958 8,344 8,294 19.20 (0.60) Brokerage commissions and fees 8,412 8,297 8,023 (4.62) (3.30) Merchant banking fees 6,191 7,467 7,714 24.60 3.31 Securities gains (losses), net 9,660 1,622 (4) nm nm Gain on sale of Credit Card Portfolio - - 93,000 nm nm Other 18,647 20,485 34,954 87.45 70.63 --------- ---------- ---------- Total noninterest income $203,171 $211,205 $331,010 62.92% 56.72% ========= ========== ========== Noninterest Expense (Unaudited) Percentage Change to For the Three Months Ended June 30, 2004 from ------------------------------- -------------------- (Dollars in June 30, March 31, June 30, June 30, March 31, thousands) 2003 2004 2004 2003 2004 --------------- --------- ---------- ---------- --------- ---------- Salaries and other compensation $161,567 $170,430 $174,894 8.25% 2.62% Employee benefits 37,362 48,993 42,703 14.30 (12.84) --------- ---------- ---------- Salaries and employee benefits 198,929 219,423 217,597 9.38 (0.83) Net occupancy 32,866 31,582 32,173 (2.11) 1.87 Equipment 16,354 17,271 16,883 3.23 (2.25) Communications 13,354 13,410 13,035 (2.39) (2.80) Software 10,849 12,995 12,908 18.98 (0.67) Advertising and public relations 9,693 8,727 10,814 11.57 23.91 Professional services 13,566 11,303 10,290 (24.15) (8.96) Data processing 7,744 7,625 7,659 (1.10) 0.45 Intangible asset amortization 3,227 4,221 4,485 38.98 6.25 Foreclosed asset expense - 519 17 nm nm Other 44,422 46,030 50,541 13.77 9.80 --------- ---------- ---------- Total noninterest expense $351,004 $373,106 $376,402 7.24% 0.88% ========= ========== ========== ------------------- nm = not meaningful Exhibit 11 UnionBanCal Corporation and Subsidiaries On an Operating Earnings Basis (reference to exhibit 3) (1) ------------------------------------------ Noninterest Income (Unaudited) Percentage Change to For the Three Months Ended June 30, 2004 from ----------------------------- --------------- June March June June March 30, 31, 30, 30, 31, (Dollars in thousands) 2003 2004 2004 2003 2004 --------------------- --------- --------- --------- ------- ------- Service charges on deposit accounts $77,942 $81,096 $90,031 15.51 % 11.02 % Trust and investment management fees 33,141 35,822 36,788 11.00 2.70 Insurance commissions 16,024 21,735 18,652 16.40 (14.18) International commissions and fees 16,856 17,545 18,102 7.39 3.17 Card processing fees, net 9,340 8,792 15,456 65.48 75.80 Foreign exchange gains, net 6,958 8,344 8,294 19.20 (0.60) Brokerage commissions and fees 8,412 8,297 8,023 (4.62) (3.30) Merchant banking fees 6,191 7,467 7,714 24.60 3.31 Securities gains nm nm (losses), net 647 1,622 (4) Other 18,647 20,485 26,419 41.68 28.97 --------- --------- --------- Total noninterest income $194,158 $211,205 $229,475 18.19 % 8.65 % ========= ========= ========= Noninterest Expense (Unaudited) Percentage Change to For the Three Months Ended June 30, 2004 from ----------------------------- --------------- June March June June March 30, 31, 30, 30, 31, (Dollars in thousands) 2003 2004 2004 2003 2004 --------------------- --------- --------- --------- ------- ------- Salaries and other compensation $161,567 $170,430 $174,894 8.25 % 2.62 % Employee benefits 37,362 48,993 42,703 14.30 (12.84) --------- --------- --------- Salaries and employee benefits 198,929 219,423 217,597 9.38 (0.83) Net occupancy 28,666 31,582 32,173 12.23 1.87 Equipment 16,354 17,271 16,883 3.23 (2.25) Communications 13,354 13,410 13,035 (2.39) (2.80) Software 10,849 12,995 12,908 18.98 (0.67) Advertising and public relations 9,693 8,727 10,814 11.57 23.91 Professional services 13,566 11,303 10,290 (24.15) (8.96) Data processing 7,744 7,625 7,659 (1.10) 0.45 Intangible asset amortization 3,227 4,221 4,485 38.98 6.25 Foreclosed asset nm nm expense -- 519 17 Other 44,422 46,030 50,541 13.77 9.80 --------- --------- --------- Total noninterest expense $346,804 $373,106 $376,402 8.53 % 0.88 % ========= ========= ========= nm = not meaningful (1) See exhibit 5 for reconciliation of 'reported earnings' to 'operating earnings'. Exhibit 12 UnionBanCal Corporation and Subsidiaries On a Reported Earnings Basis (reference to exhibit 3) ------------------------------------------------ Noninterest Income (Unaudited) Percentage Change to For the Six June 30, 2004 Months Ended from ------------------ ---------- June 30, June 30, June 30, (Dollars in thousands) 2003 2004 2003 ------------------------------------- --------- -------- --------- Service charges on deposit accounts $150,229 $171,127 13.91 % Trust and investment management fees 65,816 72,610 10.32 Insurance commissions 29,242 40,387 38.11 International commissions and fees 32,201 35,647 10.70 Card processing fees, net 19,022 24,248 27.47 Foreign exchange gains, net 13,892 16,638 19.77 Brokerage commissions and fees 17,066 16,320 (4.37) Merchant banking fees 12,209 15,181 24.34 Securities gains (losses), net 9,660 1,618 (83.25) Gain on sale of Credit Card Portfolio -- 93,000 nm Other 39,605 55,439 39.98 --------- --------- Total noninterest income $388,942 $542,215 39.41 % ========= ========= Noninterest Expense (Unaudited) Percentage Change to For the Six June 30, 2004 Months Ended from -------------------- ---------- June 30, June 30, June 30, (Dollars in thousands) 2003 2004 2003 ------------------------------------- --------- --------- --------- Salaries and other compensation $314,627 $345,324 9.76 % Employee benefits 82,409 91,696 11.27 --------- --------- Salaries and employee benefits 397,036 437,020 10.07 Net occupancy 60,502 63,755 5.38 Equipment 33,025 34,154 3.42 Communications 27,198 26,445 (2.77) Software 22,925 25,903 12.99 Professional services 25,580 21,593 (15.59) Advertising and public relations 19,360 19,541 0.93 Data processing 16,228 15,284 (5.82) Intangible asset amortization 5,704 8,705 52.61 Foreclosed asset expense 51 536 nm Other 85,995 96,572 12.30 --------- --------- Total noninterest expense $693,604 $749,508 8.06 % ========= ========= nm = not meaningful Exhibit 13 UnionBanCal Corporation and Subsidiaries On an Operating Earnings Basis (reference to exhibit 4) (1) ----------------------------------------------------------- Noninterest Income (Unaudited) Percentage Change to For the Six June 30, 2004 Months Ended from -------------------- ----------- June 30, June 30, June 30, (Dollars in thousands) 2003 2004 2003 ---------------------- --------- ---------- ----------- Service charges on deposit accounts $150,229 $171,127 13.91 % Trust and investment management fees 65,816 72,610 10.32 Insurance commissions 29,242 40,387 38.11 International commissions and fees 32,201 35,647 10.70 Card processing fees, net 19,022 24,248 27.47 Foreign exchange gains, net 13,892 16,638 19.77 Brokerage commissions and fees 17,066 16,320 (4.37) Merchant banking fees 12,209 15,181 24.34 Securities gains, net 647 1,618 150.08 Other 39,605 46,904 18.43 --------- ---------- Total noninterest income $379,929 $440,680 15.99 % ========= ========== Noninterest Expense (Unaudited) Percentage Change to For the Six June 30, 2004 Months Ended from ------------------- ---------- June 30, June 30, June 30, (Dollars in thousands) 2003 2004 2003 ------------------------------------- --------- --------- --------- Salaries and other compensation $314,627 $345,324 9.76 % Employee benefits 82,409 91,696 11.27 --------- --------- Salaries and employee benefits 397,036 437,020 10.07 Net occupancy 56,302 63,755 13.24 Equipment 33,025 34,154 3.42 Communications 27,198 26,445 (2.77) Software 22,925 25,903 12.99 Professional services 25,580 21,593 (15.59) Advertising and public relations 19,360 19,541 0.93 Data processing 16,228 15,284 (5.82) Intangible asset amortization 5,704 8,705 52.61 Foreclosed asset expense 51 536 nm Other 85,995 96,572 12.30 --------- --------- Total noninterest expense $689,404 $749,508 8.72 % ========= ========= nm = not meaningful (1) See exhibit 6 for reconciliation of 'reported earnings' to 'operating earnings'. Exhibit 14 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)